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Ethics Insight - Northrop Grumman This suit accused the...

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  Ethics Insight Marcin Balcerzak/iStockphoto. In some industries, companies bill jobs on a “cost plus profit” basis. For example, law offices bill their  customers based upon the “billable hours” incurred by their legal staff. This creates an incentive for  law offices to pad their bills—that is, to overstate the costs incurred on particular jobs so as to inflate  their bills. In one survey, two-thirds of attorneys reported knowledge of bill padding. Similarly, suppliers to the government have often been accused of overbilling by misstating their cost  accounting records. For example, the government recently filed a lawsuit against 
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Unformatted text preview: Northrop Grumman . This suit accused the company of intentionally concealing cost-accounting and material-tracking problems related to radar-jamming devices that the company made for the U.S. government more than 20 years before. These problems, the suit alleged, resulted in the government overpaying by $27 million. Company memos discussed strategies for training cost-accounting managers on how to conceal the problem from the government. One memo stated, “We can't tell the truth.”...
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