Discussion of: “The Relationship between

Internal Audit and Information Security: An

Exploratory Investigation”

Severin GrabskiMichigan State University

2011 UWCISA Symposium

Toronto, Canada

Stated ObjectiveInvestigate the nature of the relationship between information security and internal audit

• Important – Critical component of Corporate Governance

• Motivation needs to be more than “no empirical research exists”

Tasks Accomplished

• Established that the IA role has been generally ignored in the literature

• Conducted semi-structured interviews with IA and IS security professionals

• Identified factors that impact the nature of the relationship between IA and IS functions

But…• Had sense of concern

Proposed Model

IA vs. IS Control View• IA

Control objectiveo PreventiveoDetectiveoCorrective

• IA ReviewoMonitoring – Detective

• ISStage of attempted penetrationo Configuration –

(Preventive)o Access -

(Preventive)oMonitoring –

(Detective)• What’s missing?• What happened to Corrective?

Proposed Model

But…“…no empirical research investigating how well the two functions work together.” (p.5)Proposed Model -• Never addresses Role of IA and IS• How Should IA and IS Interact?

oModel only shows tasks and how they are reviewed

• Is there Theory for this Interaction?

SOX & IT Governance• Case Study of Charles Schwab

Corporation (Damianides 2005)

• Top management sought improved IT Governance Frameworko IA recommended COBITo Improve IS controlso Enhance IT & Business ProcessesoMap audits to COBIT

• On a high level, this shows units working together

Proposed Model

But… (p. 131)??

So How Did This Proposed Model

Occur?

From Here!Includes Monitoring & Documentation

Basis for Proposed Model

But…

• Ransbotham & Mitra (2009) Model is about external attacks on an organization – information security compromise process

• How does this relate to “Internal” Controls?• How does this relate to securing the system

from the “Innocent Incompetent”?

Proposed Model

So How Did We Get Figure 3?

Proposed Model

NEVER TESTE

D!

I Got Lost!

I Need a MapI Need a THEORY

Where’s the Theory?

• While there has not been any study of IA and IS working together, there has been many studies of organizations and institutional structure

• Possible theory –Neo-institutional Theory

Neo-institutional Theory

• Should be used for studying IT security issues in organizations (Bjorck 2004)oCan be used to explain differences in formal

and actual security behavioroCan be used to explain why formal security

structures are created and not fully implemented

• Can be used to explain how institutional factors influence the behavior of individuals (Hu et al. 2007)

Neo-institutional Theory

• Organizations are structured by phenomena in institutional environment and become isomorphic with them

• Two partsInstitutionalismIsomorphism

Institutionalism

• Process in which components of formal structure become accepted, and are seen as appropriate and needed

• Decision to adopt depends upon whether the innovation will improve internal processes

Isomorphism• Explains how institutional

structures and practices propagate among organizationsoCoercive Isomorphism (External pressure)oMimetic Isomorphism (Imitation)• Software selection (Tingling & Parent 2002)

oNormative Isomorphism (Professionalism)• Mediating role of top management in

ES assimilation (Liang et al. 2007)

Benefit of Theory

• Guide formulation of constructs & interview questions

• Focus does not need to be on testing neo-institutional theory

• Focus can be on extending theory• Could still use case-based

approach

Research Instrument• Discuss “perceived inequality”

oNever appears in research instrumentoWhat does appear is “Working

Relationship”

• Suggest that “Organizational Characteristics” impact relationshipo “Working Relationship,” “Audit

Demographics,” and “IT Demographics” are used

Setting - Education• Concern about Security

oMore or less in Education than Business?

oMany Laws (FERPA, GLBA, PCI, HIPPA, States also have laws/penalties for data disclosure, etc.) impact Universities•Manuscript states that security was not an overarching strategic factor.• How can security not be a major concern?

Research Method

• Good Approach• Did the participants get the

opportunity to review the transcripts and correct errors/omissions?

• Need to state in the Research Method section that an IA and IS security person were interviewed at institutions that did not outsource IA (information is only in Table 1)

Findings• Technical Knowledge

oTech knowledge deeper relationships

oOr is it that they know the correct questions to ask and can bring value to the IS team?

• Communication Skillso If IA explains what & why, than IS is

cooperative• Auditor’s Perception of the Role of IA

vis-à-vis Information Security

Findings• Does Technical Knowledge Result

in Improved Communication Skills & Result in Increased Cooperation with IS?

IS perceived top management to be very supportive of information security but, adequate resources were not necessarily forthcoming (in Not For Profit)

Findings

• How can IS and IA work smarter with fewer (limited) resources?

For Profit

• Budgetary Support• Incentive for Audit Compliance• Why?

CEO, CFO

Security Issues Related to Financial Results

IT Corporate Governance

Relationships Matter

IS

IS IS

IS

IA

IA

Relationships Matter

• A collaborative relationship between the internal audit and information systems security functions increases user compliance, improves the effectiveness of internal audit (P6 A&B)

• More interesting question:How is a collaborative relationship

established?

Additional Survey• Interviewed CIO

o IA was “bad guy” in the pasto IA had stringent standardso Didn’t understand that IT Security is situational

(practical, unsecure to totally secure but impractical)• SSN need high security • Other stuff can be wide-open

o Had to work with IA to be “practical”• Could not apply all of COBIT all the time!

o IA acts like an extra set of eyes & ears• Working smarter

Additional Survey• IA did not want to disclose

standards used in auditoReleasing audit standards viewed as

“teaching to the test”oNeeded to get shared understanding of

standards good practices• IS can now share these good practices• Facilitates audit• IS can help invent technologies to

meet new standards, e.g., PCI, etc.

Additional Survey• IA tells IS the annual audit plan• IS uses IA for help garnering

additional resourcesoCard Lock system for Server Roomso Expanded for Physical Security across

campus

• CIO & IA Director have mutual respect• This “Top Management” directly

influences the other IA and IS unit employees

Summary• Need clear evolutionary path from

literature to Figure 2 to Figure 3• Theory• Gap between questions in research

instrument and issues identified in the manuscript

• Relationship to ERM• Operationalize Constructs• Model Specified Correctly?

Closing Comments

• Enjoyed manuscript• Do we know if the proposed model

(Figure 3) would change if the IA and IS were viewed as belonging to o “High performing” organizations? o “Low performing” organizations?