915 Duties and Responsibilities Financial Controller • Establish and maintains a system of internal control of hotel assets, revenues and expenses. • Direct the timely recording of financial data and preparation of financial and management report required by government of Vietnam and making sound decisions and plans and to meet legal and regulatory requirements. • Control expenses in relation to revenues as per approved budget for achieving maximum profits. • Develop and administer systems and procedures to ensure the timely collection of receivable and the discharge of financial obligations and funding to the Owner. • Develop and maintain annual budgets for use by Your Hotel’s Name and Owner in measuring, planning and controlling business operations. • Provide financial consultancy service to Hotel Management for developing promotions to increase revenues or to adopt cost cutting measures to decrease expenses. • Ensure the safeguarding of hotel’s assets in the interests of Owner and General Manager for providing continuous and efficient service to the guest. • Ensure that the F & B Control section provides timely and accurate reports to Management review and support the plans of the F & B Manager to control costs and improve revenues. • Prepare annual salary increases for graded employees for approval by appropriate decision makers to compensate these employees on a timely basis. • Ensure that the Purchasing section in thoroughly familiar with the market and obtain best possible bids on purchases to control or lower operating expenses.
916 • Ensure that all required coverage of all insurances policies of the hotel are in effect as well as all necessary licenses is renewed according to the Vietnam law and Binh Thuan government regulations. • Responsible for reviewing and approving of legal contracts and attending to all legal matters in the hotel operations • Ensure maintaining of in-house back office computer system in optimum operating condition. Hotel Chief Accountant • Under the guidance of the Financial Controller and within the limits of Your Hotel’s Name Policy & Procedures as outline in the accounting standards manual, is responsible for all Hotel accounting and Financial Controls. • Responsible for handling any tax record and maintain the General Ledger, prepare any tax report monthly and yearly. In absent of the Financial Controller, has to handle any government side inspection, but not to decide on behalf of company or for the name of Financial Controller. • Comply and responsible for tax regulation and law regarding our business • To verify daily banking from duplicate of bank receipt to the General Cashier reports. • Check the Daily General Cashier Report. • Follow up, on delays in realizing deposit, and return checks, to carry out monthly reconciliation of all hotel bank accounts.
917 • To maintain general ledger, starting from posting, adjusting, and printing and also to maintain the adequate of accounting records • To reconcile by monthly all Currents Assets of Balance Sheet • Carry out the function of collecting city ledger accounts with the assistance of Account Receivable. • Carry out the function of Financial Controller when he is out the hotel area. • Represent of Financial Controller for government when he/she is no time to visit. • To lead an accounting meeting when the Financial Controller not able to come for attending accounting department meeting • To maintain a General Ledger as per instruction of the management, based on the guidance had given to. • Posting into the HOTEL COMPUTERIZE System by daily basis, all Front Office function and Income Auditing • To print Daily Report as per instruction, and filed into the proper place in sequence date and month and to store into the safe place for tax audit purpose. • To prepare monthly tax report i.e., Value Added Tax Monthly Tax Return, Personal Income Tax Return, and Letter Tax Payment for Added Tax, and Personal Income Tax. Also Corporate Income Tax • Responsible for timely reporting and payment of other taxes such as withholding tax, VAT, entertainment tax, etc. • To prepare monthly report of Value Added Tax, as well as the payment advice. • To pay alls taxes above based on the schedule of payment according to the regulation. • To prepare annual tax return for: all taxes, as well as to prepare of the Letter
918 of Tax Payment. • Prepares Annual Payroll Tax Return not latest than government time frame each year • Complies with Your Hotel’s Name Accounting Standard Manual • Performs any other duties as assigned by the hotel’s management
919 Accounting Supervisor • The Accountant is responsible for preparing the monthly Financial Package. He / She is also responsible for assisting the Controller in guaranteeing that the Accounting Department operates smoothly and efficiently. In order to do this the Accountant must maintain the General Ledger as well as have a good working relationship with other department in the hotel • Responsible for daily auditing to all records pertaining to revenue of the hotel, Prepares and complete daily reports and prepares relevant documents for incorporation in the monthly accounts. • Prepares or supervises the preparation of all journal entries necessary for closing the books on a monthly basis. Ensures that depreciation, amortization, accrual are properly recorded, check that all revenue cost expenses and all transactions are posted to the proper charge of account. • Maintains a daily log of specific package charges for purpose of reconciling clearing accounts at the end of the month • Prepares all monthly bank account reconciliation • Reconciles all balance sheet accounts and selected profit and loss accounts monthly before closing • To ensure that the amounts of the balance sheet accounts are tally will its respective subsidiary ledger and the items on the subsidiary ledger are fully substantiated. • Close all books by the 5th working day of the subsequent month. • Prepares monthly variance analysis reports between budgeted and actual figures • Check payment vouchers prepared by Accounts Payable. • Supervise the work of Accounts Receivable, Accounts Payable and Cost Controller. • Develops a working knowledge of all procedures and operations as detailed
920 in the Accounting Manual • Cooperates with the internal and external auditors to minimize the cost of auditing and the implementation of recommendations • Assist the Controller and Assistant Controller in the preparation of whatever special projects and reports are required. • Performs whatever additional task is required by the Financial Controller or the Assistant Financial Controller to guarantee that Accounting records are maintained professionally. • Audits the daily revenue figures and supporting folios, vouchers and summaries submitted by the night auditors • Audits the daily general cashier’s report • Prepares daily reports for distribution in the hotel. • Prepares and to process some necessary adjustment to fix wrong charge and price applied. • Prepares the necessary journal vouchers at the end of the period • Verifies the daily house phone call reports • Keeps stock of guest checks and ensures that these are issued and used in numerical sequence by maintaining logbook to document this. • Verifies all voids and previous day corrections, as well as corrections made at the point of sales • Checks housekeeping report for complimentary rooms and housekeeping occupancy with the Front Office records • Calculates employee’s service charge and preparing “An announcement regarding Service Charge” weekly and Month Ending • Prepares Daily and Month Ending Food & Beverage Statistic i.e., Food Cover, Beverage Cover, Food Revenues and Beverage Revenues • Complies with Hotel’s Policy and Procedures
921 • Perform any other duties as assigned by the hotel’s management. Cost Controller • Responsible for recording and controlling the all invoices for foods, beverages and all supplies on the daily basis through receiving department and recording and controlling all outgoing merchandises from store room used store room requisitions. • Assist the Financial Controller in preparing cost reconciliation’s. • Recording and pricing all storeroom requisitions. • Posting all inventories item from daily receiving report into the System • Preparing Daily Flash Food Cost • Develop Food & Beverage Cost Potential. • Calculates beverage potential sales on a monthly basis • To do spot check between kitchens copies of captain orders with guest restaurant’s checks. • Recording and pricing inter kitchens or bar transfer. • To supervise a physical inventory taking at storeroom and all hotel’s outlets • Preparing month-end Food & Beverage cost reconciliation. • Complies with Your Hotel’s Name policy and procedures • To conduct a monthly analysis of food and beverage inventories, to determine “slow-moving” and absolute inventory items, and calculate turnover ratios.
922 • To play an active role in calculation of per plate costs of menu items. • To conduct random spot checks of inventories in the bar and kitchen for accuracy and observe service procedure to ensure that the internal control system is effective. • To conducts regular, surprise spot-checks in restaurants and bars to ensure that all guests are issued posted guest checks at the time of consumption. • To work closely with the Food & Beverage Manager, the Chef and Purchasing in order to minimize Food and Beverage costs, and to maintain high quality production and service. • To work closely with the Assistant Financial Controller in order to improve the Food and Beverage control operation. • Complies with Hotel’s Accounting Standard Manual • Performs any other duties as assigned by the hotel’s management Accounts Receivable Officer • Responsible for investigating credit applications for new accounts, reviewing accounts for potential problems on an on-going basis and maintaining contract with other parties to enable timely detection of payment problems. • Conducts credit investigations, so that an intelligent appraisal of customer’s worth, character and ability to pay may be ascertained to justify extension of credit. • Review supporting documents and verifies the accuracy of balances in accounts receivable. • Follow up collections of accounts receivable regularly in a firm but
923 diplomatic manner, calculated to produce results and at the same time maintain good relations with the customers. • Recommends write – off of un-collectable accounts with supporting document of legal correspondence or notification from right sources. • Reports immediately any unfavorable information received affecting a customer’s credit standing, so that appropriate actions maybe taken. • Ensure that Your Hotel’s Name policies and procedures granting of credit are observed. • Attend Monthly Credit Meeting and maintains updates the list of travel agents which are blacklisted and/or prepayment basis. • Complies with Hotel’s Accounting Standard Manual • Performs any other duties as assigned by the hotel’s management Account Payable Officer • Responsible for verification, processing and timely payment of all hotels’ purchases, Maintains proper files for all accounts payables records • Receives all invoices and matches those with receiving records and purchase orders. Verifies pricing, extensions and additions • Prepare cheques/bank transfer for all payment vouchers, cancel all documents with a “DATED PAID STAMP” and forwards those all cheques/ bank transfer together with all supporting documentation to Financial Controller and to General Manager for signatures. • Prepares all necessary payment vouchers, ensures timely payment based on term credit and maintains these files for both paid and unpaid payment vouchers. • Post all payment vouchers into the hotel’s ledger timely basis.
924 • Complies with all Hotel’s policies & procedures • Perform any other duties assigned by the hotel’s management. General Cashier • Responsible for adequate money supply in the hotel, collecting of all daily receipts and to do daily banking, Responsible also for Petty Cash’s Payment and Reimbursement • Collects the cashier’s envelopes from the “Drop Safe Deposit Box” each morning and counts the contents in the presence of a witness. • Receives and banking all cheques received, including those received in the mail. • Banked the previous day’s collection at the hotel’s bank accounts on the daily basis • Prepares “Daily General Cashier Report” and forwards it to Income Auditor for verification. • Provide some small money for outlet cashiers that required for money change. • Verifies all cash receipts, foreign currency receipts, are used in numerical sequence to ensure all collections are account to. • Ensure adherence to all cash and banking policy based on the Your Hotel’s Name Accounting Standards Manual. • Disburses all authorized Petty Cash Vouchers and submits for reimbursement at least each Thursday. • Monitor the fluctuations of Exchange Rates and amends the Front Desk Exchange Rates notice accordingly on the daily basis. • Maintains a permanent record of all cash overages and shortages by
925 individual cashier on a daily basis and submits this report to the Financial Controller for monthly review and signature. • Keeps the safe closed at all times and fully locked when unattended regardless of the length of time involved. • Prepares Petty Cash Journal Voucher weekly • Prepares Cash Receipt Journal each the end of the month • Carries out any other duties as required by the hotel’s management Receiver / Storekeeper Responsible for all goods entering and leaving the hotel and to ensure that all necessary documents are completed and that merchandise is in acceptable condition Responsible for goods entering and leaving storerooms, also responsible to maintaining accurate store room records, and store room in good conditions A. As Receiver: • Responsible for the proper documentation and distribution of all merchandise entering the hotel, include purchase orders, market lists, removal of property authorization. • Prepares receiving records and daily receiving reports • Ensures that receiving records are used in strict numerical sequence • Ensures that all merchandise entering the hotel is distributed to the respective department or storeroom as soon as possible • Ensures that all outgoing goods, such as empty beverage containers and equipments sent out for repair are properly documented and accounted for
926 • Follow up with Purchasing Manager at the end of each month to ensure that all orders have arrived and cooperate in investigating any late deliveries. • Complies with Hotel’s Accounting Standard Manual • Performs any other duties as assigned by the hotel’s management B. As Storekeeper: • Responsible for maintaining the perpetual inventory records and daily summary of all purchases and issues from each of the hotel’s storerooms • Assist the cost controller in the taking periodical physical inventories. • Accounts for any differences in physical inventories with book figures and advises to management of any material differences. • Ensures that all incoming and outgoing goods are supported by properly authorized documents such as Receiving Records and Requisitions • Implements proper controls in maintaining security of Store Areas at all times. • Ensures that adequate stocks of all articles are kept and responsible for the timely raising of Purchase Requisitions • Monitors expiry dates of stocks and ensures that all goods are used prior to their expiry date. Ensure that all goods without expiry date are strictly issued on a First – In – First – Out basis. • Maintain proper procedures and methods such as record, keeping, stock maintain and issuing. • Complies with all Hotel’s Policy & Procedures • Complies with Hotel’s Accounting Standard Manual • Performs any other duties as assigned by the hotel’s management
927 Night Auditor • Responsible for entering all room charges, separating room taxes from room revenues and insuring that all vouchers have been accounted for and properly posted to each guest folio. • Prepare the front office room status report and reconcile it with the housekeeper's report for any room discrepancy • Verify Food & Beverage charges made to guests and charged to their rooms with the daily Food and Beverage sales reports. This duty is conducted, also, for all other revenue centers. • Guest folio errors (whether overcharges or undercharges) shall be corrected by the night auditor using either a correction or an allowance voucher and posted to a separate allowance journal. • Responsible for preparing a summary report of the up-to-date amounts owned to the hotel in both guest ledger and city ledger accounts Expense Accounting In the hotel industry, expenses are divided into two main categories: Direct Expenses: These are the expenses that vary with the level of production. For example, in the Food and Beverage department, the Cost of Food Sales is a direct expense. For, the more dishes we serve, the more cost of Food Sales the Hotel incurs. Moreover, in the Telephone Department, the Cost of Calls is a direct expense. For, the more we connect guests to whatever destination wanted, the more cost of calls the hotel incurs.
928 Indirect Expenses: These are the expenses that do not vary with the level of production, or variable costs that can not be feasibly distributed to various Financial Reporting Centers. In the hotel industry, indirect expenses are, hence, divided into two different categories: 1. Fixed Charges: Examples might include rent, insurance, property taxes, and interest expense. For, these very expenses are incurred for the benefit of the hotel as a whole not for the benefit of each single department. To illustrate, if a hotel insures itself against fire, theft and burglary, and one day some valuable equipment has been stolen, from any department whatsoever, the insurance company will indemnify the hotel. 2. Undistributed Expenses: Examples might include electricity, energy, and water expenses. For, usually the hotel receives a total energy bill to be paid. In the old days, some hotels went for allocating this amount according to certain factors (ex. Surface, Department Usage…). However, this practice proved to be misleading, since it might under-allocate energy expenses for some departments and over-allocate it for others. Nowadays, most of the hotels decide not to allocate such expenses any more. Rather, hotels report such expenses in separate schedules. At this stage, departments of a typical hotel would be listed along with their various related direct expenses. Later, examples of fixed charges and undistributed expenses would be discussed. Last, a bracket would be opened to discuss one of the most important Direct Expenses in any hotel, which is Payroll and Related Expenses. For, hotels being described as labor intensive companies devote a big percentage of their financial resources to such an expense. 1. Rooms Division Department direct expenses include: Commissions expenses: This account includes payments by the hotel to authorized agents that bring room business to the hotel. Usually at the end of each month, hotels sit with these agents in order to reconcile their monthly sales figures and authorize commission payment (usually in the form of a percentage of room revenue) Reservation expenses: This expense account represents any payment to various agents contracting to bring potential room revenue business to the hotel. These agents might have the form of Central Reservation Offices (Whether affiliate or non-affiliate), Intersell agencies
929 Contract cleaning expenses: This expense account represents payment to contracting outside cleaning agencies. Some hotels (especially small and middle size hotels) might opt for contract cleaning because of its attractive financial implications. If this is the case, these hotels might not be forced to have a housekeeping department, or might keep housekeeping staff to minimum. Such expenses should be determined in light of the contract signed between both parties (i.e. the hotel from one side and the cleaning company from the other.) Laundry and dry cleaning expenses: This cost applies to outside laundry and dry cleaning costs for the Rooms Division department. In most of the cases, such contracts are signed to benefit more than one revenue generator. In this case, the Rooms Division department shall report the laundry and dry cleaning expenses related only to the Rooms Division department. Guest transportation expenses: These expenses include the cost of transporting guests from and to the hotel via various means of transportation (ex: Mini-buses, buses, limousines…). If the guest transportation's volume business, staff, and costs are significantly high, then a separate department might be established. Linen expenses: This specific expense account includes the allocation of a portion of linen expenditure for a specific period of time. This practice goes along with one of the accounting principles: the matching principle. Some sub-accounts of linen expense might be: Towels expenses Facecloth expenses Blankets expenses Sheets expenses Pillow expenses Guest supplies expenses: This account includes the various guest supplies provided free of charge to guests in their rooms. Some sub-accounts of guest supplies expenses might include: Newspaper expenses Guest stationary expenses Shoe cloth expenses Coffee expenses Writing supplies expenses Toilet requisites expenses Flowers expenses Hangers expenses Matches expenses Ice expenses Candy expenses Cleaning supplies expenses: Such an account includes the cost of Rooms Division's cleaning supplies. Some sub-accounts of guest supplies expenses might include: Brooms expenses Soaps and polishes expenses Cleaning cloths expenses Mops expenses Cleaning chemicals expenses Dusters expenses Brushes expenses Insecticides expenses Dustpans expenses Pail expenses Disinfectants expenses Cleaning accessories expense
930 Printing and stationary expenses: This expense account includes printed formats (ex: virgin registration records, reservation records, guest folios…), office supplies (ex: pens, pencils, rubbers, erasers…), printed manuals and guidelines for the use of the Rooms Division employees. Some sub-accounts of printing and stationary expenses might include: Binders expenses Floor plans expenses Pencils and Pens expenses Vouchers expenses Rack card expenses Reports expenses Desk pad expenses Envelopes expenses Ink expenses Folio expenses Uniforms expenses: This expense account includes the allocation of a portion of uniforms asset (if the hotel purchases uniforms) for a certain period of time along with the expense of repairing, and cleaning them. If the hotel rents uniforms rather than purchasing them, then the uniform expense shall include the renting cost, usually predetermined in light of the contract linking the hotel and the uniform renting company. 2. Food & Beverage Department: This department is responsible for the preparation and service of food and beverage to guests. It compromises the kitchen, restaurants, bars, and any premise in which Food and Beverage is served. 3. Telephone Department: This department is responsible to handle guest communication. This might be insured through connecting guests to desired locations, whether in-house, local or long distance calls. Moreover, this department is usually composed of a chief operator, supervisors, operators, and messengers. Last, with the automation revolution affecting right now most hotels, it became possible to separate calls of guests and communication handled by hotel employees, therefore, making it possible to have the telephone department as a minor revenue generating department. For, prior to automation, the separation of cost of calls was not possible and hence the telephone department might show frequently a loss since telephone direct costs are overstated. 4. Administrative & General Department: Actually looking at any hotel organization chart, Administrative and General Department (referred usually as A&G) does not exist. It is however a financial reporting centers including executives of the Hotel (ex: General Manager, Assistant General Managers…) and other employees involved with executive and financial activities (ex: Accounting personnel, resident Manager, Accounts Receivable clerks, Night Auditors…). Moreover, if there is staff in the hotel not included in departments due to low business volume not justifying the establishment of a department, they might be
931 included under the A& G department (ex. Data Processing Staff, Transportation Staff, and Personnel Staff…). 5. Marketing Department: This department is composed of a marketing manager, marketing assistant managers responsible for sales, convention, public relations, and advertising functions, along with marketing personnel. This department is a cost center that indirectly supports revenue generators in their sole aim of generating hotel revenue. This can be insured, for example, through large group reservations, hence maximizing room revenue, or buffet, conference, and catering opportunities brought by this very department hence maximizing room revenue, F& B revenue, and the hotel revenue as a whole. 6. Property, Operation and Maintenance (POM): Concerned with the appearance and physical condition of the building, the repair and maintenance of equipment, and rubbish removal. Some positions of this department might include POM manager, POM assistant manager(s), electricians, plumbers, gardeners, painters, and interior design specialists… 7. Data Processing Department: This special department might be established in hotels operating under the fully automated system. Moreover, such hotels should have significant investment in computer equipment and staff to justify the establishment of a single department. If these conditions do not exist, than the Data Processing functions would be financially grouped under Administrative & General Department. 8. Human Resources Department: Similar to Data Processing Department, if the Dollar Amount and Staff incurred for employees' hiring, screening, interviewing, selecting, recruiting, and Training is significant, than a Human Resources Department may be established. Otherwise, Human Resources functions would be financially grouped under Administrative & General Department 9. Guest Transportation Department: If the Dollar Amount and Number of Staff employed in the transportation of Guests is significant, a separate Department might be established. Otherwise, guest transportation staff would be grouped under Rooms Division Department. Financial Reporting Centers: Financial Reporting Center is an area of responsibility for which separate Cost Information must be collected Might be classified as Revenue Centers, Support Centers, and Other Financial Reporting Centers
932 1. Revenue Centers ⇒ Generate Revenue through sales of Products and/or Services to Guests • Rooms • Food and Beverage • Telephone • Gift Shops • Garage and Parking • Other Operated Departments • Rentals and other Income 2. Support Centers ⇒ those departments that have minimal Guest Contact and do not produce Sales. Yet, they do provide services to Revenue Centers, which, in turn, provide Services to Guests • Administrative & General • Marketing • Property Operation and Maintenance • Data Processing • Human Resources 3. Other Financial Reporting Centers ⇒ include Energy Costs and Fixed Charges (Rent Expense, Property Taxes, Insurance Expense, Interest Expense, Depreciation and Amortization Expenses) Each Financial Reporting Center should be assigned an Identification Number. To illustrate, consider the following Example: Financial Reporting Center Identification Number Rooms 11 Food and Beverage 15 Telephone 17 Administrative & General 31 Marketing 36 Property Operation and Maintenance 38 Energy Costs 41 Fixed Charges 51 Furthermore, each Account should be assigned an Identification Number. Hotels commonly opt for either the Five-Digit (xx-xxx) or Eight-Digit Account Numbering Systems (xx-xxx-xxx)
933 Accounting Responsibility: Aim ⇒ provides Financial Information useful in evaluating the effectiveness of Managers and Department Heads. That's why only Direct Expenses should be charged to Specific Departments 1. Expenses ⇒ include the day-to-day Costs of Operating the Business, the Expired Costs of Assets through Depreciation and Amortization, and the "write-off" of prepaid items. Expenses are classified as Direct expenses (Cost of Sales and Operating Expenses), Indirect Expenses (Fixed Charges and Undistributed Expenses) and Income Taxes a) Direct Expenses ⇒ they are Costs incurred solely for the benefit of a particular Department • Cost of Sales • Payroll Expenses • Payroll-related Expenses • Operating Supplies • China, Glassware, Silver, and Linen • Laundry and Dry Cleaning b) Indirect Expenses ⇒ They are incurred for the benefit of the Hotel as a whole, and cannot be identified with any particular Department • Property Insurance | • Interest Expense | • Property Taxes | ⇒ FIXED CHARGES • Rent Expense | • Depreciation and Amortization | • Marketing Expense | • Administrative & General Expenses |⇒ UNDISTRIBUTED EXPENSES • Property Operations and Maintenance | • Energy Costs | c) Income Taxes ⇒ it is neither a Direct Expense, nor an Indirect Expense. It should appear as a separate Line Item on a Hotel's Summary Income Statement
934 Payroll and Payroll-related Expenses: 1. Salaries and Wages (Payroll Expense) ⇒ Includes Salaries, Wages, Overtime Pay, and any Employee Bonuses and Commissions 2. Employee Benefits ⇒ Include Vacation and Holiday Pay 3. Payroll Taxes ⇒ Includes Social Security Taxes (Employer's Portion) 4. Employee Meals ⇒ Includes the Cost of Food furnished to Employees as a Convenience to the Employer 5. Worker's Compensation Insurance ⇒ Includes the Expense of Worker's Compensation Insurance 6. Employee Group Plans ⇒ Includes Life and Health Insurance, and Other Forms of Employee Group-plan Fringe Benefits
935 Hotel Department Statements Basic Format of Revenue Center Statements Basic Format of Support Center Statements: Since support centers do not generate sales, they cannot have a gross profit. Therefore, the basic format of support center statements only lists the direct expenses incurred for the period. Presentation of Payroll Expenses: Whether a revenue or support center, every functional area shall separately report the following information pertinent to payroll expenses: • Salaries and wages • Employee benefits • Total payroll and related expenses ⇒ Accumulation of the two above mentioned accounts Example of Hotel Departmental Statements: • Rooms department income statement • Food and Beverage department income statement • Telephone department income statement • Other operated departments income statement • Schedule of rentals and other income • Administrative and general department statement • Marketing department statement • Property operation and maintenance department statement • Schedule of energy costs • Schedule of fixed charges Each departmental statement (or schedule) must have an identifier in the upper right corner along with the hotel name, department nature, and the period for which the income statement has been prepared. To illustrate, consider the following example:
936 Hotel Income Statement: The hotel income statement is simply the consolidation or accumulation of all the departmental income statements or schedules. The procedure of consolidation is the following: • Come up with the total net revenue (i.e. all revenue - total allowances) • Come up with the total cost of sales • Compute the total gross profit = total net revenue - total cost of sales • Come up with the total departmental payroll and related expenses • Come up with the total other direct expenses • Compute total direct expenses = total payroll and related expenses + total other direct expenses • Compute total operating income = total gross profit - total direct expenses • Come up with the total undistributed expenses before fixed charges • Come up with the total fixed charges • Compute the net income before taxes = total operating income - total undistributed expenses - fixed charges Hotel Balance Sheet What is a Balance Sheet? • Balance Sheet shows the values of Assets, Liabilities, and Owner’s Equity for a Certain Specific Time • According to Law, Balance Sheets shall be prepared at least once in a year! • Companies might prepare Balance Sheets on a monthly, Quarterly, and/or Semiannual Basis for Internal Control Purposes It is divided in to Assets and Liabilities. Assets: They are: • Something that the Company Owns
937 • Something that the Company purchased • Something, which would give a Future Benefit to the Company Assets include: • Current Assets • Non-Current Assets Current Assets: Include Cash and Other Assets that can be converted to cash within 12 months of the balance sheet date. Moreover current assets are divided into: The order or sequence of Current Asset’s Classification stems from Liquidity Issues Current Assets typically include: a) Cash Includes Cash in: • Checking and Saving Accounts • House-banks • Deposit Certificates b) Marketable securities Includes Short-term Investments that are readily marketable and that can be converted into Cash The reason behind Marketable Securities shall be Potential Gains not Control over or affiliation with other companies! c) Accounts Receivable Includes: •Guest Ledger •City Ledger •Contra-asset Account called Allowance For Doubtful Accounts
938 d) Inventories: Includes: •Food & Beverage Inventory •Operating Supplies (ex. Guest Room Supplies, Office Supplies, and Cleaning Supplies) •A certain Stock of Furniture & Equipment (including Spare Parts!) e) Prepaid expenses • These are expenditures paid in advance for services that will benefit the Hospitality Company for a Period up to 12 Months from the Balance Sheet Date • Might include: •Pre-paid Insurance •Pre-paid Rent •Pre-paid Property Taxes Non-current assets: • These are the assets that will not be converted to cash within 12 months of the balance sheet date. • It includes: a) Non-current receivables b) Investments c) Property and equipment which also includes the contra-asset of accumulated depreciation d) Other Assets: Includes intangible assets (i.e.: organization costs, preopening expenses, franchise rights, goodwill, trademarks, trade-names, security deposits, patents, copy rights, and cash surrender value of officers’ life insurance along with their amortization) and deferred charges (i.e.: the portion of pre-paid expenses not applicable for the next 12 months period) Liabilities: • Liabilities represent the amounts owed to Credit-holders that Hospitality Companies are liable and, hence, responsible to pay them • Credit-holders include:
939 •Suppliers and Vendors (Accounts Payable) •Banks and Borrowing Entities Notes Payable versus Long-Term Debts •Employees Salaries Payable •Government Income Tax Payable •Guests Unearned Revenue 1. Current liabilities: • These are liabilities that must be paid within 12 Months of the Balance Sheet Date • Includes: • Accounts Payable • Notes Payable • Current Portion of Long-Term Debt • Unearned Revenue • Salaries Payable • Income Tax Payable 2. Long-term Liabilities: • These are Debts and Commitments that are due beyond 12 Months of the Balance Sheet Date 3. EQUITY: • Might be called “Shareholders’ Equity” or “Stockholders’ Equity” • The nature of the Equity Section might depend on the Nature of the Organization, which might be established under the following forms: • Sole Proprietorship • Partnership • Corporations Some typical Equity Accounts in a Corporation includes: 1. Common Stock 2. Preferred Stock 3. Additional Paid-in Capital 4. Retained Earnings 5. Donated Capital 6. Treasury Stock
940 HOTEL CASH MANAGEMENT PROCEDURE All receipts, either in cash or cheque from Hotel Revenue, collection of Accounts Receivable, Selling Assets, loans from Bank or from share holder (owner), MUST BE DEPOSITED TO BANK next day. And all payment must be used Bank Cheque or Bank Transfer. For safety reason all Cheque must crossed. All accidental expenses paid by “Petty Cash” must reimbursed through “Cash Disbursement” then prepared a Bank Cheque with same value of spend as cash replacement. Hotel Cash Management is divided into three groups of Cash : ¾ Cash Collection; ¾ House Float or Cash in Hand; ¾ Cash at Bank. Cash Collection: Cash Collection is all “incoming cash” either from revenue of cash sales, collection of Account Receivable in cash or other cash receipt from other activities. All incoming cash must be processed through General Cashier as an authorized person as administrator of cash. Each Shift of Outlet Cashier is responsible to balancing their physical cash to “Cash Report”, then to remit those cash into the: “Remittance of Fund Envelope”. All outlet cashier to report their cash following the procedure as follow: Front Office Cashier to submit their cash to General Cashier by putting all cash receipt into the Remittance of Fund, to include the Guest Folio. Then General Cashier to prepare a “Daily General Cashier Report” and the Income Auditor must to verify this report as the confirmation balancing process to cash receipt from Front Office. All Outlet Cashier must to report every end of their Shift based on their Summary of Sales with procedures as bellow:
941 ¾ To put all cash into the Remittance of Fund, then to fill “Deposit Log Box” with detail value of cash inside. Every cashier who dropped into “Drop Deposit Box (Night Safe Box)” has responsible to call a witness. ¾ All copy of guest check (Restaurant & Bar Check) and print out Summary of Sales be placed into Box for Night Auditor, next day morning the Income Auditor to check with the Daily General Cashier Report prepared by General Cashier. Responsible to deposit all cash into the: “Drop Deposit Box (Night Box)” is a must that can not be neglected. Usually Drop Deposit Box is located in safe place and just only cashiers are allowed to enter. Each Cashier who wants deposit her/his “Cash” must use a “Remittance of Fund” and compulsory to write the amount into the “Deposit Log Book” to gather with a Witness must to sign this Deposit Log Book. Every day General Cashier must to collect the Remittance of Fund Envelope also with another witness, then to make “Daily General Cashier Report”. This report must be get verification from an Income Auditor as “double Check”. After deposit to the bank, Daily General Cashier Report together with a “Bank Deposit Slip” sends to Financial Controller to get approval for complete process. When any Incoming Cash is received from outside the company activities i.e., Bank Loans, Paid Up Capital, Selling Fixed Assets, Prize etc.,) so these Incoming Cash can directly received by General Cashier, by given a Cash Receipt, and to posting into the Computer System into the correct account code. All “Daily General Cashier Report” that been complete in process must be sent to General Manager for his acknowledged all Incoming Cash been deposited into bank in daily basis. Incoming Cash Non Operating: Incoming Cash Non Operating is any cash come into company bank account NOT THROUGH General Cashier, so a Secretary of Financial Controller to prepare a “Reconciliation Journal Voucher”, the Incoming Cash as follow: Incoming Transfer from Credit Card collection. Inter Company Bank Account Transfer Credit Note Bank as Travel Agent payment of Account Receivable or deposit Bank Loans
942 Interest Earn on Bank Account Interest Earn on Time Deposits Foreign Exchange Gains House Float “House Float” is to keep enough money for hotel operation and be used to pay accidental payment in order not to disturb Hotel Cash Management System to ensure the “Revolving Fund System” can be implemented by consistence. House Float Management to use “Impress Fund System”. In this system the amount of House Float must be “Fixed Amount” and not change within one period of Accounting or Fiscal Period. To change House Float one must get approval from Executive Committee (General Manager and Financial Controller). House Float divided by: a. Outlet Float (F.O Cashier, F & B Outlet Cashier; and Purchasing) b. House Bank (General Cashier Cash on Hand) The Outlet Float divided into: a. Rotating Float b. Fixed Float c. Floating Float Rotating Float in this system the money will be handed over from shift to next shift by using a “Float Handover Form”. Fixed Float in this system every cashier has their own Cash Float and its their Responsibility Floating Float in this system all Floats are temporary in nature and the amount set is based on operational need. This Floats must be returned back to General Cashier including all cash collection within one shift. House Float use only for covering small change money for Front Office and all F & B Outlet for guest money change and “Paid Out” for guest only. This House Float can not be used for hotel expenses. For some urgent payment for example guide commissions, purchasing urgent items to avoid guest complaint were allowed as “Cash Advance” and General Cashier will pay back within 2 x 24 hours.
943 “Paid Out” only for guests and not for payment of expenses, the guest take Paid Out usually for: 1. To pay Taxi, then the paid out will post to Guest Folio (amount paid out plus 5% administration and bank fees). 2. Refund “deposit” for guests. 3. “Cash Advance”: this cash advance guest must guarantee with “Credit Card” and Process through EDC complete, when intended credit card been approved and have approval code from Bank Issuer then “Paid Out” given to the guest with ask “SURCHAGES” 5% this 5% must be posted to System by using “Miscellaneous Charge”. Using House Bank General Cashier’s Cash on Hand (House Bank) use for reimbursement of operational expenses with urgent requirements and the amount not to exceed US$, any expense reimbursement must use “Petty Cash”. Petty Cash reimbursement must complete with docket such as invoice, this Petty Cash must be approved by General Manager, and then can be paid from General Cashier Cash on Hand. When “Petty Cash” is not approved by General Manager, this “Petty Cash” can not be reimbursed. When General Cashier Cash on Hand almost finished, so General Cashier has responsible to reimburse all Petty Cash Vouchers to Account Payable by preparing “Petty Cash Report” include the account code for expenses allocations. Then Account Payable to prepare “Payment Voucher” in order to get Bank Cheque to replace the Petty Cash with same amount reimbursed. Cash at Bank Any Incoming Cash must be deposited to company bank account. According to Hotel Cash Management procedures, any deposit slip must be equal amount with one day hotel operation cash receipts as at Daily General Cashier Report.
944 Bank Reconciliation The Bank Reconciliation is a “Monthly Procedure of Cash Management”, to compare the cash balance at Company Ledger to bank balance as at Bank Statement. Monthly Chief Accountant will need to prepare a “Bank Reconciliation”, to compare bank balance as at Bank Statement to balance as at Company Ledger. Usually some normal difference between Bank Statement and Company Ledger was occur by as follow: a. Deposit Outstanding or Deposit in Transit; b. Cheque Outstanding or Cheque in Transit; c. Bank Interest; d. Bank Fees. Deposit Outstanding or Deposit in Transit is deposit from Hotel been submitted to bank, but did not appear in the Bank Statement. This deposit must appear to next month. Cheque Outstanding or Cheque in Transit is cheque issued to third party or Suppliers, but did not cashing by third party or Suppliers to the bank. Bank Fees consist of: • Cheque Book Fees • City Transfer Fees • Cross Regional Transfer Fees • International Transfer Fees • Provision on Foreign Account Maintain Cost • Tax on Interest of Interest Earn • Credit Card Discount Deduction • Other Bank Fees INTEREST EARNED Interest Earned is an income that the bank will credited the company bank account for depositing the hotel money in the bank.
945 Steps to Prepare Bank Reconciliation 1. To compare cash deposit which is recorded into the Bank Statement with cash deposit recorded into Company Book. When some cash deposit does not appear in the Bank Statement, this different was called as “Deposit in Transit or Outstanding” and need to increase the bank statement balance. 2. To compare Cheques issued by the company, also be compared to the Bank Statement, any cheque not appearing in the Bank Statement is called as: “Cheque Outstanding”. Then compare “Cheque Outstanding List” of last month and must be updated and crossed out from the list when the cheque had been encashed and appear in the Bank Statement. 3. Added up any “Credit Note Bank” to company ledger. The Credit Notes include “Interest Earned”. For this transaction prepare a Journal Voucher then post to Ledger. 4. Reduce for any “Debit Note Bank” and post into ledger. The Debit Notes include Tax on Interest Earn (except posting Interest Earn – Net). 5. Prepare immediately a correction on misreporting or disposing by company employee or by bank. 6. After adjustments are made, so the Ledger Balance Adjusted must equal with Bank Balance Adjusted, but not with Bank Statement Balance. 7. Prepare Journal Voucher Adjustment in order to make balance the Company Ledger as at “Bank Reconciliation”.
946 Hotel Budgets Two types of budgets most commonly used in hotel operations are: ¾ Capital expenditure budgets ¾ Operating budgets. ¾ Preopening budgets (for New Hotels) Budgets should be prepared by the Department Heads of the respective departments. A review of Budget takes place by the General Manager/Directors or the management committee and any revisions/changes are suggested. Once budgets are approved, they are used to guide departments to successful operations over the course of the year or period of time to which they apply. CAPITAL EXPENDITURE BUDGETS Capital expenditure budgets allocate the use of capital assets that have a life span considerably in excess of one year; these are assets that are not normally used up in day-to-day operations. Because such items of material are capital in nature, they are considered to add to the capital investment of the company and are therefore subject to some form of depreciation. The hotel building is a capital asset that may be depreciated over a period of 25 or 30 years. Furniture, fixtures, and equipment (FFE) are capital assets whose depreciation schedules are somewhat shorter (3, 5, or 7 years) but are nonetheless depreciable. In hotel operations, the term software is sometimes used to describe certain types of depreciable fixtures. In ongoing operations, once each fiscal year there is a call for capital expenditure budgets from the various departments. At this time the hotel department management is required to specify needs for funds to purchase FFE. Capital expenditure budgets might also include requests for funds to support renovation and modernization programs, since both add to the asset value of the property. Once budgets are approved and funds are made available, capital expenditure budgets are implemented by the various departments.
947 If unexpected needs arise for FFE during the budget year, the general manager usually must submit supplementary justification to ownership before making such expenditures. Depending on company policy, some general managers have authority to spend a finite amount of money in excess of capital expenditure budgets, but such spending is quite constrained. As an example, for one major hotel corporation whose capital expenditure budget may range in the millions of dollars for a given property, the authority of its general managers for excess spending without approval from higher authority is limited to $500. Before a specific item of equipment may be capitalized, there could be a requirement that the item have a life expectancy in excess of one year and that the cost be in excess of $100. Should a specific item not meet these criteria, it would be expensed (converted into the cost of doing business) rather than capitalized. OPERATING BUDGETS Operating budgets are prepared annually for a fiscal-year period. Operating budgets relate day-to-day operating costs to the revenue resulting there from. Labor costs (salaries and wages), employee costs (health, welfare, and benefit programs), and controllable costs make up the total expenditure relating to specific revenue being generated; control profit (or loss) is the result of the comparison. Revenue is generated by a hotel rooms department, and costs are incurred by two sub departments, front office and housekeeping. The front office manager and the executive housekeeper are therefore responsible for controlling the costs associated with revenue generated from the sale of guestrooms. That portion of controllable cost administered by the executive housekeeper includes but is not limited to items such as cleaning supplies, guest supplies, linen expense, uniform costs (for staff), and laundry costs. A detailed analysis of an operating budget for a rooms department is given in article 11. Because department managers are charged with holding operating costs in check in order that profit may be maximized, the purchase of small items of equipment on a one-at-a-time basis should be curtailed.Foresightinplanning can and will maximize departmental control profit.
948 PREOPENING BUDGETS Preopening budgets are usually thought of as allocating money and resources to opening parties, advertising, and initial goodwill. Preopening expenses actually go far beyond such expenditures and usually include initial cost of employee salaries and wages and supplies, food, china, glass, silver, and similar items. Recall that in our hypothetical opening, many managers have been on the payroll for several months. Other employees will soon be on the payroll for training and orientation. Preopening budgets normally include the cash and inventory requirements to meet these needs, along with others for getting the property open and operating. Preopening budgets are quite sizable and as a result are usually amortized over a three-year period from the date of opening. Preopening expenses are therefore not quite so devastating to corporate profits in the first year of operation. Most professionally sound hotel companies understand the need for substantial preopening budgets and plan such expenses into pro formas. Hotel companies that do not plan ahead are plagued with unplanned-for last-minute costs, and departments end up undersupplied and under equipped. The preopening budget forces the planning necessary for a smooth opening. The executive housekeeper can play a major role in establishing sound preopening budgets.
949 Hotel Audit Checklist FRONT OFFICE (Room Rates) 1. Obtain the most recent month's financial statements and management reports for hotel operations. Extract figures for monthly average occupancy, average room rate, and room revenue. Obtain explanations for material fluctuations from budget. 2. Obtain the updated hotel comparison analysis maintained by the hotel director and compare hotel performance with competitor and industry averages. Obtain explanations for material deviations for room rates and what is being charged by competitors for the same period. Determine whether management explanations are reasonable and attach a summary to the working paper. 3. Inquire how room rate maintenance is performed and updated in the front office reservation system, and how overrides are changed, controlled, and deleted. In summary form, prepare the observations and document observed control weaknesses in the working papers. FRONT OFFICE (Reservation System) 1. Obtain the daily reservation report and determine that there is evidence of review by the reservation/front office manager of entries keyed in by the reservation clerks — in particular the room rates quoted to customers. 2. Test 10 of the quoted room rates in the daily reservation report to the reservation forms. Ensure the reservation forms or computer entries are signed by the reservation clerk, or that some other documentation exists. Also, ensure that proper reservation forms are prepared for all reservations made. 3. Inquire from the credit department how customers' credit limits/credit standings are taken into account when accepting reservations for hotel rooms. 4. Check the reservation file to ensure that written confirmation is received for travel agent guests — telex, fax, or e-mail form — and attached to the reservation form, documenting any noncontracted rates extended to the
950 agents/guests. 5. Compare a sample of 10 suspended credit limit correspondence memos to the reservation system to ensure that all suspended accounts are updated into the system. REVENUE AUDIT (Daily Audit) 1. Using a revenue audit checklist, observe one daily hotel audit performed by the revenue audit staff. Compare your observations to their approved, written checklist and document variations in memo form to the working paper. 2. Choose three days of daily revenue audit packets for the hotel revenue audit. Obtain vouchers for all revenue adjustment transactions — that day's voids, nonguest paid outs, guest paid outs, previous day corrections, and refunds — and trace total voucher amounts to the final revenue detail report to determine if all adjustments are supported by vouchers. If vouchers do not balance, document procedures for daily balancing. 3. Review vouchers for propriety, proper completion — including guest name, room or account number, date, amount, adequate explanation, name of preparer, and approval. Refund vouchers and guest paid outs should include the guest signature. Paid outs should be supported with a receipt. Trace 10 percent of the vouchers for each day tested to the folio to ensure that the account was affected properly. 4. For the three days tested, trace totals to the general ledger. 5. Review tax documentation to determine that tax rates are appropriate for the following areas: Room service delivery charges, banquet service charges, package plans, and mandatory restaurant service charges. 6. For any exceptions prepared by revenue audit for the three days tested, ensure that management responded properly.
951 REVENUE AUDIT (Contracts) 1. Obtain the contract between the hotel and the pay TV provider. Include a copy of commission terms and discuss procedures used by management to ensure pay TV revenue is recorded on the financial statements. Research and document any concerns that arise during this testing. 2. If the property has an "on command" video or other system with a percentage commission due the hotel, review last two months' invoices to determine if the commission received complies with the contract, and the amount remitted was properly calculated prior to payment. Research and document any concerns that arise during this testing. 3. Review lease/rental agreements, if any, for hotel space. Determine that the recorded revenues agree to the terms specified. Include copies of applicable lease documents in working papers. REVENUE AUDIT (Accounts Receivable) 1. Review the current accounts receivable (A/R) aging report. Select at least 25 accounts and determine whether or not all categories of receivables are adequately covered. Heavier concentration should be placed on old and unusual items. The total amount selected for testing should be between 15 percent and 20 percent of the city ledger. Test for the following: • Agreement to supporting documentation, either on file with the applicable folios, banquet checks, and other related documents, or to online billing. • Initial billing date is timely, based on check-out date. • Consistent documentation is maintained of collection efforts and approved direct bill authorization. • Unusual items are reasonable (e.g., credit balances, returned checks, skip accounts, one company with balance in several different categories.) 2. If material, or if unusual items are noted, test for proper controls, including review of the high balance report and Telecheck procedures. 3. Trace the total of the aging report to the general ledger and the A/R recap report.
952 4. Review write-offs, and if material, review selected write-offs for adequate support, proper collection efforts, proper approval, and reason for write-off. Be alert to consistent causes (e.g. front desk personnel failure to follow established hotel policies). CASH and CHECKS Obtain the mail check-register log for the last two-week period. Trace all hotel checks received to the bank-certified deposit slip and to the respective posting to the general ledger. Review the mail check register log to ensure: • Proper segregation of duties exists among the employee who opens the mail and logs the checks, the person who deposits the items to the bank account, and the person who posts the checks received to the A/R ledger. • Copies of logs are filed chronologically for proper recordkeeping purposes. Perform a surprise cash count on two open hotel cashier drawers. Include a copy of the surprise count sheet with the working papers. Investigate material variances. Review and count the petty cash voucher box to ensure proper balancing. Ensure that appropriate backup documentation exists in the bank for petty cash activity. HOTEL LAUNDRY Verify that billings from the laundry contractor are checked to delivery/service records provided by the contractor, and unit prices are agreed to the services agreement with the contractor. Ensure the delivery/service record is verified by hotel staff. Trace a sample of laundry contractor billings to guest billings for laundry services. Trace guest billings to the daily sales transactions report or similar document,
953 and the guest ledger to ensure that revenue has been captured in the accounts. Ensure that "free of charge" laundry services, if any, outside of the ordinary linen provided to guests, staff, and outside parties (e.g. entertainers) are in compliance with hotel policies and procedures. Document other observations and concerns regarding the laundry operation within the facility. ADVANCE DEPOSITS AND REFUNDS 1. Select one month's advance deposit account activity and obtain a copy of the general ledger transactions. 2. Trace a block of 10 refund payments to accounts payable vouchers and verify the following: • Refund is supported by copy of deposit ticket. • Refund was for correct amount. • Refund was payable to the correct payee. • Refund is listed on transaction list used to update master deposit listing. • Refund is for a reservation cancelled in advance. • Endorsement on cancelled check agrees with the name of the payee. 3. For deposits applied at the front desk, main cage, vault, or mail receipts, agree a sample of 10 transactions in the most recent month to the general ledger. 4. Trace the check to a bank deposit slip. 5. Obtain a copy of the guest folio and verify the deposit was applied to the correct guest's account. 6. Review the general ledger control account for any adjusting journal entries to the advance deposit account and explain the nature of adjustments. 7. Obtain a copy of the finance department's reconciliation of the advance deposit account and determine that all reconciling and outstanding items are reasonable. 8. Determine if there are stale items in this account that should be written off. HOTEL COMPLIMENTARY ITEMS Obtain a copy of the current master complimentary (comp) list reflecting who can approve complimentary services. Verify that: • Employees listed are currently active employees.
954 • Comp privileges authorized for the individuals listed were approved by senior management. Check a sample of documentation to validate the employees' level of authorization. Select the most recent month of complimentary activity for detail testing and perform the following: • Review transactions in the comp clearance account. • Agree entries to applicable journal entries and indicate purpose of such entries. Select one day's transaction report and obtain comp charges for the day. Agree actual comp charges to transaction total. Review each comp folio and verify the following: • That comp is supported by documentation signed by an employee who is authorized to comp at that level. • That charges authorized for comp are according to policy (i.e., a comp room should not include food and beverages if not authorized as such). For complimentary food and beverage (F&B) charges posted to the complimentary master folio at the front desk — the customers' hotel account for the period of their stay — agree the actual restaurant charges to the folio and verify that the comp is signed by an employee who is authorized to comp at that level. Obtain a copy of the daily complimentary worksheet for the date being reviewed and perform the following steps: • Reconcile the total charges shown on the worksheet to the transaction total and F&B recap totals. Explain any variances or reconciling items. • Verify that information shown on the comp worksheet agrees with the applicable comp folio and are posted into the proper category. Obtain the month-end comp worksheet and perform the following steps: • Verify computation of total comps, tax adjustments, and net comps for the month. • Trace total to the comp clearing general ledger account. • Trace tax adjustments to related tax accounts.
955 Determine how comp charges are handled for computing room tax and document procedures in the work papers: • Verify that procedures being followed are in compliance with applicable tax regulations. • Test computation of related tax adjustments to determine if the method used is reasonable. Food and Beverage Revenue Audit Checklist 1. System Documentation • Document the procedures of the F&B revenue cycle for the following: - restaurant (specialty/à la carte) - restaurant (buffet) - breakfast - lounge service - banquet & conference - bar beverage sales - room service • Evaluate the adequacy of controls. • Ensure there is a designated restaurant cashier and that guest billing is mechanised.
956 2. Guest Orders/Captain Orders • Ensure there is proper control over the guest or captain orders. • Ensure that the guest or waiter orders are serially numbered, matched to the respective guest bill and are properly accounted for at the end of each shift. • Determine whether the guest order is rubber-stamped by the cashier before forwarding to the kitchen or bar to dispense the food and/or beverage. Ensure no goods are issued until the chef or barman is in receipt of guest order/waiter order stamped as received by the cashier. 3. Guest Bills • Check the guest bills to the respective guest order and the menu price of the items ordered. Ensure accuracy of billing. • Determine the procedures for posting bills to guest room charges. • Determine whether the POS system is linked to the hotel system. 4. Buffets & Lounge Service • Ensure the guest orders are controlled by the host or cashier as opposed to servers. • Ensure the number of covers and table number is recorded on the guest order prior to seating guests. • Ensure the guest orders are settled by the Cashier. • Ensure that the guest orders are serially numbered, matched to the respective guest bill and are properly accounted for at the end of each shift. 5. Bars • Perform a bar observation when you first arrive on property, observe the following: - Checks are presented to guests after the order has been recorded in the register and prior to payment.
957 - Room key or credit card is obtained from guests running a tab 6. Room Service • Ensure that the waiter’s dockets recording room service orders are serially numbered and properly controlled. • Ensure the waiter’s dockets contain critical details like room number, description and time of service and guest’s signature. • Ensure the waiter’s dockets are matched to the food release docket from the room service kitchen and are properly accounted for at the end of each shift • Test check the billings and ensure they are charged correctly to the respective guest. 7. Voids • Observe and document the security of POS manager's keys for processing voids. (i.e., key is not left in register, kept in drawer at register, etc.). • If key controls are lax, expand testing by performing the following: Obtain the final register reports for two days with voids and perform the following: - Trace the void total per the final reports to the actual void checks. Sight evidence of management review. • Review void tickets to ensure voids are adequately explained. 8. Banquet & Conference • Review the reservation procedures. • Ensure detail banquet instructions lists are prepared prior to each function. It should include the following: - weekly list of functions for staffing purposes and F&B orders; - daily list giving details of locations of functions, type of function, the numbers attending and the manager dealing with each function; - house list circulated to personnel dealing with items such as special lighting,
958 microphones, table linen, overhead projector etc. • Select 2 banquets and review the correspondence between the hotel and the banquet organiser noting the agreement of date, start and finish times, number and price per person plus any fixed charges. • Ensure the events were recorded on the Functions Diary with the above details together with an analysis of the facilities required. The entries in the diary should have an authorising signatues. • Each banquet should have a file where copies of the requisitions from the relevant store is kept. The quantities should be reconciled that recorded on the Functions Diary. • Review the usage of casual labour and the number of full-time or part-time staff deployed for the banquet. Review the reasonableness. • Check the correctness of billing. 9. Sale Of Swill (food scrap) • Determine how swill are handled. • Evaluate the adequacy of control. Food and Beverage Cost Audit Checklist 1. Purchase a Quotation • Ensure vendors selected are approved by management. • Ensure vendor list is periodically reviewed by management. • Ensure purchase request is properly approved by user department.
959 • Check quotations are obtained from vendors according to corporate policy (monthly/quarterly/half-yearly update of price). • Match quotations with price comparison list. • Ensure vendors are selected based on quotations submitted and, more importantly, on vendor’s past performance. • Ensure quotation selected is approved by purchasing manager. • Ensure cost plus vendor is approved by financial controller and general manager. b. Purchase Order • Match purchase order to supporting quotation to ensure corporate policy on selection of vendor is followed. • Ensure management has checked the estimated inventory level does not exceed the maximum inventory level. If exceeded, customer order is needed to support the purchase. • Check estimated inventory level to past utilization rate to ensure no over purchase. • Ensure that there are detailed recipes to facilitate efficient ordering. • Ensure purchase orders are properly authorized by management according to authority level. 2. Receipt • Check goods received are supported by approved purchase order. • Ensure goods received are properly inspected for quality and quantity/net weight by Receiver. • Check goods received to ensure expiry date of product is acceptable. • Ensure fresh/frozen/chilled food items received are marked with receipt date to alert kitchen staff of potential usage period.
960 • Match invoice details to goods received. • Check casting of invoice. • Check posting to receiving report, inventory ledger and/or accounts payable/general ledger. • Ensure goods rejected are returned to vendor with credit note issued. 3. Storage • Ensure the method and place of storage is appropriate for the item. • Evaluate that the storage area is secured from pilferage. • Ensure the shelves are strong enough for the product, allow air circulation and easy to clean. • Ensure all items are stored at an appropriate temperature appropriate for the product. • Determine whether the storage area is clean and orderly. 4. Usage • Ensure issues for storeroom are supported by approved stock requisition. • Perform yield test for high cost food items to ensure actual utilization rate as compared to standard utilization rate is acceptable. • Ensure bottles and sales slips for high cost beverage items are returned to storeroom to exchange for new issues of beverage. Empty bottles must be destroyed by store personnel to avoid duplicate issue of beverage. • Ensure portion control is properly exercised. • Check wastage to ensure no saleable portion is abandoned. • Ensure voided orders are not served to customers. • Review monthly wastage to ensure wastage (in amount and in percentage) is acceptable.
961 5. Cost • Ensure recipe and menu cost control is prepared timely and updated every six months by Head Chef. • Ensure accurate costing before menu price is finalized. • Ensure all food and beverage portion/serving sizes are established in conjunction with costing and pricing of menus. Observe what comes back from the guests to determine whether the portion is appropriate. • Ensure free pouring is properly monitored. • Check food and beverage cost only includes costs incurred for revenue generating activities. Costs incurred for non-revenue generating activities (i.e. duty meal and entertainment) are treated in accordance with the nature of the activity. • Ensure food cost percentage and beverage cost percentage, as compared to budget and/or last year performance, is reasonable. For significant fluctuation, explanation is required. • Ensure weekly food and beverage cost report has been prepared for timely control of food and beverage cost. • Ensure management has reviewed the monthly and year-to-date food cost percentage and beverage cost percentage.
962 HOTEL BEST PRACTICES PHYSICAL ASSETS Use physical security protection measures such as locks on premises, the use of security cameras and retaining a security service Keep smaller valuables in a safe Lock small but valuable items to desks Provide access codes to employees on a need to know basis Maintain an asset register with all relevant details of each asset Perform a regular asset register audit Take out appropriate insurance coverage Review insurance coverage details regularly IT SYSTEMS AND DATA SECURITY Use passwords to limit access to business records Change computer passwords regularly Install firewalls, anti-virus software and other protective devices on computers Develop written policy guidelines on personal use of IT equipment FINANCIAL DATA INTEGRITY Use sequentially numbered business forms (such as on checks, sales orders, invoices etc.) to provide an audit trail Perform reconciliation of accounts regularly Develop automated controls such as valid date ranges or dollar value limits Implement budget and cash flow projection reports and a regular comparison of budgeted against actual figures and investigate any significant discrepancies Segregate the duties involved in financial transactions such as ordering, recording and paying for purchases Assign particular responsibilities to particular people Institute supervisor level checking of financial records Build in validation checks to processes, for instance checking invoice totals against the individual items on the invoice to ensure correctness
963 Carry out exception routines such as spot checks or reviews Develop a hierarchy of spending level approval authority Rotate duties involved in financial transactions and recording such as petty cash and receipting Keep sufficient financial record details to provide useful management information e.g. double entry bookkeeping Maintain books and records up-to-date and balanced Ensure employees with financial functions take their annual vacations Develop a records retention schedule ACCOUNTS RECEIVABLE Develop and document a credit approval/balance limit policy; include information on who must authorize new applications Conduct credit checks on new credit customers Develop an aged accounts procedure that includes regular reporting and follow up on aging accounts Record credit purchases as soon as the transaction occurs Keep the duties involved in accounts receivable separate from cash receipting Have transactions such as non-cash credits and write off of bad debts cross checked Review credit balances on a regular basis Use numerical or batch processing controls over billing Cross check early payment discounts and penalties on overdue accounts Ensure mailing of accounts cannot be tapered with and Separate mailing duties from statement preparation duties Prepare trial balance of individual accounts receivable regularly Reconcile trial balances with general ledger control accounts ACCOUNTS PAYABLE Develop and document a purchasing and accounts payable procedure including authorization levels and any price comparison requirements prior to purchase Pay on original invoices only to avoid duplicate payment
964 Mark paid invoices to prevent resubmission or double payment Set payment amount authorization permissions Separate the duties of handling refund checks from suppliers from invoicing duties Check invoices from suspect sources e.g. businesses with only a post office box address Separate the duties of approving new suppliers from responsibility for payment of their invoices Check the record of supplier billing each month and investigate any suspicious activity e.g. rapidly increasing purchases from one vendor Carry out random checks of the invoices of individual suppliers Investigate invoices for poorly defined services e.g. listing the business in a directory Develop a process that brings together the purchasing order and receiving reports, along with the check for payment, for review before signature Develop a procedure that ensures direct shipments to customers are properly billed to them SALES Develop and document a pricing and discounting policy including authorisation to vary rules Check sales figures against their individual source such as invoices If salespeople work on commission ensure that their sales figures are valid Don’t pay commissions to salespeople until monies are received Reconcile sales register records with cash takings and credit card receipts Dispatch goods COD or with a copy of the invoice Require evidence of delivery Record orders on pre-numbered forms Compare sales invoices to shipping documents before dispatching Record sales invoices promptly Have customer complaints handled independently of the sales department HANDLING CASH AND CHECKS Keep check books in secure storage Use pre-numbered checks