Underwriting a lease
Taking ownership of a lease by understanding its terms, making the accounting judgements yourself, and recording the basis for each, so the numbers are defensible.
Definition
Under IFRS 16 and amended FRS 102, the lease liability and right-of-use asset are not simply lifted from the contract. They depend on judgements the contract does not make for you: the lease term (including renewals you are reasonably certain to exercise), the discount rate, and whether the short-term or low-value exemptions apply. To "underwrite" a lease is to understand those inputs, decide each judgement, and record the reasoning, rather than accept a figure produced without human review.
Why it matters
The most challenged numbers in a lease audit are judgements, not data. An auditor asks how you know the term, the rate and the lease population are right. That confidence comes from having made and evidenced each call, not from automated extraction that no one has stood behind.
In AuditLease
AuditLease asks you to underwrite every lease: you enter and confirm the terms, make each judgement with a recorded rationale, and the evidence chain links every journal line back to those inputs. It automates the arithmetic, not the accountability.
Related terms
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Why you underwrite every lease →Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence, so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.