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Disa Project Report on Audit of Outsourced Software Development

Project Report

Audit of Outsourced Software Development

 

1.    Introduction

AMG Software (AMG) is the world’s leading provider of management solutions that ensure the availability, performance, and recovery of business-critical applications.  AMG calls this application service assurance and it means that the applications its customers rely on most stay up and running, around the clock. For more than 20 years, the largest and most successful companies have relied on AMG Software.  AMG Software is among the world’s largest independent software vendors, a Forbes 500 company and a member of the S&P 500, with revenues of $2.3 billion in the last 12 months.  The company is headquartered in Houston, Texas, with offices worldwide.

 

2.    Outsourcing vendor

DLF Software (DLF) is focused on providing Offshore Development Services (ODS) to Global Clients who include 25 of the Fortune 500 corporations of the world. With a penchant for working closely with clients and organizing work according to the client’s needs, DLF believes in working with the customer as its Partner in Progress and participating in mutual growth both quantitatively and qualitatively. From its inception, DLF has been one of the fastest growing major software companies in India and is rated amongst the top 10 software export houses in India. DLF is headquartered in Bangalore and is represented through offices in the USA, Europe, South East Asia and Japan.

 

3.    Background

AMG has outsourced software development through ODS mode to DLF. AMG has supplied IT infrastructure for these services and has also recruited required personnel who work at DLF for the software projects of AMG. AMG wanted an independent assurance on the security and usage of the technology as also protection of the IPR of AMG. Abraham and Associates (AAA) is a practising CA firm based at Bangalore and offers IS Assurance services with a team of DISAs and IT security professionals.

Leading to the proposal, Mr. Bentley, Manager, OEM of AMG based on research on google had identified AAA for providing assurance services and had contacted AAA through Email. The need for IS Assurance services for conducting IS audit with the objective of providing assurance on protection of Intellectual property\security audit was communicated. Based on this, AAA had sent their profile offering their services outlining their experience in this area and providing sample proposals and deliverables of such type of reviews executed by AAA. The scope, objectives, fees and deliverables were finalised after detailed discussion to meet specific requirement of AMG and this was communicated to DLF.

 

4.    Situation

The need of AMG was understood to be the requirement of an assurance that the intellectual property including assets and access to such assets (hardware, software, manuals, media, etc.) of AMG used at the AMG labs at DLF in Bangalore are adequately secured (physically and logically) from unauthorised and inappropriate use through adequate and appropriate physical, environmental and logical access controls.  Hence, an independent review was to be conducted on the process and methods in place at AMG labs at DLF so as to provide assurance that there are adequate and appropriate safeguards and procedures that prevent unauthorized access, mishandling and damage to any of the assets of AMG at AMG labs at DLF and all the facilities provided by AMG are being used for the purposes of AMG’s operations by personnel authorised or assigned for AMG’s operations only at DLF allocated work site.

5.    Objectives of Assignment

Based on the detailed discussions with Mr. Ben Crocker and visit to the AMG Labs at DLF, the primary objectives of the assignment of Security Audit are finalised as follows:

  • Provide assurance to AMG that the intellectual property of AMG including assets and access to such assets (hardware, software, manuals, media, etc.) used at the AMG labs at DLF in Bangalore are adequately secured (physically and logically) from unauthorised and inappropriate use through adequate and appropriate physical, environmental and logical access controls;
  • Review the process and methods in place at AMG labs at DLF so as to provide assurance to AMG that there are adequate and appropriate safeguards and procedures that prevent unauthorized access, mishandling and damage to any of the assets of AMG at AMG labs at DLF;
  • Review whether all the facilities provided by AMG are being used for the purposes of AMG’s operations by personnel authorised or assigned for AMG’s operations only at DLF;
  • Validate the process and methods at AMG labs at BLF against available norms and standards of AMG wherever available

 

6.    Audit observations of IT Environment and practices

As part of the planning for IS Audit,  the AAA audit team has reviewed the security and control procedures and had walk-through of the independent location at DLF which houses all the technology and human resources of AMG as per contract. Key observations covering specific areas are given below:

A. Physical access controls

  • Access into the premises is guarded by security guards.
  • To gain access into the building visitors or the employees have to sign the register maintained at the security.
  • Visitors are given a visitors pass and are required to wait for the person whom they wish to meet at the reception and are then escorted into the building by the concerned employee to areas other than the AMG labs.
  • Visitors are not allowed into the AMG labs.
  • The access to the lab at the basement is granted upon the use of the swipe cards that are issued to the employees associated to the AMG projects.
  • Temporary passes are also used to grant access to employees whose cards are to be received from the manufacturer after capture of relevant details.
  • IS auditors were also given temporary cards to gain access to the lab during the period of review.
  • The access to the lab on the first floor is granted after the use of a numeric combination on the keypad device that authenticates the number and grants entry.
  • The door for the first floor lab does not automatically lock itself after it has been opened. If a user is not careful in ensuring the door is locked after he/she enters or leaves the lab there could be opportunities for unauthorised users to enter the lab without using the keypad device.

 

B. Logical Access Controls

  • The users are classified into various groups for each of the projects they work on. Based on this grouping the users create a group login at the root level in the OS at the AMG labs at DLF. Since all these users work on a common project and require a similar set of permissions for testing the software no individual logins have been created.
  • The users are not allowed to download source code from the servers at AMG and therefore have to access the same at the Houston through telnet sessions. The access rights and the user id with passwords are controlled by the system administration at Houston.
  • Access to the source code of software under development / maintenance / testing etc., is given by AMG as per procedures followed by them. The code is accessed online.
  • The management of the above access control procedures are solely with AMG and the same are not controlled or monitored by DLF. Hence the procedures or policies that govern such accesses to the servers at Houston are outside the scope of this review.
  • Individual workstations also have a user id and password for the users to login into their desktops.
  • A sample test of the individual work stations was carried out ensure that they have screen savers with passwords or session locks with passwords so that open telnet sessions are not accessible to any other user if the original user is not at his/her desk.
  • New users are given access only to the local resources at the time of joining the AMG group at DLF by the IS department locally.
  • The domain accesses that grant them access to the information resources at AMG, Houston are given and controlled by AMG.

C. Disaster Recovery Plan

  • There is a generic disaster recovery plan/procedure pertaining to all the operations of DLF in place to ensure the successful revival of operation in the event of a disaster.
  • There are no back-up systems available for the systems supplied by AMG.
  • DLF owned desktops can be used should there be any disaster affecting them.
  • There is no redundancy for the telecommunication equipment.
  • Offsite storage of the media and other related materials is provided for in the fire proof lockers in the other buildings of DLF.
  • The labs that house the AMG related systems have adequate fire detection and fire-fighting capabilities including fire extinguishers, power cut off systems etc.
  • The power supply is backed up by a UPS backup facility which ensures continued supply of power to the systems in the event of power failure/tripping off due to power surges etc. till such time that the generator is switched on.
  • The generator that is common for all the operations of DLF supplies power to the computers in the event of continued power disruption. The generator facility has enough stock of fuel to run continuously for a period of 6 days.
  • The documented generic disaster recovery plan is the same is applicable to DLF as a whole and is not customised to AMG labs.
  • There is no Disaster recovery plan for the systems that are supplied by AMG and the communication capabilities of the labs.
  • Alternative processing capabilities for the systems supplied by AMG are not identified.
  • No annual maintenance contracts exist for AMG supplied machines

 

7.    Deliverables

  • Provide IS Audit report to management of AMG with reasonable assurance that Identified controls as relevant are in place at the AMG Labs at DLF;
  • Provide detailed report covering findings for each of significant control weaknesses and advise management of AMG on corrective actions to be initiated. Include management comment from DLF on audit findings and recommendations with agreed action plan.

 

8.    Format of Report/Findings

Please use extracts from SLA and the contents from relevant section of the DISA background material and relevant best practices as required as the benchmark for evaluation of the controls.  IS Audit report may be prepared based on standards of reporting issued by ICAI and ISACA.

The detailed findings should be in the following format:

  • Issue (ranked as high/medium or low)
  • Cause
  • Exposure
  • Recommendations
  • Management comment

 

9.    Extracts from Service Level Agreement (SLA)

As part of the assignment, you have reviewed the SLA signed by DLF for AMG. Extracts from these are given for your consideration. These provide the benchmark of security and controls to be provided.

 

Clause 6.6: Maintenance of Records

DLF shall maintain complete, current, and accurate record of the number and location of the Systems (and all components thereof) loaned to DLF pursuant to this Agreement (including all extracts, adaptations, or transcriptions of any Software). As often as AMG may request, but no less often than at least once every three months, DLF shall send AMG a copy of such record certified as complete, current, and accurate by the a duly authorized representative of DLF charged with general responsibility for the operation of the Systems.

Software:

Source code development is undertaken on an online basis through the resources at the AMG facility in Houston. Configuration management tools that are in use at AMG perform the configuration management of software under development/maintenance. DLF here has no control over the configuration/change management procedures that are to be followed during the system development or maintenance phases of SDLC. Therefore in lieu of such practices DLF does not maintain any records/documents that record the changes incorporated to software during maintenance/ developmental activities.

Hardware:

DLF as per the agreement with AMG is not allowed to open any of the machines that are sent to them by AMG for the purposes of the usage at their labs. In lieu of this clause DLF does not maintain any configuration of hardware sent to them by AMG nor does it carry out any maintenance activities on such machines. However DLF does maintain an inventory of all the hardware that is supplied by AMG as per details that are entered in the invoices.

 

Clause 10.4: Disaster Recovery

  1. DLF shall follow AMG conventions for protection and back up of data, including checking source code in to AMG’s designated coordinator each week on or before a specified day set by AMG.
  2. As requested by AMG, DLF will establish and maintain off‑site disaster recovery capabilities that permit DLF to recover from a disaster and continue providing Services to and carrying out Projects for AMG, including without limitation:
  • Storage of any AMG data, Work Product or Deliverables in an off‑site protected vault for such period as AMG specifies;
  • Such off‑site protected vault having security and environmental protection systems to guard against theft, fire, humidity and temperature;
  • Such security system providing controlled access and alarm systems restricting access to DLF employees currently working on AMG Projects; and
  • Implementation of disaster recovery capabilities in the event of any failure of DLF information technology systems which may jeopardize AMG data, Work Product or Deliverables. Upon request, DLF will provide AMG with an executive summary of the current disaster recovery plan, which may change from time to time.  DLF shall test the operation and effectiveness of DLF’s disaster recovery plan at least annually.  In addition, DLF shall establish and maintain a backup power supply system to guard against electrical outages.

 

Clause 10.2: Backup and Storage

  • So that lost or damaged data or materials can be reconstructed,
  • DLF shall establish and maintain procedures for backup on magnetic tape or other electronic media and storage at an off-site storage facility, as applicable, of Systems, Deliverables and other AMG data and materials in DLF’s custody and all storage media containing the same.

 

Clause 10.1: Generally

DLF shall establish and maintain security measures and safeguards reasonably satisfactory to AMG

  • To protect against the destruction,
  • Loss, or alteration, and
  • The unauthorized access, use, or disclosure,

any Systems, Deliverables, or other data and materials which DLF from time to time may have in DLF’s possession, custody or control at the Center or otherwise pursuant to this Agreement.

 

Clause 10.3: User and Access Restrictions

  1. DLF shall be responsible for ensuring that Systems, Deliverables and other AMG data and materials in DLF’s custody are installed and used only on and/or in combination with designated Systems installed at the Center pursuant to this Agreement as specified in the Contract Addenda.
  2. DLF will restrict access to such Systems, deliverables, data and materials at all times to DLF employees who have a “need to know” subject to acceptable undertakings of confidentiality and non-disclosure.

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