Company: BWXT
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0001486957-25-000008
Chunk: 4

Company: BWX Technologies, Inc.
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 4
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 also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Over Time Revenue Recognition – Estimating Costs at Completion – Refer to Note 1 and Note 3 to the Financial Statements

Critical Audit Matter Description

The Company generally recognizes contract revenue and related costs over time for individual performance obligations based on a cost-to-cost method in accordance with Financial Accounting Standards Board Topic Revenue from Contracts with Customers. The Company recognizes estimated contract revenue and resulting income based on the measurement of the extent of progress toward completion as a percentage of the total project. The Company reviews contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs to complete the performance obligation.

Given the significance of revenue and the level of judgment involved in estimating total costs to complete the performance obligations used to recognize revenue for long-term contracts, auditing such estimates involved especially subjective judgment.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to revenue recognized over time, including management’s estimates of total contract costs to complete its performance obligations, included the following, among others:

•We tested the effectiveness of controls over revenue recognized over time, including those over cost estimates at completion for performance obligations.

•We tested recorded revenue using analytical procedures.

•We analyzed cumulative adjustments recorded during the year and separately tested those with characteristics of audit interest due to their size to determine that the adjustments were the result of changes in facts and circumstances, recorded in the appropriate period, and for the appropriate amount. 

•We analyzed contracts with customers recognized over time to identify whether there are contracts with characteristics of audit interest. For a contract determined to