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ACCA Strategic Professional · Strategic Business Leader · Finance transformation

Orion Components is moving its finance systems to a cloud-based enterprise platform provided by a third party. The audit committee is concerned about the change. Which risk is most directly increased by this decision?

The most directly increased risk is dependence on the provider's security, availability and data controls. The company still owns responsibility for its financial data, so it must manage this third-party risk through contract terms, assurance reports and monitoring, rather than assuming controls are no longer needed.

  1. ALoss of the ability to produce any management reports
  2. BDependence on the provider's security, availability and data controlsCorrect
  3. CElimination of the need for internal controls over finance data
  4. DInability to integrate with any other business system

Explanation

Using a cloud provider creates reliance on a third party for security, uptime and data handling, which must be managed through contracts, assurance reports and monitoring. The other options overstate or misstate cloud effects; internal controls remain necessary.

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