Information Systems: The Status of Computer Security at the Department of
Veterans Affairs (Letter Report, 10/04/1999, GAO/AIMD-00-5).

Pursuant to a legislative requirement, GAO reported on the status of
computer security throughout the Department of Veterans Affairs (VA).

GAO noted that: (1) in September 1998, GAO reported that VA's
information system controls placed critical department operations, such
as financial management, health care delivery, benefit payments, and
other operations, at risk of misuse and disruption; (2) since then, VA
organizations have taken actions to correct some of the weaknesses GAO
reported and independently initiated actions to improve certain aspects
of their computer security management programs; (3) progress in
correcting the weaknesses GAO identified in its September 1998 report
has been inconsistent across VA organizations, and efforts to improve
local computer security management programs were not part of a
coordinated, departmentwide effort; (4) in connection with VA's fiscal
year 1998 consolidated financial statement audit, GAO and VA's Office of
Inspector General continued to find serious problems related to the
department's control and oversight of access to its information systems;
(5) these weaknesses placed sensitive information, including financial
data and sensitive veteran medical and benefit information at increased
risk of inadvertent or deliberate misuse, fraudulent use, improper
disclosure, or destruction, possibly occurring without detection; (6) VA
has recognized the significance of these problems and reported
information system security as a material weakness in its Federal
Managers' Financial Integrity Act report for 1998; (7) in September
1998, GAO also reported that the primary reason for VA's continuing
information system control problems was that the department did not have
a comprehensive computer security planning and management program; (8)
to strengthen its departmentwide computer security management program,
VA established a centrally managed security group in February 1999 and
an Information Security Working Group, which includes representatives
from the central security group and all VA line and staff organization
security groups, in March 1999; (9) the Information Security Working
Group developed a departmentwide plan to improve information system
security throughout VA and establish a departmentwide computer security
planning and management program; (10) because this multi-year plan is at
an early stage of development, its ultimate effectiveness cannot yet be
assessed; and (11) VA's success in improving information security is
largely dependent on the level of commitment to this throughout VA and
adequate resources being effectively dedicated to implement its
departmentwide plan.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-00-5
     TITLE:  Information Systems: The Status of Computer Security at
	     the Department of Veterans Affairs
      DATE:  10/04/1999
   SUBJECT:  Computer security
	     Financial statement audits
	     Financial management systems
	     Information resources management
	     Internal controls
	     Federal agency accounting systems
	     Confidential communication
IDENTIFIER:  VA Integrated Funds Distribution, Control Point Activity,
	     Accounting & Procurement System
	     VA Awards Data Entry System

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AI00005.book A Report to the Secretary of Veterans Affairs

October 1999 INFORMATION SYSTEMS

The Status of Computer Security at the Department of Veterans
Affairs

GAO/AIMD-00-5

  GAO/AIMD-00-5

Accounting and Information Management Division

Let ter

B-283225 October 4, 1999 The Honorable Togo D. West, Jr. The
Secretary of Veterans Affairs

Dear Mr. Secretary: We reviewed information system general
controls 1 at the Department of Veterans Affairs (VA) in
connection with VA's required annual consolidated financial
statement audit 2 for fiscal year 1998. Our evaluation included
follow- up on departmentwide computer security planning and
management weaknesses and specific computer security weaknesses we
identified at the Austin Automation Center (AAC) in conjunction
with the audit of VA's fiscal year 1997 financial statements. 3 On
June 8, 1999, we issued a separate report to the acting VA Chief
Information Officer (CIO) and the director of AAC that details the
results of our review at AAC. 4 We also reviewed VA Office of
Inspector General (OIG) and consultant reports regarding

computer security at Veterans Benefits Administration (VBA) and
Veterans Health Administration (VHA) facilities. These site
reports included recommendations to correct the security
weaknesses identified. The results of our underlying reviews were
shared with VA's Office of Inspector General (OIG) for its use in
auditing VA's consolidated financial statements for fiscal year
1998.

1 General controls affect the overall effectiveness and security
of computer operations as opposed to being unique to any specific
computer application. They include security management, operating
procedures, software security features, and physical protection
designed to ensure that access to data and programs is
appropriately restricted, only authorized changes are made to
computer programs, computer security duties are segregated, and
backup and recovery plans are adequate to ensure the continuity of
essential operations.

2 The Government Management Reform Act of 1994, which expands the
Chief Financial Officers Act of 1990, requires that the inspectors
general of 24 major federal agencies, including VA, annually audit
agencywide financial statements. 3 Information Systems: VA
Computer Control Weaknesses Increase Risk of Fraud, Misuse, and
Improper Disclosure (GAO/AIMD-98-175, September 1998). 4 VA
Information Systems: The Austin Automation Center Has Made
Progress In Improving General Computer Controls (GAO/AIMD-99-161,
June 1999).

The purpose of this report is to advise you of the status of
computer security throughout VA. Results in Brief In September
1998, we reported that VA's information system controls placed
critical department operations, such as financial management,
health care delivery, benefit payments, and other operations, at
risk of misuse and disruption. Since then, VA organizations have
taken actions to correct some of the weaknesses we reported and
independently initiated actions to improve certain aspects of
their computer security management programs. However, progress in
correcting the weaknesses we identified in our September 1998
report has been inconsistent across VA organizations, and efforts
to improve local computer security management programs were not
part of a coordinated, departmentwide effort. In connection with
VA's fiscal year 1998 consolidated financial statement audit, we
and VA's OIG continued to find serious problems related to the
department's control and oversight of access to its information
systems. These weaknesses placed sensitive information, including
financial data and sensitive veteran medical and benefit
information at increased risk of inadvertent or deliberate misuse,
fraudulent use, improper disclosure, or destruction, possibly
occurring without detection. VA has recognized the

significance of these problems and reported information system
security as a material weakness in its Federal Managers' Financial
Integrity Act (FMFIA) report for 1998. In September 1998, we also
reported that the primary reason for VA's continuing information
system control problems was that the department did not have a
comprehensive computer security planning and management program.
To strengthen its departmentwide computer security management
program, VA established a centrally managed security group in
February 1999 and an Information Security Working Group, which
includes representatives from the central security group and all
VA line and staff organization security groups, in March 1999. The
Information Security Working Group developed a departmentwide plan
to improve information system security throughout VA and establish
a departmentwide computer security planning and management
program. This plan includes initiatives that would generally
address the key elements of a comprehensive security planning and
management program. Because this multi- year plan, which is
scheduled to be fully implemented by January

2003, is at an early stage of development, its ultimate
effectiveness cannot yet be assessed. VA's success in improving
information security is largely

dependent on the level of commitment to this throughout VA and
adequate resources being effectively dedicated to implement its
departmentwide plan. As VA implements its computer security
management program, establishing detailed guidance can help ensure
that requirements of this program are implemented fully and
consistently throughout the department. This guidance should
include developing a framework for conducting risk assessments;
monitoring system and user access; and monitoring compliance with
established procedures and testing control effectiveness. In
commenting on a draft of this report, VA concurred with all our
recommendations. VA stated that the CIO will report progress in
implementing the computer security management program as well as
progress correcting specific weaknesses. Also, VA stated that the
CIO will

develop the detailed processes described above as part of a
departmentwide security policy framework.

Background VA is responsible for administering health care and
other benefits, such as compensation and pensions, life insurance
protection, and home mortgage loan guarantees, that affect the
lives of more than 25 million veterans and approximately 44
million members of their families. VA operates the largest
healthcare delivery system in the United States and reported
spending more than $17 billion on medical care in fiscal year
1998. The department also processed more than 42 million benefit
payments totaling about

$22 billion in fiscal year 1998 and provided life insurance
protection through more than 2.4 million policies that represented
about $23 billion in coverage at the end of fiscal year 1998. In
providing these benefits and services, VA collects and maintains
sensitive medical record and benefit payment information for
veterans and their family members. The VA maintains medical
information for both inpatient and outpatient care. For example,
the department records admission, diagnosis, surgical procedure,
and discharge information for each stay in a VA hospital, nursing
home, or domiciliary. The VA also stores information concerning
health care provided to and compensation received by ex- prisoners
of war. In addition, the VA maintains information concerning each
of the guaranteed or insured loans closed by VA since

1944, including about 3.5 million active loans.

The VA relies on a vast array of computer systems and
telecommunication networks to support its operations and store the
sensitive information the department collects in carrying out its
mission. Three centralized data centers-located in Austin, Texas;
Hines, Illinois; and Philadelphia, Pennsylvania-maintain the
department's financial management systems; process compensation,
pension, and other veteran benefit payments; and manage the
veteran life insurance programs. AAC maintains VA's departmentwide
systems, including centralized accounting, payroll, vendor
payment, debt collection, benefits delivery, and medical systems.
In fiscal year 1998, the VA's payroll was over $11 billion and the
centralized accounting system generated over $7 billion in
administrative payments. The center also provides information
technology services, for a fee, to other government agencies,
including GAO. The other two centralized data centers support VA's
Veterans Benefits Administration (VBA) programs. The Hines
Benefits Delivery Center (BDC)

processes information from VA systems that support the
compensation, pension, and education applications for VBA's 58
regional offices. The Philadelphia BDC is primarily responsible
for supporting VA's life insurance program.

In addition, the Veterans Health Administration (VHA) operates 172
hospitals at locations across the country that process local
financial management and medical support systems on their own
computer systems. The medical support systems manage information
on veteran inpatient and outpatient care, as well as admission and
discharge information, while the

main medical financial system-the Integrated Funds Distribution,
Control Point Activity, Accounting and Procurement (IFCAP) system-
controls most of the $17 billion in funds that VA reported
spending on medical care in fiscal year 1998. The IFCAP system
also transmits financial and inventory information daily to the
Financial Management System in Austin. The three VA data centers,
as well as the 172 VHA hospitals, 58 VBA regional offices, the VA
headquarters office, and customer organizations such as non- VA
hospitals and medical universities, are all interconnected through
a wide area network. Altogether, VA's network services over

700 locations nationwide, including Puerto Rico and the
Philippines.

Objectives, Scope, and Our objectives were to determine the status
of computer security at VA and Methodology evaluate computer
security planning and management throughout the

department. To determine the status of computer security, we
assessed VA's efforts to correct computer security weaknesses
discussed in our September 1998 report; 5 evaluated information
system general controls at AAC; and reviewed VA's fiscal year 1998
financial statement audit report, VA's 1998 FMFIA report, and VA
OIG and consultant reports regarding computer security at VBA and
VHA facilities. We restricted our review of information system
general controls to AAC because the VA's OIG planned to evaluate
these controls at VBA and VHA facilities as part of the
department's fiscal year 1998 financial statement audit. As part
of this work, the VA OIG tested selected security planning and
management, access, segregation of duties, and service continuity
controls at the Philadelphia BDC; followed up on certain
previously

reported weaknesses at the Hines BDC; and performed limited tests
of security planning and management, access, system software,
application development, segregation of duties, and service
continuity controls at a medical facility, the Carl T. Hayden
Medical Center. We reviewed the OIG's information system general
control work at these facilities and the resulting reports. In
July 1999, VBA provided us with information regarding actions to
correct security weaknesses reported by the OIG. However, the
operating effectiveness of these actions still needs to be
verified.

To evaluate information system general controls at AAC, we
identified and reviewed general control policies and procedures.
We also tested and observed the operation of information system
general controls at AAC to determine whether these controls were
in place, adequately designed, and operating effectively. Our
evaluation was based on our Federal Information System Controls
Audit Manual (FISCAM), 6 which contains guidance for reviewing
information system controls that affect the integrity,
confidentiality, and availability of computerized data associated
with federal agency operations. In addition, we determined the
status of previously identified AAC computer security weaknesses,
but did not perform any follow- up penetration testing. We
requested and received 5 Information Systems: VA Computer Control
Weaknesses Increase Risk of Fraud, Misuse, and Improper Disclosure
(GAO/AIMD-98-175, September 23, 1998). 6 Federal Information
System Controls Audit Manual, Volume I - Financial Statement
Audits (GAO/ AIMD- 12.19.6, January 1999).

comments on the results of our evaluation from the acting VA CIO
and the director of AAC. We did not verify VA statements regarding
corrective actions taken subsequent to our AAC site visit, but
plan to do so during future reviews. To evaluate computer security
planning and management practices throughout VA, we held
discussions with headquarters, VBA, and VHA officials. We also
reviewed current computer security policies and procedures as well
as VA's plan to improve information security and establish a
departmentwide computer security planning and management program.
Our evaluation was based on the results of our May 1998 study of
security management best practices at leading organizations, 7
which identifies key elements of an effective information security
program. This guide, which incorporates many of the concepts in
the National Institute of Standards and Technology's September
1996 publication, Generally

Accepted Principles and Practices for Securing Information
Technology Systems, and in the Office of Management and Budget's
February 1996 revision of Circular A- 130, Appendix III, Security
of Federal Automated Information Resources, has been endorsed by
the federal government's CIO Council.

We performed our work at VA headquarters, VBA, VHA, and AAC from
October 1998 through July 1999, in accordance with generally
accepted government auditing standards. VA provided us with
written comments on a draft of this report, which are discussed in
the Agency Comments section and reprinted in appendix I. Actions
to Improve

In September 1998, we reported that VA's information system
controls Computer Security placed critical department operations,
such as financial management, health care delivery, benefit
payments, and other operations at risk of Were Inconsistent misuse
and disruption. Since then, VA organizations have taken some
Across VA

actions to correct the computer security weaknesses we reported,
with some organizations making more progress than others. Although
progress in correcting weaknesses was uneven across VA
organizations, each organization had initiated actions to improve
certain aspects of their computer security planning and management
programs. However, these 7 Information Security Management:
Learning From Leading Organizations (GAO/AIMD-98-68, May 1998).

efforts were performed independently and not coordinated under a
departmentwide computer security planning and management program.

VA Organizations Addressed Actions taken to correct the weaknesses
we reported in September 1998 Previously Reported

were uneven across VA organizations. AAC had corrected most of the
Weaknesses to Varying

specific computer security issues we reported in September 1998.
As part Degrees of this effort, the center had reduced the number
of users with access to the computer room; restricted access to
certain sensitive libraries, audit information, and utilities;
improved ID and password management controls; developed a formal
system software change control process; and expanded tests of its
disaster recovery plan.

In contrast, the VBA benefits delivery centers were still in the
process of correcting most of the weaknesses we reported in
September 1998. A VBA task force, which was established to review
the administration's information security posture and develop
recommendations for correcting computer security weaknesses, had
prepared a number of recommendations to correct policy
shortcomings and access control concerns identified at the Hines
and Philadelphia benefits delivery centers. In addition, VBA
management told us that the benefits delivery centers had
initiated corrective actions for all of the weaknesses we
reported. However, information system controls reviews performed
by VA's OIG as part of VA's fiscal year 1998 financial statement
audit found that only one of the seven weaknesses we reported had
been fully corrected at the Philadelphia BDC. Similarly, VA OIG
information system controls work showed that corrective

actions for at least five of the seven weaknesses we reported at
the Hines BDC had not been completed. For example, VA's OIG found
that the Philadelphia BDC had limited the number of invalid
password attempts allowed for the master security administration
ID, but still needed to begin reviewing user access authority to
ensure that access privileges are appropriate. VA's OIG also
reported that neither the Hines nor Philadelphia benefits delivery
centers had established a program to routinely monitor network or
mainframe user access activity. In August 1999, VBA management
told us that both the Hines and Philadelphia benefits delivery
centers had begun monitoring user access activity. VBA management
also told us that the Philadelphia BDC had begun periodically
reviewing user access authorities.

Furthermore, the status of most of the weaknesses we reported at
the Albuquerque and Dallas medical centers in September 1998 was
not evident because VA and VHA reports on follow- up actions did
not specifically

address the weaknesses that we previously reported. In addition,
neither the VA nor VHA central security groups had verified that
reported corrective actions, such as control mechanisms and/ or
policy adjustments, were operating as intended. In responding to
VHA follow- up efforts, the Albuquerque medical center indicated
that it had not yet implemented a targeted monitoring program for
its telecommunications system. However, the status of the other
access control, ID and password management, service continuity,
and security management weaknesses we reported at the Albuquerque
and Dallas medical centers in September 1998 was not specifically
addressed. In July 1999, the director of VHA's Medical Information
Security Service (MISS) 8 told us that he will follow up on the
specific weaknesses we reported at the Albuquerque and Dallas
medical centers in September 1998 and verify that reported
corrective actions are

operating effectively. Actions to Improve

In addition to efforts to correct specific weaknesses, VA
organizations have Computer Security taken some other actions to
improve computer security planning and Management Were Not
management since our previous review. However, none of the

Coordinated organizations we visited had implemented a
comprehensive computer

security planning and management program. In addition, efforts to
improve computer security management were initiated independently
and not coordinated as part of a departmentwide program. Until
these efforts are coordinated centrally, VA will have little
assurance that individual

computer security planning and management programs are consistent
with departmentwide requirements and priorities. Since September
1998, AAC, VBA, and VHA had all acted to improve computer security
planning and management.

 AAC had established a centralized computer security group,
developed a comprehensive security policy that covered all aspects
of the center's interconnected environment, and established
technical security standards to implement this policy for one of
its operating environments. In May 1999, the director of AAC told
us that the center

8 MISS is the organization in VHA's Office of the CIO that manages
the national VHA information security program.

also plans to develop a risk assessment framework, a program to
monitor and evaluate the effectiveness of information system
controls, and technical security standards for its other operating
environments by the end of September 1999.  VBA had established a
centralized computer security group and implemented a self-
assessment tool to assist VBA facilities in generating

information system security plans that satisfy OMB Circular A-
130. 9 In July 1999, VBA's Acting Information Security Officer
told us that the administration was updating its security policies
and procedures. VBA management also told us that a risk
assessment, along with a plan to mitigate the vulnerabilities
identified, had been completed for the Hines BDC and that VBA
planned to perform a risk assessment at the Philadelphia BDC by
the end of September 1999. In addition, the Acting Information
Security Officer told us that VBA plans to establish a program in
fiscal year 2000 for routinely assessing risk and testing the
effectiveness of established information system general controls
at VBA facilities.  VHA's central security group, MISS, had
distributed a risk assessment tool to VHA facilities. MISS had
also expanded the information system

control checklists that (1) are provided to VHA facilities as
security selfassessment tools and (2) guide MISS's triennial
security reviews at VHA facilities. In July 1999, the director of
MISS told us that VHA was also updating its security policies to
develop a more concise overall policy

along with an accompanying handbook that provides additional
guidance for implementing the policy. MISS staff also told us in
July 1999 that it plans to hire a consultant to follow up on a VHA
network risk assessment and penetration study performed in 1998.
VHA plans to expand this assessment, which it anticipates
performing annually, to include intranet activity and internet web
sites. VHA also plans to contract with consultants to (1) develop
procedures for certifying and accrediting VHA systems and
applications and (2) obtain additional

technical expertise to assist MISS in performing the more
technical aspects of the triennial site visits and develop
detailed procedures and guidance that will allow MISS to perform
these steps in the future. 9 OMB Circular A- 130, Appendix III,
establishes a minimum set of controls for agencies' automated
information security programs, including assigning responsibility
for security, security planning, periodic review of security
controls, and management authorization of systems to process
information.

In our May 1998 study of information security best practices, we
reported that central coordination is important when managing
information security risks in highly interconnected environments,
such as VA's. In addition, this study found that central security
groups that coordinate and oversee an organization's computer
security program were able to achieve some

efficiencies and increase consistency in implementing security
programs. However, actions taken by AAC, VBA, and VHA to improve
computer security planning and management were not coordinated.
Consequently, different organizations had sometimes developed or
begun developing similar aspects of computer security planning and
management in isolation. For example, both AAC and VBA had begun
developing separate programs for assessing risk and testing the
effectiveness of information system controls at their facilities.
In addition, VBA and VHA had developed different types of security
self- assessment tools for organizational units. Further, AAC had
developed technical security standards for its primary

computing environment and was developing standards for additional
computing environments that could be useful to other
organizations. Sensitive Data and Despite efforts to improve
computer security, financial and sensitive Programs Were Still
veteran medical and benefit information on VA systems continued to
be vulnerable to unauthorized access. In connection with the VA's
fiscal year Vulnerable to 1998 consolidated financial statement
audit, we and the VA OIG continued Unauthorized Access

to find serious problems related to the department's control and
oversight of access to its systems. VA still had not adequately
limited the access granted to authorized users, appropriately
segregated incompatible duties among computer personnel, properly
managed user IDs and passwords, or routinely monitored access
activity. As a result, VA's computer systems, programs, and data
were still at risk of inadvertent or deliberate misuse, fraudulent
use, and unauthorized alteration or destruction occurring without
detection. VA recognized the seriousness of these problems and
began reporting information system security as a material FMFIA
weakness in 1998. Subsequent to our fieldwork, VA provided us with
updated information regarding corrective actions to address the
security weaknesses we identified at AAC. In July 1999, VBA also
provided us with information regarding actions to correct security
weaknesses reported by VA's OIG. However, these reported actions,
which are noted below, will need to be verified to ensure that
they are operating effectively.

Access Authority Was Not A key weakness in VA's internal controls
was that the department had not Appropriately Limited for
sufficiently restricted access for authorized users. Organizations
can Authorized Users protect information from unauthorized changes
or disclosures by granting employees authority to read or modify
only those programs and data that are necessary to perform their
duties and periodically reviewing access granted to ensure that it
is appropriate. VA, however, had not adequately

limited access to financial and sensitive veteran medical and
benefit information maintained on its systems. We and VA's OIG
found instances where AAC, VBA and VHA facilities had not
sufficiently restricted access to sensitive data and programs
based on job responsibility.  At AAC, access to certain sensitive
data and programs was not restricted based on job responsibility.
This access increased the risk that users could circumvent
security controls, improperly modify financial data, or disclose
sensitive veteran medical and benefit information maintained at
AAC. AAC limited access to most of the data and programs that we
identified before we completed our fieldwork. In March 1999, the
director of AAC told us that access to the remaining data had been
appropriately restricted.

 At the Philadelphia Insurance Center, 265 users, including
computer specialists, secretaries, and students, who were not
authorized to perform data entry functions in the Awards Data
Entry (ADE) system, which is used to initiate insurance awards,
had the ability to read, write

and delete this information through the operating system software.
One hundred and thirty- two insurance program staff members were
also provided access to ADE information that exceeded their
authorization through the operating system software. This
unnecessary access could lead to improper insurance payments. In
July 1999, VBA management told us that unauthorized access to ADE
data that was allowed through the operating system software had
been eliminated.

 At the Carl T. Hayden medical facility, 17 of 18 users with
access to the operating system software had unnecessary privileges
that provided the opportunity to bypass security controls. As a
result, sensitive veteran medical information stored at this
facility is vulnerable to improper

disclosure. One reason that these problems existed was because
user access authority was not being reviewed periodically. Such
periodic reviews could have allowed VA to identify and correct
inappropriate access.

VA's OIG also continued to find instances where VBA and VHA
facilities were not promptly removing unused or unneeded IDs.
Although the Philadelphia BDC had begun to review inactive
accounts established for users at remote locations, these reviews
were not always effective. For example, a BDC review for one
regional office identified 87 users who had never logged on and 6
users who had not logged on since 1996. However, the regional
office directed the Philadelphia BDC to delete only one user
account. Despite efforts to identify and remove inactive accounts,
VA's OIG also found that 231 users at the Carl T. Hayden medical
facility had never signed on to the system. Not promptly removing
unused and unnecessary IDs increases the risk that these IDs could
be used to gain unauthorized access to VA computer systems.

In August 1999, VBA management told us that VBA is in the process
of matching system users to personnel files to remove user IDs for
terminated employees from the Hines and Philadelphia benefits
delivery centers. Computer Duties Were Not In addition to limiting
user access authority, the duties and responsibilities Properly
Segregated of computer personnel should be segregated to reduce
the risk that errors or fraud will occur and go undetected. Duties
that should be separated include application and system
programming, quality assurance, computer operations, and data
security. In addition, organizations with limited resources to
segregate duties should implement compensating controls, such as
reviewing recorded transactions, to mitigate the resulting risks.
However, VA's OIG reported that computer duties were not
appropriately

separated at the Hines and Philadelphia benefits delivery centers.
System programmers at both the Hines and Philadelphia benefits
delivery centers were also allowed to perform security
administration functions. For example, VA's OIG found that
security administrators at Hines had performed fewer than 60 of
about 4, 800 actions to administer security

during a particular period. Because these individuals had both
system and security administration privileges, they had the
ability to improperly modify or delete data and programs and
eliminate any evidence of their activity in the system. The risk
of improper payments resulting from unauthorized modification to
sensitive compensation, pension and insurance data maintained at
these centers was also increased because neither center was
monitoring user access activity to identify and investigate
unusual or suspicious actions.

In August 1999, VBA management told us that VBA would implement
compensating controls to mitigate the risks associated with not
fully separating the data security and system programming
functions at the Hines and Philadelphia benefits delivery centers.
User ID and Password

It is also important to actively manage user IDs and passwords to
ensure Management Controls Are that users can be identified and
authenticated. To accomplish this Not Effective

objective, organizations should establish controls to maintain
individual accountability and protect the confidentiality of
passwords. These controls should include requirements to ensure
that IDs uniquely identify users; passwords are changed
periodically, contain a specified number of characters, and are
not common words; default IDs and passwords are

changed to prevent their use; and the number of invalid password
attempts is limited to preclude password guessing. Organizations
should also evaluate user ID and password management controls
periodically to ensure that they are operating effectively.
Password management weaknesses persisted at VBA and VHA
facilities. VA's OIG determined that users at both the Hines and
Philadelphia benefits delivery centers were allowed to create
passwords that were common words. A VHA consultant study also
found that most VHA network

passwords were easily guessed. Because the confidentiality of user
IDs is typically not protected, allowing easily guessed passwords
increases the risk that unauthorized users could gain access to
VBA and VHA systems. A program for periodically testing password
contents could have allowed these facilities to identify and
eliminate easily guessed passwords.

In August 1999, VBA management told us that the benefits delivery
centers were in the process of strengthening password management
controls. For instance, the Hines BDC had conducted security
awareness training on password management and the Philadelphia BDC
had provided its employees guidance on effective password
management. In addition, VA's OIG reported that the security
software was implemented in a manner that allowed unlimited
guessing of the master security account, which has the highest
level of security authority, at the Hines BDC. Allowing unlimited
password attempts to this ID increases the risk of unauthorized
access to or disclosure of sensitive benefit information
maintained at Hines.

User Access Activity Was The risks created by these control
problems were also heightened because

Not Adequately Monitored VA was not adequately monitoring user
access activity. Such a program

would include routinely reviewing user access activity to identify
and investigate both failed attempts to access sensitive data and
resources and unusual or suspicious patterns of successful access
to these resources. A comprehensive user access activity
monitoring program is critical to ensuring improper access to
sensitive information would be detected. VA facilities had not yet
implemented comprehensive user access activity monitoring
programs. AAC was reviewing failed attempts to access sensitive
data and resources but had not established a program to monitor

successful access to these resources for unusual or suspicious
activity. In addition, VA's OIG reported that neither the Hines
nor Philadelphia benefits delivery centers had established
programs to regularly monitor user access activities on the
mainframe or network. Further, in its response to a MISS follow-
up survey concerning recommendations in our September 1998 report,
the Albuquerque medical center indicated that it had not
established a targeted monitoring program for its
telecommunications system. Until VA facilities begin adequately
monitoring user access activity, the department will have little
assurance that unauthorized access to financial and sensitive
veteran medical and benefit information will be detected.

In May 1999, VA stated that AAC would complete its procedures for
monitoring successful access to sensitive computer resources by
the end of September 1999. In addition, VBA management told us in
August 1999 that both the Hines and Philadelphia benefits delivery
centers had begun monitoring user access activity.

Departmentwide In September 1998, we reported that a primary
reason for VA's information Computer Security system control
problems was that the department did not have a

comprehensive computer security planning and management program to
Planning and ensure that effective information system controls
were established and Management Is maintained. VA has taken
important steps to strengthen its computer Essential

security planning and management by establishing a centralized
computer security group that reports directly to the department's
CIO and developing a plan to establish a strong departmentwide
information security program. As VA implements its computer
security planning and management program, developing detailed
guidance can help ensure that requirements

of the information security program are implemented fully and
consistently throughout the department. Planned Improvements Are

In our May 1998 study of information security best practices, we
reported Consistent With Our that central coordination of computer
security planning and management Security Management programs is
important in highly interconnected computing environments to
Framework ensure that weaknesses in one facility do not place the
entire organization's information assets at unnecessary risk. In
order to be effective, the central security focal point must have
the authority to enforce the organization's security policies or
have access to senior executives who can act and effect change
across organizational divisions. One approach for ensuring that a

central group has such access is to place it under a CIO who
reports directly to the head of the organization. This approach is
consistent with the Clinger- Cohen Act, 10 which requires that
major federal departments and agencies establish CIOs who report
to the department/ agency head and are responsible for
implementing effective information management. In July 1998, 11 we
reported that VA's CIO responsibilities were not limited primarily
to information management. In response to this report, VA
established an Assistant Secretary position, which reports
directly to the Secretary of Veterans Affairs on all information
resources issues, to serve

as the department's CIO. To further strengthen its departmentwide
computer security management program, in February 1999, VA
established a centrally managed security group, which reports
directly to the

department's acting CIO, to provide policy, direction, and
oversight for security management throughout the department. In
March 1999, VA also chartered an Information Security Working
Group, which includes representatives from the central security
group and all VA line and staff organization security groups. This
group finalized a multiyear plan in May

1999 to improve information system security and establish a
departmentwide computer security planning and management program.
The information security program plan, which is to be phased in
over

several years, generally includes requirements for the key
elements we believe to be important to having an effective
security management 10 The 1996 Clinger- Cohen Act, Public Law No.
104- 106, section 5125, 110 Stat. 684 (1996). 11 VA Information
Technology: Improvements Needed to Implement Legislative Reforms
(GAO/AIMD-98-154, July 1998).

program-establishing guidance and procedures for assessing risk,
implementing appropriate policies and controls, raising awareness
of prevailing risks, and monitoring and evaluating the
effectiveness of established controls. The plan also (1) defines
the roles and relationships of the principle stakeholders in VA's
information security program and (2) sets milestones for specific
tasks defined in the planned security initiatives that were
developed to accomplish security program plan requirements.
However, because the information security program plan is at an
early stage of development and is not scheduled to be fully
implemented until January 2003, it is too soon to assess its
ultimate effect on improving information security throughout VA.
The success of VA's efforts to improve departmentwide computer
security planning and management will depend largely on adequate
resources being dedicated to its information security program plan
and on the level of commitment throughout the department to
effectively implement the requirements of this plan. Although the
plan recognizes that dedicated staff and recurring funds are
critical, VA has not yet approved funding requested to implement
the information security program plan over the next several

years. In addition, the acting VA CIO is still obtaining formal
concurrence with the information security program plan from other
key VA organizations, including the three VA administrations and
the Office of Financial Management. Including representatives from
all levels in developing the information security program plan
should help foster support for the plan and the associated
security initiatives. However, as VA implements its information
security program, it will be important to monitor compliance with
departmentwide security policies and guidance

to determine if additional mechanisms, such as performance
measures that hold program managers accountable for information
security, are required to help ensure that requirements of the
program are fully implemented throughout the department. To be
effective, the acting CIO must have the authority to enforce VA's
security policies or access to the Secretary of Veterans Affairs
to ensure that needed changes can be implemented across VA
organizations.

Comprehensive Policies and Our May 1998 study of security
management best practices found that Guidance Are Important to
current, comprehensive security policies, which cover all aspects
of an Ensure Consistent organization's interconnected environment,
are important because written Implementation policies are the
primary mechanism by which management communicates its views and
requirements. We also reported that organizations should develop
both high- level organizational policies, which emphasize

fundamental requirements, and more detailed guidelines or
standards, which describe an approach for implementing policy.
Such guidance not only helps ensure that appropriate information
system controls are established consistently throughout the
department, but also facilitates periodic reviews of these
controls. VA's plan includes an initiative to develop, with
significant involvement from affected organizations, a security
policy framework by September 1999 and an updated umbrella policy
by March 2000. Also, technologyspecific security policies, which
should establish technical security standards for the various VA
computing environments, are to be developed by October 2000. As VA
implements its security policy, developing detailed guidance will
help ensure that key program elements are fully addressed and
implemented consistently across the department. In September 1998,
we reported weaknesses at VA in key information security areas
such as performing risk assessments, monitoring user access
activities, and monitoring and evaluating the effectiveness of the
security program. To help correct these weaknesses, VA's detailed
guidance should include provisions as discussed below. Guidance
for Assessing Risk Periodically assessing risk is an important
element of computer security

planning because it provides the foundation for the other aspects
of computer security management. Risk assessments not only help
management to determine which controls will most effectively
mitigate risks, but also increase awareness and, thus, generate
support for adopted policies and controls. An effective risk
assessment framework generally includes procedures that link
security to business needs and provide for managing risk on a
continuing basis. Managing risk relating to computer security on a
continuing basis is especially important because computer systems
and the environments in which they operate change continually.
Although VA's security policy requires risk to be assessed when
significant changes are made to a facility or its computer
systems, it does not provide additional guidance for determining
if an event is a significant change or address risk analysis
requirements for other changes. Although many changes made to
computer systems are not significant and do not require extensive
risk analyses, security risks associated with these changes should
still be considered. These risk assessments could be very limited
and informal, but should still be appropriately documented. For
example, replacing a mainframe computer and implementing a new
mainframe operating system would be considered a significant
change requiring a formal risk assessment;

whereas, the risk assessment for changes such as updating system
software or adding a network server configured similar to others
already in use could be more informal.

In addition, VA's departmentwide security handbook did not provide
additional guidance for conducting risk assessments. In our May
1998 study of security management best practices, we found that it
was important for organizations to define a risk assessment
process that could be adapted to different organizational units
and involve individuals with knowledge of business operations,
security controls, and the technical aspects of the applicable
computer systems. In our study of risk assessment best practices,
12 we also reported that procedures for conducting risk
assessments generally specified

 how risk assessments should be initiated and conducted,  who
should participate in the risk assessment,  how disagreements
should be resolved,

 what approvals were needed, and  how assessments should be
documented and maintained.

Framework for Monitoring To ensure that unauthorized attempts to
access sensitive information are

System and User Access Activity detected, organizations should
develop guidance for monitoring system

and user access activity and investigating possible security
incidents. This includes network monitoring to promptly identify
potential security incidents, and examining user access activity
to identify unauthorized attempts, both successful and
unsuccessful, to access VA systems. A proactive network monitoring
program would allow VA to promptly identify and investigate
unusual or suspicious network activity indicative of malicious,
unauthorized, or improper attempts to access or disrupt VA
systems. Such a program would require VA to (1) identify
suspicious access patterns, such as repeated failed attempts to
log on to the network, attempts to identify systems and services
on the network, connections to the network from unauthorized
locations, and efforts to overload the network to disrupt
operations, and (2) set up an intrusion detection system to
automatically log unusual activity, provide necessary alerts, and
terminate sessions when necessary. 12 Information Security Risk
Assessment: Practices of Leading Organizations, Exposure Draft
(GAO/AIMD-99-139, August 1999).

In addition to identifying attempts by unauthorized users to gain
access to the system, it is also important to monitor attempts to
access sensitive information once entry to the system is
accomplished. Routinely monitoring the access activities of users
to identify and investigate unusual or suspicious access to
sensitive data and resources could help identify significant
problems and deter employees from inappropriate and unauthorized
activities.

Because the volume of security information available is likely to
be too voluminous to review routinely, the most effective
monitoring efforts are those that selectively target unauthorized,
unusual, and suspicious patterns of access to sensitive data and
resources, including security software, system software,
application programs, and production data. This would include
evaluating both failed attempts to access sensitive data and
resources, as well as successful access to these resources
exhibiting unusual or suspicious activity, such as

 updates to security files that were not made by security staff,
changes to sensitive system files that were not performed by
system

programmers,  modifications to production application programs
that were not initiated by production control staff,

 revisions to production data that were completed by system or
application programmers, or  deviations from normal patterns of
access to financial and sensitive

veteran medical and benefit data. VA could develop such a program
by (1) identifying sensitive system files, programs, and data
files on its computer systems and the network, (2) using the audit
trail capabilities of its security software to document both
failed and successful access to these resources, (3) defining
normal patterns of access activity, and (4) analyzing audit trail
information to identify and report on access patterns that differ
significantly from defined normal patterns.

Program for Monitoring and It is also important for information
system controls to be monitored and Evaluating the Effectiveness
of periodically reassessed to ensure that policies continue to be
appropriate

Information System Controls and that controls are accomplishing
their intended purpose. Over time, policies and procedures may
become inadequate because of changes in threats, changes in
operations, or deterioration in the degree of compliance. Periodic
assessments or reports on activities can be a valuable means of
identifying areas of noncompliance, reminding employees of their

responsibilities, and demonstrating management's commitment to the
security program. Our May 1998 study of security management best
practices found that an effective control evaluation program
includes processes for (1) monitoring compliance with established
information system control policies and guidelines and (2) testing
the effectiveness of information system controls. Performing these
processes is a key step in the cycle of managing information
security. In the VA environment, periodic security self-
assessments and independent security reviews could be used to
monitor compliance with established information system control
policies and guidelines. For example, periodically reviewing user
access authority to ensure that it is limited to the minimum
required access level based on job requirements would allow VA
organizations to discover and correct access control weaknesses.
Likewise, setting technical security standards for system software
and routinely evaluating the technical implementation of the
system software

based on these standards would permit VA to eliminate or mitigate
system software exposures. Also, software tools such as password
crackers could be used to monitor compliance with VA password
guidelines that prohibit the use of English words.

In addition to monitoring, directly testing information system
controls would allow VA to determine if the risk reduction
techniques that had been agreed to are, in fact, operating
effectively. For example, periodically (1) running computer
programs designed to detect vulnerabilities in VA's network
environment and (2) allowing designated individuals to try to
break into VA systems using the latest hacking techniques could be
used to test the effectiveness of information system controls
throughout VA. By allowing such tests, VA could readily identify
previously unknown vulnerabilities and either eliminate them or
make adjustments to lessen risks. Our May 1998 study also found
that unannounced tests of disaster recovery plans had been
successful in identifying plan weaknesses and in dramatically
sensitizing employees to the value of anticipating and being

prepared for such events. Although monitoring and testing
information system controls may encourage compliance with
information security policies, the full benefits of these actions
are not achieved unless results are used to improve the security
program. Analyzing the results of these efforts provides a means
of reassessing previously identified risks, identifying new
problem areas, reassessing the appropriateness of existing
controls, identifying the need for new controls, and redirecting
subsequent monitoring and testing

efforts. The VA central security group had begun monitoring the
status of actions to remedy findings reported in external
information security audits conducted by GAO and VA's OIG.
However, the quarterly Security Audit Remediation Report did not
track weaknesses identified by internal management or consultant
security studies. Also, the corrective actions included in the
Security Audit Remediation Report for GAO reviews are based on
recommendations rather than the underlying weaknesses. Therefore,
it is not always evident if the specific weaknesses that prompted
our recommendations have been addressed. Furthermore, VA did not
have

a process in place to ensure that reported corrective actions are
operating as intended. In addition to monitoring and testing
controls, periodically analyzing security incidents can identify
vulnerabilities and security problems that need to be addressed.
Keeping summary records of actual security

incidents is one way that an organization can measure the
frequency of various types of violations as well as the damage
suffered from these incidents. One of the organizations we studied
in our May 1998 report on security management best practices
developed an incident database that served as a valuable
management tool in monitoring problems, reassessing risks, and
determining how to best use limited resources to address the

most significant problems. By keeping a record of incidents, the
organization could develop monthly reports that showed increases
and decreases in incident frequency, trends, and the status of
resolution efforts. These reports provided the organization a
means of identifying emerging problems, assessing the
effectiveness of current policies and awareness efforts,
determining the need for stepped up education or new controls to
address problem areas, and tracking corrective actions.

Conclusions Although VA organizations, especially AAC, had
independently taken actions to correct some of the weaknesses we
reported in September 1998 and improve local computer security
planning and management programs, these efforts were not
coordinated as part of a departmentwide effort. Consequently,
improvements in computer security were inconsistent across VA
organizations and VA's computer systems, programs and data
continued to be vulnerable to inadvertent or deliberate misuse,
fraudulent use, improper disclosure, or destruction, possibly
occurring without detection. VA has recently taken important steps
to strengthen its computer security planning and management
program by developing a plan to improve

information security throughout the department and establishing a
central security group, which reports directly to the acting CIO,
to provide overall policy, direction, and oversight. VA's
Information Security Program Plan includes requirements that
address the key elements of our computer security planning and
management framework. However, because this multiyear plan is at
an early stage of development, it is too soon to assess its impact
on VA efforts to establish and maintain effective information
system controls. The success of VA's actions to improve
information security will depend largely on adequate resources
being effectively dedicated to implement its information security
program plan and the level of commitment throughout the department
to improve information security. To be effective, the central

security group must have the authority to enforce VA's security
policies or have access to the Secretary of Veterans Affairs to
ensure that needed changes can be implemented across VA
organizations. In addition, as VA implements its departmentwide
computer security planning and management program, it will be
important to develop detailed guidance to ensure that key program
elements, such as periodically assessing risk, monitoring system
and user access activity, evaluating compliance with security
policies and guidelines, and testing the effectiveness of
information system controls, are fully addressed and implemented
consistently across the department. Recommendations We recommend
that the Secretary of Veterans Affairs direct the VA CIO to
periodically report to the Secretary on progress in implementing
its information security program plan;

 develop detailed departmentwide guidance and oversight processes
as described in this report so that important aspects of computer
security programs, such as periodically assessing risks,
monitoring system and user access activity, and monitoring and
evaluating information system policy and control effectiveness,
are fully addressed and implemented consistently throughout the
department; and  expand the scope of current procedures for
tracking information security weaknesses so that all information
security weaknesses identified by management, consultants, the
audit community, or other

external organizations are included and that reported corrective
actions are operating as intended.

Agency Comments In commenting on a draft of this report, VA agreed
with our recommendations. Specifically, VA stated that the CIO
will periodically

report to the Secretary on progress in implementing the
information security program. VA stated that it plans to integrate
this reporting into a single, coherent executive reporting
framework that will include FMFIA and PDD- 63 reporting
requirements. In addition, VA stated that the CIO will develop
detailed processes for assessing risks, monitoring system access
activity, and monitoring and evaluating information system policy
and control effectiveness as part of a departmentwide security
policy framework to be completed by October 2000. Finally, VA
stated that the

CIO will expand ongoing reporting on progress to remedy each
specific weakness to the VA OIG and include other computer
security weaknesses as they surface.

This report contains recommendations to you. The head of a federal
agency is required by 31 U. S. C. 720 to submit a written
statement on actions taken on these recommendations. You should
send your statement to the Senate Committee on Governmental
Affairs and the House Committee on Government Reform within 60
days of the date of this report. A written

statement also must be sent to the House and Senate Committees on
Appropriations with the agency's first request for appropriations
made over 60 days after the date of this report. We are sending
copies of this report to Senator Arlen Specter, Senator Ted
Stevens, Senator Robert C. Byrd, Senator Fred Thompson, Senator
Joseph Lieberman, Senator John D. Rockefeller IV, Representative
C. W. (Bill) Young, Representative Lane Evans, III, Representative
Bob Stump, Representative David Obey, Representative Dan Burton,
and Representative Henry A. Waxman in their capacities as Chairmen
or Ranking Minority Members of Senate and House Committees. We are
also sending a copy to the Honorable Jacob J. Lew, Director of the
Office of Management and Budget. In addition, copies will be made
available to others upon request.

If you have any questions or wish to discuss this report, please
contact me at (202) 512- 3317 or Dave Irvin at (214) 777- 5716.
Key contributors to this assignment were Shannon Cross, Jeffrey
Knott, and Charles Vrabel.

Sincerely yours, Robert F. Dacey Director, Consolidated Audit and
Computer Security Issues

Comments From the Department of Veterans Appendi I x Affairs Note:
GAO comments supplementing those in the

report text appear at the end of this appendix.

See comment 1.

The following is GAO's comment on the Department of Veterans
Affairs letter dated September 2, 1999. GAO Comment 1. The report
number has been changed to GAO/AIMD-00-5.

(919389) Let er t

GAO United States General Accounting Office

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Appendix I

Appendix I Comments From the Department of Veterans Affairs

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Appendix I Comments From the Department of Veterans Affairs

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Appendix I Comments From the Department of Veterans Affairs

Page 29 GAO/AIMD-00-5 Status of Computer Security at VA

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