Reports that Boeing is being investigating by US authorities over its accounting processes for two of biggest aircraft wiped almost $8 billion off the company’s market value.
Investors shed shares after claims that the Securities & Exchange Commission is looking into how Boeing recorded costs developing the 787 Dreamliner and an updated 747 jumbo jet under a system known as “programme accounting”.
The shares dropped by more than 12%, with the Seattle-based manufacturer’s market value dropping to $69 billion.
A Bloomberg report claimed regulators – aided by a whistleblower – are looking into how Boeing recorded the huge costs of developing the new jets and forecasts about their future profitability.
Under programme accounting, aerospace companies defer spending on research for new aircraft and the cost of tools and facilities to make them, spreading the massive costs over many years and offsetting them against projected sales of new aircraft, flattering their results.
The process is acceptable under accounting rules but companies must update the figures they have projected as new aircraft programmes mature and companies get a more accurate picture of the true costs.
It is reported that the SEC is investigating whether Boeing could have been too optimistic in its sales forecasts for the jets, and whether the company’s estimates on how production costs would fall may not hit expectations, the Telegraph reported.
Typically, producing new jets becomes cheaper as aerospace companies iron out problems and they become more experienced at making them.
A Boeing spokesman said: “We do not comment on media inquiries of this nature.”
The SEC declined to comment.
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