The Night Audit

1. The Night Audit Chapter Twelve PowerPoints developed by Bharath M. Josiam, Ph. D. Professor, Hospitality Management University of North Texas, Denton, TX, USA And Edited by Gary K. Vallen, Ed. D. Professor, School of Hotel and Restaurant Management Northern Arizona University, Flagstaff, AZ, USA

2. Objectives of Chapter 12 Understanding the role of the night audit for: Summarizing the days accounting activities Providing reports for management Providing data for permanent entry into accounting books Understanding terms/jargons used in night audit Understanding the Housekeepers Report and its relationship with the night audit

3. The Audit and the Auditor The Night Auditor Work Shift Graveyard Shift: 11/12 midnight to 7/8 AM Required to remain, until job is completed Relieves the “Swing Shift” and is relieved by the “Day Shift” General Duties Night Audit plus all Night Manager Duties in smaller hotels Security, FO, HK, Maintenance etc., Restricted to auditing duties only in larger hotels FO staff and others handle night operations

4. The Audit and the Auditor The Audit Reconciling Accounts Receivable All businesses need to reconcile accounts periodically Hotels need to do it daily, as it may be too late otherwise! The Closeout Hour Hotels never close, so we have to pick a time to “close” “Closing” means one days accounts are closed and the next days accounts begin Most hotels chose midnight to “close” Can be done later, if F & B outlets are open later Later closing puts pressure on night auditors, but it accounts better for sales of outlets for the “day”

5. The Audit and the Auditor Posting Room Charges Posting Room Charges Manually (Exhibit 12-1) Each folio has to be taken out of the “pit” and room and tax charges entered manually, room by room The days charges are totaled, and “brought forward” to get a cumulative running total Manual System Errors Manual system is prone to handwriting, entry, copying, and totaling errors Posting Room Charges Electronically (Exhibit 12-2) Room and tax for all rooms is posted at the press of one button instantaneously Totals are updated automatically, and a summary made No math or entry errors! Room Charges Not Posted By the Auditor Day rate, use rate, part day rate guests Extra room charge for late check outs

6. Reconciling Using a Property Management System Verifying Basic Data (Exhibit 12-4) Closing Routine The press of one button does all steps of the manual night audit! Need to tally department totals with FO totals only if POS systems are not interfaced with PMS system Reports and print-out of folios generated automatically Express Check-out (Exhibit 12-5) Printed folio is put under guest room door late at night and amount is charged to credit card, guest comes to FO for check-out only if there is a problem Similar procedure can be done with in-room TV If guest needs a copy of bill, it can be mailed to them PMS Posting Errors (Exhibit 12-6) Errors still possible in PMS Mostly entry errors of cashiers System reduces errors by “rejecting” wrong entries Can be systematic errors due to bugs in the system

7. Reconciling Using a Property Management System Reports form the Night Audit Turnkey Systems A standardized system installed by a vendor that the user simply “turns the key” to start (as opposed to designing a system from scratch!) Main Benefits Hardware and software work together System is consistent across chain Kinds of Reports Exception Reports Highlights only exceptions from the norm Lists only those over credit limit as opposed to credit status of each guest Downtime Reports Print outs of core information in case of system breakdown Credit Reports Credit status of “problem” guests

8. Reconciling Using a Property Management System Reports from the Night Audit Kinds of Reports Reservation Reports Report of rooms sold, un-sold, sold-by, demanded, refused, walked, projected occupancy etc. Rooms Management Reports (Exhibit 12-7) List of guests, rates, convention member, VIP etc Room Status Reports List of occupied, vacant, OOO, OOI rooms etc Accounts Receivable Reports (Exhibit 12-12) Lists details of City Ledger, Credit Card transactions, departmental totals etc.

9. Reconciling Using a Property Management System Report to the Manager A report of the key issues of the previous day Exhibit 12-14 Room Count, House Count, Room Income These are reported daily and accounted for Room Statistics Rooms sold, ADR, Occupancy%, Comps, RevPar are reported daily Summary PMS allows night audit to be a real management tool, rather than an accounting procedure to catch mistakes quickly!

10. Objectives of Chapter 12 Understanding the role of the night audit for: Summarizing the days accounting activities Providing reports for management Providing data for permanent entry into accounting books Understanding terms/jargons used in night audit Understanding the Housekeepers Report and its relationship with the night audit