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1
Remote Transfer Agent Processing
System
TA2000/TRAC Internal Control Report For the Period of October 1, 2009 to September 30, 2010
2
The contents of this report and all computer systems, procedures, databases, software programs, documentation
and other materials (collectively “Information”) created, maintained or provided by DST Systems, Inc.
(“DST”), are proprietary to DST and are confidential. Any unauthorized use or disclosure of any DST
Information may result in civil liabilities.
Any person who knowingly and without authorization discloses or takes any DST Information that is
confidential, proprietary, or a trade secret, residing or existing internal or external to a computer, computer
system, or computer network or who knowingly and without authorization accesses or causes to be accessed
any computer, computer system, or computer network of DST’s or containing DST Information, may be subject
to criminal penalties under applicable law.
No part of any DST Information may be reproduced, stored, disseminated or used, in any form or by any means,
mechanical, electrical, or otherwise, without the prior written permission of DST. Each authorized reproduction
of any part of DST Information must contain notice of DST’s copyright as follows: “Copyright 2010 by DST
Systems, Inc.”
© 2010, DST Systems, Inc. All rights reserved.
TA2000 and TRAC are registered trademarks of DST Systems, Inc. AWD is a registered trademark of DST
Technologies, Inc. Top Secret is a registered trademark of Computer Associates. Other products and company
names mentioned herein are the trademarks of their respective owners.
TA2000 Remote Transfer Agent Processing System SAS 70
Twelve months ended September 30, 2010
DST Systems, Inc.
333 West 11th
Street
Kansas City, MO 64105–1594
www.dstsystems.com
Prepared in U.S.
Table of Contents Report of Independent Auditors ..........................................................................................1
Chapter I: DST’s Description of TA2000 Remote Operations Transaction
Processing and Information Processing General Computer Controls 3
Scope of Report ...................................................................................................................5
Description of DST Systems, Inc. .......................................................................................8
Organizational Overview .................................................................................................. 10
Organization and Management Controls ........................................................................... 13
Data Center Support .......................................................................................................... 17
Information Security Administration ................................................................................ 23
Application Overviews ...................................................................................................... 26
Review of Transaction Systems ........................................................................................ 34
User Control Considerations ............................................................................................. 40
Chapter II: DST’s Control Objectives, Controls and Tests of Operating
Effectiveness of TA2000 Remote Operations Transaction Processing
Controls 43
TA2000 Transaction System Processing Controls ............................................................ 47
TA2000 Subaccounting Transaction System Processing Controls .................................... 87
TRAC Transaction System Processing Controls ............................................................... 89
Chapter III: DST's Control Objectives, Controls and Tests of Operating
Effectiveness of Information Processing General Computer Controls 121
IT General Computer Controls ........................................................................................ 125
Information Processing General Computer Controls ...................................................... 143
TA2000, TA2000 Subaccounting and TRAC Application Software Modifications
and Job Monitoring ................................................................................................ 143
AWD Application Software Modification ............................................................. 146
TA2000 Desktop/TA2000 Subaccounting Desktop/TRAC Desktop/DST
SmartDesk/Compliance Workstation Application Software Modifications ........... 147
FAN Web/Vision/TRAC Web/E-commerce Core Application Software
Modification ........................................................................................................... 148
TA2000 Subaccounting Interface Monitoring ........................................................ 149
Chapter IV: Information Provided by the Service Auditor 151
Control Environment ....................................................................................................... 154
Test of Controls ............................................................................................................... 154
Chapter V: Other Information Provided by DST 157
Management's Responses to Identified Exceptions ......................................................... 159
Overview of Business Continuity Plan ............................................................................ 160
PricewaterhouseCoopers LLP 1100 Walnut, Suite 1300
Kansas City, MO 64106
Telephone (816) 472 7921 Facsimile (816) 218 1890
www.pwc.com
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of DST Systems, Inc.:
We have examined the accompanying description of the controls related to DST Systems, Inc.
(DST) applicable to the Remote Transfer Agent Processing System (TA2000) and the TRAC
Defined Contribution Participant Recordkeeping System (TRAC). Our examination included
procedures to obtain reasonable assurance about whether (1) the accompanying description
presents fairly, in all material respects, the aspects of DST‟s controls that may be relevant to a
user organization‟s internal control as it relates to an audit of financial statements; (2) the
controls included in the description were suitably designed to achieve the control objectives
specified in the description, if those controls were complied with satisfactorily and the clients of
DST applied the controls contemplated in the design of DST‟s controls; and (3) such controls
had been placed in operation as of September 30, 2010. The control objectives were specified
by the management of DST. Our examination was performed in accordance with standards
established by the American Institute of Certified Public Accountants and included those
procedures we considered necessary in the circumstances to obtain a reasonable basis for
rendering our opinion.
In our opinion, the accompanying description of the aforementioned controls presents fairly, in
all material respects, the relevant aspects of DST‟s controls that had been placed in operation as
of September 30, 2010. Also, in our opinion, the controls, as described, are suitably designed to
provide reasonable assurance that the specified control objectives would be achieved if the
described controls were complied with satisfactorily and clients of DST applied the controls
contemplated in the design of DST‟s controls.
In addition to the procedures we considered necessary to render our opinion as expressed in the
previous paragraph, we applied tests to specific controls to obtain evidence about their
effectiveness in meeting the control objectives, during the period from October 1, 2009 to
September 30, 2010. The specific control objectives and controls and the nature, timing, extent
and results of the tests are listed in Chapters II and III. This information has been provided to
clients of DST and to their auditors to be taken into consideration, along with information about
the internal control of clients, when making assessments of control risk for clients. In our
opinion, the controls that were tested were operating with sufficient effectiveness to provide
reasonable, but not absolute, assurance that the specified control objectives were achieved during
the period from October 1, 2009 to September 30, 2010.
The relative effectiveness and significance of specific controls at DST and their effect on
assessments of control risk at client organizations are dependent on their interaction with the
controls and other factors present at individual client organizations. We have performed no
procedures to evaluate the effectiveness of controls at individual clients of DST.
The description of controls at DST is as of September 30, 2010 and the information about tests
of the operating effectiveness of specific controls covers the period from October 1, 2009 to
September 30, 2010. Any projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the controls in existence. The
potential effectiveness of specific controls at DST is subject to inherent limitations and
accordingly, errors or fraud may occur and not be detected. Furthermore, the projection of any
conclusions, based on our findings, to future periods is subject to the risk that changes made to
the system or controls or the failure to make needed changes to the system or controls, may alter
the validity of such conclusions.
The information included in Chapter V describing DST‟s business continuity plan and
management's responses to identified exceptions is presented by DST to provide additional
information and is not part of DST‟s description of controls that may be relevant to clients‟
internal control as it relates to an audit of financial statements. Such information has not been
subjected to the procedures applied in the examination of the description of controls, related to
transaction processing and accordingly, we express no opinion on it.
This report is intended solely for use by the management of DST, its clients and the independent
auditors of its clients.
November 15, 2010
Chapter I:
DST’s Description of TA2000 Remote
Operations Transaction Processing and
Information Processing General Computer
Controls
Scope of Report 5
Copyright © 2010 DST Systems, Inc.
Scope of Report
This report is designed to describe the control environments surrounding the Remote
Transfer Agent Processing System (TA2000) and the Remote Defined Contribution
Recordkeeping Processing System (TRAC).
The objective of this report is to provide information to clients regarding DST's
internal controls relevant to DST Remote clients over DST Remote transfer agent
processing for open end and closed end mutual funds and non-traded real estate
investment trusts (REITs) as well as recordkeeping activities supporting defined
contribution processing. It has been prepared taking into consideration guidance
described in the American Institute of Certified Public Accountants (AICPA)
Statement on Auditing Standards No. 70 (SAS 70), Service Organizations.
The overall control environment of the Remote TA2000 and TRAC systems consists
of the following components:
Organization and management controls.
Controls programmed into the TA2000, TA2000 Subaccounting and TRAC
system software (system controls).
Interaction of controls at DST with Remote client user controls.
Controls over the Information Systems (IS) function in the Mainframe, UNIX,
Windows and IBM Power Systems (iSeries, formerly known as AS/400)
environments at the Winchester Data Center and AWD Data Center.
Controls over the IS function relating to TA2000, TRAC, TA2000 Desktop,
TA2000 Subaccounting Desktop and TRAC Desktop/DST
SmartDesk/Compliance Workstation processing environment at the Winchester
Data Center and AWD Data Center.
Controls over the IS function relating to the FAN Web/TRAC
Web/Vision/E-commerce Core processing environment at the Winchester Data
Center.
Controls over the Automated Work Distributor (AWD) Information Processing
General Computer Controls applicable to those clients that have outsourced those
activities to DST and whose AWD information resides on DST‟s iSeries platform,
which is housed in the AWD Data Center and the Winchester Data Center.
Another level of control consists of the control activities exercised by the client. User
controls will vary depending on the specific function involved and on the extent of
services that DST provides to each individual client. This report does not consider
activities that are performed at client locations. However, this report, when coupled
with an understanding of controls in place at user locations, is intended to permit
evaluation of the system of internal controls surrounding transactions processed
through the TA2000, TA2000 Subaccounting and TRAC systems.
6 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
This report is organized into five chapters:
Chapter I DST’s Description of TA2000 Remote Operations Transaction Processing
and Information Processing General Computer Controls
o Provides an overview of DST.
o Describes organization and management controls and details the internal
control responsibilities that DST believes its Remote transfer agent clients
should have present in their control environments, in conjunction with the
DST controls described in Chapters II and III.
o Provides an overview of the TA2000 Transfer Agent Processing system, the
TRAC Defined Contribution Recordkeeping Processing system and those
activities over the transaction processing for Remote shareowner accounts.
o Provides an overview of the general controls over the IS function in the DST
TA2000, TA2000 Subaccounting and TRAC, Mainframe, UNIX, iSeries,
Windows, FAN Web/TRAC Web/Vision/E-commerce Core, TA2000
Subaccounting Desktop, AWD, TA2000 Desktop and TRAC Desktop/DST
SmartDesk/Compliance Workstation environments at the Winchester Data
Center and AWD Data Center.
Chapter II DST’s Control Objectives, Controls and Tests of Operating Effectiveness of TA2000 Remote Operations Transaction Processing Controls
o Provides the control objectives and controls over Remote transaction
processing established by DST.
o Includes the tests and results of operating effectiveness for those controls over
Remote transaction processing.
Chapter III DST’s Control Objectives, Controls and Tests of Operating Effectiveness of Information Processing General Computer Controls
o Provides the control objectives and controls over the IS function established by
DST.
o Includes the tests and results of operating effectiveness for those controls over
the IS function.
Chapter IV Information Provided by the Service Auditor
o Provides a description of the nature of tests applied to the TA2000, TA2000
Subaccounting and TRAC transaction system processing controls and the IS
function controls by DST‟s independent service auditors,
PricewaterhouseCoopers LLP (PwC).
Chapter V Other Information Provided by DST
o Management‟s Responses to Identified Exceptions.
o Overview of DST‟s Business Continuity Plan.
Scope of Report 7
Copyright © 2010 DST Systems, Inc.
This is a 12-month report which includes results for the period October 1, 2009 to
March 31, 2010, which were also included in the previous report dated May 14, 2010.
The management responses in Chapter V include details around the six-month period
in which the exception was identified. Responses preceded by “3/31/10” relate to
exceptions identified and communicated in the prior report. Responses preceded by
“9/30/10” relate to newly identified exceptions. For those control activities with
exceptions identified during both time periods, separate responses are included.
Areas Not Covered By This Report This report does not cover the control environment as it relates to Full Service clients
although, by necessity, sections of this report address certain controls pertinent to Full
Service clients. Full Service clients should refer to the DST TA2000 Full Service
Transfer Agent Processing report, which describes control aspects relevant to Full
Service users as of September 30, 2010 and for the previous 12 months.
This report does not cover activities that are performed at client locations as described
in User Control Considerations on page 40. It is not designed to provide assurance
regarding client specific application functionality and/or automated controls that are
unique to a single client or group of clients. Additionally, this report does not consider
controls related to lines of business other than the transfer agent or shareowner
servicing business.
In addition, there are certain aspects of DST services to clients that are not covered by
this report, which include, but are not necessarily limited to, the following:
Remote installations of TA2000 Desktop.
Remote installations of TA2000 Subaccounting Desktop.
Remote installations of TRAC Desktop/DST SmartDesk/Compliance Workstation.
Remote installations of AWD.
Conversions to/from TA2000 and TRAC.
Printing and mail services other than those provided by DST Output – Kansas City
and DST Output – Hartford.
8 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Description of DST Systems, Inc.
DST Systems, Inc. (DST) is a global provider of information processing and computer
software services and products to the financial services industry (primarily mutual
funds and investment managers), telecommunications industry, the healthcare industry
and other service industries. These services, which may be provided on a remote
(client-hosted systems) or full service (DST-hosted systems) basis, include
recordkeeping and processing for the healthcare, mutual fund, banking and insurance
industries. Revenues are derived primarily from remote or full service transfer agency
or third-party administration product offerings that utilize DST's software applications
being processed at its data centers or derived from presentation and delivery (either
printed or electronic) and archival of customer documents, and are based upon the
number of statements mailed and/or the number of images produced.
Description of DST Systems 9
Copyright © 2010 DST Systems, Inc.
DST Organizational Chart
Board of Directors Audit Committee
Chief Executive
Officer
President
DST Output
President
and Chief
Operating Officer
Chief Information
Officer
Enterprise Systems
Executive Vice President
U.S. Recordkeeping
Solutions
Vice President
Winchester Data
Center
Vice President
DST Solutions &
Hosting Services
Vice President
Human
Resources
Vice President
and Chief Accounting
Officer
Officer
Internal Audit
Vice Presidents
Client Services
Vice President
Development
Vice President
Full Service
Vice President
Corporate
Support
Officers
Full Service
Directors
Full Service
Client Relations
Manager
Officer
Corporate
Support
Officer
Regulatory
Solutions
Director
Cash Control
Systems Officers
Administrative
Officer
Officer
Systems
Development
Vice President
Chief Financial Officer
and Treasurer
Vice President
General Counsel
and Secretary
Systems Vice
Presidents
Director
Information
Security
Director
Systems Support
Vice President
Support
Vice Presidents
Product Areas
Vice President
DST Worldwide
Services
Vice President
AWD
10 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Organizational Overview
Financial Services DST, based in Kansas City, Missouri provides information processing, computer
services, and products that are designed to provide a vital link between clients and
their customers. DST is also a registered transfer agent with the Securities and
Exchange Commission (SEC), providing shareowner servicing functions to the mutual
fund industry and certain real estate investment products. The recordkeeping and
shareowner servicing system (TA2000 System or TA2000) was designed to provide
Full Service processing or to provide services to clients on a remote basis.
Full Service clients use virtually all available services offered by DST including input,
transaction processing and output control. Remote clients use the DST system,
wherein all transaction input, output and review is performed at the clients‟ locations.
Partial Remote clients use more services than traditional Remote clients, but not all of
the services included in the definition of a Full Service client.
Additionally, DST offers retirement plan processing capabilities through the TRAC
Defined Contribution Participant Recordkeeping System (TRAC) that permit financial
institutions to efficiently and effectively support the needs of plan sponsors and their
participants. TRAC's integration with TA2000 helps eliminate reconciliation problems
that can occur when different systems are used for participant recordkeeping and
shareowner accounting.
Data Processing DST uses two data centers in the Kansas City area to support computer operations and
data processing. The Winchester Data Center (Winchester) is the primary data center
and the AWD Data Center, also known as the Poindexter Data Center, primarily
houses iSeries operations. DST owns and maintains a Recovery Data Center located
approximately 250 miles from Kansas City.
Output Solutions DST Output, a wholly owned subsidiary of DST, is among the largest first-class
mailers in the U.S., providing single-source, integrated print and electronic statement
and billing output solutions. Every month, DST Output prints, mails and electronically
delivers bills, statements, marketing materials, policy statements, proxies, summary
prospectuses, tax applications, explanations of benefits and other business-critical
client communications.
Statement processing services are supported by integrated and automated production
environments that transform electronic data received from clients into customized
Organizational Overview 11
Copyright © 2010 DST Systems, Inc.
statements that can be delivered in print or electronic format in accordance with
individual client preferences.
Business Process Management DST Technologies, Inc. is a wholly owned subsidiary of DST. DST‟s Automated
Work Distributor (AWD) application from DST Technologies, Inc. is an enterprise-
scale software system that enables companies to further develop operating efficiency.
AWD‟s automation components allow customers to streamline tasks in which human
interaction is not required. The AWD platform also includes imaging and content
management, business intelligence and monitoring, a contact center desktop with
proactive call scripting, intelligent character and word recognition capabilities and
correspondence tools. Clients include banking, financial services, insurance,
healthcare and video/broadband companies.
Shareholder Solutions DST TASS, a wholly owned subsidiary of DST, provides shareowner subaccounting
services related to mutual fund processing to Broker Dealers using the TA2000
Subaccounting platform. Through this line of business, DST TASS offers a Full
Service outsourcing solution to meet Broker Dealer needs and requirements for
mutual fund processing and servicing.
Retirement Solutions DST Retirement Solutions, a wholly owned subsidiary of DST, provides defined
contribution recordkeeping services. DST Retirement Solutions combines DST's
TRAC technology solution with Boston Financial Data Services, Inc.‟s (BFDS)
defined contribution Full Service plan administration and recordkeeping services.
From application service provider (ASP) to business process outsourcing (BPO), DST
Retirement Solutions offers a variety of selective outsourcing options, including front-
and back-office technology solutions for financial service organizations offering
retirement plan recordkeeping for plans of varying size.
Health Solutions DST Health Solutions, LLC, a wholly owned subsidiary of DST, offers a
comprehensive set of software solutions to the marketplace that addresses many facets
of health plan, administrator, and physician business operations, from managed care
and physician practice administration to decision support, e-business transactions, and
operational work flow. DST Health Solutions provides a variety of solutions for
health plan administration that can support any size and type of organization; from
start-up and small provider-sponsored health plans to third-party administrators and
large national health plans with a significant number of members.
12 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Argus Health Systems Argus, a wholly owned subsidiary of DST, provides a full suite of services that allows
customers to manage their pharmacy benefits by choosing the services offered by
Argus that best fit their needs. The systems developed by Argus are designed to
provide pharmacy benefits management, claims adjudication, reconciliation and
rebate processing solutions that are scalable, flexible, and highly reliable. These
systems are primarily housed at Winchester.
Argus supports a wide range of customers and key healthcare organizations, from
managed care organizations to Pharmacy Benefits Managers (PBMs) and
pharmaceutical manufacturers. Argus processes pharmacy claims on behalf of its
customers to support their various lines of business including commercial, Medicaid
and Medicare Part D.
Worldwide Services DST Worldwide Services, LLC (DSTWS), a wholly-owned subsidiary of DST, is
headquartered in Kansas City, MO, with associates located in the United States,
Bangkok, Thailand and Hyderabad, India. DSTWS provides Information Technology
and Business Processing services in support of other DST subsidiaries, and to external
clients in the financial services, communications, and healthcare industries.
Information technology services include: Systems Development and Support, Testing
Automation and Abstraction, Data Conversions and Migrations, Infrastructure
Monitoring and Management, Database Management, E-Business Solutions,
Reporting and Datawarehousing, Content Management and Specialist Sourcing across
various platform arenas. Business Process Outsourcing (BPO) services include
healthcare claims processing and mutual fund transaction processing.
Organization and Management Controls 13
Copyright © 2010 DST Systems, Inc.
Organization and Management Controls
Management controls are typically not specific to any individual transaction system;
rather, they are general in nature and apply to the organization as a whole. The
objective of organization and management controls is to establish an appropriate
control environment to enhance internal control activities and therefore help achieve
internal control objectives. Appropriate management controls are necessary to
facilitate the proper functioning of the overall control environment.
The DST Organizational Structure described in the DST Organizational Overview is
designed along functional lines. Divisions are assigned responsibilities for specific
clients and for processing related to those groups. DST‟s organizational structure
includes segregation of duties and provides defined areas of functional responsibility
over transaction processing areas.
DST has structured its organization into client service groups and centralized support
groups, governed by the Board of Directors and Audit Committee, whose
responsibilities include administering DST policies and procedures.
Board of Directors The Board of Directors meets on a regular basis to review and discuss the operations
of DST, financial results, key strategic initiatives, pending transactions and other
business as deemed appropriate. DST management reports to the DST Board of
Directors. Board members are required to have sufficient time, business and financial
knowledge and industry expertise to serve on the Board of Directors. The Board meets
at least quarterly and has input on three committees, each with respective charters:
DST Audit Committee.
DST Corporate Governance/Nominating Committee.
DST Compensation Committee.
Each committee is comprised of independent directors.
14 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Audit Committee
The Audit Committee oversees DST's policies and procedures, which are designed to
ensure that controls are adequate and support regulatory standards and other business
requirements. Audit Committee members provide an appropriate line of
communication between the Board of Directors, the internal audit function and
external auditors. Internal and external audit findings, recommendations and related
management responses are reviewed along with copies of the internal and external
audit reports. The Audit Committee maintains meeting minutes of regularly scheduled
meetings.
Corporate Governance/Nominating Committee
The Corporate Governance/Nominating Committee oversees the evaluation of the
Board and management. The committee is composed of independent members of the
Board of Directors. The committee's primary responsibilities include, but are not
limited to, recommendation of director nominees to the Board, advising the Board on
Board committee appointments and removals, and recommendation and review of
Corporate Governance Guidelines or applicable policies and procedures.
Compensation Committee
Executive officer compensation is overseen by the Compensation Committee, which
also evaluates incentive plans and stock compensation awards. The committee is
composed of independent members of the Board of Directors.
Internal Audit Department The Internal Audit Department reports functionally to the Audit Committee of the
Board of Directors. Internal Audit performs ongoing operational, financial,
information technology and regulatory compliance audits of business and support
areas to assess the effectiveness of the organization‟s internal controls. Internal Audit
reports are directed to Senior Management and the Audit Committee, and issues
identified are monitored through resolution.
Finance Finance is responsible for recording and maintaining all DST financial activities.
Finance is responsible for the general ledger accounting functions, including accounts
payable, purchasing, fixed assets, and accounts receivable. DST has engaged an
independent audit firm to perform a calendar year annual financial statement audit.
Organization and Management Controls 15
Copyright © 2010 DST Systems, Inc.
Human Resources Human Resources has standard controls addressing the critical aspects of employment
services including hiring, training, evaluating and terminating associates. Management
has an open door policy which is communicated to employees via the employee
handbook. DST has documented job descriptions for its employees and posts them on
DST‟s Intranet. Responsibilities are linked to specific control activities within the
organization. Annually, supervisors meet with and review the job performances of
employees. These evaluations are linked to changes in employee compensation.
Corporate Policies DST has formal corporate policies and procedures that are utilized to inform
employees of relevant laws, regulations, industry compliance responsibilities and
company practices. All employees receive training on ethics, conduct and behavior in
the workplace during new associate orientation and on a periodic basis thereafter. In
addition, newly-hired employees and contractors are required to read and sign an
acknowledgement form for the following corporate policies as applicable:
Business Ethics and Legal Compliance Policy
Acceptable Use Policy (Computer and Telephone Systems)
Insider Trading Policy
Security/ID Procedures
SecurID Policy
Communication Policy
Non-Disclosure Agreement
Employees are bonded and new employees are required to sign an attestation
regarding the confidentiality of DST information. Criminal background checks are
conducted for associates and contractors. Where required to meet regulatory
requirements of the SEC, the background check involves submission of completed
fingerprint cards for DST employees and contractors to the Financial Industry
Regulatory Authority (FINRA) which are then submitted to the FBI to be matched
against its files. Information obtained during the background checks is reviewed by
Human Resources. Identification of a criminal conviction may result in the
termination of an individual‟s employment.
16 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Training and Education Extensive training programs are required for new associates. Training is facilitated by
two groups.
IS Training administers training programs geared towards application
development (such as COBOL, Java programming, etc.).
Center for Education and Development (CED) - Also known as Training and
Development, administers a wide variety of training that covers areas such as
Corporate, Industry Overviews, IT, etc.
The efforts of these groups are supplemented by training programs internal to various
business units at DST.
Risk Management Controls DST has a risk assessment process to identify and manage risks that could affect
DST‟s ability to provide reliable transaction processing to its clients. This process
requires management to identify significant risks inherent to its products or services
and to identify underlying causes of risk, measure the impact to the company,
establish acceptable risk tolerance levels and implement appropriate measures to
monitor and manage these risks. This process has identified risks resulting from the
nature of the services provided by DST and management has implemented various
measures designed to manage these risks.
Data Center Support 17
Copyright © 2010 DST Systems, Inc.
Data Center Support
Winchester Data Center The Winchester Data Center is DST's primary computer operations and data
processing facility. Winchester occupies a total of 163,000 square feet, of which
76,000 square feet is raised floor computer room space. Winchester runs Mainframe
computers with a combined processing capacity of more than 32,000 million
instructions per second (MIPS) and direct access storage devices with an aggregate
storage capacity that exceeds 270 trillion bytes. Winchester also contains more than
1,000 servers with over 600 trillion bytes of storage capacity supporting Windows,
UNIX and iSeries computing environments. These servers are used to support DST's
products and processing for certain DST affiliates. The physical facility, located in the
Kansas City area, is seismically braced and designed to withstand tornado-force
winds.
AWD Data Center The AWD Data Center supports DST's AWD image processing services. The facility
occupies a total of 13,000 square feet. The computer room houses IBM iSeries
computers, disk-based storage systems, and optical storage systems (over 825 million
images), which support more than 39,000 AWD users. In addition to DST's full
service mutual fund operations, AWD users include clients in the healthcare,
insurance and brokerage industries. The AWD Data Center also houses over 500
servers supporting various DST products and Winchester's remote tape storage using
IBM's automated tape libraries.
Physical Security Security at the Winchester Data Center is achieved through a multi-layered physical
and electronic solution. Physical security includes a dual perimeter fence and concrete
encased steel bollards that prevent vehicles from entering the premises. Bonded and
licensed security guards and police officers are onsite at all times. The electronic
security includes extensive video surveillance, motion detection, disturbance
detection, card access and biometric access solutions.
The Poindexter Building, which houses the AWD Data Center, has one main point of
entry, which is manned by security officers 24 hours a day, seven days a week.
Bonded and licensed security guards provide the AWD Data Center physical security.
Closed circuit recorded security cameras allow security officers to monitor the door to
the AWD Data Center and the exterior of the building. The guards monitor all
cameras in the building.
18 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
For both Winchester and AWD Data Centers, visitors, vendors and non-essential
individuals are required to sign in with the security guards in the lobby.
Access to the Winchester and AWD Data Centers requires a key card obtained from
DST Human Resources. Access to Winchester requires that the key card is scanned
when both entering and exiting the facility; the AWD Data Center requires key card
scanning upon entering the facility, the lower level and the computer room floor.
Winchester has installed “anti-pass back” technology on the front doors, displaying a
message at the security station and denying entrance and exit to anyone who did not
scan their key card on their previous trip through the door. If an individual attempts to
exit the building by opening a door at the main entrance without scanning a card, the
doors remain locked and are held shut by magnets while an alarm sounds.
To enter the computer rooms at either site, the individual is authenticated using a
biometric fingerprint reader which reads their fingerprints and detects a pulse and
temperature. The reader verifies that the key card and fingerprints match, and
determines that the individual has been authorized before allowing passage through
the door. There is also a sign-in sheet inside the AWD Data Center Computer
Operations Room, where visitors and vendors are required to sign-in their name,
company affiliation and purpose prior to accessing the AWD Data Center floor.
At the Winchester Data Center, one type of key card is used to gain access to all
secured locations. This key card includes a chip, which the card reader recognizes
when the cardholder passes it in front of the scanner. Winchester limits access to
employees based on where they work on the premises and their associated job
responsibilities. Key cards are coded for various time limitations and also color coded
based on the type of building access granted. If entering the building between the
hours of 5:30pm and 6:00am, all cardholders must sign in at the security station
regardless of their access privileges. There is only one entry point to the Winchester
computer room which is always locked and requires the individual have authorized
access
Key Card Administration
Request forms for key card access to the data centers are submitted to DST Human
Resources. Request forms must contain the access requirements needed and approval
from data center management. If access to the computer room is required, a business
reason must be documented on the request form.
When an associate with access to either data center terminates, the associate‟s
manager reports the termination to Human Resources by completing an Associate
Data Change (ADC) form. Human Resources schedules and conducts exit interviews
with the terminated associate and collects company property including the key card.
Human Resources deactivates or removes physical access for all terminated associates
within one business day of notification. Human Resources also distributes reports of
users with access to each data center, at least quarterly. A designated data center
manager reviews the user access listing, indicates any revisions and certifies the
appropriateness of indicated access.
Data Center Support 19
Copyright © 2010 DST Systems, Inc.
Systems Overview The following systems are supported by the DST data centers:
Mainframe - The Winchester Mainframe platform supports a variety of
applications used by DST business operations, affiliates and other third-party
users.
iSeries - iSeries mid-range systems are housed in both Winchester and the AWD
Data Center and support applications for DST‟s clients in the mutual fund, REIT,
healthcare, insurance and brokerage industries.
UNIX - UNIX systems, housed at the Winchester Data Center, support the E-
commerce applications for DST‟s business operations, including the web
applications used by DST, its affiliates and third party users for mutual fund,
REIT, healthcare, insurance and brokerage services.
Windows - Microsoft Windows systems are housed in both Winchester and the
AWD Data Center and support applications for DST‟s clients in the mutual fund,
REIT, healthcare, insurance, and brokerage industries as well as internal business
unit applications and application development.
Systems Software Maintenance DST has established change management procedures for system software maintenance
intended to promote successful introduction of changes, minimize the risks associated
with changes and ensure maximum system availability. System software changes
include installations, upgrades, patches and functionality changes. Procedures are in
place to help ensure that system software and hardware changes are authorized, tested,
approved, properly implemented and documented. Documentation of the change
request, approval, testing and implementation are captured and retained in a change
management system.
The Remedy Change Management application is used to process and approve change
requests for the IT Infrastructure for the Winchester and AWD Data Centers. This
includes the Mainframe, UNIX, iSeries and Windows environments.
Network
The Network Services group manages firewalls and routers at Winchester as well as
the AWD Data Center to ensure that E-commerce and external connections are
protected, that security events are logged and monitored and that DST‟s network is
appropriately configured to securely support the E-commerce environment.
Authentication is required before user access is granted to firewalls and routers.
Modifications to network Access Control Lists (ACL) must be recorded in a
centralized change management tool and require strict change control procedures,
which include documentation of the reason for the change. ACL modifications must
be reviewed and approved by authorized Network Services personnel.
20 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
The DST Information Security Administration group manages the network Intrusion
Detection Systems (IDS) and ensures that each set of firewalls is appropriately
equipped with IDS to automatically log traffic. Updates to the IDS are automatically
downloaded on a daily basis.
Logical Security of Systems Software DST management has formally documented security policies and procedures to
restrict access to data files and programs. Users are granted access based on their
assigned job responsibilities and each system is configured to restrict access to only
authorized personnel. System administration personnel create and modify user
accounts upon receipt of proper approval. Additionally, DST Human Resources
communicates a daily listing of terminated employees to system administration
personnel and system access is removed. Periodic access reviews are performed by
system administration to determine if access privileges have been properly updated
and approved. Password parameters include but are not limited to the following:
User passwords must be changed every 30-35 days, depending on the system.
Minimum number of days between password changes is seven days.
A history of six previous passwords is maintained to prevent reuse of recent
passwords.
Passwords must contain alphanumeric characters.
Users are systematically locked out after a preset number of failed log-in attempts.
Computer Operations
Monitoring
The Winchester and AWD Data Centers have a shift manager/operator scheduled for
each shift, seven days a week, including holidays. Shift schedules are prepared in
advance and explicitly state who will be the backup if the assigned employee is
unavailable.
Both locations utilize a log to document shift turnover issues, special instructions and
possible recurring problems. Staff turnover meetings are held between shifts to
communicate the details of the current log to the following shift. In addition, at
Winchester, a video board residing in the Service Center provides a visual display of a
variety of monitoring tools that are used to communicate problems.
IBM System Management Facility (SMF), a component of IBM‟s z/OS for
Mainframe computers, is also used to provide logging of all baseline activities running
on the Mainframe operating system. These activities include I/O, network activity,
software usage, error conditions and processor utilization for use in troubleshooting or
performance monitoring.
Data Center Support 21
Copyright © 2010 DST Systems, Inc.
Backup and Recovery
DST has documented policies and procedures that exist for backup, recovery and off-
site storage of backup.
Winchester Data Center performs both daily incremental and weekly full backups of
TA2000 application and client data, as well as non-TA2000 client data, including
Mainframe operating system data. The data is first sent from Winchester to the DST
Recovery Center. A tape is automatically created by the DR VTS (Disaster Recovery
Virtual Tape System) at the DST Recovery Center. An additional copy of data is sent
from Winchester to the AWD Data Center where a second tape is created. All system
data backups are scheduled through the enterprise job scheduling solution, ESP.
DST also has a mirroring process in place that allows TA2000 application and client
data to be backed up in a peer-to-peer manner. A real-time copy is sent from the
Winchester Data Center to the DST Recovery Center through fiber optic links when a
"write" command occurs on the TA2000 platforms.
UNIX servers, located at Winchester, are backed up to tape daily. A full system
backup is performed when a server is first placed in production. After that, daily
incremental backups are performed. Two copies of backups are made to tape. The first
copy is created at Winchester and stored onsite. Backup data is then transmitted to the
DST Recovery Center where a secondary tape copy is created and retained.
Windows servers are backed up to tape daily. A full system backup is performed when
a server is first placed into production. After that, daily incremental backups are
performed. Two copies of backups are made to tape. The first copy is created at the
server‟s data center and stored onsite. Backup data is then transmitted to the other data
center where a second tape copy is created and retained. Management reviews a report
daily to ensure backups are performed successfully for all Windows servers.
The iSeries systems reside in both the AWD Data Center and Winchester Data Center
and are monitored by the AWD Data Center Operations Team. Backups for the iSeries
environment consist of a two-layer process during which the data is first mirrored to
the other data center in real-time and second, the data is backed up to tape from the
mirrored data. Should disaster recovery be necessary, the mirroring process allows
DST to switch clients from the AWD Data Center to Winchester and vice versa. In
addition to the mirroring process, full backups of iSeries data to tape are performed
daily and a full system backup is performed weekly.
System backups are scheduled, monitored and logged by the scheduled shift manager
and computer operators at both data centers. In the event that there are errors or
problems with the backups, appropriate escalation procedures are in place to resolve
the issue.
22 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Environmental and Continuity Systems The environmental systems at Winchester are fully redundant and fully automatic. If
any component fails or requires service, backup components assume the load. The
energy center at Winchester is a self-contained power plant. In the event of a
commercial power failure or disruption, the system will supply emergency power
without disruption to computer operations. The electrical system includes an
uninterruptible power supply from high-powered batteries and diesel-powered
generators.
Winchester is protected from significant weather events such as lightning strikes and
tornados due to the existence of a lightning deterrence system that encompasses the
entire building and blow out panels that are strategically placed to reduce the impact
of a tornado. Winchester is also built from and reinforced with steel and concrete,
which is inherently fire resistant and designed to withstand tornado-force winds.
The environmental functions at the AWD Data Center are redundant and fully
automated. If a component fails or requires service, backup components
instantaneously assume the load. The AWD Data Center‟s electrical and mechanical
systems can function independent of other systems within the building and the energy
center is a self-contained power plant. In the event of commercial power failure or
disruption, a battery backup system will supply emergency power without disruption
to computer operations. Sophisticated fire protection systems protect the entire facility
and a lightning protection array encircles the building‟s roof.
DST owns and maintains an alternate DST Recovery Center (not within the scope of
this report). If operations at Winchester are unavailable due to disaster, the DST
Recovery Center is provisioned with redundant hardware and software designed to
recover data for those applications which have designated a recovery requirement.
Additionally, a facility near Winchester serves as a crisis management center (not
within the scope of this report). This center allows DST personnel to occupy the
center and respond to telephone calls and transaction requests should backup facilities
be required.
For more details on DST‟s business continuity plan, see Other Information Provided
by DST.
Information Security Administration 23
Copyright © 2010 DST Systems, Inc.
Information Security Administration
Overview DST‟s Information Security Administration group is responsible for the
confidentiality, integrity and availability of DST‟s information resources through the
establishment, implementation and management of the Information Security Program.
This involves creating, administering and overseeing policies to ensure the prevention,
detection, containment and correction of security breaches. The purpose of the
Information Security Program is to ensure that management, Internal Audit and
regulators are satisfied with the security controls that DST has implemented and that
clients and business partners are confident their information is adequately protected.
Information Security Administration‟s primary responsibilities include:
Developing, approving and publishing new or updated policies, standards and
baselines.
Acting as a liaison with business functions, including Legal and Compliance,
Human Resources, Internal Audit, Risk Management and Systems Development
to ensure fulfillment of the Information Security Program.
Providing guidance and support for information security processes.
Developing information security training and awareness programs and providing
advice and guidance to personnel requiring policy clarification.
Providing support for information classifications, risk analyses, audits and third-
party agreements.
Encouraging personnel to raise potential information security issues with their line
manager or with Information Security Administration and track information
security incidents.
Monitoring general business trends, technological developments, new
threats/vulnerabilities and solutions.
Reporting on the overall sufficiency and effectiveness of the information security
environment.
Working with internal and external auditing groups to assess the effectiveness of
information security processes.
Employing personnel who are equipped with the knowledge, skills, resources and
management support needed to fulfill their roles.
Testing and product evaluation of security elements for technologies, systems or
applications deployed within DST.
24 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
The administration of access to DST‟s managed systems on behalf of DST
associates, subsidiaries, affiliates and clients.
Two-Factor Network Authentication DST employs two-factor authentication by associates to access their workstations on
DST‟s network. SecurID tokens are assigned and distributed to new associates by the
Information Security Administration group upon receipt of the new hire roster by
Human Resources. DST provides additional in-house training to new associates on
how to log on to their workstations using their SecurID tokens. All users must perform
this authentication step before they can attempt to gain access to DST application
programs and data files.
TA2000 System Access DST management has formally documented security policies and procedures to
restrict access to data files and programs. Users are granted access based on their
assigned job responsibilities. TA2000 is configured to restrict access to only
authorized personnel. Password parameters are configured as follows:
User passwords must be changed every 30 days.
Minimum number of days between password changes is seven days.
When changing a password, the new password cannot be the same as any of the
six previous passwords.
If a user‟s password is entered incorrectly three consecutive times, the user‟s
account is suspended.
Suspended users must contact Information Security Administration to be
reactivated.
Common or obvious passwords are prohibited.
Passwords must be a minimum of seven alphanumeric characters.
The password cannot be the same as the user‟s identification code.
DST Information Security Administration utilizes a security package to control access
to the TA2000 online system. An operator security record must exist in the security
file for each operator that is allowed access to TA2000. The operator security record
can limit access by client management code. Valid user identification numbers and
passwords are required to access TA2000. Such numbers and passwords are checked
against the security record, which allows access based upon established and approved
online facilities. If no activity has occurred for two hours, the operator is logged off
the system.
Information Security Administration 25
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User Administration Additions/Modifications to User Profiles
Management has established and documented policies and procedures for creating and
modifying user accounts. Information Security Administration personnel create and
modify user accounts upon receipt of a properly approved access request form. Users
are granted access to only those programs, data files and functions required to fulfill
their assigned job responsibilities.
DST Human Resources receives daily notification of transferred associates from
Employee Relations. Human Resources communicate inter-departmental transfers to
Information Security Administration on a daily basis. Information Security
Administration reviews each individual on the list to determine if their access
privileges have been properly updated and approved by the appropriate management.
Terminations
On a daily basis, Information Security Administration receives a listing of terminated
employees from DST Human Resources. Access for terminated employees is removed
within five business days. When preparing to remove access from terminated
employees, Information Security Administration checks all systems to ensure access is
appropriately removed. Information Security Administration also receives a monthly
termination listing from Human Resources and performs a review to verify that they
have removed access for all terminated employees.
26 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Application Overviews
TA2000 DST‟s proprietary application system for recordkeeping and accounting is TA2000,
which performs the following shareowner related functions for fund sponsors:
Processing purchases, redemptions, exchanges and transfers of shares.
Maintaining shareowner identification and share ownership records.
Reconciling cash and share activity.
Calculating and disbursing commissions to brokers and other distributors.
Processing dividends.
Creating and tabulating proxies.
Reporting sales.
Providing information for printing of shareowner transaction and statement data
and year-end tax statements.
The system processes equity, fixed income and money market load, no-load, multi-
class funds and open and closed end mutual funds, and non-traded real estate
investment trusts (REITs). TA2000 also performs many specialized tasks, such as
asset allocation and wrap fee calculations. As the foundation of DST‟s transaction
processing activity, TA2000 integrates with other DST products and systems
including TRAC, TA2000 Desktop, TA2000 Subaccounting, TA2000 Voice,
Comp/Recon and AWD.
TA2000 Desktop
TA2000 Desktop is DST‟s graphical user interface for TA2000. It integrates call
center and shareowner accounting functionality into an ergonomically designed
interface for enhancing telephone-based communications. TA2000 Desktop is an
easy-to-use, intuitive call center desktop which was developed to integrate with DST‟s
work management, telephony and other client management technologies. The
application is designed to do the following:
Improve call speed and efficiency by reducing the number of keystrokes.
Permit client services representatives to answer questions and resolve open issues
immediately, thereby eliminating the need to call the shareowner back.
Permit client services representatives to view business events related to an account
and access them instantly by viewing any document generated by the fund sponsor
or shareowner.
Achieve a seamless service approach, enabling clients to differentiate themselves
through optimal client service.
Application Overviews 27
Copyright © 2010 DST Systems, Inc.
TA2000 Desktop also contains scripted information that clients want conveyed to
callers (for example, new fund information and market and performance information).
It has simplified call center operations to the point that mouse dependence is
significantly decreased and most inquiry calls can be completed in a single desktop
view. In addition, the integration of TA2000 Desktop with DST's work management
system provides clients a more effective method for servicing shareowners.
Installations of TA2000 Desktop at client sites are not included within the scope of
this report. Consequently, it is incumbent upon each user organization to ensure that
adequate controls surround TA2000 Desktop.
Comparison/Reconciliation System (Comp/Recon)
Comp/Recon is DST's internally developed application that gathers shareowner,
deposit, disbursement and bank information from existing DST systems (for example,
TA2000, Distribution Document Processing System (DDPS) and bank transmissions),
balances the transfer agent bank accounts, compares open items for matching and
provides an automated facility for Cash Control personnel to resolve remaining
unmatched items.
TA2000 Voice
TA2000 Voice is a Voice Response Unit (VRU) developed and designed by DST for
shareowners and financial intermediaries. TA2000 Voice enables callers to dial a toll-
free number with voice instructions to retrieve account information and process
transactions at times that are convenient to them. TA2000 Voice employs natural
speech recognition and a corresponding touch tone interface, and complete
customization capabilities enable clients to design unique presentations using Voice
features. TA2000 Voice offers real-time, immediate update and informational retrieval
abilities. Voice processing for shareowners allows two options for providing access to
their account:
SSN/PIN
Fund/Account/PIN
Which option is used is determined by the client. With Speech Recognition, clients
may choose the option of Voice Verification, which allows participants to gain access
by matching the caller‟s voice to a stored voice print, rather than entry of the PIN.
28 TA2000 Remote Transfer Agent Processing System – SAS 70
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TA2000 Subaccounting The TA2000 system can also perform recordkeeping for subaccounting relationships.
TA2000 Subaccounting provides a product interface which enables a financial
intermediary, acting as a sub-transfer agent, to perform the recordkeeping and
servicing responsibilities of a sub-transfer agent. This product provides a
subaccounting solution to Broker Dealers and other financial intermediaries such as
trust companies, third-party administrators and registered investment advisors for
wrap products.
TA2000 Subaccounting enables the financial intermediary to maintain complete
control of its customer base through a highly automated interface. TA2000
Subaccounting provides the conduit for systematically identifying the administrative
and reconciliation issues that often occur between subaccounts and their
corresponding omnibus accounts.
TA2000 Subaccounting empowers financial institutions with systematic data transfer,
management and transactions controls for subaccount processing.
Data Synchronization Data Synchronization is a TA2000 Subaccounting
feature that provides the functionality to process key information from the mutual
fund platform as well as the National Security Clearing Corporation (NSCC)
Mutual Fund Profile for clients having omnibus relationships. Information
included in the Data Synchronization process includes: daily prices, rates, yields,
and distribution declaration data as well as fund options for TA2000
Subaccounting users. TA2000 Subaccounting provides the support structure to
assist clients in ensuring that this key information is accurate based on the fund
family data available and updates it on a timely basis.
Management Set-Up and Controls The TA2000 Subaccounting security
framework ensures transaction and operational processes are validated.
Subaccounting specific transaction features assist in the automation of workflow.
These features distribute processing items and release transactions upon their
receipt to the omnibus position and/or financial intermediary.
NSCC Interface TA2000 Subaccounting supports the receipt and processing of
Networking, FundSERV, Automated Customer Accounting Transfer Services
(ACATS) and Mutual Fund Profile transmission data as well as the delivery of
Networking, FundSERV, ACATS and Commission Settlement data.
Trade Collection TA2000 Subaccounting utilizes subaccounting processing
parameters as well as the TA2000 NSCC processing flow to validate the
information received. These transactions are evaluated and processed to the
subaccounts using standard TA2000 transaction posting functionality.
Omnibus Roll-up Processing TA2000 Subaccounting provides the ability for
trades processed in trade collection to be aggregated based on setup and controls
established and maintained by the client. This functionality is provided for all
transactions at the transaction level, providing additional flexibility to the client.
Application Overviews 29
Copyright © 2010 DST Systems, Inc.
TA2000 Subaccounting Desktop
TA2000 Subaccounting Desktop is DST Systems' graphical user interface for TA2000
Subaccounting. It integrates shareowner accounting functionality into an
ergonomically designed interface for enhancing research, correction processing and
trade origination.
TRAC DST offers enhanced retirement processing capabilities that permit financial
institutions to efficiently and effectively support the needs of plan sponsors and their
participants. DST provides a single solution for complying with industry regulations
and meeting all marketing and servicing requirements. TRAC supports any type or
size of defined contribution plan including 401(k), 403(b), 457, Simplified Employee
Pensions, Money Purchase, Profit Sharing, Cash Balance, Group IRA, Non-Qualified,
Simple IRA and Simple 401(k).
TRAC is integrated with TA2000 and helps eliminate reconciliation problems that
occur when different systems are used for participant recordkeeping and shareowner
accounting. TRAC automatically feeds data to and from TA2000 and provides
financial institutions with systematic management control and integrated transaction
processing.
TRAC Desktop
TRAC Desktop is an integrated graphical user interface to TRAC, providing a
seamless integration between TRAC and AWD. TRAC Desktop provides an interface
for transaction processing and telephone-based communications. It improves
productivity and delivery of information to customer service representatives and
processing personnel.
DST SmartDesk
DST SmartDesk is a consolidated desktop application which provides a single portal
for access to many DST applications. It integrates many of the functionalities and
behaviors from previous desktop products within a single main window. The
applications currently available are TRAC, NSCC, and TRAC Compliance
Workstation. These applications can be used one at a time or simultaneously to
process a request. In addition, DST's business process management solution, AWD is
integrated to communicate with every application.
TRAC Compliance Workstation
TRAC Compliance Workstation is a desktop-based application that is fully integrated
with TRAC. The Compliance Workstation provides plan administrators the ability to
conduct interim and annual compliance tests for defined contribution plans. These
tests include Section 402(g) Limitations, Top Heavy, Section 410(b) Minimum
Coverage, Section 415 Limits, Deductibility, Determination of Highly Compensated
and Key Employees, Section 401(a) (4) General Nondiscrimination and Sections
401(k) and 401(m) ADP/ACP tests.
30 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Testing of the TRAC Compliance Workstation general computer controls is tested in
conjunction with TRAC Desktop (Chapter III, Control Objective 12).
Automated Work Distributor (AWD) DST developed AWD to provide the potential for enhanced control over physical
documents and the workflow of processing through a transfer agent‟s operations.
AWD is a total work management system that electronically routes work associated
with documents received via mail, phone calls and faxes through a transfer agent
processing organization. AWD enhances the control of workflow and integrates with
TA2000, thereby eliminating paper and the time required to route, log and retrieve
files. AWD also empowers management with the tools and the information needed to
perform the transfer agent/shareowner servicing function effectively. AWD handles
both the imaging and management of the work associated with the images.
AWD is based on an advanced technology architecture comprised of an image server,
intelligent workstations and local area networks. This architecture adds power to the
desktop while providing access to centralized information and programs. AWD
operates on the following platforms:
Microsoft® Windows Server™ 2003 with Service Pack 2
Sun® Solaris™ 10
Red Hat® Enterprise Linux® 5
IBM i5/OS V5R4 (iSeries) - which has been installed in both the AWD Data
Center and Winchester Data Center
The primary iSeries at the AWD Data Center are configured to continuously replicate
production AWD data to secondary iSeries at the Winchester Data Center. This
process of mirroring data between data center sites is designed to eliminate downtime
from planned events such as nightly backups, software or hardware upgrades and
database reorganizations and from unplanned events such as system failure or power
outages.
In addition to AWD data mirroring, AWD client libraries are also backed up to tape
daily. Each backup is a full backup regardless of whether there were any changes to
the data. Backup tapes are retained in one of the two tape libraries, located at the
AWD Data Center and Winchester Data Center. Tapes are not kept offsite due to the
existence of the two separate data centers.
The AWD Information Processing General Computer Controls in Chapter III are only
applicable to those clients that have outsourced those activities to DST and whose
AWD information resides on DST‟s iSeries platform, which is housed in the AWD
Data Center and the Winchester Data Center. Remote installations of AWD are not
within the scope of this report. Consequently, it is incumbent upon each user
organization to ensure that adequate controls surround AWD to the extent that the
activities have not been outsourced to DST.
Application Overviews 31
Copyright © 2010 DST Systems, Inc.
Data security over AWD is a separate and distinct information access security system
from the information security system surrounding the TA2000 system. Additionally,
the general controls environment surrounding iSeries processing is different from the
general controls environment surrounding Mainframe processing at the Winchester
Data Center. Accordingly, Chapter III differentiates between the TA2000 general
controls and the AWD general controls environment. Remote users are responsible for
establishing and monitoring security surrounding the iSeries environment as installed
at remote locations.
E-commerce DST‟s Network Services group manages all firewalls, routers and switches to ensure
DST‟s network is appropriately configured to securely support the E-commerce
environment. This includes restricting network traffic that is not required to support
the E-commerce function, as well as monitoring and logging unusual activity on a
routine basis. Logs of network activities are also reviewed routinely to verify that
network configurations are restricting traffic as intended and to allow Network
Services to respond in a timely manner to inappropriate traffic on DST‟s network.
DST has developed several internet-based products which allow shareowners and
financial advisors to access accounts, obtain information and enter transactions. These
products utilize DST‟s Financial Access Network (FAN) architecture, which is the
foundation for all DST internet-based solutions. The following is a description of
internet-based products utilized in the delivery of services to clients.
FAN Web
FAN Web is an internet-based application developed by DST and designed to allow
shareowners the ability to access fund and account information, perform financial
transactions, change personal identification numbers (PIN) and view statement
information online. The FAN Web product allows clients to reach retail investors who
have access to the internet. The FAN Web site is connected to a client‟s proprietary
internet site to enable shareowners to complete account inquiries and place transaction
requests over the internet. Clients manage the appearance of the FAN Web pages by
developing their own client specific templates. This allows clients to provide services
to investors through online markets without having to develop their own interfaces.
By providing access to fulfillment and transactions online, clients can do the
following:
Give shareowners convenient access to their account information and the ability to
move their dollars between funds.
Allow shareowners to submit transactions at a time convenient for them.
Reach a new population of potential investors effectively and efficiently.
32 TA2000 Remote Transfer Agent Processing System – SAS 70
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When a new client enrolls in FAN Web, it is their decision whether they want to use a
fund/account and PIN, or a SSN number and PIN for authentication to the application.
The client decides how many logon attempts users are allowed before they are locked
out of the system. They also determine the composition of the PIN. The PIN can be
numeric, alpha, special characters, or a combination of two or more of these.
FAN Plan Sponsor
FAN Plan Sponsor Web is an internet-based application developed by DST and
designed to offer plan sponsors a direct channel for allocation purchase processing
FAN Plan Sponsor Web allows plan sponsors to manage and submit investment plan
allocations and purchases directly to fund investment plan allocations and purchases
directly to fund companies and transfer agents through a dedicated Internet website.
Testing of the FAN Plan Sponsor general computer controls is tested in conjunction
with FAN Web (Chapter III, Control Objective 13).
DST Vision
DST Vision (Vision) is an internet-based application developed and designed by DST
for financial intermediaries such as Broker Dealers, registered representatives and
financial advisors to deliver optimal client support. As an interactive website, Vision
permits authorized Broker Dealers, registered representatives and other advisors to
view shareowner and dealer information online in a real-time environment. With the
appropriate client authorization, Vision also enables the user to perform exchanges,
purchases, redemptions, establish new accounts and access electronic statements.
DST designed and developed Vision specifically to equip financial intermediaries
with the tools they need to obtain and retain assets. By providing access to advanced
capabilities and automated functionality, Vision permits wire houses, independent
firms and representatives to operate more efficiently. Originally integrated with DST‟s
shareowner accounting system, Vision is now transfer agent independent, capable of
providing access industry wide to comprehensive client account information. For
TA2000 users, Vision authentication is performed by the application against TA2000
security files. Consequently, TA2000 and Top Secret security testing can be relied on.
TRAC Web
DST developed TRAC Web to provide access to financial information related to
defined contribution retirement plans. The product utilizes DST‟s FAN architecture
and consists of three applications targeting three distinct audiences:
Participants
Plan sponsors
Broker Dealers
The Participant and Plan Sponsor applications are accessed through the investment
provider‟s proprietary website, although they are two different applications with
separate security structures. The investment provider is given the flexibility to
customize the pages of the Participant and Plan Sponsor applications to match the
proprietary website, thereby providing seamless access to inquiry, transactional and
administrative capabilities.
Application Overviews 33
Copyright © 2010 DST Systems, Inc.
The Broker Dealer application is integrated in the Vision application. In this setting,
financial intermediaries may have access to both mutual fund and defined contribution
plan information, if applicable.
Software Development All software development is performed by associates that follow a development
lifecycle implemented and enforced by DST. Project lifecycle phases include the
following (in order):
Definition
Requirements
Design
Construction
Testing and implementation
Post-production support
Project leaders follow a standard project management process that includes the
following stages:
Initiation
Planning
Controlling
Executing
Closing
Systems enhancements are tested on multiple platforms prior to entering any
production environment. Written test scripts provide the framework for these steps of
quality review. As a project is ready to move to the next testing environment, reviews
are performed to determine project readiness and validate that the project meets
established quality ratios. Changes to applications are controlled by library
management software which provides audit trails of program changes and maintains
version control. Product Development maintains an 18-month Development Plan that
is continuously updated to reflect the changing needs of our clients and/or industry
issues.
DST has offices for software development in Jefferson City, Missouri; Boston,
Massachusetts; Bangkok, Thailand; Hyderabad, India; as well as its headquarters in
Kansas City, Missouri.
34 TA2000 Remote Transfer Agent Processing System – SAS 70
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Review of Transaction Systems
TA2000 This section is divided into two areas:
Overview of DST's Processing Environment outlines the major transaction
types and the workflow environment within which the transactions were
processed.
Transaction System Processing Controls Provides a description of the various
TA2000 system control activities over transaction processing.
The information contained in the following section, including the transaction types,
transaction channels and description of system processing controls, is fundamentally
consistent across various product types within the scope of this report. Certain key
processes are unique to specific products, including, but not limited to, the following:
Real Estate Investment Trusts
The following processes are not applicable to non-traded REITs: NSCC transactions;
exchanges; checkwriting redemptions; 12b-1 commissions; certificates; TA2000
Voice; and net asset value (NAV). Public offering prices (POP) are used in lieu of
NAVs.
Closed End Funds
The following processes are not applicable to Closed End Funds: NSCC transactions;
checkwriting redemptions; FAN Web, Vision and TA2000 Voice transactions*;
commission calculations; and systematic transactions.
*TA2000 Voice can be used to obtain account balance information.
Mutual Fund Transaction Channels
This section provides a description of the major transaction types and the workflow
environment within which the transactions were processed during the period October
1, 2009 to September 30, 2010.
Transaction Descriptions
Brief descriptions of the various types of transactions performed within the DST
transfer agent environment are presented below. Transactions can be received from
the shareowner or from the client or intermediary.
Review of Transaction Systems 35
Copyright © 2010 DST Systems, Inc.
New Account Set-Ups A new account set-up (NASU) transaction is performed to
establish a shareowner account on the recordkeeping system.
Purchases There are three common methods of purchasing shares:
Direct Purchases Direct purchases are written requests to purchase fund sponsor
shares funded by check or wire for same-day settlement.
Confirmed Purchases Confirmed purchases are those purchases received and
processed for settlement at a later time (not to exceed three business days) and
funded by check or wire.
Systematic/Automated Clearinghouse (ACH) Purchases The systematic/ACH
method allows shareholders to make periodic purchases through an automatic
draft drawn against the shareowner‟s bank account. Systematic/ACH purchases
are automatically applied to the shareowner account on the recordkeeping system
via the systematic purchase functionality. Systematic/ACH processing parameters
(for example, timing and amount) are established or modified through the NASU
and/or maintenance processes.
Redemptions There are five different methods of redeeming shares:
Direct Redemptions Direct redemptions are requests for the liquidation of shares
disbursed in the form of a check or wire for same-day settlement.
Confirmed Redemptions Confirmed redemptions are those redemptions
received and processed for settlement at a later time (not to exceed three business
days) and disbursed via check or wire.
Systematic/ACH Redemptions The systematic redemption and ACH methods
allow shareowners to receive periodic cash payments from their accounts.
Systematic/ACH redemptions are automatically applied to the shareowner account
on the recordkeeping system via the systematic functionality. Systematic
processing parameters (for example, timing and amount of redemption) are
established or modified through the NASU and/or maintenance processes.
Expedited Redemptions An expedited redemption allows a shareowner to send
the proceeds to a bank account, using pre-established bank account instructions,
via wire the same day or the next day, depending on the privileges allowed by the
client and the timing of the request.
Checkwriting Redemptions Checkwriting redemptions are redemption requests
made using drafts associated with the shareowner‟s account. The drafts are
directly received and processed by the custodian bank. This option is established
as part of the NASU and/or maintenance process.
36 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Exchanges An exchange allows for the movement of money between identically
registered accounts in different funds within the same client. The telephone exchange
privilege is established during the NASU and/or maintenance processes. Exchanges
may also be established systematically. Systematic exchanges are automatically
applied to the shareowner account on the recordkeeping system in the systematic
functionality. Systematic processing parameters (for example, timing, amount and
funds to be exchanged) are established or modified through the NASU and/or
maintenance process.
Transfer of Shares A transfer of shares is a request to move shares to an account
with a different registration within the same fund.
Transfer of Assets A transfer of assets is the movement of money into or out of an
individual retirement account (IRA), qualified retirement plan, or another retirement
vehicle.
Adjustments Adjustments principally represent error corrections.
Maintenance A maintenance transaction represents a change to shareowner records
(for example, address, name, or account feature changes).
Correspondence Correspondence represents communication to the shareowner or
shareowner representative regarding shareowner inquiries or transaction processing.
National Securities Clearing Corporation (NSCC) Support Services
Broker Dealers transmit transactions daily via the NSCC Fund/SERV system directly
to TA2000. The Broker Dealers utilizing the NSCC are responsible for ensuring
transactions are processed in accordance with the required mutual fund cutoff time.
Transaction System Processing Controls
This section provides an introduction and brief description of the control activities
over the transaction processing for Remote clients. The control activities that help
achieve the control objectives outlined in Chapter II: DST‟s Control Objectives,
Controls and Tests of Operating Effectiveness of TA2000 Remote Operations
Transaction processing Controls consist of the following:
Systematic control activities and procedures (programmed into TA2000, TA2000
Subaccounting and TRAC).
Operational procedures performed by certain DST Output locations - Control
objectives 6 and 7 in Chapter II contain the control activities specific to DST
Output. Testing of the control activities took place at the following DST Output
locations:
o DST Output – Kansas City
o DST Output – Hartford
Review of Transaction Systems 37
Copyright © 2010 DST Systems, Inc.
Six broad categories were identified by DST management as necessary to achieve an
acceptable level of control over processing:
Only authorized transactions are processed.
Authorized transactions are processed accurately and recorded in a timely manner.
Transaction activity is reconciled.
Access to TA2000 system terminals is systematically restricted.
Printed output is processed accurately and completely.
Negotiable instruments are properly safeguarded.
TRAC This section provides an introduction and brief description of the control activities
over the transaction processing for the Total Retirement Accounting Capabilities
(TRAC) product.
Management Set-Up and Controls TRAC merges the financial institution‟s
business strategy, IRS rules and plan specific requirements to help ensure
transaction processing is valid within those parameters.
Multiple Investment Options TRAC supports systematic trading of mutual
funds, company stock and insurance products like annuities, life insurance policies
and Guaranteed Interest Contracts (GICs). These investment options support the
growing demand for additional investment opportunities that may be outside of the
financial institution‟s investment product line.
Transaction Processing TRAC provides clients with single entry, systematic
validation and systematic integration of all transaction processing. In addition,
trading and reconciliation of assets and checks are systematically performed on a
daily basis. This functionality is provided for all investment options plans made
available to their participants.
Because TRAC is integrated with AWD, DST‟s image-enabled work management
system, DST enables efficient transaction processing by automating distribution of
work, releasing payroll contributions upon receipt of funding and corresponding with
entities associated to a plan.
Communication Retirement plans require communication with participants,
plan sponsors and a number of plan intermediaries. TRAC supports this need by
making information available to all parties via the internet, voice response system
and traditional reporting. In addition, TRAC helps the financial institution manage
the different business relationships by associating and maintaining information
about each plan intermediary and participant. All information is available at the
touch of a button. TRAC produces customized participant statements and provides
comprehensive support for marketing, compliance testing, plan administration, tax
reporting and employer and participant servicing.
38 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Seamless Interfaced Processing TRAC interfaces with TA2000. Daily participant transaction processing establishes and accesses investment accounts in the mutual fund system during nightly processing. All TRAC processing utilizes the same transaction reason codes of TA2000 and updates all TA2000 reports. The flexibility and reporting capabilities of TA2000 continue to exist with TRAC.
Daily Valuation TRAC is a daily valuation system providing daily account balance information for mutual fund, GIC and insurance investments. Each day all participant records reflect a participant‟s most current information. TRAC helps avoid interfacing and reconciliation issues which are inherent on non-integrated systems. For outside investment vehicles, TRAC relies on client-provided pricing and valuation information. Clients are responsible for ensuring that transaction reporting and daily valuation information is accurate and input on a timely basis.
Integrated Fund Balancing As a result of full integration with TA2000, TRAC processing provides daily updates to the fund movement supersheets provided by TA2000 to assist in fund balancing and daily money movement. Supersheet reports are used daily to control cash flow and money movement from deposit and custody accounts.
Takeover Support Complete automated online and batch load takeover capabilities are offered through the Plan Conversion facility within TRAC. Reconciliation/Balancing of conversion detail is accomplished through the generation of a conversion trial balance. The conversion trial balance reports participant allocations based upon converted valuations, prior recordkeeper gain/loss and holding account interest accrued.
Voice Response Participant-level voice response capabilities provide plan participants access to inquiry information regarding investment elections, portfolio balance, withdrawal availability, loan balances along with payoff calculations, price/yield quotations and personal identification number security, as well as transaction processing capabilities.
Flexible Statement Design TRAC utilizes a pre-processor to schedule, select, format and distribute plan participant statements in a timely, efficient process created around individual client needs. Features include flexible document formats, selective inserting capabilities and custom finishing services.
Automated Reconciliation TRAC is fully integrated with TA2000 Comp/Recon. TRAC and Comp/Recon integration gathers participant and plan, deposit, disbursement and bank information to automate TRAC with Comp/Recon to perform the following:
o Comparison and reconciliation of TRAC internal mutual fund and outside
investment vehicle information with bank information.
o Reconciliation of the transfer agency‟s demand deposit accounts (DDA).
Review of Transaction Systems 39
Copyright © 2010 DST Systems, Inc.
TRAC Web TRAC Web provides participants, plan sponsors and third-party administrators‟
convenient, self-servicing internet access to retirement plan information in a real-time
environment.
TRAC Web Participant This participant-level web application offers plan
participants access to both inquiry and transaction capabilities including portfolio
balance, current investment elections, plan and participant models, exchanges,
loans, distributions and transaction history.
TRAC Web Plan Sponsor This application offers both plan and participant-
level information to plan sponsors and other entities associated with plan
administration. Inquiry and administrative functionality includes plan assets,
participant assets, payroll processing, participant add/update, file import, reports,
distribution review, compliance information and query capabilities on plan and
participant data.
TRAC Web Broker Dealer Plan and participant inquiry capabilities are
integrated into the Vision web application for financial intermediaries.
Functionality includes plan assets, participant assets and reports.
TRAC continues to be enhanced with additional functionality to meet the needs of
DST‟s existing client base and those of the defined contribution marketplace.
40 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
User Control Considerations
DST's control activities were designed with the assumption that certain controls would
be implemented by user organizations. In certain situations, the application of specific
controls at user organizations is necessary to achieve certain control objectives
included in this report.
This section describes additional controls that should be in operation at user
organizations to complement DST's control activities. Clients and their user auditors
should consider whether the following controls are relevant and/or have been placed
in operation at user organizations:
Instructions and information provided to DST from its clients are in accordance
with the provisions of the agreement with DST or other applicable governing
agreements or documents between DST and its clients. In addition, the transfer
agent client is responsible for ensuring appropriate controls are in place regarding
cutoff at their distributors and authorized intermediaries.
Sufficient controls over physical and logical access to DST systems via terminals
at client locations should be established, monitored and maintained by DST
clients.
Timely written notification of individuals authorized to instruct DST on behalf of
the clients and any changes in that authorization should be communicated to DST.
Sufficient controls should exist at the client‟s operation to verify that instructions
are authorized and in compliance with regulatory and client requirements.
Timely review of reports of account balances and related shareowner services
activity provided by DST should be performed by the clients.
Clients are responsible for the establishment of the tax-reporting matrix within
TA2000.
Compliance with Blue Sky requirements is the responsibility of DST clients.
Clients are responsible for the establishment of a master file of dealers who are
authorized to receive commissions.
In order to determine the amounts and transactions are identified, recorded and
accumulated properly and that the proper tax forms are produced, DST
encourages its clients to participate in a mock tax-reporting run. Any problems
associated with the tax-reporting process can then be resolved in a timely manner.
The client is responsible for information integrity when the transmission or tape
media is transmitted directly from the client.
Clients are responsible for establishing and maintaining controls over ADTRANS
processing.
User Control Considerations 41
Copyright © 2010 DST Systems, Inc.
Clients are responsible for determining security parameters (PIN composition,
lockout features) and functionality for FAN Web/TRAC Web/Vision/TA2000
Voice transactions, based on DST- established minimums.
TA2000 Subaccounting customers are responsible for utilizing reports available
from TA2000 and TA2000 Subaccounting to reconcile activity between the
Broker Dealer system, TA2000 Subaccounting and TA2000 to ensure transactions
were processed completely and accurately.
TA2000 Subaccounting customers are responsible for establishing guidelines that
limit account administration (operator) access by DST personnel. Customers
should determine what activities will be performed by DST and establish access
policies that appropriately restrict system access.
All TA2000 Subaccounting account administration activity is logged and a report
of activity is provided to clients daily for their review. This report should be
reviewed to ensure all activity is appropriate and in accordance with established
policies and guidelines.
Information relating to TA2000 Control and Exception Reports, TRAC Control
Reports and AWD Queries can be obtained either through the DST Customer
Center website or the client‟s respective client service representative.
For confirmed purchases or redemptions, which are rejected due to a lack of
specific information or lack of payment, clients are responsible for a follow-up
with brokers. This follow-up may be performed by DST at the client‟s request.
Clients are responsible for reviewing and following up on transactions listed on
the Daily "As-of" Accountability Report.
Clients are responsible for reviewing and following up on wire redemption control
reports including the daily balancing and reconciliation functions.
The list of user control considerations presented above and those presented with
certain specified control objectives do not represent a comprehensive set of all the
controls that should be employed by user organizations. Other controls may be
required at user organizations.
Chapter II:
DST’s Control Objectives, Controls and Tests of Operating
Effectiveness of TA2000 Remote Operations Transaction
Processing Controls
TA2000 Remote Operations Transaction Processing Controls 45
Copyright © 2010 DST Systems, Inc.
DST’s Control Objectives, Controls and Test of Operating Effectiveness of TA2000 Remote Operations Transaction Processing Controls
DST management has specified certain control objectives that it believes are relevant
to its clients and their auditors and has identified its control activities in place to
achieve those objectives.
Twelve control objectives have been identified and are grouped into three major
functional areas, which are as follows:
TA2000 Transaction System Processing Controls
1. Controls provide reasonable assurance that transactions are authorized.
2. Controls provide reasonable assurance that transactions are processed accurately,
timely, properly recorded in the shareowner accounts and properly updated to the
system.
3. Controls provide reasonable assurance that corporate actions transactions are
properly authorized and accurately recorded in a timely manner.
4. Controls provide reasonable assurance that transaction activity is reconciled.
5. Controls provide reasonable assurance that access to the TA2000 system terminals
is systematically restricted.
6. Controls provide reasonable assurance that printed output is processed accurately
and completely.
7. Controls provide reasonable assurance that negotiable instruments are properly
safeguarded by DST Output.
TA2000 Subaccounting Transaction System Processing Controls
8. Controls provide reasonable assurance that TA2000 Subaccounting transactions
are aggregated completely and accurately processed.
TRAC Transaction System Processing Controls
9. Controls provide reasonable assurance that TRAC transactions are processed
accurately and timely.
46 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
10. Controls provide reasonable assurance that TRAC transactions are processed at
the proper price based on system input.
11. Controls provide reasonable assurance that TRAC transactions activity is
reconciled.
12. Controls provide reasonable assurance that access to the TRAC application is
systematically restricted.
PwC has determined the nature, timing and extent of testing to be performed in order
to determine if control activities specified by management are operating effectively.
DST‟s control activities and PwC‟s results of operating effectiveness are detailed in
the following chapter. Further information on testing performed by PwC can be found
in Chapter IV.
TA2000 Transaction System Processing Controls 47
Copyright © 2010 DST Systems, Inc.
TA2000 Transaction System Processing Controls
Authorization 1. Controls provide reasonable assurance that transactions are authorized.
Control Activities Tests Applied Results of Testing User Control Considerations
1.1 Access to TA2000 Voice, FAN Web,
TRAC Web and Vision is restricted with the
use of an individual account and Personal
Identification Number (PIN) unique to each
account/broker as applicable. TA2000 Voice,
FAN Web, TRAC Web and Vision restrict
participant access via voice authentication
and/or PIN entry. If TA2000 Voice is unable
to match the caller‟s voice with a valid
participant voice print, the caller is
systematically required to enter a PIN. After
a preset number of PIN entry errors, TA2000
Voice automatically disables the PIN and
transfers the participant to a service
representative. After a preset number of PIN
entry errors, FAN Web, TRAC Web
(Participant and Plan Sponsor) and Vision
will not allow processing on the specified
account.
Reperformance Utilized an ITF
to test TA2000 Voice, FAN Web,
TRAC Web and Vision for use of
voice prints, PINs and PIN entry
error processing.
No relevant exceptions
noted.
The user is responsible for
establishing:
Security parameters
for TA2000 Voice,
FAN Web, TRAC
Web, and Vision
based on DST-
established
minimum standards.
Maximum amount of
dollars to be
redeemed/exchanged.
The types of
transactions allowed by
TA2000 Voice, FAN
Web, TRAC Web, and
Vision from the
available choices.
Procedures to review
applicable control and
exception reports.
48 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
1. Controls provide reasonable assurance that transactions are authorized.
Control Activities Tests Applied Results of Testing User Control Considerations
1.2 A shareowner master account must
exist on TA2000 before redemption
transactions will be allowed to process.
TA2000 displays the master file information
upon entry of the fund and account number.
Reperformance Utilized an ITF
to attempt to process a redemption
on a non-existent account and to
determine proper rejection of the
transaction.
No relevant exceptions
noted.
The user is responsible for
questioning the account
information received from
the shareowner when the
name on the documentation
or on the digitized optical
image does not match the
name on the master file.
1.3 At the fund‟s option, ADTRANS
journals may be generated when ADTRANS
are processed on TA2000.
Inquiry Inquired of TA2000
management as to operating
procedures surrounding generation
of ADTRANS journals and
processing of ADTRANS
transactions.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund options. Due to the
lack of a shareowner
history record, user
controls, including the
following, are required to
control ADTRANS
processing:
Restricting access to
ADTRANS
ADTRANS approval
Review of ADTRANS
journals
TA2000 Transaction System Processing Controls 49
Copyright © 2010 DST Systems, Inc.
1. Controls provide reasonable assurance that transactions are authorized.
Control Activities Tests Applied Results of Testing User Control Considerations
1.4 Programs for TA2000 nightly
transaction processing generate shareowner
account confirmations containing the
transaction details. The confirmations are
mailed directly to the shareowner and can be
suppressed within TA2000. For changes of
address, a fund option exists to send a change
of address notification to the old address and
a confirmation to the new address. When a
certificate is issued to an address other than
the address of record, a confirmation is sent
to the address of record and the certificate,
acting as a confirmation, is sent to the special
address.
Reperformance Utilized an ITF
to generate confirmations for test
transactions including redemption,
purchase, transfer, exchange,
address change and certificate
issuance to an address other than
the address of record, for evidence
of generation in accordance with
transaction details. Additionally,
utilized an ITF to verify that
confirmations can be suppressed.
No relevant exceptions
noted.
System controls are
designed to detect
unauthorized
transactions. User
controls are necessary to
provide assurance that
entry or submission of
unauthorized
transactions to the
system is prevented.
Additionally, controls
are necessary to ensure
that confirmations are
mailed directly to the
shareowner independent
of the transaction
processing areas.
1.5 Transmitter IDs are used to verify
access to the correct fund for each TA2000
bulk transmission. Transmissions with
invalid transmitter IDs are rejected.
Transmissions are received either on
dedicated transmission lines or on dial-up
lines.
Reperformance Utilized a test
environment to submit a bulk
transmission with an invalid
Transmitter ID to verify the ID
was rejected by the TA2000
system.
No relevant exceptions
noted.
The user is responsible
for correcting rejected
bulk transmissions and
ultimately resubmitting
the bulk transmission.
50 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Accuracy and Timeliness 2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.1 Certain information is required for
establishment of an account. Without such
information TA2000 will not allow
processing. This includes:
Name
Address
ZIP Code
Social Code
State or Country Code
Tax ID Code/TIN Code
TA2000 verifies that the zip code in the
address is a valid zip code for the state code
entered.
Reperformance Utilized an ITF
to establish a new account to test
the operation of the online editing
and formatting routines.
No relevant exceptions
noted.
The user is responsible
for reviewing transaction
processing and the
appropriate TA2000
exception reports to
ensure propriety of
information entered.
2.2 During information input, online
formatting and editing routines are
performed. Edit tests for the validity of such
items as fund code, shareowner account
number, check number, management code
and status are performed by TA2000.
Reperformance Utilized an ITF
to test that online editing and
formatting routines are performed
by the TA2000 system.
No relevant exceptions
noted.
The user is responsible
for reviewing transaction
processing and the
appropriate TA2000
exception reports to
ensure propriety of
information entered.
TA2000 Transaction System Processing Controls 51
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.3 FAN Web, Vision, TA2000 Voice and
TRAC Web do not allow the participant to
modify account registration information. In
addition, the amount allowed to be redeemed
or exchanged via FAN Web, Vision,
TA2000 Voice or TRAC Web can be limited
at the fund level.
Reperformance Utilized an ITF
to test FAN Web, Vision, TA2000
Voice and TRAC Web for
evidence that modification of
account registration is not allowed.
Additionally, utilized an ITF to
verify transaction limits
established at the fund level are
enforced.
No relevant exceptions
noted.
The user is responsible for
establishing:
Security parameters for
TA2000 Voice, FAN
Web, TRAC Web, Vision
based on DST-
established minimum
standards.
Maximum amount of
dollars to be
redeemed/exchanged.
The types of transactions
allowed by TA2000
Voice, FAN Web, TRAC
Web, Vision from the
available choices.
Procedures to review
applicable control and
exception reports.
2.4 Establishment of new accounts on
TA2000 is performed on a real-time basis.
Reperformance Utilized an ITF
to establish a new account and
verified the new account was
established on the TA2000 system
on a real-time basis.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
quality controls over
shareowner maintenance.
52 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.5 A Voluntary Maintenance Journal and
a General Journaling Facility Report are
created out of TA2000 nightly processing
which shows, for fields changed on the
shareowner master and fiduciary file, the
value of the field before the change. An
online history of shareowner master file
maintenance is available.
Reperformance Utilized an ITF
to process a change to the
shareowner master to verify
appropriate posting to the
Voluntary Maintenance Journal
and proper inclusion on the online
history of the shareowner master
file maintenance. Additionally,
utilized an ITF to process a change
to the fiduciary file to verify
appropriate posting to the General
Journaling Facility. Verified for
fields changed on the shareowner
master and for fields changed on
the fiduciary file the reports listed
the value of the fields before the
change and after the change.
No relevant exceptions
noted.
The user is responsible for
reviewing maintenance
journals for accuracy and
completeness.
TA2000 Transaction System Processing Controls 53
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.6 Edits exist within TA2000 to validate
that the fund's new price/rate equals the
previous day's price/rate plus/minus the net
change transmitted. TA2000 maintains a
Daily Price File which contains prices for
each fund. Both sides of exchanges are
priced at the same time to assure the proper
prices are used. The use of batch totals for
purchase and redemption input provides
assurance that the dollar amount of the
individual transactions is correct.
Reperformance Utilized an ITF
to test that online edit and
validation routines surrounding
fund pricing are performed by the
TA2000 system. Additionally,
utilized an ITF to generate test
exchange transactions to determine
that both sides of the transaction
are appropriately priced.
No relevant exceptions
noted.
The user is responsible
for entering all prices,
reviewing the available
TA2000 reports and
ensuring the correction
of any prices not
properly entered.
Additionally, the user is
responsible for
investigation and reentry
of exchanges which are
rejected during nightly
processing. Such items
are listed on the Daily
Transaction Work File
Deletions Report.
54 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.7 TA2000 converts dollars to shares and
maintains account balances in shares.
TA2000 generates a Daily Price Update
report which lists prices entered. TA2000
will not process any transactions without a
current price for the fund for that trade date.
TA2000 produces a Consolidated Error
Report showing items rejected because of no
price.
Reperformance Utilized an ITF
to generate test transactions for
evidence that the TA2000 system
appropriately converts dollar based
transactions to shares during
nightly processing and maintains
accounts in shares. Also utilized an
ITF to generate test transactions
entered without a daily price file to
determine that the TA2000 system
appropriately rejected the
transactions and posted them to the
Consolidated Error Report.
No relevant exceptions
noted.
The user is responsible
for:
Entering all prices
initially.
Reviewing the error
reports.
Reentering any
prices that were not
correctly entered.
TA2000 Transaction System Processing Controls 55
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.8 TA2000 online edits prohibit an
individual redemption, transfer, exchange, or
certificate issuance transaction if it is greater
than the current shareowner balance. A fund
option exists on TA2000 to age shares
purchased for a specified number of days to
allow proceeds to clear the banking system. If
a redemption or exchange is attempted for
more than the collected balance, an online
warning message will display and require an
override to process the redemption. If an
override is processed, TA2000 produces a
Premature Share Removal Report.
Reperformance Utilized an ITF
to process a redemption, transfer
and exchange in excess of the
collected account balance and non-
certificate share balance, to verify
rejection of the transactions and/or
operation of the online edit
routines, as applicable.
Additionally, utilized an ITF to
override a redemption in excess of
the collected balance to verify
posting of the override to the
Premature Share Removal Report.
No relevant exceptions
noted.
User controls for
handling online
collected balance
warning messages are
required to enforce
minimum holding
period requirements.
The user is also
responsible for
establishing appropriate
fund options and for
reviewing redemptions
on the Premature Share
Removal Report.
56 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.9 TA2000 prevents the processing of
other redemption requests in excess of the
account balance on the same day that a wire
redemption is made.
Reperformance Utilized an ITF
to process a redemption on the
same day that a wire redemption
was made to verify rejection of the
transaction.
No relevant exceptions
noted.
User activities or
controls are required to
provide control over the
transmittal of wire
redemption proceeds.
2.10 The transfer and exchange facilities
require the input of all accounts affected by
the transaction. TA2000 will not accept the
transaction without account information for
all accounts affected.
Reperformance Utilized an ITF
to test the transfer and exchange
online edit routines to verify
TA2000 requires account
information for all accounts
affected by the transaction.
No relevant exceptions
noted.
Rejected transactions
would show on either the
Daily Transaction Work
File Deletions Report or
Daily Update Error
Listing Report. The user
is responsible for
monitoring the
referenced reports and
for investigating and
correcting any rejected
transactions.
TA2000 Transaction System Processing Controls 57
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.11 Transaction records are created out of
TA2000‟s nightly processing reflecting share
and/or cash transactions to shareowner
accounts. If a transaction is cancelled, a
record is created which reverses the effect of
the original transaction and the original
transaction is retained.
Reperformance Utilized an ITF
to process a purchase, exchange,
redemption, dividend adjustment
and cancellation transaction and
verified each transaction was
appropriately posted to the
transaction record. Additionally,
verified the original transaction
was retained after a cancellation
was processed.
No relevant exceptions
noted.
The user is responsible
for investigation and
resolution of
transactions requiring
cancellation and for
determining that such
transactions are
ultimately appropriately
processed.
2.12 Once established in TA2000, each
systematic transaction is automatically
executed on the date(s) specified by the client
or the shareowner.
Reperformance Utilized an ITF
to establish a systematic purchase,
a systematic redemption and a
systematic exchange to determine
that the transactions were executed
on the appropriate days and at the
correct amount.
No relevant exceptions
noted.
The user is responsible
for establishing dates to
run and types of
privileges to allow.
Also, the user is
responsible for
establishing and
maintaining systematic
instructions from
shareowners.
58 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.13 TA2000 edits ensure that certificate
transactions cannot be processed outside the
account values. Certificate transactions
update the certificate file on TA2000, which
shows deposited/cancelled, issued, stopped
and voided certificates.
Inquiry Inquired of TA2000
management as to operating
procedures surrounding the
processing of previously
cancelled/stopped certificates as
well as the processing of
certificates outside of account
values.
Reperformance Utilized an ITF
to issue and deposit certificate
transactions to verify that TA2000
edits ensure that certificate
transactions cannot be processed
outside of the account values.
Additionally, as the certificate
status was changed, verified the
certificate file on TA2000 was
appropriately updated to reflect the
status change.
No relevant exceptions
noted.
The user is responsible
for reviewing
transaction processing
to ensure propriety of
information entered.
TA2000 Transaction System Processing Controls 59
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.14 TA2000 allows processing “as-of” a
trade date which is different from the current
date. TA2000 requires the user to enter a
reason code for these items. Such
transactions are listed on the Detail Daily
"As-of" Report.
Reperformance Utilized an ITF
to process a transaction “as-of” a
trade date which was not the
current date to verify TA2000
required the entry of a reason code.
Additionally, reviewed the Detail
Daily “As-of” Report to verify the
transaction posted.
No relevant exceptions
noted.
User controls should
provide assurance that
the proper trade date is
indicated on the
supporting
documentation and that
such date is entered into
the system. The user is
also responsible for
timely entry of such
transactions. Lastly, the
user is responsible for
reviewing reason codes
assigned to transactions
and the transaction
detail listed on the
Detail Daily "As-of"
Report for propriety.
2.15 Batch transmissions submitted to
TA2000 are systematically processed during
nightly routines.
Reperformance Utilized an ITF
to process various transaction
types to verify that sources/batches
submitted to TA2000 are
processed in the current nightly
process.
No relevant exceptions
noted.
The user is responsible
for the input of the
daily price and/or daily
dividend rate before the
nightly batch process
commences.
60 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.16 TA2000 systematically assigns the
best possible price the shareowner is entitled
to receive (i.e. breakpoint level, cumulative
discount) using the information provided on
the trade.
Reperformance Utilized an ITF
to process purchase transactions to
verify that TA2000 assigned the
appropriate price based on
breakpoint levels and cumulative
discounts.
No relevant exceptions
noted.
The user is responsible
for ensuring the
shareowner accounts are
appropriately linked to
the proper breakpoint
schedule and cumulative
discount categories.
2.17 TA2000 Voice confirms each
transaction requested by the caller verbally,
allowing the caller to verify entered
information and cancel the transaction if an
error is made.
Reperformance Utilized an ITF
to process a transaction to verify
that TA2000 Voice confirmed the
transaction, allowing the caller to
verify information entered and
cancel the transaction if an error is
made.
No relevant exceptions
noted.
The user is responsible
for establishing:
Security parameters
for TA2000 Voice
based on DST-
established minimum
standards.
Maximum amount of
dollars to be
redeemed/exchanged.
The types of
transactions allowed
by TA2000 Voice
from the available
choices.
Procedures to review
applicable control and
exception reports.
TA2000 Transaction System Processing Controls 61
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.18 FAN Web, TRAC Web and Vision
confirm transactions online allowing the
shareowner/broker to verify the information
entered and cancel the transaction if an error
is made.
Reperformance Utilized an ITF
to process a FAN Web, TRAC
Web and Vision transaction to
verify that FAN Web, TRAC Web
and Vision confirmed the
respective transactions online;
thereby allowing the
shareowner/broker to verify the
information entered and cancel the
transaction if an error was made.
No relevant exceptions
noted.
The user is responsible for
establishing:
Security parameters
for FAN Web, TRAC
Web, Vision based on
DST-established
minimum standards.
Maximum amount of
dollars to be
redeemed/exchanged.
The types of
transactions allowed
by FAN Web, TRAC
Web, Vision from the
available choices.
Procedures to review
applicable control
and exception
reports.
62 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.19 Statements are generated and mailed
to the address of record confirming
systematic transactions. Systematic
transactions receive either a daily
confirmation or a monthly or quarterly
statement detailing the prior time period‟s
activity.
Reperformance Utilized an ITF
to establish and process systematic
transactions to verify that
confirmations were generated and
mailed to the address of record
once the systematic transactions
had been executed.
No relevant exceptions
noted.
Not applicable.
TA2000 Transaction System Processing Controls 63
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.20 New accounts, commission rates at
the fund level and the commissionable share
option must be established in TA2000.
TA2000 calculates the appropriate
commission amounts, including exchange of
“free” and commissionable shares, based on
inputs to the system.
Reperformance Utilized an ITF
to evidence accurate calculation of
commission amounts by the
TA2000 system, including
exchange of “free” and
commissionable shares.
No relevant exceptions
noted.
The user is responsible for
assigning the correct
broker to the shareowner
master account, assigning
any default numbers for
unidentified brokers and
ensuring the correct broker
number is input when
submitting trades through
the order processing
system. The user is
responsible for
establishing the
commission rates and any
letter of intent or
cumulative discounts on
the master files.
2.21 TA2000 also maintains
commissionable share amounts and
determines if commissions have already been
paid for shares being exchanged and, if
appropriate, adjusts the exchange transaction.
Reperformance Utilized an ITF
to determine that TA2000
maintains commissionable share
amounts and determines if
commissions have already been
paid for shares being exchanged
and, if appropriate, adjusts the
exchange transaction.
No relevant exceptions
noted.
The user is responsible for
reviewing price error
reports, correcting any
transactions rejected and
ensuring adjustments made
by the system were proper.
64 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.22 Clients must authorize the dealers to
which commissions are to be paid.
Authorized dealers are assigned a code in the
TA2000 Financial Institution Database for
commission processing. Shareowners provide
instructions regarding specific dealers for
their accounts. Changes to this designation
are provided by confirmation to the address
of record. Once assigned to an account,
specific dealer information is used for
subsequent purchases and the payment of
associated commissions. TA2000
systematically calculates the 12b-1
commission payout amount for each dealer.
Additionally, online edit and validation
routines surrounding commission processing
are performed by the TA2000 system.
Inquiry Inquired of TA2000
management to ensure that
changes to the dealer designation
are provided by confirmation to
the address of record.
Additionally, inquired of TA2000
management as to the operating
procedures surrounding
commission check processing,
commission payments and
adjustments to the Dealer Master
File.
Reperformance Utilized an ITF
to process exchange and purchase
transactions to verify that
shareowner accounts, when
established, have specific dealer
information used for subsequent
purchases. Additionally, verified
that online edit and validation
routines surrounding commission
processing are performed by the
No relevant exceptions
noted.
The user is responsible for
assigning the correct
broker to the shareowner
master account, assigning
any default numbers for
unidentified brokers and
ensuring the correct broker
number is input when
submitting trades through
the order processing
system.
TA2000 Transaction System Processing Controls 65
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.22 (continued) TA2000 systems. Utilized an ITF
to process a purchase transaction
with a commission from a valid
discount category and verified the
system correctly calculates the
commission. Also, utilized an ITF
to change the dealer on an account
to verify a confirmation was
generated. Utilized an ITF to
process a 12b-1 commission
payment to confirm the payout
was calculated accurately.
2.23 TA2000 charges a fee based on the
establishment of fund thresholds designating
a short term trade.
Reperformance Utilized an ITF
to process redemption transactions
to verify that redemption fee on a
short term trade fees were
accurately calculated and applied
by the TA2000 system in
accordance with operating
procedures.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund thresholds.
66 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.24 TA2000 system routines ensure that
fund fees (i.e. front end loads and/or CDSCs)
are appropriately assessed and accurately
calculated. Additionally, shares are converted
to other share classes by the TA2000 system
in accordance with system settings.
Inquiry Inquired of TA2000
management as to operating
procedures surrounding front-end
loads and CDSC processing.
Reperformance Utilized an ITF
to process exchange, purchase and
redemption transactions to verify
that front-end loads, CDSCs and
redemption fees were
appropriately assessed, accurately
calculated and applied by the
TA2000 system in accordance
with operating procedures.
Additionally, utilized an ITF to
process exchange and redemption
transactions to verify that shares
were converted to other share
classes in accordance with
operating procedures.
No relevant exceptions
noted.
The user is responsible for
selecting whether the
commission should be
taken at gross, net, or
special (waived). The user
is responsible for
reviewing the Sharelot
Reporting Redemption
Journal and the Sharelot
Reporting Redemption at
Special Journal to ensure
propriety of information
processed. The user is
responsible for
establishing and
maintaining shareowner
master files, front-end
loads, CDSC fees and
share class conversion
setting within the TA2000
system.
TA2000 Transaction System Processing Controls 67
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.25 NSCC transactions and other bulk
transmissions are received by TA2000 in
batches with either batch header or trailer
information containing the total number of
accounts and shares and/or dollars. These
totals are verified by TA2000 after each
transmission. If the calculated totals and the
trailer records do not agree, the transmission
is rejected.
Reperformance Utilized a test
environment to submit a bulk
transmission to verify that
header/trailer totals are
systematically verified by TA2000
after each transmission.
No relevant exceptions
noted.
The user is responsible for
establishing batches with
either batch header or
trailer information for
verification. Additionally,
the user is responsible for
controlling the validity of
individual transactions
comprising the bulk
transmission, for
submitting bulk
transmissions on a timely
basis and for ensuring that
all rejected items are
reprocessed. The user is
also responsible for
balancing the bulk
transmission details to the
header/trailer record prior
to transmission to DST.
68 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that transactions are processed accurately, timely, properly recorded in the
shareowner accounts and properly updated to the system.
Control Activities Tests Applied Results of Testing User Control Considerations
2.26 TA2000 calculates tax withholdings
based on system inputs entered by the
processor.
Reperformance Utilized an ITF
to ensure TA2000 accurately
calculated the tax withholding
amount based on system inputs.
No relevant exceptions
noted.
Not applicable.
2.27 For updated check items, TA2000
edits ensure that the current status of a check
is validated when the status of a check is
updated to voided, stopped, or reissued.
Observation Observed the
designated TA2000 Facility used
to update the status of checks after
proper authorization.
No relevant exceptions
noted.
Not applicable.
2.28 The TA2000 system generates the
Production Funds Not Priced Current Day
Report and the Daily Dividend Live Funds
Without Rates Report identifying funds that
did not receive a price/rate for the current
day.
Reperformance Utilized an ITF
to determine that the TA2000
system accurately generates the
Production Funds Not Priced
Current Day and the Daily
Dividend Live Funds Without
Rates reports identifying any funds
that did not receive a price or rate.
No relevant exceptions
noted.
The user is responsible for
review and follow up on
the Production Funds Not
Priced Current Day Report
and the Daily Dividend
Live Funds Without Rates
Report.
TA2000 Transaction System Processing Controls 69
Copyright © 2010 DST Systems, Inc.
Corporate Actions - Authorization, Accuracy and Timeliness 3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.1 For daily dividend funds, the TA2000
system automatically computes any dividend
adjustments resulting from “as-of”
transactions and produces a report of those
transactions and resulting dividend
adjustments. A decrease dividend adjustment
will be rejected if there are insufficient shares
in the account. If dividend adjustments are
not posted, they appear on the Daily Update
Error Listing. For non-daily dividend funds,
the TA2000 Record Date Journal is produced
which shows any “as-of” transactions with a
trade date prior to any previous record date.
TA2000 requires the entry of the current
day‟s rate and the net change from the prior
day. If the prior rate plus or minus the net
change does not equal the current rate,
TA2000 will not accept the rate.
The TA2000 Daily Update Error Listing is
generated and transmitted to the fund‟s
Inquiry Inquired of TA2000
management regarding decreased
dividend adjustments and the
rejection of such adjustment if
there are insufficient shares in an
account.
Reperformance Utilized an ITF
to process a dividend on a daily
dividend fund for evidence of the
accurate calculation of the
dividend by TA2000.
Additionally, utilized an ITF to
test that online edit and validation
routines surrounding dividend
processing are performed by
TA2000. Also, utilized an ITF to
process dividend adjustments for
evidence of proper posting to the
shareowner account. Lastly,
utilized an ITF to process
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund options and for review
and follow-up of the Daily
Update Error Listing
Report. For daily dividend
funds, it is the user‟s
responsibility to post any
dividend adjustments to the
shareowner accounts not
posted by the system. For
non-daily dividend funds,
the user is responsible for
calculating the amount of
the dividend adjustment
using the Record Date
Journal and posting the
adjustment to the account.
The user is also responsible
for establishing the proper
70 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.1 (continued)
portfolio accountants. This report includes
the daily dividend accrual, month to date
accrual and the number of record date shares.
transactions (purchase,
redemption, etc.) adjustments for
evidence that system generated
adjustments were appropriately
calculated and posted to the
shareowner account.
options for accruals and
payments of dividend
funds.
TA2000 Transaction System Processing Controls 71
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.2 For non-daily dividend funds,
TA2000 will not calculate a dividend unless a
dividend calculation flag is set. Once set, the
dividend is calculated for each shareowner
account eligible for that record date and
subsequently posted to the shareowner
account.
Reperformance Utilized an ITF
to process a dividend to verify
accurate calculation and posting by
the TA2000 system during nightly
processing and the operation of
online edit and validation routines.
No relevant exceptions
noted.
The user is responsible for
entering dividend
calculation information,
turning on and subsequently
removing the calculation
flag and scheduling the
processing of the dividend
with DST.
3.3 For non-daily dividend funds, a
dividend calculation record exists which
contains the dividend rate and appropriate
dates. The Dividend Calculation program
performs individual extensions and total
accumulations.
Reperformance Utilized an ITF
to process a dividend on a non-
daily dividend fund for evidence of
appropriate calculation of the
dividend by the TA2000 system.
No relevant exceptions
noted.
The user is responsible for
setting the calculation flags
for the system to compute
the dividend and
communicating to DST the
need to schedule the
dividend to be processed.
The user is also responsible
for balancing the dividend
calculation cycle and
agreeing to the shares
created and cash
distributed.
72 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.4 The shares related to the “fail” and
“fail-free” files of confirmed purchases and
redemptions are included or excluded from
the dividend calculation, as appropriate, by
TA2000. TA2000 computes a dividend
transaction for each shareowner as of the
record date. This transaction record is posted
to the shareowner‟s account in the next
TA2000 nightly cycle. If a shareowner‟s
account was not posted, the totals for the
fund would not agree to the summation of the
shareowner‟s records. This out-of-balance
condition would be included on the TA2000
Supersheet Audit Report. The Shares
Supersheet Report will show dividends
loaded back and the amount of shares loaded
back (reinvested), which is reconciled to the
Dividend Calculation Report at the time the
dividend was calculated.
Reperformance Utilized an ITF
to determine that TA2000
accurately computes a distribution
transaction based upon shares as of
a certain record date, which is
posted to the shareowner‟s account
or outstanding order. Utilized an
ITF to process a dividend
subsequent to processing
confirmed transactions to
determine proper posting to the
shareowner accounts.
No relevant exceptions
noted.
The user is responsible for
reviewing transaction
processing and the
appropriate TA2000
exception reports to ensure
propriety of information
entered. In addition, the
following responsibilities
should also be performed:
Reconciliations, as
described in objective 4,
can detect certain types
of errors made in
processed transactions.
The user is responsible
for reconciling the
dividend cycle
processing and
determining propriety
thereof.
TA2000 Transaction System Processing Controls 73
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.4 (continued) The user is responsible
for reviewing any out of
balance condition on the
supersheet report and
reconciling dividends
calculated to dividends
posted using the reports
indicated in the TA2000
Control Reports and
TA2000 Exception
Reports sections.
3.5 Daily dividend accruals are calculated
and updated to shareowner accounts by
TA2000 during nightly processing.
Reperformance Utilized an ITF
to process a dividend to determine
accurate calculation by the
TA2000 system during nightly
processing and proper posting to
shareowner account.
No relevant exceptions
noted.
The user is responsible for
entering dividend
calculation information,
turning on and
subsequently removing the
calculation flag and
scheduling the processing
of the dividend with DST.
74 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that corporate actions transactions are properly authorized and accurately
recorded in a timely manner.
Control Activities Tests Applied Results of Testing User Control Considerations
3.6 TA2000 generates reports of wire
redemption activity. The Bank Instruction
Maintenance Journal lists changes to wire
instructions. The Expedited Redemption
Warning Report lists accounts where a
redemption occurred on the same day a
change in wire instructions was performed.
Reperformance Utilized an ITF
to process an expedited
redemption and a direct
redemption of shares by wire for
evidence of posting on the Wire
Instruction Report for Expedited
Redemptions and Wire Instruction
Reports for Direct Redemptions,
respectively. Additionally, utilized
an ITF to attempt to change wire
instructions on a wire redemption
and to perform a redemption on
the same day a change in wire
instructions was performed to
determine posting to the Bank
Instruction Maintenance Journal
and Expedited Redemption
Warning Report, respectively.
No relevant exceptions
noted.
The user is responsible for
review and follow up on
wire redemption control
reports including the daily
balancing and
reconciliation functions.
TA2000 Transaction System Processing Controls 75
Copyright © 2010 DST Systems, Inc.
Activity Reconciliation 4. Controls provide reasonable assurance that transaction activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
4.1 The following TA2000 reconciling
procedures are performed during nightly
processing:
Shareowner history records are
accumulated and added to the beginning
share balances on the shareowner master
and reconciled to the ending share
balances on the shareowner master. Any
differences are printed on the Daily Fund
Share Balance Error Listing (only
accounts with exceptions or differences
will appear on the report).
The cumulative ending shareowner
balances are reconciled to the fund total
per the supersheet file. Any differences
are printed on the Supersheet Audit
Report.
Reperformance Utilized an ITF
to generate test transactions and
determine differences, if any, were
appropriately posted to the Daily
Fund Share Balance Error Listing
and/or Supersheet Audit Report.
No relevant exceptions
noted.
The user is responsible
for investigation and
resolution of any out-of-
balance conditions
appearing on exception
reports.
76 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
4. Controls provide reasonable assurance that transaction activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
4.2 TA2000 produces a Cash Supersheet
which details cash activity and a Daily
Distribution of Cash report which indicates
the movement of cash needed between
accounts as a result of the current day‟s
activity. In the Same Day Cash Management
(SDCM) environment, cash supersheets,
accurate at a point in time, may be generated
throughout the day to allow for more timely
money movement.
Reperformance Utilized an ITF
to process cash transactions to
determine proper posting to the
Cash Supersheet and Daily
Distribution of Cash Report, as
applicable.
No relevant exceptions
noted.
The user is responsible
for initiating and
controlling cash
movements. The user is
also responsible for
requiring adequate
documentation for
transactions and
reconciling recorded
trades to supporting cash
activity.
4.3 Recorded exchanges are appropriately
included on the TA2000 Daily Distribution of
Cash Report requiring movement of cash and
on the Cash Supersheet.
Reperformance Utilized an ITF
to process cash transactions to
determine proper posting to the
Cash Supersheet and Daily
Distribution of Cash Report, as
applicable.
No relevant exceptions
noted.
The user is responsible
for reviewing reports and
reconciling recorded
exchanges.
TA2000 Transaction System Processing Controls 77
Copyright © 2010 DST Systems, Inc.
4. Controls provide reasonable assurance that transaction activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
4.4 Transactions rejected by TA2000 are
listed on various rejected transaction reports.
The TA2000 system produces exception
reports which indicate transactions that have
not been processed in whole or in part.
Reperformance Utilized an ITF
to process improper trades to
determine posting to the
appropriate exception and warning
reports.
No relevant exceptions
noted.
The user is responsible for
reviewing and resolving
daily items appearing on
the rejected transaction
reports. The user is also
responsible for reviewing
and resolving with
brokers, items appearing
on daily listings of “fail-
file” activity.
4.5 Confirmed purchases or redemptions,
which are rejected due to a lack of specific
information or lack of payment, are
maintained in the “fail/free file” or the “fail
file,” respectively. The system produces the
Fail/Free Daily Balance Listing Report,
which details confirmed
purchases/redemptions. System edit and
validation routines ensure orders for
confirmed purchases and redemptions are
correct.
Reperformance Utilized an ITF
to process a confirmed purchase
and redemption lacking specified
information and/or lack of
payment to test system edit and
validation routines for confirmed
purchases and redemptions and
inclusion on the “fail/free file” or
“fail file,” as applicable.
Additionally, utilized an ITF to
process confirmed purchases to
verify posting to the Fail/Free
Daily Balance Listing Report.
No relevant exceptions
noted.
The user is responsible for
reviewing and resolving
with brokers items
appearing on daily listings
of “fail file” activity.
78 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
4. Controls provide reasonable assurance that transaction activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
4.6 TA2000 allows pre-edit of
checkwriting redemption (CWR) items
received by the bank to determine
acceptability of such items or segregate
individual items for review based on
predetermined criteria (i.e., dollar amount).
Inquiry Inquired of TA2000
management as to the system
infrastructure surrounding CWRs.
No relevant exceptions
noted.
The user is responsible for
reviewing pre-edit reports.
4.7 Comp/Recon systematically compares
expected bank and fund processing activity to
actual TA2000 processing and bank activity
and identifies exceptions.
Reperformance Validated the
TA2000 Daily Balancing
Verification Summary report
compares TA2000 bank balances
to actual bank balances and
identifies exceptions.
No relevant exceptions
noted.
The user is responsible for
reviewing identified
exceptions.
4.8 The TA2000 Daily Balancing
Verification Summary Report compares
TA2000 bank balances to actual bank
balances.
Reperformance Validated that
Comp/Recon compares expected
bank and fund processing activity
to actual TA2000 processing and
bank activity and identifies
exceptions, if any.
No relevant exceptions
noted.
The user is responsible for
reviewing the TA2000
Daily Balancing
Verification Summary
Report.
TA2000 Transaction System Processing Controls 79
Copyright © 2010 DST Systems, Inc.
4. Controls provide reasonable assurance that transaction activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
4.9 A payee different than the shareowner
can be entered. A report identifying
redemptions with special payee is produced.
Inquiry Inquired of TA2000
management as to the system
infrastructure and reporting
surrounding special payees.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund options and for
reviewing redemptions
with special payees for
propriety.
4.10 TA2000 maintains a check
reconciliation file for checks written by the
system. TA2000 systematically balances and
compares the outstanding checks detail to the
summary of the outstanding checks on the
check reconciliation system (Comp/Recon)
and posts exceptions to the "Check Activity
Discrepancy Report".
Reperformance Utilized an ITF
for evidence that an exception
posted to the "Check Activity
Discrepancy Report" when the
outstanding check detail did not
balance with the check
reconciliation system
(Comp/Recon).
No relevant exceptions
noted.
The user is responsible for
reviewing daily check
activity and reconciling
such activity to TA2000.
80 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Terminal Access – Systematic Restrictions 5. Controls provide reasonable assurance that access to the TA2000 system terminals is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
5.1 Valid user identification numbers and
passwords are required to access TA2000.
Such numbers and passwords are checked
against the security record which allows
access based upon established online
facilities. Passwords must be changed every
30 days. Invalid passwords will suspend the
related ID after a specific number of
attempts. If no activity has occurred for two
hours, the operator is logged off the TA2000
system.
Reperformance Attempted to
gain access to TA2000 using
invalid user identification numbers
and passwords for evidence that
the validation routines
appropriately deny access and that
the ID was suspended after the
specified number of invalid access
attempts.
Utilized the TA2000 system to
verify that passwords must be
changed every 30 days and the
operator was logged off the system
after two hours of inactivity. In
addition, validated that invalid
passwords suspended the related
ID after three invalid login
attempts.
No relevant exceptions
noted.
User activities or controls
are required to achieve
adequate control. User
personnel are responsible
for the following functions
in the security system:
Establishing operator
security records
Defining the accesses
allowed for each
terminal and operator
Controlling the
capability to modify
accesses
Periodically reviewing
the Daily Operator
Update Report to
determine propriety of
changes to individual
operator security records
TA2000 Transaction System Processing Controls 81
Copyright © 2010 DST Systems, Inc.
5. Controls provide reasonable assurance that access to the TA2000 system terminals is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
5.2 An operator security record must exist
in the security file for each operator that is
allowed access to TA2000. The operator
security record can limit access by
management code.
Reperformance Utilized the
TA2000 system to attempt to gain
access to restricted user functions
and management companies within
TA2000.
No relevant exceptions
noted.
User controls are required
to achieve adequate control.
User personnel are
responsible for the
following functions in the
security system:
Establishing operator
security records
Defining the accesses
allowed for each operator
Controlling the capability
to modify accesses
Periodically reviewing
the Daily Operator
Update Report to
determine propriety of
changes to individual
operator security records
82 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Printed Output – Accuracy and Completeness 6. Controls provide reasonable assurance that printed output is processed accurately and completely.
Control Activities Tests Applied Results of Testing User Control Considerations
6.1 The TA2000 system systematically
produces a data file designating output to be
mailed based on established criteria for
confirmations, statements and negotiables.
DST Output receives the data file through
transmission or upload.
Observation Observed a data
file being produced by the TA2000
system.
No relevant exceptions
noted.
Not applicable.
6.2 DST Output jobs are not released to
production without client approval.
Inspection Inspected a sample of
production orders processed
during the period for evidence of
approval of completeness and
accuracy before the orders were
released.
No relevant exceptions
noted.
Not applicable.
TA2000 Transaction System Processing Controls 83
Copyright © 2010 DST Systems, Inc.
6. Controls provide reasonable assurance that printed output is processed accurately and completely.
Control Activities Tests Applied Results of Testing User Control Considerations
6.3 Production orders are systematically
produced for each output job. Work will not
be produced without a production order for
that work. Immediately after printing of a
job, the file is purged from the printer‟s
queue and the system reflects that the job
status is “Printed”.
Observation Observed the
process performed by the staff to
determine they have received a
valid print production order.
Additionally, observed the print
queue status after printing of a job
and observed a tape being marked
with “PM” for Printed Matters
(tapes are Kansas City only).
No relevant exceptions
noted.
Not applicable.
6.4 The reconciliation of check and non-
check insert production orders is performed
by either the Insert Operator or a
Reconciliation Associate and confirmed by
entering the completed number of pieces into
the system and then logging the order out of
the system to indicate it is closed. Output
associates review the open orders report daily
to research and resolve open orders.
Inspection Inspected a sample
of check and non-check insert
production orders processed
during the period for evidence of
reconciliation in the system.
Additionally, inspected a sample
of open orders for evidence of
resolution in the system.
No relevant exceptions
noted.
Not applicable.
84 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
6. Controls provide reasonable assurance that printed output is processed accurately and completely.
Control Activities Tests Applied Results of Testing User Control Considerations
6.5 Quality Assurance performs random
quality reviews on check and non-check
production orders at various points
throughout the insert process.
Observation Observed random
quality reviews on check and non-
check production orders at various
points throughout the insert
process.
No relevant exceptions
noted.
Not applicable.
TA2000 Transaction System Processing Controls 85
Copyright © 2010 DST Systems, Inc.
Safeguarding of Negotiable Instruments by DST Output 7. Controls provide reasonable assurance that negotiable instruments are properly safeguarded by DST Output.
Control Activities Tests Applied Results of Testing User Control Considerations
7.1 Pre-numbered checks are physically
secured before use in production of
negotiable instruments. Only authorized
Control Clerks pull check stock from
inventory for use in production.
Observation Observed that pre-
numbered checks are physically
secured before use in production of
negotiable instruments.
Inspection Utilizing the list of
associates authorized to perform
check control clerk functions
inspected a sample of check
control logs or negotiable
document request/issuance forms
to verify the check control clerks
that pulled the checks appeared on
the authorization list.
No relevant exceptions
noted.
Not applicable.
7.2 Access to the check signature file is
restricted to authorized personnel.
Inquiry Inquired of
management regarding the
restriction of access to the check
signature file.
No relevant exceptions
noted.
Not applicable.
7.3 Access to check signature files is
segregated from access to physical check
stock.
Inquiry Inquired of
management regarding the
segregation of access to check
signature files and access to
physical check stock.
No relevant exceptions
noted.
Not applicable.
86 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
7. Controls provide reasonable assurance that negotiable instruments are properly safeguarded by DST Output.
Control Activities Tests Applied Results of Testing User Control Considerations
7.4 Negotiable instruments are physically
secured throughout the production process
once printed with signatures.
Observation Observed the
physical security of negotiable
instruments throughout the
production process once printed
with signatures.
No relevant exceptions
noted.
Not applicable.
7.5 After each check order has completed
printing, a reconciliation form is completed
which includes the number of check stock
pulled, printed, mutilated and unused.
Additionally, unused and misprinted check
stock is accounted for at the end of each check
printing order and destroyed at the end of each
production work shift.
Observation Observed the
process for unused and misprinted
check stock, verifying it was
accounted for at the end of each
check printing order and destroyed
at the end of each production work
shift. Additionally, observed the
completion of a reconciliation form
after a check print order was
completed.
Inspection Inspected a sample of
completed check production orders
for the test period to verify that
check stock was accounted for
appropriately on the check
reconciliation form.
No relevant exceptions
noted.
Not applicable.
TA2000 Subaccounting Transaction System Processing Controls 87
Copyright © 2010 DST Systems, Inc.
TA2000 Subaccounting Transaction System Processing Controls
Transaction Accuracy and Aggregation 8. Controls provide reasonable assurance that TA2000 Subaccounting transactions are aggregated completely and
accurately processed.
Control Activities Tests Applied Results of Testing User Control Considerations
8.1 Trade transmissions received from the
client brokerage system are filtered through
preprocessing edits to confirm that necessary
information to process the trades is provided
and valid.
Reperformance Utilized an ITF
to verify that necessary information
needed to process the trades is
provided and valid.
No relevant exceptions
noted.
Not applicable.
8.2 Transactions, received from the
brokerage system, are grouped together by the
TA2000 Subaccounting application based on
established transaction type criteria to create
omnibus transactions. These transactions are
put in an outbound transmission file for
processing and the trades are posted to the
omnibus account.
Reperformance Utilized an ITF
to process redemption transactions
and verified that trades were
grouped together by the TA2000
Subaccounting application to create
omnibus transactions. Additionally,
verified that transmitted omnibus
trades were posted to the omnibus
account via the brokerage platform.
No relevant exceptions
noted
Not applicable.
88 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
8. Controls provide reasonable assurance that TA2000 Subaccounting transactions are aggregated completely and
accurately processed.
Control Activities Tests Applied Results of Testing User Control Considerations
8.3 The TA2000 Subaccounting Share
Proof function is used to identify differences
between the omnibus balance and the
TA2000 Subaccounting balance so that
corrective action can be taken by the Broker
Dealer.
Reperformance Utilized an ITF
to process redemption and
purchase transactions to verify that
the Subaccounting Share Proof
function identified differences
between the omnibus balance and
the TA2000 Subaccounting
balance.
No relevant exceptions
noted.
Not applicable.
8.4 TA2000 Subaccounting transmits
trade confirmations on individual trades back
to the broker‟s system.
Reperformance Utilized an ITF
to process redemption transactions
to verify that TA2000
Subaccounting transmitted trade
confirmations back to the broker‟s
system.
No relevant exceptions
noted.
Not applicable.
TRAC Transaction System Processing Controls 89
Copyright © 2010 DST Systems, Inc.
TRAC Transaction System Processing Controls
Transaction Accuracy and Timeliness 9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.1 Certain information is required for
establishment of an account, without such
information TRAC will not allow processing.
This includes:
Name
Address
ZIP Code
Social Code
State or Country Code
Tax ID Code/TIN Code
TRAC verifies that the zip code in the
address is a valid zip code for the state code
entered.
Reperformance Utilized an ITF
to establish a new account to test
the operation of the online editing
and formatting routines.
No relevant exceptions
noted.
The user is responsible
for reviewing transaction
processing and the
appropriate TRAC
exception reports to
ensure propriety of
information entered.
90 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.2 During information input as a part of
participant setup, online edits are performed
to ensure validity of such items as Plan ID
and Investment Company.
Reperformance Utilized an ITF
to establish a new participant to
verify that the TRAC system
infrastructure surrounding the
participant setup edit and
validation routines exists as
described herein.
No relevant exceptions
noted.
The user is responsible for
ensuring that participant
setup processing is
complete and accurate.
TRAC Transaction System Processing Controls 91
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.3 TRAC provides real-time processing
for maintenance activity. In addition to
immediate online review of plan and
participant maintenance information, a
Voluntary Maintenance Journal is created out
of TRAC nightly processing, which shows,
for fields changed on the participant master,
the value of the field before the change.
Participant master maintenance history is also
available for online review and reflects
previous field values.
Reperformance Utilized an ITF
to establish a new participant and
perform maintenance activity to
verify that the TRAC system
infrastructure surrounding real-
time update of system records and
availability of maintenance activity
for online review is accurate as
described herein.
Utilized an ITF to process a
change to the participant master to
verify appropriate posting to the
Voluntary Maintenance Journal
and proper inclusion on the online
history of the participant master
file maintenance. Additionally,
utilized an ITF to process a change
to the fiduciary file to verify
appropriate posting to the General
Journaling Facility. Verified for
fields changed on the participant
master and for fields changed on
the fiduciary file the reports listed
the value of the fields before the
change and after the change.
No relevant exceptions
noted.
The user is responsible for
reviewing “before and
after” reporting for
control over maintenance
history changes.
The user is responsible for
reviewing maintenance
journals for accuracy and
completeness.
92 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.4 Maintenance activity is propagated
through the TRAC facilities to ensure
consistent information across common
information components. Maintenance
activity journals produced in the nightly
processing cycle reflect maintenance
processed on the system, including before
and after values of the fields changed.
Maintenance processing for internal mutual
fund accounts update through the TRAC
nightly processing cycle.
Reperformance Utilized an ITF
to perform maintenance activity to
verify that the TRAC system
infrastructure surrounding the
posting of maintenance activity to
TRAC and activity journals and
the availability of maintenance
activity for on-line review exists as
described herein.
No relevant exceptions
noted.
The user is responsible
for reviewing
maintenance journals for
accuracy and
completeness.
9.5 TRAC utilizes DB2 referential
integrity rules to ensure transactions are
properly recorded in participant accounts.
Inquiry Inquired of management
as to the TRAC system
infrastructure to determine that the
controls exist as described herein.
No relevant exceptions
noted.
Not applicable.
TRAC Transaction System Processing Controls 93
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.6 TRAC Roster processing provides for
transactions to be placed in a pending status
until they are processed through the next
nightly cycle. Batch numbers are
systematically assigned (or manually
assigned by the client) after the transaction is
entered. Any pending transactions can be
deleted anytime prior to the nightly cycle.
Roster processing provides an online edit to
prevent the release of any batch when the
total dollar amount does not equal the detail
participant activity. The ability to override
this edit exists within TRAC.
Reperformance Utilized an ITF
to process various Roster
transactions to verify that the
TRAC system infrastructure
surrounding the systematic
assignment of batch numbers and
the Roster processing online edit
preventing the release of out of
balance rosters exists as described
herein.
No relevant exceptions
noted.
The user is responsible for
ensuring that items
received are routed to
information entry or other
processing areas.
Additionally, the user is
responsible for balancing
the roster information to
the detail participant
activity and resolving any
differences.
9.7 During information input online
formatting and editing routines are
performed. Edit tests for the validity of such
items as fund code, participant account
number, check number, management code
and status are performed by TRAC.
Reperformance Utilized an ITF
to test that online editing and
formatting routines are performed
by the TRAC system.
No relevant exceptions
noted.
The user is responsible for
reviewing transaction
processing and the
appropriate TRAC
exception reports to
ensure propriety of
information entered.
94 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.8 TRAC will not allow a withdrawal
against a non-existent participant account.
Reperformance Utilized an ITF
to attempt a distribution from a
non-existent participant account to
verify that the TRAC system
infrastructure surrounding
distribution edit routines exists as
described herein.
No relevant exceptions
noted.
The user is responsible
for reviewing withdrawal
activity reflected in the
nightly distribution
reports and initiating
appropriate follow up.
9.9 TRAC nightly processing utilizes the
TRAC pricing routines. Guaranteed
Investment Contract (GIC) rates are
calculated each night through an algorithm
which uses the GIC contract start date,
maturity date and rate.
Reperformance Utilized an ITF
to process a contribution into an
investment vehicle utilizing GIC
pricing to determine accurate
calculation by the TRAC system.
No relevant exceptions
noted.
The user is responsible
for assuring that proper
GIC rates are used and
for monitoring the
changes noted in the GIC
Rate Change Report.
TRAC Transaction System Processing Controls 95
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.10 Transfers and exchanges at an amount
in excess of the participant‟s account values
are prohibited and will result in an online
error message. TRAC processes in a real-
time environment. Participant account
balance is reduced immediately after the
withdrawal transaction is entered into the
system. Any transactions rejected during the
nightly process will set to an “open” status
and are reflected in the Cumulative Open
Item Report.
Reperformance Utilized an ITF
to process transfer and exchange
transactions to verify that the
TRAC system infrastructure
surrounding transfer and exchange
edit routines and real-time update
of system records for transfers and
exchanges exists as described
herein.
No relevant exceptions
noted.
The user is responsible
for monitoring the Pre-
Nightly Exception
Journal and Control
Totals Report and the
Cumulative Open Item
Report, in addition to
correcting rejected items
and incomplete
processing.
9.11 Transaction records are created out of
nightly processing reflecting share and/or
cash transactions to participant accounts. If a
transaction is cancelled, a record is created
which reverses the effect of the original
transaction and the original transaction is
retained.
Reperformance Utilized an ITF
to process a purchase, exchange,
redemption, dividend adjustment
and cancellation transaction and
verified each transaction was
appropriately posted to the
transaction record. Additionally,
verified the original transaction
was retained after a cancellation
was processed.
No relevant exceptions
noted.
The user is responsible
for investigation and
resolution of transactions
requiring cancellation
and for determining that
such transactions are
ultimately appropriately
processed.
96 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.12 TRAC allows processing “as-of” a
trade date which is different from the current
date. The system requires the user to enter a
reason code for these items. Online history
and participant statements reflect both trade
date and confirm date for transaction
processing activity.
Reperformance Utilized an ITF
to process a distribution with an
“as-of” date to verify that the
TRAC system infrastructure
surrounding trade date validation
and “as-of” trade processing exists
as described herein.
No relevant exceptions
noted.
User controls should
provide assurance that
the proper trade date is
indicated on the
supporting
documentation and that
such date is entered to
system. The user is also
responsible for timely
entry of such
transactions. Lastly, the
user is responsible for
reviewing reason codes
assigned to transactions
for propriety.
9.13 A payee different than the participant
can be entered. The nightly distribution
report and participant check register reflect
the participant account information as well as
the special payee information. Clients have
the option of providing voided checks with
payment information to the participant when
checks to a special payee have been
processed.
Reperformance Utilized an ITF
to process a distribution with a
special payee to verify that the
TRAC system infrastructure
surrounding special payee
processing and reporting of special
payee transactions exists as
described herein.
No relevant exceptions
noted.
User is responsible for
establishing appropriate
controls over special
payee processing.
TRAC Transaction System Processing Controls 97
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.14 TRAC history is maintained by status.
Transactions entered into the system are
either processed and placed in a confirmed
status, or rejected and placed in an open
status.
Reperformance Utilized an ITF
to process a variety of transactions
to verify that the TRAC system
infrastructure surrounding the
maintenance of accepted
transactions in “confirmed” status,
the maintenance of rejected
financial transactions in “open”
status until cancelled or
reprocessed, posting of rejected
transactions to rejected transaction
reports and the availability of
rejected transactions for online
review exists as described herein.
No relevant exceptions
noted.
The user is responsible
for monitoring rejected
transactions with an
open status.
98 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.15 TRAC operates real-time and sets
entered transactions to a pending status to be
processed during the nightly cycle. Pending
trades are included in any subsequent online
inquiries made throughout the day based on
yesterday‟s price for each investment vehicle.
By recognizing pending trades, subsequent
transaction edits reflect the effect of these
transactions. Pending batches at the end of
the day are processed in the current nightly
update. The nightly update process is
performed each night the stock exchanges are
open.
Reperformance Utilized an ITF
to process a transaction to verify
that the TRAC system
infrastructure surrounding
real-time update of system records
for transaction processing and the
availability of pending trades for
online review exists as described
herein.
No relevant exceptions
noted.
The user is responsible
for the input of the daily
price and/or daily
dividend rate before the
nightly batch process
commences.
9.16 The online distribution functions
prevent errors from entering the system and
errors, when encountered, are highlighted
with a descriptive message provided to the
operator detailing the cause of the error.
Online edits prevent the operator from
processing hardship withdrawals and
participant loans taken in excess of available
amounts.
Reperformance Utilized an ITF
to process a variety of transactions
to verify that the TRAC system
infrastructure surrounding
distribution and loan related
transaction edit routines, including
the posting of rejected transactions
to rejected transaction reports,
exists as described herein.
No relevant exceptions
noted.
The user is responsible
for reviewing withdrawal
activity reflected in the
nightly distribution
reports and initiating
appropriate follow up.
TRAC Transaction System Processing Controls 99
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.17 TRAC financial transactions which
are rejected by the system are placed into an
“open” status and can be reviewed through
the participant history online or on various
rejected transaction reports. TRAC
maintains”open” transactions until they are
subsequently cancelled or reprocessed.
Reperformance Utilized an ITF
to process a contribution
transaction and verify that the
TRAC system infrastructure
surrounding the maintenance of
rejected financial transactions in
“open” status until cancelled or
reprocessed, posting of rejected
transactions to rejected transaction
reports and the availability of
rejected transactions for online
review exists as described herein.
No relevant exceptions
noted.
User controls are
required to ensure that
rejected items are
reprocessed. Plan within
Funds and Assets within
Plan supersheets are
available to users who
are responsible for the
reconciliation of bank
activity to processing
activity.
100 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.18 Programs for TRAC nightly
transaction processing generate daily
confirmations in the form of audit reports to
reflect enrollment, transaction and
maintenance activity. In addition, statements
are run at the discretion of the Plan
Administrator and are not limited to any
particular time frame. Participant statements
reflect processing activity within a specified
time frame. Lastly, a monthly report package
is generated for the Sponsor/Employer
Company and Trustees of the plan receive a
monthly Trust Report reflecting all Plan
activity. Both the Trust report and report
packages are not limited to a monthly time
frame.
Reperformance Utilized an ITF
to process a variety of transactions
to verify that the TRAC system
infrastructure surrounding the
accurate generation of audit
reports and activity included on
participant statements and monthly
reports exists as described herein.
No relevant exceptions
noted.
System controls are
designed to detect
unauthorized
transactions. User
activities or controls are
necessary to provide
assurance that entry of
unauthorized
transactions to the
system is prevented.
TRAC Transaction System Processing Controls 101
Copyright © 2010 DST Systems, Inc.
9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.19 A participant history and transaction
record is created for dollar transactions
affecting participant value.
Reperformance Utilized an ITF
to process a variety of transactions
to verify that the TRAC system
infrastructure surrounding accurate
generation of participant history
and transaction records exists as
described herein.
No relevant exceptions
noted.
The user is responsible
for review of the Plan
within Funds and Assets
within Plan Supersheets.
9.20 Bulk transmissions are received by
TRAC in batches with either batch header or
trailer information containing the total
number of accounts and shares and/or dollars.
These totals are verified by TRAC after each
transmission. If the calculated totals and the
trailer records do not agree, the transmission
is rejected.
Reperformance Utilized an ITF
to process a contribution and
verify that the TRAC system
infrastructure surrounding TRAC
transmissions exists as described
herein.
No relevant exceptions
noted.
The user is responsible
for reconciling items
entered to items
processed. Exception
items can be traced
through the “Pre-Nightly
Exception Journal and
Control Totals” report.
102 TA2000 Remote Transfer Agent Processing System – SAS 70
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.21 TRAC fully integrates with the
TA2000 system and provides daily updates to
the fund supersheets which indicate the
movement of cash needed between accounts
as a result of the current day‟s activity. In
addition, TRAC generates supersheet reports
to facilitate the control of GIC cash
movements.
Reperformance Utilized an ITF
to process a contribution into an
investment vehicle using GIC
pricing to verify that the fund
supersheets included the
movement of cash needed between
accounts as a result of the current
day's activity.
No relevant exceptions
noted.
The user is responsible
for initiating and
controlling cash
movements. Also, the
user is responsible for
requiring adequate
documentation for
transactions and
reconciling recorded
trades to supporting
cash activity.
9.22 TRAC fully integrates with the
TA2000 mutual fund pricing. TRAC
calculates a daily value on each GIC based
upon the rate established by the operator.
Authority for updates to GIC contract rates is
secured through operator security.
Reperformance Utilized the
TRAC system to verify the
infrastructure surrounding the
capability to restrict the ability to
update GIC contract rates as
described herein.
No relevant exceptions
noted.
The user is responsible
for establishing
operator security for
investment provider
information and
ensuring the correct
rates have been entered.
9.23 For outside investment vehicles,
TRAC utilizes a separate price file for daily
valuation.
Reperformance Utilized an ITF
to process a contribution into an
outside investment vehicle to
verify that the TRAC system
infrastructure surrounding the
valuation of outside investment
vehicles exists as described herein.
No relevant exceptions
noted.
The user is responsible
for providing timely
and accurate pricing
information for outside
investment vehicle
pricing on TRAC.
TRAC Transaction System Processing Controls 103
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.24 For outside investment vehicles,
TRAC ensures that trades have a valid trade
date when transactions are processed.
Inquiry Inquired of management
as to the TRAC system
infrastructure surrounding
processing outside investment
vehicles transactions to determine
that the controls exist as described
herein.
Reperformance Utilized an ITF
to process a distribution with an
„as-of‟ date to verify that the
TRAC system infrastructure
surrounding trade date validation
exists as described herein.
No relevant exceptions
noted.
The user is responsible
for providing timely and
accurate pricing
information for outside
investment vehicle
pricing on TRAC.
9.25 The TRAC system prevents additional
interest from being accrued due to late
payment when the loan type is established
under the Expected Loan Payment method.
Reperformance Utilized an ITF
to process a loan payment on a
participant loan that uses the
Expected Loan Payment method to
verify that the TRAC system
infrastructure surrounding loan
payments exists as described
herein.
No relevant exceptions
noted.
The user is responsible
for establishing loan
parameters controlling
late payment interest
calculations according to
the plan document.
104 TA2000 Remote Transfer Agent Processing System – SAS 70
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.26 Daily dividend accruals are calculated
and appropriately updated to participant
accounts by TRAC during nightly processing.
Reperformance Utilized an ITF
to process a dividend to determine
accurate calculation by the TRAC
system during nightly processing
and proper posting to participant
account.
No relevant exceptions
noted.
The user is responsible
for entering dividend
calculation information.
TRAC Transaction System Processing Controls 105
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.27 The shares related to the “fail” and
“fail/free” files of confirmed purchases and
redemptions are included or excluded from
the dividend calculation, as appropriate, by
TRAC.
TRAC computes a dividend transaction for
each participant as of the record date. This
transaction record is posted to the
participant‟s account in the next TRAC
nightly cycle. If a participant‟s account was
not posted, the totals for the fund would not
agree to the summation of the participant‟s
records. This out-of-balance condition would
be included on the Supersheet Audit Report.
Reperformance Utilized an ITF
to determine that TA2000
computes a distribution transaction
based upon shares as of a certain
record date, which is posted to the
participant‟s account or
outstanding order.
Utilized an ITF to process a
dividend subsequent to processing
confirmed transactions to
determine proper posting to the
participant accounts.
No relevant exceptions
noted.
The user is responsible for
reviewing transaction
processing and the
appropriate TRAC
exception reports to ensure
propriety of information
entered. In addition, the
following responsibilities
should also be performed:
Reconciliations, as
described in objective 4,
can detect certain types
of errors made in
processed transactions.
The user is responsible
for reconciling the
dividend cycle
processing and
determining propriety
thereof.
The user is responsible
for reviewing any out of
balance condition on the
supersheet report and
reconciling dividends
calculated to dividends
posted using the
exception and control
reports.
106 TA2000 Remote Transfer Agent Processing System – SAS 70
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.28 For daily dividend funds, the TRAC
system computes any dividend adjustments
resulting from “as-of” transactions and
produces the Daily Dividend Adjustment
Calculation and the Daily Update Error
Listing reports showing the transactions and
resulting dividend adjustments. A decrease
dividend adjustment will be rejected if there
are insufficient shares in the account. If
dividend adjustments are not posted, they
appear on the Daily Update Error Listing
report.
For non-daily dividend funds, the Record
Date Journal is produced which shows any
“as-of” transactions with a trade date prior to
any previous record date.
TRAC requires the entry of the current day‟s
rate and the net change from the prior day. If
the prior rate plus or minus the net change
does not equal the current rate, TRAC will
not accept the rate.
The Daily Update Error Listing report is
accurately generated and transmitted to the
fund‟s portfolio accountants. This report
includes the daily dividend accrual, month to
date accrual and the number of record date
shares.
Inquiry Inquired of TA2000
management regarding decreased
dividend adjustments and the
rejection of such adjustment if
there are insufficient shares in an
account.
Reperformance Utilized an ITF
to process a dividend on a daily
dividend fund for evidence of the
accurate calculation of the
dividend by TA2000.
Additionally, utilized an ITF to
test that online edit and validation
routines surrounding dividend
processing are performed by
TA2000. Also, utilized an ITF to
process dividend adjustments for
evidence of proper posting to the
participant account. Lastly, utilized
an ITF to process transactions
(purchase, redemption, etc.)
adjustments for evidence that
system generated adjustments were
appropriately calculated and
posted to the participant account.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund options and for
review and follow-up of
the Daily Update Error
Listing report. For daily
dividend funds, it is the
user‟s responsibility to
post any dividend
adjustments to the
participant accounts not
posted by the system.
For non-daily dividend
funds, the user is
responsible for calculating
the amount of the dividend
adjustment using the
Record Date Journal and
posting the adjustment to
the account.
The user is also
responsible for
establishing the proper
options for accruals and
payments of dividend
funds.
TRAC Transaction System Processing Controls 107
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9. Controls provide reasonable assurance that TRAC transactions are processed accurately and timely.
Control Activities Tests Applied Results of Testing User Control Considerations
9.29 TRAC provides a Plan Summary
Position Account Update report which
reflects participant status, asset loans and
open item changes made within TRAC.
Additionally, discrepancies, if any, between
TA2000 and TRAC, by participant, would be
reflected within the report.
Reperformance Utilized an ITF
to establish a new participant and
verify that the TRAC system
infrastructure surrounding updates
made within TRAC and the
generation of the Plan Summary
Position Account Update report
exists as described herein.
No relevant exceptions
noted.
The user is responsible for
investigation and resolution
of any out-of-balance
conditions appearing on the
Plan Summary Position
Account Update reports.
9.30 TRAC calculates tax withholdings
based on system inputs entered by the
processor.
Reperformance Utilized an ITF
to verify TRAC accurately
calculated the tax withholding
amount based on system inputs.
No relevant exceptions
noted.
Not applicable.
108 TA2000 Remote Transfer Agent Processing System – SAS 70
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Pricing Accuracy 10. Controls provide reasonable assurance that TRAC transactions are processed at the proper price based on system
input.
Control Activities Tests Applied Results of Testing User Control Considerations
10.1 Edits exist within TRAC to validate
that the fund's new price/rate equals the
previous day's price/rate plus/minus the net
change transmitted. TRAC maintains a Daily
Price File which contains prices for each
fund.
Both sides of exchanges are priced at the
same time to assure the proper prices are
used.
The use of batch totals for purchase and
redemption input provides assurance that the
dollar amount of the individual transactions is
correct.
Reperformance Utilized an ITF
to test that online edit and
validation routines surrounding
fund pricing are performed by the
TA2000 system. Additionally,
utilized an ITF to generate test
exchange transactions to determine
that both sides of the transaction
are appropriately priced.
No relevant exceptions
noted.
The user is responsible for
entering all prices,
reviewing the available
TRAC reports and ensuring
the correction of any prices
not properly entered.
Additionally, the user is
responsible for
investigation and reentry of
exchanges which are
rejected during nightly
processing. Such items are
listed on the Daily
Transaction Work File
Deletions Report.
TRAC Transaction System Processing Controls 109
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10. Controls provide reasonable assurance that TRAC transactions are processed at the proper price based on system
input.
Control Activities Tests Applied Results of Testing User Control Considerations
10.2 TRAC converts dollars to shares and
maintains account balances in shares.
TRAC generates a Daily Price Update report
which lists prices entered.
TRAC will not process any transactions
without a current price for the fund for that
trade date. TRAC produces a Consolidated
Error Report showing items rejected because
of no price. TRAC will interrupt processing
when a predetermined number of errors is
reached.
Reperformance Utilized an ITF
to generate test transactions for
evidence that the TRAC system
appropriately converts dollar based
transactions to shares during
nightly processing and maintains
accounts in shares. Also utilized an
ITF to generate test transactions
entered without a daily price file to
determine that the TRAC system
appropriately rejected the
transactions and posted them to the
Consolidated Error Report.
No relevant exceptions
noted.
The user is responsible for:
Entering all prices
initially.
Reviewing the error
reports.
Reentering any prices
that were not correctly
entered.
110 TA2000 Remote Transfer Agent Processing System – SAS 70
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10. Controls provide reasonable assurance that TRAC transactions are processed at the proper price based on system
input.
Control Activities Tests Applied Results of Testing User Control Considerations
10.3 TRAC calculates Net Unit Value
(NUV) pricing based on daily prices and
other factors included in the price calculation
provided by the client for TRAC valuation.
Reperformance Utilized an ITF
to process a contribution into an
investment vehicle using NUV
pricing to verify that the TRAC
system infrastructure surrounding
accurate NUV pricing exists as
described herein.
No relevant exceptions
noted.
The user is responsible for
establishing the operator
security for investment
provider information related
to external mutual funds
and annuities and ensuring
the correct NAV prices and
Mortality and Expense
factors have been entered.
This information is used in
the final NUV price
calculation.
10.4 The TRAC system charges a fee based
on the establishment of fund thresholds
designating a short term trade.
Reperformance Utilized an ITF
to process a series of transactions
to verify that the short term trade
fees were accurately calculated
and applied by the TRAC system
in accordance with operating
procedures.
No relevant exceptions
noted.
The user is responsible for
establishing appropriate
fund thresholds.
TRAC Transaction System Processing Controls 111
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Activity Reconciliation 11. Controls provide reasonable assurance that TRAC transactions activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
11.1 Transactions rejected by TRAC are
listed on various rejected transaction reports.
The TRAC system produces exception
reports which indicate transactions that have
not been processed in whole or in part.
Reperformance Utilized an ITF
to process improper trades to
determine posting to the
appropriate exception and warning
reports.
No relevant exceptions
noted.
The user is responsible for
reviewing and resolving
daily items appearing on the
rejected transaction reports.
The user is also responsible
for reviewing and resolving
with brokers, items
appearing on daily listings
of “fail file” activity.
11.2 Confirmed purchases or redemptions,
which are rejected due to a lack of specific
information or lack of payment, are
maintained in the “fail/free file” or the “fail
file,” respectively. The system produces the
Fail/Free Daily Balance Listing Report,
which details confirmed
purchases/redemptions. The client is
responsible for follow-up with brokers. This
follow-up may be performed by DST at the
client‟s request. System edit and validation
routines ensure orders for confirmed
purchases and redemptions are correct.
Reperformance Utilized an ITF
to process a confirmed purchase
and redemption lacking specified
information and/or lack of
payment to test system edit and
validation routines for confirmed
purchases and redemptions and
inclusion on the “fail/free file” or
“fail file,” as applicable.
Additionally, utilized an ITF to
process confirmed purchases to
verify posting to the Fail/Free
Balance listing.
No relevant exceptions
noted.
The user is responsible for
reviewing and resolving
with brokers items
appearing on daily listings
of “fail file” activity.
112 TA2000 Remote Transfer Agent Processing System – SAS 70
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11. Controls provide reasonable assurance that TRAC transactions activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
11.3 TRAC generates reports of wire
redemption activity, including the Wire
Instruction Report for Expedited
Redemptions and the Wire Instruction Report
for Direct Redemptions. The Bank
Instruction Maintenance Journal lists changes
to wire instructions. The Expedited
Redemption Warning Report lists accounts
where a redemption occurred on the same
day a change in wire instructions was
performed.
Reperformance Utilized an ITF
to process an expedited
redemption and a direct
redemption of shares by wire for
evidence of posting on the Wire
Instruction Report for Expedited
Redemptions and Wire Instruction
Report for Direct Redemptions,
respectively. Additionally, utilized
an ITF to attempt to change wire
instructions on a wire redemption
and to perform a redemption on
the same day a change in wire
instructions was performed to
determine posting to the Bank
Instruction Maintenance Journal
and Expedited Redemption
Warning Report, respectively.
No relevant exceptions
noted.
The user is responsible
for review and follow up
on wire redemption
control reports including
the daily balancing and
reconciliation functions.
TRAC Transaction System Processing Controls 113
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11. Controls provide reasonable assurance that TRAC transactions activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
11.4 Recorded exchanges will be included
on the TRAC Daily Distribution of Cash
Report requiring movement of cash and on
the Cash Supersheet.
Reperformance Utilized an ITF
to process cash transactions to
determine proper posting to the
Cash Supersheet and Daily
Distribution of Cash Report, as
applicable.
No relevant exceptions
noted.
The user is responsible
for reviewing reports and
reconciling recorded
exchanges.
11.5 TRAC produces a Cash Supersheet
which details cash activity and a Daily
Distribution of Cash report which indicates
the movement of cash needed between
accounts as a result of the current day‟s
activity. In the Same Day Cash Management
(SDCM) environment, cash supersheets,
accurate at a point in time, may be generated
throughout the day to allow for more timely
money movement.
Reperformance Utilized an ITF
to process cash transactions to
determine proper posting to the
Cash Supersheet and Daily
Distribution of Cash Report, as
applicable.
No relevant exceptions
noted.
The user is responsible
for initiating and
controlling cash
movements. The user is
also responsible for
requiring adequate
documentation for
transactions and
reconciling recorded
trades to supporting cash
activity.
114 TA2000 Remote Transfer Agent Processing System – SAS 70
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11. Controls provide reasonable assurance that TRAC transactions activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
11.6 TRAC maintains a check
reconciliation file for checks written by the
system. TRAC systematically balances and
compares the outstanding checks detail to the
summary of the outstanding checks on the
check reconciliation system (Comp/Recon)
and posts exceptions to the "Check Activity
Discrepancy Report."
Inquiry Inquired of TRAC
management as to the edits in
place which compare outstanding
check detail to the summary of
outstanding checks on the
Comp/Recon system.
Reperformance Utilized an ITF
for evidence that an exception
posted to the “Check Activity
Discrepancy Report” when the
outstanding check detail did not
balance with the check
reconciliation system
(Comp/Recon). Additionally,
utilized an ITF to issue a manual
check and verify reconciliation of
the check through check status
updates and TRAC reports.
No relevant exceptions
noted.
The user is responsible for
reviewing daily check
activity and reconciling
such activity to TRAC.
TRAC Transaction System Processing Controls 115
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11. Controls provide reasonable assurance that TRAC transactions activity is reconciled.
Control Activities Tests Applied Results of Testing User Control Considerations
11.7 The following reconciling procedures
are performed during nightly processing:
The participant history records are
accumulated and added to the
beginning share balances on the
participant master and reconciled to
the ending share balances on the
participant master. Any differences
are printed on the Daily Fund Share
Balance Error Listing (only accounts
with exceptions or differences will
appear on the report).
The cumulative ending participant
balances are reconciled to the fund
total per the supersheet file. Any
differences are printed on the
Supersheet Audit Report.
Reperformance Utilized an ITF
to generate test transactions and
determine differences, if any, were
appropriately posted to the Daily
Fund Share Balance Error Listing
and/or Supersheet Audit Report.
No relevant exceptions
noted.
The user is responsible for
investigation and
resolution of any out-of-
balance conditions
appearing on exception
reports.
116 TA2000 Remote Transfer Agent Processing System – SAS 70
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Systematic Restriction of Access 12. Controls provide reasonable assurance that access to the TRAC application is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
12.1 An operator security record must exist
in the security file for each operator that is
allowed access to TRAC. The operator
security record can limit access by
management code.
Reperformance Utilized the
TA2000 system to attempt to gain
access to restricted user functions
and management companies within
TA2000.
No relevant exceptions
noted.
User controls are required
to achieve adequate
control. User personnel are
responsible for the
following functions in the
Application Control
Security System:
Establishing operator
security records.
Defining the accesses
allowed for each
operator.
Controlling the
capability to modify
accesses.
Periodically reviewing
the Daily Operator
Update Report to
determine propriety of
changes to individual
operator security
records.
TRAC Transaction System Processing Controls 117
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12. Controls provide reasonable assurance that access to the TRAC application is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
12.2 TRAC accounts can only be accessed
by individuals who are assigned TRAC
processing capabilities. For internal mutual
fund accounts, TA2000 contains a system
flag at the account level, identifying TRAC
accounts. This flag prevents TA2000
processors access to TRAC accounts.
Reperformance Utilized the
TRAC system to attempt to gain
access in order to verify that the
infrastructure surrounding
restriction of processing
capabilities to authorized users
exists as described herein.
No relevant exceptions
noted.
The user is responsible for
establishing and monitoring
appropriate controls over
the Information Security
function.
118 TA2000 Remote Transfer Agent Processing System – SAS 70
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12. Controls provide reasonable assurance that access to the TRAC application is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
12.3 Valid user identification numbers and
passwords are required to access TRAC.
Such numbers and passwords are checked
against the security record which allows
access based upon established online
facilities. Passwords must be changed every
30 days. Invalid passwords will suspend the
related ID after a specific number of
attempts. If no activity has occurred for two
hours, the operator is logged off the TRAC
system.
Reperformance Attempted to
gain access to TA2000 using
invalid user identification numbers
and passwords for evidence that
the validation routines
appropriately deny access and that
the ID was suspended after the
specified number of invalid access
attempts.
Utilized the TA2000 system to
verify that passwords must be
changed every 30 days and the
operator was logged off the system
after two hours of inactivity. In
addition, validated that invalid
passwords suspended the related
ID after three invalid login
attempts.
No relevant exceptions
noted.
User activities or
controls are required to
achieve adequate
control. User personnel
are responsible for the
following functions in
the Application Control
Security System:
Establishing operator
security records.
Defining the accesses
allowed for each
terminal and operator.
Controlling the
capability to modify
accesses.
Periodically reviewing
the Daily Operator
Update Report to
determine propriety of
changes to individual
operator security
records.
TRAC Transaction System Processing Controls 119
Copyright © 2010 DST Systems, Inc.
12. Controls provide reasonable assurance that access to the TRAC application is systematically restricted.
Control Activities Tests Applied Results of Testing User Control Considerations
12.4 In addition to terminal and operator
security, TRAC provides security to be
established at the investment company, plan,
facility and function levels. Within each
online function an operator can be limited to
browse, update, add or delete access.
Reperformance Utilized the
TRAC system to verify the
infrastructure surrounding the
capability to restrict access to the
investment company, plan, facility
and function levels exists as
described herein.
No relevant exceptions
noted.
The user is responsible for
establishing and
monitoring appropriate
controls over the
Information Security
function.
Chapter III:
DST's Control Objectives, Controls and Tests of Operating
Effectiveness of Information Processing General Computer
Controls
Information Processing General Computer Controls 123
Copyright © 2010 DST Systems, Inc.
DST's Control Objectives, Controls and Tests of Operating Effectiveness of Information Processing General Computer Controls
DST management has specified certain control objectives that it believes are relevant
to its clients and their auditors and has identified its control activities in place to
achieve those objectives.
Fourteen control objectives have been identified and are grouped into eleven major
functional areas, which are as follows:
IT General Computer Controls
Organization and Administration 1. Controls provide reasonable assurance that relevant corporate policies are
communicated and acknowledged by new employees and contractors and
background checks are performed.
Physical/Logical Security 2. Controls provide reasonable assurance that physical access to production
computer systems and operator consoles is limited to authorized individuals.
3. Controls provide reasonable assurance that logical access to production data,
programs, data files and system parameters is restricted to properly
authorized individuals and programs.
System Software Maintenance and Implementation 4. Controls provide reasonable assurance that system software changes
including installations, upgrades, patches and functionality changes are
documented, tested and approved.
Computer Operations – Backups/Problem Management 5. Controls provide reasonable assurance that current and successful backups of
programs and data are performed and monitored.
6. Controls provide reasonable assurance that hardware and system software
problems are monitored, tracked and resolved.
Network Security 7. Controls provide reasonable assurance that external access to internal DST
data and systems is limited to individuals with a legitimate business need.
124 TA2000 Remote Transfer Agent Processing System – SAS 70
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Network Modifications
8. Controls provide reasonable assurance that modifications to network Access
Control Lists are documented, logged and approved.
Information Processing General Computer Controls
TA2000, TA2000 Subaccounting and TRAC Application Software Modifications
and Job Monitoring
9. Controls provide reasonable assurance that TA2000, TA2000 Subaccounting
and TRAC application software modifications are logged, tested and
approved.
10. Controls provide reasonable assurance that TA2000, TA2000 Subaccounting
and TRAC jobs are monitored and that errors are resolved.
AWD Application Software Modification
11. Controls provide reasonable assurance that AWD application software
modifications are tested and approved.
TA2000 Desktop/TA2000 Subaccounting Desktop/TRAC Desktop/DST
SmartDesk/Compliance Workstation Application Software Modifications
12. Controls provide reasonable assurance that Desktop application software
modifications are tested and approved.
FAN Web/Vision/TRAC Web/E-commerce Core Application Software
Modification
13. Controls provide reasonable assurance that FAN Web/Vision/TRAC Web/
E-commerce Core application software modifications are tested and
approved.
TA2000 Subaccounting Interface Monitoring
14. Controls provide reasonable assurance that TA2000 Subaccounting interfaces
are monitored.
PwC has determined the nature, timing and extent of testing to be performed in order
to determine if control activities specified by management are operating effectively.
DST‟s control activities and PwC‟s results of operating effectiveness are detailed
below. Further information on testing performed by PwC can be found in Chapter IV.
IT General Computer Controls 125
Copyright © 2010 DST Systems, Inc.
IT General Computer Controls
Organization and Administration 1. Controls provide reasonable assurance that relevant corporate policies are communicated and acknowledged by new
employees and contractors and background checks are performed.
Control Activities Tests Applied Results of Testing
1.1 Employees and contract new hires are
required to sign the Business Ethics and Legal
Compliance Policy, Acceptable Use Policy
(Computer and Telephone Systems),
Security/ID Procedures, Insider Trading Policy,
SecurID Policy and Communications Policy.
Inspection Inspected Human Resources
records for a sample of new and contract hires
for evidence that each signed the applicable
policies.
No relevant exceptions noted.
1.2 Criminal background investigations are
performed on new associates and contractors
and all associates and contractors are bonded.
Inspection Inspected Human Resources
records for a sample of new and contract hires
for evidence that criminal background checks
are performed.
Inspected DST‟s insurance policy for evidence
that associates and contractors are bonded.
No relevant exceptions noted.
126 TA2000 Remote Transfer Agent Processing System – SAS 70
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Physical Security 2. Controls provide reasonable assurance that physical access to production computer systems and operator consoles is
limited to authorized individuals.
Control Activities Tests Applied Results of Testing
2.1 The data centers are equipped
with multi-layer security elements
which include:
Winchester Data Center:
Dual perimeter fences.
Concrete encased steel bollards to
prevent vehicles from entering.
Security guards and police officers
on-site.
Video surveillance.
Motion and disturbance detection.
Mantraps at entrances.
Mandatory visitor sign-in and
escorts.
AWD Data Center:
Security guards on-site.
Video surveillance.
Mandatory visitor sign-in and
escorts.
Winchester and AWD Data Center
Observation During a walkthrough of each data
center, observed multi-layer security elements.
Winchester and AWD Data Center
No relevant exceptions noted.
IT General Computer Controls 127
Copyright © 2010 DST Systems, Inc.
2. Controls provide reasonable assurance that physical access to production computer systems and operator consoles is
limited to authorized individuals.
Control Activities Tests Applied Results of Testing
2.2 Individuals with the ability to
add, modify, or delete badge access are
appropriate.
Winchester and AWD Data Center
Inspection Inspected a listing of all individuals with
access to add, modify, or delete badge access to determine
appropriateness.
Winchester and AWD Data Center
No relevant exceptions noted.
2.3 Management approval is
obtained prior to granting access to the
Winchester and AWD Data Center
computer rooms.
Winchester and AWD Data Center
Inspection Inspected a sample of access requests for the
Winchester Data Center and AWD Data Center computer
rooms for evidence that the request was approved by
appropriate management.
Winchester and AWD Data Center
No relevant exceptions noted.
2.4 Access for terminated associates
is removed within one business day of
notification.
Winchester and AWD Data Center
Inspection Inspected documentation for a sample of
terminated employees and contractors for evidence that
access was removed within one business day of
notification.
Winchester and AWD Data Center
No relevant exceptions noted.
2.5 Management reviews
Winchester Data Center and AWD Data
Center access quarterly to determine
appropriateness of access.
Winchester and AWD Data Center
Inspection Inspected a sample of Winchester Data
Center and AWD Data Center access reviews for
existence and evidence of review.
Winchester and AWD Data Center
No relevant exceptions noted.
128 TA2000 Remote Transfer Agent Processing System – SAS 70
Copyright © 2010 DST Systems, Inc.
Logical Security 3. Controls provide reasonable assurance that logical access to production data, programs, data files and system
parameters is restricted to properly authorized individuals and programs.
Control Activities Tests Applied Results of Testing
3.1 All requests for new privileged
user access must be approved by an
appropriate level of management.
Mainframe
Observation Observed a DST Transmission Form
request to determine the appropriateness of email
notification routing and that the approving manager field
is locked and cannot be changed by the requester.
Inspection Inspected a sample of Top Secret access
requests to determine if the request was approved by the
appropriate Top Secret resource owner.
UNIX
Observation Observed a UNIX request to determine
the appropriateness of email notification routing and that
the approving manager field is locked and cannot be
changed by the requester.
iSeries, Windows
Inspection Inspected a sample of new privileged user
access requests to determine if the request was approved
by the appropriate level of management.
UNIX
Inquiry Inquired of management as to the procedures
for approving privileged access for new users. Verified
that no new individuals obtained privileged access to
UNIX during the period.
Mainframe, UNIX, iSeries, Windows
No relevant exceptions noted.
IT General Computer Controls 129
Copyright © 2010 DST Systems, Inc.
3. Controls provide reasonable assurance that logical access to production data, programs, data files and system
parameters is restricted to properly authorized individuals and programs.
Control Activities Tests Applied Results of Testing
3.2 Mainframe, UNIX and
Windows emergency access IDs are
assigned only when authorized by
management. Mainframe firecall IDs
are recertified every 90 days.
Mainframe
Observation Observed automatic routing of firecall
request forms to appropriate management for
authorization.
Inspection Inspected a sample of firecall IDs to
determine if they were authorized and recertified every
90 days by management or suspended.
UNIX, Windows
Inspection Inspected documentation to determine if
emergency access was authorized by management.
Mainframe, UNIX, Windows
No relevant exceptions noted.
3.3 Emergency access IDs for
iSeries are systematically removed
within 24 hours. System settings for
the emergency access removal job are
configured to systematically
communicate failures for resolution.
iSeries
Inspection Inspected a sample of job scheduling logs
and verified the automated job to remove emergency
access IDs ran daily.
Inspected iSeries automated tools for evidence that
security job failures are systematically communicated
for the iSeries platform.
iSeries
No relevant exceptions noted.
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3. Controls provide reasonable assurance that logical access to production data, programs, data files and system
parameters is restricted to properly authorized individuals and programs.
Control Activities Tests Applied Results of Testing
3.4 Privileged access for terminated
associates is removed in accordance
with established guidelines.
Mainframe
Inspection Inspected evidence of access removal and
compared to termination dates for a sample of users
with privileged access for evidence that access was
removed within 5 business days of termination.
UNIX
Inspection Inspected evidence of privileged access
removal and compared to termination dates for a sample
of users for evidence that access was removed within 1
business day of termination.
iSeries, Windows
Inspection Compared current system access listings
with the Human Resources termination listing for
evidence that all terminated associate access was
removed.
Mainframe, UNIX, iSeries, Windows
No relevant exceptions noted.
3.5 Privileged access for transferred
associates is validated as appropriate
by management or removed within 30
days from effective transfer date.
Mainframe, Windows
Inspection Inspected evidence to determine if
transfers have privileged access appropriately approved
or suspended timely.
UNIX, iSeries
Inquiry Inquired of management as to the procedures
for approving and suspending privileged access for
transferred users. Verified that no transfer of individuals
with privileged access to UNIX or iSeries occurred during
the report period.
Mainframe, UNIX, iSeries, Windows
No relevant exceptions noted.
IT General Computer Controls 131
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3. Controls provide reasonable assurance that logical access to production data, programs, data files and system
parameters is restricted to properly authorized individuals and programs.
Control Activities Tests Applied Results of Testing
3.6 SecurID administrators are
reviewed on a quarterly basis for
access appropriateness.
Mainframe, UNIX, iSeries, Windows
Inspection Inspected a sample of quarterly access
reviews performed by management of individuals with
administrative access to SecurID for existence and
evidence of review.
Mainframe, UNIX, iSeries, Windows
No relevant exceptions noted.
3.7 Mainframe, UNIX, iSeries,
Windows and CICS administrators are
reviewed for access appropriateness.
Mainframe
Inspection Inspected a sample of monthly
appropriateness reviews performed by management of
Mainframe administrators for existence and evidence of
review.
Inspection Inspected a sample of quarterly SYS1
reviews for existence and evidence of review.
UNIX, iSeries, CICS
Inspection Inspected a sample of quarterly
appropriateness reviews performed by management of
UNIX, iSeries and CICS administrators for existence
and evidence of review.
Windows
Inspection Inspected an annual appropriateness
review performed by management of Windows
administrators for existence and evidence of review.
Mainframe, UNIX, CICS, Windows
No relevant exceptions noted.
iSeries
For 1 of a sample of 2 quarterly reviews
selected, the review was not performed.
Management Response
Please refer to Management's Responses to
Identified Exceptions in Chapter V.
3.8 Audit logs are reviewed on a
monthly basis to ensure that IDs are
removed after 90 days of inactivity.
Mainframe
Inspection Inspected a sample of monthly audit log
reviews for existence and evidence of review.
Mainframe
No relevant exceptions noted.
3.9 Remedy approvers are reviewed
on a quarterly basis for access
appropriateness.
Remedy (Mainframe, UNIX, iSeries, Windows)
Inspection Inspected a sample of quarterly reviews
for existence and evidence of review.
Remedy (Mainframe, UNIX, iSeries, Windows)
No relevant exceptions noted.
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System Software Maintenance and Implementation 4. Controls provide reasonable assurance that system software changes including installations, upgrades, patches and
functionality changes are documented, tested and approved.
Control Activities Tests Applied Results of Testing
4.1 Changes to system software are
documented, tested and approved at
the conclusion of testing.
Mainframe, UNIX, Windows
Inspection Inspected documentation indicating a
sample of software changes received supervisor
approval of testing.
Mainframe, UNIX, Windows
No relevant exceptions noted.
4.2 Changes to system software are
appropriately approved by
management prior to implementation
into the production environment.
Mainframe, UNIX, Windows
Inspection Inspected documentation indicating a
sample of system software changes were approved prior
to implementation into the production environment.
Mainframe, UNIX, Windows
No relevant exceptions noted.
IT General Computer Controls 133
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4. Controls provide reasonable assurance that system software changes including installations, upgrades, patches and
functionality changes are documented, tested and approved.
Control Activities Tests Applied Results of Testing
4.3 Changes to iSeries system
software are documented, tested and
approved for production by an
appropriate level of management.
Approval for production encompasses
approval of testing.
iSeries
Inspection Inspected a sample of system software
changes for evidence of documentation, testing approval
and approval by an appropriate level of management,
prior to implementation into the production
environment.
iSeries
No relevant exceptions noted.
4.4 Programs defined in the
Program Properties Table (PPT) are
reviewed semi-annually for
appropriateness and changes made as
required.
Mainframe
Inspection Inspected the semi-annual review of
programs defined in the Program Properties Table (PPT)
for existence and evidence of review.
Mainframe
No relevant exceptions noted.
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4. Controls provide reasonable assurance that system software changes including installations, upgrades, patches and
functionality changes are documented, tested and approved.
Control Activities Tests Applied Results of Testing
4.5 Datasets defined in the
Authorized Program Facility (APF) are
reviewed semi-annually for
appropriateness and changes made as
required.
Mainframe
Inspection Inspected the semi-annual review of
datasets defined in the APF for existence and evidence
of review.
Mainframe
No relevant exceptions noted.
4.6 Firecall activity is logged and
routed to a firecall manager to review
for appropriateness. All firecall activity
must be reviewed within five business
days of manager receiving notification.
Mainframe
Observation Observed the Lotus Notes Firecall
Activity database to obtain evidence that only
authorized individuals can approve firecall activity.
Observed a firecall transaction to obtain evidence that
firecall activity is logged, only approved activity is
archived and email notification is provided to the
manager.
Inspection Inspected a sample of firecall activities for
evidence that manager review and approval occurred in
a timely manner.
Inspected system settings for evidence that notifications
are sent when firecall activity occurs, after three days
outstanding and after five days outstanding.
Mainframe
No relevant exceptions noted.
IT General Computer Controls 135
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Computer Operations – Backups 5. Controls provide reasonable assurance that current and successful backups of programs and data are performed and
monitored.
Control Activities Tests Applied Results of Testing
5.1 Backups are performed on a daily basis
based on system configurations and are stored
at a secure, environmentally controlled, offsite
facility.
Mainframe, UNIX, iSeries
Inspection Inspected system settings for
evidence that backups are scheduled to occur
on a daily basis.
Mainframe
Observation Observed the existence of
software to monitor extended remote copy
(XRC) sessions and volumes and observed real-
time monitoring of XRC by the recovery
facility operations group for the mirroring of
TRAC transactions.
iSeries
Observation Observed real-time replications
occurring between primary and secondary
AWD iSeries partitions.
Mainframe, UNIX, iSeries
No relevant exceptions noted.
5.2 Backup system settings are configured
to systematically communicate failures for
resolution.
Mainframe
Inspection Inspected automated tools for
evidence that backup failures are systematically
communicated and failures are resolved.
UNIX
Inspection Inspected automated tools for
evidence that backup failures are systematically
communicated.
Inspection Inspected that communicated
backup failures are resolved.
Mainframe
No relevant exceptions noted.
UNIX
During the testing period, from 4/12/10 to
8/12/10, noted that while backup failures were
communicated for operating system backups,
evidence to show resolution of backup failures
was not available.
Management Response
Refer to management's response to Identified
Exceptions in Chapter V.
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5. Controls provide reasonable assurance that current and successful backups of programs and data are performed and
monitored.
Control Activities Tests Applied Results of Testing
5.3 Incremental updates of programs and
data on UNIX servers occur to recovery servers
multiple times per day. Issues are researched
and resolved.
UNIX
Observation (4/1/10 - 9/30/10 Only) Observed
the real-time monitoring of incremental updates
of programs and data performed by the
operations group.
Inspection (4/1/10 - 9/30/10 Only) Inspected
system configurations for evidence that
programs and data were updated to recovery
servers.
Inspected a sample of issues for evidence of
resolution.
UNIX
No relevant exceptions noted.
5.4 On a weekly basis, exercises are
performed to recover programs and data for
UNIX servers and results are communicated to
management.
UNIX
Inspection (4/1/10 - 9/30/10 Only) Inspected for
a sample of weeks, evidence that recovery
exercises were performed and the results were
communicated to management.
UNIX
No relevant exceptions noted.
5.5 A computer operator manually
communicates the status of backups by
updating the nightly shift turnover log.
iSeries
Inspection Inspected evidence to determine
that the backup status is communicated for the
iSeries platform.
iSeries
No relevant exceptions noted.
IT General Computer Controls 137
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5. Controls provide reasonable assurance that current and successful backups of programs and data are performed and
monitored.
Control Activities Tests Applied Results of Testing
5.6 A report is reviewed on a daily basis by
management to ensure backups are performed
for Windows servers. Any server that does not
successfully backup is researched and resolved.
Windows
Inspection Inspected a sample of
appropriateness reviews performed by
management of daily backups for existence and
evidence of review.
Windows
No relevant exceptions noted.
5.7 Modifications to the backup schedule
are documented and routed to the appropriate
parties for completion.
Windows
Inspection Inspected a sample of backup
schedule modifications for evidence of
documentation.
Windows
No relevant exceptions noted.
5.8 Exercises are performed to recover
platforms and related products and establish
network connectivity to specified client
locations in support of their product validation
testing.
Mainframe, UNIX, Windows
Inspection Inspected a sample of recovery
exercises to determine existence.
iSeries
Inspection Inspected a sample of client
switch exercises from one data center to
another to determine existence.
Mainframe, UNIX, iSeries, Windows
No relevant exceptions noted.
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Computer Operations – Problem Management 6. Controls provide reasonable assurance that hardware and system software problems are monitored, tracked and
resolved.
Control Activities Tests Applied Results of Testing
6.1 Hardware and software
problems are logged and open issues
are monitored. Hardware and software
problems are routed to appropriate
parties for resolution.
Winchester and AWD Data Center
Inspection Inspected a sample of problem reports to
determine that problems were assigned and resolved.
Winchester and AWD Data Center
No relevant exceptions noted.
6.2 Shift turnover logs are utilized
to communicate any problems or
special instructions between shifts.
Winchester and AWD Data Center
Inspection Inspected a sample of daily shift turnover
logs for evidence that problems and special instructions
are documented.
Winchester and AWD Data Center
No relevant exceptions noted.
6.3 A computer operations
supervisor is present on all shifts at the
Winchester Data Center. At least one
computer operator is present at the
AWD Data Center.
Winchester Data Center
Inspection Inspected a sample of Winchester shift
manager schedules for evidence that a shift manager is
scheduled for every shift.
AWD Data Center
Inspection Inspected a sample of AWD Data Center
operator shift schedules for evidence that at least one
operator is scheduled for every shift.
Winchester and AWD Data Center
No relevant exceptions noted.
IT General Computer Controls 139
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Network Security 7. Controls provide reasonable assurance that external access to internal DST data and systems is limited to individuals
with a legitimate business need.
Control Activities Tests Applied Results of Testing
7.1 Firewalls and routers within the
Winchester and AWD Data Centers are
logging unusual activity or evidence of
problems to a centralized location.
Inspection Inspected evidence that firewall and router
events are logged and sent to a centralized monitoring
facility.
No relevant exceptions noted.
7.2 An Intrusion Detection System
has been deployed in both the
Winchester and AWD Data Centers.
The most recent signatures have been
evaluated and updates which affect
DST‟s network environments have been
applied.
Inquiry Inquired of management as to the existence of
an Intrusion Detection System for the infrastructure.
No relevant exceptions noted.
7.3 The firewalls, routers and
switches which support the Winchester
and AWD Data Center infrastructure
are maintained in computer rooms with
access restricted to authorized
personnel.
Inspection Inspected a sample of access requests for the
Winchester Data Center and AWD Data Center computer
rooms for evidence that the request was approved by
appropriate management.
No relevant exceptions noted.
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7. Controls provide reasonable assurance that external access to internal DST data and systems is limited to individuals
with a legitimate business need.
Control Activities Tests Applied Results of Testing
7.4 The Winchester and AWD Data
Center E-commerce client connections
and external subsidiary connections are
protected by firewall systems through
which flow all inbound traffic.
Inquiry and Inspection Inspected network diagrams
and inquired of management to determine that all network
traffic entering the E-commerce environment via client
connections or external subsidiary connections are routed
through firewalls.
No relevant exceptions noted.
7.5 The E-commerce firewalls and
perimeter routers are configured to
protect against unauthorized access and
are configured to disallow all traffic,
except those protocols and services
specifically required to support the
E-commerce function.
Inquiry and Inspection Inspected E-commerce firewall
and router configurations for proper rulesets to protect
against unauthorized access and for proper configuration
of protocols and services to support the E-commerce
environment. Inquired of management as to the
appropriateness of the settings configured on the
firewalls.
No relevant exceptions noted.
7.6 Web application security
assessments are performed by a
third-party on an annual basis.
Inquiry Inquired of management as to the performance
of web assessment by a third party which address web
application security issues relating to access to the
network.
No relevant exceptions noted.
IT General Computer Controls 141
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7. Controls provide reasonable assurance that external access to internal DST data and systems is limited to individuals
with a legitimate business need.
Control Activities Tests Applied Results of Testing
7.7 Firewall rules for external-
facing perimeter firewalls are reviewed
by a third party on a semi-annual basis.
Inquiry Inquired of management as to the
performance of firewall rule reviews by a third party
which address firewall security issues relating to access
to the network.
No relevant exceptions noted.
7.8 Users of the Winchester and
AWD Data Center firewalls and
routers are identified by a unique
identification (ID) and authentication
is required before access to the
firewalls and routers is granted.
Inquiry and Inspection Inspected users with access
to firewalls and routers and inquired of management to
determine that the users configured to access the
firewalls and routers are set in accordance with
management intentions.
Inspection Inspected configurations for Winchester
and AWD Data Center firewalls and routers to
determine that users are identified by a unique
identification (ID) and authentication is required before
access to the infrastructure components is granted.
No relevant exceptions noted.
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Network Modifications 8. Controls provide reasonable assurance that modifications to network Access Control Lists, are documented, logged
and approved.
Control Activities Tests Applied Results of Testing
8.1 Firewall and router modifications are
logged. Automated alerts are generated when a
firewall rule is modified.
Inspection Inspected the syslog
configuration file and/or alert settings for
firewalls and routers to determine that alerts are
automatically generated when firewall and
router modifications occur.
No relevant exceptions noted.
8.2 Modifications to network Access
Control Lists (ACLs) are documented,
including the reason for the change.
Inspection Inspected a sample of network
ACL modification documentation to determine
that documentation exists and contains a clear
reason for the change.
No relevant exceptions noted.
8.3 Authorization, from either a manager or
a senior security engineer, is required prior to
modification of Access Control Lists (ACLs).
Inspection Inspected a sample of network
ACL modifications for evidence of manager
authorization prior to implementation of the
change.
No relevant exceptions noted.
Information Processing General Computer Controls 143
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Information Processing General Computer Controls
TA2000, TA2000 Subaccounting and TRAC Application Software Modifications
9. Controls provide reasonable assurance that TA2000, TA2000 Subaccounting and TRAC application software changes
are logged, tested and approved.
Control Activities Tests Applied Results of Testing
9.1 Library management software (Endevor)
with version control at the module level is used to
manage source code development and
maintenance. Only one individual can check out
code at a time.
Observation Observed system queries of the
Endevor system to determine if Endevor properly
maintains audit trail information and utilizes version
numbering.
Observed controls over contention when attempting
to “check out” a module to a platform already under
revision in an Endevor platform.
Observed controls over contention when a module
“jumps” another module in the install process.
No relevant exceptions noted.
9.2 Unit test script guidelines exist to ensure
consistent testing procedures. Migration
Checklists are completed by the project team and
reviewed by Test Platform Support to ensure
testing is occurring.
Observation Observed the Unit Test Script
Guidelines for evidence of existence.
Inspection Inspected testing documentation for a
sample of changes for evidence that testing is
occurring.
No relevant exceptions noted.
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9. Controls provide reasonable assurance that TA2000, TA2000 Subaccounting and TRAC application software changes
are logged, tested and approved.
Control Activities Tests Applied Results of Testing
9.3 Management clients are notified of the
availability to perform testing of program changes
in a beta environment.
Inspection Inspected documentation for a sample
of program changes evidencing availability of
testing in the beta environment.
No relevant exceptions noted.
9.4 Top Secret restricts access to production
libraries by requiring that Endevor is used in the
change management process.
Inspection Inspected a Top Secret listing of users
with access to migrate changes to production load,
JCL and source libraries to determine if Top Secret
requires Endevor be used in the change management
process. For users that do not require the use of
Endevor due to job functions, access is verified as
appropriate with management.
No relevant exceptions noted.
9.5 Endevor systematically requires manager
authorization for programs installed to production.
A monthly review of individuals authorized to
perform regular and JCL automated verifies
within Endevor is performed by management.
Observation Observed that an error message was
produced by Endevor when an unauthorized user
attempted to perform an automated verify.
Observed the Endevor LGM Install Panel and
validated only programs with the appropriate
approvals were installed to production.
Inspection Inspected a sample of access reviews
for individuals authorized to perform regular and
JCL automated verifies within Endevor for
existence and evidence of review.
No relevant exceptions noted.
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TA2000, TA2000 Subaccounting and TRAC Job Monitoring 10. Controls provide reasonable assurance that TA2000, TA2000 Subaccounting and TRAC jobs are monitored and that
errors are resolved.
Control Activities Tests Applied Results of Testing
10.1 An automated scheduling system has
been installed to control job scheduling activities.
The following computer operations monitoring
techniques are in place:
TA2000 Operations personnel review the
scheduler for abend conditions.
Abend conditions are documented by
Operations personnel, researched and
resolved.
Inspection Inspected system software
documentation to determine that an automated
scheduling system is installed.
Inspected a sample of abends to determine
documentation was created and included the
problem and the resolution.
No relevant exceptions noted.
10.2 Top Secret validates that departures from
authorized setup and execution procedures are
submitted by an authorized user ID. If a special
request job is not submitted by an authorized ID,
an abend will occur and the job will not execute.
Reperformance Utilized an ITF to obtain
evidence that Top Secret will not allow a special
request submitted by an unauthorized ID (i.e., an ID
without the required permission) to successfully
process and will result in an abend.
No relevant exceptions noted.
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AWD Application Software Modifications 11. Controls provide reasonable assurance that AWD application software modifications are tested and approved.
Control Activities Tests Applied Results of Testing
11.1 Management ensures that appropriate user testing
and/or approval is performed for changes to AWD prior to
releasing changes into production.
Inspection Inspected documentation used to
request change migration to production and verified
existence as evidence of user approval of the change.
No relevant exceptions noted.
11.2 Changes to the AWD application are appropriately
approved by management prior to releasing changes into
production.
Inspection Inspected documentation for a sample
of AWD application changes to determine that
changes were approved by management prior to
releasing changes into production.
No relevant exceptions noted.
11.3 The ability to migrate changes to production is
restricted to appropriate individuals. A quarterly review of
individuals with the ability to migrate changes to
production is performed by management.
Inspection Inspected a sample of quarterly reviews
for existence and evidence of review.
No relevant exceptions noted.
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TA2000 Desktop/TA2000 Subaccounting Desktop/TRAC Desktop/DST SmartDesk/Compliance Workstation Application Software Modifications
12. Controls provide reasonable assurance that Desktop application software modifications are tested and approved.
Control Activities Tests Applied Results of Testing
12.1 Management ensures that appropriate
testing is performed for changes to Desktop
applications prior to creation of the Installation
CD.
Inspection Inspected documentation for a sample
of enhancements for evidence of appropriate testing
prior to the creation of the Installation CD.
No relevant exceptions noted.
12.2 Changes to the Desktop applications are
appropriately approved by management prior to
releasing the Installation CD.
Inspection Inspected evidence of appropriate
approval to migrate desktop changes prior to
release of the Installation CD.
No relevant exceptions noted.
12.3 The ability to migrate changes to
production is restricted to the Software
Configuration Management Team. A quarterly
review of individuals with the ability to migrate
changes to production is performed by
management.
Inspection Inspected a sample of quarterly
reviews for existence and evidence of review.
No relevant exceptions noted.
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FAN Web/Vision/TRAC Web/E-commerce Core Application Software Modifications
13. Controls provide reasonable assurance that FAN Web/Vision/TRAC Web/E-commerce Core application software
modifications are tested and approved.
Control Activities Tests Applied Results of Testing
13.1 Management ensures that appropriate
testing is performed for changed to E-
commerce applications prior to releasing
changes into production.
FAN Web/ Vision/TRAC Web/E-commerce Core Inspection Inspected documentation for a sample
of enhancements for evidence of appropriate testing
prior to the change being released into production.
FAN Web/Vision/TRAC Web/E-commerce Core No relevant exceptions noted.
13.2 Changes to the E-commerce
Applications are appropriately approved by
management prior to releasing changes into
production.
FAN Web/Vision/TRAC Web/E-commerce Core Inspection Inspected evidence of appropriate
approval to migrate E-commerce application changes
to production.
FAN Web/Vision/TRAC Web/E-commerce Core No relevant exceptions noted.
13.3 The ability to migrate changes to
production is restricted to appropriate
individuals. A quarterly review of individuals
with the ability to migrate changes to
production is performed by management.
FAN Web/Vision/TRAC Web/E-commerce Core Inspection Inspected a sample of quarterly reviews
for existence and evidence of review.
FAN Web/Vision/TRAC Web/E-commerce Core No relevant exceptions noted.
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TA2000 Subaccounting Interface Monitoring 14. Controls provide reasonable assurance that TA2000 Subaccounting interfaces are monitored.
Control Activities Tests Applied Results of Testing
14.1 The TA2000 Subaccounting interface
between clients and DST is monitored and failures
are resolved to help ensure a continuous data
connection is maintained.
Observation Observed the existence of
monitoring software and the identification of
failures to help ensure a continuous data connection
is maintained between TA2000 Subaccounting
clients and DST.
Inspection Inspected a sample of failure tickets
for evidence of resolution.
No relevant exceptions noted.
14.2 MQ interface failures supporting TA2000
Subaccounting are systematically identified and
communicated to the support team.
Inspection Inspected MQ system settings to
determine that failure notifications are
systematically identified and communicated.
No relevant exceptions noted.
14.3 The TA2000 Subaccounting to NSCC
interface is monitored daily through the use of a
checklist and automated failure notifications to
validate all transmissions are processed as
intended.
Inspection Inspected a sample of TA2000
Subaccounting NSCC monitoring checklists to
determine consistent monitoring of the TA2000
Subaccounting to NSCC interface.
No relevant exceptions noted.
Chapter IV:
Information Provided by the Service Auditor
Information Provided by the Service Auditor 153
Copyright © 2010 DST Systems, Inc.
Information Provided by the Service Auditor
This report is intended to provide users of DST‟s Remote Transfer Agent Processing
System (hereafter referred to as TA2000), TA2000 Subaccounting and TRAC
information sufficient to understand the flow of transactions within TA2000, TA2000
Subaccounting and TRAC and the controls that may affect the processing of client
transactions and to provide information about the operating effectiveness of the
controls that were tested.
This report, when combined with an understanding of the internal controls in place at
client locations, is intended to assist the client‟s independent auditors in planning the
audit of client organizations and in assessing the control risk for assertions in client
organization financial statements that may be affected by the controls of TA2000,
TA2000 Subaccounting and TRAC.
Our testing of the controls of TA2000, TA2000 Subaccounting and TRAC was
restricted to those control objectives and the related controls outlined by DST
management contained in Chapters II and III of this report. Management believes
these are the relevant key control activities for the stated objectives. Our examination
did not extend to the information contained in Chapter V: Other Information provided
by DST Systems. The examination was performed in accordance with American
Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards
No. 70 (SAS 70), Service Organizations. It is each interested party‟s responsibility to
evaluate this information in relation to the internal controls in place at each client‟s
organization. These control activities at client organizations, contemplated in the
design of DST‟s controls, have been outlined in Chapter I, User Control
Considerations. If effective client internal controls are not in place, the controls
within TA2000, TA2000 Subaccounting and TRAC may not compensate for such
weaknesses.
The objective of a coordinated system of control activities is to provide reasonable,
but not absolute, assurance as to the safeguarding of assets against loss from
unauthorized use or disposition and the reliability of financial records for maintaining
accountability for assets. The concept of reasonable assurance recognizes that the cost
of a system of internal controls should not exceed the benefits derived and also
recognizes that the evaluation of these factors necessarily requires estimates and
judgments by management.
As part of our review of TA2000, TA2000 Subaccounting and TRAC we performed a
variety of tests, each of which provided different levels of audit satisfaction. The
combined results of these tests provided the basis for our understanding of the
framework for control and whether the controls represented were actually in place as
of September 30, 2010 and were operating effectively throughout the period from
October 1, 2009 to September 30, 2010.
154 TA2000 Remote Transfer Agent Processing System – SAS 70
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Control Environment The control environment represents the collective effect of various factors on
establishing, enhancing or mitigating the effectiveness of specific controls. In addition
to tests of specific controls described below, our procedures included tests or
consideration of the relevant components of the DST control environment, including:
DST‟s organizational structure and approach to segregation of duties.
Management methods.
Personnel policies and practices.
Internal Audit.
Our tests of the control environment included the following procedures to the extent
we considered necessary:
A review of DST‟s organizational structure, including the segregation of duties,
policy statements and personnel policies.
Discussions with management, operations, administrative and other personnel,
who are responsible for developing, ensuring adherence to and applying controls.
Observations of personnel in the performance of their assigned duties.
A review of DST action plans taken in response to recommendations to improve
internal controls.
The control environment was considered in determining the nature, timing and extent
of testing of the operation of controls relevant to achievement of the control
objectives.
Tests of Controls Our tests of the operating effectiveness of controls included such tests as were
considered necessary in the circumstances to evaluate whether those controls and the
extent of compliance with them, are sufficient to provide reasonable, but not absolute,
assurance that the specified control objectives were achieved during the period from
October 1, 2009 to September 30, 2010. Our testing of the operating effectiveness of
controls was designed to cover a representative number of transactions and procedures
throughout the period October 1, 2009 to September 30, 2010 for each of the control
activities listed in Chapters II and III, which are designed to achieve the specified
control objectives. In selecting particular tests of the operating effectiveness of
controls, we considered:
Nature of the controls being tested.
Types and competence of available evidential matter.
Nature of the control objectives to be achieved.
Assessed level of control risk.
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Expected efficiency and effectiveness of the tests.
Such techniques were used to evaluate the fairness of the description of the controls
and to evaluate the operating effectiveness of specified controls.
In determining the tests to be conducted, procedures performed by internal audit were
considered where applicable. Accordingly, the effectiveness of internal audit was
evaluated and tested, including:
Assessment of the competence and objectivity of internal audit.
Evaluation of the scope of their work, supervision and review.
Assessment of the conclusions reached and reports issued.
The types of tests performed to assess the operating effectiveness of the controls
detailed in Chapters II and III are described below.
Inquiry
Inquiries were made with appropriate DST personnel in order to gain an
understanding of DST‟s framework for control, to identify those control activities that
are necessary to effectively achieve specified control objectives and/or for evidence
that the control activities are in place and the operating effectiveness of those control
activities. Inquiry testing was performed for all controls contained in Chapters II and
III.
Observation
We observed the application or existence of specific controls as represented.
Inspection
We inspected documents and records indicating performance of the applicable
controls. Examples of what this could include are listed below:
Physically inspecting or counting tangible assets and comparing the results with
DST‟s records.
Inspection of reconciliations and management reports to assess whether
transactions and reconciling items are properly monitored, controlled and
resolved, as necessary, on a timely basis.
Review of source documentation and authorizations for evidence of propriety of
transactions processed.
Examining documents or records for evidence, such as the existence of initials or
signatures, of performance of controls.
Reperformance
We reperformed the control or processing application of the control for evidence of
the accuracy of its operation. Examples of what this could include are listed below:
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Obtaining evidence of the arithmetical accuracy and correct processing of
transactions by either recomputing the TA2000, TA2000 Subaccounting and
TRAC computations or performing independent calculations.
Reperforming the matching of various system records by independently matching
the same records and comparing reconciling items to TA2000, TA2000
Subaccounting and TRAC prepared reconciliations.
Processing test transactions through application programs in a production
environment.
Where applicable, the test transaction technique of an integrated test facility was used
to ascertain whether computer software processing controls and computerized
processing functions were operating effectively. This technique is described below.
Integrated Test Facility (ITF)
An ITF was used to test the operating effectiveness of certain TA2000, TA2000
Desktop, TA2000 Subaccounting, TA2000 Subaccounting Desktop, TRAC, TRAC
Desktop, DST SmartDesk, FAN Web, Vision, TRAC Web, and TA2000 Voice
automated controls and functions. An ITF consists of periodically processing selected
test transactions on test accounts and funds in the DST production processing
environment.
The tests were designed to both:
Process invalid transactions to determine the proper functioning of various edit
and validation tests which are to be performed by the system.
Process valid transactions in order to determine that all applicable files and
controls and exceptions reports are properly updated and/or generated.
Expected results were identified for each of the test steps. This was done so the
operating effectiveness of the TA2000, TA2000 Desktop, TA2000 Subaccounting,
TA2000 Subaccounting Desktop, TRAC, TRAC Desktop, FAN Web, Vision, TRAC
Web and TA2000 Voice automated controls could be measured by comparing the
expected results to the actual results.
Chapter V:
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Other Information Provided by DST
Management’s Responses to Identified Exceptions Chapter III: Information Processing General Computer Controls
Control Activity Management Response
3.7 - Mainframe, UNIX, iSeries and CICS
administrators are reviewed on a quarterly
basis for access appropriateness. Windows
administrators are reviewed on an annual
basis for access appropriateness.
iSeries
For 1 of a sample of 2 quarterly reviews
selected, the review was not performed
iSeries
9/30/10: Management concurs with the finding and is
developing an automated process intended to minimize the
disruption associated with key personnel transitions. This
action coupled with the next deployment phases of the
iSecurity software suite will facilitate the continual process
improvement cycle associated with this space.
Additionally, a subsequent review of access has been
performed and access was appropriate for all users.
5.2 - Backup system settings are configured
to systematically communicate failures for
resolution.
UNIX
During the testing period, from 4/12/10 to
8/12/10, noted that while backup failures
were communicated for operating system
backups, evidence to show resolution of
backup failures was not available.
UNIX
9/30/10: Management concurs with the finding and has
reinstituted the automatic generation of work tickets to
evidence the action taken to resolve backup failure
notifications. While tickets were not automatically
generated for the period noted, email alerts continued to be
sent to the appropriate support personnel and action was
taken to resolve issues as required. There was no impact to
operating system availability during the reporting period
due to the lack of automated ticket generation.
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Overview of Business Continuity Plan Business Continuity pertains to the recovery of a business unit, group of business
units, or an entire facility due to an incident that disrupts or threatens to disrupt
normal business functions. The recovery is focused on restoring the technology
infrastructure required to support critical business processes and relocating staff
displaced by an incident to suitably equipped alternative facilities if required.
The Business Continuity Program is organized by the Corporate Business
Continuity Department. This department reports directly to a senior officer of
DST Systems, Inc. DST‟s Business Continuity program is based on the
Professional Practices for the Business Continuity Planner, the standard
developed jointly by Disaster Recovery Institute International (DRII) and the
Business Continuity Institute (BCI).
The Corporate Business Continuity Department works with business units to
develop planning guidelines based on the most likely worst-case scenario, which
is the partial or entire loss of a single facility or building. A facility may house
one or more business units.
In the event an incident is severe enough to require relocation of a business unit,
a series of notifications are initiated to alert designated response teams. These
response teams include:
Incident Response Team The incident response team consists of members from
Corporate Business Continuity, Technology, Human Resources, Facilities
Management, Procurement and Media Relations. This team is responsible for
facilitating the recovery of the business unit. The team is located at the Incident
Communication Center (ICC) where it works together to manage the incident and
share information. There is an alternate ICC available if the primary site is not
accessible.
Incident Management Team The incident management team consists of
members of management from the impacted business units. This team acts as the
primary decision making body for the recovery. This team is also responsible for
monitoring the recovery and providing focused management support during the
recovery of the business unit.
Corporate Communications Response Team The corporate communications
response team consists of members from Media Relations, Corporate Business
Continuity and Human Resources. This team is responsible for corporate-level
communications to the media and internal staff. It also assists business units to
develop clear and consistent communications with clients and third parties.
Business Continuity exercises are performed for each facility annually and may
include a table top exercise, a physical relocation exercise, or a combination of
both. Exercises are designed to utilize business continuity plans to validate
assumptions, resource requirements and tasks necessary for business resumption.
Areas for improvement are identified and assigned for remediation. Results of
each exercise are forwarded to the business unit officer, planners and the internal
audit department.