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Chapter 5: Networks, Internet & Ecommerce. IT Auditing & Assurance, 2e, Hall & Singleton. NETWORKS: TYPES. LAN (Local Area Networks) WAN (Wide Area Networks Internet/Internet-Works. IP addresses and Hosts Names. Each machine is addressed by a 32-bit integer: IP address

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chapter 5 networks internet ecommerce

Chapter 5:Networks, Internet & Ecommerce

IT Auditing & Assurance, 2e, Hall & Singleton

networks types
  • LAN (Local Area Networks)
  • WAN (Wide Area Networks
  • Internet/Internet-Works

IP addresses and Hosts Names

  • Each machine is addressed by a 32-bit integer: IP address
    • We will tell you what “IP” is later
    • Ran out of numbers and there are schemes to extend
  • An IP address is:
    • Written down in a “dot notation” for “ease” of readings such as
    • Consists of a network address and a host ID
  • IP addresses are the universal IDs that are used to name everything
  • For convenience, each host also has a human-friendly host name: for example “” is “”
  • Question: how do you translate names into IP addresses?

Domain Hierarchy

edu com gov mil org net uk fr

Yale MIT

Cisco . . . yahoo

  • Initially name-to-address mapping was a flat file mailed out to all the machines on the internet.
  • Now we have a hierarchical name space, just like a UNIX file system tree.
  • Top level names: historical influence: heavily US centric, government centric, and military centric view of the world.

Math CS Physics

Cyndra netra


DNS Zones and Name Servers

edu com gov mil org net uk fr

Yale MIT

Cisco . . . yahoo

  • Divide up the name hierarchy into zones
  • Each zone corresponds to one or more name servers under a single administrative control

Math CS Physics

Cyndra netra

network protocols
Network Protocols


  • Ethernet
  • Token ring


  • TCP/IP (4 layer)
  • OSI model (7 layer)


  • Encryption systems translate data into a secret code.
  • Encryption systems include 4 main components:
    • Plaintext: the unencrypted message
    • An encryption algorithm: that works like the locking mechanism to a safe
    • A key that works like the safe’s combination
    • Ciphertext is produced from the plaintext message by the encryption function.
    • Decryption is the same process in reverse (like a modulation/demodulation), but it doesn’t always use the same key or algorithm. Plaintext results from decryption.

Encryption Techniques

  • The two main encryption techniques now in use:
    • Symmetric encryption in which both sender and receiver use the same key.
    • Asymmetric or public key encryption, which uses two separate keys, called public and private keys.

Symmetric Encryption

  • Symmetric or private key encryption, uses the same algorithm and key to both encrypt and decrypt a message.
  • Historically, this is the most common encryption technique.
  • Since the key must be distributed, however, it is vulnerable to interception. This is an important weakness of symmetric key encryption.
  • DES uses symmetric encryption.

Asymmetric or Public Key Encryption

  • A second popular technique is asymmetric or public key encryption (PKE).
  • PKE is called asymmetric since it uses two different “one way” keys:
    • a public key used to encrypt messages, and
    • a private key used to decrypt them.
  • PKE greatly reduces the key management problem since the private key is never distributed.
  • PGP (pretty good privacy) is a popular form of PKE available as shareware.


  • Authentication is the security process of verifying that a user is who he or she says they are.
  • Passwords are the most common type of authentication.
  • Digital signatures are now gaining popularity for authenticating transmitted information.

Authentication: Digital Signatures

  • Digital signatures take the place of ordinary signatures in online transactions to prove that the sender of a message is who he or she claims to be.
  • When received, the digital signature is compared with a known copy of the sender’s digital signature.
  • Digital signatures are also sent in encrypted form to ensure they have not been forged.

Secure servers

  • Secure Sockets Layer (SSL) is a standard for secure interactions use on the Web. SSL, uses a combination of private key encryption (using a one-time session key) and digital signatures to enhance the security of transmission.
  • Secure servers protect the privacy of the data they send and receive through encryption.
networks connecting devices
  • LAN Linking Devices and Systems
    • Multiplexer
    • Hubs
      • Passive
      • Manageable
      • Switched
    • Routers
    • Switches
    • Gateways
    • Bridges
electronic commerce
  • Electronic commerce
  • Types
    • B2C
    • B2B
    • C2C
  • Components
    • Electronic payment systems
    • SSL
    • SET
    • S-HTTP
electronic commerce1
  • Risks
    • Internal
      • Accidents / system failures
      • Ineffective accounting
      • Malicious activities
      • Fraud
    • External
      • Intruders
        • Hackers
        • Cracker
        • Script kiddies
      • Viruses
      • Cyberterrorism / cyber-crime
controlling e commerce
  • Controls
    • Policies and procedures
    • SDLC techniques
    • Anti-virus systems
    • Message sequence numbers
    • Logs
    • Monitoring systems
controlling e commerce1
  • Access control systems
    • Call-back systems
    • Challenge-response systems
    • Multifaceted password systems
    • Biometrics
    • Firewalls
    • IDS
      • Misuse detection vs. anomaly detection
      • Network-based vs. host-based systems
      • Passive system vs. reactive systems
    • Controlling DoS attacks
audit objectives
  • Verify the security and integrity of transactions
    • Can detect and correct message loss
    • Can prevent and detect illegal access, internally and externally
    • Will render useless any data captured
  • Verify that backup procedures are sufficient
  • Determine:
    • All EDI and electronic transactions are authorized, validated, and compliant with SLA
    • No unauthorized access to databases
    • Authorized partners only have access to approved data
    • Adequate controls are in place to ensure a complete audit trail for electronic transactions
audit objectives1
  • Backup control for networks
  • Transaction validation
  • Access control:
    • Tests of validation control
    • Tests of audit trail controls
audit procedures
  • Select of sample of messages from transaction log and verify their integrity
  • Review the message transaction logs to verify that all messages were received in proper sequence
  • Test the operation of features such as call-back
  • Review security procedures governing data
  • Verify any encryption process by sending test messages
  • Review the adequacy of firewalls