HLB HAMT’s Internal Auditors has extensive experience in dealing with the hospitality sector and has worked across multiple types of hotels, F&B outlets, and other sectors in UAE
2. In this difficult business climate, the hospitality industry has evolved as one of the most
critical determinants of service sector recovery in the UAE. It is not only an important
source of foreign income for the country, but it also generates a lot of jobs. Businesses
all over the world have had to take a pause and reconsider their strategy in order to
react to the new reality caused due to the emergence of the COVID 19 pandemic.
Industries that rely largely on travel and human connection have been struck the
hardest, and the hospitality industry has been put under severe strain as a result of the
dramatic decline in personal and business travel.
HLB HAMT’s Certified internal auditors in UAE, which is equipped with deep subject
matter expertise, with a thorough grasp of procedures, can play a crucial role in this
demanding business climate. Internal auditors can help businesses in the hospitality
industry ensure that goals are accomplished, risks are adequately handled, and
finances are handled wisely.
3. KEY RISKS IN HOSPITALITY INDUSTRY
The amount of risks that hospitality businesses must cope with is mounting. Hotels
must contend with a number of potentially detrimental risks in this industry, especially
as they manage an inflow of both tourist and business guests.
General Internal Controls
Internal control risks have an effect on the overall performance and efficiency of
internal controls and, consequently, on the company’s ability to fulfil its goals. Certain
risks that need to be addressed are the absence of properly specified qualification
standards with flaws in the division of responsibilities; insufficient standard operating
procedures in different departments also have a big impact. A risk analysis that is
sufficiently thorough and completed on a regular basis should influence internal control
systems.
4. Revenue Recognition
One of an entity’s most important components is its revenue recognition criteria. It is
an important performance indicator in the hospitality industry, and it is regularly
evaluated by many stakeholders. Internal controls that are weaker, such as income
from business centres, hotel rates, restaurants, barter arrangements, deviations from
the discount approval process, and complementary processes, all add risk to revenue
recognition.
F&B Pricing
The Food & Beverage (F&B) sector is the largest in the hospitality industry, and it
consists of facilities that offer food, snacks, and drinks for immediate consumption,
either on or off the premises. If you’re not cautious with F&B price concerns including
food costs deviations, events & promotions, and recipe quantity correctness, your firm
5. Inventory procedures
In the hospitality industry, inventory control is critical for maintaining accurate
accounting records and eliminating fraud. Proper inventory management processes aid
in the production of accurate data and allow businesses to order the appropriate
amount of inventory. While the primary goal of managing inventory is to reduce loss,
hospitality businesses are also expected to maintain compliance.
Fixed Asset
The risk component of fixed assets is compounded by the lack of fixed asset registries,
as well as insufficient asset movement regulations and gaps in asset warranty tracking.
Any business must keep a record of fixed assets throughout their existence. A company
with a high number of fixed assets must identify, monitor, record, and reconcile its
assets, which is critical for asset management.
6. Finance
Improper tracking of cash management and control practices, absence of an evaluation
of daily purchases/validation of vendor comparative prices, slowdowns or factual errors
in bank reconciliation statements, delays in books of accounts finalization, and
insufficiency of backup documentation and many more are all finance-related issues
that need to be addressed.
HR / Payroll
Managing HR/payroll activities in any company is a difficult process that necessitates a
significant commitment of time and money. Companies can get into difficulties if they
are not managed by qualified experts because of hazards including poor controls in
employee management, inappropriate practices for employee entitlements, and gaps in
recruiting processes and procedures for promotions and salary calculation.
7. IT Systems
The hospitality industry is becoming more vulnerable to cyber-attacks because it handles a
lot of personal and financial information. The Internal Auditor’s role is to offer assurance
and verify that proper controls are in place to manage major risks such as inadequacy of IT
systems, poor access controls, and loopholes in workflows, procedures and controls relevant
to systems such as
POS & PMS systems
Finance and Accounting systems
Payroll
Central Reservation systems
8. Procurement
Strategic procurement is an important aspect of the hospitality sector for any
organisation that wants to stay profitable. A well-developed procurement process
immediately converts into enhanced company performance by focusing on eliminating
risks such as a lack of control over price comparisons and purchase lead times,
loopholes in purchase order processing, vendor selection, periodic monitoring, and
agreements with third parties.
9. INTERNAL AUDIT IN HOTEL INDUSTRY:
CONCLUSION
Implementing the correct actions to reduce the possible occurrence of these risks is a
necessary part of a successful risk management approach in UAE. Risk mitigation is
the first element in securing a profitable business, and risk assessments must be
performed on a regular basis to prevent dangers that may arise.
The audit team will have to understand about the business through managerial
inquiries, analysis tools, monitoring, and examination as part of the risk and
performance assessment procedures.
The audit functions are evolving and are on the verge of digital change, and many
businesses will have to adjust to the new environment faster than other sectors. More
analysis may be used to facilitate remote auditing, resulting in a better and more
productive audit with enhanced customer satisfaction.
10. HLB HAMT’s team has extensive experience in dealing with the hospitality sector and
has worked across multiple types of hotels, F&B outlets, and other sectors that are
closely related to the hospitality industry. We understand industry practices, the IT
environment, control requirements, and efficiency aspects, as well as the need to
maintain a balance between controls and guest experience.
11. CONTACT US
HLB HAMT
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates.
Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
