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It looks like there's a missing piece for cross-account. I see in https://docs.aws.amazon.com/secretsmanager/latest/userguide/retrieving-secrets_lambda.html that the extension allows you to specify the secret by ARN as well as name, so you can reference a secret in another account. Your execution role can be set up to assume a suitable role in that other account. But the problem is getting the extension to do that role assumption - I don't see a way to make that happen.
Depending on your lambda's calling frequency you can at least do some basic caching of the secret by retrieving it outside of the handler function so it's reused for multiple invokes over the lifecycle of the runtime container.
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