Chapter 16

IT Controls Part II: Security

and Access

Accounting Information Systems, 5th edition

James A. Hall

COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo,
and South-Western are trademarks used herein under license
 Objectives for Chapter 16
• Threats to the operating system and
internal controls (IC) to minimize them
• Threats to database integrity and IC to
minimize them
• Risks associated with electronic
commerce and IC to reduce them
• Exposures associated with electronic
data interchange (EDI) and IC to reduce
them
 Operating Systems
• 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
 Requirements for Effective Operating
Systems Performance
• Protect itself from tampering from 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
 Operating Systems Security
• 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
 Operating Systems Controls
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
– formally acknowledgements to maintain
confidentiality of data
– users’ log-on times
Operating Systems S Controls
Password Control
• Audit objectives: ensure adequacy and
effectiveness 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
 Operating Systems Controls
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
 Operating System Controls
Audit Trail Controls
• Audit objectives: whether used to (1) detect
unauthorized access, (2) facilitate event
reconstruction, and (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
Database Management Controls
Two crucial database control issues:
Access controls
• Audit objectives: (1) those authorized to use
databases are limited to data needed to perform
their duties and (2) unauthorized individuals are
denied access to data
Backup controls
• Audit objectives: backup controls can adequately
recovery lost, destroyed, or corrupted data
 Access Controls
• User views - based on sub-schemas
• Database authorization table - allows
greater authority to be specified
• User-defined procedures - user to create
a personal security program or routine
• Data encryption - encoding algorithms
• Biometric devices - fingerprints, retina
prints, or signature characteristics
 Database Authorization Table
Resource Employee Line Cash Receipts
User AR File File Printer Program
Read data
User 1 Change
Add No Access Use No Access
Delete
Read code
User 2 Read only No Access Use Modify
Delete

User 3 No Access Read only Use No Access

 Access Controls
Audit procedures: verify…
– responsibility for authority tables &
subschemas
– granting appropriate access authority
– use or feasibility of biometric
controls
– use of encryption
Subschema Restricting Access
 Backup Controls
• Database backup – automatic periodic
copy of data
• Transaction log – list of transactions
which provides an audit trail
• Checkpoint features – suspends data
during system reconciliation
• Recovery module – restarts the system
after a failure
 Backup Controls
• Audit procedures: verify…
– that production databases are copied
at regular intervals
– backup copies of the database are
stored off site to support disaster
recovery
 Internet and Intranet Risks
• Communications is a unique aspect of the
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)
Sources of Internet & Intranet Risks
Internal and external subversive activities
Audit objectives:
1. prevent and detect illegal internal and Internet
network access
2. render useless any data captured by a perpetrator
3. preserve the integrity and physical security of data
connected to the network
Equipment failure
Audit objective: the integrity of the electronic commerce
transactions by determining that controls are in
place to detect and correct message loss due to
equipment failure
Risks from Subversive Threats
• Include:
– unauthorized interception of a message
– gaining unauthorized access to an
organization’s network
– a denial-of-service attack from a
remote location
 IC for Subversive Threats
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
Dual-Homed Firewall
 IC for Subversive Threats
• 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.
 DOS Attack
Sender Receiver

Step 1: SYN messages

Step 2: SYN/ACK

Step 3: ACK packet code

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.
 Standard Data Encryption
Technique
Key

Cleartext Encryption Communication

Message Program Ciphertext System

Cleartext Encryption
Communication
Message Program
Ciphertext System

Key
 Public – Private Key Encryption
Message A Message B Message C Message D

Multiple people
may have the public key Public Key used for
encoding messages

Ciphertext Ciphertext Ciphertext Ciphertext

Typically one person or Private Key used for

a small number of people decoding messages
have the private key

Message A Message B Message C Message D

Advanced Data Encryption
Technique
 IC for Subversive Threats
• 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
Digital Signature
 IC for Subversive Threats
• 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
 Auditing Procedures for
Subversive Threats
• 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
 IC for Equipment Failure
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
Vertical and Horizontal Parity
 Auditing Procedures for
Equipment Failure
• Using a sample of 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
 Electronic Data Interchange
• 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.
 EDI Risks
• Authorization
– automated and absence of human
intervention
• Access
– need to access EDI partner’s files
• Audit trail
– paperless and transparent (automatic)
transactions
 EDI Controls
• 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
 EDI System without Controls

Company A Company B (Vendor)

Application Purchases Sales Order Application
Software System System Software

EDI EDI
Translation Translation
Software Software
Direct Connection
Communications Communications
Software Software
 EDI System with Controls
Company A Company B (Vendor)
Application Purchases Audit trail of Sales Order Application
Software System transactions between System Software
trading partners

EDI EDI
Translation Translation
Software Software
Transaction Transaction
Log Log
Communications Communications
Software Software

Other
Software limits Mailbox
vendor’s Use of VAN to
(Company B) Company VAN Company enforce use of
access to A’s mailbox B’s mailbox
passwords and
company A’s valid partners
database Other
Mailbox
 Auditing Procedures for EDI
• 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 exists of transaction logs are key points
– Review a sample of transactions