Chapter 15

Controlling Computer-Based

Information Systems, Part I

Objectives for Chapter 15• Features of a CBIS environment and the control

objectives in SAS 78• Threats to the operating system and controls used

to minimize exposures• Techniques used to control access to the database• Incompatible functions in a CBIS environment• Controls necessary to regulate systems

development and maintenance activities• Controls of an organization’s computer facilities and

the disaster recovery options

Controls, CBIS & SAS 78

• Transaction authorization – may be embedded into the programs

• Segregation of duties – Duties that must be separated in a manual

system may be combined in a computerized setting.

– The computer-based functions of programming, processing, and maintenance must be separated.

Segregation of Duties Control Objectives

• Transaction authorization is separate from transaction processing.

• Asset custody is separate from record-keeping responsibilities.

• The sub-tasks needed to process the transactions are separated so that no individual or group is responsible for transaction authorization, transaction recording, and asset custody.

Segregation of Duties

Authorization

Authorization

Authorization

Processing

Custody Recording

Task 1 Task 2 Task 3 Task 4

Custody Recording

Control Objective 1

Control Objective 3

Control Objective 2

TRANSACTION

Controls, CBIS & SAS 78

• Supervision - more supervision is typically necessary in a CBIS because:– highly skilled employees generally have a

higher turnover rate– highly skilled employees are often in positions

of authority– physical observation of employees working

with the system is often difficult or impractical

Controls, CBIS & SAS 78

• Accounting records – Source documents and ledgers may be stored

magnetically with no “paper trail.” – Expertise is required to understand the links.

• Access control – Tight control is necessary over access to

programs and files.– Fraud is easier to commit since records are

located in one data repository.

Controls, CBIS & SAS 78 • Independent verification

– need to review the internal logic of programs and comparison of accounting records and physical assets

– management must assess: the performance of individuals the integrity of the transaction processing system the correctness of data contained in accounting

records

General Control Framework for CBIS Exposures

10 control components need to be addressed:– operating system– data management– organizational structure – systems development – systems maintenance– computer center security– internet and Intranet– EDI– personal computer– applications

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Operating System Controls• The operating systems performs 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.

For An Operating System To Perform These Tasks Consistently And Reliably, It Must…

• protect itself from tampering from users• be able to prevent users from tampering

with the programs of other users• be able to safeguard users’ applications

from accidental corruption• be able to safeguard its own programs

from accidental corruption• be able to protect itself from power failures

or other disasters

Operating System 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 System Control Techniques

• Access privilege controls – determine who can access what data in the system

• Password controls– reusable passwords– one-time passwords

• Malicious and destructive programs controls – protection against virus, worms, logic bombs, etc.

• System audit trail controls– keystroke monitoring– event monitoring

Operating System Control Dangers

• Browsing – looking through memory for sensitive information (e.g.,

in the printer queue)• Masquerading

– pretend to be an authorized user by getting id and passwords

• Virus & Worms – foreign programs that spread

through the system– virus must attach to another program,

worms are self-contained

Operating System Control Dangers

• Trojan Horse– foreign program that conceals itself with

another legitimately imported program• Logic Bomb

– foreign programs triggered by a specific event

• Back Door – alternative entry into system

can prevent the initial infection by write protecting the filecan detect the infection of known virusescan sometimes remove the infectionmust stay current

Anti-Virus Software

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Data Management Controls

Two crucial control issues:

Access controls Backup controls

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• Inference controls - necessary in systems which

allow queries

Subschema Restricting Access

Computer Resource Authority Table

Resource

User Employee Line Cash Receipts

AR File File Printer Program

Read dataChangeAddDelete

No Access Use No Access

Read only Read code No Access Use Modify

Delete

No Access Read only Use No Access

User 1

User 3

User 2

Ticket

List

Data Management Controls• Backup options:

– grandparent-parent-child backup - the number of generations to backup is a policy issue

– direct access file backup - back-up master-file at pre-determined intervals

– off-site storage - guard against disasters and/or physical destruction

Backup Controls

• Database environment– database backup - automatic periodic backup – transaction log (journal) - a list of transactions

which provides an audit trail of all processed transactions

– checkpoint features - suspends all data processing while the system performs reconciliation

– recovery module - restarts the system after a failure

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Organizational Structure Controls

The two main CBIS environments have different exposures and IC requirements:

Centralized DP Distributed DP

President

VPMarketing

VP ComputerServices

VPOperations

VPFinance

SystemsDevelopment

DatabaseAdministration

DataProcessing

New SystemsDevelopment

SystemsMaintenance

DataControl

DataPreparation

ComputerOperations

DataLibrary

President

VPMarketing

VPFinance

VPOperations

IPU IPU IPU IPU IPU IPU

VPAdministration

Treasurer Controller ManagerPlant X

ManagerPlant Y

CENTRALIZED COMPUTER SERVICES FUNCTION

DISTRIBUTED ORGANIZATIONALSTRUCTURE

Centralized DP Organizational Controls

• In centralized IS, need to separate:– systems development from computer

operations– database administrator and other computer

service functions• especially database administrator (authorizing) and

systems development (processing)• DBA authorizes access

– maintenance and new systems development– data library and operations

Distributed DP Organizational Controls

• Distributed Data Processing: despite many advantages of this approach, control implications are present– incompatible software among the various

work centers – data redundancy may result– consolidation of incompatible tasks– difficulty hiring qualified professionals– lack of standards

Organizational Structure Controls

• A corporate computer services function/information center may help to alleviate the potential problems associated with DDP by providing:– central testing of commercial hardware and

software– a user services staff– a standard-setting body – reviewing technical credentials of prospective

systems professionals

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Systems Development Life Cycle

1. Systems Strategy - Assessment - Develop Strategic Plan

2. Project Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis

3. In-house Development - Construct - Deliver

4. Commercial Packages - Configure - Test - Roll-out

5. Maintenance & Support - User help desk - Configuration Management - Risk Management & Security

SSystemystem Interfaces, Architecture Interfaces, Architecture and Uand User ser RRequirementsequirements

BBusiness usiness RRequirementsequirements

High Priority Proposals undergo High Priority Proposals undergo Additional Study and DevelopmentAdditional Study and Development

FeedbackFeedback::User requests for New SystemsUser requests for New Systems

Selected System Proposals Selected System Proposals go forward for Detailed go forward for Detailed

DesignDesign

New and Revised New and Revised Systems Enter into Systems Enter into

ProductionProduction

Business Needs and Strategy

Legacy Situation

FeedbackFeedback::User requests for System User requests for System Improvements and SupportImprovements and Support

Systems Development Controls

• New systems must be authorized.• User needs and requests should be formally

documented.• Technical design activities should be documented.• Internal auditors should participate in the

development process.• All program modules must be thoroughly tested

before they are implemented.• Individual modules must be tested by a team of

users, internal audit staff, and systems professionals.

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

System Maintenance Controls• Last, longest and most costly phase

of SDLC– 80-90% of entire cost of a system

• All maintenance actions should require– technical specifications– testing– documentation updates– formal authorizations for any changes

made

SPL

• Source program library (SPL) – library of applications and software– place where programs are developed and

modified– once compiled into machine language, no longer

vulnerable

Uncontrolled Access to the Source Program Library

A Controlled SPL Environment

• An SPL Management System (SPLMS) can be used to protect the SPL environment by controlling the following functions:– storing programs on the SPL– retrieving programs for maintenance

purposes– deleting obsolete programs from the library– documenting program changes to provide an

audit trail of the changes

Source Program Library under the Control of SPL Management Software

SPL Control Features• Password control• Separation of test libraries• Reports that enhance management control and

the audit function• Assigns program version numbers automatically• Controlled access to maintenance commands• Documentation and authorization of changes

Operating System

Data Management

Systems Development

Systems Maintenance

Organizational Structure

Internet

& Intranet

EDI Trading Partners

Personal Computers

Computer Center Security

Applications

Internet

& Intranet

General Control Framework for CBIS Exposures

Computer Center Controls

Considerations:• location away from human-made and natural

hazards• utility and communications lines underground • windows closed and air filtration systems in place• access limited to the operators and other necessary

workers; others required to sign in and out• fire suppressions systems should be installed• backup power supplies

Disaster Recovery Planning

• Disaster recovery plan (DRP)– all actions to be taken before, during, and after

a disaster– Disaster Recovery Team (DRT) identified– critical applications must be identified

• restore these applications first

• Backups & off-site storage procedures– databases and applications– documentation– supplies

Second-Site Disaster Backups• The Empty Shell - involves two or more user

organizations that buy or lease a building and remodel it into a computer site, but without computer equipment

• The Recovery Operations Center - a completely equipped site; very costly and typically shared among many companies

• Internally Provided Backup - companies with multiple data processing centers may create internal excess capacity