Night Audit

rpranith.reddy10@gmail.com 1
NIGHT AUDIT/END OF
DAY

Audit Meaning?
•An official inspection of an
organization’s accounts, typically by an
independent body
•Conduct an official financial inspection
of a company or its accounts

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).

Types of Audit

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

•Therefore, the hotels must ensure that all accounts
are exact and settled on time.
•Any mistake in guest account can ruin the hotel’s
reputation.
•Any negligence could mean that revenue is lost
forever.
•Employees may show dishonest tendencies.

Hotel Night Audit: Definition
•A daily review, analysis, recapitulation and reporting
of the financial data, facts and events to achieve the
following three purposes:
Accounts are true and error-free.
Financial Health of the business is understood.
Data is summarized meaningfully for management
to take correct financial & operational decisions.

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.

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

THE ROLE OF THE NIGHT AUDITOR
The role of night auditor requires attention to accounting detail, procedural
controls, and guest credit restrictions.
The auditor should be aware of the nature of cash transactions affecting
the front office.
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 hotel’s financial performance for the day.
The night auditor summarizes the results of operations for reporting to
management.
10

Night Audit Procedure: Major
Tasks
Post room tariff plus taxes in all folios for current day.
Reconcile (compare to match, voucher amount and
folio amount) posting of F & B charges into respective
guest folio.
Reconcile , for all points-of-sale departments, sales
summary sheet with copy of vouchers.
Verify “No Show” reservations and post retention
charge in guaranteed reservation folios.
11

Resolve any discrepancydifference
between room occupancy data of FO &
HK.
Calculate total revenue from rooms,
points-of-sale (separately) and finally,
whole hotel.
Prepare a list of accounts which are near
or over permissible credit limit (high
balance report).
12

•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.
•He usually works from 11.00 pm to 8.00
a.m. next day.

Sequence of Audit
•Guest Account
•City Account
•“Point-of-Sale” Sales Summary Sheet

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)

•Commission (Incentive for sales promotion to an
outside agency)
•Complimentary (free goods or services)
•VPO (money paid by hotel on guest behalf to an
outsider)
•Discount (Tool for increasing sales during
offseason)
•Upgrade (Marketing tool of hotel promotion, by
assigning a room of higher value to guest)

•Walking a guest (denying room to a guaranteed
reservation)
•Account Transfer (balance transferred, from
one guest account to another)
•Room Transfer (Change of room)
•Coupons & Vouchers for sales promotion

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 yesterday’s 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.

Calculating Account balance
Yesterday's outstanding
balance + Today’s debits
(purchases) – Today’s credits
(payments) = Today’s
outstanding balance

Calculating Occupancy %

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.

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.

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.

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

A simple basic posting formula given below
should be used
Previous Balance + Debits -
Credits = Net Outstanding
Balance

Night Auditor as Night Receptionist
•Process late check-ins
•Process early check-outs
•Monitor fire alarm system
•Act as Manager-on-duty
•Handle emergencies

Night Auditor Profile
•Accounts background
•Hotel management degree
•Temporary posting (no one likes continuous
night shifts)
•Reports to FOM & Chief Accountant

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

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

Semi-automated
These machines are only
capable of producing a
limited number of
departmental totals;
they don't interface
with other POS systems
and don't retain folio
balances

Semi-automated
• 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 ‘pick up error’.
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

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.

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

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.

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.

Account Correction
•A posting error,
rectified on the
same day.
•A correction
voucher is
made.

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.

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.

Account Cash
Advance
• Cash disbursed by hotel on
behalf of guest.
• VPO voucher is made.

THANK YOU
47

Night Audit

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Night Audit

Similar to Night Audit (20)

More from GITAM University

More from GITAM University (16)

Recently uploaded

Recently uploaded (20)

Night Audit