PLAZA, JEREMIE R.

AC EL / 12:00-1:30 TTH 08/26/14

Reflection Paper: Internal Auditing and the Local Lodging Industry

For a span of two weeks, interviews were conducted to assess the internal
auditing systems of selected hotels in the local lodging industry. The first interviewee is
the USC Training Hotel located in Cebu City and the second interviewee is Arabelle
Suites, a hotel in Tagbilaran City, Bohol. To guide the interviewees, questionnaires were
sent to them prior to the actual interview. In the case of Arabelle Suites, the interviewers
opted to have the interview thru a phone conversation due to time and cost constraints.
Both respondents were cooperative during the interview process although they insisted
to refrain from answering confidential questions.

On Awareness…

Although the respondents did not clearly describe the process as to how they
conduct the internal audit, it was evident that they acknowledge the general view on
audit methodology which is familiarization and planning, verification and testing,
evaluation and review, and reporting and follow-up. With regard to organizational
structure, both of the respondents lack a separate Internal Audit function and were
aware of the concept behind an Audit Committee but opted not to establish such
function let alone provide its charter. As an operations audit student, I understand that
business especially micro and small-sized establishments must take into account the
benefits and costs of investments. An audit committee and a separate internal audit
department might prove too costly for the above-mentioned respondents.

On Acceptance…

Arabelle Suite’s audit approach is (as defined by the interviewee) proactive.

During the early stages of their audit, they assess whether a project maximizes value to
the entire organization. Moreover, they stressed the fact that they focus their resources
on areas which are more susceptible to risks and that they perform the audit generally
twice a year or as often as the need arises. With regard to the department who
conducts the audit, the USC Training Hotel noted that audit is conducted by the
combined Finance and Audit department which is handled by HRM student interns.
Arabelle Suites on the other hand, also delegated the internal audit function to a
combined Accounting and Audit department.

On Action…

I understand that micro and small-sized businesses need to take into

consideration the costs and benefits of their actions. However, I find it necessary to
delegate the internal audit function to a separate department in the organization to
mitigate the risks stemming from unsegregated duties.