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A whistle-blower in her allegations made in a qui tam suit,

Exercise11-18: A whistle-blower in her allegations made in a qui tam suit, alleged that her former employer fired her because she told the company that it was "padding the bills" to the federal government for the cost-plus contract it had to build ejection seats for fighter aircraft. She alleges that the company overcharged for materials, ran up labor costs, threw "all kinds of stuff in overhead," and illegally plugged corporate administrative costs into the contract billings. As the forensic accountant hired by the U.S. Justice Department to litigate this case, answer the following:

a. What documents will you seek during discovery to address the whistle-blower's allegations?
b. What will you be looking for in each of the requested documents?
c. What will be the basis/foundation for the opinions you will provide in this case?
d. How will you utilize the whistle blower in pursuing your opinions in this case?

Exercise 11-19: Jamestown Electric has a contract with an agency of the federal government to provide electrical power to the agency for a five-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 specifically for this contract represents 40 percent of the coal sales for Great Plains. The profit 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 filed 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?

Exercise 11-20: Up North Marina is and has been the only marina on Lake Woodward for the last 20 years. There have been numerous efforts to open other marinas during this time period. Each attempt, however, was unsuccessful. A recent lawsuit was successful in proving liability on the part of Up North Marina management is keeping many of those other marina operations off the lake. The court is now addressing the liability issue in this case.

a. You are the forensic accountant for the plaintiffs in the case. What documents and other information will you seek to compute damages? What will be the basis for you damage estimate? What is your theory of damages, and what are the components of your damage model?
b. You are the forensic accountant for the defendant in the case. What documents and other information will you seek to compute damages? What will be the basis for your damage estimate? What is your theory of damages, and what are the components of your damage model?
What are your plans to counter the plaintiffs' damage calculations?

Solution Preview

11-18

a. What documents will you seek during discovery to address the whistle-blower's allegations?

You would obtain all of the documents that are direct evidence of the billing, and the supporting documents for the direct evidence. You would also want to conduct a brief analysis of jobs that were similar in size from the past, and obtain the same basic billing information and supporting documents as a means of comparison.

b. What will you be looking for in each of the requested documents?

In this case, you need to identify where the differences exist in similar jobs, and also between the estimates given for the current job, and the actual charges billed. You can then base your case around the variances that exist, showing that the costs were purposefully elevated.

c. What will be the basis/foundation for the opinions you will provide in this case?

Your basis will be the current evidence, and on external research. You can also include this in part (a) as well. External research would show that based on the current trends, similar jobs, even if completed by competitors, were reasonably priced and didn't include the extraneous items. If more than one job is used for comparison, either from this company or various companies, it would further prove the case against the company.

d. How will you utilize the whistle blower in pursuing your opinions in this case?

The whistle-blower is the most important factor in this ...

Solution Summary

A whistle-blower in her allegations made in a qui tam suit, alleged that her former employer fired her because she told the company that it was "padding the bills" to the federal government for the cost-plus contract it had to build ejection seats for fighter aircraft. She alleges that the company overcharged for materials, ran up labor costs, threw "all kinds of stuff in overhead," and illegally plugged corporate administrative costs into the contract billings. As the forensic accountant hired by the U.S. Justice Department to litigate this case, answer the following:

a. What documents will you seek during discovery to address the whistle-blower's allegations?
b. What will you be looking for in each of the requested documents?
c. What will be the basis/foundation for the opinions you will provide in this case?
d. How will you utilize the whistle blower in pursuing your opinions in this case?

Exercise 11-19: Jamestown Electric has a contract with an agency of the federal government to provide electrical power to the agency for a five-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 specifically for this contract represents 40 percent of the coal sales for Great Plains. The profit 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 filed 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?

Exercise 11-20: Up North Marina is and has been the only marina on Lake Woodward for the last 20 years. There have been numerous efforts to open other marinas during this time period. Each attempt, however, was unsuccessful. A recent lawsuit was successful in proving liability on the part of Up North Marina management is keeping many of those other marina operations off the lake. The court is now addressing the liability issue in this case.

a. You are the forensic accountant for the plaintiffs in the case. What documents and other information will you seek to compute damages? What will be the basis for you damage estimate? What is your theory of damages, and what are the components of your damage model?
b. You are the forensic accountant for the defendant in the case. What documents and other information will you seek to compute damages? What will be the basis for your damage estimate? What is your theory of damages, and what are the components of your damage model?
What are your plans to counter the plaintiffs' damage calculations?

$2.19