The Doctrine of Cardwell
1. Meaningful detection and deterrence of inside theft can not be obtained as a by-product of audits made for other purposes.
2. The exclusive purpose of audit surveillance is the detection and deterrence of inside theft on a peremptory basis (as of right, without cause).
3. Practical protection against inside theft may be afforded to employers, and society generally, by the service of accountants in performance of audit surveillance engagements.
4. As a contract-based engagement, audit surveillance is a free-market solution to inside theft. The function of the engagement is to perform routine, objective explorations for the possibilities of inside theft within practical cost-benefit parameters.
5. Audit surveillance is accomplished by incisive tests of limited scope of the books and records - the jurisdictional purview of the accountant. These tests seek to detect complements, fraudulent entries and omissions, and certain forms of conversion. The incisive tests of limited scope vary in focus, direction and timing, and are supplemented by the overall techniques of direct observation and oral inquiry. While such tests are short and efficient, they are exceedingly thorough and may utilize all relevant sources of corroborative data.
6. The routine tests of the surveillance auditor are designed to bring at least one fraudulent document or record under scrutiny.
7. When tests locate conclusive evidence of a single fraudulent manipulation, routine surveillance testing is discontinued and an unrestricted search for theft begins.
8. Audit surveillance is but one of six components of a comprehensive system available to owners for protection against inside theft.
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