Computer-Based Information Systems Control

1. Computer-Based Information Systems Control

2. General Controls • A company designs general controlsto ensure that its overall computer system is stable and well managed. • The following are categories of general controls: • Developing a security plan • Segregation of duties within the systems function

3. General Controls • Project development controls • Physical access controls • Logical access controls • Data storage controls • Data transmission controls • Documentation standards • Minimizing system downtime

4. General Controls 10 Disaster recovery plans 11 Protection of personal computers and client/server networks 12 Internet controls

5. Developing a Security Plan • Developing and continuously updating a comprehensive security plan is one of the most important controls a company can identify. • What questions need to be asked? • Who needs access to what information? • When do they need it? • On which systems does the information reside?

6. Segregation of Duties Withinthe Systems Function • In a highly integrated AIS, procedures that used to be performed by separate individuals are combined. • Any person who has unrestricted access to the computer, its programs, and live data could have the opportunity to both perpetrate and conceal fraud.

7. Segregation of Duties Withinthe Systems Function • To combat this threat, organizations must implement compensating control procedures. • Authority and responsibility must be clearly divided among the following functions: • Systems analysis • Programming • Computer operations

8. Segregation of Duties Withinthe Systems Function • Users • AIS library • Data control • It is important that different people perform these functions. • Allowing a person to perform two or more of them exposes the company to the possibility of fraud.

9. Project Development Controls • To minimize failures, the basic principles of responsibility accounting should be applied to the AIS function. • What key elements are included in project development control? • Long-range master plan • Project development plan • Data processing schedule

10. Project Development Controls • Assignment of responsibility • Periodic performance evaluation • Post-implementation review • System performance measurements

11. Physical Access Controls • How can physical access security be achieved? • placing computer equipment in locked rooms and restricting access to authorized personnel • having only one or two entrances to the computer room • requiring proper employee ID • requiring that visitors sign a log • installing locks on PCs

12. Logical Access Controls • Users should be allowed access only to the data they are authorized to use and then only to perform specific authorized functions. • What are some logical access controls? • passwords • physical possession identification • biometric identification

13. Data Storage Controls • Information is generally what gives a company a competitive edge and makes it viable. • A company should identify the types of data maintained and the level of protection required for each. • A company must also document the steps taken to protect data.

14. Data Storage Controls • A properly supervised file library is one essential means of preventing loss of data. • A file storage area should also be protected against fire, dust, excess heat, or humidity. • Following are types of file labels that can be used to protect data files from misuse: • external labels • internal labels (volume, header, trailer)

15. Data Transmission Controls • To reduce the risk of data transmission failures, companies should monitor the network. • How can data transmission errors be minimized? • using data encryption (cryptography) • implementing routing verification procedures • adding parity • using message acknowledgment techniques

16. Data Transmission Controls • Data Transmission Controls take on added importance in organizations that utilize electronic data interchange (EDI) or electronic funds transfer (EFT). • In these types of environments, sound internal control is achieved using the following control procedures: • Physical access to network facilities should be strictly controlled.

17. Data Transmission Controls • Electronic identification should be required for all authorized network terminals. • Strict logical access control procedures are essential, with passwords and dial-in phone numbers changed on a regular basis. • Encryption should be used to secure stored data as well as data being transmitted. • Details of all transactions should be recorded in a log that is periodically reviewed.

18. Documentation Standards • Another important general control is documentation procedures and standards to ensure clear and concise documentation. • Documentation may be classified into three basic categories: • Administrative documentation • Systems documentation • Operating documentation

19. Minimizing System Downtime • Significant financial losses can be incurred if hardware or software malfunctions cause an AIS to fail. • What are some methods used to minimize system downtime? • preventive maintenance • uninterruptible power system • fault tolerance

20. Disaster Recovery Plan • Every organization should have a disaster recovery plan so that data processing capacity can be restored as smoothly and quickly as possible in the event of a major disaster. • What are the objectives of a recovery plan? • Minimize the extent of the disruption, damage, and loss. • Temporarily establish an alternative means of processing information.

21. Disaster Recovery Plan • Resume normal operations as soon as possible. • Train and familiarize personnel with emergency operations. • A sound disaster plan should contain the following elements: • Priorities for the recovery process • Backup data and program files

22. Disaster Recovery Plan • Specific assignments • Complete documentation • Backup computer and telecommunications facilities • reciprocal agreements • hot and cold sites

23. Disaster Recovery Plan • There are other aspects of disaster recovery planning that deserve mention: • The recovery plan is incomplete until it has been satisfactorily tested by simulating a disaster. • The recovery plan must be continuously reviewed and revised to ensure that it reflects current situation. • The plan should include insurance coverage.

24. Protection of PCs and Client/Server Networks • Why are PCs more vulnerable to security risks than are mainframes? • It is difficult to restrict physical access. • PC users are usually less aware of the importance of security and control. • Many people are familiar with the operation of PCs. • Segregation of duties is very difficult.

25. Application Controls • The primary objective of application controls is to ensure the accuracy of a specific application’s inputs, files, programs, and outputs. • This section will discuss five categories of application controls: • Source data controls • Input validation routines

26. Application Controls • On-line data entry controls • Data processing and file maintenance controls • Output controls

27. Source Data Controls • There are a number of source data controls that regulate the accuracy, validity, and completeness of input: • key verification • check digit verification • prenumbered forms sequence test • turnaround documents • authorization

28. Input Validation Routines • Input validation routines are programs that check the validity and accuracy of input data as it is entered into the system. • These programs are called edit programs. • The accuracy checks they perform are called edit checks. • What are some edit checks used in input validation routines?

29. Input Validation Routines • sequence check • field check • sign check • validity check • limit check • range check • reasonableness test

30. On-Line Data Entry Controls • The goal of on-line data entry controls is to ensure the accuracy and integrity of transaction data entered from on-line terminals and PCs. • What are some on-line data entry controls? • data checks • user ID numbers and passwords • compatibility tests • prompting

31. On-Line Data Entry Controls • preformatting • completeness check • automatic transaction data entry • transaction log • clear error messages

32. Data Processing and File Maintenance Controls • What are some of the more common controls that help preserve the accuracy and completeness of data processing? • data currency checks • default values • data matching • exception reporting