We want to make the audit of Cradle as easy as possible. We understand that if the auditor isn't happy with Cradle's numbers, our customers won't be either!

So here's a step-by-step guide on auditing Cradle's calculations and financial reports.

Step 1 is to ensure you invite your auditor to Cradle. That makes everything a lot easier.

To audit any balance usually starts with the listing of the population. In Cradle, there are many ways to get a listing.

For the most detailed listing, we recommend our Custom report. To get to custom reporting, click Consolidated Reports on the sidebar, then click Custom:

Using this report will be helpful no matter what sampling method you decide to use. Why? Because you can get a listing of all leases based on commencement and other input amounts such as lease liability and right of use asset amount at year-end.

To do that, we recommend selecting the following columns. To change columns, click Change Columns and select the following:

We have selected the following inputs:

With the following inputs, you should have all you need to use specific item testing or any sampling technique.

Now you have your sample it's time to make sure your client's lease accounting balances are free from material error by gaining sufficient appropriate audit evidence 🙂

You can simply search for the agreement in the top right of Cradle. This will take you to the overview of the agreement:

Next, you will want to perform an audit over Cradle's NPV calculations, so we recommend you read the following article:

http://appsupport.cradleaccounting.com/en/articles/3444553-i-want-to-recalculate-the-lease-agreement

Once you're happy with the calculation, you'll want to tie the inputs to the underlying agreement. Your audit client should have uploaded the agreement to Attachments.

One area you'll have to speak to your client about is the accounting judgments of the lease accounting standard, the two most significant being:

To do that, select Consolidated Reports and then the applicable financial report.

To see what leases make up the balance click the "+". You can export the financial reports to Excel by clicking Export Excel.

All financial report exports are formula linked to the underlying agreements. You can then tie those figures to the Audit Schedule report of each underlying agreement. The Audit Schedule is what was recalculated in step 1.

Disclosures

The last piece of your audit is ensuring Cradle's disclosures are correct. The easiest way to do this is to export the disclosure report to excel. You can validate most numbers by checking the excel formulas, such as the average weight discount rate and remaining lease term.

To audit the current / non-current split of the lease liability, refer to the following article:

http://appsupport.cradleaccounting.com/en/articles/5521874-how-to-calculate-the-current-non-current-split-of-the-discounted-lease-liability-classification

Given your client is using us as a service organization, you probably want to know our SOC 2 compliance. Cradle has a SOC 2 Type 2 certification. For more information on our internal controls and compliance, refer here http://appsupport.cradleaccounting.com/en/articles/6117595-soc-2-report

You've now finished your audit. See you next year!

Also, if there are any improvements you'd like to see, please don't hesitate to reach out.