Conduct night audit

1
Chapter 9

• Conduct night audit

2
Learning outcomes

• Describe the role of the night auditors.
• Monitor financial transactions.
• Conduct the night audit.
• Implement financial systems and financial
  control.
• Complete routine records and reports.

3
What is auditing?

• Auditing is the process of checking and reviewing
  financial and non-financial transactions to
  determine their accuracy.

4
What is auditing?

• In accommodation venues, it is a function that
  ensures
• All guests receive a correct account on departure
• All revenues are accounted for
• Errors are identified and corrected
• Control is maintained over the guest accounting
  system.

5
Night auditors role

• D shift. Usually commencing at 2300hr.
• Size of venue and volume of business determines
  number of night auditors required.
• The night auditor(s) is responsible for managing
  front office operations during the night.

6
Night auditors role

• The night auditor undertakes a range of front
  office/reception duties, such as
• Security checks
• Processing late charges and no shows
• Processing outstanding charges and payments
• Processing floats
• Balancing their shift.

7
Night auditors role

• The primary role of the night auditor however is
  to audit the financial and non-financial
  transactions that were processed in the last 24
  hours.

8
Aim of the night audit

• Identify and allocate revenues according to
  department.
• Ensure guest and departmental charges and
  payments are accurate.
• Monitor and control credit.
• Monitor and report on financial performance.
• Balance all transactions.
• Provide accounting integrity.

9
Process late arrivals

• Late arrivals are those guests with reservations
  who have made arrangements for a late check in.

10
Process late arrivals

• Guaranteed late arrivals are registered in the
  PMS these will be processed as usual on
  arrival.
• Non-guaranteed late-arrivals are cancelled.

11
Process no shows

• A no show is a guest with a reservation who fails
  to arrive (these reservations would not have been
  cancelled earlier if they made arrangements for a
  late arrival).

12
Process no shows

• Cancel no show reservations.
• Charge one nights accommodation for guaranteed
  no shows (depends on venue policy and who the
  guest is).

13
Process outstanding charges and payments

• Outstanding charges and payments are processed by
  night audit when the previous shift has not had
  sufficient time to record these charges before
  balancing.
• Outstanding charges and payments are posted to
  the appropriate guest and department accounts.

14
Process floats

• The various revenue-earning departments in the
  venue return their floats to the front office for
  checking and safe-keeping.
• To process floats
• Recount each float
• Ask the department cashier (who returned the
  float) to sign in the float
• Exchange float notes and coins as required
• Drop the float in the safe.

15
Balance the shift

• Similar to other shifts, the night auditor must
  complete a shift balance before commencing the
  audit.
• A shift balance is completed by the night auditor
  because charges and payments processed by the
  night auditor are included in the audit.
• This balance is likely to take place around
  0200hrs.

16
How do you conduct the night audit?

• Prepare documentation.
• Balance all departments.
• Verify room rates.
• Post room rates.
• Perform close of day procedures.
• Generate and distribute reports.

17
1. Prepare documentation

• Check all shift and department balances are
  accounted for we usually need to count the
  physical money (and payment vouchers) to compare
  the totals with the banking envelop totals and
  do in fact balance.
• Batch and tally the source documents.

18
Prepare documentation

• Print a journal copy for each posting code.
• Print an EFTPOS settlement report (note, the
  issuing bank usually automatically generates a
  settlement report at a predetermined time).
• Reconcile each voucher (or receipt) to each
  posting code.

19
What is batching?

• To batch means to put together all the same
  charges and payment types (source documents) and
  tally them.

20
What is batching?

• Because the journal print out for each posting
  code is a tally of all shifts, we can only
  determine if each posting code balances by having
  first manually batched all the source documents -
  and then comparing the two totals.

21
2. Balance all departments

• Print a copy of all the journals to which charges
  were posted that day.
• Print a banking report.
• Compare the departmental totals (computer
  printout) with the batched tallies.
• Compare the banking report totals with the
  batched tallies.

22
Balancing all shifts

• If the manual tallies match the computer
  printouts we can move on the step 3.
• If any totals do not match, we need to track and
  amend the error before moving on.

23
3. Verify room rates

• Before posting room charges, verify that all
  registered rooms have the correct rate.
• To do this, print a Room Rate Variance Report.

24
Room rate variance report

• Provides a list of all occupied rooms sorted by
  room rate code.
• If a variance to a room rate exists, check why in
  the remarks section.
• If no remarks explain the variance
• Check the original reservation for the correct
  rate which may indicate reason for variance.
• If not, post the usual rate for that room.

25
4. Post room rates

• This function is performed automatically in a
  computerised PMS by selecting the post room
  charge option (once variations have been checked
  and amended).
• In a manual system, each room rate is posted
  manually to the guests account.

26
Room rates

• Room rates are not posted earlier in the day
  because of
• Room changes
• Room rate changes
• Unexpected departures.

27
5. Perform close of day procedures

• Close of Day, also referred to as Rollover
  refers to closing trading for that day and
  commencing a new day of trading.
• When the day has been closed, no further charges
  can be added to that days trading.

28
Close of day procedures

• Close of day procedures are automatically
  generated in a computerised PMS by selecting
  this function.
• Close each department that has transactions
  recorded against it
• Deposit the banking for the day
• Back up the system
• Rollover to the new trading day.

29
Close each department (posting code)

• Any posting code with a posting recorded to it is
  closed after its accuracy is verified.

30
Deposit banking

• The PMS requires us to enter the amount of money
  (recorded on each payment posting code) received
  that day.
• These are the amounts we verified earlier.
• We then put all the money and corresponding
  documentation into the banking envelope and
  deposit is in the safe.

31
Back up the system

• To back up the system means saving all the
  information recorded in the computer to the hard
  drive (small venues may use removable disks. The
  disks are then secured in the safe).
• The back up is an important step. It allows us to
  retrieve important information in the event the
  computer crashes.

32
Rollover

• Again, we may need to select this option in the
  PMS or it will do it automatically depending on
  the system in place.
• The PMS will only accept the instruction to
  rollover if all previous steps are correctly
  performed.
• The PMS will generate final versions of all
  relevant reports.

33
Notes about the night audit

• It will take several hours.
• Always takes place during the quietest time of
  night.
• Night auditor likely to undertake concurrent
  activities such as check in late arrivals
  (processed manually if night audit started and
  finalised after rollover).

34
Notes about the night audit

• Tracking errors can be onerous and time-consuming
  (very important for earlier shifts to correct
  their own errors).
• Because of the large quantities of cash and other
  payment documentation, important to count money
  in a secure environment.

35
Implement financial systems

• Because of the large sums of money being handled
  in an accommodation venue, it is important to
  keep it secure at all times.
• To facilitate this we implement financial control
  systems.

36
Cash security

• The night auditor counts and checks all cash
  received from the various departments during the
  day.
• All floats are return to reception for safe
  keeping at the end of the day and checked by
  night audit.

37
Cash security

• All cash counting is completed in a secure area.
• No cash is held in the various outlets.
• Never leave cash unattended (even in secure
  areas!).
• Never leave cash drawers open.

38
Documentation security

• All financial transactions must be supported by
  written documentation (evidence of a
  transaction).
• Loss of these documents can represent loss of
  revenue.
• All documents must be kept for seven years.

39
Docket control

• Some venues use a docket numbering system to help
  maintain financial transaction control.
• The numbered docket system requires each outlet
  to account for each docket issued (to guests for
  services rendered).

40
Docket control

• Docket books are signed out at the commencement
  of the shift and back in at the end of the shift.
• A control sheet is completed at the end of the
  shift by the department cashier which lists all
  dockets used, in numerical order, and the amount
  (value) of each docket.

41
Voucher control

• Vouchers may be credit card vouchers, gift
  vouchers, service vouchers.
• All represent money.
• Vouchers are evidence of payment.
• Loss of a voucher can mean loss of revenue.

42
Debtor control

• A debtor is any business or individual who owes
  the venue money.
• Debtor control refers to a system whereby the
  venue is able to keep track of the total of each
  outstanding debtor account.

43
City ledger debtors

• The city ledger holds all account balances from
  departed guests who paid by company charge back.
• Also holds skipper accounts and late charges.

44
City ledger to accounts receivable

• The city ledger is closed off daily and
  outstanding amounts are transferred to accounts
  receivable.
• The financial controller is responsible for
  accounts receivable.

45
In-house guest debtors

• In-house guests who are able to charge services
  and goods to their room account are also debtors
  until their account is settled (usually on
  departure).
• The in-house guest ledger holds all the account
  balances of in-house guests.

46
What is a credit limit?

• The maximum amount that a debtor can charge to
  their account at a venue, before some form of
  payment is required.
• Debtor control is therefore about checking that
  debtors accounts do not exceed the credit limit.

47
What is a house limit?

• A maximum amount determined by the venue, that a
  guest can charge to their account before the
  venue seeks payment.

48
What is a floor limit?

• A maximum amount that a guest can charge to their
  credit (or charge) card before the venue must
  seek authorisation from the respective card
  company.
• The issuing card company sets the floor limit for
  each venue/department in the venue (based on the
  services offered and/or goods sold).

49
What is a credit check report?

• A report that lists all the accounts whose totals
  are near to or in excess of their limit.
• The night auditor is usually responsible for
  identifying those accounts near to or in excess
  of their credit limit

50
Credit limits

• A guest may be prevented from making further
  charges to their room account once their credit
  limit is reached.
• Different guests may be extended different credit
  limits with the venue.

51
What is a credit check report?

• These guests will be asked to settle some or all
  of their account before further charges are
  accepted.
• A guest may be locked out of their room for
  failure to make a payment.

52
Credit control post departure

• City ledger accounts receive a statement at the
  end of the trading month.
• Usually the responsibility of the financial
  controller.

53
Credit control post departure

• The statement is a list of all invoices raised
  and payments received during the accounting
  period.
• The account holder is requested to make payment
  (settle their account) within a pre-agreed time
  frame (trading terms).

54
Credit control post departure

• If city ledger account holders do not settle
  their account within credit limit the venue will
• Telephone the company as a reminder
• After 45 days write requesting payment
• After 60 days, send strongly worded letter
• After 90 days, may commence legal proceedings.

55
Credit control post departure

• Whether a non-declared or late charge is followed
  up after departure will depend on
• Dollar amount of the item in question
• Venue policy.

56
Credit control post departure

• It is not always worth the time, effort and cost
  to chase non-declared items.
• The venue needs to be certain that a late charge
  does in fact belong to a particular guest.

57
Manage banking procedures

• Banking procedures can mean
• Depositing shift balances in safe
• Physically depositing money in bank.

58
Manage banking procedures

• Money may be
• Taken to bank by owner or employee
• Collected by asset management company.
• However money is physically removed from
  premises, security must be controlled and managed
  well.

59
Back up control

• Most venues do not allow front office staff to
  back up to removable devices as this compromises
  the integrity and security of the information.
• Most front office computers do not have a disk
  drive.

60
Security checks

• Security is concerned with the conservation and
  preservation of the assets and wellbeing of the
  venue and guests.

61
What is involved with security checks?

• The night auditor often completes security checks
  of the venue. This involves physically checking
• Car parks
• Venue perimeter
• External and internal public areas
• All back of house areas.

62
Why do venues have security checks?

• The purpose of undertaking security checks is to
  ensure the venue (property, assets and people) is
  secure.
• It also serves to identify maintenance issues.

63
6. Generate and distribute audit reports

• The auditor (or rather audit process) is
  responsible for generating reports that relate to
  the financial and non-financial activities of the
  venue.
• These reports are used by management for
  operational control and decision making.

64
Generate and distribute audit reports

• Once the reports are generated, the night auditor
  can log back on (start new shift in the PMS).
• Refer to Table 9.2 on page 336 of your text,
  Front Office Skills for a discussion of reports.

65
Night audit reports

• Reports may be generated nightly, weekly,
  monthly, yearly or other accounting period,
  depending on the information contained in the
  report and venue requirements.

66
Night audit reports

• The reports are distributed to all staff who need
  to be aware of this information.
• Refer to Table 9.3 on page 340 of your text,
  Front Office Skills.