In addition to acknowledging control deficiencies Ducommun Incorporated (DCO), an engineering and manufacturing firm serving the aerospace and defense industries, sowed doubt about the accuracy of its reported sales, noting controls are lacking:

“...over the accuracy of contract terms and the reasonableness of gross margin assumptions used to recognize revenue.”

In cases where purchase orders are amended, the assumptions used in the company’s revenue recognition analysis have not been properly reviewed with enough precision.

The material weakness resulted in what Ducommun characterizes as immaterial adjustments to net revenue and contract assets for the quarterly and annual periods ending December 31, 2023.

Notably though, Ducommun did not quantify the error in its latest annual report.

The company did not immediately respond when DuDil requested it quantify the adjustments to quarterly and annual results.

As is customary when control deficiencies are detected, Ducommun warned it may misstate revenue again in the future until the deficiencies are fixed.