Accounting Information about Fair Value in Thai Property Funds

Abstract

The accounting information about assets and liabilities were required by the accounting standard presented in fair value especially the financial instruments such as investment in securities and investment in property since believing that fair value was useful value for financial statement’s users making decisions because the fair value was the current value. However, there were supporting and against evidences for fair value and included fair value was questioned about the reliability that related to the deriving of the fair value, the valuation techniques used and the reviewing of that value. This study aimed to investigate fair value status in Thai property funds (PFUND) listed in the Stock Exchange of Thailand and to study the association of fair value of investment in property and the unit fund price. This study was based on Thai property funds during the years 2009-2013. The sample data were 39 funds for a total observation of 138 financial statements. Although, the number of sample data was limited, the fair value accounting information of Thai PFUND was very specific. The major asset was the investment in property that was required by Thai Accounting Standard 106 to recognized at fair value and the unrealized gains or losses would recognized in the income statement of the current year. The research results found that the fair value status in Thai PFUND that was used to value the investment in property derived from the independent appraisers. There was 68.12% of the appraisers’ names were disclosed in the notes of the financial statements. All of the financial statements that were audited by three of Big-4 firms did not disclosed the appraisers’ names whereas the 31.88% of the financial statements did not audit by not a Big-4 firm disclosed the appraisers’ names. The income approach was the most valuation techniques that was used by the independent appraisers (96.38%).  Brooke Real Estate Company Limited was the most independent appraiser that was hired by the Thai PFUND. For the second objective, this study found that the association between the fair value of investment in property and the unit fund price at the end of the second quarter of the next year was more than the association between the fair value of investment in property and the unit fund price at the end of the current year and the association between the fair value of investment in property and the unit fund price at the end of the first quarter of the next year. The results of this study could assist the financial statements’ users to value the reliability of the accounting information in Thai PFUND.