STRUCTURING THE IT FUNCTION Centralized data processing (as opposed to DDP) Database administrator Data processing manager/dept. Data control

STRUCTURING THE IT FUNCTION

Centralized data processing (as opposed to DDP)

Database administrator Data processing manager/dept.

Data control Data preparation/conversion Computer operations Data library

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Segregation of incompatible IT functions Systems development & maintenance

ParticipantsEnd usersIS professionalsAuditorsOther stakeholders

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STRUCTURING THE IT FUNCTION Segregation of incompatible IT functions

Objectives: Segregate transaction authorization

from transaction processing Segregate record keeping from asset

custody Divide transaction processing steps

among individuals to force collusion to perpetrate fraud

Separating systems development from computer operations

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Segregation of incompatible IT functions Separating DBA from other functions

DBA is responsible for several critical tasks: Database security Creating database schema and

user views Assigning database access authority to users Monitoring database usage Planning for future changes

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Alternative 1: segregate systems analysis from programming

Two types of control problems from this approach:

Inadequate documentation Is a chronic problem. Why? Not interesting Lack of documentation provides job security Assistance: Use of CASE tools

Potential for fraud Example: Salami slicing, trap doors

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Segregate data library from operations Physical security of off-line data files Implications of modern systems on use of

data library: Real-time/online vs. batch processing Volume of tape files is insufficient to justify full-

time librarian Alternative: rotate on ad hoc basis

Custody of on site data backups Custody of original commercial software and

licenses

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Audit procedures: Obtain and review security policy Verify policy is communicated Review relevant documentation (org. chart,

mission statement, key job descriptions) Review systems documentation and

maintenance records (using a sample) Verify whether maintenance programmers are

also original design programmers Observe segregation policies in practice Review operations room access log Review user rights and privileges

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Computing ModelsCentralized ProcessingClient Server Processing

thin or fat clients2 to n tiered

Distributed Computingusing idle processing time

Distributed Database Computingreplicated or divided

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STRUCTURING THE IT FUNCTION The distributed model

Risks associated with DDP Inefficient use of resources

Mismanagement of resources by end users

Hardware and software incompatibility Redundant tasks

Destruction of audit trails Inadequate segregation of duties Hiring qualified professionals

Increased potential for errors Programming errors and system failures

Lack of standards

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STRUCTURING THE IT FUNCTION The distributed model

Advantages of DDP Cost reduction

End user data entry vs. data control group Application complexity reduced Development and maintenance costs

reduced Improved cost control responsibility

IT critical to success then managers must control the technologies

Improved user satisfaction Increased morale and productivity

Backup flexibility Excess capacity for DRP

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STRUCTURING THE IT FUNCTION Controlling the DDP

environment Audit objectives:

Conduct a risk assessment Verify the distributed IT units

employ entity-wide standards of performance that promotes compatibility among hardware, operating software, applications, and data

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STRUCTURING THE IT FUNCTION Controlling the DDP environment

Audit procedures: Verify corporate policies and standards are

communicated Review current organization chart, mission

statement, key job descriptions to determine if any incompatible duties exist

Verify compensating controls are in place where incompatible duties do exist

Review systems documentation Verify access controls are properly

established

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THE COMPUTER CENTER Computer center controls

Physical location Avoid human-made and natural hazards Example: Chicago Board of Trade

Construction Ideally: single-story, underground utilities,

windowless, use of filters If multi-storied building, use top floor (away

from traffic flows, and potential flooding in a basement)

Access Physical: Locked doors, cameras Manual: Access log of visitors

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Air conditioning Especially mainframes Amount of heat even from a group of PCs

Fire suppression Automatic: usually sprinklers

Gas, such as halon, that will smother fire by removing oxygen can also kill anybody trapped there

Sprinklers and certain chemicals can destroy the computers and equipment

Manual methods Power supply

Need for clean power, at a acceptable level Uninterrupted power supply


Audit objectives Verify physical security controls are

reasonable Verify insurance coverage is adequate Verify operator documentation is adequate in

case of failure

Audit procedures Tests of physical construction Tests of fire detection Tests of access control Tests of backup power supply Tests for insurance coverage Tests of operator documentation controls

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PC SYSTEMS Control environment for PCs

Controls Risk assessment Inherent weaknesses Weak access control Inadequate segregation of duties Multilevel password control – multifaceted

access control Risk of physical loss

Laptops, etc. can “walk off” Risk of data loss

Easy for multiple users to access data End user can steal, destroy, manipulate Inadequate backup procedures

Local backups on appropriate medium Dual hard drives on PC External/removable hard drive on PC

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PC SYSTEMS Control environment for PCs

Risk associated with virus infection Policy of obtaining software Policy for use of anti-virus software Verify no unauthorized software on

PCs

Risk of improper SDLC procedures Use of commercial software Formal software selection

procedures

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FIGURE 2.8 – Password Policy

Proper Dissemination – Promote it, use it during employee training or orientation, and find ways to continue to raise awareness within the organization.

Proper Length: Use at least 8 characters. The more characters, the more difficult to guess or crack. Eight characters is an effective length to prevent guessing, if combined with below.

Proper Strength: Use alphabet (letters), numbers (at least 1), and special characters (at least 1). The more non-alpha, the harder to guess or crack. Make them case sensitive and mix upper and lower case. A “Strong” password for any critical access or key user. Password CANNOT contain a real word in the content.

Proper Access Levels or Complexity: Use multiple levels of access requiring multiple passwords. Use a password matrix of data to grant read-only, read/write, or no access per data field per user. Use biometrics {such as fingerprints, voice prints}. Use supplemental access devices, such as smart cards, or beeper passwords in conjunction with remote logins. Use user-defined procedures.

Proper Timely Changes: At regular intervals, make employees change their passwords.

Proper Protection: Prohibit the sharing of passwords or “post-its” with passwords located near one’s computer.

Proper Deletion: Require the immediate deletion of accounts for terminated employees, to prevent an employee from being able to perpetrate adverse activities.

SYSTEM-WIDE CONTROLS E-mail risks

Spoofing Spamming Hoax virus warnings Flaming Malicious attachments (e.g., viruses) Phishing Pharming

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SYSTEM-WIDE CONTROLS Malicious objects risk

Virus Worm Logic bomb Back door / trap door Trojan horse Potential control procedures Audit objective Audit procedures

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Types of Computer CrimeHackingTheft of Intellectual PropertyTheft of PIIPhishing and PharmingIdentity TheftCyberstalkingViruses

Email Image Spams

Botnets infect up to 10% of all computers

Image spams allow emails to avoid filters

Popular spam – enticing readers to buy a cheap stock in a pump and dump

The Italian JobInfected more than 10,000 web pages on

popular websites including travel agents, hotels, charities and government departments.

Most are in Italy, but also Spain and US.Eastern European based using a $500 kit.Downloads keylogger to steal identities.

SYSTEM-WIDE CONTROLS Controlling electronic audit

trails Keystroke monitoring (keystroke log) Event monitoring (key events log) Audit trail objectives

Detecting unauthorized access Reconstructing events Personal accountability

Implementing an audit trail Transaction logs

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Data Capture

KeyKatcher Records chat, e-mail, internet &

more Is easier to use than parental

control software Identifies internet addresses Uses no system resources Works on all PC operating

systems Undetectable by software

www.lakeshoretechnology.com

SYSTEM-WIDE CONTROLS Disaster recovery planning

Critical applications identified and ranked

Create a disaster recovery team with responsibilities

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Site backup “Hot site” – Recovery

Operations Center “Cold site” – empty shell Mutual aid pact Internally provided backup Other options

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Disaster Recovery Plan

1. Critical Applications – Rank critical applications so an orderly and effective restoration of computer systems is possible.

2. Create Disaster Recovery Team – Select team members, write job descriptions, describe recovery process in terms of who does what.

3. Site Backup – a backup site facility including appropriate furniture, housing, computers, and telecommunications. Another valid option is a mutual aid pact where a similar business or branch of same company swap availability when needed.

4. Hardware Backup – Some vendors provide computers with their site – known as a hot site or Recovery Operations Center. Some do not provide hardware – known as a cold site. When not available, make sure plan accommodates compatible hardware (e.g., ability to lease computers).

5. System Software Backup – Some hot sites provide the operating system. If not included in the site plan, make sure copies are available at the backup site.

6. Application Software Backup – Make sure copies of critical applications are available at the backup site

7. Data Backup – One key strategy in backups is to store copies of data backups away from the business campus, preferably several miles away or at the backup site. Another key is to test the restore function of data backups before a crisis.

8. Supplies – A modicum inventory of supplies should be at the backup site or be able to be delivered quickly.

9. Documentation – An adequate set of copies of user and system documentation.

10. TEST! – The most important element of an effective Disaster Recovery Plan is to test it before a crisis occurs, and to test it periodically (e.g., once a year).


Audit objectives Verify management’s DRP is adequate

Audit procedures Verify a second-site backup is adequate Review the critical application list for

completeness Verify backups of application software are

stored off-site Verify that critical data files are backed up and

readily accessible to DRP team Verify resources of supplies, documents, and

documentation are backed up and stored off-site

Verify that members listed on the team roster are current employees and that they are aware of their responsibilities

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SYSTEM-WIDE CONTROLS Fault tolerance

Definition 44% of IS down-time attributable to system

failures! Controls

Redundant systems or parts RAID

UPS Multiprocessors

Audit objective To ensure the organization is employing an

appropriate level of fault tolerance Audit procedures

Verify proper level of RAID devices Review procedures for recovery from system

failure Verify boot disks are secured 31

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Client Server Systems

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Firewalls

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Demilitarized Zone

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Documents

STRUCTURING THE IT FUNCTION Centralized data processing (as opposed to DDP) Database administrator Data processing manager/dept. Data control