A balance sheet is prepared by you; the certificate is attested by a CA
Authorship is the difference, and the rest follows from it. Management draws up the accounts and signs them as its own representation of the entity. A chartered accountant examines a position and certifies it to a named reader. The balance sheet versus net worth certificate question is, at bottom, a question about who is answerable for the numbers.
Prepared by management
The entity's own representation of itself
- Who signs: the directors, the partners or the proprietor, as their own statement of position.
- Where an audit applies: the auditor expresses an opinion on statements somebody else prepared; the auditor does not author the figures.
- How an acceptor reads it: as the entity's own reporting, useful and self-interested by construction.
Attested by a chartered accountant
An independent professional's statement to a named reader
- Who signs: a member in practice, who authors the conclusion rather than commenting on somebody else's.
- What ties it to the signer: a unique document identification number the member generates for that one document, which the reader can look up.
- How an acceptor reads it: as an independent statement addressed to the reader holding it, on the date the reader set.
Preparation and attestation are different professional acts, and acceptors treat the two documents accordingly. Filed accounts are received as the entity's reporting of itself. A certificate is received as an independent member's statement, written for the reader who asked for it and for nobody else.
The audited accounts tell the lender what the company said about itself at each year end. The certificate tells the lender what an independent member will put their name to, for this lender, on this date, about this borrower. The first is evidence of a trading record; the second is evidence of a present position. The lender wants both because neither does the other's job.
Line items a balance sheet carries that a net worth statement drops
Accounts carry balances that exist for reporting reasons rather than because anything is owned. A net worth statement is built the other way round: it carries a line only where something can be realised or is actually owed. Three groups of balance change hands on the way from one document to the other.
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Carried, not ownedCapitalised software, goodwill on an acquisition, development costs carried forwardShown as assets in the statutory format (Schedule III), because the money was spent and the standards let the cost be carried.Taken out, or disclosed with no value attributed. None of them can be sold separately or pledged to anybody.Taken out
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Counted twice or lostA loan from a director to the companyA liability of the company, and in the director's own records an asset of the director. The same rupee sits in two sets of books.One view is chosen and named. Read at group level the two cancel each other; read at entity level they do not cancel at all.One view
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Off the face of the statementContingent liabilities, capital commitments, pending litigationDisclosed in the notes rather than deducted from anything. Under section 2(40) of the Companies Act, 2013, the notes form part of a company's financial statements.Brought onto the face of the statement and disclosed there, with the reason, so the reader sees them without turning to a note. They are still not deducted.Disclosed
A reader who stops at the two columns of a balance sheet has read half the document, and formed a view on the wrong half. A net worth statement is shorter precisely because it has already done that reading: what cannot be realised is gone, what is owed to and by related parties has been settled into one view, and what might become payable is on the face of the page.
Book value against realisable value: the real divide
Measurement is the divide that produces most of the argument. Books record what was paid, less the depreciation charged since. A certified position generally reports what the holdings would realise instead. Both are correct, and they describe different things.
Cost, less depreciation
A flat bought in 2006 sits in the accounts at the 2006 price, less two decades of depreciation where it is depreciated at all.
A fact supported by an invoice. Nothing in that treatment is wrong, and nothing in it describes the present.
What the holdings would realise
The same flat is carried at what a buyer would pay for it on the certificate's date, with the evidence for that figure named.
An opinion supported by evidence: a valuer's report, the stamp duty value, a closing price. The statement says which it relied on.
- Land and buildingsDepreciated in the books where depreciation applies, so the carrying amount falls every year.Book value fallsMarket value tends to rise
- Long-held investmentsCarried at what was paid years ago, while the market has moved in the meantime.Book value stands stillMarket value has moved
- Unquoted shares in a closely held company, jewelleryCost from the invoice or the subscription, often decades old.Cost is a factCan differ from cost by a multiple
Where the gap is widest the number changes character entirely. What a willing buyer would pay is an opinion supported by evidence, while cost is a fact supported by an invoice. Neither is the more honest of the two. They answer different questions, and only one of them tells a lender what its security is worth today.
Every certified statement says, in one line, whether its figures are at cost or at what the holdings would realise. A reader who skips that line misreads the total by a wide margin. Before setting the certificate's total against the balance sheet's, find the basis line; the difference between the two totals usually lives there.
Why an audited balance sheet still gets sent back by lenders
The commonest rejection has nothing to do with the quality of the audit work. Audited accounts come back because they answer a question the lender did not ask, and the covering note usually says which of three questions that was.
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The wrong date Audited accounts are drawn to the year end, and the lender wants the position as at a date it chose for itself, frequently the previous month end. No amount of audit rigour converts one of those dates into the other, and no note can be added to make it do so.The accounts as at 31 March, audited and filed.The position as at the lender's date, certified to the lender.
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The wrong reporting entity A promoter offering a personal guarantee is being assessed personally, and the company's accounts describe the company. The shares in that company become one line in the promoter's own schedule, sitting beside the flat, the deposits and the borrowings standing in the promoter's own name. Where earnings rather than holdings are being tested, how a filed return is read is the separate question.The company's balance sheet.The guarantor's personal position, with the company as one line in it.
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No attestation addressed to this reader An audit report is addressed to the members of the company. A certificate is addressed to the bank, the mission or the authority that asked for it, and carries an identification number generated by the signing member for that one document. A verifier told to check an identifier cannot check one that was never issued in the first place.An audit report, addressed to the members.A certificate addressed to this reader, with a number the reader can look up.
From audited accounts to a certified figure: what changes
Readers also arrive here with a shorter question: how to find net worth from a balance sheet. The honest answer is that the accounts are the starting material and not the answer. Moving from them to a certified figure runs through a fixed set of adjustments, and it starts at the capital line.
- Taken outBalances with no realisable value. Capitalised costs, goodwill and development expenditure leave the statement, or stay as a disclosure with nothing attributed to them.
- RestatedAssets carried at cost. Where the statement reports what the holdings would fetch, property and long-held investments are restated, with the evidence for the new figure named.
- ExaminedAmounts due from related parties, and old receivables. Examined rather than accepted. A receivable outstanding for several years is treated for what it has become, not for what it was recorded as.
- Brought inItems the books never carried. A proprietor's own flat, personal deposits, jewellery and a share in a jointly held property are outside the business books by definition. A personal position includes every one of them.
The result is a dated list of holdings rather than a set of accounts, and the two are not expected to reconcile line for line. The certificate names its date, its basis and its reader; the balance sheet names none of the three.
Nothing in the audited figures is wasted on the way. The capital line is where the work begins, the adjustments above are the whole of the journey, and a reader who holds both documents can follow one into the other without a single number being re-derived.
If the request names a date and a reader
Send us the audited accounts and the request that came back with them, and a CA tells you which of these adjustments the certificate will need before any work starts.
Or call +91 945 945 6700, Monday to Saturday, 9 AM to 6 PM.
Which entities even have a balance sheet to start from
Not every applicant has accounts to start from, and the request usually assumes they do. What exists depends on the entity, and so does whether the figures were ever audited.
CompanyAudited, on a public file
Companies file their financial statements with the Registrar in Form AOC-4 within thirty days of the annual general meeting under section 137 of the Companies Act 2013, so audited figures exist and are public. The certificate starts from them, and a lender can read the filed set for itself.
Limited liability partnershipFiled; audited above a threshold
An LLP files a Statement of Account and Solvency in Form 8 each year. It is due by 30 October each year, under section 34 of the Limited Liability Partnership Act, 2008. An audit arises only above turnover of Rs 40 lakh or contribution of Rs 25 lakh, the test in rule 24(8) of the LLP Rules 2009. Below that the figures on the file are the LLP's own, unaudited.
Partnership firm or proprietorBooks, no public file
They keep books, and a partnership deed or a tax filing may produce something recognisable as accounts, but nothing is placed on a public file. An audit arises only on crossing the tax-audit thresholds below, and a proprietor's personal holdings are outside the business books in any case.
Salaried individualNo books at all
Keeping no books is not a defect. The position is put together straight from bank, property-registration and depository records, and there is no balance sheet to reconcile it to. The certificate is the first document that states the position at all.
- BusinessTurnover above Rs 1 crore; above Rs 10 crore where cash receipts and cash payments are each 5 per cent or less of the total.
- ProfessionGross receipts above Rs 50 lakh.
- Presumptive schemesA business may declare 8 per cent of turnover (6 per cent for digital receipts) up to Rs 2 crore, or Rs 3 crore on the same cash test; a profession 50 per cent of receipts up to Rs 50 lakh, or Rs 75 lakh on that test. Leaving a scheme locks the taxpayer out of it for five years. Both schemes now sit in section 58 of the Income-tax Act, 2025 (formerly sections 44AD and 44ADA of the Income-tax Act, 1961).
Below these limits a firm or a proprietor has unaudited books; above them, audited accounts exist and the certificate can start from them.
A provisional balance sheet, drawn to a date before the audit closes, is a different document again: the entity's own interim figures, not a statement of what the person behind it is worth. And where the question concerns a company rather than the person standing behind it, the arithmetic for an incorporated entity runs off a statutory definition and reaches a different number.
Verdict: when your audited accounts are already enough
There are requests that filed accounts close outright, and checking for them first saves a wasted exercise. The requests they cannot satisfy share a recognisable shape, and any one of three features gives it away.
Requests that want the accounts as filed, and nothing more
- Registrar filings and most statutory returns
- Income tax proceedings, which work from the return and the accounts behind it
- Many supplier registrations that ask for the last filed set
- A tender asking for three years of audited figures to evidence turnover: it is asking for exactly that, and no more
Three signs in the request, any one of which decides it
- It names a date other than the financial year end
- It names a person rather than an entity
- It uses the word "certified" with a profession printed next to it
Where it is unavoidable, arguing the point with the acceptor rarely succeeds, and the accounts are not wasted work either way. They are the starting material, and the shortest route runs from the audited figures, through the adjustments described above, to a position certified to the reader who asked the question. Nothing in the books has to be redone to get there.