Hotel Audit Policy

8/13/2019 Hotel Audit Policy

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HOTEL DEPARTMENT OPERATIONALAUDIT PROGRAM

AUDIT STEPS

1. Review previous audit files and reports to become familiar with areas ofconcern.

2. As the audit progresses, review material exceptions or discuss withmanagement areas that internal auditing is uncovering during the audit.

3. Conduct an informal pre-exit conference once all audit steps have beencompleted to ensure that management nows what to expect in theupcoming draft audit report.

!. "inali#e all files and draft an audit report for review b$ the chief auditexecutive.

AUDIT OBJECTIVES

1. %etermine that the hotel department and related functions are followingcompan$ policies and procedures.

2. %etermine that the compan$&s hotel-related assets are properl$safeguarded and accounted for.

AUDIT PROCEDURES

1. Review the hotel-related department&s procedures manuals ' such as thefront office, laundr$, revenue audit ' and discuss with the appropriatedepartment personnel to determine if there are an$ areas of concern thatthe$ might have over the operations.

2. Complete the internal control (uestionnaire.3. Complete the woring papers stipulated in this audit program.

AUDIT PROGRAM

A. FRONT OFFICE (Room Rates)

1. )btain the most recent month&s financial statements and managementreports for hotel operations. *xtract figures for monthl$ averageoccupanc$, average room rate, and room revenue. )btain explanations formaterial fluctuations from budget.

2. )btain the updated hotel comparison anal$sis maintained b$ the hoteldirector and compare hotel performance with competitor and industr$averages. )btain explanations for material deviations for room rates andwhat is being charged b$ competitors for the same period. %eterminewhether management explanations are reasonable and attach a summar$

to the woring paper.3. +n(uire how room rate maintenance is performed and updated in the frontoffice reservation s$stem, and how overrides are changed, controlled, anddeleted. +n summar$ form, prepare the observations and documentobserved control weanesses in the woring papers.

B. FRONT OFFICE (Reserat!o" S#stem)

1. )btain the dail$ reservation report and determine that there is evidence ofreview b$ the reservationfront office manager of entries e$ed in b$ the


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reservation clers ' in particular the room rates (uoted to customers.2. est 1 of the (uoted room rates in the dail$ reservation report to the

reservation forms. *nsure the reservation forms or computer entries aresigned b$ the reservation cler, or that some other documentation exists.

Also, ensure that proper reservation forms are prepared for all reservationsmade.

3. +n(uire from the credit department how customers& credit limitscreditstandings are taen into account when accepting reservations for hotelrooms.

!. Chec the reservation file to ensure that written confirmation is received fortravel agent guests ' telex, fax, or e-mail form ' and attached to thereservation form, documenting an$ noncontracted rates extended to theagentsguests.

/. Compare a sample of 1 suspended credit limit correspondence memos tothe reservation s$stem to ensure that all suspended accounts are updatedinto the s$stem.

C. FRONT OFFICE (Room B!$$!"%)

1. 0elect 1 entries with a room rate from the dail$ list of rooms and traceto the comp form or other comparable document, ensuring it is approvedb$ the proper member of management. Reasons for authori#ation shouldbe documented and acceptable in accordance with hotel polic$.

2. est 1 registration cards to the corresponding occupied room on the roomstatuse$ report and the dail$ room charges report to ensure that alloccupied rooms are billed.

3. 0electe 1 occupied rooms noted on the room statuse$ report and tie tothe corresponding registration card. ote his test is to ensure thatregistration exist for rooms that are occupied alread$ to prevent the roombeing rented twice.

!. Review the reasonableness of room rates per the dail$ room charge reportand test 1 rates to the corresponding reservation form or standard pricelistcustomer contract for unusual or exceptional rates.

D. REVENUE AUDIT (Da!$# A&'!t)

1. 4sing a revenue audit checlist, observe one dail$ hotel audit performedb$ the revenue audit staff. Compare $our observations to their approved,written checlist and document variations in memo form to the woringpaper.

2. Choose three da$s of dail$ revenue audit pacets for the hotel revenueaudit. )btain vouchers for all revenue ad5ustment transactions ' thatda$&s voids, nonguest paid outs, guest paid outs, previous da$ corrections,and refunds ' and trace total voucher amounts to the final revenue detailreport to determine if all ad5ustments are supported b$ vouchers. +fvouchers do not balance, document procedures for dail$ balancing.

3. Review vouchers for propriet$, proper completion ' including guest name,room or account number, date, amount, ade(uate explanation, name ofpreparer, and approval. Refund vouchers and guest paid outs shouldinclude the guest signature. 6aid outs should be supported with a receipt.race 1 percent of the vouchers for each da$ tested to the folio to ensurethat the account was affected properl$.

!. "or the three da$s tested, trace totals to the general ledger./. Review tax documentation to determine that tax rates are appropriate for

the following areas Room service deliver$ charges, ban(uet service


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charges, pacage plans, and mandator$ restaurant service charges.7. "or an$ exceptions prepared b$ revenue audit for the three da$s tested,

ensure that management responded properl$.

E. REVENUE AUDIT (Co"trats)

1. )btain the contract between the hotel and the pa$ 8 provider. +nclude acop$ of commission terms and discuss procedures used b$ managementto ensure pa$ 8 revenue is recorded on the financial statements.Research and document an$ concerns that arise during this testing.

2. +f the propert$ has an 9on command9 video or other s$stem with apercentage commission due the hotel, review last two months& invoices todetermine if the commission received complies with the contract, and theamount remitted was properl$ calculated prior to pa$ment. Research anddocument an$ concerns that arise during this testing.

3. Review leaserental agreements, if an$, for hotel space. %etermine that therecorded revenues agree to the terms specified. +nclude copies ofapplicable lease documents in woring papers.

F. REVENUE AUDIT (Ao&"ts Ree!a$e)

1. Review the current accounts receivable :AR; aging report. 0elect at least2/ accounts and determine whether or not all categories of receivables areade(uatel$ covered.


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6roper segregation of duties exists among the emplo$ee whoopens the mail and logs the checs, the person who deposits theitems to the ban account, and the person who posts the checsreceived to the AR ledger.

Copies of logs are f iled chronologicall$ for proper recordeepingpurposes.

3. 6erform a surprise cash count on two open hotel cashier drawers.+nclude a cop$ of the surprise count sheet with the woring papers.+nvestigate material variances.

!. Review and count the pett$ cash voucher box to ensure properbalancing. *nsure that appropriate bacup documentation exists inthe ban for pett$ cash activit$.

H. HOTEL LAUNDR+

1. 8erif$ that billings from the laundr$ contractor are checed todeliver$service records provided b$ the contractor, and unit prices areagreed to the services agreement with the contractor. *nsure the

deliver$service record is verified b$ hotel staff.2. race a sample of laundr$ contractor billings to guest billings for

laundr$ services.3. race guest billings to the dail$ sales transactions report or similar

document, and the guest ledger to ensure that revenue has beencaptured in the accounts.

!. *nsure that 9free of charge9 laundr$ services, if an$, outside of theordinar$ linen provided to guests, staff, and outside parties :e.g.entertainers; are in compliance with hotel policies and procedures.

/. %ocument other observations and concerns regarding the laundr$operation within the facilit$.

I. ADVANCE DEPOSITS AND REFUNDS

1. 0elect one month&s advance deposit account activit$ and obtain a cop$of the general ledger transactions.

2. race a bloc of 1 refund pa$ments to accounts pa$able vouchersand verif$ the following

Refund is supported b$ cop$ of deposit ticet.

Refund was for correct amount.

Refund was pa$able to the correct pa$ee.

Refund is listed on transaction list used to update master depositlisting.

Refund is for a reservation cancelled in advance.

*ndorsement on cancelled chec agrees with the name of the

pa$ee.

3. "or deposits applied at the front des, main cage, vault, or mailreceipts, agree a sample of 1 transactions in the most recent monthto the general ledger.

!. race the chec to a ban deposit slip./. )btain a cop$ of the guest folio and verif$ the deposit was applied to

the correct guest&s account.7. Review the general ledger control account for an$ ad5usting 5ournal


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entries to the advance deposit account and explain the nature ofad5ustments.

>. )btain a cop$ of the finance department&s reconciliation of theadvance deposit account and determine that all reconciling andoutstanding items are reasonable.

?. %etermine if there are stale items in this account that should be written

off.J. HOTEL COMPLIMENTAR+ ITEMS

1. )btain a cop$ of the current master complimentar$ :comp; list reflectingwho can approve complimentar$ services. 8erif$ that

*mplo$ees listed are currentl$ active emplo$ees.

Comp privileges authori#ed for the individuals listed were approved b$senior management. Chec a sample of documentation to validate theemplo$ees& level of authori#ation.

2. 0elect the most recent month of complimentar$ activit$ for detail testing

and perform the following

Review transactions in the comp clearance account.

Agree entries to applicable 5ournal entries and indicate purpose ofsuch entries.

3. 0elect one da$&s transaction report and obtain comp charges for the da$.Agree actual comp charges to transaction total. Review each comp folioand verif$ the following

hat comp is supported b$ documentation signed b$ an emplo$ee whois authori#ed to comp at that level.

hat charges authori#ed for comp are according to polic$ :i.e., a comp

room should not include food and beverages if not authori#ed assuch;.

!. "or complimentar$ food and beverage :"@=; charges posted to thecomplimentar$ master folio at the front des ' the customers& hotelaccount for the period of their sta$ ' agree the actual restaurant chargesto the folio and verif$ that the comp is signed b$ an emplo$ee who isauthori#ed to comp at that level.

/. )btain a cop$ of the dail$ complimentar$ worsheet for the date beingreviewed and perform the following steps

Reconcile the total charges shown on the worsheet to the transactiontotal and "@= recap totals. *xplain an$ variances or reconciling items.

8erif$ that information shown on the comp worsheet agrees with theapplicable comp folio and are posted into the proper categor$.

7. )btain the month-end comp worsheet and perform the following steps

8erif$ computation of total comps, tax ad5ustments, and net comps forthe month.

race total to the comp clearing general ledger account.

race tax ad5ustments to related tax accounts.


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>. %etermine how comp charges are handled for computing room tax anddocument procedures in the worpapers

8erif$ that procedures being followed are in compliance withapplicable tax regulations.

est computation of related tax ad5ustments to determine if the methodused is reasonable.

Hotel Audit Policy

Documents

Transcript of Hotel Audit Policy