New Technologies and Your Audit

By Underwood, Doug | Independent Banker, April 2011 | Go to article overview

New Technologies and Your Audit


Underwood, Doug, Independent Banker


How to prepare for your next regulatory IT examination

Given the ever-changing technological landscape in which community banks operate, their evaluation of IT risk and controls must change in kind. Such technological advancements as social media/networking, cloud computing and server virtualization- along with threats such as data leakage-pose new risks to all financial institutions, and bank auditors and examiners will focus on how your community bank is mitigating these risks.

Security risks arise when banks rush to implement new technologies to meet evolving customer demands without first reviewing the effect on the bank's related risk tolerance. For instance, if a bank outsources data replication to a third party, does that require the third party to have access to the bank's internal network, and is management willing to accept those new risks? Technology also changes so quickly that risks can evolve before they are fully known.

As with all new technology, auditors and examiners expect bank management to complete a formal risk assessment as part of its information security program. If your community bank's management has not completed the appropriate risk assessment activities for its IT efforts, examiners could question your bank's overall IT governance.

Here is some guidance related to three issues-technology outsourcing, social media activities and server virtualization-to help prepare for your bank's next IT audit.

Outsourcing. Banks are increasingly considering service bureaus and software as a service options instead of internally hosting their computer network systems. Examples of outsourcing (outside of core processing and Internet banking) include data replication, imaging, e-mail and merchant capture.

Examiners and auditors want to verify that management has done due diligence and risk assessment for any new outsourcing relationships. An outsourced relationship vendor, especially for a critical system, should not be approached lightly. Any potential vendor should go through extensive vetting, and examiners will check that management has reviewed the vendor's financial condition to ensure that those IT projects can continue.

Examiners will also check into independent controls. Banks commonly obtain a Service Organization Control (SOC) report (previously SAS 70) to verify the effectiveness of controls at an outsourced vendor. However, just obtaining the report is not enough. Managers should review it carefully and complete a formal analysis to verify that controls critical to the bank's needs are operating effectively.

Financial institutions can request information beyond the SOC report, such as test results for business continuity or penetration testing results. Your community bank should validate that its service providers implement the same controls that the bank itself would if the service were internal. Controls to review may include but are not limited to the following:

* authentication controls,

* data protection and encryption controls,

* software development life cycle and change management controls,

* patch management controls and

* network and application monitoring controls. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

New Technologies and Your Audit
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.