Taxmann’s Balance Sheet Decoded (Keys to Unlock Balance Sheet Secrets) by G.C Pipara – 3rd Edition April 2021.

This book aims to explain the readers how to read, understand, analyse and interlink the voluminous information available in the financial statement with the help of charts, case analysis, etc. In other words, this book provides in-depth analysis, stepwise approach with the use of case analysis, to understand & decode the financial statements. This book extensively deals with the following issues & suggests on how they can be mitigated through proper analysis of financial statements:

• Laxity in credit risk appraisal and loan monitoring in banks
• Lack of appraisal skills for projects that need specialised skills, resulting in acceptance of inflated cost or aggressive projections etc.
• How to find out frauds, wilful default, diversion of funds
• How to find out early warning signs based on proper analysis of financial statements

The entire concept of decoding of financial statement has been divided into six keys:

• Key #1 deals with Statement of Profit & Loss
• Key #2 deals with Balance Sheet
• Key #3 deals with Concept of Audit and Auditor’s Report
• Key #4 relates to Companies Auditor’s Report Order
• Key #5 is used for decoding Connecting Statements, and
• Key #6 is the Master Key

The Present Publication is the 3^rd Edition, authored by G.C. Pipara, with the following noteworthy features:

• [Reading between the lines of Financial Statements] and correlating relevant information with proper analysis, using the Authors experience
• [How to Hone your Skills] to dissect financial statements with surgical precision
• [Unlocking the Mysteries & Tricks] by explaining how to analyse the various details & detect what has been disclosed and not
• [Focused Analysis] to find out strengths, early warning signs, frauds, creative accounting, genuineness of various items, etc.
  • How to read the balance sheet beyond what is visible on the surface
  • How to analyse the information
  • How to correlate the various details available
• [Professional Oriented Book] This book has been developed, keeping in mind the following factors:
  • Interaction of the author during his trainings to various banks and organisations on credit and analysis of financial statements
  • Shaped by the authors experience of 38+ years being a chartered accountant, research analyst and fraud investigator
  • Reaction and responses of attendees during the trainings, have also been incorporated at different places in the book
• [New Chapter on CARO 2020] has been considered in detail under Key #4 | The Companies Auditor’s Report Order.
• [Updated & Amended] All changes made in the Companies Act and latest position as at the end of March 2021 has been considered in this book

The detailed contents of the book are as follows:

• Statement of Profit & Loss
  • Revenue from Operations
  • Other Income
  • Cost of Materials Consumed and Purchases of Traded Goods
  • Manufacturing and Operating Cost
  • Finance Cost
  • Depreciation
  • Tax Expense
  • Other Expenses
  • Exceptional Items, Extraordinary Items and Prior Period Items
  • Property, Plant and Equipment – Tangible
  • Fixed Assets – Intangible
  • Investments
  • Loans & Advances
  • Other Assets
  • Inventories and Trade Receivables
  • Cash, Cash Equivalent and Bank Balances
  • Advances Recoverable in Cash or Kind or for Value to be Received
  • Shareholders’ Funds or Net Worth or Capital
  • Provisions & Contingent Liabilities
  • Borrowings
  • Trade Payables and Other Liabilities
• Concept of Audit and Auditor’s Report
  • Understand the Audit
  • Report on Internal Financial Controls
  • Analysis of Opinions
  • Analysis of Emphasis of Matters/Note
• Companies Auditor’s Report Order
  • Control over Resources
  • Related Party Transactions
  • Legal Compliance
  • Statutory Dues
  • Financial Health of the Company
  • End Use of Funds
  • Whistle Blower
  • Resignation of Statutory Auditor
• Connecting Statement
  • Significant Accounting Policies
  • Notes on Accounts
  • Cash Flow Statements
• Master Key
  • How to Link 5 Key to Decode Financial Statement