Information Systems Audit Report 2019

Appendix 1- Cloud application (SaaS) better practice principles

In a software as a service (SaaS) arrangement, responsibility for cyber security is shared between the vendor and customer. Public sector entities remain responsible for security including governance and access to information. Entities should assess the risks associated with handing over data to vendors and ensure sufficient controls are in place to meet each entity’s security needs, including that contracts include measures to mitigate risks and protect information held in the cloud. Ongoing contract management is also essential and should include the entity verifying that the vendor adheres to agreed terms. This may occur through third party assurance reports and entity reviews.

The following table shows some better practice principles entities should consider when choosing a SaaS provider and considerations for ongoing contract management. This is not intended as an exhaustive list. Further guidance can be obtained from the Australian Cyber Security Centre.

Stage Principle Our expectation
Decision to adopt SaaS Understand risks Perform a risk assessment to understand security risks associated with handing over information to a cloud vendor. The sensitivity, use and value of data should inform an understating of the risks to be closely managed when weighing value for money considerations
Vendor Knowing who the vendor is and what they do. Vendor reputation and its compliance with recognised security standards should be assessed. The Australian Cyber Security Centre maintains a list (CCSL) of Australian government certified cloud vendors *This will no longer be maintained from June 2020.
SaaS contract and management Security Appropriate controls should be defined to protect the application and existing ICT systems that interact with the application from cyber attacks
Data sovereignty Data is subject to the laws of the country where it is stored. Entities should prefer an arrangement where data is stored in Australia. If this is not possible, the nature of data going overseas and laws of those countries should be carefully considered
Data ownership Contracts should clearly state who has legal ownership of any data during and after the contract
Data retention and deletion Contracts should clearly define the data retention method and period
Access to data and monitoring Controls to restrict and monitor access to data should be in place
Vendor lock-in Controls to enable efficient migration of data to other cloud or on premise systems, should be defined. An exit strategy should be agreed with the vendor to support the move
Encryption of data Appropriate levels of encryption should be defined for data in transit and at rest. This should also include management of the data encryption key
Data segregation Many SaaS applications provide access to multiple customers on a shared platform. Controls should be in place to segregate data from other tenants
Security breaches Contracts should clearly define how the vendor must report security breaches and include penalties and indemnities. Entities should have access to relevant evidence (e.g. logs) for forensic investigations
Availability of application and data Data backup requirements should be defined and vendor disaster and business continuity plans should meet the entity’s business needs. Contracts should define acceptable down times and penalties.

An appropriate escrow agreement should be considered if the SaaS application is built or highly customised for the entity

Strong authentication controls Access to cloud applications and data should have strong controls and include multifactor authentication
Assurance reports Vendors should provide independent audit assurance reports (e.g. SOC 2) to confirm vendor controls meet expectations and operate effectively
Right to audit Contracts should define the entity’s right to conduct a security audit of vendor controls to protect the confidentiality, integrity and availability of applications and information
Background checks Vendors should perform background and criminal history checks for their staff. Security clearances should be considered for highly sensitive data
Ongoing contract management Vendor compliance with agreed terms should be regularly checked.


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