Company: BA
Filing Date: 2025-02-03
Form Type: 10-K
Source: 0000012927-25-000015
Chunk: 154

Company: BOEING CO
Filing Date: 2025-02-03
Form: 10-K
Item: Item 8
Chunk 154
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 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 cost estimates for the KC-46A Tanker, Commercial Crew, VC-25B Presidential Aircraft, T-7A Redhawk, and MQ-25 fixed-price development contracts included the following, among others:

•We evaluated the appropriateness and consistency of management’s methods used in developing its cost estimates. 

•We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key cost and schedule estimates, including the effects of supply chain and labor disruptions. We also evaluated the range and probabilities of reasonably possible outcomes, and where management set its point estimate within the range.

•We evaluated the appropriateness of the timing of the incorporation of changes to key cost estimates, including evaluating the timeline of key events and knowledge points that led to management’s determination that a change in estimate was necessary. 

•We inquired of project management, engineers, supply chain leadership, and others directly involved with the execution of contracts to evaluate management’s ability to achieve the key 

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cost and schedule estimates, as well as evaluate project status and challenges which may affect total estimated costs to complete. 

•We observed the project work site to evaluate tangible or physical progress of the project against assumptions used by management in developing its cost and schedule estimates.

•We tested the accuracy and completeness of the key data used in developing estimates. We developed independent expectations of reasonable outcomes using the program’s data and compared our expectations to management’s estimates.

•We performed retrospective reviews when evaluating the thoroughness and precision of management’s estimation process and effectiveness of the related internal controls by comparing actual outcomes to previous estimates and the related financial statement impact, and evaluating key judgements made by management when determining the timing of changes to key estimates.

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

Program Accounting Estimates for the 777X Program — Refer to Notes 1 and 8 to the financial statements

Critical Audit Matter Description

The Company uses program accounting to compute the cost of sales and margin for each commercial airplane program. However, as the 777X is a developmental program that has not yet delivered any aircraft, there is no cost of sales recorded unless the program has determined that estimated program costs exceed estimated program revenue