Annual Report 2017

97 Key audit matter How my audit addressed the key audit matter Fair value estimation on equity and debt investment securities As 31 December 2017, investments in trading, available-for-sale and held-to-maturity securities for consolidated financial statements of The Stock Exchange of Thailand and its subsidiaries (the Group) and the separate financial statements of The Stock Exchange of Thailand (SET), were valued at Baht 24,435 million and Baht 12,322 million, respectively and represented 83% of total investments in consolidated and represented 77% of total investments in the separate financial statements of The Stock Exchange of Thailand. I focused on fair value measurement of those investments in both equity and debt securities defined to be level 2 because the valuation of fair value at level 2 depends on estimates and assumptions in valuation techniques which uses inputs, either directly or indirectly, other than quoted prices in active market that are observable for the asset as refer to note 35 on the financial statements for fair value estimations. Moreover, The Group has invested in variety of investments, therefore the accuracy and completeness of fair value estimation presentation and disclosure in the financial statements and notes to the financial statements is a significant area. I tested the assumptions and valuation techniques of fair value by valuation method level 2 of trading and available for sale investments presented in the statement of financial position and held to maturity investments disclosed in the notes to financial statements as follows : For the investments in trading and available for sale including Mutual funds and Private funds, I tested the fair value valuation by checking the last bid price at the end of the date in the statement of financial position by referring to the Association of Investment Management Companies. For the investments in held-to-maturity securities including 1) long term fixed deposit accounts, I assessed the assumptions used and tested the calculations for the discounted cash flows based on each contract with an average yield of 4 commercial banks. 2) bonds and debentures, I tested values against the clean price of debt securities published by the Thai Bond Market Association at the end of the date in the statement of financial position. I assessed the adequacy of the disclosures, particularly regarding completeness and accuracy of the valuation of equity and debt securities defined to be level 2 and I didn’t identify any issues. I found that the valuation method is appropriate based on management’s assumptions.