Fortax Financial Statements

Financial statements

Needs Python 3 and internet: runs scripts/fortax.py (the Fortax engine on ai.fortax.in; your file is processed and not stored).

Build the statements in a workbook where every figure is a formula back to the trial balance. This skill prepares drafts; the CA reviews, the board / partners approve, and the auditor signs.

Inputs

• Trial balance for the year (or period) and the previous year — Tally/Busy/Zoho export, .xlsx/.csv, with ledger name, group, opening, debit, credit, closing.
• Last year's signed financial statements (comparatives, note structure, accounting policies).
• Fixed asset register, ageing of debtors and creditors (with MSME status of suppliers), stock statement, loan statements, share capital register, tax computation, and any known adjustments.
• The entity type, which decides the format:

Formats line by line: references/schedule-iii-formats.md. Thresholds that decide small-company exemptions, Ind AS applicability or rounding change by notification: check with python3 scripts/fortax.py kb "small company definition paid up capital turnover" --topics mca and quote the source and date, or mark "confirm on MCA".

If no TB is given, ask for it. Paste-in data is fine for an MIS; statutory statements need the TB.

Step 1 — map every ledger

1. Load the TB into a sheet TB. Check it first: total debits = total credits, and opening + debits - credits = closing for each ledger (formulas). A TB that does not tie goes to fortax-reconciliation.
2. Sheet Mapping: every ledger gets a Schedule III line and a note number. Group names in Tally are a start, not the answer (e.g. Sundry Creditors with debit balances are advances to suppliers; Loans (Liability) has current maturities of long-term debt).
3. A check cell: sum of mapped closing balances = TB total, and count of unmapped ledgers = 0. Do not build statements while any ledger is unmapped.
4. Ledgers whose placement is a judgement (a director's account, an advance of unclear nature, a debit balance in a creditor) are listed for the CA to confirm.

Step 2 — period-end adjustments

Before the statements, list and pass (as proposed entries, via fortax-journal-entry):

1. Accruals: expenses incurred not booked (audit fee, interest, salary, power).
2. Deferrals: prepaid expenses, income received in advance.
3. Depreciation and amortisation under Schedule II.
4. Provision for doubtful debts / expected credit loss from the ageing and history.
5. Inventory: valuation at cost or NRV, whichever is lower (AS 2 / Ind AS 2); write-down of obsolete or slow-moving stock.
6. Foreign currency: restate monetary items at the closing rate (AS 11 / Ind AS 21).
7. Tax: current tax from the computation; deferred tax (AS 22 / Ind AS 12).
8. Fair value: investments and derivatives measured at fair value (Ind AS 109).
9. Employee benefits: gratuity and leave (AS 15 / Ind AS 19).
10. MSME: interest payable under s.16 MSMED Act on dues beyond 45 days, and its disallowance.

Reclassifications (no P&L effect): long-term borrowings due within 12 months to current maturities; netting of allowances and accumulated depreciation; related-party / group eliminations on consolidation; discontinued operations to a separate line; share of associates (equity method) in consolidated statements; debit balances in creditors and credit balances in debtors to the other side.

Step 3 — build the statements (sheets with formulas off Mapping)

• Balance Sheet and Statement of Profit and Loss in the Schedule III order, with the previous year alongside (reclassify comparatives to match and say so in a note).
• Cash Flow Statement (AS 3 / Ind AS 7), indirect method. Not required for a one person company, a small company or a dormant company (s.2(40) Companies Act) — confirm the entity's status.
• Statement of Changes in Equity for Ind AS companies.
• Notes: accounting policies, then one note per line item, and the Schedule III additional disclosures (list in the reference file): promoter shareholding, trade receivable and payable ageing, CWIP ageing, title deeds not in the company's name, the ratios with reasons for change over 25%, MSME dues, related-party transactions, contingent liabilities, CSR, and the rest.
• Rounding as Schedule III allows for the turnover band (confirm the band).

Step 4 — tie-back checks (each a formula cell that must show TRUE / 0)

• Total assets = total equity and liabilities, both years
• Profit for the year in P&L = movement in surplus in reserves (after dividends and transfers)
• Closing cash and bank in the cash flow = balance sheet = bank BRS balances
• Every note total = its line on the face
• Sum of all mapped ledgers = TB; unmapped ledgers = 0
• Depreciation in P&L = fixed asset note; additions in the note = investing cash flow (after capital creditors)
• Tax expense = current tax + deferred tax; DTA/DTL movement = deferred tax charge
• Previous-year figures = last year's signed statements (or the reclassification is noted)
• Revenue in books vs GST returns (GSTR-1/3B, annual return) — differences explained

Step 5 — comparison and variances

For a management P&L (monthly, quarterly, annual, year-to-date), present current period, comparison period, variance in Rs and %, and budget where available:

STATEMENT OF PROFIT AND LOSS — Sharma Traders Pvt Ltd
Period: Q2 FY 2026-27                                (Rs in lakh)

                              Current   Prior    Var (Rs)  Var (%)  Budget   Budget var
Revenue from operations
  Sale of products              X         X        X        X%       X         X
  Sale of services              X         X        X        X%       X         X
Other income                    X         X        X        X%
TOTAL INCOME                    X         X        X        X%       X         X

Cost of materials consumed      X         X        X        X%       X         X
Purchases of stock-in-trade     X         X        X        X%
Changes in inventories          X         X        X        X%
GROSS MARGIN                    X         X        X        X%
  Gross margin %                X%        X%       X pp

Employee benefits expense       X         X        X        X%       X         X
Other expenses                  X         X        X        X%       X         X
EBITDA                          X         X        X        X%
Finance costs                   X         X        X        X%
Depreciation and amortisation   X         X        X        X%
PROFIT BEFORE TAX               X         X        X        X%       X         X
Tax expense (current, deferred) X         X        X        X%
PROFIT FOR THE PERIOD           X         X        X        X%       X         X
  Net margin %                  X%        X%       X pp

Variance: Rs variance = current - comparison; % variance = (current - comparison) / |comparison|; margins and ratios as change in percentage points (or basis points, 1 bp = 0.01%). Materiality, decomposition (volume, price, mix, one-time, timing, exchange), narratives and waterfalls follow fortax-variance-analysis.

Key metrics block:

KEY METRICS                   Current   Prior    Change
Revenue growth %                                  X%
Gross margin %                X%        X%        X pp
EBITDA margin %               X%        X%        X pp
Net margin %                  X%        X%        X pp
Employee cost % of revenue    X%        X%        X pp
Effective tax rate %          X%        X%        X pp

Material variance list:

For statutory statements, the Schedule III ratio note needs a reason for every ratio that moved more than 25% — take the reason from the ledgers, not a guess; unknown reasons are questions for the client.

Output

Into <Client>/<FY>/Audit/ (or Books/), e.g. FS_Sharma-Traders_FY2026-27_draft.xlsx with sheets TB, Mapping, Adjustments, BS, PL, CFS, Notes, Ratios, Checks, plus a short note:

1. The statements with comparatives.
2. Key metrics and the ratio note.
3. Material variances with investigation flags.
4. Proposed adjustments, ledgers whose mapping needs confirmation, and follow-up questions for the client.
5. Any failed check — a blocker, not a footnote.

For a client reporting to a foreign parent under US GAAP or IFRS, the presentation rules and reference formats are in references/us-gaap-ifrs-presentation.md.

Credit

Workflow, variance method, presentation reference and adjustments adapted from anthropics/knowledge-work-plugins (Apache-2.0). Changed by Fortax: rebuilt around Schedule III, Indian Accounting Standards, TB mapping and tie-back checks; US GAAP material moved to a reference file.