IS Audit of Banking Application: A Comprehensive Analysis of Security and Risks

1. Introduction

A. The auditee is a leading commercial bank with a global presence that provides a range of financial services to retail and corporate customers. The bank’s technology infrastructure comprises various hardware and software components, including servers, databases, and application systems, which are used to  manage customer accounts, process transactions, and maintain financial records. The bank has implemented several policies and procedures related to IT security, including access control, incident management, and business continuity planning.

B. The audit firm (fictitious name) is a reputable consulting company with extensive experience in conducting IS audits for various industries. The project team consists of certified information systems auditors (CISAs) with expertise in banking IT systems, IT security, and risk management. The team leader has over 15 years of experience in IT auditing and has successfully completed several projects for leading banks.

2. Auditee Environment

The auditee is a commercial bank with a global presence that provides a range of financial services to retail and corporate customers. The bank’s technology infrastructure comprises various hardware and software components, including servers, databases, and application systems, which are used to manage customer accounts, process transactions, and maintain financial records. The bank has implemented several policies and procedures related to IT security, including access control, incident management, and business continuity planning. The banking application is a core system that is used for processing transactions and managing customer accounts.

3. Background

The bank management has requested an IS audit of the banking application to identify security vulnerabilities and assess the effectiveness of the bank’s IT controls. The audit is being conducted to ensure compliance with regulatory requirements, protect against cyber threats, and enhance the bank’s IT security posture.

4. Situation

The current situation is that the banking application is being used by the bank’s employees and customers to process transactions and manage accounts. The application is vulnerable to cyber threats, including hacking, malware, and phishing attacks. The bank’s IT controls are not fully effective in preventing security incidents and mitigating their impact. The identified problem areas include weak passwords, inadequate access controls, lack of encryption, and insufficient incident response procedures.

5. Terms and Scope of assignment

The scope of the assignment includes a comprehensive review of the banking application’s IT controls, including access control, data security, system availability, and incident management. The audit will cover the entire system development life cycle (SDLC), including requirements analysis, design, development, testing, implementation, and maintenance. The audit will also assess the bank’s compliance with relevant regulatory requirements, such as the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR).

6. Logistic arrangements required:

The audit team will require access to the banking application, including the server infrastructure, network infrastructure, and database infrastructure, in order to perform the necessary testing and analysis. The team will also require access to any relevant documentation, such as network diagrams, application architecture diagrams, and user manuals. The necessary hardware and software tools required for the audit will also need to be procured and made available.

7. Methodology and Strategy adapted for execution of assignment:

The IS audit will be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing (IIA Standards) and Information Systems Audit and Control Association (ISACA) guidelines. The audit team will adopt a risk-based approach and will focus on the key areas of the banking application, including security, availability, confidentiality, integrity, and compliance with applicable laws and regulations. The audit team will use various tools and techniques such as penetration testing, vulnerability scanning, and social engineering to evaluate the effectiveness of the controls in place.

8. Documents reviewed:

The audit team will review various documents as part of the audit process, including policies and procedures related to the banking application, user manuals, network diagrams, architecture diagrams, and disaster recovery plans. The team will also review any relevant contracts, agreements, and service level agreements.

9. References:

The audit team will reference various standards, guidelines, and best practices during the audit process. These will include the International Standards for the Professional Practice of Internal Auditing, ISACA guidelines, ISO/IEC 27001, and COBIT 5.

10. Deliverables:

The deliverables for this IS audit will include a draft report, a final report, executive summary, and detailed findings and recommendations. The draft report will be presented to the auditee for review and feedback before the final report is prepared.

11. Format of Report/Findings and Recommendations:

The report will be structured as per the guidelines provided in the International Standards for the Professional Practice of Internal Auditing (IIA Standards) and will include the following sections: Executive summary, Background, Scope and Objectives, Methodology, Findings and Recommendations, Conclusion, and Appendices. The findings and recommendations will be presented in a tabular format, with the severity of the finding identified and recommendations provided for each finding.

12. Summary/Conclusion:

In conclusion, the IS audit of the banking application will evaluate the effectiveness of the controls in place to ensure the security, availability, confidentiality, integrity, and compliance with applicable laws and regulations of the application. The audit will be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing (IIA Standards) and Information Systems Audit and Control Association (ISACA) guidelines. The final report will provide detailed findings and recommendations to improve the effectiveness of the controls and ensure compliance with applicable laws and regulations.