Catching Al Capone: What All Accountants Should Know About Computer ForensicsS c a r f a c ePowerPoint PresentationSlide 4Catching Al CaponeSurvey Shows Companies Fear Fraud, But Many Not PreparedSlide 7WhyCommon Applications of Computer ForensicsCardinal Rules of Evidence HandlingForensic Accountants are Involved InSlide 12Slide 13Digital Crime Scene Investigation Digital Forensic InvestigationAudit Goals of a Forensic InvestigationAudit Goals of a Forensic Investigation Immediate ResponseAudit Goals of a Forensic Investigation Continuing InvestigationDigital Crime Scene Investigation Scene Preservation & DocumentationAudit Goals of a Forensic Investigation Requirements for EvidenceDigital Crime Scene Investigation Problems with Digital InvestigationDigital Crime Scene Investigation Extract, process, interpretDigital Crime Scene Investigation TechnologyRole of a First ResponderImportance of Computer Forensics to AccountantsBeginning of AccountingA Little Bit of HistorySlide 27Base 10 versus Base 2Alphabet SoupThe Byte ScaleThis is where it gets tricky.Binary Numbering SystemPlaceholdersBinary to DecimalHands-on Activity 1Hands-on Activity 1 AnswerHands-on Activity 2Hands-on Activity 2 AnswerHands-on Activity 3Hands-on Activity 3 AnswerDo I Really Need to Know This?HexadecimalSlide 43Slide 44Hexadecimal and BinaryOdometer EffectSlide 47Slide 48Slide 49Slide 50Slide 51Slide 52Hands-on ActivityHands-on Activity AnswersSlide 55Slide 56Hexadecimal EditorsThe Hex EditorSlide 59Slide 60Slide 61Slide 62Slide 63Slide 64File Signatures in HexSlide 66Slide 67Slide 68Slide 69“Accountants are supposed to function as the nation’s watchdogs.”Watch Dog’s Need Big TeethEnd Class 2 Lecture Questions?Grover Kearns, PhD, CPA, CFE, CITPCatching Al Capone: What All Accountants Should Know About Computer ForensicsScarfaceEliotNessCatching Al CaponeCapone was known to be responsible for a wide array of felonies and violent crimes but evidence was lackingWitnesses tended to disappearDirect evidence was neededBusiness records provide direct evidenceCareful search, analysis, and handling of data are required to produce data that are acceptable as evidence5Survey Shows Companies Fear Fraud, But Many Not Prepared Ernst & Young's 9th Global Fraud Survey: Fraud Risk in Emerging Markets60 percent of multinationals say they believe fraud is more likely to occur in emerging market operations than developed marketsRobust internal controls remain the first line of defense against fraud for companies in all markets68WhyAccountants and auditors …are better positioned to detect computer based fraudcan assist in maintaining a chain-of-custody for digital evidencecan better communicate with IT employeescan promote IT-based internal controlscan assist in the efficient use of IT resourcesCommon Applications of Computer ForensicsEmployee internet abuse common, but decreasingUnauthorized disclosure of corporate information and data accidental and intentionalIndustrial espionage Damage assessmentCriminal fraud and deception cases9Cardinal Rules of Evidence Handling Only use tools and methods that have been tested and evaluated to validate their accuracy and reliability.Handle the original evidence as little as possible to avoid changing the data.Establish and maintain the chain of custody.Document everything done.Never exceed personal knowledge10Forensic Accountants are Involved InCriminal InvestigationsShareholders' and Partnership DisputesPersonal Injury ClaimsBusiness InterruptionFraud InvestigationsMatrimonial DisputesProfessional NegligenceMediation and Arbitration11Computer forensics can be defined as the collection and analysis of data from computersystems, networks, communication streams (wireless) and storage media in a manner that is admissible in a court of law.-CERT12“Computer forensics” can thus not afford solely to concern itself with procedures and methods of handling computers, the hardware from which they are made up and the files they contain. The ultimate aim of forensic investigation is use in legal proceedings [Mandia 01].The objective in computer forensics is quite straightforward. It is to recover, analyze and present computer based material in such a way that it is useable as evidence in a court of law [Mandia 01].14Digital Crime Scene Investigation Digital Forensic InvestigationA process that uses science and technology to examine digital objects and that develops and tests theories, which can be entered into a court of law, to answer questions about events that occurred. IT Forensic Techniques are used to capture and analyze electronic data and develop theories.15Audit Goals of a Forensic InvestigationUncover fraudulent or criminal cyber activityIsolate evidentiary matter (freeze scene)Document the sceneCreate a chain-of-custody for evidenceReconstruct events and analyze digital informationCommunicate results16Audit Goals of a Forensic Investigation Immediate ResponseShut down computer (pull plug)Bit-stream mirror-image of dataBegin a traceback to identify possible log locationsContact system administrators on intermediate sites to request log preservationContain damage and stop lossCollect local logsBegin documentation17Audit Goals of a Forensic Investigation Continuing InvestigationImplement measures to stop further lossCommunicate to management and audit committee regularlyAnalyze copy of digital filesAscertain level and nature of lossIdentify perpetrator(s)Develop theories about motivesMaintain chain-of-custody18Digital Crime Scene Investigation Scene Preservation & DocumentationGoal: Preserve the state of as many digital objects as possible and document the crime scene.Methods:Shut system down Unplug (best)Do nothingBag and tag19Audit Goals of a Forensic Investigation Requirements for EvidenceComputer logs …Must not be modifiableMust be completeAppropriate retention rules20Digital Crime Scene Investigation Problems with Digital InvestigationTiming essential – electronic evidence volatileAuditor may violate rules of evidenceNEVER work directly on the evidenceSkills needed to recover deleted data or encrypted data21Digital Crime Scene Investigation Extract, process, interpretWork on the imaged data or “safe copy”Data extracted may be in binary formProcess