Page 302 - CA Inter Audit PARAM

CA Ravi Taori
order to satisfy himself of this, the auditor should consider attending the physical inventory
taking and carrying out certain pricing and calculation tests. The extent of such tests could well be
limited since the figures will have been prepared independently of the hotel.

• Cash –
• There are many problems involved in any hotel audit, some of which are peculiar to the
hotel industry such as control of cash assumes greater proportions.
• Almost all sales points in a hotel make both cash and credit sales. The auditor should
reconcile the total sales reported with the total of the bills issued by the sales point; this
total may take the form of a bill roll or a series of numerically controlled bills. This
numerical control must be checked to ensure that all bills are included in the total. The cash
element of the sales must then be checked to the cash records and the credit sales in total
and detail to the guest’s bills.

➢ Other Points–Travel Agents / Taxes
• For ledgers coming through travel agents or other booking agencies the bills are usually made on the
travel agents or booking agencies. The auditor should ensure that money is recovered from the
travel agents or booking agencies as per the terms of credit allowed.
Commission, if any, paid to travel agents or booking agents should be checked by reference to the
agreement on that behalf.

• The auditor should satisfy himself that all taxes collected from occupants on food and occupation
have been paid over to the proper authorities.

Author’s Note
• Text in ITALICS are examples by author for better understanding of answer.
• This is a master answer you can write the relevant aspect of the master answer as per
what the question is asking.
• In question related to pilferage explain only concept related to pilferage given in 2
paragraphs.

QNO Audit of Hotel- Inventories Old Course -- (N20E/N22R/N22M/M23M/N23M)
ADE.33 Bhaskar CNO - ADE.060 New Course—(M24M)
You have been appointed as an auditor of ABC Hotel, a three-star hotel, for Financial Year 2019-20. As an
auditor what are the special points that need to be considered in verifying the Inventories in the nature of
food and beverages?
Answer Verification of inventories in the nature of food and beverages: 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 stores’ areas and sales point. The auditor should
carry out tests to ensure that all such documentation is accurately processed. Therefore, following may
be noted in this regard:

(a) All movement and transfer of inventories must be properly documented.
(b) Areas where inventories are kept must be kept locked and the key retained by the
departmental manager.
(c) The key should be released only to trusted personnel and unauthorized persons should
not be permitted in the stores area.
(d) Many hotels use specialized professional valuers to count and value the inventories on a
continuous basis throughout the year.
(e) The auditor should ensure that all inventories are valued at the year end and that he
should himself be present at the year-end physical verification, to the extent practicable,
having regard to materiality consideration and nature and location of inventories.

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