Lease Accounting Audit Checklist
Prepare for your lease accounting audit leveraging our 10-step checklist which features videos, tips, how-to blogs and definitions for each step.
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A lease accounting audit is a comprehensive review of a company’s lease accounting practices and financial statements to ensure compliance with ASC 842, which mandates recognizing all leases over 12 months on the balance sheet. It involves verifying accurate calculation of lease liabilities and right-of-use assets, testing internal controls, and providing insights to optimize leasing practices.
Frequently Asked Questions:
A lease accounting audit is a process to ensure compliance with accounting standards like ASC 842, requiring organizations to recognize most leases on their balance sheets as right-of-use assets and lease liabilities. This audit verifies the accuracy of lease transactions and related financial data.
Conducting a departmental lease survey is crucial for ensuring the completeness of the lease population. It involves corroborating leases through various methods, such as reviewing agreements and analyzing rent expenses, to confirm that all leases are accounted for.
Auditors should request a roll-forward report of right-of-use assets and lease liabilities, draft financial statement disclosures related to leases, and a report detailing significant assumptions used in lease accounting. These documents provide essential evidence for audit analysis.
A lease accounting audit checklist streamlines the auditing process by summarizing key procedures and required documentation. Using this checklist helps ensure that audits are thorough, efficient, and compliant with the new lease accounting standards.