Page 301 - CA Inter Audit PARAM

CA Ravi Taori
Room Sales Guest Register – Guest Bills – Corroborative Evidence from Housekeeper Daily Room
Report
• The charge for room sales is normally posted to guest bills by the receptionist/ front office
or in the case of large hotels by the night auditor. The source of these entries is invariably
the guest register and audit tests should be carried out to ensure that the correct
numbers of guests are charged for the correct period. Any difference between the
charged rates used on the guests’ bills and the standard room rate should be investigated
to ensure that they have been properly authorised.
• In many hotels, the housekeeper prepares a daily report of the rooms which were
occupied the previous night and the number of beds kept in each room. This report tends
not to be permanently retained and the auditor should ensure that a sufficient number of
reports are available for him to test both with the guest register and with the individual
guest’s bill.
• Occupancy in Progress
The auditor should ensure that proper valuation of occupancy-in-progress at the balance
sheet date is made and included in the accounts.
• Hall Booking
The auditor should ensure that proper records re-maintained for booking of halls and other
premises for special parties and recovered on the basis of the tariff.

• KOTs
The auditor should verify a few restaurants bills by reference to K.O.T.s (Kitchen Order Tickets) or
basic record. This would enable the auditor to ensure that controls regarding revenue cycle are in
order.

➢ Major Expense–Casual Labour/Repairs
• Casual Labour –
The hotel trade operates to very large extent on casual labour. The records maintained of such wage
payments are frequently inadequate. The auditor should ensure that defalcation on this account
does not take place by suggesting proper controls to the management.
• Repairs –
The auditor should see that costs of repairs and minor renovation and redecoration are treated as
revenue expenditure, whereas costs of major alterations and additions to the hotel building and
facilities capitalised.

➢ Major Assets–Fixed Asset / Inventory / Cash
• Fixed Assets –
The accounting policies for fixed assets of individual hotels are likely to differ. However, many hotels
account for certain quasi-fixed assets such as silver and cutlery on inventory basis. This can lead to
confusion between each inventory items and similar assets which are accounted for on a more
normal fixed assets basis. In such cases, it is important that very detailed definitions of inventory
items exist and the auditor should carry out tests to ensure that the definitions have been closely
followed.

• Inventories –
The inventories in any hotel are both readily portable and saleable particularly the food and
beverage inventories. It is therefore extremely important that all movements and transfers of such
inventories should be properly documented to enable control to be exercised over each individual
store’s areas and sales point. The auditor should carry out tests to ensure that all such
documentation is accurately processed.

Areas where large quantities of inventory are held should be kept locked, the key being retained by
the departmental manager. The key should be released only to trusted personnel and unauthorized
persons should not be permitted in the store’s areas except under constant supervision. In
particular, any movement of goods in or out of the stores should be checked. Many hotels use
specialized professional valuers to take and value the inventories on a continuous basis throughout
the year. Such a valuation is then almost invariably used as the basis of the balance sheet inventory
figure at the year end. Although such valuers are independent of the audit client, it is important
that the auditor satisfies himself that the amounts included for such inventories are reasonable. In
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