Grover Kearns, PhD, CPA, CFE, CITP Catching Al Capone : What All Accountants Should Know About...

Grover Kearns, PhD, CPA, CFE, CITP

Catching Al Capone: What All Accountants Should Know About

Computer Forensics

Scarface

EliotNess

Catching 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 evidence

5

Survey 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 markets

6

8

Why

Accountants 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 resources

Common 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 cases

9

Cardinal 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 knowledge

10

Forensic Accountants are Involved In Criminal Investigations Shareholders' and Partnership Disputes Personal Injury Claims Business Interruption Fraud Investigations Matrimonial Disputes Professional Negligence Mediation and Arbitration

11

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.

-CERT

12

“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].

14

Digital Crime Scene Investigation Digital Forensic Investigation

A 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.

15

Audit 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 results

16

Audit 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 documentation

17


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-custody

18

Digital 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 tag

19


Requirements for Evidence

Computer logs … Must not be modifiable Must be complete Appropriate retention rules

20

Digital 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 data

21

Digital Crime Scene Investigation Extract, process, interpret Work on the imaged data or “safe copy” Data extracted may be in binary form Process data to convert it to

understandable form Reverse-engineer to extract disk partition

information, file systems, directories, files, etc Software available for this purpose

Interpret the data – search for key words, phrases, etc.

22

Digital Crime Scene Investigation Technology

Magnetic disks contain data after deletion Overwritten data may still be salvaged Memory still contains data after switch-off Swap files and temporary files store data Most OS’s perform extensive logging (so do

network routers)

Role of a First Responder

Essentially the first person notified and reacting to the security incident

Responsibilities: Determine the severity of the incident Collect as much information about the

incident as possible Document all findings Share this collected information to determine

the root cause

23

Importance of Computer Forensics to Accountants First Responder IT Auditor Member of CERT Maintain Chain-of-Evidence Document Scene Develop Investigatory Process Manage Investigatory Process Advanced Certifications (CISA etc)

24

Beginning of Accounting

About 9,000 BC

25

Double Entry Accounting

A Little Bit of History

Our numbering system is based on a Hindu system that came into the Arabic world about 776 CE.

This replaced the Roman that is still used today (at the end of movie credits).

26

A Little Bit of History

Pingala (c. 5th-2nd century B.C.)

An Indian scholar, used binary numbers in the form of short and long syllables (think Morse code).

Base 10 versus Base 2

When we talk numbers, we use a base 10 system, because we use ten characters to write out all of our numbers.

•Computers using binary language operate on a base-2 number system, because the two numbers they use are “0” and “1”.

0 1 2 3 4 5 6 7 8 9

0 1These are called

binary digits or bits.

Alphabet Soup

We use the English language consisting of 26 characters.

•Computers use binary language consisting of 2 characters, arranged together in groups of eight, to communicate.

Aa Bb Cc Dd Ee Ff Gg Hh Ii Jj Kk Ll Mm

Nn Oo Pp Qq Rr Ss Tt Uu Vv Ww Xx Yy Zz

Aa = 01000001 01100001

Zz = 01011010 01111010

8 bits = 1 byte

The Byte Scale

This is where it gets tricky.

31

Binary Numbering System

32

Placeholder 5 4 3 2 1Power 4 3 2 1 0Digital 10^4 10^3 10^2 10^1 10^0Digital 10,000 1,000 100 10 1Binary 2^4 2^3 2^2 2^1 2^0Binary 16 8 4 2 1

Placeholder 10 9 8 7 6Power 9 8 7 6 5Digital 10^9 10^8 10^7 10^6 10^5Digital 1,000,000 100,000,000 10,000,000 1,000,000 100,000Binary 2^9 2^8 2^7 2^6 2^5Binary 512 256 128 64 32

Placeholders

In the value 5,736,941 the 3 stands for 30,000 because of its location in the fifth place or 3 x 104 power.

Nearly all numbering systems use placeholders. An exception is the Roman where they write down numbers from biggest to smallest. Ex. MCMXCVIII is 1998.

33

Binary to Decimal

34

Power 4 3 2 1 0Binary 2^4 2^3 2^2 2^1 2^0Value 16 8 4 2 1

Binary Value Decimal Value1111 8 + 4 + 2 + 1 = 15 OR 16 -1 = 151000 16

1 0101 16 + 4 + 1 = 211 1111 16 + 8 + 4 + 2 + 1 = 31 OR 2^5 - 1 = 32 - 1 = 31

Hands-on Activity 1

Use your math skills to calculate the binary number for the base-10 number provided.

__ =__ __ __ __

24 23 22 21 20

16 8 4 2 1

21

Hands-on Activity 1Answer

Use your math skills to calculate the binary number for the base-10 number provided.

24 23 22 21 20

16 8 4 2 1

=1 0 1 0 1 21

Hands-on Activity 2

__ =__ __ __ __ 31

__ =__ __ __ __

24 23 22 21 20

16 8 4 2 1

7

__ =__ __ __ __ 17


24 23 22 21 20

16 8 4 2 1

=1 0 0 0 1 17

=1 1 1 1 1 31

=0 0 1 1 1 7

Hands-on Activity 3

= ?

24 23 22 21 20

16 8 4 2 1

1 = 0 ?1

11 1 1

0

0

Use your math skills to translate the binary number into the decimal number it represents.


= 29

24 23 22 21 20

16 8 4 2 1

1 = 0 241

11 1 1

0

0

Use your math skills to translate the binary number into the decimal number it represents.

Do I Really Need to Know This?

41

Hexadecimal

0, 1, 2, 3, 4, 5, 6, 7, 8, 9 A = 10 B = 11 C = 12 D = 13 E = 14 F = 15 (highest hex value in one place)

42

Hexadecimal

43

Placeholder 5 4 3 2 1Power 4 3 2 1 0Digital 10^4 10^3 10^2 10^1 10^0Digital 10,000 1,000 100 10 1Hexadecimal 16^4 16^3 16^2 16^1 16^0Hexadecimal 65,536 4,096 256 16 1

Hexadecimal

44

Power 4 3 2 1 0Hexadecimal 16^4 16^3 16^2 16^1 16^0Hexadecimal 65,536 4,096 256 16 1

Hex Value Decimal ValueF 15 x 1 = 15ABC 10 x 256 + 11 x 16 + 12 x 1 = 2,7482D05 2 x 4,096 + 13 x 256 + 5 x 1 = 11,5251000 4,096FFF 4,096 -1 = 4,095

Hexadecimal and Binary

Base 16 (0-9, A, B, C, D, E, F) Short-hand for binary

Decimal Hex Binary

255 FF 1111 1111

256 100 1 0000 0000

4,095 FFF 111 1111 1111

4,096 1000 1 0000 0000 0000

45

Odometer Effect

When a value reaches its maximum for the placeholders and you add 1, it rolls over. For example, in decimal

46

Decimal Binary Hex255 1111 1111 FF

1 1 1256 1 0000 0000 100

999,999 add 1 1,000,000

Hands-on Activity 1

Use your math skills to calculate the hex number for the base-10 number provided.

47

= 65,535

164 163 162 161 160

65,536 4,096 256 16 1

= 4,095_ _ _ _ _

_ _ __ _ _



48

= F 65,535F F F

164 163 162 161 160

65,536 4,096 256 16 1

= F 4,095 F F

Hands-on Activity 2


49

= 297,036

164 163 162 161 160

65,536 4,096 256 16 1

= 83,041_ _ _ _ _

_ _ __ _ _



50

= 297,036

164 163 162 161 160

65,536 4,096 256 16 1

= 83,0411 4 4 6 1

4 8 8 4 C

Hands-on Activity 3


51

1 = 2 ?A 0 C

164 163 162 161 160

65,536 4,096 256 16 1

= B ?1 A D


52

1 = 2 107,020A 0 C

164 163 162 161 160

65,536 4,096 256 16 1

= B 7,0851 A D

Hands-on Activity

1. Calculate how many bytes are in a 500 GB hard drive.

2. How many bytes are in a 64 MB memory chip?

3. A hard drive has 1 terabyte of data. How many kilobytes is that?

Hands-on ActivityAnswers

1. Calculate how many bytes are in a 500 GB hard drive.

500 x 1,000,000,000 = 500,000,000,000 2. How many bytes are in a 64 MB memory chip?

64 x 1,000,000 = 64,000,000

3. A hard drive has 1 terabyte of data. How many kilobytes is that?1,000,000,000,000 = 1,000,000,000 kbytes

Hands-on Activity

Your computer just received the following binary message from the keyboard. Translate the message into English.

01001000 01100101 01111001 00101100 00100000 01111001 01101111 01110101 00100111 01110110 01100101 00100000 01101100 01100101 01100110 01110100 00100000 01110100 01101000 01100101 00100000 01000011 01000001 01010000 01010011 00100000 01101100 01101111 01100011 01101011 00100000 01101011 01100101 01111001 00100000 01101111 01101110 00100001

Hands-on Activity

Your computer just received the following binary message from the keyboard. Translate the message into English.

01001000 01100101 01111001 00101100 00100000 01111001 01101111 01110101 00100111 01110110 01100101 00100000 01101100 01100101 01100110 01110100 00100000 01110100 01101000 01100101 00100000 01000011 01000001 01010000 01010011 00100000 01101100 01101111 01100011 01101011 00100000 01101011 01100101 01111001 00100000 01101111 01101110 00100001

Just kidding!

Hexadecimal Editors

Many freewares available. HxD is a popular editor.

57

The Hex Editor

58

59

jpg file opened in HxD editor.

Note JFIF

60

gif file opened in HxD editor.

Note GIF and 47 49 46 signature.

61

exe file opened in HxD editor.

Note 2E 65 78 65 is .exe

62

MS Word document opened in HxD editor.

63

MS Excel spreadsheet opened in HxD editor.

Note DO CF 11 EO signature for all MS files.

64

Bitmap image opened in HxD editor.

Note 42 4D signature for bitmap files.

File Signatures in Hex

65

File Type Signature

PDF 25 50 44 46

JPG FF D8 FF E0

EXE 4D 5A 90 00

DLL 4D 5A 90 00

DOC D0 CF 11 E0

XLS D0 CF 11 E0

66

A PDF file opened in a Hex Editor

67

A PDF file opened in NotePad

68

A BMP file opened in a Hex Editor

69

A JPG file opened in a Hex Editor

“Accountants are supposed to function as the nation’s watchdogs.”

70

~ U.S. Supreme Court, 1984

Watch Dog’s Need Big Teeth

71

End Class 2 Lecture

Questions?

72

Grover Kearns, PhD, CPA, CFE, CITP Catching Al Capone : What All Accountants Should Know About...

Documents

Transcript of Grover Kearns, PhD, CPA, CFE, CITP Catching Al Capone : What All Accountants Should Know About...