Warren Ullman and Timothy Hart, co-owners of Fort Lauderdale, Fla.-based CPA firm Ullman & Hart CPAs, have not had a headache from a back-up issue in four years. Ever since they started using NetSuite, an online accounting software provider, their jobs have been made a little easier and their back-up duties have vanished."I can't think of anything I would change," said Hart. "It's one of their selling tools as an online provider. We don't have to worry about back-up, they worry about back-up."

However, many CPAs don't feel the same way that Ullman and Hart do, because they don't believe their data is secure online - a notion that online accounting providers and their clients have repeatedly labeled a misconception.

In an effort to ease CPAs' fears, providers are now offering hard copies of data to their clients for additional peace of mind, while playing up the high level of security and cost savings involved in online accounting software and back-up systems.

"I used to have to do back-ups once a day," said Mo Aminian, an enrolled agent and president of accounting firm and NetSuite reseller Aminian Business Services in Irvine, Calif. "If something got corrupted because of a power surge or a computer freezes, then you've got to restore the back-up. It's not fool-proof either - you have to find where the corruption was [in the data]. If I didn't find the corruption in seven days, I was really screwed."

An effective back-up system is one in which you can retrieve data from a day, a week, or years ago with confidence that the information is correct. To achieve this level of confidence, a business owner needs more than one server, with one in a separate location; five to seven different back-up tapes running at all times and changed every five to seven days; and a fireproof safe, preferably offsite, to store the tapes.

The cost, energy and time needed to maintain such a system is not what the CPA should be worrying about, said Aminian; the CPA should be worrying about accounting.

Online, not unsafe

Many CPAs are skeptical of using online accounting software because of fears that a hacker would be able to see what they are doing.

"Our clients are still very reluctant to put their information up into cyberspace. We're only now just starting to get good compliance with e-filing!" said Linda Geery, senior manager at Sacramento, Calif.-based CPA firm Gilbert Associates Inc. "Once our clients get more on board with that method, we will start to as well."

However, proponents of online systems claim that these fears are unfounded. The data on an accounting software Web site, unlike a regular site, is secured the same way an online banking site is secured - as shown by a small gold padlock icon usually in the bottom righthand side of the Web site, explained Craig Sullivan, director of product management at NetSuite. A CPA's PC is no more likely to be hacked if the firm uses an online accounting software package than if it uses an in-house software system.

"They have a false sense of security of their data," said Aminian. "Just because it's on their workstation does not make it secure. They think that if they can put their arms around their data, it's secure - that's not true. It's easy for people to take data files from your desktop and you don't even know it."

The data in an online accounting software system is encrypted both ways - coming to and from a CPA's computer. With this 128-bit encryption, the flow of information is virtually impenetrable by an outside force. The servers are infinitely redundant, so no matter how many servers become powerless from a blackout, flood or electrical storm, the data is still being stored. And if the power goes out in a facility, a diesel generator is there to keep on running anywhere from 30 to 72 days without refueling.

The data is continuously stored, compressed, saved onto tapes, and then duplicated onto another set of tapes. One set of tapes goes to an offsite location, usually about 200 to 300 miles away (sometimes in a different state), so in case something happens to the original site, there is another set on hand and far away enough so the chances of both locations being damaged or destroyed are slim.

"You can't possibly have the discipline and back-up system that a typical IBM facility or other big facilities can provide," said Don Haney, CPA and chief executive officer of Sacramento, Calif.-based CPA firm Haney Accountants Inc., who uses Intacct, an online accounting software provider. (Intacct uses IBM facilities to house its clients' data.) "They would be hard-pressed to find a more industrial-strength support than these data facilities have."

The facilities all have non-stop security camera monitoring, guards, and alarmed doors with some biometric scanner and/or key card access.

Not convinced?

Spokespeople from online accounting software providers Intacct, NetSuite and QuickBooks Online Edition all claimed fairly high growth rates - anywhere from 25 percent to 100 percent in the last year.

Ryan Howe, product marketing manager of Peachtree Payroll and integrated solutions, however, reported minimal growth in the number of ePeachtree users in the last year, with a small percentage of those customers being CPAs.

"I'm a control freak," explains Todd Blome, partner at Lincoln, Neb.-based Basso, McClure & Goeglein LLP. "I prefer to keep my client data in-house rather than hosted, because I like knowing where my data is. With online [systems], what happens if there's not an Internet connection, for whatever reason - then how do you access the data?"

Online users need a stable Internet connection to use online accounting software and their back-up offerings; however, the providers claim 99.9 percent availability on their part - with the remaining 0.1 percent being time used for upgrades. NetSuite guarantees this 99.9 percent availability, or the user is refunded their monthly payment.

Ullman and Hart can only remember two instances in four years in which NetSuite was unavailable. "It's so rare, though - I really had to sit down and think about it," said Hart.

Today, ePeachtree, Intacct, NetSuite and QBOE all have options for customers who would like to have their data on file in-house as well. They'll send the backed-up data to the user, either via CD or a downloadable file in XML, or in the comma-separated value format supported by Microsoft Excel.

"If they are concerned about access to their data, they can have their data in a CD sent to them, or as a CSV file, or in any common delineated format they want," said Bob Jurkowski, Intacct's chief executive. "Customers own their own data; they always have."

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