Cloud Computing: Overview and Risk Analysis

ABSTRACT :  We provide an overview of cloud computing: evolution, benefits, and challenges. Then we examine the risk characteristics identified in accounting and auditing literature by comparing a hand-collected sample of cloud computing companies with a matched sample of non-cloud computing companies. The study uses a comprehensive set of factors used in accounting and auditing literature to describe client business risk, audit risk, and auditor-related risk. Unsurprisingly, the findings show that large companies in the historically high-risk information technology industries provide cloud computing. More interestingly, the results show that cloud computing is more leveraged, and more likely to have a material weakness and longer audit tenure. Cloud computing companies are also more likely to restate their financial statement after providing cloud technologies. Some of the risk variables we used in the study are not statistically significant in capturing the risks of cloud providers (e.g., security, priv...

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