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IT Auditing & Assurance, 2e, Hall & SingletonIT Auditing & Assurance, 2e, Hall & Singleton
CLASSES OF INPUT CONTROLS
1) Source document controls
2) Data coding controls
3) Batch controls
4) Validation controls
5) Input error correction
6) Generalized data input systems
IT Auditing & Assurance, 2e, Hall & Singleton
SOURCE DOCUMENT CONTROLS
Controls in systems using physical source documents
Source document fraud
To control for exposure, control procedures are needed over source documents to account for each one
Use pre-numbered source documents Use source documents in sequence Periodically audit source documents
IT Auditing & Assurance, 2e, Hall & Singleton
DATA CODING CONTROLS Checks on data integrity during processing
Transcription errors Addition errors, extra digits Truncation errors, digit removed Substitution errors, digit replaced
Transposition errors Single transposition: adjacent digits transposed (reversed) Multiple transposition: non-adjacent digits are transposed
Control = Check digits Added to code when created (suffix, prefix,
embedded) Sum of digits (ones): transcription errors only Modulus 11: different weights per column: transposition and
transcription errors Introduces storage and processing inefficiencies
IT Auditing & Assurance, 2e, Hall & Singleton
BATCH CONTROLS Method for handling high volumes of
transaction data – esp. paper-fed IS
Controls of batch continues thru all phases of system and all processes (i.e., not JUST an input control)
1) All records in the batch are processed together2) No records are processed more than once3) An audit trail is maintained from input to output
Requires grouping of similar input transactions
IT Auditing & Assurance, 2e, Hall & Singleton
VALIDATION CONTROLS Intended to detect errors in data
before processing
Most effective if performed close to the source of the transaction
Some require referencing a master file
IT Auditing & Assurance, 2e, Hall & Singleton
VALIDATION CONTROLS Field Interrogation
Missing data checks Numeric-alphabetic data checks Zero-value checks Limit checks Range checks Validity checks Check digit
Record Interrogation Reasonableness checks Sign checks Sequence checks
File Interrogation Internal label checks (tape) Version checks Expiration date check
IT Auditing & Assurance, 2e, Hall & Singleton
INPUT ERROR CORRECTION Batch – correct and resubmit Controls to make sure errors dealt with
completely and accurately1) Immediate Correction2) Create an Error File
Reverse the effects of partially processed, resubmit corrected records
Reinsert corrected records in processing stage where error was detected
3) Reject the Entire Batch
IT Auditing & Assurance, 2e, Hall & Singleton
GENERALIZED DATA INPUT SYSTEMS (GDIS)
Centralized procedures to manage data input for all transaction processing systems
Eliminates need to create redundant routines for each new application
Advantages: Improves control by having one common
system perform all data validation Ensures each AIS application applies a
consistent standard of data validation Improves systems development efficiency
IT Auditing & Assurance, 2e, Hall & Singleton
CLASSES OF PROCESSING CONTROLS
1) Run-to-Run Controls
2) Operator Intervention Controls
3) Audit Trail Controls
IT Auditing & Assurance, 2e, Hall & Singleton
RUN-TO-RUN (BATCH) Use batch figures to monitor
the batch as it moves from one process to another
1) Recalculate Control Totals2) Check Transaction Codes3) Sequence Checks
IT Auditing & Assurance, 2e, Hall & Singleton
OPERATOR INTERVENTION When operator manually enters
controls into the system
Preference is to derive by logic or provided by system
IT Auditing & Assurance, 2e, Hall & Singleton
AUDIT TRAIL CONTROLS Every transaction becomes traceable from
input to output
Each processing step is documented
Preservation is key to auditability of AIS Transaction logs Log of automatic transactions Listing of automatic transactions Unique transaction identifiers [s/n] Error listing
IT Auditing & Assurance, 2e, Hall & Singleton
OUTPUT CONTROLS Ensure system output:
1) Not misplaced2) Not misdirected3) Not corrupted4) Privacy policy not violated
Batch systems more susceptible to exposure, require greater controls Controlling Batch Systems Output
Many steps from printer to end user Data control clerk check point Unacceptable printing should be shredded Cost/benefit basis for controls Sensitivity of data drives levels of controls
IT Auditing & Assurance, 2e, Hall & Singleton
OUTPUT CONTROLS Output spooling – risks:
Access the output file and change critical data values
Access the file and change the number of copies to be printed
Make a copy of the output file so illegal output can be generated
Destroy the output file before printing take place
IT Auditing & Assurance, 2e, Hall & Singleton
OUTPUT CONTROLS Bursting
Supervision
Waste Proper disposal of aborted copies
and carbon copies
Data control Data control group – verify and log
Report distribution Supervision
IT Auditing & Assurance, 2e, Hall & Singleton
OUTPUT CONTROLS End user controls
End user detection
Report retention: Statutory requirements (gov’t) Number of copies in existence Existence of softcopies (backups) Destroyed in a manner consistent
with the sensitivity of its contents
IT Auditing & Assurance, 2e, Hall & Singleton
TESTING COMPUTER APPLICATION CONTROLS
1) Around the computer1) Rarely appropriate
1) Through the computer1) Supported by continuous
audit techniques
IT Auditing & Assurance, 2e, Hall & Singleton
TESTING COMPUTER APPLICATION AROUND THE COMPUTER
Ignore internal logic of application Use functional characteristics
Flowcharts Interview key personnel
Advantages: Do not have to remove application from
operations to test it Appropriately applied:
Simple applications Relative low level of risk
IT Auditing & Assurance, 2e, Hall & Singleton
TESTING COMPUTER APPLICATION CONTROLS THROUGH THE COMPUTER
Relies on in-depth understanding of the internal logic of the application
Uses small volume of carefully crafted, custom test transactions to verify specific aspects of logic and controls
Allows auditors to conduct precise test with known outcomes, which can be compared objectively to actual results
IT Auditing & Assurance, 2e, Hall & Singleton
COMPUTER AIDED AUDIT TOOLS AND TECHNIQUES (CAATTs)
1) Test data method2) Base case system evaluation3) Tracing4) Integrated Test Facility [ITF]5) Parallel simulation6) GAS
IT Auditing & Assurance, 2e, Hall & Singleton
TEST DATA Used to establish the application processing
integrity
Uses a “test deck” Valid data Purposefully selected invalid data Every possible:
Input error Logical processes Irregularity
Procedures:1) Predetermined results and expectations2) Run test deck3) Compare
IT Auditing & Assurance, 2e, Hall & Singleton
TRACING Test data technique that takes step-by-step
walk through application
1) The trace option must be enabled for the application
2) Specific data or types of transactions are created as test data
3) Test data is “traced” through all processing steps of the application, and a listing is produced of all lines of code as executed (variables, results, etc.)
Excellent means of debugging a faculty program
IT Auditing & Assurance, 2e, Hall & Singleton
TEST DATA: ADVANTAGES AND DISADVANTAGES
Advantages of test data
1) They employ white box approach, thus providing explicit evidence
2) Can be employed with minimal disruption to operations3) They require minimal computer expertise on the part of
the auditors
Disadvantages of test data
1) Auditors must rely on IS personnel to obtain a copy of the application for testing
2) Audit evidence is not entirely independent3) Provides static picture of application integrity4) Relatively high cost to implement, auditing inefficiency
IT Auditing & Assurance, 2e, Hall & Singleton
Continuous AuditingEmbedded Audit ModuleReal and test transactionsTagged transactionsAudit hooks
IT Auditing & Assurance, 2e, Hall & Singleton
INTEGRATED TEST FACILITY ITF is an automated technique that allows auditors to
test logic and controls during normal operations
Set up a dummy entity within the application system
1) Set up a dummy entity within the application system2) System able to discriminate between ITF audit module
transactions and routine transactions3) Auditor analyzes ITF results against expected results
IT Auditing & Assurance, 2e, Hall & Singleton
PARALLEL SIMULATION Auditor writes or obtains a copy of the program that
simulates key features or processes to be reviewed / tested
1) Auditor gains a thorough understanding of the application under review
2) Auditor identifies those processes and controls critical to the application
3) Auditor creates the simulation using program or Generalized Audit Software (GAS)
4) Auditor runs the simulated program using selected data and files
5) Auditor evaluates results and reconciles differences6) Out of date approach
IT Auditing & Assurance, 2e, Hall & Singleton
Email and IM
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Sedona ConferenceWG1 Best Practices for E Doc Retention and Production
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Sedona ESI Framework
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Sedona Conference - White papers on keyword searches and electronic stored information (ESI)
Keyword list can cut costs substantiallyMost searches turn up small percent of relevant
documents and miss many critical documentsRisks for both under and over inclusive termsSedona framework provides higher quality and
lower costs
Keyword Search and E-Discovery
E-discovery and document review expensive
Cost associated with heavy reliance on human review
Search solutions were not built with e-discovery in mind
Majority of companies do not have an effective retention or archiving plan for electronic documents
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ESI Retention Policy
Must comply with SOX and be scrutinized by legal
Categorize documents by type and retention period
Use different archival methodsSoftware can provide for efficient retrievalTrain employees to policy
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E-Mail Retention Policy
Federal Rules of Civil Procedure, industry regulations and internal policies all influence which emails should be archived.
Safe harbor in eDiscovery rests in an organization adhering to its policies and procedures that guide the destruction of its email data.
Not all e-mails are the same: Set archive categories by nature of email.
Adopt a policy and do not vary from it.
Redacted E-mail and PrivacyDeleted information may be recoverable
from electronic documentsPolicy should be specific as to what
information must be deleted before issuing to a third party
Covered by federal laws and regsSoftware available to filter and delete
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Cost of Poor Retention Policy
The judge could …instruct the jury to infer that the record(s)
destroyed contained information unfavorable to your company.
order your company to pay cost of restoring any archival media on which a lost record is stored plus reasonable litigation expenses incurred by your opponent in filing a motion for discovery and production of the record.
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Beware the Unmanaged IM and EmailRecipients may retain IMIM immune to firewallsIM may be offensive to employeesTrack IM usageEnable content filtering and blockingLog and audit conversationsDo not allow encrypted IM
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IT Auditing & Assurance, 2e, Hall & Singleton
IT Auditing & Assurance, 2e, Hall & Singleton