UNIT 3 POST DEPARTURE

The audit is a daily review of guest account transactions recorded at the front desk against revenue center transactions. This routine helps guarantee the reliability and thoroughness of front office accounting. The front office audit also includes active non-guest accounts. A successful audit will result in balanced guest and non-guest accounts, accurate account statements, appropriate account credit monitoring, and timely reports to management. An effective audit also increases the likelihood of correct account settlement. The front office audit is usually called the night audit because hotels generally perform it during the late evening hours. Before the implementation of automated front office systems, the most convenient time to perform the audit was during the late evening and early morning hours when front office auditors could work with minimal interruption. Also, most hotels have an accounting day or hotel day that defines the daily charging period of the hotel. The night audit closes the books on one hotel day and opens the books on another. 2 In a computer-based, fully automated front office, the audit is usually called a system update since computer files are electronically updated as part of the audit routine.

A) 1. Unpaid Account Balances:

Definition: Unpaid account balances refer to outstanding charges incurred by guests for hotel services or products that have not been settled within the specified payment period, typically at the time of check-out.

Importance:

Financial Stability: Unpaid balances directly impact the financial stability of the hotel, affecting cash flow and revenue projections.
Guest Satisfaction: Timely resolution of unpaid balances is crucial for maintaining positive guest experiences and preserving the hotel's reputation.
Legal Compliance: Proper management of unpaid accounts ensures compliance with legal and regulatory requirements governing debt collection practices.

Methods of Identification:

Accounting Systems: Hotel management systems automatically flag overdue accounts based on predefined criteria, such as payment due dates and outstanding balances.
Manual Review: Staff may manually review guest accounts to identify overdue balances, especially for guests with extended stays or frequent transactions.

Follow-up Procedures:

Communication: Hotel staff contact guests via phone, email, or mail to remind them of outstanding balances and request payment.
Payment Options: Guests are provided with various payment options, including online portals, credit card transactions, or in-person payment at the hotel.
Negotiation: In some cases, hotels may negotiate payment plans or settlements with guests to facilitate account resolution.

Resolution:

Payment Processing: Once payment is received, hotel staff process the payment and update the guest's account to reflect the settlement.
Documentation: All payment transactions and communication with guests regarding unpaid balances should be meticulously documented for auditing and legal purposes.

Challenges:

Guest Communication: Some guests may be unresponsive or unwilling to settle their balances, requiring persistent follow-up from hotel staff.
Legal Considerations: Hotels must adhere to legal and regulatory guidelines governing debt collection practices to avoid potential liabilities or legal disputes.
Disputed Charges: Occasionally, guests may dispute charges, necessitating thorough investigation and resolution to ensure fairness and accuracy.

Record-keeping and Reporting:

Account Records: Detailed records of unpaid account balances, communication with guests, and payment transactions are maintained in the hotel's accounting system.
Reporting: Regular reports are generated to track the status of unpaid accounts, monitor collection efforts, and analyze trends in overdue balances over time.

Integration with Accounting Systems:

Automation: Unpaid account balances are seamlessly integrated into the hotel's accounting system, allowing for automated tracking, reporting, and resolution of outstanding debts.
Efficiency: Integration streamlines the collection process, reduces manual errors, and ensures consistency in debt management practices across the organization.

Conclusion: Effectively managing unpaid account balances is essential for maintaining financial stability, preserving guest satisfaction, and ensuring legal compliance within the hotel industry. By implementing proactive identification, follow-up procedures, and resolution strategies, hotels can minimize financial risks and maintain a positive reputation among guests.

B) NIGHT AUDIT:

1. Importance:

Financial Accuracy: The night audit is crucial for ensuring the accuracy of financial transactions and maintaining the integrity of the hotel's accounting records.
Operational Efficiency: By reconciling accounts and generating reports, the night audit facilitates smooth operations and enables informed decision-making by management.
Compliance: Compliance with regulatory requirements and internal policies is upheld through thorough auditing and documentation conducted during the night audit process.

2. Function of the Night Audit:

Financial Reconciliation: Verifies the accuracy of financial transactions, including room charges, payments, and other revenue sources.
Report Generation: Generates various reports detailing revenue data, occupancy statistics, and operational information for management review.
Error Identification: Identifies and corrects accounting errors, ensuring the integrity of guest and non-guest accounts.
Cash Management: Balances cash receipts, verifies cash transactions, and prepares cash deposits for banking.
System Maintenance: Conducts system updates and backups to ensure the continuous functioning of front office computer systems.

3. Role of the Night Auditor:

Financial Oversight: Responsible for overseeing the financial aspects of hotel operations during the night shift, ensuring accuracy and compliance with accounting standards.
Attention to Detail: Requires meticulous attention to detail to identify discrepancies, errors, and irregularities in financial records.
Communication: Collaborates with front office staff, management, and other departments to address accounting issues and provide accurate financial reporting.
Problem-Solving: Must be able to troubleshoot and resolve accounting problems effectively, often under time constraints.
System Management: Manages computerized front office systems, including performing updates, backups, and system checks as part of the night audit process.

4. End of the Day (EOD):

Closing Procedures: Marks the end of the business day for the hotel, involving the finalization of financial transactions and preparation for the next day's operations.
System Update: Conducts system updates to establish an audited end-of-day and allow for report production, system file reorganization, and maintenance.
Cash Management: Prepares cash deposits and reconciles cash receipts to ensure accurate accounting of daily transactions.
Report Generation: Generates various reports summarizing daily operations, revenue data, and occupancy statistics for management review.

5. Auditing Posting Formula:

Verification Process: Involves comparing guest and non-guest account balances with departmental totals and source documents to ensure accuracy and completeness.
Mathematical Checks: Performs mathematical verifications to identify posting errors, such as range checks for unusually large or small amounts.
Account Balancing: Balances accounts by reconciling transactions, identifying discrepancies, and correcting errors to ensure the accuracy of financial records.

6. The Night Audit Process:

Sequence of Steps: Involves completing outstanding postings, reconciling room status, balancing departmental accounts, verifying room rates, and preparing required reports.
Timely Resolution: Addresses discrepancies and errors promptly to ensure the accuracy of financial records and maintain operational efficiency.
System Update: Conducts system updates to finalize the night audit process and establish an audited end-of-day for the hotel's accounting records.

7. Verifying the Night Audit:

Quality Assurance: Ensures the accuracy and completeness of the night audit process through thorough verification and review of financial transactions and reports.
Error Identification: Identifies and corrects any discrepancies or errors found during the night audit, ensuring the integrity of financial records.
Documentation: Maintains detailed documentation of the night audit process, including audit trails, reports, and communication with staff and management.
Continuous Improvement: Implements measures to enhance the efficiency and effectiveness of the night audit process, addressing any issues or areas for improvement identified during verification.