10-K FY 2022 FINAL MOOG Inc - Flipbook - Page 86
Table of Contents
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that were 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 the critical audit matter does not alter in any way our opinion
on the consolidated 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 disclosure to which it relates.
Estimated contract costs at completion
Description of As discussed in Note 2 of the consolidated financial statements, revenue for certain of the
the Matter
Company’s contracts with its customers is recognized over time as work progresses toward
completion and is measured based on the ratio of cumulative costs incurred to date to the estimated
total contract costs at completion. For the year ended October 1, 2022, the Company recognized
revenue of $1.9 billion or 64% of total net sales on this basis.
Auditing management’s estimated contract costs at completion was complex and highly judgmental
due to the significant judgments applied by management including the application of significant
assumptions such as estimated direct labor hours, direct material costs, and other direct costs. A
significant change in an estimate on one or more contracts could have a material effect on the
Company’s statement of earnings.
How We
Addressed
the Matter in
Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over management’s review of estimated contract costs at completion, including the
determination of the underlying significant assumptions described above.
To test the estimated contract cost at completion, we performed audit procedures that included,
among others, inspecting the approved contract and inquiring of program managers regarding the
nature of the contract and the scope of work to be performed, testing the actual costs incurred
through inspection of source documentation and testing the significant assumptions described above.
Our testing of each of these assumptions included a combination of inquiries of finance directors and
program managers, inspection of source documentation to support the future estimated costs and
analytical procedures comparing profit rates to similar contracts, as applicable. We also assessed the
historical accuracy of management’s estimated costs at completion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2003.
Buffalo, NY
November 14, 2022
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