Airline Catering Division Audit Program

1.

SOURCING AND SELECTION OF CATERERS

A. To ensure that the sourcing and selection of caterers are properly performed
and documented.
i.
Inquire the procedures and records of initial sourcing of caterer for ne
w ports in Inflight Service (ISD) and Purchasing (APD).
ii.

Review the assessment criteria.

iii.
Select 2 samples to review if the selection of caterer followed the preset selection criteria and assess the sufficiency of involvement from APD and IS
D.
2.

CATERING CONTRACTS

A.
To ensure that there is proper agreement (either formal or informal) sig
ned with the caterers on the provide of catering services to COMPANY and all cri
tical terms in COMPANY standard contracts are included in the agreement signed.
i.
Obtained a standard COMPANY catering contract from ISD. Check if APD ha
s properly endorsed the standard contract.
ii.
Obtained a list of ports from ISD that formal agreement had been signed
with the caterer in the port.
iii.
Select 3 samples from the list and check if the agreement signed with th
e caterers is the standard COMPANY contract. If not, inquire the reasons and ch
eck if those critical terms in the agreement complied with our standard contract
.
iv.
Select 5 samples from ports without formal catering agreement and check
if any written correspondences with the caterers confirming the appointment.
v.
Check if those critical terms in our standard contract existed and accep
ted by the caterers in the informal correspondences.
vi.
Inquire reasons for not signing formal agreement with the caterers. Che
ck if APD is aware of the situations and ascertain the risk and control of witho
ut having a signed agreement.
B.
To ensure that both formal and informal agreements, and subsequent amend
ments, if any, signed with caterers are valid, properly filed and all necessary
information is properly distributed to all related parties.
i.

Review the filing system of agreements in ISD.

ii.
In addition to the 8 samples selected in N2-1, select 10 more samples to
check the validity and filing of the agreements.
iii.
Inquire the distribution list of agreements/information and assess the s
ufficiency of the distribution.
Description of Tests
3.

MENU SELECTION & PRICE NEGOTIATION

A.
To ensure that the menu selection and prices negotiation processes had i
nvolved appropriate parties and with proper documentation.
i.

Inquire the menu selection process.

ii.

Review the price negotiation process carried out by APD.

iii.
rts.

Select 5 samples to review the record of menu selections in different po

4.

PERFORMANCE MEASUREMENT

A.
To ensure that proper performance measurement is developed to monitor th
e performance of the caterers and a continuous performance improvement mechanism
is in place.
i.
Inquire ISD the means of performance measurement of the caterers and ass
ess the methodology and sufficiency of the measurement.
ii.

Review the frequency and completeness of the measurement.

iii.

Review the distribution and follow-up actions taken on the reports.

iv.
Select 6 caterers to review the last 2 performance assessment reports.
Check if proper follow-up actions had been taken.
5.

CATERING ORDERS

A.
To ensure that there is adequate control over the placing of catering or
ders to the caterers.
i.
Inquire the general/standard guidelines on the placing of catering order
s to caterers.
ii.
Send memo to 10 different Airport Services Managers to inquire their con
trol mechanism on the placing of catering orders to caterers.
iii.
Assess the adequacy of distribution of all parties concerned on the fina
l catering orders information.
B.
To ensure that excessive catering orders are being properly monitored by
appropriate parties.
i.
Inquire the methodology of preparing the Excess Meal Statistics Summary
and check the accuracy of the Summary in both dollar and quantity terms.
ii.
Review the follow-up actions taken on those exceeded Meal Wastage Target
ports.
6.

INVOICES PROCESSING & PAYMENTS

A.
To ensure that there are proper control over catering invoices processin
g and payments.
i.
Inquire the catering invoices processing procedures in outports (using t
he samples in N5-1) and ISA.
ii.
Review their invoices checking process before payment effective to acces
s the adequacy.

iii.
Select 10 catering invoices from different caterers and check if they ha
d been properly checked and processed before payment effective.
iv.
Identify the common reasons of discrepancies, the handling procedures of
ISA and ISD on the discrepancies and assess the efficiency of the handling proc
edures.
v.

Check payments records and account posting records of the above samples.

vi.
Review the reasonableness of the outstanding in the catering accrual acc
ounts and the reconciliation process of the accounts.
7.

MANAGEMENT CONTROL

A.
To ensure that there are proper management reports and meetings to revie
w the catering costs.
i.

Assess the frequency of the Monthly Monitoring Meeting (MMM) in ISD.

ii.
Review the past 6 meetings minutes and check if any catering costs issue
s are tabled on the meetings.
iii.

Check the accuracy of the catering information presented in the MMM.

iv.
Review the past 6 months Budgetary Control Reports and assess the explan
ation notes on variances noted in catering costs.