Jamestown Electric has a contract with an agency of the federal government to provide electrical power to the agency for a fi ve-year period. The contract stipulates, in part, that the power will be provided "at the lowest reasonable cost without compromising safety." In connection with this contract, Jamestown Electric buys and uses coal from its wholly-owned subsidiary Great Plains Coal Company. The sale of this coal to Jamestown Electric specifi cally for this contract represents 40 percent of the coal sales for Great Plains. The profi t for Great Plains Coal Company during the life of the contract averaged $1.2 million per year. Jed Jones, a former employee of Jamestown Electric was fired by the firm and immediately fi led a qui tam suit alleging Jamestown had intentionally overcharged the government throughout the life of the power supply agreement
a. You are the forensic accountant for the whistle-blower's attorney. What are the accounting issues in this case? What are the damages in this case? What documents and other information do you intend to seek? What is the basis for your opinion?
b. You are the forensic accountant for Jamestown Electric. What are the accounting issues in this case? What are the damages in this case? What documents and other information do you intend to seek? What is the basis for your opinion?