Company: BA
Filing Date: 2025-02-03
Form Type: 10-K
Source: 0000012927-25-000015
Chunk: 155

Company: BOEING CO
Filing Date: 2025-02-03
Form: 10-K
Item: Item 8
Chunk 155
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, resulting in a reach-forward loss. The Company has recognized approximately $3.5 billion in reach-forward losses in 2024. The introduction of new aircraft programs involves increased risk associated with meeting development, certification, and production schedules. The level of effort required to meet regulatory requirements and achieve certification may be challenging to predict, potentially leading to delays in the timing of entry into service and corresponding changes to forecasted costs and revenues. Production disruptions and delays to entry into service for the 777X program have increased the risk associated with forecasted revenue estimates used in determining the program margin, primarily due to the difficulty in assessing the value of consideration expected to be provided to retain customers. Changes to cost estimates related to regulatory requirements for certification and production challenges, as well as changes in estimates for customer consideration could result in material reach-forward losses. Auditing the estimated costs and estimated customer consideration for the 777X program involved extensive audit effort, a high degree of auditor judgment, and required audit professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit 

Our audit procedures related to the estimated costs and customer consideration for the 777X program included the following, among others: 

•We evaluated the appropriateness and consistency of management’s methods used in developing its cost estimates related to regulatory requirements to achieve certification.

•We performed procedures to evaluate new changes in estimated costs driven by changes in regulatory requirements to achieve certification.

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•We evaluated the timeline of key events and knowledge points that led to management’s determination that a change in the cost estimate related to regulatory requirements to achieve certification was necessary. 

•We inquired of those directly involved with the certification of the aircraft to evaluate project status and challenges which may affect total estimated costs to certify the aircraft. 

•We obtained and evaluated communications with regulatory bodies for consistency between management’s certification timeline assumptions and cost and revenue estimates related to regulatory requirements. 

•We evaluated management’s ability to estimate customer consideration by comparing actual re-contracted values to prior estimates.

•We inquired of management, including individuals responsible for sales and pricing, to evaluate the estimated customer consideration and status of negotiations with individual customers.

•We obtained and evaluated communications with customers for consistency with management’s estimated customer consideration.

•We performed internet searches to identify reports related to the regulatory environment and customer statements and evaluated any contradictory evidence.

•We tested the effectiveness of internal controls, including those over significant judgments made and assumptions used to develop key estimates, key data used in developing the cost estimates, the mathematical extrapolation of such