© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart1 of...

© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 1 of 136

C HAPTER 8

Information Systems Controls for System Reliability

Part 2: Confidentiality, Privacy, Processing Integrity, and

Availability


INTRODUCTION

• Questions to be addressed in this chapter include:– What controls are used to protect the confidentiality of

sensitive information?– What controls are designed to protect privacy of

customers’ personal information?– What controls ensure processing integrity?– How are information systems changes controlled to

ensure that the new system satisfies all five principles of systems reliability?


INTRODUCTION

• Reliable systems satisfy five principles:– Information Security

(discussed in Chapter 7)– Confidentiality– Privacy– Processing integrity– Availability

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CONFIDENTIALITY

Reliable systems maintain the confidentiality of sensitive information.

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CONFIDENTIALITY

• Maintaining confidentiality requires that management identify which information is sensitive.

• Each organization will develop its own definitions of what information needs to be protected.

• Most definitions will include:– Business plans– Pricing strategies– Client and customer lists– Legal documents

• COBIT control objective PO 2.3 specifies the need to identify and to properly label potentially sensitive information, to assign responsibility for its protection, and to implement appropriate controls.


CONFIDENTIALITY

Table 8-1 in your textbook summaries key controls to protect confidentiality of information:

Situation ControlsStorage Encryption and access controlsTransmission EncryptionDisposal Shredding, thorough erasure, physical

destructionOverall Categorization to reflect value and training

in proper work practices


CONFIDENTIALITY

• Encryption is a fundamental control procedure for protecting the confidentiality of sensitive information.

• Confidential information should be encrypted:– While stored– Whenever transmitted


CONFIDENTIALITY

• The Internet provides inexpensive transmission, but data is easily intercepted.

• Encryption solves the interception issue.• If data is encrypted before sending it, a virtual

private network (VPN) is created.– Provides the functionality of a privately owned

network– But uses the Internet


CONFIDENTIALITY

• Use of VPN software creates private communication channels, often referred to as tunnels.– The tunnels are accessible only to parties who have

the appropriate encryption and decryption keys.– Cost of the VPN software is much less than costs of

leasing or buying a privately-owned, secure communications network.

– Also, makes it much easier to add or remove sites from the “network.”

• In accordance with COBIT DS 5.11, VPNs include controls to authenticate the parties exchanging information and to create an audit trail of the exchange.


CONFIDENTIALITY

• It is critical to encrypt any sensitive information stored in devices that are easily lost or stolen, such as laptops, PDAs, cell phones, and other portable devices.– Many organizations have policies against storing

sensitive information on these devices.– 81% of users admit they do so anyway.


CONFIDENTIALITY

• Encryption alone is not sufficient to protect confidentiality. Given enough time, many encryption schemes can be broken.

• Access controls are also needed:– To prevent unauthorized parties from obtaining the encrypted

data; and– Because not all confidential information can be encrypted in

storage.• Strong authentication techniques are necessary.• Strong authorization controls should be used to limit the

actions (read, write, change, delete, copy, etc.) that authorized users can perform when accessing confidential information.


CONFIDENTIALITY

• Access to system outputs should also be controlled:– Do not allow visitors to roam through buildings unsupervised.– Require employees to log out of any application before leaving

their workstation unattended, so other employees do not have unauthorized access.

– Workstations should use password-protected screen savers that automatically engage when there is no activity for a specified period.

– Access should be restricted to rooms housing printers and fax machines.

– Reports should be coded to reflect the importance of the information therein, and employees should be trained not to leave reports with sensitive information laying in plain view.


CONFIDENTIALITY

• It is especially important to control disposal of information resources.

• Printed reports and microfilm with sensitive information should be shredded.

• COBIT control objective DS 11.4 addresses the need to define and implement procedures governing the disposal of sensitive data and any hardware on which that data was stored.


CONFIDENTIALITY

• Special procedures are needed for information stored on magnet and optical media.– Using built-in operating system commands to delete the

information does not truly delete it, and utility programs will often be able to recover these files.

– De-fragmenting a disk may actually create multiple copies of a “deleted” document.

– Consequently, special software should be used to “wipe” the media clean by repeatedly overwriting the disk with random patterns of data (sometimes referred to as “shredding” a disk).

– Magnetic disks and tapes can be run through devices to demagnetize them.

– The safest alternative may be to physically destroy disks with highly sensitive data.


CONFIDENTIALITY

• Controls to protect confidentiality must be continuously reviewed and modified to respond to new threats created by technological advances.

• Many organizations now prohibit visitors from using cell phones while touring their facilities because of the threat caused by cameras in these phones.

• Because these devices are easy to hide, some organizations use jamming devices to deactivate their imaging systems while on company premises.


CONFIDENTIALITY

• Phone conversations have also been affected by technology.

• The use of voice-over-the-Internet (VoIP) technology means that phone conversations are routed in packets over the Internet.– Because this technology makes wiretapping much

easier, conversations about sensitive topics should be encrypted.


CONFIDENTIALITY

• Employee use of email and instant messaging (IM) probably represents two of the greatest threats to the confidentiality of sensitive information.– It is virtually impossible to control its distribution once

held by the recipient.– Organizations need to develop comprehensive

policies governing the appropriate and allowable use of these technologies for business purposes.

– Employees need to be trained on what type of information they can and cannot share, especially with IM.


CONFIDENTIALITY

• Many organizations are taking steps to address the confidentiality threats created by email and IM.– One response is to mandate encryption of all email

with sensitive information.– Some organizations prohibit use of freeware IM

products and purchase commercial products with security features, including encryption.

– Users sending emails must be trained to be very careful about the identity of their addressee.

• EXAMPLE: The organization may have two employees named Allen Smith. It’s critical that sensitive information go to the correct Allen Smith.


PRIVACY

• In the Trust Services framework, the privacy principle is closely related to the confidentiality principle.

• Primary difference is that privacy focuses on protecting personal information about customers rather than organizational data.

• Key controls for privacy are the same that were previously listed for confidentiality.

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PRIVACY

• COBIT section DS 11 addresses the management of data and specifies the need to comply with regulatory requirements.

• A number of regulations, including the Health Insurance Portability and Accountability Act (HIPAA) and the Financial Services Modernization Act (aka, Gramm-Leach-Billey Act) require organizations to protect the privacy of customer information.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management

• The organization establishes a set of procedures and policies for protecting privacy of personal information it collects.

• Assigns responsibility and accountability for those policies to a specific person or group.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice

• Provides notice about its policies and practices when it collects the information or as soon as practicable thereafter.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent

• Describes the choices available to individuals and obtains their consent to the collection and use of their personal information.

• Choices may differ across countries.– United States—The default is “opt

out,” i.e., organizations can collect personal information about customers unless the customer explicitly objects.

– Europe—The default is “opt in,” i.e., they can’t collect the information unless customers explicitly give them permission.

• Collection– The organization collects only that

information needed to fulfill the purposes stated in its privacy policies.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection

• The organization collects only that information needed to fulfill the purposes stated in its privacy policies.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention

• The organization uses its customers’ personal information only according to stated policy and retains that information only as long as needed.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention– Access

• The organization provides individuals with the ability to access, review, correct, and delete the personal information stored about them.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention– Access– Disclosure to Third Parties

• The organization discloses customers’ personal information to third parties only per stated policy and only to third parties who provide equivalent protection.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention– Access– Disclosure to Third Parties– Security

• The organization takes reasonable steps to protect customers’ personal information from loss or unauthorized disclosure.

• Issues that are sometimes overlooked:– Disposal of computer equipment

• Should follow the suggestions presented on section regarding protection of confidentiality.

– Email• If you send emails to a list of recipients, each recipient

typically knows who the other recipients are.• If the email regards a private issue, e.g., perhaps it pertains to

their AIDS treatment, then the privacy of all recipients has been violated.

• One remedy might be to address the recipients on the “bcc” line of the email, rather than as original addresses.

– Release of electronic documents.• When physical documents are exchanged, sometimes

portions are blacked out (redacted) to protect privacy.• Similar procedures are needed for the exchange of electronic

documents.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention– Access– Disclosure to Third Parties– Security– Quality

• The organization maintains the integrity of its customers’ personal information.


PRIVACY

• The Trust Services privacy framework of the AICPA and CICA lists ten internationally recognized best practices for protecting the privacy of customers’ personal information:– Management– Notice– Choice and consent– Collection– Use and retention– Access– Disclosure to Third Parties– Security– Quality– Monitoring and enforcement

• The organization assigns one or more employees to be responsible for assuring and verifying compliance with its stated policies.

• Also provides for procedures to respond to customer complaints, including third-party dispute-resolution processes.


PRIVACY

• As with confidentiality, encryption and access controls are the two basic mechanisms for protecting consumers’ personal information.– It is common practice to use SSL to encrypt all

personal information transmitted between individuals and the organization’s Website.

– However, SSL only protects the information in transit.– Consequently, strong authentication controls are

needed to restrict Website visitors’ access to individual accounts.


PRIVACY

• Organizations should consider encrypting customers’ personal information in storage.– May be economically justified, because some

state laws require companies to notify all customers of security incidents.

– The notification process is costly but may be waived if the information was encrypted while in storage.

• California SB 1386 effectively requires companies to notify all their customers whenever a security incident may have led to the compromise of personally identifiable information.


PRIVACY

• Organizations need to train employees on how to manage personal information collected from customers.– Especially important for medical and financial

information.– Intentional misuse or unauthorized disclosure can

have serious economic consequences, including:• Drop in stock price• Significant lawsuits• Government suspension of the organization’s business

activity


PRIVACY

• One topic of concern is cookies used on Web sites.– A cookie is a text file created by a Website and stored

on a visitor’s hard drive. It records what the visitor has done on the site.

– Most Websites create multiple cookies per visit to make it easier for visitors to navigate the site.

– Browsers can be configured to refuse cookies, but it may make the Website inaccessible.

– Cookies are text files and cannot “do” anything other store information, but many people worry that they violate privacy rights.


PRIVACY

• Another privacy-related issue that is of growing concern is identity theft.– Organizations have an ethical and moral obligation to

implement controls to protect databases that contain their customers’ personal information.


PRIVACY

• Steps that individuals can take to minimize the risk of becoming a victim of identity theft include:– Shred all documents that contain personal information,

especially unsolicited credit card offers. Cross-cut shredders are more effective.

– Never send personally identifying information in unencrypted email.

– Beware of email, phone, and print requests to “verify” personal information that the requesting party should already possess.

• Credit card companies won’t ask for your security code.• The IRS won’t email you for identifying information in

response to an audit.


PRIVACY

– Do not carry your social security card with you or comply with requests to reveal the last 4 digits.

– Limit the amount of identifying information preprinted on checks and consider eliminating it.

– Do not place outgoing mail with checks or personal information in your mailbox for pickup.

– Don’t carry more than a few blank checks with you.– Use special software to thoroughly clean any digital media

before disposal, or physically destroy the media. It is especially important to thoroughly erase or destroy hard drives before donating or disposing of equipment.


PRIVACY

– Monitor your credit reports regularly.– File a police report as soon as you discover that your

purse or wallet was stolen.– Make photocopies of driver’s licenses, passports, and

credit cards. Store them with phone numbers for all the credit cards in a safe location to facilitate notifying authorities if they are stolen.

– Immediately cancel any lost or stolen credit cards.


PRIVACY

• A related concern involves the overwhelming volume of spam.– Spam is unsolicited email that contains either

advertising or offensive content.• Reduces the efficiency benefits of email.• Is a source of many viruses, worms, spyware, and

other malicious content.


PRIVACY

• In 2003, the U.S. Congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act.– Provides criminal and civil penalties for violation of the

law.– Applies to commercial email, which is any email with

a primary purpose of advertising or promotion.– Covers most legitimate email sent by organizations to

customers, suppliers, or donors to non-profits.


PRIVACY

• Consequently, organizations must carefully follow the CAN-SPAM guidelines, which include:– The sender’s identity must be clearly displayed in the

message header.


PRIVACY

• Consequently, organizations must carefully follow the CAN-SPAM guidelines, which include:– The sender’s identity must be clearly displayed in the message

header.– The subject field in the header must clearly identify the

message as an advertisement or solicitation.


PRIVACY


header.– The subject field in the header must clearly identify the message

as an advertisement or solicitation.– The body must provide recipients with a working link that

can be used to “opt out” of future email.• Organizations have 10 days after receipt of an “opt out”

request to ensure they do not send additional unsolicited email to that address.

• Means someone must be assigned responsibility for processing these requests.


PRIVACY



as an advertisement or solicitation.– The body must provide recipients with a working link that can be

used to “opt out” of future email.– The body must include the sender’s valid postal address.

• Best practice (not required) would be to provide full street address, telephone, and fax numbers.


PRIVACY



as an advertisement or solicitation.– The body must provide recipients with a working link that can be

used to “opt out” of future email.– The body must include the sender’s valid postal address.– Organizations should not:

• Send email to randomly generated addresses.• Set up Websites designed to harvest email addresses of

potential customers.

• Experts recommend that organizations redesign their own Websites to include a visible means for visitors to “opt in” to receive email.


PROCESSING INTEGRITY

• COBIT control objective DS 11.1 addresses the need for controls over the input, processing, and output of data.

• Identifies six categories of controls that can be used to satisfy that objective.

• Six categories are grouped into three for discussion.SECURITY

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• Three categories/groups of integrity controls are designed to meet the preceding objectives:– Input controls– Processing controls– Output controls



• Three categories of integrity controls are designed to meet the preceding objectives:– Input Controls– Processing controls– Output controls



• Input Controls– If the data entered into a system is inaccurate or

incomplete, the output will be, too. (Garbage in garbage out.)

– Companies must establish control procedures to ensure that all source documents are authorized, accurate, complete, properly accounted for, and entered into the system or sent to their intended destination in a timely manner.



• The following input controls regulate integrity of input:– Forms design

• Source documents and other forms should be designed to help ensure that errors and omissions are minimized (Chapter 18).




• Pre-numbered forms sequence test

• Pre-numbering helps verify that no items are missing.

• When sequentially pre-numbered input documents are used, the system should be programmed to identify and report missing or duplicate form numbers.



• The following input controls regulate integrity of input:– Forms design– Pre-numbered forms sequence test

• Turnaround documents• Documents sent to external parties that are prepared

in machine-readable form to facilitate their subsequent processing as input records.

• Example: the stub that is returned by a customer when paying a utility bill.

• Are more accurate than manually-prepared input records.




• Pre-numbered forms sequence test• Turnaround documents

– Cancellation and storage of documents

• Documents that have been entered should be canceled– Paper documents are stamped “paid” or

otherwise defaced– A flag field is set on electronic documents.

• Canceling documents does not mean destroying documents.

• They should be retained as long as needed to satisfy legal and regulatory requirements.




• Pre-numbered forms sequence test• Turnaround documents

– Cancellation and storage of documents– Authorization and segregation of duties

• Source documents should be prepared only by authorized personnel acting within their authority.

• Employees who authorize documents should not be assigned incompatible functions.



• The following input controls regulate integrity of input:– Forms design– Pre-numbered forms sequence test– Turnaround documents– Cancellation and storage of documents– Authorization and segregation of duties– Visual scanning

• Documents should be scanned for reasonableness and propriety.



• The following input controls regulate integrity of input:– Forms design– Pre-numbered forms sequence test– Turnaround documents– Cancellation and storage of documents– Authorization and segregation of duties– Visual scanning– Check digit verification– RFID security



• Five categories of integrity controls are designed to meet the preceding objectives:– Input controls

• Data entry controls– Processing controls– Output controls



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check

• Determines if the characters in a field are of the proper type.

• Example: The characters in a social security field should all be numeric.



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check

• Determines if the data in a field have the appropriate arithmetic sign.

• Example: The number of hours a student is enrolled in during a semester could not be a negative number.



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check

• Tests whether an amount exceeds a predetermined value.

• Example: A university might use a limit check to make sure that the hours a student is enrolled in do not exceed 21.



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check– Range check

• Similar to a field check, but it checks both ends of a range.

• Example: Perhaps a wage rate is checked to ensure that it does not exceed $15 and is not lower than the minimum wage rate.



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check– Range check– Size (or capacity) check

• Ensures that the data will fit into the assigned field.• Example: A social security number of 10 digits would

not fit in the 9-digit social security field.



• Common tests to validate input include:– Field check– Sign check– Limit check– Range check– Size (or capacity) check– Completeness check

• Determines if all required items have been entered.• Example: Has the student’s billing address been

entered along with enrollment details?



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check– Range check– Size (or capacity) check– Completeness check– Validity check

• Compares the value entered to a file of acceptable values.

• Example: Does the state code entered for an address match one of the 50 valid state codes?



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check– Range check– Size (or capacity) check– Completeness check– Validity check– Reasonableness test

• Determines whether a logical relationship seems to be correct.

• Example: A freshman with annual financial aid of $60,000 is probably not reasonable.



• Once data is collected, data entry control procedures are needed to ensure that it’s entered correctly. Common tests to validate input include:– Field check– Sign check– Limit check– Range check– Size (or capacity) check– Completeness check– Validity check– Reasonableness test– Check digit verification

• An additional digit called a check digit can be appended to account numbers, policy numbers, ID numbers, etc.

• Data entry devices then perform check digit verification by using the original digits in the number to recalculate the check digit.

• If the recalculated check digit does not match the digit recorded on the source document, that result suggests that an error was made in recording or entering the number.



• The preceding tests are used for batch processing and online real-time processing.

• Both processing approaches also have some additional controls that are unique to each approach.



• Additional Batch Processing Data Entry Controls– In addition to the preceding controls, when

using batch processing, the following data entry controls should be incorporated.

• Sequence check• Tests whether the data is in the proper numerical or

alphabetical sequence.





• Sequence check• Error log

• Records information about data input or processing errors (when they occurred, cause, when they were corrected and resubmitted).

• Errors should be investigated, corrected, and resubmitted on a timely basis (usually with the next batch) and subjected to the same input validation routines.

• The log should be reviewed periodically to ensure that all errors have been corrected and then used to prepare an error report, summarizing errors by record type, error type, cause, and disposition.





• Sequence check• Error log• Batch totals

• Summarize key values for a batch of input records. Commonly used batch totals include:– Financial totals—sums of fields that contain dollar

values, such as total sales.– Hash totals—sums of nonfinancial fields, such as

the sum of all social security numbers of employees being paid.

– Record count—count of the number of records in a batch.

• These batch totals are calculated and recorded when data is entered and used later to verify that all input was processed correctly.



• Additional online data entry controls– Online processing data entry controls include:

• Automatic entry of data• Whenever possible, the system should automatically

enter transaction data, such as next available document number or new ID number.

• Saves keying time and reduces errors.




• Automatic entry of data• Prompting

• System requests each input item and waits for an acceptable response.




• Automatic entry of data• Prompting• Pre-formatting

• Fields that need to be completed are highlighted.




• Automatic entry of data• Prompting• Pre-formatting• Closed-loop verification

• Checks accuracy of input data by retrieving related information.

• Example: When a customer’s account number is entered, the associated customer’s name is displayed on the screen so the user can verify that entries are being made for the correct account.




• Automatic entry of data• Prompting• Pre-formatting• Closed-loop verification• Transaction logs

• Maintains a detailed record of all transaction data, including:– A unique transaction identifier– Date and time of entry– Terminal from which entry is made– Transmission line– Operator identification– Sequence in which transaction is entered

• The log can be used to reconstruct a file that is damaged or can be used to ensure transactions are not lost or entered twice if a malfunction shuts down the system.




• Automatic entry of data• Prompting• Pre-formatting• Closed-loop verification• Transaction logs• Error messages

• Should indicate when an error occurred, which item, and how it should be corrected.



• Three categories of integrity controls are designed to meet the preceding objectives:– input controls– Processing controls– Output controls



• Processing Controls– Processing controls to ensure that data is

processed correctly include:• Data matching

• Two or more items must match before processing can proceed.

• Example: The quantity billed on the vendor invoice must match the quantity ordered on the purchase order and the quantity received on the receiving report.




processed correctly include:• Data matching• File labels

• External labels should be checked visually to ensure the correct and most current files are being updated.

• There are also two important types of internal labels to be checked.– The header record, located at the beginning of each file, contains

the file name, expiration date, and other identification data.– The trailer record at the end of the file contains the batch totals

calculated during input.




processed correctly include:• Data matching• File labels• Recalculation of batch totals

• Batch totals should be recomputed as processing takes place.• These totals should be compared to the totals in the trailer record.• Discrepancies indicate processing errors, such as:

– If the recomputed record count is smaller than the original count, one or more records were not processed.

– If the recomputed record count is larger than the original, then additional unauthorized transactions were processed or some authorized transactions were processed twice.

– If the discrepancy between totals is evenly divisible by 9, there was probably a transposition error (two adjacent digits were reversed).




processed correctly include:• Data matching• File labels• Recalculation of batch totals• Cross-footing balance test

• Compares arithmetic results produced by two different methods to verify accuracy.

• EXAMPLE: Compute the sum of column totals in a spreadsheet and compare it to a sum of the row totals.




processed correctly include:• Data matching• File labels• Recalculation of batch totals• Cross-footing balance test• Write-protection mechanisms

• Protect against accidental writing over or erasing of data files but are not foolproof.




processed correctly include:• Data matching• File labels• Recalculation of batch totals• Cross-footing balance test• Write-protection mechanisms• RFID security

• Many businesses are replacing bar codes and manual tags with radio frequency identification (RFID) tags that can store up to 128 bytes of data.

• These tags should be write-protected so that unscrupulous customers cannot change price information on merchandise.




processed correctly include:• Data matching• File labels• Recalculation of batch totals• Cross-footing balance test• Write-protection mechanisms• Database processing integrity procedures

• Database systems use database administrators, data dictionaries, and concurrent update controls to ensure processing integrity.

• The administrator establishes and enforces procedures for accessing and updating the database.

• The data dictionary ensures that data items are defined and used consistently.

• Concurrent update controls protect records from being updated by two users simultaneously.– Locks one user out until the other has finished

processing.



• Three categories of integrity controls are designed to meet the preceding objectives:– Input controls– Processing controls– Output controls



• Output Controls– Careful checking of system output

provides additional control over processing integrity.

– Output controls include:• User review of output

• Users carefully examine output for reasonableness, completeness, and to assure they are the intended recipient.





– Output controls include:• User review of output• Reconciliation procedures

• Periodically, all transactions and other system updates should be reconciled to control reports, file status/update reports, or other control mechanisms.

• Control accounts should also be reconciled to subsidiary account totals.





– Output controls include:• User review of output• Reconciliation procedures• External data reconciliation

• Database totals should periodically be reconciled with data maintained outside the system.

• EXAMPLE: Compare number of employee records in the payroll file to number in the human resources file. (Excess records in payroll suggests a “ghost” employee.)



• Output Controls– In addition to using encryption to protect the confidentiality of

information being transmitted, organizations need controls to minimize the risk of data transmission errors.

– When the receiving unit detects a data transmission error, it asks the sending unit to re-send. Usually done automatically.

– Sometimes, the system may not be able to accomplish automatic resubmission and will ask the sender to re-transmit the data.

– Two basic types of data transmission controls:• Parity checking• Message acknowledgment techniques










• Parity checking– Computers represent characters as a set of binary

digits (bits).– For example, “5” is represented by the seven-bit

pattern 0000101.– When data are transmitted some bits may be lost or

received incorrectly.– Two basic schemes to detect these events are

referred to as even parity and odd parity.– In either case, an additional bit is added to the digit

being transmitted.



– In even parity, the parity bit is set so that each character has an even number of bits with the value 1.

– In odd parity, the objective is that an odd number of bits should have the value 1.

– The pattern for 5 is 0000101. This pattern has two bits (an even number) with a value of 1. Therefore, the parity bit that is added would be zero if we were using even parity and 1 if we were using odd parity.

– The receiving device performs parity checking to verify that the proper number of bits set to one in each character received.

– Additional accuracy can be achieved with more complex parity schemes.










• Message Acknowledgment Techniques– A number of message acknowledgment

techniques can be used to let the sender of an electronic message know that a message was received:

• Echo check

• When data are transmitted, the system calculates a summary statistic such as the number of bits in the message.

• The receiving unit performs the same calculation (an “echo check”) and sends the result to the sending unit.

• If the counts match, the transmission is presumed accurate.





• Echo check• Trailer record

• The sending unit stores control totals in a trailer record.• The receiving unit uses the information in those totals to

verify the entire message was received.





• Echo check• Trailer record• Numbered batches• If a large message is transmitted in segments, each can

be numbered sequentially.• The receiving unit uses those numbers to properly

assemble the segments.


AVAILABILITY

• Reliable systems are available for use whenever needed.

• Threats to system availability originate from many sources, including:– Hardware and software failures– Natural and man-made disasters– Human error– Worms and viruses– Denial-of-service attacks and

other sabotage

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AVAILABILITY

• Proper controls can minimize the risk of significant system downtime caused by the preceding threats.

• It is impossible to totally eliminate all threats.

• Consequently, organizations must develop disaster recovery and business continuity plans to enable them to quickly resume normal operations after such an event.


AVAILABILITY

• Minimizing Risk of System Downtime– Loss of system availability can cause

significant financial losses, especially if the system affected is essential to e-commerce.

– Organizations can take a variety of steps to minimize the risk of system downtime.

• Physical and logical access controls (Chapter 7) can reduce the risk of successful denial-of-service attacks.

• Good information security reduces risk of theft or sabotage of IS resources.


AVAILABILITY

– COBIT control objective DS 13.5 identifies the need for preventive maintenance. Examples:

• Cleaning disk drivers• Properly storing magnetic and optical media

– Use of redundant components can provide fault tolerance, which enables the system to continue functioning despite failure of a component. Examples of redundant components:

• Dual processors• Arrays of multiple hard drives.

• Surge protection devices provide protection against temporary power fluctuations.


AVAILABILITY

• COBIT control objectives DS 12.1 and 12.4 address the importance of proper location and design of rooms housing mission-critical servers and databases.– Raised floors protect from flood damage.– Fire protection and suppression devices reduce

likelihood of fire damage.– Adequate air conditioning reduces likelihood of

damage from over-heating or humidity.– Cables with special plugs that cannot be easily

removed reduce risk of damage due to accidentally unplugging.


AVAILABILITY

– An uninterruptible power supply (UPS) provides protection from a prolonged power outage and buys the system enough time to back up critical data and shut down safely.


AVAILABILITY

• Training is especially important.– Well-trained operators are less likely to make

mistakes and more able to recover if they do.– Security awareness training, particularly concerning

safe email and Web-browsing practices, can reduce risk of virus and worm infection.

• Anti-virus software should be installed, run, and kept current.

• Email should be scanned for viruses at both the server and desktop levels.

• Newly acquired software and disks, CDs, or DVDs should be scanned and tested first on a machine that is isolated from the main network.

• COBIT control objective DS 13.1 stresses the importance of defining and documenting operational procedures and ensuring that operations staff understand their responsibilities.


AVAILABILITY

• Disaster Recovery and Business Continuity Planning– Disaster recovery and business continuity

plans are essential if an organization hopes to survive a major catastrophe.

– Being without an IS for even a short period of time can be quite costly—some report as high as half a million dollars per hour.

– Yet many large U.S. companies do not have adequate disaster recovery and business continuity plans.

• Experience suggests that companies which experience a major disaster resulting in loss of use of their information system for more than a few days have a greater than 50% chance of going out of business.


AVAILABILITY

• The objectives of a disaster recovery and business continuity plan are to:– Minimize the extent of the disruption, damage,

and loss– Temporarily establish an alternative means of

processing information– Resume normal operations as soon as

possible– Train and familiarize personnel with

emergency operations


AVAILABILITY

• Key components of effective disaster recovery and business continuity plans include:– Data backup procedures– Provisions for access to replacement

infrastructure (equipment, facilities, phone lines, etc.)

– Thorough documentation– Periodic testing– Adequate insurance


AVAILABILITY





AVAILABILITY

• Data Backup Procedures– Data need to be backed up regularly and

frequently.– A backup is an exact copy of the most current

version of a database. It is intended for use in the event of a hardware or software failure.

– The process of installing the backup copy for use is called restoration.


AVAILABILITY

• Several different backup procedures exist.– A full backup is an exact copy of the data

recorded on another physical media (tape, magnetic disk, CD, DVD, etc.)

– Restoration involves bringing the backup copy online.

– Full backups are time consuming, so most organizations:

• Do full backups weekly• Supplement with daily partial backups.


AVAILABILITY

• Two types of partial backups are possible:– Incremental backup

• Involves copying only the data items that have changed since the last backup.

• Produces a set of incremental backup files, each containing the results of one day’s transactions.

• Restoration:– First load the last full backup.– Then install each subsequent incremental

backup in the proper sequence.


AVAILABILITY

• Two types of partial backups are possible:– Incremental backup– Differential backup

• All changes made since the last full backup are copied.• Each new differential backup file contains the cumulative

effects of all activity since the last full backup.• Will normally take longer to do the backup than when

incremental backup is used.• Restoration:

– First load the last full backup.– Then install the most recent differential backup file.


AVAILABILITY

• Incremental and differential backups are both made daily.– Additional intra-day backups are often made for

mission-critical databases.– Periodically, the system makes a copy of the

database at that point in time, called a checkpoint, and stores the copy on backup media.

– If a hardware or software fault interrupts processing, the checkpoint is used to restart the system.

– The only transactions that need to be reprocessed are those that occurred since the last checkpoint.


AVAILABILITY

• Whichever backup procedure is used, multiple backup copies should be created:– One can be stored on-site for use in minor

incidents.– At least one additional copy should be stored

off-site to be safe should a disaster occur• Mirroring (maintaining two copies of the database at two

separate data centers) is an alternative to these traditional backup methods. Mirroring is used by financial institutions and airlines, that cannot afford to lose transactions.


AVAILABILITY

• The offsite copies can be transported to remote storage physically or electronically.– The same security controls should apply as to

original copies.• Sensitive data should be encrypted in storage and

during transmission.• Access to the backup files should be carefully

controlled and monitored.


AVAILABILITY

• Backups are retained for only a fixed period of time.

• An archive is a copy of a database, master file, or software that will be retained indefinitely as an historical record, usually to satisfy legal and regulatory requirements.

• Multiple copies of archives should be made and stored in different locations.

• Appropriate security controls should also be applied to these files.

• Tape or disk? Disk backup is faster and disks are less easily lost. Tape, however, is cheaper, easier to transport, and more durable. Many organizations use both. Data is first backed up to disk, for speed, and then transferred to tape. Archives are usually stored on tape.


AVAILABILITY

• Special attention should be paid to email, because it has become an important archive of organizational behavior and information.

• Access to email is often important when companies are embroiled in lawsuits.

• Organizations may be tempted to adopt a policy of periodically deleting all email to prevent a plaintiff’s attorney from finding a “smoking gun.”


AVAILABILITY

• Most experts advise against such policies and recommend that organizations include email in their backup and archive procedures because:– There are likely to be copies of the email stored in

locations outside the organization.– Such a policy would mean that the organization would

not be able to tell its side of the story.– Also, courts have sanctioned companies for failing to

provide timely access to email.


AVAILABILITY





AVAILABILITY

• Infrastructure Replacement– Major disasters can totally destroy an organization’s

information processing center or make it inaccessible.– A key component of disaster recovery and business

continuity plans incorporates provisions for replacing the necessary computing infrastructure, including:

• Computers• Network equipment and access• Telephone lines• Office equipment• Supplies

– It may even be necessary to hire temporary staff.

• How much time can the organization afford to be without its information system? The recovery time objective (RTO) represents the time following a disaster by which the organization’s information system must be available again .


AVAILABILITY

• Organizations have three basic options for replacing computer and networking equipment.– Reciprocal agreements

• The least expensive approach.• The organization enters into an agreement with another organization

that uses similar equipment to have temporary access to and use of their information system resources in the event of a disaster.

• Effective solutions for disasters of limited duration and magnitude, especially for small organizations.

• Not optimal in major disasters as:– The host organization may also be affected.– The host also needs the resources.


AVAILABILITY

• Organizations have three basic options for replacing computer and networking equipment.– Reciprocal agreements– Cold sites

• An empty building is purchased or leased and pre-wired for necessary telephone and Internet access.

• Contracts are created with vendors to provide all necessary computer and office equipment within a specified period of time.

• Still leaves the organization without use of the IS for a period of time.


AVAILABILITY

• Organizations have three basic options for replacing computer and networking equipment.– Reciprocal agreements– Cold sites– Hot sites

• Most expensive solution but used by organizations like financial institutions and airlines which cannot survive any appreciable time without there IS.

• The hot site is a facility that is pre-wired for phone and Internet (like the cold site) but also contains the essential computing and office equipment.

• It is a backup infrastructure designed to provide fault tolerance in the event of a major disaster.


AVAILABILITY





AVAILABILITY

• Documentation– An important and often overlooked component.

Should include:• The disaster recovery plan itself, including instructions for

notifying appropriate staff and the steps to resume operation, needs to be well documented.

• Assignment of responsibility for the various activities.• Vendor documentation of hardware and software.• Documentation of modifications made to the default

configuration (so replacement will have the same functionality).

• Detailed operating instructions.– Copies of all documentation should be stored both on-

site and off-site.


AVAILABILITY





AVAILABILITY

• Testing– Periodic testing and revision is probably the

most important component of effective disaster recovery and business continuity plans.

• Most plans fail their initial test, because it’s impossible to anticipate everything that could go wrong.

• The time to discover these problems is before the actual emergency and in a setting where the weaknesses can be carefully analyzed and appropriate changes made.


AVAILABILITY

• Plans should be tested on at least an annual basis to ensure they reflect recent changes in equipment and procedures.– Important to test procedures involved in

executing reciprocal agreements or hot or cold sites.

– Backup restoration procedures also require practice.


AVAILABILITY

• Brainstorming sessions involving mock scenarios can be effective in identifying gaps and shortcomings.– More realistic and detailed simulations or drills should

also be performed, although not to the expense of completely performing every activity.

– Experts recommend testing individual components of the plans separately, because it is too difficult and costly to simulate and analyze every aspect simultaneously.

• The plan documentation needs to be updated to reflect any changes in procedure made in response to problems identified during testing.


AVAILABILITY





AVAILABILITY

• Insurance– Organizations should acquire adequate

insurance coverage to defray part or all of the expenses associated with implementing their disaster recovery and business continuity plans.


CHANGE MANAGEMENT CONTROLS

• Organizations constantly modify their information systems to reflect new business practices and to take advantage of advances in IT.

• Controls are needed to ensure such changes don’t negatively impact reliability.

• Existing controls related to security, confidentiality, privacy, processing integrity, and availability should be modified to maintain their effectiveness after the change.

• Change management controls need to ensure adequate segregation of duties is maintained in light of the modifications to the organizational structure and adoption of new software.



• Important change management controls include:– All change requests should be documented in a

standard format that identifies:• Nature of the change• Reason for the change• Date of the request

– All changes should be approved by appropriate levels of management.

• Approvals should be clearly documented to provide an audit trail.

• Management should consult with the CSO and other IT managers about impact of the change on reliability.



– Changes should be thoroughly tested prior to implementation.

• Includes assessing effect of change on all five principles of systems reliability.

• Should occur in a separate, non-production environment.– All documentation (program instructions, system

descriptions, backup and disaster recovery plans) should be updated to reflect authorized changes to the system.

– “Emergency” changes or deviations from policy must be documented and subjected to a formal review and approval process as soon after implementation as practicable. All such actions should be logged to provide an audit trail.

• When changing systems, data from old files and databases are entered into new data structures.

• Conversion controls help ensure that the new data storage media are free of errors.

• Old and new systems should be run in parallel at least once and results compared to identify discrepancies.

• Internal auditors should review data conversion processes for accuracy.



– “Backout” plans should be developed for reverting to the previous configuration if the approved changes need to be interrupted or aborted.

– User rights and privileges should be carefully monitored during the change process to ensure proper segregation of duties.



• The most important change management control is adequate monitoring and review by top management to ensure that the changes are consistent with the entity’s multiyear strategic plan.

• Objective: Be sure the system continues to effectively support the organization’s strategy.

• Steering committees are often created to perform this function.


SUMMARY

• In this chapter, you’ve learned about the controls used to protect the confidentiality of sensitive information and the controls used to protect the privacy of customer information.

• You’ve also learned about controls that help ensure processing integrity.

• Finally, you’ve learned about controls to ensure that the system is available when needed.

Date post:	06-Jan-2018
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