A brief overview of the Night Audit Process. The short video at the bottom explains a typical night for the Night auditor (thanks to bBryan Tong).
An accurate night audit is important for effective cost control. The 6 basic steps involved in preparing a night audit are:
1. Posting room and tax charges.
2. Collating guest charges and payments.
3. Reconciling departmental financial activities.
4. Reconciling accounts receivable.
5. Running the trial balance.
6. Preparing the night audit report.
We briefly explain each of the above in limited detail:
1. Posting Room and Tax Charges
The night auditor reviews:
a) messages from front office staff.
c) Extended guest stays.
d) All room rates and a variance report
His / her first task is to post room and tax charges to all accounts. The PMS easily posts room and tax charges to the electronic folios, with the room and tax options.
2. Collating Guest Charges and Payments
The following is a typical list of sale departments for which income could be reported:
Restaurant 1 (breakfast), Restaurant 2 (lunch), Restaurant 3 (dinner), Lounge 2 (happy hour), Lounge 3 (dinner), Valet, Telephone, Gift shop, Spa, and pool and more.
The guest charges option of the night audit module in a property management system can sort and total all departmental charges and payments that have been posted to the electronic folios from the point - of - sale systems that interface with the PMS. These data are accurate if the person entering the charges at the point - of - sale terminal keys them in accurately.
3. Reconciling Departmental Financial Activities
The departmental totals option of the night audit module in the PMS will report the totals of sales by department, as shown in Figure. These totals are compared to posting information received from the point - of - sale system.
Another receipt that must be verified is the cash tendered by guests at the front office. Hotels vary in their cash - processing policies. Some front offices process restaurant guest checks from cash customers or other departments in the hotel because management wants to centralize the cash transactions. In other hotels, this policy would be a great inconvenience because of the distance of the various restaurants, lounges, and outlets,
The departmental totals option of a PMS lists amounts generated by each department.
The cashier option of the night audit module in the PMS will report the amount of cash, credit cards, and coupons received, and discounts processed during the shift, as shown in Figure. The total amount of cash received by each cashier who has been issued a cash drawer must be verified against the total money deposited for that shift.
Reconciling Accounts Receivable
They have either received approval for direct - billing privileges or paid a deposit on a future banquet, meeting, or reception. The night auditor will treat these accounts just like the accounts on the guest ledger for registered guests. He or she must assemble the charges and verify their accuracy. The cash received from these accounts is reflected the cashier’s report.
The figures in a city ledger can be large. A hotel that promotes direct billing as a customer service may have outstanding guest debit charges of $10,000 to $50,000. The hotel may hold a credit balance, amounts of money a hotel owes guests in future services, of $25,000 to $150,000 or more from deposits on future receptions and meeting room rentals. The Manager responsible must closely watch the balances of these accounts to ensure effective cash flow management.
When the checks from the credit - card agency are received, they are posted to the respective credit card’s account receivable, and a current balance is calculated.
The city ledger and accounts receivable options of the night audit module of a PMS will produce a report of the activity on the city ledger and master credit - card accounts.
Running the Trial Balance
The trial balance helps the night auditor focus on accounts in which charges may have been posted or reported incorrectly. It’s important that the night auditor compare the departmental totals against any transfers and paid - out slips for each department processed by desk clerks and cashiers.
This last step enables the final step for a night audit report to be completed.