Every filing is a searchable PDF or HTML. Before the read order and all the way through it, you run a fixed list of search terms. Each hit earns thirty seconds of attention; most turn out innocent; the one that isn't can save you from a permanent loss. This is the ★ pass of the quality-of-earnings checklist (Phase 2) compressed to ten keystrokes. Learn why each word is a tripwire, because a word you search without knowing why it matters is astrology:
Which ten words should you search for?
| Search term | Why it is a tripwire | What a hit triggers |
|---|---|---|
| "related party" | Promoter/insider self-dealing hides here: sales, purchases, loans, royalties, guarantees routed to entities the controllers own. RP receivables that never collect are loans wearing revenue's clothes. | Read the RP note; total the value; ask which direction value flows (to or from the listed company) |
| "pledge" | (India) A promoter borrowing personally against company shares. High/rising pledge is a margin-call fuse that can force the company to bleed cash to service the promoter's debt (the pledge spiral, M1.10). | Pull the shareholding pattern; read pledge % and its trend; >50% of promoter holding → top of the question list |
| "contingent" | Off-balance-sheet liabilities (guarantees, disputed taxes, litigation, group-company guarantees) that can become real debt overnight. | Compare total contingents to net worth; >15–20% → read the detail; note any group guarantees |
| "going concern" | The auditor or management is telling you, in the most formal language available, that survival for the next year is in doubt. | Stop and read the whole paragraph and management's plan; near-fire-alarm — but its absence proves little |
| "restated" | The company previously reported numbers it now admits were wrong. A restatement is the accounting equivalent of "we lied, or we couldn't count." | Find what was restated, by how much, and why; check for CFO/auditor turnover around it |
| "auditor" (and "resign") | Auditor resignations mid-term and changes are among the highest-signal events in any filing. When a firm prefers losing a fee to signing, believe them (Manpasand, Vakrangee). | Read the exit reason; "information not provided" ≈ fire alarm; scheduled rotation is routine noise |
| "exceptional" | (India/IFRS) Items management wants you to treat as one-off. Serial "exceptional" items are ordinary costs in a costume, always conveniently below the line. | Count how many years carry one; if it recurs, it's operating; never let it be netted out of your view |
| "one-time" | The US cousin of "exceptional." "One-time" charges that appear four years in five are a run-rate cost the company is dressing as unusual. | Same as exceptional: check recurrence; rebuild the number without the costume |
| "guarantee" | Corporate guarantees, especially to subsidiaries, JVs, or promoter entities, are contingent debt and a fund-diversion route (CARO clause iii/ix). | Total the guarantees; identify the beneficiary; group-entity guarantees → governance question |
| "receivable" (and "unbilled") | Receivables and unbilled/contract assets are where premature or fictitious revenue settles. Rising faster than sales, they signal pull-forward, stuffing, or POC abuse. | Cross-check the DSO trend (Layer 3); a sustained rise with no disclosed terms change → dig |
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How do you use the list, and when do you stop?
Run the list at the start (to pre-mark where to slow down) and keep it live as you read. Ten searches take two minutes and routinely change where the other fifty-eight go. Two stop rules survive from M1.10: an adverse opinion or disclaimer → stop the analysis, the accounts are not a usable input; pledge >50% of promoter holding → elevate governance to the top of your question list before anything else.