The night audit involves verifying guest accounts and transactions, balancing department accounts, resolving discrepancies, and producing reports for management. Key tasks include posting room rates and taxes, reconciling food and beverage charges, verifying cash deposits, and producing a daily operations report with metrics like occupancy percentage. The night auditor acts to ensure account accuracy, protect hotel revenue, and monitor credit limits on high balance accounts.
2. Audit Meaning?
â˘An official inspection of an
organizationâs accounts, typically by an
independent body
â˘Conduct an official financial inspection
of a company or its accounts
rpranith.reddy10@gmail.com 2
3. Why Audit?
⢠Auditing provides assurance to clients, owners,
shareholders, Government, and creditors that
company funds (money, material) are handled
appropriately. ...no fraud, fudging or falsifications!
⢠Audit is a confirmation that books of accounts of a
company are accurate (mathematically), genuine
(factually) and legal (tax calculations are correct).
rpranith.reddy10@gmail.com 3
5. Why Night Audit?
⢠Hotel runs non-stop.
⢠Large hotels, with high business levels, generate an enormous volume
of transaction documents, that can not be checked once a year, like
normal businesses.
⢠Customers of hotels are mostly strangers and some never return.
⢠Once a guest leaves the hotel, it is difficult to collect an unpaid
account, even legally.
⢠Hotels also suffer from a Charge Back problem in Credit Card
settlements, where the guest protests to the Bank that a charge is
false, after leaving the hotel. E.g. Express Check-Out
rpranith.reddy10@gmail.com 5
6. â˘Therefore, the hotels must ensure that all accounts
are exact and settled on time.
â˘Any mistake in guest account can ruin the hotelâs
reputation.
â˘Any negligence could mean that revenue is lost
forever.
â˘Employees may show dishonest tendencies.
rpranith.reddy10@gmail.com 6
7. Hotel Night Audit: Definition
â˘A daily review, analysis, recapitulation and reporting
of the financial data, facts and events to achieve the
following three purposes:
ďśAccounts are true and error-free.
ďśFinancial Health of the business is understood.
ďśData is summarized meaningfully for management
to take correct financial & operational decisions.
rpranith.reddy10@gmail.com 7
8. The night audit is a daily review of guest accounts
and non-guest accounts having activity, against
revenue centre transaction information which helps
guarantee accuracy in front office accounting.
A successful audit will result in balanced accounts,
accurate statements, appropriate credit monitoring
and timely reports to management.
rpranith.reddy10@gmail.com 8
9. Audit is concerned with
A.Verification of posting
B. Balancing of accounts
C. Resolving room status discrepancies
D.Monitoring credit limitations
E. Producing operational reports
rpranith.reddy10@gmail.com
9
10. THE ROLE OF THE NIGHT AUDITOR
ď´The role of night auditor requires attention to accounting detail, procedural
controls, and guest credit restrictions.
ď´The auditor should be aware of the nature of cash transactions affecting
the front office.
ď´The auditor tracks room revenues, occupancy percentages, and other front
office statistics and prepares a summary of cash, cheques and credit card
activities. These data reflect the hotelâs financial performance for the day.
ď´The night auditor summarizes the results of operations for reporting to
management.
rpranith.reddy10@gmail.com
10
11. Night Audit Procedure: Major
Tasks
ď´Post room tariff plus taxes in all folios for current day.
ď´Reconcile (compare to match, voucher amount and
folio amount) posting of F & B charges into respective
guest folio.
ď´Reconcile , for all points-of-sale departments, sales
summary sheet with copy of vouchers.
ď´Verify âNo Showâ reservations and post retention
charge in guaranteed reservation folios.
rpranith.reddy10@gmail.com
11
12. ď´Resolve any discrepancydifference
between room occupancy data of FO &
HK.
ď´Calculate total revenue from rooms,
points-of-sale (separately) and finally,
whole hotel.
ď´Prepare a list of accounts which are near
or over permissible credit limit (high
balance report).
rpranith.reddy10@gmail.com
12
13. â˘In case of small and medium size hotels,
the night auditor, in addition to his
normal duties may also act as night
manager or night receptionist and may be
required to perform the functions of
'graveyard' shift.
â˘He usually works from 11.00 pm to 8.00
a.m. next day.
rpranith.reddy10@gmail.com 13
15. Transactions That are Checked
⢠Room Tariff
⢠Tax
⢠F & B Checks (Restaurant & Bar Credit Bills)
⢠Miscellaneous Charges (Laundry, Spa,
⢠Telephone, VPO, Business Centre etc.)
⢠Allowance (RebateDeductionCompensation)
⢠Incentive (monetary reward for better staff
⢠performance)
rpranith.reddy10@gmail.com 15
16. Transactions That are Checked
â˘Commission (Incentive for sales promotion to an
outside agency)
â˘Complimentary (free goods or services)
â˘VPO (money paid by hotel on guest behalf to an
outsider)
â˘Discount (Tool for increasing sales during
offseason)
â˘Upgrade (Marketing tool of hotel promotion, by
assigning a room of higher value to guest)
rpranith.reddy10@gmail.com 16
17. Transactions That are Checked
â˘Walking a guest (denying room to a guaranteed
reservation)
â˘Account Transfer (balance transferred, from
one guest account to another)
â˘Room Transfer (Change of room)
â˘Coupons & Vouchers for sales promotion
rpranith.reddy10@gmail.com 17
18. Night Audit Reports
⢠Department Detail & Summary Report:
⢠Total revenue, allowances, discounts, complimentary and transfers
⢠High Balance Report:
⢠Accounts (Resident & City) near or over the permissible credit limit,
actions taken on yesterdayâs high balance accounts and the result
of those actions.
⢠Daily Operations Report:
⢠Occupancy % (FIT, GIT, Domestic, Foreign, Bed), House count,
Average daily Rate, RevPAR, OOOOOS rooms, Variance between
actual & budget figures, etc.
rpranith.reddy10@gmail.com 18
22. Cross Checking
⢠For every revenue generating transaction section of the hotel the
originating revenue centre documents the type i.e. cash charge or
paid outs and the monetary value of the transaction.
⢠Front office posts to appropriate guest or non-guest account.
Transactional documentation identifies the nature and amount of the
transaction and is the basis for data input into accounting system.
⢠Night audit should cross check the information on room revenue
(which he receives from folio bucket) (Bucket check) with room rate
posting on guest folios against housekeeping reports of occupied
rooms and front office room rack to avoid any occupancy error etc.
rpranith.reddy10@gmail.com 22
23. Account Integrity
⢠Proper internal control means correct verification posting
and collection for sales transaction by front office staff
members.
⢠If all activities such as selling of room posting and verification
of charges, and collection were done by the same person,
then any error carried out by him can never be detected and
this will cause embarrassment and possible dispute at the
time of departure of the guest.
⢠Hence distribution of duties, for example, one person to sell,
another to enter, another to collect and another to verify the
transaction should be done.
rpranith.reddy10@gmail.com 23
24. Credit Monitoring
⢠Various factors such as credit card company, credit
limit/floor limit, guest's credit profile (status/reputation),
hotel's house credit limits, etc. are instrumental in fixing
line of credit with guest by the hotel Guests with credit
cards are given credit up to the limit of his card.
⢠which is fixed by the credit card company and guests with
no credit card or with some other credit facilities are given
credit only up-to the house limit which is fixed by the hotel
as per hotel policy and rules.
rpranith.reddy10@gmail.com 24
25. High risk or high balance
account
⢠Where the account reaches credit or house limit the auditor informs
the management to communicate to the guest and request the guest
for partial or full payment till that date the management may also
request the credit card company to authorize an additional credit
facility to the guest.
⢠At the end of each business day, the night auditor should identify
each account, which have either reached or exceeded their assigned
credit limit.
⢠A list of all such accounts called 'High Balance Report' is made
and such account are called High Balance Account
rpranith.reddy10@gmail.com 25
26. A simple basic posting formula given below
should be used
Previous Balance + Debits -
Credits = Net Outstanding
Balance
rpranith.reddy10@gmail.com 26
27. Night Auditor as Night Receptionist
â˘Process late check-ins
â˘Process early check-outs
â˘Monitor fire alarm system
â˘Act as Manager-on-duty
â˘Handle emergencies
rpranith.reddy10@gmail.com 27
28. Night Auditor Profile
â˘Accounts background
â˘Hotel management degree
â˘Temporary posting (no one likes continuous
night shifts)
â˘Reports to FOM & Chief Accountant
rpranith.reddy10@gmail.com 28
29. The night auditing involves following steps in
sequence
1. Complete outstanding
posting
3. Balance all department
5. Verify no show
reservations
7. Prepare reports
9. Back-up system
2. Recognize rooms status
discrepancy
4. Verify room racks
6. Post room rates and taxes
8. Deposit cash
10. Distribute reports
rpranith.reddy10@gmail.com 29
32. Non-automated
(i)Daily and supplemental transcripts,
(ii)Guest and non-guest folio,
(iii) Front office cash sheets, and
(iv)Audit recapitulation sheet and transactional
voucher produced by hotel's revenue centre
are sent to front desk
rpranith.reddy10@gmail.com 32
34. Semi-automated
rpranith.reddy10@gmail.com 34
⢠These systems retain folio balance to eliminate the need to enter the
previous balance (pick up balance) and error associated with those
entries. Many electronic posting machines can store previous account
balances, which help eliminate âpick up errorâ.
Forms produced in a semi-automatic system are:
1. Front office cash report, and
2. Night audit summary report (D-card)
⢠This card shows the opening balance of the system, provides a
running record of all charges and credits posting through the machine
and shows a final balance
37. Fully Automated
⢠A fully automated system can be interfaced with POS equipment,
telephone switches and call accounting system for automatic postings
from these devices directly to guest or non-guest folios.
⢠An out-of-balance situation usually indicates internal computer
problem or an unusual data handling error. More details of this have
been explained in the chapter on Computer Fidelio System.
⢠Many computers based front office systems can perform nearly
continuous system audit routine and provide summary reports at a
predetermined time providing greater flexibility in front office
operation.
rpranith.reddy10@gmail.com 37
39. Tracking transactions. A transaction can be
one of the following
(a) Cash payment
(b) Charge purchase
(c) Account correction
(d) Account allowance
(e) Account transfer
(f) Account cash advance
rpranith.reddy10@gmail.com 39
40. Cash payment
⢠Payments made by guest or non-resident guests. It decreases
the payable balance of guest. A supporting cash voucher is
made.
1. For any cash purchase made by the guest other than front
office, no entry is made on account folio, and
2. For such transaction, the account is created, increased,
settled and closed at the point of sales.
rpranith.reddy10@gmail.com 40
41. Charge Purchase
⢠A deffered payment
transaction. In this case the
guest receives services/goods
but does not pay for it at the
time of purchase.
⢠In such cases the point of
sales must immediately
communicated to front office
for posting a charge voucher
which is prepared at the point
of sales transmitted by a
runner in manual system.
rpranith.reddy10@gmail.com 41
42. Account Correction
â˘A posting error,
rectified on the
same day.
â˘A correction
voucher is
made.
rpranith.reddy10@gmail.com 42
43. Account allowance
⢠This involves two types of
transactions. One type of
allowance is for compensation
for poor service/product and
rebate or discount coupons
are issued and second to
correct posting error found
after the close of the day. In
this case also an allowance
voucher is prepared which is
authorized by the
management.
rpranith.reddy10@gmail.com 43
44. Account allowance
⢠This involves two types of
transactions. One type of
allowance is for compensation
for poor service/product and
rebate or discount coupons
are issued and second to
correct posting error found
after the close of the day. In
this case also an allowance
voucher is prepared which is
authorized by the
management.
rpranith.reddy10@gmail.com 44
45. Account transfer
⢠When one guest agrees to pay
the account of some other
guest. In this case the balance
of original account is reduced
and the balance of the
destination bill is increased. In
this case a transfer voucher is
made.
rpranith.reddy10@gmail.com 45
46. Account Cash
Advance
⢠Cash disbursed by hotel on
behalf of guest.
⢠VPO voucher is made.
rpranith.reddy10@gmail.com 46