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Everything You Need to Know about Night Auditing Process: A Complete Guide.

Community - HC by Community - HC
October 15, 2020
in Hotel Management, Magazine, Technology
Reading Time: 7 mins read
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Everything You Need to Know about Night Auditing Process: A Complete Guide.
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New Hoteliers and especially Front Office Aspirants mostly wonder ‘What is Night Auditing?’ So Here’s Everything You Need to Know about Night Auditing Process. Be it a Complete Guide!

The Night auditing is actually the audit process of taking inventory of the day’s work. In other words, it is the activity of checking and confirming that whatever transaction has been done during the day is correct and complete. Any mistakes made during the day are corrected and balanced. The audit is done during night and hence it is called as “Night Auditing”.


In General, The Night Auditing Process includes Completion of outstanding postings, Reconciling room status discrepancies, Balance all department’s financials, Verify No-Show, Reconciling accounts receivable, Preparing night audit report, Deposit cash, Clear or backup system, Distribution of reports and Preparing night audit report.

Depending upon the policy of the hotel and manager’s requirement, the number and content of the night auditor’s report may differ. Some managers may require more financial details than others. Those prepared for management review are the final departmental details and summary report, the daily operations report and high balance reports. Night auditor’s report should be viewed as a functional tool. This provides feedback on daily operations performance. Daily review of figures reported will allow management the opportunity to be flexible in meeting planned financial goals.

Now If We talk about the of Front Office Audit then The main purpose of front office audit is to verify the accuracy and completeness of the guest and non-guest accounts against revenue center transaction report. Specifically the front office audit is concerned with these functions as Verifying posted entries to guest and non-guest accounts, Balancing all front office accounts, Revolving guest credit transactions against establish limits and Generating operational and managerial reports.

It is important to understand that the front office audit is concerned with only front office activities. The audit of food, beverage in room refreshment center, banquets and other revenue outlets is usually the responsibility of the accounting department and accrue the day after these outlets close. Very large hotels may require extensive staffs to audit food, beverages and other revenue producing department! In some small hotels… the front office auditor may perform several parts of a complete audit in addition to the front office audit since there are fewer revenue outlets in small hotels and the outlets are less complex too.

CROSS CHECKING, CREDIT MONITORING, VERIFY NO-SHOW & CANCELLATIONS MANAGEMENT are the crucial parts of the Night Auditing Process.


1. What is Cross Checking?

The Hotel departs may generate paper work to document transaction. For each revenue center transaction, the originally revenue center classifies and records the transaction type (cash, charge, or paid out) and its monitory value. Front office personnel may review on online postings to ensure that the appropriate guest or non-guest electronic folio has been properly accessed. In addition, revenue centers not interfaced to the front office system may need to use a voucher to communicate transactional information to the front office for posting. And The front office auditor relies on transaction documentation to prove that proper front office accounting procedures have been followed. The auditor’s review of daily posting of daily posting reconcilers front office accounts with revenue center and departmental records.


2. What is Credit Monitoring?

The Software responsible for monitoring the credit limits of guest and non-guest’s accounts helps maintain the integrity of the front office accounting system. Establishing line of credit or credit limits depends on many factors. Such as credit card company floor limits, the hotels house-limits and the guest’s status or reputation as a potential credit risk.

The front office auditor should be familiar with these limits and how they relate to each guest and non-guest account, At the close of each business day. The front office auditor should identify guest and non-guest accounts that have reached or exceeded assigned credit limits (front office software can flag these accounts automatically). These accounts are typically called “High balance accounts” a report lighting high balance accounts or a high balance report. Should prepare for appropriate front office management action.


3. What is Verifying No-Show?

The front office auditor may also be responsible for cleaning the reservation file or filling and posting charges to no-show accounts. When initiating the electronic posting of no-show charges. The front office auditor must be careful to verify that the reservation was guaranteed and the guest never registered with the hotel.

Sometimes duplicate reservations may be made for a guest or a guest’s name may be misspelled and another record accidentally created by the front office staff or system. If these are non identified by front office reservations staff. The guest may actually arrive but appear to be a no-show under the second reservation.


4. What is Cancellations Management?

No-Show billings must be handled with extreme care. A front desk agent who does not record cancellation properly may cause clients to be billed incorrectly. Incorrect billing may lead the credit card company to reevaluate its legal agreement and relationship with the hotel. Moreover… Incorrect billing may also cause the hotel to less the guest’s future business and the business of the travel agencies or intermediary that guaranteed reservation. The front office staff must adhere to establish no-show procedures when handling reservation cancellation or modification.


Lastly, The Detailed Night Auditing Process includes…
  • Transfer sheet-wise total of all guest ledger transcripts in to the recapitulate sheet. Total each column of the recapitulation sheet.
  • Check all paid and endorsed bills of the day, separate out paid bills and endorsed bills.
  • Separate endorsed bills into the once payable in foreign currency and other payable in Indian currency.
  • Prepare city ledger transfer with the endorsed bills. Totals of city ledger transfer must be tally with the total of the transfer credit in the recapitulation sheet.
  • Prepare master food & beverage sales summary from the sales summary received from different food and beverage sales outlets.
  • Tally room sale prepared by the receptionist in the night receptionist, with the room count and house count of the recapitulation sheet.
  • Tally room count and house count prepared by the receptionist, with the room count and house count of the recapitulation sheet.
  • Check all Non food & beverage sales summaries from their sales points with the help of supporting vouchers. The credit sales must be tally with the total credit sale indicated for the respective sales point in the recapitulation sheet.
  • Compare duplicate copies of the restaurant vouchers with the restaurant sales summaries to check that entries in cash and credit columns are in order.
  • Total credit sale of mater food and beverage sales summary should tally with the total of food sales in the recapitulation sheet.
  • Check all cash receipts with the FOC & MC cash receipt and their corresponding entries in the FOC & MC cash books.
  • Check all paid-out vouchers and allowance vouchers. Prepare summary of paid-out’s and allowances.
  • Total of the paid-out and allowances must be tally with their respective total in the recapitulation sheet.
  • Prepare cross sales summary.
  • Prepare cash turn over statement and Total of cash turned in and impressed should be equal to the amount of cash in the cash book.
  • Prepare trial balance and ensure that it tallies.
The Preparation of Night Auditing Report…
  • The front office auditor typically prepares reports that indicates that status of front office activities and operations. Among those prepared for management preview are the final department detail and summary reports, the daily operations reports, the high-balance report and other reports specific to the property.
  • Final department detail and summary reports are produce and may be filed along with their source documents for accounting divisions review. These reports help to prove that all transactions where properly posted and accounted for.
  • The daily operations report summaries the day’s business and provides insight into revenues, receivables, operating statistics and cash transactions related to the front office. This reports is typically consider the most important out come of the front office auditor. The high-balance report identities guest whose charges are approaching an account credit limit designated by the hold (house limit).

The software (PMS) that automates front office system may be programmed to produce many management reports on demand. i.e. The high-balance report may be produced at any time during the day as a continuing check on guest transactions and account balances. Another important report is the daily summary or flash report. The daily summary provides a snap short of important operating statistics of the previous day, as well as month to date totals. The hotel manager finds this summary report very informative and easy to read and they often read it at the start of their work shift. The daily summary may also show the occupancy and rate forecast for the new business day, altering management to changes that may have happened over night!


That’s the End of Total Night Auditing Process. If you have any doubts than feel free to post in comments section below.


Do Check out Our Keynote Courses of Front Office, Housekeeping, Food & Beverage Service, Hotel Law, Food Production and Human Resource Management. Start Reskilling & Upskilling Today. Develop niche skills and make yourself ready for ‘New Normal’. CLICK HERE to know more!
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