Chapter 11: The Front Office Aduit

1. 1. Chapter 11: The Front Office Audit Competencies for The Front Office Audit 1.
Identify the functions of the front office audit. 2. Identify the steps in the front office
audit process. 3. Explain the function of a system update and describe centralized front
office audits. Managing Front Office Operations PowerPoint 1
2. 2. Chapter 11: The Front Office Audit Front Office Audit Functions Verify posted
entries to guest/non-guest accounts Balance all front office accounts Resolve room
status and rate discrepancies Review guest credit transactions against established limits
Generate operational and managerial reports Managing Front Office Operations
PowerPoint 2
3. 3. Chapter 11: The Front Office Audit Front Office Auditor Duties Tracks standard
operating statistics Room revenues Occupancy percentages Other statistics Summarizes
daily transactions Cash Credit card Debit card Gift card Other transactions Continued
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4. 4. Chapter 11: The Front Office Audit Front Office Auditor Duties Reconciles account
postings with departmental source Continued from previous slide documentation
Summarizes hotels financial performance for the day Produces reports for management
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5. 5. Chapter 11: The Front Office Audit Establishing an End of Day Each hotel must
decide what time will be considered the end of its accounting (or hotel) day. An end of
day is simply an arbitrary stopping point for the business day. The front office manager
must establish an end of day so that the front office audit can be considered complete
through a specific, consistent point in time. Usually, the closing time of hotel revenue
outlets determines the propertys end of day. Continued Managing Front Office
Operations PowerPoint 4a
6. 6. Chapter 11: The Front Office Audit Establishing an End of Day Continued from
previous slide For hotels with 24-hour retail outlets, the end of day is typically when
a majority of the outlets no longer have frequent transaction activity. Typically, the
business day ends when the front office audit begins. Transactions that occur while the
audit is taking place are considered part of the next business day. Managing Front Office
Operations PowerPoint 4b
7. 7. Chapter 11: The Front Office Audit Cross-Referencing Hotel departments may
generate paperwork to document transactions. For each revenue center transaction, the
originating revenue center classifies and records the transaction type (cash, charge, or
paid-out) and its monetary value. Front office personnel may review automated postings
to ensure that the appropriate guest or non-guest folio has been properly accessed.
Revenue centers not interfaced to the front office system may need to use a voucher or

other form of documentation to communicate transactional data to the front office staff
for posting. Continued Managing Front Office Operations PowerPoint 5a
8. 8. Chapter 11: The Front Office Audit Cross-Referencing A front office accounting
system depends on system interfaces and Continued from previous slide transactional
documentation to establish accurate records and maintain operational controls. An
accounting system should provide independent supporting documentation to verify each
transaction. In a non-automated operation, supporting documents (restaurant guest check,
front office guest folio, etc.) provide cross-reference information. A bucket check
ensures that accurate room rates have been posted for all occupied rooms and helps
reduce occupancy errors. The auditors review of daily postings reconciles front office
accounts with revenue center and departmental records. Managing Front Office
Operations PowerPoint 5b
9. 9. Chapter 11: The Front Office Audit Account Integrity Sound internal control
techniques help ensure the accuracy, completeness, and integrity of front office
accounting procedures. Internal control techniques include cash control and the
separation of duties. Different front office staff members should post, verify, and collect
sales transactions at the front desk. No single individual should be responsible for
accounting for all phases of a transaction. The front office auditor establishes guest and
non-guest account integrity by cross-referencing account postings with departmental
source documentation. An audit is complete with the totals for guest, non-guest, and
departmental accounts are in balance (i.e., proven correct). Continued Managing Front
Office Operations PowerPoint 6a
10. 10. Chapter 11: The Front Office Audit Account Integrity Continued from previous
slide As long as the audit presents an out-of-balance position, the audit is
considered incomplete. An out-of-balance position exists when the charges (debits) and
credits posted to guest and non-guest accounts throughout the day do not match the debits
and credits posted to the departmental revenue sources. An out-of-balance condition
may require a thorough review of all account transactions, statements, vouchers, and
other support documents. With a fully automated system, out-of-balance positions are
rare. Managing Front Office Operations PowerPoint 6b
11. 11. Chapter 11: The Front Office Audit Guest Credit Monitoring Software responsible
for monitoring the credit limits of guest and non-guest accounts helps maintain the
integrity of the front office accounting system. Establishing credit limits depends on
many factors, such as payment card company floor limits, the hotels house limit, and the
guests reputation as a potential credit risk. At the close of each business day the front
office auditor should identify guest and non-guest accounts that have reached or exceeded
their credit limits; these accounts are called high-balance accounts. A report listing
high balance accounts should be prepared for appropriate action by management.
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12. 12. Chapter 11: The Front Office Audit Audit Posting Formula Previous balance + debits
credits = net outstanding balance. Managing Front Office Operations PowerPoint 8

13. 13. Chapter 11: The Front Office Audit Daily and Supplemental Transcripts A daily
transcript is a detailed report of guest accounts that summarizes and updates those guest
accounts that had transactional activity on that particular day. A supplemental transcript
may track the days transactional activity for non-guest accounts. Together, the daily
transcript and supplemental transcript detail all transactions occurring on a single hotel
day. Data appearing on a system-produced daily transcript is typically detailed by
revenue center, transaction type, and transaction total. Continued Managing Front Office
Operations PowerPoint 9a
14. 14. Chapter 11: The Front Office Audit Daily and Supplemental Transcripts The daily
transcript and the supplemental transcript form the Continued from previous slide basis
for a consolidated report of front office accounting transactions from which revenue
center totals can be checked. Daily and supplemental transcripts are simply electronic
spreadsheets designed to eliminate posting discrepancies. Daily and supplemental
transcripts can facilitate the front office audit routine by identifying out-of-balance
figures in advance of a detailed review. Managing Front Office Operations PowerPoint 9b
15. 15. Chapter 11: The Front Office Audit Front Office Automation Front office software
modules of a front office system can be interfaced with point-of-sale equipment, call
accounting systems, in-room entertainment devices, and other revenue sources for timely,
accurate, and automatic postings to electronic guest and non-guest account folios.
Automated systems allow the front office auditor to spend more time auditing
transactions and analyzing front office activities and less time performing routine
postings and bookkeeping entries. An automated system may retain previous balance
information for guest and non-guest accounts, along with appropriate transactional
details, in an electronic database. An automated system performs numerous
mathematical verifications to ensure postings are correct. Continued Managing Front
Office Operations PowerPoint 10a
16. 16. Chapter 11: The Front Office Audit Front Office Automation Front office automated
systems can organize, compile, and Continued from previous slide print records faster
than can be done manually. During an audit, an automated system can process a large
quantity of data, perform numerous computations, and generate accurate account totals.
Automated system updates are run daily to establish an audited end of day and allow for
report production, file reorganization, and system maintenance. Front office automated
systems offer rapid access to information, enabling front office managers to more
knowledgeably plan, organize, and direct operations. Managing Front Office Operations
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17. 17. Chapter 11: The Front Office Audit The Front Office Audit Process 1. Complete
outstanding postings 2. Reconcile room status discrepancies 3. Verify room rates 4.
Balance all departmental accounts 5. Verify no-show reservations 6. Post room rates and
taxes 7. Prepare reports 8. Prepare cash receipts for deposit 9. Perform system back-up
routine 10. Distribute reports Managing Front Office Operations PowerPoint 11

18. 18. Chapter 11: The Front Office Audit Complete Outstanding Postings One of the
primary functions of the front office audit is to ensure that all transactions affecting guest
and non-guest accounts have been posted to appropriate folios. It is important that all
transactions be accurately posted and accounted for. Posting errors lead to discrepancies
and delays at check-out. The front office auditor must confirm that all transactions have
been posted before starting the audit routine. Continued Managing Front Office
Operations PowerPoint 12a
19. 19. Chapter 11: The Front Office Audit Complete Outstanding Postings The auditor
must verify that all vouchers for revenue center Continued from previous slide
transactions have been posted. Outstanding telephone charges may require manual
posting. With automated systems, revenue center totals can be compared to totals
reported by the front office accounting system; if the figures are identical, the systems are
in balance. If the figures are not identical, the auditor must look for transactions that
have been omitted or improperly posted. Managing Front Office Operations PowerPoint
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20. 20. Chapter 11: The Front Office Audit Reconcile Room Status Discrepancies Room
status discrepancies must be resolved quickly to avoid confusion at the front desk and lost
business. The front office system must maintain current and accurate room status
information to determine the number and types of rooms still available for sale. The
housekeeping department typically requires staff to record the perceived status of
guestrooms as they are serviced. The auditor must review front office and housekeeping
reports to reconcile and finalize the occupancy status of all guestrooms on a given night.
Continued Managing Front Office Operations PowerPoint 13a
21. 21. Chapter 11: The Front Office Audit Reconcile Room Status Discrepancies If
housekeeping reports a room as vacant, but the front office Continued from previous
slide considers it occupied, the auditor should search for an active guestroom folio and
registration record, and verify that the guest has indeed left the hotel. If the guest has
left the hotel, the auditor should process the check-out and set the folio aside for front
office management review and follow-up. The room should then be recorded as vacant in
the system. The auditor should check guest folios, housekeeping reports, and room
status reports to make sure that all three are consistent. Few, if any, room status
discrepancies should occur in an automated front office system. Managing Front Office
Operations PowerPoint 13b
22. 22. Chapter 11: The Front Office Audit Verify Room Rates Verifying room rates is
usually done at the same time as reconciling room status. The front office auditor will
review a system-generated room report to check guestroom rack rates (standard rates)
against actual rates (what the rooms actually were rented for) and analyze room revenues.
Guestroom rate verification is usually performed by comparing the room rate in the
registration record with the room rate in the front office system. (Any changes made to
the guestroom rate would happen during or after check-in.) During room revenue
analysis, the actual room revenue posted in the system is compared with the rack rate of
the rooms occupied for the night. Managing Front Office Operations PowerPoint 14

23. 23. Chapter 11: The Front Office Audit Balance All Departmental Accounts It is
considered more efficient to balance all departmental accounts first, then determine
individual posting errors within an out-of-balance department. The front office auditor
typically balances all revenue center departments using source documents that originated
in the revenue center. The auditor seeks to balance all front office accounts against
departmental transaction information. Vouchers received electronically or manually at
the front desk are totaled and compared with revenue center summaries. Continued
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24. 24. Chapter 11: The Front Office Audit Balance All Departmental Accounts When the
front office accounting system is out of balance, the Continued from previous slide
correctness and thoroughness of account postings must be investigated. A detailed
department audit (by shift or cashier) may be conducted and individual postings reviewed
until the error or errors are detected and corrected. The process used to balance revenue
center departments is often called the trial balance. A trial balance is a test of the front
office accounts to confirm proper balancing before the final audit. The front office
system will normally generate a trial balance before initiating final audit reports. The trial
balance usually uncovers corrections or adjustments that must be made during the audit
process. A mathematical balance in guest and non-guest accounts against departmental
totals does not necessarily mean that the proper accounts were selected for posting.
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25. 25. Chapter 11: The Front Office Audit Verify No-Show Reservations The front office
auditor may also be responsible for clearing the reservation file or filing and posting
charges to no-show accounts. When initiating a front office system posting of no-show
charges, the auditor must verify that the reservation was guaranteed and the guest failed
to register with the hotel. The auditor must check that a duplicate reservation was not
made for the no-show guest, or that the guests name was not misspelled. Continued
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26. 26. Chapter 11: The Front Office Audit Verify No-Show Reservations No-show billings
must be handled with extreme care. A front Continued from previous slide desk agent
who does not record cancellations properly may cause guests to be billed incorrectly.
Incorrect billings may cause payment card companies to reevaluate their legal agreement
and relationship with the hotel. An incorrectly billed guest may not return to the hotel,
and if a travel agency or other intermediary was involved in helping the guest make the
reservation, the hotel may lose the travel intermediary as a client as well. Managing Front
Office Operations PowerPoint 16b
27. 27. Chapter 11: The Front Office Audit Post Room Rates and Taxes The automatic
posting of guestroom rates and room taxes to guest folios typically occurs at the hotels
end of day. Once guestroom rates and taxes are posted, a rate and tax report may be
generated for front office management review. The ability to electronically post room
rates and room taxes is one of the most frequently cited advantages of an automated front
office system. Continued Managing Front Office Operations PowerPoint 17a

28. 28. Chapter 11: The Front Office Audit Post Room Rates and Taxes Once the front
office initiates guestroom rate postings, the Continued from previous slide system
auto-posts rates and taxes to the appropriate electronic folios. Some hotels pre-set their
front office systems to post daily recurring charges, such as occupancy taxes (in those
communities who impose them), valet parking fees, or mandatory gratuities. Autoposting charges saves front office audit time and improves accuracy. Managing Front
Office Operations PowerPoint 17b
29. 29. Chapter 11: The Front Office Audit Prepare Reports The front office auditor
typically prepares reports for management review, such as the final department detail and
summary reports, the daily operations report, the high balance report, and other reports
specific to the property. Final department detail and summary reports help prove that
transactions were properly posed and accounted for. Continued Managing Front Office
Operations PowerPoint 18b
30. 30. Chapter 11: The Front Office Audit Prepare Reports The daily operations report
summarizes the days business Continued from previous slide and is considered the
most important product of the front office audit. The high balance report identifies
guests whose charges are approaching their credit limits. The front office system may be
programmed to produce a variety of other management reports on demand: daily
summary reports or flash reports, group sales reports, frequent guest reports, VIP reports,
and so on. Managing Front Office Operations PowerPoint 18b
31. 31. Chapter 11: The Front Office Audit Prepare Cash Receipts for Deposit The front
office auditor frequently prepares a cash deposit voucher as part of the audit process. If
front office cash receipts have not yet been deposited, the front office auditor compares
the postings of cash payments and paid-outs (net cash receipts) with actual cash on hand.
A copy of the front office cashier shift report may be included in the cash deposit
envelope to support any overage, shortage, or due back balances. Continued Managing
Front Office Operations PowerPoint 19a
32. 32. Chapter 11: The Front Office Audit Prepare Cash Receipts for Deposit The hotel
may require the front desk cashier to deposit cash Continued from previous slide at the
end of each shift without knowing the value of cash receipts the system has recorded (that
is, make a blind drop). Blind drops are used when management is concerned that
employees may not be reporting all cash received. When a blind drop is used, the
auditor compares system totals per cashier with the cashier drop document; variances are
reported to management. Managing Front Office Operations PowerPoint 19b
33. 33. Chapter 11: The Front Office Audit Perform System Back-Up Routine System backup routines are performed in hotels that have automated systems. Normally, at least two
guest lists are printed for back-up and emergency use: one for front desk staff and one for
the telephone switchboard operator. A guest list may be printed for other hotel
departments as well (such as the security department). Other reports that may be
printed: a room status report, guest ledger report, front office activity report, next days

registration report, and disabled guest report. Continued Managing Front Office
Operations PowerPoint 20a
34. 34. Chapter 11: The Front Office Audit Perform System Back-Up Routine Systemgenerated front office information should also be Continued from previous slide
backed up onto a DVD or other media. A system back-up should be conducted after
each audit and stored in a safe place. Many front office systems have two types of backups: a daily back-up and system back-up. Managing Front Office Operations PowerPoint
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35. 35. Chapter 11: The Front Office Audit Distribute Reports Due to the sensitive and
confidential nature of front office information, the front office auditor must promptly
deliver the front office reports to authorized individuals. The distribution of front office
audit reports is the final step in the front office audit routine. Front office managers can
make more informed decisions if front office audit reports are completed accurately and
delivered on a timely basis. Managing Front Office Operations PowerPoint 21
36. 36. Chapter 11: The Front Office Audit System Update A system update in a front office
accounting system accomplishes many of the functions in the audit routine. System
updates are performed daily to enable system file reorganization, system maintenance,
and report production, as well as to provide an end-of-day closure. Since front office
systems audit transactional postings as they occur, there may be little or no need for the
front office auditor to perform account postings. The front office system may be
connected to revenue centers for automatic postings, enabling the system to monitor
charges made at revenue outlets throughout the hotel. Continued Managing Front Office
Operations PowerPoint 22a
37. 37. Chapter 11: The Front Office Audit System Update The auditor should routinely
review system interface Continued from previous slide procedures to ensure the proper
handling of automatically posted transactions from revenue outlets. Room status
discrepancies are rare in an automated front office environment; the system can be
programmed to automatically flag discrepancies when they occur so that they can be
quickly dealt with. In some front office systems, the balancing of front office and
department accounts is continuously monitored in real time. Front office systems can be
programmed to produce a variety of reports for management. Managing Front Office
Operations PowerPoint 22b
38. 38. Chapter 11: The Front Office Audit Centralized Front Office Audits Front office
automation significantly simplifies the front office audit process and allows multiple
audit tests to be performed simultaneously. Centralization of multiple audits reduces
staffing requirements for the participating properties and provides a basis for consolidated
reporting. Centralized front office audits usually work best in limited-service hotels
where there are few revenue outlets and operating departments are closed before the start
of the audit process. Continued Managing Front Office Operations PowerPoint 23a

39. 39. Chapter 11: The Front Office Audit Centralized Front Office Audits At the central
location, the auditor can obtain all the Continued from previous slide information
necessary to complete the audit routine over secure data lines connecting participating
hotels. The auditor can post corrective entries, back up the system, and produce reports
for distribution to each hotel. Being able to quickly produce aggregate or consolidated
reports for a group of hotels is especially beneficial to managers of chain properties.
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