HOTEL AUDIT PROGRAMME

SCOPE OF AUDIT WORK IN RESPECT OF HOTELS/RESTAURANTS

INTERNAL CONTROL
A.
I.
a)
b)
II.
a)
b)
c)
d)
e)
f)
g)
III.
a)
b)
IV.
a)
PARTICULARS
REVENUE
ROOM REVENUE
Checking of guest main bills with efeence to
ai!al"de#atue egiste$ taiff$ occu#anc% e#ot & le!%
of e'#enditue ta' and lu'u% ta'
Checking of discounts and allowance with efeence to
delegation of #owes as well as fom #o#iet% angle.
FOOD & BEVERAGES
Checking of ()* sales bills with efeence to menu
ates and le!% of sales ta'
Checking of dail% sales summaies with efeence to
()* sales bills and cash tendeed at (ont +ffice.
Checking of chage !ouches with efeence to dail%
sales summaies and guest main bills.
Checking of ()* cash and chage !ouches with ,+Ts
Checking of *-S sales with efeence to consum#tion
Scutin% of Intenal checks"contols fo ade.uac%
Re!iew of e'isting menu ates whethe ates ae aised
in accodance with cost of #oduction.
BANQUETS:
Checking of *an.uet bills with efeence to function
foms acknowledged b% the #aties$ ates chaged in
accodance with #escibed ates ageed ates in
accodance with delegation of #owes including chage
of sales ta' and e'#enditue ta' checking of bills with
*an.uet ,+Ts and #osting of bills into bill egiste.
Scutin% of intenal checks" contols fo ade.uac%
LICENCE FEE /
Checking of bills aised on licencees with efeence to
ageements including chage of electicit% whee!e
a##licable.
C+0T10T +(
C21C,I03
R14AR,S
b)
c)
V.
a)
b)
c)
*.
I.
a)
i)
ii)
iii)
b)
i)
ii)
iii)
i!)
!)
!i)
c)
d)
Scutin% of indi!idual licence files fo ascetaining
whethe laid down #ocedue fo allotments of s#ace
ha!e been followed including fi'ation of licence fee.
Re!iew of dis#uted cases of eco!e% of licence fee and
action taken.
MISCELLANEOUS RECEIPTS /
Swimming #ool
,abai Sales
Tele#hone etc.
-ith efeence to guest main bills aised.
EXPENDITURE :
OPERATIONAL EXPENDITURE /
Consum#tion of Po!ision ) *e!eages /
,itchen consum#tion egiste & checking of ecei#ts
fom the main stoes and consum#tion with efeence to
sales.
*a stock5cum5consum#tion egiste & with efeence to
#icking sheets and ecei#ts of ba items fom the main
stoes.
Com#aison of monthl% *-S and ciga and cigaettes
cost with laid down standads and cost in othe hotels.
1m#lo%ees emuneation and benefits /
Sala% bills with efeence to attendance and lea!es
ecods and #esonnel files etc.
Pa% fi'ation in es#ect of #omotion cases
Pa%ment of 6A whethe in accodance with odes on
the sub7ect
4edical benefits in accodance with ules famed b%
2.s.
Pa%ment of bonus in accodance with *onus Act o
othe odes of the 4anagement.
+!etime allowance & anal%sis fo suggestions$ if an%.
Powe and (uel & Pa%ment with efeence to the bills$
consum#tion of fuel as #e ecods & suggestions if an%$
on sa!ings in electicit% and fuel.
Re#ais ) 4aintenance & Pa%ment with efeence to
bills e!iew of consum#ti8on of mateials"stoes5
contacts awaded fo R)4 to outside #aties with
efeence to laid down #ocedues & Com#aati!e stud%
of R)4 cost with othe hotels.
e)
f)
i)
ii)
iii)
g)
h)
i)
II.
C)
a)
b)
c)
d)
e)
6.
a)
b)
U#5kee# se!ice cost & #a%ment with efeence to bills.
2ouse ,ee#ing /
Re!iew of stock5cum5consum#tion egiste and linen
and blanket egiste with efeence to ecei#ts and
consum#tion.
Re!iew of consum#tion of !aious stoes items with
efeence to ooms and ()* sales.
Scutin% of #ocedue followed fo wite5off of linen and
blankets.
-ite5off and *eakages & Scutin% of s%stem followed
fo wite off and beakages of cocke%$ cutle%$
glasswae and kitchen utensils & whethe egiste is
maintained 9a##o!ed wite off noms & see #age 0o. :)
Tele#hone ) Tele' 1'#enditue & Re!iew of e'#enditue
on tele#hone and tele' etc. !is5a5!is income alongwith
intenal check"contols and suggestions fo futhe
contols if an%.
6ecoation and flowes & Reco!e% fom guests and
#a%ment to su##lies e!iew.
ADMINISTRATIVE EXPENDITURE /
TA$ 6A ) Con!e%ance$ #inting and statione%$ #ostage$
telegam$ tele#hones and tele'"fa'$ ad!etisement$
#ublicit% and sales #omotion$ entetainment 9with
efeence to #escibed noms). Running )
maintenance of !ehicles$ bank and music$ e'#enses on
cultual shows including income$ commission to ta!el
agents etc. with efeence to #a%ment !ouches etc.
STORES AND PURCHASE /
Scutin% and e!iew of #uchase cases with efeence to
laid down Puchase and Stoe Pocedue manual and
delegation of #owes.
Checking of stoes ledges with stoes ecei#t !ouches
and issue !ouches alongwith authoit% e.uisitioning
the stoes and coss checking of ecei#ts with secuit%
ecods.
Re!iew of old"obsolete and su#lus stoes and action
taken fo tansfe to othe units whee e.uied o
dis#osal.
Re!iew of minimum$ ma'imum and ecoding le!el fi'ed.
Re!iew of o!eall in!ento% #osition and suggestions fo
educing the in!ento% if an%.
SUNDRY DEBTORS OUTSTANDING /
Checking of #osting of guest main bills into #aties
accounts in the cit% ledge with efeence to 1*R.
Re!iew of outstanding #eiod wise
c)
d)
e)
f)
1.
a)
b)
(.
3.
a)
b)
c)
d)
e)
f)
g)
h)
i)
7)
k)
2.
Re!iew of cout cases and follow u# action
Re!iew of old outstanding consideed non5eco!eable
fo wite5off
Re!iew of oustandings with efeence to authoit% lettes
of customes.
Re!iew of unlinked cedit balances and #ossibilit%"ste#s
fo ad7ustments against debit balances.
ENGINEERING AND OTHER CONTRACTS /
Re!iew and scutin% of contacts awaded with
efeence to delegation of #owes and whethe
#escibed #ocedues ha!e been followed.
Re!iew of dismantled"su#lus mateial and its dis#osal "
tansfe to othe units whee e.uied.
FUND FLOW /
Re!iew of funds flow statements with actual collection
and utilisation of funds and suggestions$ if an% fo
ma'imising etun"tansfe of funds to 2.s.
BOOKS OR ACCOUNTS AND MONTHLY REPORTS /
Re!iew of #osition of maintenance of *ooks of Accounts
and suggestions fo u#dating.
Re!iew of monthl% tial balance
Re!iew of 4anagement infomation s%stem e#ots fo
accuac%
Re!iew of sub5ledges fo ad!ances with 3eneal
Ledge fo econciliation.
Reconciliation of Cit% ledge with 3eneal Ledge.
Re!iew of #eiodical inte5unit balances econciliation.
Re!iew of *ank econciliation statements.
Re!iew of Cedit balances of Customes$ Contactos$
su##lies and em#lo%ees fo ad7ustments.
Re!iew of outstanding liabilities fo ad7ustments.
Re!iew of ad!ances and thei ad7ustments"ealisation.
- against staff fo #uchases
- against staff fo sala%"festi!al"moto
ca"scoote"c%cle" ad!ances etc.
- against su##lies
- against contactos etc.
Scutin% of 3eneal ledge fo e.uied ad7ustments.
INSURANCE
a)
b)
I.
Re!iew of !aious Insuance co!es taken fo thei
ade.uac%
Re!iew of Insuance claims lodged with the Insuance
Com#anies and follow u# action.
S1CURIT; /
a) Re!iew of 2otel #o#et% etunable egiste and
non5etunable egiste with efeence to gate
#asses
b) Re!iew of goods incoming egiste.
Re#ot of deficiencies and suggestions fo emedial
measues.
Im#lementation"follow u# action
SAMPLE AUDIT PROGRAMME CHECKLIST
Client: ______________________ Schedule No: ______________
Audit Period: _________________ Date: _______________________
AUDIT OF FIXED ASSETS
Audit Objectives
1. Fixed assets, recorded in books, are actually in existence, owned by the entity and are
used in oerations.
!. No unrecorded "ixed asset is in existence.
#. Fixed assets sold, abandoned, or otherwise disosed o" ha$e been eli%inated "ro%
the "inancial state%ents. Fixed assets, retired "ro% acti$e use and held "or disosal,
ha$e been stated at the lower o" their net book $alue and net realisable $alue and are
shown searately in the "inancial state%ents.
&. Subse'uent a%ount sent on existin( "ixed assets ha$e been caitalised only in a
case where it increases the "uture bene"its "ro% the asset beyond its re$iously
assessed standard o" er"or%ance, e.(., where it increases the caacity.
). *aluation o" "ixed assets is aroriate keein( in $iew the (enerally acceted
accountin( rinciles and these rinciles ha$e been consistently alied.
+. All the assets obtained on "inance lease, on or a"ter 1
st
Aril, !,,,, are reco(nised as
assets in the "inancial state%ents as er Accountin( Standard -AS. 1/, 0eases, issued
by the 1nstitute o" the Chartered Accountants o" 1ndia. 2eratin( lease rentals ha$e
been aroriately char(ed as an exense o$er the li"e o" lease.
3. Any i%air%ent in the $alue o" "ixed assets has been aroriately reco(nised in the
"inancial state%ents.
Audit Procedures

1. 4race and $eri"y oenin( balances o" "ixed assets "ro% re$ious year audited
"inancial state%ents.
!. 5e$iew si(ni"icant exenditure related to "ixed assets incurred durin( the year to
ensure that the exenditure incurred on urchase o" new "ixed assets has been
roerly caitalised.
#. 2btain a list o" "ixed assets disosed o" durin( the eriod and $eri"y co%utation o"
ro"it6loss, i" any, on the sa%e on sa%le basis.
&. *eri"y that the ite%s o" "ixed assets, retired "ro% acti$e use and held "or disosal,
ha$e been stated at the lower o" their net book $alue and net realisable $alue and are
shown searately in the "inancial state%ents. Also $eri"y that any exected loss has
been reco(nised i%%ediately in the state%ent o" ro"it and loss.
). 7nsure that dereciation on "ixed assets has been char(ed at the rates which are not
lower than the rates rescribed in alicable statute, i" any, to the enterrise, e.(.,
rates rescribed in Schedule 81* to the Co%anies Act, 1/)+, would be rele$ant "or
the co%anies re(istered under the Act.
+. 1n case dereciation on "ixed assets has been char(ed at rates hi(her than those
rescribed in the alicable statute on the (rounds o" lower use"ul li"e, the reort o"
the technical exert %ust be $eri"ied.
3. Per"or% analytical re$iew rocedures on co%utation o" dereciation on %a9or "ixed
assets as also on use"ul li"e o" the assets.
:. *eri"y that the "ixed assets re(ister has been duly %aintained and udated on re(ular
basis. Further, $arious balances aearin( in the "ixed asset re(ister should be
reconciled with the books o" account.
/. Physical $eri"ication o" $arious "ixed assets should be carried out and discreancies
noticed, i" any, should be roerly analysed and reconciled.
PROFIT AD LOSS ACCOUT
Audit Objectives
1. All the ite%s o" re$enue and exenses ha$e been roerly recorded and reco(nised.
!. Proer ad9ust%ents ha$e been %ade "or exenses accrued 6 outstandin( at the year;
end and "or the reaid exenses.
#. Proer ad9ust%ents ha$e been %ade "or inco%e accrued at the year;end and "or the
inco%e recei$ed in ad$ance.
&. Ade'uate ro$ision has been created "or exected un;collectable ortion o" debtors
and the indi$idual ite%s ha$e been char(ed o"" on beco%in( un;collectable.
). 5eco(nition, %easure%ent and disclosure re'uire%ents laid down in $arious
ronounce%ents o" the 1nstitute o" the Chartered Accountants o" 1ndia ha$e been duly
co%lied with.
Audit Procedures
Sales and Purchase Accounting
1. Per"or% walk;throu(h tests to exa%ine the syste% o" accountin( and internal control
with re(ard to sales and urchases.
!. 1denti"y and test controls on which reliance is to be laced.
#. 1n case accountin( and6or internal control syste% has under(one a chan(e durin( the
year, re;er"or% tests as stated in -1. and -!. abo$e to the extent re'uired and
docu%ent the sa%e.
&. Aly necessary tests on the syste%s and controls, desi(ned to re$ent errors and
"rauds, to obtain the desired le$el o" con"idence. 1n case the desired le$el o"
con"idence cannot be obtained by alyin( these tests, its i%act on the accounts and
audit %ust be ascertained and the auditor should consider alyin( the additional
tests.
). Deter%ine si(ni"icant $ariances "or %a9or heads o" re$enue and exenditure $is;<;$is
the bud(et "i(ures and the corresondin( "i(ures "or the re$ious year.
+. 1denti"y unusual ite%s o" re$enue and exenditure in the ro"it and loss account.
3. Ascertain6obtain reasons "ro% the %ana(e%ent "or such $ariances and unusual ite%s
and these reasons should be roerly docu%ented.
:. 2btain corroborati$e e$idence "or %ana(e%ent=s exlanations o" si(ni"icant %atters.
Analytical Review of Individual Items
/. Co%are %onthly roo% rent re$enue with the bud(eted a%ount and with the re$enue
"or the corresondin( %onth o" the re$ious year6eriod.
1,. Co%are %onthly roo% rent re$enue with the re$enue co%uted on the basis o"
industry trends and occuancy rates "or the %onth.
11. Carry out a (lobal check on the roo% rent re$enue by considerin( industry occuancy
rates -articularly in that %arket se(%ent. and the roo% rates char(ed by the hotel.
1!. 2btain necessary in"or%ation and exlanations "ro% the %ana(e%ent "or %a9or
$ariances, i" any, and ensure that all in"or%ation and exlanations "or $ariances are
consistent with the rele$ant a$ailable in"or%ation.
1#. Co%are and analyse %onthly relationshi o" "ood and be$era(es re$enue with roo%
rent re$enue besides co%arin( actual "ood and be$era(e re$enue with bud(eted
re$enue and re$enue "or the corresondin( %onth in re$ious year.
1&. *eri"y reasonableness o" ban'uetin( inco%e by co%arin( the sa%e with the inco%e
"or the corresondin( re$ious eriod and the bud(eted inco%e. Any %aterial
$ariances should be roerly analysed and in$esti(ated.
1). Assess reasonableness o" interest recei$ed and interest aid by co%arin( the sa%e
with the interest co%uted on the basis o" the a$era(e balance outstandin( and
alicable rates o" interest. Further, ensure on test basis that interest has been
recei$ed and aid at rates contracted and co%utation o" interest should also be
checked on sa%le basis.
PA!ROLL

Audit Objectives
1. A%ounts outstandin( at the year;end as also the a%ounts aid in ad$ance ha$e been
recorded and roerly ad9usted in the "inancial state%ents "or the eriod.
!. A%ounts recorded as ayroll exenses accurately reresent the $alue o" ser$ices
recei$ed by the entity.
#. Allocation o" $arious exenses to assets, exenses, and other accounts has been done
correctly on reasonable and e'uitable basis and alied consistently.
&. Accountin( rinciles alied to $arious e%loyee bene"it costs includin( health
care, ension and other ost;retire%ent bene"it costs are aroriate keein( in $iew
$arious ronounce%ents o" the 1nstitute o" the Chartered Accountants o" 1ndia such
as Accountin( Standard -AS. 1), Accountin( "or 5etire%ent >ene"its in the Financial
State%ents o" the 7%loyers. 1t should also be ensured that the accountin( rinciles
ha$e been aroriately disclosed in the notes to the "inancial state%ents.
Audit Procedures
Accounting System and Internal Control
1. Per"or% walk;throu(h test to exa%ine accountin( syste% and internal control with
re(ard to ayroll.
!. 1denti"y and test controls on which reliance is to be laced.
#. 1n case accountin( and6or internal control syste% has under(one a chan(e durin( the
year, re;er"or% tests as stated in -1. and -!. abo$e to the extent re'uired and
docu%ent the sa%e.
&. Aly necessary tests on the syste%s and controls, desi(ned to re$ent errors and
"rauds, to obtain the desired le$el o" con"idence. 1n case the desired le$el o"
con"idence cannot be obtained by alyin( these tests, its i%act on the accounts and
audit %ust be ascertained and the auditor should consider alyin( the additional
tests.
). 7xa%ine and re$iew the se(re(ation o" duties within the ayroll deart%ent and 7DP
deart%ent.
+. Carry out analytical re$iew o" ayroll costs usin( key er"or%ance indicators.
3. ?ake co%arison o" current year ayroll cost with the bud(eted cost as also with the
cost "or the re$ious year.
:. Aly trend analysis on ayroll cost incurred and bene"it recei$ed by the deart%ent.
/. Co%ute a ratio o" ro"it as a ercenta(e o" ayroll costs "or each deart%ent and
co%are the sa%e with the rior years as also with the industry standards.
1,. 2btain necessary in"or%ation and exlanations "ro% the %ana(e%ent "or %a9or
$ariances, i" any, noticed at stes 3 to / and ensure that all in"or%ation and
exlanations "or $ariances are consistent with the rele$ant a$ailable in"or%ation.
11. Check rele$ant docu%ents relatin( to "resh aoint%ents and "or resi(nations.
1!. 5e$iew ayroll sheets to identi"y unusual ite%s and si(ni"icant $ariances and obtain
exlanations "ro% the %ana(e%ent "or such unusual ite%s and $ariances.
1#. Analyse relationshi between casual labour cost and %onthly occuancy rate,
co%are the sa%e with re$ious year "i(ures and industry standards and obtain
exlanations "ro% %ana(e%ent "or si(ni"icant $ariances.
1&. *eri"y that ti%ely ay%ent o" ayroll related statutory dues such as tax deducted at
source, ro$ident "und, 7S1C, etc., has been %ade.
1). 5e$iew the correctness o" $arious calculations done by actuaries with re(ard to
retire%ent bene"its and ascertain reasonableness o" assu%tions used.
1+. 7xa%ine the "ollowin( docu%ents "or their rele$ance to the eriod under audit:
Contracts with unions
2ther e%loy%ent contracts
7%loyee bene"it lans
Post retire%ent bene"its.
STOCK "ERIFICATIO
1. 2btain a coy o" the stocktakin( instructions to ensure that these instructions are
ade'uate "ro% the control $iewoint and also ensure that these instructions ha$e been
duly co%lied with.
!. 1denti"y all stock locations to ensure the co$era(e o" all locations in the stocktakin(
rocess.
#. 1denti"y i%ortant ite%s "ro% the stock sheets and hysically $eri"y the%.
Discreancies noticed, i" any, should be roerly docu%ented.
&. Select certain ite%s o" in$entory on rando% basis and ensure that these aear
roerly in the stock sheets.
). 1denti"y i%ortant ite%s o" in$entory "ro% the stock led(er and con"ir% their
balances in the stock sheets.
+. Select certain ite%s o" in$entory "ro% the stock sheets -other than those co$ered
re"erred in ) abo$e. and trace their balances in the stock led(er.
3. 7nsure that the stock sheets are re"erenced 6 nu%bered in a %anner which ensures
their co%leteness.
:. 2btain details o" cut;o"" rocedures used on in$entories "ro% all docu%ents
ertainin( to %o$e%ent o" stocks.
/. 1denti"y any da%a(ed or slow 6 non;%o$in( stock, as also stocks in excess o" current
re'uire%ents.
STOCK "ALUATIO
1. 7nsure that the rinciles relatin( to $aluation o" in$entories stated in Accountin(
Standard -AS. !, *aluation o" 1n$entories, issued by the 1nstitute o" the Chartered
Accountants o" 1ndia, ha$e been duly co%lied with.
!. *eri"y that the rinciles relatin( to $aluation o" in$entories ha$e been "ollowed
consistently "ro% year to year, i.e., the $aluation rinciles "ollowed in the current
year are the sa%e as those "ollowed in re$ious year.
#. 1ndeendently deter%ine lower o" net realisable $alue and cost "or certain i%ortant
ite%s o" in$entory and ensure that their $aluation is correct.
&. Carry out an analytical re$iew on the $alue o" stock by co%arin( the sa%e with the
bud(eted $alue as also with the $alue o" in$entories at the end o" the re$ious year.
). 1n case si(ni"icant $ariances are "ound in the $aluation o" in$entories, cate(ory;wise
analytical re$iew %ust be carried out and reasons "or $ariances in $alue o" each
cate(ory %ust be ascertained "ro% the %ana(e%ent and roerly docu%ented.
+. *eri"y that aroriate ro$ision has been created on da%a(ed or slow6 non;%o$in(
stock, as also on stocks in excess o" current re'uire%ents.
DE#TORS
1. 7xa%ine the rele$ant records to ensure $alidity, accuracy and reco$erability o" debtor
balances.
!. 4he balances o" debtors shown in the schedules %ust be tallied with those shown in
the led(er accounts. Further, the total o" schedules %ust be tallied with the control
account o" debtors as aearin( in the led(er accounts. Any di""erences in this re(ard
should be clearly exa%ined and analysed.
#. 1n case o" si(ni"icant debtors, the corresondence and other docu%entary e$idence
%ust also be $eri"ied to ensure their $alidity and accuracy.
&. For lar(er balances, subse'uent realisations %i(ht also be $eri"ied.
). >ad debts written o"" or excessi$e discounts or unusual allowances should be $eri"ied
"ro% the rele$ant corresondence.
+. 5e$iew city led(er and "ront o""ice reconciliation "or the year and in$esti(ate any
unusual or si(ni"icant ite%s in the reconciliation.
3. 7nsure that year;end char(es %ade to (uests ha$e been ad9usted "or credit
notes6allowances (i$en in the next accountin( year.
:. 7xa%ine credit balances in Sundry Debtors Account and a"ter $eri"yin( correctness
thereo" ensure that these are (roued under creditors.
/. 2btain exlanations "ro% the %ana(e%ent with re(ard to doubt"ul debts and $eri"y
the sa%e with the corroborati$e e$idence a$ailable. Further, it should be ensured that
ro$ision "or doubt"ul debts is ade'uate.
1,. 2btain an a(in( analysis o" (uest balances to identi"y old debts in resect o" which
ro$ision has not been %ade, check all corresondence in relation thereto, and obtain
exlanations "ro% the %ana(e%ent be"ore decidin( uon whether a ro$ision ou(ht
to be %ade.
11. Assess the e""ecti$eness o" credit control@ the %easures taken to ensure credit;
worthiness o" the si(ni"icant debtor (rous such as cororates, tra$el a(ents and lon(;
stayin( (uests be"ore extendin( credits.
LA$S%STATUTES APPLICA#LE TO HOTEL IDUSTR!
1.#1 Aart "ro% the co%%on laws that are (enerally alicable to any business entity,
such as the 1nco%e;tax Act, 1/+1, the Co%anies Act, 1/)+ -i" the entity ownin(
the hotel is a co%any., and the labour laws, the "ollowin( statutes re'uire seci"ic
%ention as bein( alicable to the hotel industry:
7xenditure 4ax Act,
1/:3
Central Act For le$y o" tax on exenditure
incurred in certain hotels.
0uxury 4ax Act State Act For le$y o" tax on luxury ro$ided in
the hotel.
4he Pre$ention o" Food
Adulteration Act, 1/)&
Central Act For %aintenance o" hy(iene and
'uality o" "ood
Central 7xcise Act, 1/&& Central Act 7xcise duty on astries and cakes.
State 7xcise Act State Act State excise laws "or le$y o" excise
duty on li'uor.
Ser$ice 4ax -le$ied under
the Finance Act, 1//&.
Central Act For le$y o" tax on >an'uet Aall hire B
Mandap etc.
Shos and 7stablish%ents
Act
State Act For re(ulatin( the workin( o" the
hotels.
Sales 4ax Act State Act For le$y o" tax on sale o" "ood and
other (oods
Standards o" Cei(hts and
?easures Act, 1/3+
Central Act 4o establish standards o" wei(hts and
%easures.
ROOMS
!.1# 5oo%s (enerally constitute the bi((est source o" re$enue "or a hotel.
Aroxi%ately, +,D ; +!D o" the (ross re$enue o" a hotel co%es "ro% roo%
rent. Nor%ally, contribution "ro% this source o" re$enue co%es out to be %ore
than 3,D due to the low $ariable costs. 4he $arious oerations relatin( to
roo%s nor%ally are as "ollows :
Front 2""ice, includin( reser$ations
>ell;desk
Aousekeein(
Eeneral Ad%inistration
Fro&t O''ice
Reservations
!.1& Nor%ally, a searate erson "ro% the "ront o""ice is %ade resonsible "or
%akin( all ad$ance bookin(s6reser$ations. 5eser$ations %ay be %ade based on
direct in'uires "ro% the (uests or throu(h other di$erse sources such as tra$el
a(ents, reser$ation networks - in the case o" an enterrise oeratin( a chain o"
hotels., secretaries o" executi$es and throu(h sales and %arketin( deart%ent.
4he erson resonsible "or %akin( reser$ations nor%ally reares a list o"
bookin(s "or the next day, inter alia, statin( roo% rate to be char(ed, discount to
be allowed on the standard rate, billin( instructions, airort ick;u status and
exected date and ti%e o" dearture, etc. the list so reared is sent to other
deart%ents "or takin( necessary action at their end.
Filling of Registration Card
!.1) 7ach (uest is re'uired to "ill;u a re(istration card at the "ront o""ice. 4he
re(istration card nor%ally records the na%e and address o" the (uest, the
nationality, assort nu%ber -in case o" a "orei(n national., the arri$al date and
ti%e as also the exected dearture date and ti%e. 4he re(istration card is
re'uired to be si(ned by the (uest and a resonsible o""ice o" the hotel. A"ter
the (uest has "illed;in and si(ned the re(istration card, the roo% nu%ber allotted
to the (uest as also tari"" to be char(ed is "illed;in. 4he discount allowed to the
custo%er on the standard rate is also recorded on the re(istration card. 4he
discount (ranted to the custo%er can be either contractual or based on the
ne(otiations %ade across the counter. 4he arri$al o" custo%er is also recorded
in the (uest "olio o" the (uest led(er.
Intimation to other operating departments
!.1+ At the ti%e a roo% is sold, the "ront o""ice inti%ates the rele$ant details to the
housekeein( and other oeratin( deart%ents. 4he basic ob9ecti$e o"
inti%ation is to in"or% the other oeratin( deart%ents about the sale o" roo%
so that they (ear u to ro$ide the re'uired ser$ices. Chile inti%atin(, roo%s
with scanty ba((a(e, i" known, are hi(hli(hted.
Reconciliation of Guest Count as per the housekeeping department with Guest Folio
!.13 4he housekeein( deart%ent, which is resonsible "or the roer ukee o" the
(uest areas, %ore articularly roo%s, reares a (uest count reort atleast once
a day and sends a coy o" the sa%e to the Front 2""ice. 4he Front 2""ice is
re'uired to co%are the reort with the (uest "olio. 4he discreancies noticed,
i" any, between the two counts are re'uired to be duly reconciled, with a $iew to
ensure that there is no leaka(e o" re$enue. For exa%le, an extra bed
re'uisitioned a"ter check;in %i(ht (et recorded "ro% the housekeein( reort.
Report of Guests Checking !ut
!.1: 1t is a ractice in %ost o" the %ediu% and lar(e hotels to circulate a reort o"
(uest check;outs "or the next day to all oeratin( deart%ents. Such a ractice
is use"ul in ensurin( that all the char(es ha$e been osted to the (uest "olio
be"ore raisin( the "inal bill on the custo%er and, there"ore, reduces the chances
o" leaka(e o" re$enue.
ROOM RE"EUE
&.11 As stated earlier, roo%s are the lar(est source o" re$enue "or a hotel both in ter%s
o" (ross re$enue and in ter%s o" contribution. 4he %ethod o" checkin(6analysin(
roo% re$enue, there"ore, assu%es (reater si(ni"icance.
&.1! 0ettin( out o" roo% is usually recorded in %ore than one record, "or exa%le in
the (uest "olio, housekeein( deart%ent reort, etc. Nor%ally, %ore than one
erson is in$ol$ed in the rearation o" these records. 1n $iew o" this, the
ossibility o" %aniulatin( roo% sales is nor%ally less since in order to o%it a sale
"ro% the records it would be necessary to o%it the entry o" the (uest "ro% all
records. 1n lar(e hotels, %any ersons are in$ol$ed in %aintenance o" records
relatin( to roo% sales and, there"ore, intentional o%issions beco%e ractically
i%ossible, and unintentional errors or o%issions can be detected 'uickly.
&.1# 1" control rocedures exlained abo$e, are actually in existence and ha$e worked
roerly to the satis"action o" the auditor, he %i(ht not carry out $arious detailed
checks "or the audit o" roo% re$enue durin( the course o" the year. 1n such a case,
the auditor should aly $arious analytical re$iew rocedures "or $eri"ication o"
o$erall re$enue "ro% roo% rent. Chile alyin( analytical re$iew rocedures, it
should be noted that rent o" roo%s %i(ht $ary deendin( uon the con"i(uration
and location o" the roo%. 4he roo% rent char(ed "or the sa%e roo% %ay also
di""er "ro% custo%er to custo%er and "ro% season to season. Accordin(ly, it is "elt
that roer understandin( o" the roduct %ix o" the hotel would enable the auditor
to "ine;tune the analytical re$iew rocedures. For carryin( out an analytical
re$iew o" roo% re$enue, the "ollowin( rocedures %i(ht be alied (ain"ully by
the auditor:
a. Co%arison o" actual roo% rent re$enue with industry nor%s@
and
b. Fsin( the in"or%ation (athered on the roduct %ix to indeendently arri$e at
the roo% rent re$enue and co%arin( the sa%e with actual roo% rent.
&.1& Food and be$era(es inco%e (enerally %o$es in tande% with roo% rent re$enue,
since the resident (uests usually consu%e "ood and6or take drinks at the
restaurant6bar o" the hotel durin( their stay. For instance, a lar(e roortion o"
resident (uests ha$e their break"ast at the hotel. 4his relationshi between roo%
rent re$enue and "ood and be$era(es inco%e would be stron(er in case o" resorts
that are situated at laces away "ro% the city. City based hotels nor%ally also try
to attract custo%ers who are not stayin( at the hotel "or "ood and be$era(es. 4hus,
the relationshi between "ood and be$era(es inco%e and roo% rent re$enue %ay
$ary deendin( uon the tye o" the hotel.
&.1) 4he %ost i%ortant asect o" $eri"ication o" "ood and be$era(es inco%e would be
the exa%ination o" serial control on aid and unused bills. Control on cash bills
can be exercised throu(h re$iew o" the cash su%%ary sheets containin( details o"
the sales "or a articular day6shi"t. 4he auditor could also aly surrise on;line
checks on the serial control. 4he said check %i(ht be alied either durin( the
day or while carryin( out audit on the sale o" the day that does not "all within the
audit eriod.
&.1+ Fnder the analytical re$iew rocedures, the auditor should re$iew the relationshi
between roo% rent re$enue and "ood and be$era(es re$enue on %onthly basis.
4he reasons "or any excetional relationshi between the two should be
deter%ined and roerly analyGed. 1n so%e cases, there %i(ht be so%e $alid
reasons "or chan(e in relationshi, "or exa%le, a disroortionate increase in the
"ood and be$era(es re$enue in the %onth o" Dece%ber could be attributed to
Christ%as and New Hear celebrations.
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