cumulative effect of the changes on prior periods. If a loss is expected on a performance obligation, the estimated loss is recorded in the period in which the loss is identified. There is significant judgment involved in estimating revenues and costs in the Transport segment, in particular on the indefinite delivery, indefinite quantity Next Generation Delivery Vehicle (NGDV) contract. The contract is fixed price with an economic price adjustment (EPA), where the price paid to the Company can be adjusted upward or downward based on cost indexes of material that are specifically identifiable in the contract. The contract is inherently uncertain in that revenue is fixed to an extent, while the estimates of costs required to complete the contract are subject to significant variability. The Company must make assumptions regarding scaling production, supply base cost and performance, and the expected impacts on pricing related to EPA clauses. The operational and technical complexities of the NGDV contract create financial risk, which could increase the estimates of costs and result in lower margins. Given the complexities of this contract, the limited amount of historical data available, and significant judgments necessary to estimate future costs at completion, auditing the estimates of costs for this contract required extensive audit effort and a high degree of auditor judgment. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the key cost estimates for the NGDV contract included the following, among others: • We evaluated the appropriateness and consistency of management's methods and assumptions 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. 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 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 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 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. Goodwill Valuation – Refer to Notes 2 and 12 to the Financial Statements Critical Audit Matter Description The Company performed an impairment evaluation of goodwill by comparing the estimated fair values of reporting units to their carrying values. In order to estimate the fair values of the reporting units, management is required to make estimates and assumptions related to the discount rates and forecasts of future operating income margins, which involve significant judgment. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. As of October 1, 2025, the Company’s measurement date, the Company determined that the fair values of the reporting units exceeded their carrying values and therefore no impairment was recognized. We identified the impairment evaluation of goodwill for one reporting unit in the Vocational Segment as a critical audit matter because of the inherent subjectivity involved in management’s estimates and assumptions related to the discount rate and forecasts of future revenue growth and operating income margins. The audit procedures to evaluate the reasonableness of
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