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Night Audit
A daily comparison of guest accounts
(and non-guest accounts having
activity) with revenue center
transaction information. A night
audit, so called because it is usually
performed at night, helps guarantee
accuracy in front office accounting
Night Auditor
An Employee who checks the
accuracy of front office accounting
records and compiles a daily
summary of hotel financial data as
part of the night audit. In many
hotels, the night auditor is actually
an employee of the accounting
division
Functions of the Night Audit
Night Audit is concerned with the following functions:
•Verifying posted entries to guest and non-guest accounts
•Balancing all front office accounts
•Resolving room status and rate discrepancies
•Review guest credit transactions against established
•limits
•Producing operational and managerial reports
A front office audit process which is called the night
audit is intended to fulfill this need
It is a daily review of guest account transactions
recorded at the front desk against revenue center
transactions
The Role of the Night Auditor
Track room revenues, occupancy
percentages, and other hotel operating
statistics
Prepare a daily summary of cash,
check, credit card, debit card, gift
certificate, and other activities that
occurred at the front desk
Summarizes and reports the results of
operations to front office management
Duties of the Night Auditor
Performing the night audit requires:
Attention to accounting detail
Procedural controls, and
Guest credit transactions
The night auditor should also be familiar with:
 the nature of cash transactions affecting the front office
accounting system
The night auditor should be able to track:
Room revenues
Occupancy percentages
And other operational statistics
Duties of the Night Auditor
The night auditor prepares a daily summary
of cash, check and credit card activities and
reports the results to front office management
The Night Auditor generally works the night
shift, from 11p.m. to 7a.m. compiling,
balancing and reviewing the transactions form
the previous day
Each front office must decide what time will
be considered the end of its accounting day
Duties of the Night Auditor
Usually, the closing time of hotel revenue
outlets such as room service, restaurants, stores,
determines the end of the accounting day
Typically the business day ends when the
night audit begins. For e.g. if a night audit begins
at 12:00 a.m., the hotel’s business day would
end at 12:00 a.m.
Any transactions that take place during the
audit work time are considered part of the next
business day
Cross Referencing
Cross-referencing refers to the activities
associated with comparing data found from
different sources to ensure correctness of the
audit. Some examples of cross referencing are as
follows:
Compare online posting and /or vouchers against
guest, master, non-guest and employees folios
Compare Charge Vouchers/Guest Checks against
Register Tape or Sales Journal (for example, a coffee
shop guest check and a front office guest folio)
Compare room rate postings against Housekeeping
Room Status Report and Registration Records/Files
Account Integrity
The Night Auditor shall establish Guest and NonGuest account integrity by cross referencing
account postings with departmental source
documentation
The Audit Process is said to be complete when
the total guest, non-guest and departmental
accounts are in balance
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 charges (debits) and credits posted to
the departmental revenue sources.
Account Integrity
When Audit is not in balance: If the
audit is not in balance, the Night Auditor
shall thoroughly review:
Account transactions
Statements
Vouchers
Support documents
Departmental source documentation
Guest Credit Monitoring
Hotels establish lines of credit or
credit limits for guest and nonguests. Those limits depend on
several variables as follows:
Credit Card Company floor limits
The Hotel’s House limits
Guest status or Reputations
Guest Credit Monitoring
At the close of each business
day, the night auditor will:
Identify guest and non-guest
accounts that have reached or
exceeded assigned credit limits
Prepare a report about High
Balance Accounts to be evaluated
by the management
Audit Posting Formula
Net Outstanding Balance (NOB) =
Previous Balance (PB) + Debits (DR) –
Credits (CR)
NOB = PB + DR - CR
Daily Transcript
•The daily transcript is a detailed report of
guest accounts that summarizes and updates
those guest account that had transcriptional
activity on that particular day. Under the fully
automated system, system produced daily
transcript detailed by:
•Revenue center
•Transcription type
•Transcript total
Supplemental Transcript
•The supplemental transcript
is a report of non-guest
accounts that summarizes and
updates those non-guest
accounts that had
transactional activity on that
particular day.
How Daily & Supplemental Transcript are used?
•They form the basis for a consolidated
report (Daily Transaction Report) of front
office accounting from which revenue
center totals can be checked.
•For e.g. the total of charged purchases
reported by the hotel’s restaurant should
equal the total amount of restaurant
charge purchases posted to guest and
non-guest accounts
The Night Audit Process
The night audit process focuses on two areas:
•Discovery and correction of front office accounting
errors through the cross-referencing process.
•Creation of accounting and managerial reports
(e.g. Average Rate, Revenue Per Available Room
(RevPAR), Occupancy Percentage, Usage of Package
Plans and other marketing programs, and the
number of group rooms and complimentary rooms
occupied)
The Night Audit Process
The main steps of the night audit process are:
•Complete outstanding posting
•Reconcile room status discrepancies
•Verify room rates
•Balance all departmental accounts
•Verify no-show reservation
•Post room rates and taxes
•Prepare reports
•Prepare cash receipts for deposit
•Clear or back up the system
•Distribute reports
The Night Audit Process
Complete outstanding posting:
•The Night Auditor must confirm that all transactions
have been posted before starting the audit routine
Reconcile room status discrepancies:
•The Night Auditor must review front office occupancy
status and HK room status reports to reconcile and
finalize the occupancy status of all rooms for a given
night
Verify room rates:
•The Night Auditor shall compare registration records
with system generated room report. If room’s rack and
actual rates do not match, the night auditor shall
consider following issues:
The Night Audit Process
•If the room is occupied by a member of a group or by a
corporate-rate customer, is the discounted rate?
•If the room is occupied by a guest with a package rate
on a special discount offered through the hotel’s
reservation distribution channels, is the discounted rate
correct
•If there is only one guest in a room and the actual rate
is approximately half the rack rate, is the guest part of a
shared reservation? If s/he is, did the second guest
register.
•If the room is complimentary, is there appropriate
supporting evidence for the rate(for example, a
complimentary room authorization form)?
The Night Audit Process
•Balance all departmental accounts:
•It is more efficient for a Night Auditor to balance all
departmental accounts first and then look for individual
posting errors within an out-of-balance department.
This process of balancing al revenue center accounts is
called ‘Trial Balance’
•Verify no-show reservation:
•The night auditor is responsible for:
•Clearing reservation files
•Posting charges to no show accounts (guaranteed
reservations)
The Night Audit Process
While doing so, the night auditor shall pay attention to the following
points:
•Duplicate reservations
•Misspelling of guest name and / or reserving them
•Front office or system entry errors
•Front office forgetting to cancel properly a reservation
•Post room rates and taxes:
•Posting room rates and taxes takes place typically at the end of
the day. The advantages of posting room rates and taxes
automatically by the fully automated system are:
•Room rates and taxes posting to appropriate electronic folios can
be done in minutes
•Posting is reliable, accurate with no pick-up, tax calculation, or
posting errors
The Night Audit Process
Prepare reports:
The night auditor shall prepare reports that indicate the
status of front office activities and operations. Some of the
reports prepared by night auditor are:
•The Final Department detail and Summary Reports (help prove
that a transactions were properly posted and accounted for)
•The Daily Operations Report (summarizes the day’s business and
provides insights into revenues, receivables, operating statistics
and cash transactions related to front office)
• The High Balance Report (identifies guests whose charges are
approaching on account credit designated by the hotel
•Specialty Reports (Group Sales Report dispatched by each group,
showing number of rooms occupied by each group, and revenue
generated by each group. Report that lists guests who stay
frequently and guests who are VIPs)
The Night Audit Process
•Prepare cash receipts for deposit: The night auditor should:
• prepare a Cash Deposit Voucher as part of the audit
process if cash receipts have not yet been deposited in the
bank,
•compare the postings of cash payments and paid-outs
with actual cash on hand,
•call Front Desk Cashiers to deposit cash at the end of their
shifts without knowing how much in cash receipts that the
system has recorded for them. This process is called ‘Blind
Drop’,
•compare system totals per cashier with the actual cashier
drop document. Had any discrepancies occur, the night
auditor shall report this to GM, FOM or Controller.
The Night Audit Process
•Clear or back up the system:
•At least two Guest Lists must be printed for back-up
and emergency use (one for front desk staff and the
other for Switchboard Operator)
•Moreover, a printed Room Status Report shall be
prepared to enable front desk agents to identify
vacant and ready rooms, should the front office
system become inoperable
•A Guest Ledger Report shall be prepared which
contains the opening and closing balances for all.
Report is generated to include expected arrival, stayover and departure information for several days
The Night Audit Process
•Distribute reports:
•Due to the sensitive and
confidential nature of front office
information, the night auditor
must promptly deliver
appropriate reports to authorized
individuals
Verifying the Night Audit
Numerous types of posting,
mathematical and clerical errors can be
identified.
The most typical errors are those
involving:
Previous balance pick-up
Transpositions
Misplaced folios
Verifying the Night Audit
Pickup Errors:
If the previous balance is entered
incorrectly, so will be the resulting-end
balance
It is mostly found where the system is
manual or semi-automated
It is very time consuming to locate and
correct as it is often necessary to review all
previous and ending balances on every folio
in order to identify the error
Verifying the Night Audit
Transposition Errors:
It is easiest to identify
This type of error occurs when numbers
related to a transaction are reversed
For e.g. entering $324 into a posting
machine rather than the actual previous
balance of $342
Such errors can be easily identified by
subtracting the smaller number from the
larger and dividing by 9.
Verifying the Night Audit
Missing Folios:
In manual or semi-automated system a folio has
been filed incorrectly or has been removed form the
folio bucket
Misappropriation may take place for check-out
guest, or when a high balance account may have been
temporarily removed by credit manager, etc. Hence, a
written note may be helpful
When a folio is missing, the night audit simply will
not balance
In automated hotels, where folios are stored
electronically, missing folios are not an issue
Difference
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
It is used as a worksheet and helps to detect posting
errors in the guest account on that particular day
A supplemental transcript is a detailed report of all
non-guest accounts that indicates each charge
transaction that affected a non-guest account that day,
It is also used as a worksheet to detect posting
errors in the non-guest account on that particular day
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