PPC Methodology Playbook
Crunchafi’s PPC Methodology Playbook
The Thomson Reuters and Crunchafi partnership brings seamless lease accounting automation directly into existing PPC‑based workflows, eliminating the burden of manual lease calculations while preserving your established methodology.
Check out the detailed steps below on how to complete audit lease procedures with PPC Methodology via Thomson Reuters Guided Assurance.
Overview
This guide provides a step-by-step walkthrough for performing lease accounting audit procedures using Crunchafi Lease Accounting with PPC methodology via Guided Assurance.
It assumes your engagement team has already populated Crunchafi with the complete lease population for the period under audit, including any new leases, terminations, modifications, reassessments, and other updates needed to reflect management’s records. It also assumes that all required lease accounting entries have been posted by management. If not, review Crunchafi’s Journal Entries report to identify any unposted journal entries.
The guide starts by walking through how to run the appropriate Crunchafi reports, then provides detailed instructions for completing each applicable PPC or Guided Assurance procedure.
Important disclaimer: This guide is provided for informational purposes only. Your firm’s methodology, policies, and professional judgment should always govern your work. Always consult your engagement team and review your firm’s PPC or Guided Assurance guidance, as well as applicable professional standards and ASC 842 requirements, to determine the appropriate procedures, documentation, and conclusions for your specific engagement. Crunchafi does not provide audit opinions or assurance services, and use of this guide does not replace your firm’s required review, supervision, or quality control procedures.
Preparation steps before completing procedures
Step 1: Make sure all leases within Crunchafi are up to date
Coordinate with your client to confirm the Crunchafi lease population is fully up to date for the audit period. This includes entry of any new leases, completion of all updates to existing leases (for example modifications, reassessments, renewals, or terminations) and that all journal entries have been posted to their financial system.
Step 2: Run / gather the relevant reports from Crunchafi
For lessee reports, navigate to the Reports sections at the bottom of the My Leases tab. Export the following reports with these parameters:
Report # (for reference) | Report Name | Description and Parameters |
|---|---|---|
Amort #1 | Amortization Schedule | Used to obtain the opening balances for ROU Assets and Lease Liabilities. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: 
|
Amort #2 | Amortization Schedule | Used to obtain the current balances for ROU Assets, Lease Liabilities and Income Statement accounts during the current fiscal year. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
FN Report #1 (for Lessee) | Footnote | Used to generate the Footnote for the Lessee Financial Statements. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
FN Report #2 (for Lessor) | Footnote | Used to generate the Footnote for the Lessor Financial Statements. Report parameters:
Example shown below as if we were auditing the January 2025 to December 2025 fiscal year: |
Amort #3 | Amortization Schedule | Used to assess the reasonableness of Balance Sheet and Income Statement balances for the next year based on the data entered during the current year. This report will not be used for this audit period, rather, will be used in the next audit period. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:
|
Gather the following from your prior year workpapers, if Crunchafi was used:
Report # (for reference) | Report Name | Description and Parameters |
|---|---|---|
Amort #2 PY | Amortization Schedule | Used to identify changes from the prior to current year. Refer to the prior year workpapers and obtain the Amortization Schedule for the full prior audit year. This is the same as Amort #2, but from the prior year workpapers. |
Amort #3 PY | Amortization Schedule | If Amort #3 was run during the previous audit year, gather this report as it will be used to assess the reasonableness of Balance Sheet and Income Statement items during the current audit year. |
Screenshots and examples in this guide are based on a sample audit period of January 2025 through December 2025.
Step 1: Make sure all leases within Crunchafi are up to date
Coordinate with your client to confirm the Crunchafi lease population is fully up to date for the audit period. This includes entry of any new leases, completion of all updates to existing leases (for example modifications, reassessments, renewals, or terminations) and that all journal entries have been posted to their financial system.
Step 2: Run / gather the relevant reports from Crunchafi
For lessee reports, navigate to the Reports sections at the bottom of the My Leases tab. Export the following reports with these parameters:
Report # (for reference) | Report Name | Description and Parameters for Lessee |
|---|---|---|
GASB Amort #1 | Amortization Schedule | Used to obtain the opening balances for Lease Assets and Lease Liabilities. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:
|
GASB Amort #2 | Amortization Schedule | Used to obtain the current balances for Lease Assets, Lease Liabilities and Income Statement accounts during the current fiscal year. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:
|
GASB Amort #3 | Amortization Schedule | Used to assess the reasonableness of Balance Sheet and Income Statement balances for the next year based on the data entered during the current year. This report will not be used for this audit period, rather, will be used in the next audit period. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
GASB FN Report #1 | Footnote | Used to generate the Footnote for the Lessee Financial Statements. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:
|
GASB FN Report #2 (for Lessor) | Footnote | Used to generate the Footnote for the Lessor Financial Statements. Report parameters:
Example shown below as if we were auditing the January 2025 to December 2025 fiscal year: |
Report # (for reference) | Report Name | Description and Parameters for Lessor |
|---|---|---|
GASB Amort #4 | Amortization Schedule | Used to obtain the opening balances for Deferred Inflow of Resources, Lease Receivable, Interest Receivable and Cash/AR Entries Report Parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year. (screenshot below) |
GASB Amort #4 PY | Amortization Schedule | If Amort #4 was run during the previous audit year, gather this report as it will be used to assess the reasonableness of Balance Sheet and Income Statement items during the current audit year. This is the same as Amort #4 but from the prior year workpapers. |
GASB FN Report #2 | Footnote | Used to generate the Footnote for the Financial Statements. |
Screenshots and examples in this guide are based on a sample audit period of January 2025 through December 2025.
Step 1: Make sure all leases within Crunchafi are up to date
Coordinate with your client to confirm the Crunchafi lease population is fully up to date for the audit period. This includes entry of any new leases, completion of all updates to existing leases (for example modifications, reassessments, renewals, or terminations) and that all journal entries have been posted to their financial system.
Step 2: Run / gather the relevant reports from Crunchafi
For lessee reports, navigate to the Reports sections at the bottom of the My Leases tab. Export the following reports with these parameters:
Report # (for reference) | Report Name | Description and Parameters for Lessee |
|---|---|---|
IFRS Amort #1 | Amortization Schedule | Used to obtain the opening balances for ROU Assets and Lease Liabilities. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:
|
IFRS Amort #2 | Amortization Schedule | Used to obtain the current balances for ROU Assets, Lease Liabilities and Income Statement accounts during the current fiscal year. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
IFRS Amort #3 | Amortization Schedule | Used to assess the reasonableness of Balance Sheet and Income Statement balances for the next year based on the data entered during the current year. This report will not be used for this audit period, rather, will be used in the next audit period. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
IFRS FN Report #1 (for Lessee) | Footnote | Used to generate the Footnote for the Lessee Financial Statements. Report parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year: |
IFRS FN Report #2 (for Lessor) | Footnote | Used to generate the Footnote for the Lessor Financial Statements. Report parameters:
Example shown below as if we were auditing the January 2025 to December 2025 fiscal year: |
Lessor Reports: Crunchafi Lease Accounting is available for Lessor Operating Lease Classification
Report # (for reference) | Report Name | Description and Parameters for Lessor |
|---|---|---|
IFRS Amort #4 | Amortization Schedule | Used to obtain the opening balances for Deferred Rent, Initial Direct Costs and Cash/Clearing Entries Report Parameters:
Example shown below as if we are auditing the January 2025 to December 2025 fiscal year. (screenshot below) |
IFRS Amort #4 PY | Amortization Schedule | If Amort #4 was run during the previous audit year, gather this report as it will be used to assess the reasonableness of Balance Sheet and Income Statement items during the current audit year. This is the same as Amort #4 but from the prior year workpapers. |
IFRS FN Report #2 | Footnote | Used to generate the Footnote for the Financial Statements |
Screenshots and examples in this guide are based on a sample audit period of January 2025 through December 2025.
Select the playbook relevant to you from the drop-down menu
Note: PPC Procedures referenced in this playbook are based on PPC's 2026 Guide to Audits of Nonpublic Companies (ASB).
Table of Contents
ASB-AP-70 Audit Program for Property
Basic Procedures - 5a
Procedure Excerpt from PPC: Basic Procedures
Perform procedures to determine if there are any unidentified or embedded leases that require the completion of lease testing procedures.
a. For any outsourcing, service, supply, or other similar contracts that have not been previously reviewed for potentially embedded leases or were significantly modified in the current period, obtain contracts and other applicable documents related to the contracts and review for potential lease terms, wherein the contract or agreement conveys the right to control the use of a specified asset over a period in exchange for consideration.
As you identify contracts with embedded leases or previously unidentified contracts that include lease terms, add the details of these contracts as a lease into Crunchafi. If new leases are added, the reports indicated above will need to be run again.
Concluding Audit Steps - 6
Procedure Excerpt from PPC: Concluding Audit Steps
Ensure that the workpapers include the information needed to support required financial statement disclosures and such information has been subjected to appropriate audit procedures.
To verify the lease accounting disclosures are properly represented in the Financial Statements, use the Footnote report from Crunchafi (FN Report #1). The Footnote report automatically includes quantitative disclosures as required by the lease accounting standards, reducing the burden on accounting teams. See example below:
Test Additions to Property - 2f
Procedure Excerpt from PPC: Test Additions to Property
For significant additions to property, perform the following procedures (document the items selected for testing):
f. Inspect significant lease agreements entered into during the period and rental expense accounts for significant items and consider whether the items meet the short-term lease criteria or whether the asset should be capitalized.
As you inspect new lease agreements during the current audit period, make sure you are aware of the ‘short-term lease election’, which allows the client to elect (per 842-20-25-2 to 3) not to record a ROU Asset and Lease Liability if, at commencement:
The lease term is 12 months or less, and
There is no purchase option that is reasonably certain to be exercised.
If a previously short term lease is renewed or reasonable certainty to purchase changes, lessee shall apply the guidance in ASC 842 as of the commencement date of the lease.
If the lease qualifies and the election is made for that class of assets, straight-line lease expense is typically recorded, which often shows up as rent expense. Refer to our Knowledge Base on how to use Crunchafi for short-term leases.
If the lease does not qualify or it qualifies and the election is not made, be sure the lease was added to Crunchafi. If it was not added, proceed to add the lease into Crunchafi and rerun reports listed above.
ASB-AP-70A Other Audit Procedures for Property
Significant Leases for Lessees - 1a through 1d
Procedure Excerpt from PPC: Significant Leases for Lessees
For all leases and outsourcing, service, supply, or similar contracts, perform the following procedures:
a. Obtain an analysis of lease contracts separated by class of asset, if appropriate, including those that existed at the end of the prior year and any new lease contracts, showing the balance of right-of-use lease assets and lease liabilities at the beginning (A) and end of the period, and the related amortization and interest expense (B).
b. Test the clerical accuracy of the analysis. Trace the opening balances (A) to the adjusted prior-year working trial balance and the ending balances (B) to the current-year working trial balance. Review any reconciliation to the general ledger and investigate any unusual reconciling items.
c. Compare and document (including expectations) balances in the lease liability accounts and related interest expense with those of the preceding years or other expectations.
d. Compare and document (including expectations) balances in the right-of-use asset accounts and related amortization with those of the preceding years or other expectations.
Opening Balances: Using the Amortization Schedule ran for the last month of the prior year (Amort #1), identify the prior year (PY) balances by navigating to the ‘Data’ tab. Refer to the following columns:
ROU Asset EOM
ST Liability EOM
LT Liability EOM
If client is combining Short and Long Term Liability, use column Total ST & LT Liability EOM
The Grand Total row for these columns represents the ending balance for PY and opening balance of the current year (A referenced above in Procedure 1a & 1b).
Ending Balances: Next, identify the current year balances for the ROU Asset, Lease Liabilities and related Amortization and Interest Expense or Operating Lease Expense. Using the Amortization Schedule for the fiscal current year (Amort #2), navigate to the ‘Data’ tab and the following columns:
ROU Asset EOM
ST Liability EOM
LT Liability EOM
Amortization Expense (Finance Leases) or Operating Lease Expense (Operating Leases)
Interest Expense (Finance Leases)
The Grand Total row for each of these columns represents the ending balance for Balance Sheet accounts (ROU Asset and Lease Liability) and the full period expense balances for Amortization and Interest Expense or Operating Lease Expense (B referenced above in Procedure 1a).
To test the clerical accuracy of the analysis in Procedure 1b:
Trace the opening balances identified in Amort #1 (the Grand Totals referenced as A) to the final adjusted trial balance in the prior year workpapers, and
Trace the ending balances identified in Amort #2 (the Grand Totals referenced as B) to the trial balance in the current year workpapers.
For Procedure 1c and 1d, use the current year (Amort #2) and last year’s (Amort #2 PY) Amortization Schedules to document the period-over-period change in the ROU Asset, Lease Liability, and related Amortization/Operating Lease Expense and Interest Expense balances.
In Amort #2 on the ‘Data by Lease’ tab, refer to the ‘Start Date’ in column AK to identify any lease-level changes in the current year:
For new leases during the period, review the related inputs within Crunchafi (as listed in the ‘Lease’ tab) to ensure they are entered correctly. For revisions during the period, review the Revision Info in columns B through H in the ‘Lease’ tab of Amort #2.
Significant Leases for Lessees - 2a
Procedure Excerpt from PPC: Significant Leases for Lessees
For any leases and outsourcing, service, supply, or other similar contracts that were not tested in a prior audit or were significantly modified in the current periods, perform the following procedures:
a. Determine that the contracts contain a lease as defined in FASB ASC 842 and that the entity has identified the separate lease components (or multiple components) and nonlease components, if any, within each contract and has allocated the consideration in the contracts to each separate lease and nonlease component of the contract.
As you evaluate contracts that were not tested in a prior audit or significantly modified contracts during the current audit period, first determine whether each contract contains a lease using the flowchart in 842-10-55-1. For contracts that contain both lease and non-lease components, confirm whether the entity has elected, under 842-10-15-37, to combine those components. If no election has been made, apply the guidance in 842-10-15-28 through 15-37 to identify and account for the separate lease and non-lease components and to allocate consideration accordingly. Within Crunchafi, trace the resulting allocation to the associated payment streams in the ‘Data’ tab of the Amort #2 report for the lease under review.
Significant Leases for Lessees - 3
Procedure Excerpt from PPC: Significant Leases for Lessees
Based on the terms of the contracts, determine that leases are appropriately classified as either finance or operating leases (C) and that initial measurement of the right-of-use asset and lease liability are in accordance with FASB ASC 842 (D).
To determine if leases are appropriately classified as either finance or operating leases (reference C above), open Amort #2 and review the Lease Classification Wizard answers in the ‘Lease’ tab.
Next, review the Lease Term Wizard answers in the ‘Lease’ tab of Amort #2, to determine if the client appropriately considered Renewal Options or Early Termination Options that were Reasonably Certain.