1. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. IT Auditing, Hall, 3e

2. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Perform three main tasks: ◦ translates high-level languages into the machine-level language ◦ allocates computer resources to user applications ◦ manages the tasks of job scheduling and multiprogramming 1Hall, 3e

3. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Protect against tampering by users  Prevent users from tampering with the programs of other users  Safeguard users’ applications from accidental corruption  Safeguard its own programs from accidental corruption  Protect itself from power failures and other disasters 2Hall, 3e

4. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Log-On Procedure ◦ first line of defense – user IDs and passwords  Access Token ◦ contains key information about the user  Access Control List ◦ defines access privileges of users  Discretionary Access Control ◦ allows user to grant access to another user 3Hall, 3e

5. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Access Privileges  Audit objectives: verify that access privileges are consistent with separation of incompatible functions and organization policies  Audit procedures: review or verify… ◦ policies for separating incompatible functions ◦ a sample of user privileges, especially access to data and programs ◦ security clearance checks of privileged employees ◦ formal acknowledgements to maintain confidentiality of data ◦ users’ log-on times 4Hall, 3e

6. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Password Control  Audit objectives: ensure adequacy and effectiveness of password policies for controlling access to the operating system  Audit procedures: review or verify… ◦ passwords required for all users ◦ password instructions for new users ◦ passwords changed regularly ◦ password file for weak passwords ◦ encryption of password file ◦ password standards ◦ account lockout policies 5Hall, 3e

7. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Malicious & Destructive Programs  Audit objectives: verify effectiveness of procedures to protect against programs such as viruses, worms, back doors, logic bombs, and Trojan horses  Audit procedures: review or verify… ◦ training of operations personnel concerning destructive programs ◦ testing of new software prior to being implemented ◦ currency of antiviral software and frequency of upgrades 6Hall, 3e

8. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Audit Trail Controls  Audit objectives: used to (1) detect unauthorized access, (2) facilitate event reconstruction, and/or (3) promote accountability  Audit procedures: review or verify… ◦ how long audit trails have been in place ◦ archived log files for key indicators ◦ monitoring and reporting of security violations 7Hall, 3e

9. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  The communications component is a unique aspect of computer networks: ◦ different than processing (applications) or data storage (databases)  Network topologies – configurations of: ◦ communications lines (twisted-pair wires, coaxial cable, microwaves, fiber optics) ◦ hardware components (modems, multiplexers, servers, front-end processors) ◦ software (protocols, network control systems) 8Hall, 3e

10. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Intercepting network messages ◦ sniffing: interception of user IDs, passwords, confidential e-mails, and financial data files  Accessing corporate databases ◦ connections to central databases increase the risk that data will be accessible by employees  Privileged employees ◦ override privileges may allow unauthorized access to mission-critical data  Reluctance to prosecute ◦ fear of negative publicity leads to such reluctance but encourages criminal behavior 9Hall, 3e

11. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  How serious is the risk? ◦ National Consumer League: Internet fraud rose by 600% between 1997 and 1998 ◦ SEC: e-mail complaints alleging fraud rose from 12 per day in 1997 to 200-300 per day in 1999  Major areas of concern: ◦ Theft of credit card numbers ◦ Theft of passwords ◦ Consumer privacy--cookies 10Hall, 3e

12. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  IP spoofing: masquerading to gain access to a Web server and/or to perpetrate an unlawful act without revealing one’s identity  Denial of service (DOS) attacks: assaulting a Web server to prevent it from servicing users ◦ particularly devastating to business entities that cannot receive and process business transactions  Other malicious programs: viruses, worms, logic bombs, and Trojan horses pose a threat to both Internet and Intranet users 11Hall, 3e

13. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  SYN Flood – when the three-way handshake needed to establish an Internet connection occurs, the final acknowledgement is not sent by the DOS attacker, thereby tying-up the receiving server while it waits.  Smurf – the DOS attacker uses numerous intermediary computer to flood the target computer with test messages, “pings”.  Distributed DOS (DDOS) – can take the form of Smurf or SYN attacks, but distinguished by the vast number of “zombie” computers hi-jacked to launch the attacks. 12Hall, 3e

14. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  In a DOS Attack, the sender sends hundreds of messages, receives the SYN/ACK packet, but does not response with an ACK packet. This leaves the receiver with clogged transmission ports, and legitimate messages cannot be received. 13 Sender Receiver Step 1: SYN messages Step 2: SYN/ACK Step 3: ACK packet code Hall, 3e

15. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14Hall, 3e

16. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15Hall, 3e

17. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Include: ◦ Disrupting, destroying, or corrupting transmissions between senders and receivers ◦ Loss of databases and programs stored on network servers 16Hall, 3e

18. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Firewalls provide security by channeling all network connections through a control gateway.  Network level firewalls ◦ Low cost and low security access control ◦ Do not explicitly authenticate outside users ◦ Filter junk or improperly routed messages ◦ Experienced hackers can easily penetrate the system  Application level firewalls ◦ Customizable network security, but expensive ◦ Sophisticated functions such as logging or user authentication 17Hall, 3e

19. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18Hall, 3e

20. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Denial-of-service (DOS) attacks ◦ Security software searches for connections which have been half-open for a period of time.  Encryption ◦ Computer program transforms a clear message into a coded (cipher) text form using an algorithm. 19Hall, 3e

21. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Controlling for three common forms of DOS attacks: ◦ Smurf attacks—organizations can program firewalls to ignore an attacking site, once identified ◦ SYN flood attacks—two tactics to defeat this DOS attack  Get Internet hosts to use firewalls that block invalid IP addresses  Use security software that scan for half-open connections ◦ DDos attacks–many organizations use Intrusion Prevention Systems (IPS) that employ deep packet inspection (DPI)  IPS works with a firewall filter that removes malicious packets from the flow before they can affect servers and networks  DPI searches for protocol non-compliance and employs predefined criteria to decide if a packet can proceed to its destination (See chapter 12 for more on DOS attacks) 20Hall, 3e

22. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  The conversion of data into a secret code for storage and transmission  The sender uses an encryption algorithm to convert the original cleartext message into a coded ciphertext.  The receiver decodes / decrypts the ciphertext back into cleartext.  Encryption algorithms use keys ◦ Typically 56 to 128 bits in length ◦ The more bits in the key the stronger the encryption method.  Two general approaches to encryption are private key and public key encryption. 21Hall, 3e

23. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Digital signature – electronic authentication technique to ensure that… ◦ transmitted message originated with the authorized sender ◦ message was not tampered with after the signature was applied  Digital certificate – like an electronic identification card used with a public key encryption system ◦ Verifies the authenticity of the message sender 22Hall, 3e

24. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Digital Signature

25. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Message sequence numbering – sequence number used to detect missing messages  Message transaction log – listing of all incoming and outgoing messages to detect the efforts of hackers  Request-response technique – random control messages are sent from the sender to ensure messages are received  Call-back devices – receiver calls the sender back at a pre-authorized phone number before transmission is completed 24Hall, 3e

26. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Review firewall effectiveness in terms of flexibility, proxy services, filtering, segregation of systems, audit tools, and probing for weaknesses.  Review data encryption security procedures  Verify encryption by testing  Review message transaction logs  Test procedures for preventing unauthorized calls 25Hall, 3e

27. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Line errors are data errors from communications noise.  Two techniques to detect and correct such data errors are: ◦ echo check - the receiver returns the message to the sender ◦ parity checks - an extra bit is added onto each byte of data similar to check digits 26Hall, 3e

28. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27Hall, 3e

29. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Using a sample of messages from the transaction log: ◦ examine them for garbled contents caused by line noise ◦ verify that all corrupted messages were successfully retransmitted 28Hall, 3e

30. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Electronic data interchange (EDI) uses computer-to-computer communications technologies to automate B2B purchases.  Audit objectives: 1.Transactions are authorized, validated, and in compliance with the trading partner agreement. 2.No unauthorized organizations can gain access to database 3.Authorized trading partners have access only to approved data. 4.Adequate controls are in place to ensure a complete audit trail. 29Hall, 3e

31. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Reduction or elimination of data entry  Reduction of errors  Reduction of paper  Reduction of paper processing and postage  Reduction of inventories (via JIT systems) 30Hall, 3e

32. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Authorization ◦ automated and absence of human intervention  Access ◦ need to access EDI partner’s files  Audit trail ◦ paperless and transparent (automatic) transactions 31Hall, 3e

33. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Authorization ◦ use of passwords and value added networks (VAN) to ensure valid partner  Access ◦ software to specify what can be accessed and at what level  Audit trail ◦ control log records the transaction’s flow through each phase of the transaction processing 32Hall, 3e

34. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 EDI System Hall, 3e

35. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 EDI System using Transaction Control Log for Audit Trail Hall, 3e

36. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Tests of Authorization and Validation Controls ◦ Review procedures for verifying trading partner identification codes ◦ Review agreements with VAN ◦ Review trading partner files  Tests of Access Controls ◦ Verify limited access to vendor and customer files ◦ Verify limited access of vendors to database ◦ Test EDI controls by simulation  Tests of Audit Trail Controls ◦ Verify existence of transaction logs ◦ Review a sample of transactions 35Hall, 3e

37. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36  PC operating systems  PC systems risks & controls  In general:  Relatively simple to operate and program  Controlled and operated by end users  Interactive data processing vs. batch  Commercial applications vs. custom  Often used to access data on mainframe or network  Allows users to develop their own applications  Operating Systems:  Are located on the PC (decentralized)  O/S family dictates applications (e.g., Windows) Hall, 3e

38. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37  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 Hall, 3e

39. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38  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 Hall, 3e

40. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39  Verify controls are in place to protect data, programs, and computers from unauthorized access, manipulation, destruction, and theft  Verify that adequate supervision and operating procedures exist to compensate for lack of segregation between the duties of users, programmers, and operators  Verify that backup procedures are in place to prevent data and program loss due to system failures, errors  Verify that systems selection and acquisition procedures produce applications that are high quality, and protected from unauthorized changes  Verify the system is free from viruses and adequately protected to minimize the risk of becoming infected with a virus or similar object Hall, 3e

41. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40  Verify that microcomputers and their files are physically controlled  Verify from organizational charts, job descriptions, and observation that the programmers of applications performing financially significant functions do not also operate those systems.  Confirm that reports of processed transactions, listings of updated accounts, and control totals are prepared, distributed, and reconciled by appropriate management at regular and timely intervals. Hall, 3e

42. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41 Hall, 3e  Determine that multilevel password control or multifaceted access control is used to limit access to data and applications, where applicable.  Verify that the drives are removed and stored in a secure location when not in use, where applicable.  Verify that backup procedures are being followed.  Verify that application source code is physically secured (such as in a locked safe) and that only the compiled version is stored on the micro­computer.  Review systems selection and acquisition controls  Review virus control techniques.

43. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 Internet Technologies Hall, 3e

44. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Packet switching ◦ messages are divided into small packets ◦ each packet of the message takes a different routes  Virtual private network (VPN) ◦ a private network within a public network  Extranets ◦ a password controlled network for private users  World Wide Web ◦ an Internet facility that links users locally and globally  Internet addresses ◦ e-mail address ◦ URL address ◦ IP address 43Hall, 3e

45. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  facilitate the physical connection between the network devices.  synchronize the transfer of data between physical devices.  provide a basis for error checking and measuring network performance.  promote compatibility among network devices.  promote network designs that are flexible, expandable, and cost-effective. 44Hall, 3e

46. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Transfer Control Protocol/Internet Protocol (TCP/IP) - controls how individual packets of data are formatted, transmitted, and received  Hypertext Transfer Protocol (HTTP) - controls web browsers  File Transfer Protocol (FTP) - used to transfer files across the internet  Simple Network Mail Protocol (SNMP) - e- mail  Secure Sockets Layer (SSL) and Secure Electronic Transmission (SET) - encryption schemes 45Hall, 3e

47. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A federation of computers located close together (on the same floor or in the same building) linked together to share data and hardware  The physical connection of workstations to the LAN is achieved through a network interface card (NIC) which fits into a PC’s expansion slot and contains the circuitry necessary for inter-node communications.  A server is used to store the network operating system, application programs, and data to be shared. 46Hall, 3e

48. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. File Server LAN Node Printer Server Files Printer 47 Hall, 3e

49. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A WAN is a network that is dispersed over a wider geographic area than a LAN. It typically requires the use of: ◦ gateways to connect different types of LANs ◦ bridges to connect same-type LANs  WANs may use common carrier facilities, such as telephone lines, or they may use a Value Added Network (VAN). 48Hall, 3e

50. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LAN Bridge Gateway LAN WAN 49Hall, 3e

51. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A network of IPUs with a large central computer (the host)  The host computer has direct connections to smaller computers, typically desktop or laptop PCs.  This topology is popular for mainframe computing.  All communications must go through the host computer, except for local computing. 50Hall, 3e

52. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Local Data Central Data POS Topeka St. Louis Kansas City Dallas Tulsa Star Network 51Hall, 3e

53. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A host computer is connected to several levels of subordinate smaller computers in a master-slave relationship. 52 Production Planning System Production Scheduling System Regional Sales System Warehouse System Warehouse System Production System Production System Sales Processing System Sales Processing System Sales Processing System Corporate Level Regional Level Local Level Hall, 3e

54. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  This configuration eliminates the central site. All nodes in this configuration are of equal status (peers).  Responsibility for managing communications is distributed among the nodes.  Common resources that are shared by all nodes can be centralized and managed by a file server that is also a node. 53Hall, 3e

55. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 54 Ring Topology Figure 12-10 Hall, 3e

56. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  The nodes are all connected to a common cable - the bus.  Communications and file transfers between workstations are controlled by a server.  It is generally less costly to install than a ring topology. 55Hall, 3e

57. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 56 Bus Topology Hall, 3e

58. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  This configuration distributes the processing between the user’s (client’s) computer and the central file server.  Both types of computers are part of the network, but each is assigned functions that it best performs.  This approach reduces data communications traffic, thus reducing queues and increasing response time. 57Hall, 3e

59. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 58 Client-Server Topology Hall, 3e

60. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  establish a communications session between the sender and the receiver  manage the flow of data across the network  detect errors in data caused by line failure or signal degeneration  detect and resolve data collisions between competing nodes 59Hall, 3e

61. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 60Hall, 3e

62. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 61Hall, 3e

63. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A random access technique that detects collisions when they occur  This technique is widely used--found on Ethernets.  The node wishing to transmit listens to the line to determine if in use. If it is, it waits a pre-specified time to transmit.  Collisions occur when nodes listen, hear no transmissions, and then simultaneously transmit. Data collides and the nodes are instructed to hang up and try again.  Disadvantage: The line may not be used optimally when multiple nodes are trying to transmit simultaneously. 62Hall, 3e