Explaining Cloud for non-IT Auditors, or why cloud doesn’t exist- it’s just someone else’s hardware.

Imagine someone telling you, “You don’t need a refrigerator anymore; just store all your food in the cloud!” Sounds ridiculous, right? Where’s your food actually going? Who’s making sure it stays cold? Who has access to your leftover pizza?

That’s exactly how cloud computing works. The cloud isn’t a magical, invisible storage place—it’s just someone else’s computer. You send your data off to be stored on massive servers owned by companies like Amazon (AWS), Microsoft (Azure), or Google (GCP). They handle the hardware, maintenance, and security, while you pay them for the privilege of not having to do all that yourself.

Yet, for auditors, the problem isn’t where the data lives but who controls it, secures it, and can access it. So let’s break it down.

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The Cloud is Just Renting a Computer

Back in the good old days (pre-cloud), companies stored data in on-premise servers. Think of a massive room filled with buzzing machines, all maintained by an IT team that occasionally emerged from their caves to demand more budget.

With cloud computing (and Software-as-a-Service (SaaS)), businesses don’t need to own these machines or software anymore. Instead, they rent space on other people’s hardware—often scattered across multiple data centers worldwide. This shift offers benefits like cost savings, scalability, and offloading maintenance to someone else. But it also introduces risks that auditors need to understand.

Why Should Auditors Care?

If you’re an auditor who doesn’t deal with IT daily, the cloud can feel like someone else’s problem. But if you’re responsible for assessing risk, security, and compliance, the cloud becomes your problem very quickly. Here’s why:

1. Who Owns the Data?

When a company moves to the cloud, they don’t move ownership of their data. But they do transfer control over how it’s stored and managed. Depending on the contract, the cloud provider may have the right to:

• Move the data between different servers (even in different countries!)
• Back it up on shared infrastructure
• Limit how quickly the company can access or recover it

Auditors need to check Service Level Agreements (SLAs) and data residency policies to ensure compliance with regulations like GDPR or CCPA.

2. Who Can See the Data?

Cloud providers promise security, but they also have their own employees managing the hardware. Who has admin rights? Are there logs showing who accessed what? Can an insider at the provider accidentally (or intentionally) see your company’s financials?

As an auditor, look for access control policies, encryption standards, and audit logs to track who touches the data.

3. What Happens If It Goes Down?

Cloud services have outages all the time. AWS, Azure, and Google Cloud have each suffered high-profile failures that took down major companies. If your company’s financial system relies on the cloud, what happens if it’s suddenly unavailable?

Auditors should ask:

• Does the company have a business continuity plan?
• Is there an offsite backup that isn’t in the same cloud provider?
• How long can the business function without access to cloud systems?

4. How Secure Is It?

Cloud providers claim to offer military-grade security, but breaches still happen. From exposed databases to misconfigured settings, companies frequently leave the front door open without realizing it.

Key audit questions:

• Is multi-factor authentication (MFA) required?
• Are security patches applied regularly?
• Is data encrypted at rest and in transit?

Cloud Myths That Need to Die

Myth 1: The Cloud is Safer Than On-Prem

Reality: It can be, but only if configured properly. Most breaches happen due to human error, like weak passwords or misconfigured settings.

Myth 2: Cloud Providers Handle All Security

Reality: They secure the infrastructure, but securing the data is on the customer. This is called the Shared Responsibility Model—always check what’s covered.

Myth 3: Cloud Storage is Unlimited

Reality: It’s only unlimited if you have unlimited money. Cloud storage bills can skyrocket if data isn’t managed carefully.

How to Audit Cloud Environments (Without an IT Degree)

You don’t need to be a tech wizard to audit cloud environments. Focus on these three areas:

1. Data Ownership & Access

• Who owns the data contractually?
• Who can access it (internal and external)?
• Are there logs showing who accessed what?

2. Security & Compliance

• Is sensitive data encrypted?
• Are users required to use MFA?
• Does the cloud provider comply with relevant laws (e.g., GDPR, SOC 2, ISO 27001)?

3. Continuity & Exit Strategy

• What happens if the cloud provider has an outage?
• Can the company switch providers easily?
• Are backups stored outside the primary cloud environment?

Wrapping Up: Cloud = Someone Else’s Problem (Until It’s Yours)

The cloud is a fantastic tool, but it’s not a magic bullet. For auditors, it’s less about the technology and more about risk management. Who controls the data? How secure is it? What happens in an emergency?

Next time someone tells you, “Don’t worry, it’s in the cloud,” remind them:

The cloud doesn’t exist. It’s just someone else’s hardware. And you still have to audit it.