Company: PNNT
Filing Date: 2025-11-24
Form Type: 10-K
Source: 0001193125-25-293703
Chunk: 58

Company: PENNANTPARK INVESTMENT CORP
Filing Date: 2025-11-24
Form: 10-K
Item: Item 1C
Chunk 58
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. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Level 3 Fair Value MeasurementsThe fair value of the Company’s investments valued using Level 3 fair value measurements was approximately $1,088.0 million as of September 30, 2025. The fair value of the Company’s financial instruments classified as liabilities valued using Level 3 fair value measurements was approximately $425.5 million as of September 30, 2025. As discussed in Notes 2 and 5 to the consolidated financial statements, the Company’s investment portfolio generally consists of illiquid securities, including debt and equity investments, which were acquired directly from the issuer. Such investments include first lien secured debt, second lien secured debt, subordinated debt and equity investments. Additionally, the Company has elected to apply the fair value option to certain financial instruments classified as liabilities. The inputs into the determination of fair value require significant management judgment or estimation. We identified Level 3 fair value measurements as a critical audit matter due to the subjective nature of the judgments necessary for management to select valuation techniques and the use of significant unobservable inputs to estimate the fair value. Auditing the reasonableness of management’s selection of valuation technique and the related unobservable inputs required a high degree of auditor judgment and increased audit effort, including the use of a valuation specialist. The primary procedures we performed to address this critical audit matter included the following, among others:  •With the assistance of our valuation specialists, we evaluated the appropriateness of the selected valuation techniques, and any changes to selected valuation techniques from prior periods, used for Level 3 fair value measurements. For a sample of investments, we evaluated both the reasonableness of the significant unobservable inputs and the reasonableness of any significant changes in significant unobservable inputs from prior periods, when applicable, by comparing the unobservable inputs to external sources, including, but not limited to: oHistorical operating results of the investee.oAvailable market data for comparable companies.oSubsequent events and transactions, where available. We tested both the source information used to determine the unobservable input and the mathematical accuracy of the calculation used to compute the unobservable input for a sample of investments.  /s/ RSM US LLP We have served as the Company's auditor since 2013.