Lease Accounting Audit Checklist

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.

Audit-ready means your financial records, supporting documentation, and internal processes are organized and accurate enough to withstand external scrutiny at any point in time. Rather than scrambling when an audit is announced, an audit-ready organization maintains clean, traceable data as standard practice. For lease accounting, this means current lease schedules, accurate ROU asset and liability balances, and journal entries tied to verified lease data. The goal is to answer any auditor question quickly and confidently, without last-minute reconciliations or cleanup.