Chapter 16

IT Controls Part II: Security

and Access
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.
 A Typical 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.
Controlling DOS Attacks
• Controlling for three common forms of DOS attacks:
• Smurf attacks—organizations can program firewalls to ignore an
attacking site, once identified
• SYN flood attacks—two tactics to defeat this DOS attack
• Get Internet hosts to use firewalls that block invalid IP addresses
• Use security software that scan for half-open connections
• DDos attacks–many organizations use Intrusion Prevention Systems
(IPS) that employ deep packet inspection (DPI)
• IPS works with a firewall filter that removes malicious packets from the flow before
they can affect servers and networks
• DPI searches for protocol non-compliance and employs predefined criteria
to decide if a packet can proceed to its destination

(See chapter 12 for more on DOS attacks)

Encryption
• The conversion of data into a secret code for storage and
transmission
• The sender uses an encryption algorithm to convert the
original cleartext message into a coded ciphertext.
• The receiver decodes / decrypts the ciphertext back into
cleartext.
• Encryption algorithms use keys
• Typically 56 to 128 bits in length
• The more bits in the key the stronger the encryption method.
• Two general approaches to encryption are private key and
public key encryption.
 Standard Data Encryption
Technique
Key

Cleartext Encryption Communication

Message Program Ciphertext System

Cleartext Encryption
Communication
Message Program
Ciphertext System

Key
Private Key Encryption
• Advance encryption standard (AES)
• A 128 bit encryption technique
• A US government standard for private key encryption
• Uses a single key known to both sender and receiver
• Triple Data Encryption Standard (DES )
• Considerable improvement over single encryption techniques
• Two forms of triple-DES encryption are EEE3 and EDE3
• EEE3 uses three different keys to encrypt the message three times.
• EDE3—one key encrypts, but two keys are required for decoding
• All private key techniques have a common problem
• The more individuals who need to know the key, the greater the
probability of it falling into the wrong hands.
• The solution to this problem is public key encryption.
Advanced Data Encryption
Technique
 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

 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