STAR-WARS AT THE BOTTOM LINE - THE ACCOUNTING FORUM FOR DEFENSE CONTRACTORS

During the 1980s, as the United States engaged in the largest military build up of its history, accusations of fraud and abuse in the defens e establishment escalated as well. In 1992, The Accounting Review publ ished an exclusively neo-classical economics-based ''Forum on Accounti ng for Defense Contracts.'' Demski and Magee (1992) were invited by th e editor to comment on the articles in the forum. This paper critiques Demski and Magee's article and argues that, by highlighting four part icular market imperfections and ignoring others, Demski and Magee esta blish a set of preconditions which shifts the blame for fraud from ind ustry to the government. An ''Alternative Perspective on Accounting fo r Defense Contracts'', which examines the institutional and social mec hanisms which abet unethical behavior in defense, is also presented. ( C) 1998 Elsevier Science Ltd. All rights reserved.