PowerPoint to accompany

Chapter 9

Conduct night audit

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

What is auditing?

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Night auditor’s 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.

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Night auditor’s 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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Night auditor’s 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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Process late arrivals

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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).

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Process no shows

– Cancel no show reservations.

– Charge one night’s accommodation for guaranteed no shows (depends on venue policy and who the guest is).

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

How do you conduct the night audit?

1. Prepare documentation.

2. Balance all departments.

3. Verify room rates.

4. Post room rates.

5. Perform close of day procedures.

6. Generate and distribute reports.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

What is ‘batching’?

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

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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.

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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.

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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.

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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 guest’s account.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Room rates

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Close each department (posting code)

– Any posting code with a posting recorded to it is ‘closed’ after its accuracy is verified.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

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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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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).

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

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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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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).

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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.

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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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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).

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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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Credit control post departure

– City ledger accounts receive a statement at the end of the trading month.

– Usually the responsibility of the financial controller.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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).

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

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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.

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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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

Manage banking procedures

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

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Security checks

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

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.

Vivienne O’Shannessy: Front Office Skills © 2009 Pearson Education Australia

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.