Cost Accounting for War: Contracting Procedures and Cost-Plus Pricing in WWI Industrial Mobilization in Italy

53 Pages Posted: 28 Aug 2015

See all articles by Gloria Vollmers

Gloria Vollmers

Maine Business School

Valerio Antonelli

University of Salerno

Roberto Rossi

University of Salerno - Department of Economics

Raffaele D'Alessio

University of Salerno

Date Written: July 15, 2015

Abstract

The aim of the paper is to explore the role played by cost accounting in Italy’s Industrial Mobilization System and in the largest firm manufacturing weaponry, Ansaldo of Genoa, during WWI. While in other countries such as the UK and the US, efficiency in buying and managing war material was an important part of military strategy, in Italy, various factors impeded it. The paper focuses on contracting procedures adopted by the Ministry of War and Ministry of Munitions and looks at the cost accounting practices in Ansaldo to see how costs were determined and how prices were set. We found a paradox. On the one hand, despite knowledge of costing, the government did not impose cost controls on the producers of war material, nor on their profit rates. On the other hand, examining Ansaldo’s cost sheets we discover they underestimated their production costs leading the firm to losses despite its favorable political position. The paper contributes to the theoretical debate about the relationships between accounting and war in the Italian context where lobbying, collusion, bribery, and private interests dominated the administrative behavior of public and private actors instead of efficiency, accountability and honesty.

Keywords: Ansaldo, War, Industrial Mobilization, Defense contracting

Suggested Citation

Vollmers, Gloria and Antonelli, Valerio and Rossi, Roberto and D'Alessio, Raffaele, Cost Accounting for War: Contracting Procedures and Cost-Plus Pricing in WWI Industrial Mobilization in Italy (July 15, 2015). European Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2634591

Gloria Vollmers (Contact Author)

Maine Business School ( email )

Orono, ME 04469
United States
2075811979 (Phone)

Valerio Antonelli

University of Salerno ( email )

Via Giovanni Paolo II, 132
Fisciano, Salerno 84084
Italy

Roberto Rossi

University of Salerno - Department of Economics ( email )

Via John Paul II, 132
Fisciano (SA), 84084
Italy

Raffaele D'Alessio

University of Salerno ( email )

Via Giovanni Paolo II, 132
Fisciano, Salerno 84084
Italy

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