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.

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.

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.

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

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:  Select all leases before running the report to ensure the report is complete.  Run for the last month of the prior period.   Check ‘Include Data by Lease’.  If client has multiple Reporting Entities or both classifications, the reports must be run separately. Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:  Open
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:  Select all leases before running the report to ensure the report is complete.  Run for the current fiscal year period.   Check ‘Include Data by Lease’.  If client has multiple Reporting Entities or both classifications, the reports must be run separately. Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:  Open
FN Report	Footnote	Used to generate the Footnote for the Financial Statements.  Report parameters:  Select all leases before running the report to ensure the report is complete.  Run for the current fiscal year period.   Uncheck ‘Include Data by Lease’.  Select the applicable Standard (ASC 842 or IFRS 16).  Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:  Open
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:  Select all leases before running the report to ensure the report is complete.  Run for the next fiscal period.   Check ‘Include Data by Lease’.  If client has multiple Reporting Entities or both classifications, the reports must be run separately. Example shown below as if we are auditing the January 2025 to December 2025 fiscal year:  Open

Gather the following from your prior year workpapers, if Crunchafi was used: 

Screenshots and examples in this guide are based on a sample audit period of January 2025 through December 2025. 

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.

To verify the lease accounting disclosures are properly represented in the Financial Statements, use the Footnote report from Crunchafi (FN Report). The Footnote report automatically includes quantitative disclosures as required by the lease accounting standards reducing the burden on accounting teams. See example below: 

Open

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. 

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). 

Open

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) 

Open

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: 

Open

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. 

Open

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. 

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.

Open

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.

Open

If the Classification or Lease Term is incorrect, record changes in the Crunchafi software and rerun all reports in Step 2 above. Note any changes made to the Lease Term Wizard and Classification Wizard are retroactive to the Commencement Date of the Lease.

To determine if the initial measurement of the ROU Asset and Lease Liability are in accordance with FASB ASC 842 (reference D above), open Amort #2 ‘Data by Lease’ tab:

• Highlight row 3

• Add a Filter to sort by Start Date

• Use the ROU Asset Beginning at LT Lease Liability Beginning to verify initial measurement.

Review the remaining inputs in Crunchafi to verify ROU Asset Life, discount rate, and payments. If your firm has has questions about the ROU Assets & Lease Liability calculations from Crunchafi, refer to Understanding Journal Entries in the Crunchafi Knowledge Base.

In the Amort #2 report on the ‘Data by Lease’ tab, highlight row 3 and add a Filter (Revision #) to exclude blank cells. In filter, sort Start Date by Newest to Oldest. Use this filtered list to identify the modified/remeasured leases during the current audit period and review lease details.  

Open

Take note of the following to help with your review:  

• The ‘Lease’ tab of Amort #2: Revision Type, Revision Comment

• In the ‘Data by Lease’ tab of Amort #2: Click Lease ID to launch the lease details inside of Crunchafi for review.

  • Review the revised lease inputs in Crunchafi and compare to the lease contract, including but not limited to term, ROU Asset Life, discount rate, payments, and classification (if applicable for the Revision Type). 

• Refer to the Crunchafi ASC 842 technical guidance to review and confirm selected Revision Type.

• If the lease modification qualifies as a new lease, it will not be in the above list.

As other audit procedures are performed, consider the information obtained, the remaining useful lives, and value of the ROU Assets should be evaluated for reasonableness. 

To calculate the remaining useful life of each ROU Asset (E), use the Amort #2 report and navigate to the ‘Data by Lease’ tab. Add a column between ROU Asset Life and Term Comments to calculate the remaining life of the ROU Asset. Add the following formula to the new column:

• =DATEDIF(“PERIOD END DATE”, Column AL,”m”)+(Column AN - Column AM) 

• This formula will return the remaining months of ROU Asset Life for each lease as of the current year end date.

• For example, this formula below shows the remaining useful life of the first lease on the ‘Data by Lease’ tab if the audit period end was December 31, 2025: 

  • =DATEDIF(“12/31/25”,AL5,”m”)+(AN5-AM5) 

Open

You can find the net carrying value of each ROU Asset as of the audit period end (F) in the ROU Asset EOM column of the Amort #2 report on the ‘Data by Lease’ tab. 

Open

To evaluate reasonableness and test accuracy, review the lease inputs in Crunchafi and compare to the lease contract, including but not limited to term, ROU Asset Life, discount rate, payments and classification.

If Amort #3 PY is available from your prior year audit:

Compare the Interest and Amortization Expense from Amort #3 PY to Amort #2. If there were no new leases in the current year, and no modifications or revisions, the amounts should be identical. If they differ, use the ‘Data by Lease’ tab in each schedule to identify individual lease changes from year-to-year. Once individual leases are identified, evaluate whether the year-over-year change is reasonable by confirming it relates to a new lease, a modification, or a revision, and then review the underlying lease inputs.  

If Amort #3 PY is not available from your prior year audit:

To evaluate reasonableness and test accuracy, review the lease inputs in Crunchafi and compare to the lease contract, including but not limited to term and payment streams. Additionally, review the subjective components of the term wizard, ROU Asset Life, discount rate and classification wizard.   

After tracing the ending balances identified in Amort #2 to the Trial Balance in the current year workpapers (this was referenced as B in Significant Leases for Lessees – Procedure 1a), ensure the following related to the Financial Statements: 

• Finance Lease ROU Assets and Operating Lease ROU Assets are recorded separately from each other and from other assets

• Finance Lease Liabilities and Operating Lease Liabilities are recorded separately from each other and from other liabilities

• Amortization Expense, Operating Lease Expense, and Interest Expense are appropriately classified on the Income Statement: 

  • For Finance Leases, the interest expense on the Lease Liability and amortization of the ROU Asset are not required to be presented as separate line items and shall be presented in a manner consistent with how the entity presents other interest expense and depreciation or amortization of similar assets, respectively 

  • For Operating Leases, lease expense shall be included in the lessee’s income from continuing operations 

Have questions? Submit a ticket to contact the Crunchafi Support team.