The financial reports of a power company : Part 3
Date : 10 January 2026
## 5. Financial assets, fair value measurement and investment returns
- Balances of financial assets and investments (debt and equity instruments, short‑term placements) fluctuate over 2022–2024, but interest income and fair value gains/losses do not fully align with the strong upward shift in market interest rates during this period.
- This raises questions about the appropriateness of fair value measurement, classification (e.g. amortised cost vs FVOCI vs FVTPL) and timing of recognition of unrealised losses.
**Audit concerns**
- Whether fair value hierarchies, valuation techniques, and inputs are properly applied and disclosed.
- Whether any losses have been deferred through classification choices or reliance on internal valuation models rather than observable market data.
***
## 6. Derivative instruments and hedge accounting
- A company uses certain derivative instruments for risk management, yet the profit and loss effects of derivatives do not consistently track underlying risk factors (interest rates, FX) in some periods.
- Disclosures on hedge relationships (hedged items, hedging instruments, hedge ratios, and effectiveness testing) are not sufficiently detailed to allow independent assessment of hedge effectiveness.
**Audit concerns**
- Whether the designation and documentation requirements for hedge accounting have been fully met, and whether any instruments are in substance speculative rather than hedging.
- Whether hedge ineffectiveness is properly measured and recognised in profit or loss.
To be continued———————————————————————————————————————
#FinancialAudit #PowerCompany #Thaitimes #ManagerOnline #News1The financial reports of a power company : Part 3
Date : 10 January 2026
## 5. Financial assets, fair value measurement and investment returns
- Balances of financial assets and investments (debt and equity instruments, short‑term placements) fluctuate over 2022–2024, but interest income and fair value gains/losses do not fully align with the strong upward shift in market interest rates during this period.
- This raises questions about the appropriateness of fair value measurement, classification (e.g. amortised cost vs FVOCI vs FVTPL) and timing of recognition of unrealised losses.
**Audit concerns**
- Whether fair value hierarchies, valuation techniques, and inputs are properly applied and disclosed.
- Whether any losses have been deferred through classification choices or reliance on internal valuation models rather than observable market data.
***
## 6. Derivative instruments and hedge accounting
- A company uses certain derivative instruments for risk management, yet the profit and loss effects of derivatives do not consistently track underlying risk factors (interest rates, FX) in some periods.
- Disclosures on hedge relationships (hedged items, hedging instruments, hedge ratios, and effectiveness testing) are not sufficiently detailed to allow independent assessment of hedge effectiveness.
**Audit concerns**
- Whether the designation and documentation requirements for hedge accounting have been fully met, and whether any instruments are in substance speculative rather than hedging.
- Whether hedge ineffectiveness is properly measured and recognised in profit or loss.
To be continued———————————————————————————————————————
#FinancialAudit #PowerCompany #Thaitimes #ManagerOnline #News1
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