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Chapter 11: The Front Office Aduit

The document discusses the front office audit process in a hotel. It describes the functions of a front office audit as verifying guest transactions, balancing accounts, and generating reports. The front office auditor tracks statistics, summarizes daily transactions, and reconciles account postings. A key part of the audit involves cross-referencing transactions to ensure accuracy. The audit process involves completing postings, verifying rates, balancing department accounts, and preparing cash for deposit and reports. Automated systems now handle much of the audit work.

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Chapter 11: The Front Office Audit Competencies for The Front Office Audit 1. Identify the functions of the front office audit. 2. Identify the steps in the front office audit process. 3. Explain the function of a system update and describe centralized front office audits. Managing Front Office Operations PowerPoint 1
Chapter 11: The Front Office Audit Front Office Audit Functions • Verify posted entries to guest/non-guest accounts • Balance all front office accounts • Resolve room status and rate discrepancies • Review guest credit transactions against established limits • Generate operational and managerial reports Managing Front Office Operations PowerPoint 2
Chapter 11: The Front Office Audit Front Office Auditor Duties • Tracks standard operating statistics Room revenues Occupancy percentages Other statistics • Summarizes daily transactions Cash Credit card Debit card Gift card Other transactions Continued Managing Front Office Operations PowerPoint 3a
Chapter 11: The Front Office Audit Front Office Auditor Duties • Reconciles account postings with departmental source Continued from previous slide… documentation • Summarizes hotel’s financial performance for the day • Produces reports for management Managing Front Office Operations PowerPoint 3b
Chapter 11: The Front Office Audit Establishing an End of Day • Each hotel must decide what time will be considered the end of its accounting (or hotel) day. • An “end of day” is simply an arbitrary stopping point for the business day. • The front office manager must establish an end of day so that the front office audit can be considered complete through a specific, consistent point in time. • Usually, the closing time of hotel revenue outlets determines the property’s end of day. Continued Managing Front Office Operations PowerPoint 4a
Chapter 11: The Front Office Audit Establishing an End of Day Continued from previous slide… • For hotels with 24-hour retail outlets, the end of day is typically when a majority of the outlets no longer have frequent transaction activity. • Typically, the business day ends when the front office audit begins. • Transactions that occur while the audit is taking place are considered part of the next business day. Managing Front Office Operations PowerPoint 4b
Chapter 11: The Front Office Audit Cross-Referencing • Hotel departments may generate paperwork to document transactions. • For each revenue center transaction, the originating revenue center classifies and records the transaction type (cash, charge, or paid-out) and its monetary value. • Front office personnel may review automated postings to ensure that the appropriate guest or non-guest folio has been properly accessed. • Revenue centers not interfaced to the front office system may need to use a voucher or other form of documentation to communicate transactional data to the front office staff for posting. Continued Managing Front Office Operations PowerPoint 5a
Chapter 11: The Front Office Audit Cross-Referencing • A front office accounting system depends on system interfaces and Continued from previous slide… transactional documentation to establish accurate records and maintain operational controls. • An accounting system should provide independent supporting documentation to verify each transaction. In a non-automated operation, supporting documents (restaurant guest check, front office guest folio, etc.) provide cross-reference information. • A “bucket check” ensures that accurate room rates have been posted for all occupied rooms and helps reduce occupancy errors. • The auditor’s review of daily postings reconciles front office accounts with revenue center and departmental records. Managing Front Office Operations PowerPoint 5b
Chapter 11: The Front Office Audit Account Integrity • Sound internal control techniques help ensure the accuracy, completeness, and integrity of front office accounting procedures. • Internal control techniques include cash control and the separation of duties. • Different front office staff members should post, verify, and collect sales transactions at the front desk. No single individual should be responsible for accounting for all phases of a transaction. • The front office auditor establishes guest and non-guest account integrity by cross-referencing account postings with departmental source documentation. • An audit is complete with the totals for guest, non-guest, and departmental accounts are “in balance” (i.e., proven correct). Continued Managing Front Office Operations PowerPoint 6a
Chapter 11: The Front Office Audit Account Integrity Continued from previous slide… • As long as the audit presents an “out-of-balance” position, the audit is considered incomplete. • An out-of-balance position exists when the charges (debits) and credits posted to guest and non-guest accounts throughout the day do not match the debits and credits posted to the departmental revenue sources. • An out-of-balance condition may require a thorough review of all account transactions, statements, vouchers, and other support documents. • With a fully automated system, out-of-balance positions are rare. Managing Front Office Operations PowerPoint 6b
Chapter 11: The Front Office Audit Guest Credit Monitoring • Software responsible for monitoring the credit limits of guest and non-guest accounts helps maintain the integrity of the front office accounting system. • Establishing credit limits depends on many factors, such as payment card company floor limits, the hotel’s house limit, and the guest’s reputation as a potential credit risk. • At the close of each business day the front office auditor should identify guest and non-guest accounts that have reached or exceeded their credit limits; these accounts are called “high-balance accounts.” • A report listing high balance accounts should be prepared for appropriate action by management. Managing Front Office Operations PowerPoint 7
Chapter 11: The Front Office Audit Audit Posting Formula Previous balance + debits – credits = net outstanding balance. Managing Front Office Operations PowerPoint 8
Chapter 11: The Front Office Audit Daily and Supplemental Transcripts • A daily transcript is a detailed report of guest accounts that summarizes and updates those guest accounts that had transactional activity on that particular day. • A supplemental transcript may track the day’s transactional activity for non-guest accounts. • Together, the daily transcript and supplemental transcript detail all transactions occurring on a single hotel day. • Data appearing on a system-produced daily transcript is typically detailed by revenue center, transaction type, and transaction total. Continued Managing Front Office Operations PowerPoint 9a
Chapter 11: The Front Office Audit Daily and Supplemental Transcripts • The daily transcript and the supplemental transcript form the Continued from previous slide… basis for a consolidated report of front office accounting transactions from which revenue center totals can be checked. • Daily and supplemental transcripts are simply electronic spreadsheets designed to eliminate posting discrepancies. • Daily and supplemental transcripts can facilitate the front office audit routine by identifying out-of-balance figures in advance of a detailed review. Managing Front Office Operations PowerPoint 9b
Chapter 11: The Front Office Audit Front Office Automation • Front office software modules of a front office system can be interfaced with point-of-sale equipment, call accounting systems, in-room entertainment devices, and other revenue sources for timely, accurate, and automatic postings to electronic guest and non-guest account folios. • Automated systems allow the front office auditor to spend more time auditing transactions and analyzing front office activities and less time performing routine postings and bookkeeping entries. • An automated system may retain previous balance information for guest and non-guest accounts, along with appropriate transactional details, in an electronic database. • An automated system performs numerous mathematical verifications to ensure postings are correct. Continued Managing Front Office Operations PowerPoint 10a
Chapter 11: The Front Office Audit Front Office Automation • Front office automated systems can organize, compile, and Continued from previous slide… print records faster than can be done manually. • During an audit, an automated system can process a large quantity of data, perform numerous computations, and generate accurate account totals. • Automated system updates are run daily to establish an audited end of day and allow for report production, file reorganization, and system maintenance. • Front office automated systems offer rapid access to information, enabling front office managers to more knowledgeably plan, organize, and direct operations. Managing Front Office Operations PowerPoint 10b
Chapter 11: The Front Office Audit The Front Office Audit Process 1. Complete outstanding postings 2. Reconcile room status discrepancies 3. Verify room rates 4. Balance all departmental accounts 5. Verify no-show reservations 6. Post room rates and taxes 7. Prepare reports 8. Prepare cash receipts for deposit 9. Perform system back-up routine 10. Distribute reports Managing Front Office Operations PowerPoint 11
Chapter 11: The Front Office Audit Complete Outstanding Postings • One of the primary functions of the front office audit is to ensure that all transactions affecting guest and non-guest accounts have been posted to appropriate folios. • It is important that all transactions be accurately posted and accounted for. • Posting errors lead to discrepancies and delays at check-out. • The front office auditor must confirm that all transactions have been posted before starting the audit routine. Continued Managing Front Office Operations PowerPoint 12a
Chapter 11: The Front Office Audit Complete Outstanding Postings • The auditor must verify that all vouchers for revenue center Continued from previous slide… transactions have been posted. • Outstanding telephone charges may require manual posting. • With automated systems, revenue center totals can be compared to totals reported by the front office accounting system; if the figures are identical, the systems are in balance. • If the figures are not identical, the auditor must look for transactions that have been omitted or improperly posted. Managing Front Office Operations PowerPoint 12b
Chapter 11: The Front Office Audit Reconcile Room Status Discrepancies • Room status discrepancies must be resolved quickly to avoid confusion at the front desk and lost business. • The front office system must maintain current and accurate room status information to determine the number and types of rooms still available for sale. • The housekeeping department typically requires staff to record the perceived status of guestrooms as they are serviced. • The auditor must review front office and housekeeping reports to reconcile and finalize the occupancy status of all guestrooms on a given night. Continued Managing Front Office Operations PowerPoint 13a
Chapter 11: The Front Office Audit Reconcile Room Status Discrepancies • If housekeeping reports a room as vacant, but the front office Continued from previous slide… considers it occupied, the auditor should search for an active guestroom folio and registration record, and verify that the guest has indeed left the hotel. • If the guest has left the hotel, the auditor should process the check-out and set the folio aside for front office management review and follow-up. The room should then be recorded as vacant in the system. • The auditor should check guest folios, housekeeping reports, and room status reports to make sure that all three are consistent. • Few, if any, room status discrepancies should occur in an automated front office system. Managing Front Office Operations PowerPoint 13b
Chapter 11: The Front Office Audit Verify Room Rates • Verifying room rates is usually done at the same time as reconciling room status. • The front office auditor will review a system-generated room report to check guestroom rack rates (standard rates) against actual rates (what the rooms actually were rented for) and analyze room revenues. • Guestroom rate verification is usually performed by comparing the room rate in the registration record with the room rate in the front office system. (Any changes made to the guestroom rate would happen during or after check-in.) • During room revenue analysis, the actual room revenue posted in the system is compared with the rack rate of the rooms occupied for the night. Managing Front Office Operations PowerPoint 14
Chapter 11: The Front Office Audit Balance All Departmental Accounts • It is considered more efficient to balance all departmental accounts first, then determine individual posting errors within an out-of-balance department. • The front office auditor typically balances all revenue center departments using source documents that originated in the revenue center. • The auditor seeks to balance all front office accounts against departmental transaction information. • Vouchers received electronically or manually at the front desk are totaled and compared with revenue center summaries. Continued Managing Front Office Operations PowerPoint 15a
Chapter 11: The Front Office Audit Balance All Departmental Accounts • When the front office accounting system is out of balance, the Continued from previous slide… correctness and thoroughness of account postings must be investigated. A detailed department audit (by shift or cashier) may be conducted and individual postings reviewed until the error or errors are detected and corrected. • The process used to balance revenue center departments is often called the “trial balance.” A trial balance is a test of the front office accounts to confirm proper balancing before the final audit. • The front office system will normally generate a trial balance before initiating final audit reports. The trial balance usually uncovers corrections or adjustments that must be made during the audit process. • A mathematical balance in guest and non-guest accounts against departmental totals does not necessarily mean that the proper accounts were selected for posting. Managing Front Office Operations PowerPoint 15b
Chapter 11: The Front Office Audit Verify No-Show Reservations • The front office auditor may also be responsible for clearing the reservation file or filing and posting charges to no-show accounts. • When initiating a front office system posting of no-show charges, the auditor must verify that the reservation was guaranteed and the guest failed to register with the hotel. • The auditor must check that a duplicate reservation was not made for the “no-show” guest, or that the guest’s name was not misspelled. Continued Managing Front Office Operations PowerPoint 16a
Chapter 11: The Front Office Audit Verify No-Show Reservations • No-show billings must be handled with extreme care. A front Continued from previous slide… desk agent who does not record cancellations properly may cause guests to be billed incorrectly. • Incorrect billings may cause payment card companies to reevaluate their legal agreement and relationship with the hotel. • An incorrectly billed guest may not return to the hotel, and if a travel agency or other intermediary was involved in helping the guest make the reservation, the hotel may lose the travel intermediary as a client as well. Managing Front Office Operations PowerPoint 16b
Chapter 11: The Front Office Audit Post Room Rates and Taxes • The automatic posting of guestroom rates and room taxes to guest folios typically occurs at the hotel’s end of day. • Once guestroom rates and taxes are posted, a rate and tax report may be generated for front office management review. • The ability to electronically post room rates and room taxes is one of the most frequently cited advantages of an automated front office system. Continued Managing Front Office Operations PowerPoint 17a
Chapter 11: The Front Office Audit Post Room Rates and Taxes • Once the front office initiates guestroom rate postings, the Continued from previous slide… system auto-posts rates and taxes to the appropriate electronic folios. • Some hotels pre-set their front office systems to post daily recurring charges, such as occupancy taxes (in those communities who impose them), valet parking fees, or mandatory gratuities. • Auto-posting charges saves front office audit time and improves accuracy. Managing Front Office Operations PowerPoint 17b
Chapter 11: The Front Office Audit Prepare Reports • The front office auditor typically prepares reports for management review, such as the final department detail and summary reports, the daily operations report, the high balance report, and other reports specific to the property. • Final department detail and summary reports help prove that transactions were properly posed and accounted for. Continued Managing Front Office Operations PowerPoint 18b
Chapter 11: The Front Office Audit Prepare Reports • The daily operations report summarizes the day’s business Continued from previous slide… and is considered the most important product of the front office audit. • The high balance report identifies guests whose charges are approaching their credit limits. • The front office system may be programmed to produce a variety of other management reports on demand: daily summary reports or flash reports, group sales reports, frequent guest reports, VIP reports, and so on. Managing Front Office Operations PowerPoint 18b
Chapter 11: The Front Office Audit Prepare Cash Receipts for Deposit • The front office auditor frequently prepares a cash deposit voucher as part of the audit process. • If front office cash receipts have not yet been deposited, the front office auditor compares the postings of cash payments and paid-outs (net cash receipts) with actual cash on hand. • A copy of the front office cashier shift report may be included in the cash deposit envelope to support any overage, shortage, or due back balances. Continued Managing Front Office Operations PowerPoint 19a
Chapter 11: The Front Office Audit Prepare Cash Receipts for Deposit • The hotel may require the front desk cashier to deposit cash Continued from previous slide… at the end of each shift without knowing the value of cash receipts the system has recorded (that is, make a “blind drop”). • Blind drops are used when management is concerned that employees may not be reporting all cash received. • When a blind drop is used, the auditor compares system totals per cashier with the cashier drop document; variances are reported to management. Managing Front Office Operations PowerPoint 19b
Chapter 11: The Front Office Audit Perform System Back-Up Routine • System back-up routines are performed in hotels that have automated systems. • Normally, at least two guest lists are printed for back-up and emergency use: one for front desk staff and one for the telephone switchboard operator. A guest list may be printed for other hotel departments as well (such as the security department). • Other reports that may be printed: a room status report, guest ledger report, front office activity report, next day’s registration report, and disabled guest report. Continued Managing Front Office Operations PowerPoint 20a
Chapter 11: The Front Office Audit Perform System Back-Up Routine • System-generated front office information should also be Continued from previous slide… backed up onto a DVD or other media. • A system back-up should be conducted after each audit and stored in a safe place. • Many front office systems have two types of back-ups: a daily back-up and system back-up. Managing Front Office Operations PowerPoint 20b
Chapter 11: The Front Office Audit Distribute Reports • Due to the sensitive and confidential nature of front office information, the front office auditor must promptly deliver the front office reports to authorized individuals. • The distribution of front office audit reports is the final step in the front office audit routine. • Front office managers can make more informed decisions if front office audit reports are completed accurately and delivered on a timely basis. Managing Front Office Operations PowerPoint 21
Chapter 11: The Front Office Audit System Update • A system update in a front office accounting system accomplishes many of the functions in the audit routine. • System updates are performed daily to enable system file reorganization, system maintenance, and report production, as well as to provide an end-of-day closure. • Since front office systems audit transactional postings as they occur, there may be little or no need for the front office auditor to perform account postings. • The front office system may be connected to revenue centers for automatic postings, enabling the system to monitor charges made at revenue outlets throughout the hotel. Continued Managing Front Office Operations PowerPoint 22a
Chapter 11: The Front Office Audit System Update • The auditor should routinely review system interface Continued from previous slide… procedures to ensure the proper handling of automatically posted transactions from revenue outlets. • Room status discrepancies are rare in an automated front office environment; the system can be programmed to automatically flag discrepancies when they occur so that they can be quickly dealt with. • In some front office systems, the balancing of front office and department accounts is continuously monitored in real time. • Front office systems can be programmed to produce a variety of reports for management. Managing Front Office Operations PowerPoint 22b
Chapter 11: The Front Office Audit Centralized Front Office Audits • Front office automation significantly simplifies the front office audit process and allows multiple audit tests to be performed simultaneously. • Centralization of multiple audits reduces staffing requirements for the participating properties and provides a basis for consolidated reporting. • Centralized front office audits usually work best in limited-service hotels where there are few revenue outlets and operating departments are closed before the start of the audit process. Continued Managing Front Office Operations PowerPoint 23a
Chapter 11: The Front Office Audit Centralized Front Office Audits • At the central location, the auditor can obtain all the Continued from previous slide… information necessary to complete the audit routine over secure data lines connecting participating hotels. • The auditor can post corrective entries, back up the system, and produce reports for distribution to each hotel. • Being able to quickly produce aggregate or consolidated reports for a group of hotels is especially beneficial to managers of chain properties. Managing Front Office Operations PowerPoint 23b

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Chapter 11: The Front Office Aduit

  • 1.
    Chapter 11: TheFront Office Audit Competencies for The Front Office Audit 1. Identify the functions of the front office audit. 2. Identify the steps in the front office audit process. 3. Explain the function of a system update and describe centralized front office audits. Managing Front Office Operations PowerPoint 1
  • 2.
    Chapter 11: TheFront Office Audit Front Office Audit Functions • Verify posted entries to guest/non-guest accounts • Balance all front office accounts • Resolve room status and rate discrepancies • Review guest credit transactions against established limits • Generate operational and managerial reports Managing Front Office Operations PowerPoint 2
  • 3.
    Chapter 11: TheFront Office Audit Front Office Auditor Duties • Tracks standard operating statistics Room revenues Occupancy percentages Other statistics • Summarizes daily transactions Cash Credit card Debit card Gift card Other transactions Continued Managing Front Office Operations PowerPoint 3a
  • 4.
    Chapter 11: TheFront Office Audit Front Office Auditor Duties • Reconciles account postings with departmental source Continued from previous slide… documentation • Summarizes hotel’s financial performance for the day • Produces reports for management Managing Front Office Operations PowerPoint 3b
  • 5.
    Chapter 11: TheFront Office Audit Establishing an End of Day • Each hotel must decide what time will be considered the end of its accounting (or hotel) day. • An “end of day” is simply an arbitrary stopping point for the business day. • The front office manager must establish an end of day so that the front office audit can be considered complete through a specific, consistent point in time. • Usually, the closing time of hotel revenue outlets determines the property’s end of day. Continued Managing Front Office Operations PowerPoint 4a
  • 6.
    Chapter 11: TheFront Office Audit Establishing an End of Day Continued from previous slide… • For hotels with 24-hour retail outlets, the end of day is typically when a majority of the outlets no longer have frequent transaction activity. • Typically, the business day ends when the front office audit begins. • Transactions that occur while the audit is taking place are considered part of the next business day. Managing Front Office Operations PowerPoint 4b
  • 7.
    Chapter 11: TheFront Office Audit Cross-Referencing • Hotel departments may generate paperwork to document transactions. • For each revenue center transaction, the originating revenue center classifies and records the transaction type (cash, charge, or paid-out) and its monetary value. • Front office personnel may review automated postings to ensure that the appropriate guest or non-guest folio has been properly accessed. • Revenue centers not interfaced to the front office system may need to use a voucher or other form of documentation to communicate transactional data to the front office staff for posting. Continued Managing Front Office Operations PowerPoint 5a
  • 8.
    Chapter 11: TheFront Office Audit Cross-Referencing • A front office accounting system depends on system interfaces and Continued from previous slide… transactional documentation to establish accurate records and maintain operational controls. • An accounting system should provide independent supporting documentation to verify each transaction. In a non-automated operation, supporting documents (restaurant guest check, front office guest folio, etc.) provide cross-reference information. • A “bucket check” ensures that accurate room rates have been posted for all occupied rooms and helps reduce occupancy errors. • The auditor’s review of daily postings reconciles front office accounts with revenue center and departmental records. Managing Front Office Operations PowerPoint 5b
  • 9.
    Chapter 11: TheFront Office Audit Account Integrity • Sound internal control techniques help ensure the accuracy, completeness, and integrity of front office accounting procedures. • Internal control techniques include cash control and the separation of duties. • Different front office staff members should post, verify, and collect sales transactions at the front desk. No single individual should be responsible for accounting for all phases of a transaction. • The front office auditor establishes guest and non-guest account integrity by cross-referencing account postings with departmental source documentation. • An audit is complete with the totals for guest, non-guest, and departmental accounts are “in balance” (i.e., proven correct). Continued Managing Front Office Operations PowerPoint 6a
  • 10.
    Chapter 11: TheFront Office Audit Account Integrity Continued from previous slide… • As long as the audit presents an “out-of-balance” position, the audit is considered incomplete. • An out-of-balance position exists when the charges (debits) and credits posted to guest and non-guest accounts throughout the day do not match the debits and credits posted to the departmental revenue sources. • An out-of-balance condition may require a thorough review of all account transactions, statements, vouchers, and other support documents. • With a fully automated system, out-of-balance positions are rare. Managing Front Office Operations PowerPoint 6b
  • 11.
    Chapter 11: TheFront Office Audit Guest Credit Monitoring • Software responsible for monitoring the credit limits of guest and non-guest accounts helps maintain the integrity of the front office accounting system. • Establishing credit limits depends on many factors, such as payment card company floor limits, the hotel’s house limit, and the guest’s reputation as a potential credit risk. • At the close of each business day the front office auditor should identify guest and non-guest accounts that have reached or exceeded their credit limits; these accounts are called “high-balance accounts.” • A report listing high balance accounts should be prepared for appropriate action by management. Managing Front Office Operations PowerPoint 7
  • 12.
    Chapter 11: TheFront Office Audit Audit Posting Formula Previous balance + debits – credits = net outstanding balance. Managing Front Office Operations PowerPoint 8
  • 13.
    Chapter 11: TheFront Office Audit Daily and Supplemental Transcripts • A daily transcript is a detailed report of guest accounts that summarizes and updates those guest accounts that had transactional activity on that particular day. • A supplemental transcript may track the day’s transactional activity for non-guest accounts. • Together, the daily transcript and supplemental transcript detail all transactions occurring on a single hotel day. • Data appearing on a system-produced daily transcript is typically detailed by revenue center, transaction type, and transaction total. Continued Managing Front Office Operations PowerPoint 9a
  • 14.
    Chapter 11: TheFront Office Audit Daily and Supplemental Transcripts • The daily transcript and the supplemental transcript form the Continued from previous slide… basis for a consolidated report of front office accounting transactions from which revenue center totals can be checked. • Daily and supplemental transcripts are simply electronic spreadsheets designed to eliminate posting discrepancies. • Daily and supplemental transcripts can facilitate the front office audit routine by identifying out-of-balance figures in advance of a detailed review. Managing Front Office Operations PowerPoint 9b
  • 15.
    Chapter 11: TheFront Office Audit Front Office Automation • Front office software modules of a front office system can be interfaced with point-of-sale equipment, call accounting systems, in-room entertainment devices, and other revenue sources for timely, accurate, and automatic postings to electronic guest and non-guest account folios. • Automated systems allow the front office auditor to spend more time auditing transactions and analyzing front office activities and less time performing routine postings and bookkeeping entries. • An automated system may retain previous balance information for guest and non-guest accounts, along with appropriate transactional details, in an electronic database. • An automated system performs numerous mathematical verifications to ensure postings are correct. Continued Managing Front Office Operations PowerPoint 10a
  • 16.
    Chapter 11: TheFront Office Audit Front Office Automation • Front office automated systems can organize, compile, and Continued from previous slide… print records faster than can be done manually. • During an audit, an automated system can process a large quantity of data, perform numerous computations, and generate accurate account totals. • Automated system updates are run daily to establish an audited end of day and allow for report production, file reorganization, and system maintenance. • Front office automated systems offer rapid access to information, enabling front office managers to more knowledgeably plan, organize, and direct operations. Managing Front Office Operations PowerPoint 10b
  • 17.
    Chapter 11: TheFront Office Audit The Front Office Audit Process 1. Complete outstanding postings 2. Reconcile room status discrepancies 3. Verify room rates 4. Balance all departmental accounts 5. Verify no-show reservations 6. Post room rates and taxes 7. Prepare reports 8. Prepare cash receipts for deposit 9. Perform system back-up routine 10. Distribute reports Managing Front Office Operations PowerPoint 11
  • 18.
    Chapter 11: TheFront Office Audit Complete Outstanding Postings • One of the primary functions of the front office audit is to ensure that all transactions affecting guest and non-guest accounts have been posted to appropriate folios. • It is important that all transactions be accurately posted and accounted for. • Posting errors lead to discrepancies and delays at check-out. • The front office auditor must confirm that all transactions have been posted before starting the audit routine. Continued Managing Front Office Operations PowerPoint 12a
  • 19.
    Chapter 11: TheFront Office Audit Complete Outstanding Postings • The auditor must verify that all vouchers for revenue center Continued from previous slide… transactions have been posted. • Outstanding telephone charges may require manual posting. • With automated systems, revenue center totals can be compared to totals reported by the front office accounting system; if the figures are identical, the systems are in balance. • If the figures are not identical, the auditor must look for transactions that have been omitted or improperly posted. Managing Front Office Operations PowerPoint 12b
  • 20.
    Chapter 11: TheFront Office Audit Reconcile Room Status Discrepancies • Room status discrepancies must be resolved quickly to avoid confusion at the front desk and lost business. • The front office system must maintain current and accurate room status information to determine the number and types of rooms still available for sale. • The housekeeping department typically requires staff to record the perceived status of guestrooms as they are serviced. • The auditor must review front office and housekeeping reports to reconcile and finalize the occupancy status of all guestrooms on a given night. Continued Managing Front Office Operations PowerPoint 13a
  • 21.
    Chapter 11: TheFront Office Audit Reconcile Room Status Discrepancies • If housekeeping reports a room as vacant, but the front office Continued from previous slide… considers it occupied, the auditor should search for an active guestroom folio and registration record, and verify that the guest has indeed left the hotel. • If the guest has left the hotel, the auditor should process the check-out and set the folio aside for front office management review and follow-up. The room should then be recorded as vacant in the system. • The auditor should check guest folios, housekeeping reports, and room status reports to make sure that all three are consistent. • Few, if any, room status discrepancies should occur in an automated front office system. Managing Front Office Operations PowerPoint 13b
  • 22.
    Chapter 11: TheFront Office Audit Verify Room Rates • Verifying room rates is usually done at the same time as reconciling room status. • The front office auditor will review a system-generated room report to check guestroom rack rates (standard rates) against actual rates (what the rooms actually were rented for) and analyze room revenues. • Guestroom rate verification is usually performed by comparing the room rate in the registration record with the room rate in the front office system. (Any changes made to the guestroom rate would happen during or after check-in.) • During room revenue analysis, the actual room revenue posted in the system is compared with the rack rate of the rooms occupied for the night. Managing Front Office Operations PowerPoint 14
  • 23.
    Chapter 11: TheFront Office Audit Balance All Departmental Accounts • It is considered more efficient to balance all departmental accounts first, then determine individual posting errors within an out-of-balance department. • The front office auditor typically balances all revenue center departments using source documents that originated in the revenue center. • The auditor seeks to balance all front office accounts against departmental transaction information. • Vouchers received electronically or manually at the front desk are totaled and compared with revenue center summaries. Continued Managing Front Office Operations PowerPoint 15a
  • 24.
    Chapter 11: TheFront Office Audit Balance All Departmental Accounts • When the front office accounting system is out of balance, the Continued from previous slide… correctness and thoroughness of account postings must be investigated. A detailed department audit (by shift or cashier) may be conducted and individual postings reviewed until the error or errors are detected and corrected. • The process used to balance revenue center departments is often called the “trial balance.” A trial balance is a test of the front office accounts to confirm proper balancing before the final audit. • The front office system will normally generate a trial balance before initiating final audit reports. The trial balance usually uncovers corrections or adjustments that must be made during the audit process. • A mathematical balance in guest and non-guest accounts against departmental totals does not necessarily mean that the proper accounts were selected for posting. Managing Front Office Operations PowerPoint 15b
  • 25.
    Chapter 11: TheFront Office Audit Verify No-Show Reservations • The front office auditor may also be responsible for clearing the reservation file or filing and posting charges to no-show accounts. • When initiating a front office system posting of no-show charges, the auditor must verify that the reservation was guaranteed and the guest failed to register with the hotel. • The auditor must check that a duplicate reservation was not made for the “no-show” guest, or that the guest’s name was not misspelled. Continued Managing Front Office Operations PowerPoint 16a
  • 26.
    Chapter 11: TheFront Office Audit Verify No-Show Reservations • No-show billings must be handled with extreme care. A front Continued from previous slide… desk agent who does not record cancellations properly may cause guests to be billed incorrectly. • Incorrect billings may cause payment card companies to reevaluate their legal agreement and relationship with the hotel. • An incorrectly billed guest may not return to the hotel, and if a travel agency or other intermediary was involved in helping the guest make the reservation, the hotel may lose the travel intermediary as a client as well. Managing Front Office Operations PowerPoint 16b
  • 27.
    Chapter 11: TheFront Office Audit Post Room Rates and Taxes • The automatic posting of guestroom rates and room taxes to guest folios typically occurs at the hotel’s end of day. • Once guestroom rates and taxes are posted, a rate and tax report may be generated for front office management review. • The ability to electronically post room rates and room taxes is one of the most frequently cited advantages of an automated front office system. Continued Managing Front Office Operations PowerPoint 17a
  • 28.
    Chapter 11: TheFront Office Audit Post Room Rates and Taxes • Once the front office initiates guestroom rate postings, the Continued from previous slide… system auto-posts rates and taxes to the appropriate electronic folios. • Some hotels pre-set their front office systems to post daily recurring charges, such as occupancy taxes (in those communities who impose them), valet parking fees, or mandatory gratuities. • Auto-posting charges saves front office audit time and improves accuracy. Managing Front Office Operations PowerPoint 17b
  • 29.
    Chapter 11: TheFront Office Audit Prepare Reports • The front office auditor typically prepares reports for management review, such as the final department detail and summary reports, the daily operations report, the high balance report, and other reports specific to the property. • Final department detail and summary reports help prove that transactions were properly posed and accounted for. Continued Managing Front Office Operations PowerPoint 18b
  • 30.
    Chapter 11: TheFront Office Audit Prepare Reports • The daily operations report summarizes the day’s business Continued from previous slide… and is considered the most important product of the front office audit. • The high balance report identifies guests whose charges are approaching their credit limits. • The front office system may be programmed to produce a variety of other management reports on demand: daily summary reports or flash reports, group sales reports, frequent guest reports, VIP reports, and so on. Managing Front Office Operations PowerPoint 18b
  • 31.
    Chapter 11: TheFront Office Audit Prepare Cash Receipts for Deposit • The front office auditor frequently prepares a cash deposit voucher as part of the audit process. • If front office cash receipts have not yet been deposited, the front office auditor compares the postings of cash payments and paid-outs (net cash receipts) with actual cash on hand. • A copy of the front office cashier shift report may be included in the cash deposit envelope to support any overage, shortage, or due back balances. Continued Managing Front Office Operations PowerPoint 19a
  • 32.
    Chapter 11: TheFront Office Audit Prepare Cash Receipts for Deposit • The hotel may require the front desk cashier to deposit cash Continued from previous slide… at the end of each shift without knowing the value of cash receipts the system has recorded (that is, make a “blind drop”). • Blind drops are used when management is concerned that employees may not be reporting all cash received. • When a blind drop is used, the auditor compares system totals per cashier with the cashier drop document; variances are reported to management. Managing Front Office Operations PowerPoint 19b
  • 33.
    Chapter 11: TheFront Office Audit Perform System Back-Up Routine • System back-up routines are performed in hotels that have automated systems. • Normally, at least two guest lists are printed for back-up and emergency use: one for front desk staff and one for the telephone switchboard operator. A guest list may be printed for other hotel departments as well (such as the security department). • Other reports that may be printed: a room status report, guest ledger report, front office activity report, next day’s registration report, and disabled guest report. Continued Managing Front Office Operations PowerPoint 20a
  • 34.
    Chapter 11: TheFront Office Audit Perform System Back-Up Routine • System-generated front office information should also be Continued from previous slide… backed up onto a DVD or other media. • A system back-up should be conducted after each audit and stored in a safe place. • Many front office systems have two types of back-ups: a daily back-up and system back-up. Managing Front Office Operations PowerPoint 20b
  • 35.
    Chapter 11: TheFront Office Audit Distribute Reports • Due to the sensitive and confidential nature of front office information, the front office auditor must promptly deliver the front office reports to authorized individuals. • The distribution of front office audit reports is the final step in the front office audit routine. • Front office managers can make more informed decisions if front office audit reports are completed accurately and delivered on a timely basis. Managing Front Office Operations PowerPoint 21
  • 36.
    Chapter 11: TheFront Office Audit System Update • A system update in a front office accounting system accomplishes many of the functions in the audit routine. • System updates are performed daily to enable system file reorganization, system maintenance, and report production, as well as to provide an end-of-day closure. • Since front office systems audit transactional postings as they occur, there may be little or no need for the front office auditor to perform account postings. • The front office system may be connected to revenue centers for automatic postings, enabling the system to monitor charges made at revenue outlets throughout the hotel. Continued Managing Front Office Operations PowerPoint 22a
  • 37.
    Chapter 11: TheFront Office Audit System Update • The auditor should routinely review system interface Continued from previous slide… procedures to ensure the proper handling of automatically posted transactions from revenue outlets. • Room status discrepancies are rare in an automated front office environment; the system can be programmed to automatically flag discrepancies when they occur so that they can be quickly dealt with. • In some front office systems, the balancing of front office and department accounts is continuously monitored in real time. • Front office systems can be programmed to produce a variety of reports for management. Managing Front Office Operations PowerPoint 22b
  • 38.
    Chapter 11: TheFront Office Audit Centralized Front Office Audits • Front office automation significantly simplifies the front office audit process and allows multiple audit tests to be performed simultaneously. • Centralization of multiple audits reduces staffing requirements for the participating properties and provides a basis for consolidated reporting. • Centralized front office audits usually work best in limited-service hotels where there are few revenue outlets and operating departments are closed before the start of the audit process. Continued Managing Front Office Operations PowerPoint 23a
  • 39.
    Chapter 11: TheFront Office Audit Centralized Front Office Audits • At the central location, the auditor can obtain all the Continued from previous slide… information necessary to complete the audit routine over secure data lines connecting participating hotels. • The auditor can post corrective entries, back up the system, and produce reports for distribution to each hotel. • Being able to quickly produce aggregate or consolidated reports for a group of hotels is especially beneficial to managers of chain properties. Managing Front Office Operations PowerPoint 23b