Case Study prepared & conceptualised by,

CA. Tejas Chokshi, FCA, M.com, DISA ( ICAI), Cert. FAFD(ICAI), CBA (ICAI)

20 questions for a case study on an IS auditor auditing a reputed bank's transaction

processing system:

1. What is the primary objective of auditing a bank's transaction processing

system? a) Ensuring accuracy of financial transactions b) Detecting fraudulent
activities c) Evaluating system performance d) All of the above
2. Which regulatory standards should the bank's transaction processing system
comply with? a) GLBA (Gramm-Leach-Bliley Act) b) AML (Anti-Money
Laundering) regulations c) FFIEC (Federal Financial Institutions Examination
Council) guidelines d) All of the above
3. What are the potential risks associated with a bank's transaction processing
system? a) Unauthorized access to customer accounts b) Data breaches and
information leakage c) System downtime and disruptions d) All of the above
4. How can the IS auditor assess the effectiveness of internal controls in the
transaction processing system? a) Reviewing access controls and user privileges
b) Analyzing transaction logs and exception reports c) Testing system backup
and recovery procedures d) All of the above
5. What steps should the auditor take to ensure the integrity of financial
transactions processed by the bank's system? a) Verifying transaction logs
against financial records b) Testing data validation and reconciliation
mechanisms c) Reviewing system-generated reports and alerts d) All of the
above
6. How can the auditor evaluate the compliance of the transaction processing
system with AML regulations? a) Reviewing AML policies and procedures b)
Assessing the effectiveness of customer due diligence measures c) Examining
the system's transaction monitoring capabilities d) All of the above
7. What is the role of a disaster recovery plan in managing disruptions to the
transaction processing system? a) Defining procedures for system restoration
and data recovery b) Identifying critical system components and prioritizing
recovery efforts c) Establishing communication protocols during a disaster d)
All of the above
8. Which of the following is a recommended control to protect against
unauthorized access to customer accounts? a) Implementing multi-factor
authentication b) Enforcing strong password policies c) Monitoring and logging
user activities d) All of the above
9. How can the auditor assess the system's compliance with the GLBA regulations?
a) Reviewing privacy policies and customer consent mechanisms b) Evaluating
data encryption and protection measures c) Assessing vendor management
practices d) All of the above
10. What measures should the auditor recommend to enhance the security of the
transaction processing system? a) Conducting regular vulnerability assessments
and penetration tests b) Implementing intrusion detection and prevention
systems c) Establishing incident response and recovery procedures d) All of the
above
11. How can the auditor assess the system's ability to handle high transaction
volumes efficiently? a) Reviewing system scalability and performance testing
results b) Analyzing response times and throughput metrics c) Evaluating
system monitoring and capacity planning practices d) All of the above
12. Which of the following is a recommended control to protect against data
breaches in the transaction processing system? a) Implementing data
encryption in transit and at rest b) Implementing role-based access controls c)
Regularly patching and updating software d) All of the above
13. How can the auditor evaluate the system's compliance with the FFIEC
guidelines? a) Reviewing risk assessment and mitigation practices b) Assessing
business continuity and contingency planning c) Analyzing the system's
compliance reporting capabilities d) All of the above
14. What role does segregation of duties play in the transaction processing
system's internal controls? a) Preventing unauthorized access and fraud b)
Ensuring proper authorization and approval processes c) Facilitating accurate
and reliable financial reporting d) All of the above
15. How can the auditor assess the system's response to security incidents and
breaches? a) Reviewing incident response plans and procedures b) Analyzing
past incident reports and investigations c) Assessing the implementation of
corrective actions d) All of the above
16. Which of the following is a potential consequence of a security breach in the
transaction processing system? a) Financial loss due to fraudulent activities b)
Damage to the bank's reputation and customer trust c) Legal and regulatory
penalties d) All of the above
17. How can the auditor ensure the confidentiality of sensitive customer data in the
transaction processing system? a) Implementing access controls and encryption
measures b) Regularly auditing and monitoring privileged user access c)
Conducting periodic user access reviews d) All of the above
18. What measures should the auditor recommend to enhance the system's
compliance with data protection regulations? a) Implementing data retention
and deletion policies b) Enhancing data backup and recovery mechanisms c)
Conducting privacy impact assessments d) All of the above
19. How can the auditor evaluate the system's compliance with industry best
practices for transaction processing? a) Comparing system controls against
industry standards (e.g., ISO 27001) b) Reviewing system documentation and
process flows c) Assessing the effectiveness of change management practices
d) All of the above
20. What is the role of regular system audits in ensuring the ongoing security and
compliance of the transaction processing system? a) Identifying new
vulnerabilities and risks b) Verifying the implementation of recommended
controls c) Monitoring system changes and updates d) All of the above