General Controls: Controlling Networks ● Accepts or denies access requests based on

filtering rules
NETWORK ● Does not explicitly authenticate outside users.

Network topologies consists of various configurations b. Application-level firewall

of:
1. Communication Lines (twisted-pairwires,
coaxial cable, microwaves, and fiberoptics) ● Provide a higher level of customizable network
2. Hardware components (modems, multiplexers, security.
servers, and front-end processors) ● Add overhead to connectivity.
3. Software (Protocols and network control ● Configured to run security applications called
systems) proxies that can perform sophisticated functions
such as user authentication.
Network Communications Risks ● Provide comprehensive transmission logging
and auditing tools.
1. Risks from Subversive Threats - Computer
criminals, hacking, denial of service attacks c. Dual-Homed System Firewall
2. Risks from equipment failure - Equipment
failures in the communications system. Corrupt
transmission, data and program loss on servers

I. Controlling Risks from Subversive Threats

Firewall

● Insulates the organization’s network from

Denial of Service Attacks
external networks.
● Insulate portions of the organization’s intranet
● SYN Flood Attack
from internal access.
● Smurf Attack
● Can be used to authenticate an outside user of
● Distributed Denial of Service (DDos) Attack
the network, verify his or her level of access
authority, and then direct the user to the
Controlling Denial of Service Attack
program, data, or service requested.

a. SYN Flood Attack

Types of Firewall

a. Network-level firewall

● Provides efficient but low security access

control.
● Use a screening router that examines the source
and destination addresses.
● When a user establishes a connection on the computer (IP spoofing). The ping message is
Internet a three-way handshake takes place. then sent to the intermediary, which is actually
● The connecting server sends an initiation code an entire subnetwork of computers.
called a SYN (SYNchronize) packet to the Consequently, each intermediary node sends
receiving server. The receiving server then echo responses to the ping message, which are
acknowledges the request by returning a returned to the victim’s IP address
SYNchronize–ACKnowledge (SYN-ACK) packet. ● The resulting flood echoes can overwhelm the
Finally, the initiating host machine responds with victim’s computer and cause network
an ACK packet code. congestion that makes it unusable for
● The SYN flood attack is accomplished by not legitimate traffic
sending the final acknowledgment to the server’s
SYN-ACK response, which causes the server to
Prevention and Detection
keep signaling for acknowledgement until the
server times out.
● The targeted organization can program their
Prevention and Detection firewall to ignore all communication from the
attacking site until the attacker’s IP address is
● Programming the firewalls to block outbound determined.
message packets that contain invalid internal IP
addresses to prevent attackers from hiding their c. Distributed Denial of Service (DDos) Attack
locations from the targeted site Prevention and
Detection
● Using Security software that is available for the
targeted sites that scan for half-open connections
and look for SYN packets that have not been
followed by an ACK packet.

b. Smurf Attack

● widespread attack
● May take the form of a SYNflood or smurf
attack. The distinguishing feature of the DDos
is the sheer scope of the event.
● The perpetrator of a DDos attack may employ a
virtual army of so-called zombie or bot (robot)
computers to launch the attack. Because vast
numbers of unsuspecting intermediaries are
● It is accomplished by exploiting an Internet needed,the attack often involves one or more
maintenance tool called a ping. Internet Relay Chat (IRC) networks as a source
● The ping works by sending an echo request of zombies.
message to the host computer and listening for ● Internet Relay Chat is a popular interactive
a response message. A functioning and service on the Internet that lets thousands of
available host must return an echo reply people from around the world engage in
message that contains the exact data received real-time communications via their computers.
in the echo request message packet.
● The perpetrator of a smurf attack uses a
program to create a ping message packet that
contains the forged IP address of the victim’s
Prevention and Detection security over most single encryption
techniques.
● Investing in IPS (Intrusion Prevention ● Two forms of triple-DES encryption are EEE3
Systems) that employ DPI (deep packet and EDE3.
inspection) to determine when an attack is in
progress. Public Key Encryption

Encryption ● Public key encryption uses two different keys:

one for encoding messages and the other for
● Encryption is the conversion of data into a secret decoding them.
code for storage in databases and transmission ● Users never need to share their private keys to
over networks. decrypt messages, thus reducing the likelihood
that they fall into the hands of a criminal

Two general approaches to encryption

RSA (Rivest-Shamir-Adleman)
● This method is computationally intensive and
much slower than standard DES encryption.
● Sometimes, both DES and RSA are used
together in what is called a digital envelope.
● The DES private key needed to decrypt the
message is encrypted using RSA and
transmitted along with the message. The
a. Private Key Encryption receiver first decodes the DES key, which is
then used to decode the message.
Advance encryption standard (AES)
● A 128-bit encryption technique that has
become a U.S. government standard for private
key encryption.
● The AES algorithm uses a single key known to
both the sender and the receiver of the
message.
● The receiver decodes the message with a
decryption program that uses the same key the
sender employs. Digital Message Security Feature

Triple-DES encryption

● An enhancement to an older encryption

technique called the Data Encryption Standard
(DES).
● Triple DES provides considerably improved
 sender’s public key is then used to decrypt the
Digital Envelope message.

Digital envelope is an encryption method in which both

DES and RSA are used together.
● A digital envelope is a secure electronic data
container that is used to protect a message
through encryption and data authentication.
● It allows users to encrypt data with the speed of
secret key encryption and the convenience and
security of public key encryption.

Other Controls for Subversive Threats

Message Sequence Numbering

● A sequence number is inserted in each

message, and any such attempt to delete,
change order or duplicate a message will
become apparent at the receiving end.

Digital Signature Message Transaction Log

Digital signature is electronic authentication that ● All incoming and outgoing messages, as well
cannot be forged. It ensures that the message or as failed access, should be recorded in a
document the sender transmitted was not tampered with message transaction log.
after the signature was applied ● The log should record the user ID, the time of
access, and the terminal location or telephone
number.

Request- Response Technique

● A control message from the sender and a

response from the receiver are sent at periodic,
synchronized intervals.
● The message timing should follow a random
pattern that will be difficult for the intruder to
Digital Certificate determine and circumvent.

Digital certificate is a sender’s public key that has been Call-Back Devices
digitally signed by trusted third parties.
● Verifying the sender’s identity requires a digital ● Requires the dial-in user to enter a password
certificate, which a trusted third party issues, and be identified. The system then breaks the
called a certification authority (CA). connection to perform user authentication.
● The digital certificate is transmitted with the ● Call-back device dials the caller's number to
encrypted message to authenticate the sender. establish a new connection when the caller is
The receiver uses the CA’s public key, which is authorized.
widely publicized, to decrypt the sender’s
public key attached to the message. The
Audit Objectives Relating to Subversive Threats interfere with the message signal when they
reach a certain level.
The auditor’s objective is to verify the security and ● Electric motors, atmospheric conditions, faulty
integrity of financial transactions by determining that wiring, defective components in equipment, or
network controls: noise spilling over from an adjacent
a. can prevent and detect illegal access both communications channel may cause these
internally and from the Internet. random signals.
b. will render useless any data that a perpetrator
successfully captures. ECHO CHECK
c. are sufficient to preserve the integrity and
physical security of data connected to the ● The echo check involves the receiver of the
network. message returning the message to the sender.
● The sender compares the returned message
Audit Procedures Relating to Subversive Threat with a stored copy of the original.
● If there is a discrepancy between the returned
1. Review the adequacy of the firewall in message and the original, suggesting a
achieving the proper balance between control transmission error, the message is retransmitted
and convenience based on the organization’s
business objectives and potential risks.
Criteria: flexibility, proxy services, filtering,
segregation of systems, audit tools, probe for
weaknesses.
2. Verify that an Intrusion Prevention Systems
(IPS) with deep packet inspection (DPI) is in
place for organizations that are vulnerable to
DDos attacks, such as financial institutions. PARITY CHECK
3. Review security procedures governing the
administration of data encryption keys. ● The parity check incorporates an extra bit (the
4. Verify the encryption process by transmitting a parity bit) into the structure of a bit string when
test message and examining the contents at it is created or transmitted.
various points along the channel between the ● Parity can be both vertical and horizontal
sending and receiving locations. (longitudinal).
5. Review the message transaction logs to verify ● If the number is even, the system assigns the
that all messages were received in their proper parity bit a value of one.
sequence. ● If the number of 1 bits is odd, a zero parity bit
6. Test the operation of the call-back feature by is added to the bit structure.
placing an unauthorized call from outside the
installation.

II. CONTROLLING RISKS FROM EQUIPMENT

FAILURE

LINE ERRORS
● The most common problem in data
communications is data loss due to line error.
● The bit structure of the message can be
corrupted through noise on the
communications lines.
● Noise is made up of random signals that can
Audit Objectives & Procedures Relating to software can validate the trading partner’s ID
Equipment Failure and password against a validation file in the
firm’s database.
Audit Objective: c. Before processing, the trading partner’s
application software references the valid
Verify the integrity of the electronic commerce customer and vendor files to validate the
transactions by determining that controls are in place to transaction
detect and correct message loss due to equipment
failure. ACCESS CONTROL

Audit Procedures: ● To function smoothly, EDI trading partners

must permit a degree of access to private data
1. The auditor can select a sample of messages files that would be forbidden in a traditional
from the transaction log and examine them for environment.
garbled contents that line noise causes. ● For example, it may permit the customer’s
2. The auditor should verify that all corrupted system to access the vendor’s inventory files to
messages were successfully retransmitted. determine if inventories are available. The
customer may periodically access the vendor’s
III. ELECTRONIC DATA INTERCHANGE price list file to keep pricing information
CONTROLS current. Alternatively, the vendor may need
access to the customer’s price list to update
Electronic data interchange (EDI) is the intercompany prices.
exchange of computer-processible business information ● To guard against unauthorized access:
in standard format. a. Each company must establish valid
vendor and customer files where
● The transmission may be either a direct inquiries against databases can’t be
connection between the trading partners or an validated and unauthorized attempts at
indirect connection through a value-added access can be rejected.
network (VAN) b. User authority tables can also be
established, which specify the degree
of access a trading partner is allowed.

EDI AUDIT TRAIL

● The absence of source documents in EDI

transactions eliminates the traditional audit trail
● One technique for restoring the audit trail is to
maintain a control log, which records the
transaction’s flow through each phase of the
TRANSACTION AUTHORIZATION AND EDI system.
VALIDATION
Audit Objectives Relating to EDI
a. Some VANs have the capability of validating
passwords and user ID codes for the vendor by The auditor’s objectives are to determine that:
matching these against a valid customer file. a. All EDI transactions are authorized, validated,
The VAN rejects any unauthorized trading and in compliance with the trading partner
partner transactions before they reach the agreement.
vendor’s system. b. No unauthorized organizations gain access to
b. Before being converted, the translation database records.
 c. Authorized trading partners have access only to
approved data.
d. Adequate controls are in place to ensure a
complete audit trail of all EDI transactions.

TESTS OF AUTHORIZATION AND

VALIDATION CONTROLS:

a. Review agreements with the VAN

facility to validate transactions and
ensure that information regarding valid
trading partners is complete and
correct.
b. Examine the organization’s valid
trading partner file for accuracy and
completeness.

TESTS OF ACCESS CONTROLS:

a. The auditor should determine that access to the

valid vendor or customer file is limited to
authorized employees only. The auditor should
verify that passwords and authority tables
control access to this file and that the data are
encrypted.
b. The auditor should reconcile the terms of the
trading agreement against the trading partner’s
access privileges stated in the database
authority table.
c. The auditor should simulate access by a sample
of trading partners and attempt to violate
access privileges.

TESTS OF AUDIT TRAIL CONTROLS:

● The auditor should verify that the EDI system

produces a transaction log that tracks
transactions through all stages of processing.
● By selecting a sample of transactions and
tracing these through the process, the auditor
can verify that key data values were recorded
correctly at each point