Question: Denver Electric Case Study Denver Electric has a contract with an agency of the Federal Government to provide electrical power to the agency for a

Denver Electric Case Study

Denver 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, Denver Electric buys and uses coal from its wholly-owned subsidiary, Great Yukon Electric. The sale of this coal to Denver Electric specifically for this contract represents 40% of the coal sales for Great Yukon Electric. The profit for Great Yukon Electric during the life of the contract averaged about $1.2 million per year.

Jed Williams, a former employee of Denver Electric, was fired by the firm and immediately filed a qui tam lawsuit, alleging Denver Electric had intentionally overcharged the Federal Government throughout the life of the power supply agreement.

As a Forensic Accountant for Denver Electric, please describe below:

What are the accounting issues in this case?
What are the (potential) damages in this case?
What document and other information to seek or to request as part of a work on this case?
What is/would be the basis of forensic's opinion on this case?

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