UNIFORM SYSTEM OF ACCOUNTING Uniform accounts means maintaining books of accounts and preparation offal accounts. by similar type of organisation in the same manner as directed by an agency of association ~ which design the system. j ~ The most successful uniform system was introduced by the Federation of Master Printers (USA)in 1911. In March 1926, the Hotel Association of New York city adopted and recorrimended to the members a newly formulated uniform system of accounts for hotels. In September 1926, America Hotel & Motel Associcaton ofthe United States & Canada aclopléd the same. N ecessities or pre conditions for installing U.S.A 4. Unto ‘Accounting Records :-Both subsidiary books and ledger accounts kept by the participants must be uniform in layout and enable the recording of all transactions in a pre~ determined manner. 2. High degree of standardisation in recording of al income and expenses 3: Unformity of accounting in matters such as valuing fixed assets; methods of depreciation, valuation of stock etc. Four different system if 1. U.S.A for Hotels (USAH) 2. U.S.Afor Small Hotels (USASH) Tw) r 3. ULS.A for Motels (USAM) a 4, _ U.S.A for Restaurants (USAR) ° Ad vantages 1. Simple to use 2. Comparison is easy 3. Helps depratmentalisation 4. — Statistics Disadvantages 1. Standardisation of accounting methods and procedures Is always difficult 2. Clearly itis impossible to have one system of uniform accounts forall the different types of establishments (hotels, restaurants, canteen etc). Scanned with CamScannerFlotel Accountancy Schedules, / ~ ndividual statements prepared for various deparments. giving details of income and expenses connected to that area . These schedules are prepared departments. wise or heads of account wise. ‘# . ft AL HMA prescribes the following schedules:- 1. Rooms schedules F&B Schedule 3. Telephone schedule 4. Gift shop schedule b ‘ 5._Garage & Parking schedule 6. Other operated dépts schedule 7 8. Rentals & Other income schedule Administrative & General schedule Data Processing schedule 10. Human Resource schedule 11. Transportation schedule 12. Marketing schedule 13. Property Operation & Maintenance Schedule 14. Energy cost schedule 18. Fixed Charges schedule 16. Income Tax schedule 17. Salaries & Wages schedule 18. Pay Roll Taxes & Employee Benefits Schedule: 19. House laundry schedule 20. Resale of telephone services schedule 8 Scanned with CamScannerRO ee es Rovenug - Www) ‘Teantient ~ reguler |G) Transient = group } (+) Pefmanent (# Extra room revenue = Total reverue evances J Net revenue Exnenses ‘Solaries and wages +2 Employee benefits i "ez Total payroll and related expenses Other expenses Chino, glasswe Commissions * “«) Contract clesning Sn11 Laundry and dry cleaning «1 Operating supplies + Other operating expenses eservation expense ) Uniforms : +B. Total other expenses 1nd linen, ork Departmental income (loss) Ne! asvonua~ Globe Pay 4) fate es 1 oe toda! ales expenses) ca 1.22 Schedule 8=1 Current Period | [| | lil Scanned with CamScannerwe FOOD AND BEVERAGES-SCHEDULE 2 Revenue ~< CAtLowance NET REVENUE -S h Al AGE SALES fea of Food’ ‘and crops eis + Cost of Employee Meals ¥ Vet Cost of Food and Beverages Spies Ee HER INCOME -% s Meating! loom Rentals ver Charges a iMiscellaneous Banquet income | Miscellaneuous Other Income ‘> Dther Cost of Sales & ‘Net Other Income, gROss PR PROFIT (Loss) ery es * EX! ap Seloroe and Wages ‘ © Employes Benoflis eo ola! Payroll and Rolatsddibonsos gurus Other Expenses China,.Gl Gontract Kitchen Fué) Laundry and Dry Cleaning 6ware, Silver and Linen odo ing . ‘Muslo and Entertalnmont Operating Supplos Unilorms Other Total Othor Exponsoe CAE) DEPARTMENTAL INCOME (Loss) / GP- (Told PRE + OE) Re Re» ieee —— Uconces : * ae I Hi dd fi Scanned with CamScannerTELEPHONE-SCHEDULE 3 | : Current I | wil ¢lacal pits ss “+. Long-Distance + f + Service Charties i t Pay Station = Total Revenue at) "ALLOWANCES ' evenue ~~ (Pmt) cost ‘OF CALLS > > Local “tong , Didtance Se a “don tal Cost of Calls 0% GROBs re fa ee ais EXPENSES : D 4. Salaries and Wages ' +Eimployee Benefiis |, ae 5 Total Payroll and Relates Expenses “© + = Bintngs & Stationery “Yates *Other =Total Other Expenses “E DEPARTMENTAL || INCOME (Loss) D oe- Gh petete 1 G. Pot Less = (Vat Revenug Eoaeay 2 a) 2)Pept: Lncome ororda G+ P~ (Tototpayraagy Rado acl, wetat + Tofad other Exp) Alswingn at gor bs a o> ° MP8 tT Momalte ax dy Scanned with CamScannerSo + DETAILED STUDY OF INCOME STATEMENT. OPERATED DEPARTMENTS OF A HOTEL 1. Rooms 2. Food & Beverage 3. Telephone 4. Gift Shop S. Garage & Parking S. Other operated Dept Eg. Sale of post cards, news paper, et 7. Rental & Other income Eg. Restaurant. income UNDISTRIBUTED DEPERATING EXPENSES 1. Administractién'& General 2. Data Processing 3- Human resources 4. Transportation 5. Marketing &. Property operation & Maintenance 9. Energy cost FIXED EXPENSES 1. Rent 2. Interest 1. 3. Depreciatioh and amortigation 4. Property traces a insurance NET INCOME (A- B - C) e SE ie Scanned with CamScannerHotel Accounaney OPERATED DEPARTMENTS Rooms Food and Beverages Telephone Gift Shop Garage and Parking Other Operated Departments Rental and Other Income Total Operated Departments UNDISTRIQUTED OPERATING EXPENSES Administrative and General Data Processing Human Resources Trans portation Marke ting Prope rty Operation Maintenance Energy Costs Total Undistributed Operating Expenses and INCOME: BEFORE MANAGEMENT FEES ANNO FIXED CHARGES Management Fees Interest Expenses Depreciation and Amortization INCOME BEFORE INCOME TAXES Gain or Loss on Sale of Property INCOME BEFORE INCOME TAXES Income Taxes NETINCOME Schedule Revenue Rent, Property Taxes and Insurance 14 AND GAINOR LOSS ON SALE OF PROPERTY STATEMENT OF INCOME Net Cost of ‘Sales Rs, Rs. @ osone Rs. 14 4 14 15 Current Period fl and — Fated Other {income menses Expenses; (Loss) Ex on Rs. Rs. Total operated dept. income Incorne before fixed charges Less fixed charges Incomne before income tax Income before income tax Less Income Tax Net incomes oF Less. undistributed operating expense and gain or loss on sale of properly INCOME STATEMENT AT A GLANCE Scanned with CamScannerHated le countaney GIFT SHOP-SCHEDULE 4 Current “ Period ' REVENUE ALLOWANCES ” NET REVENUE COST OF MERCHANDISE SOLD GROSS PROFIT (Loss) EXPENSES Salaries & Wages Employee Benefits Total Payroll and Related Expenses + Other Expenses Operating Supplies Uniforms Other Total Other Expenses DEPARTMENTAL INCOME (Loss) Scanned with CamScannerHotel Accountancy GARAGE AND PARKING -SCHEDULE 5 Current Period REVENUE ~~ Parking and Storage Merchandise * Other Total Revenue ALLOWANCES NET REVENUE COST OF MERCHANDISE SOLD GROSS PROFIT (Loss) EXPENSES Salaries and Wages Employee Benefits Total Payroll and Related Expenses Other Expenses Licences Management Fee ‘Operating Supplies Uniforms Other Total Other Expenses DEPARTMENTAL INCOME (Loss) Scanned with CamScanner ANDO RDON.D OO AA-NADR DR DN HOR RnHotel Accountancy RENTALS AND OTHER INCOME-SCHEDULE 6 = SPACE RENTALS Clubs * Offices Other Total Rentals CONCESSIONS Total Concessions COMMISSIONS Laundry Valet Games anid Vending Machines In-house:Movies Other Total Commissions CASH DISCOUNTS EARNED ELECTRONIC GAMES AND PINBALL MACHINES FORFEITED ADVANCE DEPOSITS INTEREST INCOME SALVAGE VENDING MACHINES OTHER TOTAL RENTALS AND OTHER INCOME Current Period Rs. Scanned with CamScannerTYP STATED DEPARTMENTS-SCHEDULE ° Current i REVENUE Period Services. : Sales of Merchandise a Total Revenue ALLOWANCES a NET REVENUE COST OF MERCHANDISE soLp GROSS PROFIT (Loss) EXPENSES Salaries & Wages Employee Benefits Total Payroll and Related Expenses Other Expenses China and Glassware Contract Services Laundry Linen Operating Supplies Uniforms —— Other aa Total Other Expenses 3 DEPARTMENTAL INCOME (Loss) | Soa Scanned with CamScannerweesvevvvwvverwe ew ee oo ADMINISTRATIVE AND GENERAL-SCHEDULE 7 Current Period SALARIES AND WAGES Rs, EMPLOYEES BENEFITS Total Payroll and Relaled Expenses OTHER EXPENSES Credit Card commissions Data Processing Dues and Subscriptions Human’ Resources Insurance-General Operating Supplies? Postage and Telegrams Professional Fees Provision for Doubtful Accounts Travel and Entertainment ——e Other = Total Other Expenses i TOTAL ADMINISTRATIVE AND GENERAL EXPENSES DATA PROCESSING-SCHEDULE 8 Curent Period SALARIES AND WAGES Rs. EMPLOYEE BENEFITS Total Payroll and Related Expenses OTHER EXPENSES Due and Subscriptions Training Maintenance Hardware Software Operating Supplies Service Bureau Fees Other Total Other Expenses “TOTAL DATA PROCESING EXPENSES Scanned with CamScannerHotel Accointancy zi ~ "| __ __ HUMAN RESOURCES - SCHEDULE 9 Current Period ‘SALARIES AND WAGES cS EMPLOYEE BENEFITS ‘_ Total Payroll and Related Expenses OTHER EXPENSES © Due and Subscriptions Employee Housing Employee Relations Medial Expenses Operating Supplies Recruitment Relocation Training Transportation Other eer et Total Other Expenses : cv APPIN N ANA N AM A 9 ninla TOTAL HUMAN RESOURCES EXPENSES AND TRANSPORTATION-SCHEDULE 10 or Current Period os 1 SALARIES AND WAGES _ es EIMPLOYEE BENEFITS Total Payroll and Related Expenses ae x OTTHER EXPENSES Fuel and Oil Insurance Operating Supplies Repairs and Maintenance Uniforms * Other oe Total Other Expenses ae a TOTAL TRANSPORTATION EXPENSES — Scanned with CamScannerHotel Accountancy MARKETING - SCHEDULE 11 Current Period SALES > Salaries and Wages Employee Benefits Total Payroll and Related Expenses Other Expenses Total sales Rs. ‘ RESERVATIONS Salaries and Wages Employee Benefits Total Payroll and Related Expenses Other Expenses Total Reservations “ADVERTISING AND MERCHANDISING Direct Mail In-House Graphics Outdoor Point-of-Sale Material : Print Radio and Television Selling Aids Other = Total Advertising and Merchandising : FEES AND COMMISSIONS ‘Agency Fees Franchisee Fees Other Total Fees and Commissions MISCELLANEOUS MARKETING EXPENSES TOTAL OTHER EXPENSES TOTAL MARKETING EXPENSES Scanned with CamScannerHe tel Accommtaney- PROPERTY OPERATION AND MAINTENANCE-SCHEDULE 12 “SALARIES AND WAGES EMPLOYEE BENEFITS + Total Payroll and Related Expenses OTHER EXPENSES - Building Supplies Electrical and Mechanical Equipment Engineering Supplies Furniture, FDixtures, Equipment and Decor Grounds and Landscaping Operating Supplies Removal of Waste Mater ‘Swimming Pool Uniforms Other Total Other Expenses TOTAL PROPERTY OPERATION AND. MAINTENANCE Current Period Rs. ENERGY COSTS-SCHEDULE 13 Electrical Current Fuel Steam Water TOTAL ENERGY COSTS Current Period Rs. Scanned with CamScannerFlotel A lecountancy . FIXED CHARGES-SCHEDULE 14 ' RENT, PROPERTY TAXES, AND INSURANCE Current Period RENT > Land & Buiiing ata Processing Equipment : ; . Telephone Equipment. | Other Equipment Total TAXES OTHER THAN INCOME AND PAYROLL Rent Estate Taxes Personall Property Taxes 7 Utility Taxes Po" TS ) Business and Occupation T: ' a pation Taxes Total ) : } INSURANCE ON’ BUILDING AND CONTENTS ) TOTAL RENT, PROPERTY TAXES, AND * : : 1 : INSURANCE ) INTEREST EXPENSES d Mortgages D Notes Payable Interest on Capital.Leases D Other Long-Term Debt P Amortization of Defferred Financing Costs d Other D Total o DEPRECIATION AND AMORTIZATION D Buildings and Improvements D Leaseholds and leasehold improvements DB Furnishings and Equipment , Capital Leases o Pre-opening Expenses o Other oO Total oO ; GAIN OR LOSS ON SALE OF PROPERTY o =| oO o Scanned with CamScannerHotel Accountancy INCOME TAXES - SCHEDULE 15 F EDERAL Current Deferred Total SS TATE Current Deferred Total OTHER Current Deferred Total T-OTAL FEDERAL AND STATE INCOME TAXES Scanned with CamScanner ated POA M i. £ Pe fm AcHotel Accountancy SALARIES AND WAGES-SCHEDULE 16 ROOMS * Management Front Office Housekeeping Service Security Total (Schedule 1) FOOD AND BEVERAGE ' = Management Kitchen Service Other. Total (Schedule 2) TELEPHONE (Schedule:3) GIFT SHOP (Schedule 4) GARAGE AND PARKING (Schedule 5) OTHER OPERATED DEPARTMENTS (Schedule ) ADMINISTRATIVE AND GENERAL Manager's Office Accounting Office Credit Office Front Office Book keeping Night Auditors Receiving clerks Timekeepers Total (Schedule 7) DATAPROCESSING (Schedule 8) HUMAN RESOURCES (Schedule 9) “TRANSPORTATION (Schedule 10) [MARKETING (Schedule 11) FPROPERTY OPERATION AND MAINTENANCE, Management Engineers Grounds Office and Store room Other Total (Schedule 12) HOUSE LAUNDRY Managers and Assistant Finishing Washing Other Total (Schedule 18) TO TAL SALARIES AND WAGES Current Period Rs. Scanned with CamScannerFlotel Accountancy: ¢ - PAYROLL TAXES AND EMPLOYEE BENEFITS -SCHEDULE 17 : Current Period Rs. PAYROLL TAXES Federal Retirement . ; Federal Unemployment i , State Unemployment : Total Payroll Taxes EMPLOYEE BENEFITS Non union Insurance Non union pension . Profit Sharing Union Insurance Union Pension Worker's Compensation Insurance Other Total Employee Benefits TOTAL PAYROLL TAXES AND EMPLOYEE ——— BENEFITS i L CHARGED TO DEPARTMENTS t Rooms Schedule 1 Food and Beverage Schedule 2 Telephone Schedule 3 Gift shop Schedule 4 Carage and Parking Schedule 5 Other Operated Departments Schedule - Administrative and General Schedule 7 Data processing Schedule 8 Human Resources Schedule 9 Transportation Schedule 10 Marketing Schedule 11 Schedule 12 Schedule 18 Property Operation and Maintenance Scanned with CamScannerHotel Accounandy * HOUSE LAUNDRY - SCHEDULE 18 £ : Current Period : ‘SALARIES AND WAGED Re PeELOvEE BENEFITS ‘otal payroll and OTHER EXPENSES Related expenses Cleaning supplies Laundry supplies Printing and Stationary Uniforms Other Total Other Expenses CREDITS Cost of Guest laundry Cost of Contessionaires Laundry CODD000N0N0 OU URUIU CHARGED TO DEPARTMENTS — Oo Total Credits o COST OF HOUSE LAUNDRY ) 'o : Rooms ‘Schedule 1 Food and Beverage Schedule 2 . Other Departments ‘Schedule - TOTAL * DEPARTMENTAL INCOME (Loss)-FROM SCHEDULE 3 INDIRECT EXPENSES Amortization of Leased Equipment Capitalized Depreciation of Owned Equipment Interest Expenses Local Taxes and Insurance Maintenance and Utility Expenses Rental of Equipment Other ee Total . ae NET DEPARTMENTAL INCOME (Loss) Scanned with CamScannerclowns or Dot Net Receivables S NN- BALANCE SHEET. Scanned with CamScannervo i + > 3 3 'NTRODUCTION > All business 5 Of geous and sey 3 > > » ) , 8 ' Tanagement Remeeteness ang accuracy © 7 Accountants) has OBJECTIVES According to Aicpa, the four objectives of Internal control are 88 follows:. 1. SAFEGUARDING assets 9 : Assets are Fesources such 85 cash, inventory, 6 wipment, building Is, objective oF internal contro ie Protec! These assets fee rere buldings Bp: Praleet the existing assets from lo85.such as then, ¥ b). Maintenance of resources $#Pecialy equipment to ensure efficient utilization, °). Safeguarding of Inventories for resale, (0 prevent waste nd spoitage, 2. CHECK ACCURACY anp RELIABILITY OF ACCOUNTING DATA Accurate and reliable 2¢counting information must not Only be avilable for reports jp owners government agencies, ind other outsiders, but is also necessary for. management's $Wv0 Use in internal operations, Forbospitaity, slablishments this may be bestbe accomplishes by adopting uniform system of accounts; 3. PROMOTE OPERATIONAL EFFICIENCY Operation al efficiency results from, Providing products and Services at a minimum, cost a hospitatity establishne *.aN4 proper supervision promen Operational efficiency. Kor cg) When MR Ne Neate, ee Scanned with CamScanner© PRESCRIBED MANAGERIAL POLICIES 1 eeetNe of internal -sntrolis to crisure that em “Sg UME recording clos 1110 Ul may encod ESSENTIAL FEATURES/ TYPE: The four objectives of Measures of.conuey sife for holding cf ployees follow managerial policies, cnonar® Manageria! personnel can obsene employees Age workers to auhere (0 the policy inl leadership aPStructure *°3. Souna practice 1 Competent and trustworthy. Personnel 7. Segreyation of duty 8 Authorzation procedure 7. Adequate fecords: Proceciie manuals F. Physical controls Budget and intemal reports 19 Independant performance checks % MANAGEMNT LEADERSHIP eee 8 AO Se cattle Management's leadership Is the key to dni dsptaity psration’s system of internal omens Coatds.of cirecters esiebien’s the operation’ and eoement communicates and enforce: the polities, ANd conmunitated to aif Manegrientievels, 7 2. ORGANIZATIONAL STRUCTURE 4 The organization chart fepresents the of anizational Structure of Must know the organization chart and folio, is Sea onal ; f an operation, Statt wf Chain oF eam ShaS 3. SOUND PRACTICES * 5 These are policy onpesure generally setup by, board of directors to create an environmen. whieh vy ‘ach coniryt ? For ag... Se Getting fidsity insurance trom a cathler, 4. COMPETENT AND TRUSTWORTHY PERSONNEL {0 the hospitality industry, the (neler dllfgrence between competitors Which Is the res j e lportant than quality of food served, 5. SEGREGATION OF DUTIES |s generally the ...." Service with ‘Smile ‘may a This involves esigning citi:eci persons to the function Of accounting Custody of assets, And production, Dtios within axonuting {unelion should be Segregated, he = ot Scanned with CamScanner us © yA A 5 n < c 4Hotel Accountancy S-AUTHORIZATION PROCEDURE : Management must properly authorize every business transaction, Management prévides’ general authorization for employees to follow in the normal course of performing their } bs, 7. ADEQUATE RECORDS” / iments for recording transactions are essential to effctive inemnal, control. They Docur include such forms as registration cards, guest checks, pay roll checks, Purchase orders, etc..... i S. PROCEDURE MANUALS 7 ” Eact, job within the Lospitality operation, can be reduced to.wrlting. The procedure anual should list the details of each position including how when to perform each task. 9. PHYSICAL CONTROLS Physical controls include security services dnd ‘measures for protecting assets, such as Sates, a locked store rocm etc... 10. BUDGETS AND INTERNAL REPORTS i penis of internal control system are functioning Broperiy. In order for a performance check to be successful, it mess be independent of the Personnel responsible for the data being checked Scanned with CamScanner- Pow, Bae yo . ‘ i INTERNAL AUDIT & STATUTORY AUDIT; INTRODUCTION / ea _ ~“*Auditing is an important professional task carrying heavy responsibility and carrying for ‘commensurate skill and judgement”. In the early stages of civilization the methods of maintaining accounts were vey crude. The size of business houses were very small and with little amount of capital, the number of transactions to be recorded was so small that each individual was in a position to maintain his accounts and check for himself all his transactions. Hence it was thought to be a sheer waste Of time and money to get the accounts checked by someone from out side. (@ricin OF AUDITING The origin of auditing may be traced back to the 18th century when the practice of large Scale production was developed as a result of industrial revolution. (the word "audit" is derived from the Latinword “auditure" which means to hearOriginally, it was customary for persons responsible for maintenance of accounts to go to’sofne impartial and experienced persons, ordinary judges, who used to hear these accounts and express their Opinion about their correctness or otherwise. Such persons were known as “auditors”, Thus the term “auditor” means literally "one who hears" and is used ever since the days when public accounts were accepted and approved on the basis of hearing the accounts read. AUDITING IN INDIA The Chartered Accountants Act was passed in 1949 and it came into force on July, 1, 4949. On passing of this Act the regulation control and management of the profession passed from the Central Government to the profession ie. in the hands of the Institute of Chartered ‘Accountants of India which was formed as per the provisions of the said Act. Now, a person has to follow the rules and regulations of this institute and has to pass the examination conducted by it. Only then fie can obtain his cerificate of Chartered Accountant (C.A.) DEFINITION OF AUDITING It to give a precise definition of the word “aucit" in a word or two, Originally, ‘as confined merely to cash audit, ie. an auditor had to ascertain whether aintenance of accounts had properly accounted for all the cash receipts on behalt of his principal. But now, it has a wide usage and it now means a thorough scrutiny of the books of accounts and ils ultimate aim is to verify the financial position disclosed by the Balance sheel and Profit & Loss account of a company. Itis a bit difficult its meaning and use w the person responsible for the mi Scanned with CamScanner5 Qve 3 Hotel Accountaney : 55 oO Montgomery : : 38 ‘Aurtng fs a systematic examination of th books and records ofa bilsiiess or other organization in order to ascertain or verily and to report ypon the facts regarding its finaj'cial peration and the result thereof * fo R.B.Bose ) 1S ee “) S “Audit may be said to be the verification of the accuracy and correctness of the books Ue of acctnts by independent person qualified forthe jab and natin any way connected with the Ww Preparation of such accounts) ! o a re Duties of an Auditor f x 1. To check the arithmetical accuracy of the accounts 7 iD 2. To check the books of accounts with the help of all the relevant vouchers, invoices x et. : v shown in the Balance sheet, 3 4. To report to the client on the basis of his findings > Qualities of an Auditor An Auditor should be a Chartered Accountant. Without obtaining the certificate of a Chartered Accountant, he cannot be appointed as an audijor of a public company. So far as his aualities are concerned, some of them are inherent in him while there are others which he has {0 acquire. He should be an expert in his work while on the other hand, he should be a main of character and noble behaviour. Ordinarily the auditor must possess the following qualifications ) and qualities:- oO 1. An auditor must be well versed in the fundamental principles and practice of all the aspects 'o ‘of accounting. ie 2. He must have a thorough knowledge of cost accounts so as to enable him to do cost audit, ' 3. He should have a thorough knowledge of the Company law and Mercantile Law and also of oO the principles and practice of auditing. . ° 4. He should also be familiar with Economics and Economic Laws : 5. He should study the audit case laws, 0 6. He should have a good knowledge of industrial management, financial administration, and o * business organization ~ 6 7. He should be honest g 8, He should be very cautious and vigilant 6 9. He should be methodical, hardworking and accurate. 0 10.He should not disclose the secrets of his client. oD CLASSIFICATION OF AUDIT ~ 0 (Grarurony suorr In the case of many undertakings, audit is made compulsory under statute, It is so : because these undertakings are established by statute. The audit of their accounts is termed ? Bs 2 slatutory audit. s Eg. Audit of companies, Trusts, €t0..une) ) INTERNAL AUDIT , By virtue of the organizational pattem some business institutions appoint auditors who are made responsible to have a constant and regular review of their accounls, Such a cadre of ‘ auditors is of a permanent nature and helps a lot in the detection and prevention of errors and ) Scanned with CamScanner43 Hotel Accountancy t ie to « ary from businéss frauds. Itis.true thal the scope and objective of internal audit oe likely to vary o 1 business depending upor, the uilferent nature of the organization. f i ing the accounts, are Such auditors are known as internal auditors who, besides chectindl’ ind the system of ¢ required to report also as to know the system of accounting can be nprave ‘appointed as public internal check be made economical and efficient. Such auditors cannot of accounting ¢ auditors or external auditors and hence are excepted to know the minor details of A Pattern adopted in 7 manner in ite Sines. They are not required to submit their reports in thé ( Which external auditors do. . i A lucted by 1 short internal audit is the examination of books and accounts whici. . condi 4 the salaried officials of a b it is, thus_. 'usiness as internal auditors throughout the year. Intern aul sheen ( and seebendent appraisal of activity within an organization ‘opéraitions. Itrendeys a p and constructive service to Management. It is optional. ROLE OF INTERNAL. AUDITOR anys THe role of intérnal auditor Normally Verifying, testing and reporting on. ly involves the following :- 3: Financial information required by management 3, Sesing information required by managerront £9. Budgets, variances, cash forecasts etc... 8. Effectiveness of internal control systens Preventing loss of assets or manipulation of -accounting data, erpenglhs of controls in non-accounting areas such as administration and selling. 8. Efficiency of company's management Particularly in the way in which it formulates plans, Policies and decisions, REQUIREMENTS OF INTERNAL AUDIT DEPARTMENT The effe Includin ctiveness of the departmentis department on a number of factors ‘1. Independence The internal audit department should be fully independent of the staff whom itis Layestizating. intemal auditors should not be apponteg py the Accounts Manager since itis ths ‘Work of the Accounts Manager and his staff on wilh the, internal auditors in fact reporting 2. Qualifications ‘The qualifications and experience ofthe internal auditor should be appropriate. S. Adequate staffing ‘There should be an adequate number of persons able to carry out the work th Li i ta iti i mm 4. Scope and type of work Complete freedom would be given to £9 carry out its work as it thinks fil, have ace AUDIT FoR HOTELS General guidelines 1- The auditor shoutd first of all examine the 5 {o the purchases, issue, payment, at He should also familiarise himself wi hotel . This is very necessary, the internal audit department by the mana 85 (0 books and records. erent INCOME ihe receipts from travellers should be checked by reference to records made in ihe cash book. Scanned with CamScanners 2 > Hotel Accoununey 4. 5. EXPENDITURE For balances outstandin; Other receipts shou 44; ig the personal ledger should be examined, ld be carefully examined 5 He should see that proper distinction has been made between capital and revenue 8. The payment of wages, salaries etc, should be vouched. 9. papa gtly cash payments should be thoroughly checked. : . should be seen that the expenses incurred on painting, equipment, etc...are spread Overareasonable number of years. MISCELLANEOUS ; 10. _ He should see t Balance sheet, He should see that all assets have adequately depreciated, 1d Job Position Category Responsible to Job Definition Directly Controls/ As signed Area of Hours of Operation Authority Work Performed Coordinates with hat all assets and liabilities are properly and distinclly shown in the! NIGHT AUDITING IN HOTELS Night Auditor ‘Supervisory 1. Income Accountant ; 2. Chief Accountant Compile and audit all revenue transactions and reconcile the Fevenue statements of outlets with the front office accounting machine with a view to prepare a daily report of the day's business Frorit-Office Cashiers ‘Supervises Desk back office Activity Front Desk Cashiers Cage. Basically 8 hours at night but hired for job completion. Can question front office and restaurant cashiers to ensure all transactions are accounted for. 1. Reconcile all revenue statements from outlets with the machine 2. Verify and Validate front office cashier's vouchers / forms 3. Check guest folios 4. Verify Front Office Cashiers Report 5. Clear cashiers NCR machine 6. Prepare a statement of bills over a specified amount 7. Prepare Dally Transcript 8. Audit Night Receptionist's Room Report 9. Account for city ledger credit amounts Front Office Cashier All cashiers of revenue outlets Scanned with CamScannerDEPARTMENTAL ACCOUNTING 1. Define departmental accounting explain the various method to find out profits under this, method, ‘ 2. Distinguish between allocation and aportionment. ‘ DEFINITION & OBJECTS G method of book keeping and accounting the purpose of which is to findout howmuch Profil or loss is produced by each section or department cto bucinees 5 Department means revenue producing departments eg. Rooms. F&B outlet -Obiect: - To find out business result of each department. _ ~Te take corrective action ifa particular department is running in loss Example ABC CATERING LTD- DEPARTMENTAL INCOME STATEMENT LOID"D.2O.FOvQ 2O10.O 2070 A 2O3E O + Items, Dept. A Dept.B Dept.c Total ¢g Rs, Rs, Rs. Rs. Sales 10,000 20,000 25,000 55,000 \ Less cost 6,000 14,000 26,000 46,000 Profit/Loss 4,000 6,000 (1,000) 9,000 Here the loss of Dept. C is reveled only by Departmental accounting, 00K KEEPING RECORDS Subsidiary books with analytical columns should be kept. Eg. A restaurant has 3 revenue producing deptment- food, beverage, & tobacco, DEPARTMENT PURCHASE BOOK > OAD DODD LD2PWD. Date Supplier's name Invoice [ Food T Beverage | Tobacco Total No. i Rs. | Rs. Rs. Re 1997 Jan.1 | Grand Bazaar 16 | 200 = : _ Jan.2 | KS.B.C Lid 7 - 5,000 a 5,000 Jan.15 | Supreme Traders | 25 : =| 1,000 1000 _ |, Total 200 5,000 1,000 6,200. | cca Scanned with CamScannerHotel Accouiuancy How to find out profits [> GROSS PROFIT METHODS | SDEPARTMENTAL Us Ner PROFIT Gross Profit Metho« - Commonly used in Hotels . _~ Analysis items in Trading A/c’s only. (Stock, Purchases etc.) - Aim is to contro! Bar Profit / Kitchen Profit/ Gross Profit. - In P &L account common expenses & Incomes are entered, Merits:- Simple to use : Demerits:- No attempt contro} departmental expenses such as wages.salaries, lighting, heating etc. 'p G.P method trading A/c is prepared in the columnar/tabular form. But P& L a/c in the usual method (ie. one column only). Scanned with CamScanneroy Ue nee eo0°o eeoen . Yeoh BOD Me™ we 2 © 7YYUIIIIO OO! DEPARTMENTAL PROFIT METHOD {Needs elaborate set of records : ra Zpplied only in large hotels & catering ~ Aim is to control dé fit ot ‘eparimental profit of each dept, ~ Departmental sales - Departmental Expenses, The following Alc's are prepared, Trading & P&L A/c (in tabuler or columnar form) General P&L A/c (To record common expenses the common benefit of business as whole) Merits : imposes responsibiily upon departmental managers Pemerits: Administration expense will be very high, 3. Net profit method: All expenses ore debited or charg: Separtments to arrive al the exact net proto each dept. ION OF EXPENSES be allocated (Trading a/c) (Overheads). Apportioned (P&L. A/c) & common income/expense incurred for Jed to the revenue producing CLASSIFICaTi 4. Direct : Can 2, Indirect: ‘ect Expenses Expenses incurred or originate from a certain dept. Ea. Cost of kitchen wages - Debited against food seiney Barmans wages - Detited against Bar Sales” Note:- Direct Expenses will be given Seperately and it should be entered in Trading A/c. It is called allocation, vay Haat Indirect expense/Overhead : Expenses incurred on the behalf of the business as a whole. | There are apportioned / Split ‘Con s6me fair & resonable basis between all depts.“ Eg. Rent & Rates- Apportioned on the basis of floor space of each dept, i ge GM's Salary a Turnover of each dept. ' o Depreciation - Value of asset Electricity Charge > ___ Plug points/meter readings Building tax or insurance premium — | Floor spaces, Apportioned expenses are shown in Pa ale Note:-in exam. question student ul be given the percenta to PAL Alc. ry ‘ Allocation Vs Apportionment . | ae [-1). Direct expenses | Indirect Expenses/Overhead \ 2). Shown in Trading A/c Shown inP&LA Ua fuwin eo (ned j ' its -Net Profit Methos | a: {Shown department vise proflor ss | 2, More accurate information gelratio for apportioning expenses, Scanned with CamScannerSe, Vas: Turnover for the period: (AARITS: *« Shows department wise, profit and loss, * Gives most accurate Information, DEMERITS: * Controverts the methods of @pportionment. The G.M's salary: Turn over of each department. (In exam students will be given the Percentage or ratio, account.) for apportioning expenses to P&L Scanned with CamScannerScanned with CamScannerSOs 00 9 {9.400{ e700 soso | 9c “ Sica. Lt,uon| 32s ,c0. 8,667 13,000 435 Fs 3 ice} “IT,500 5,833| 5 ; 12535 |_-. 21,801 B26et] a Yea L335} 11,000 BS6E tres se 3333.1: 5.000 Leet} 7 — Te Aeactionmont | 55590 | e850) aa,t87 | [seco Heep Net pal 15,667] 88,100] 44 655 I {ongment. Sp é Toe me ie = eet Bsoc0ox Se 11500 Dept : Dep > BSCOK IL = S53. Scanned with CamScanner: foom SCHEDULE + J RoBLens Qh tne wae ffalloring Ladger balan: vracra... echadite . LEG, BEC a 32,299 + cari coho Ta 1,390 2 _tifazvere.... J = 14, £29 ~ Sakes CracashOih= WO — 36,820 Kimen Lxpenrses —~ +, 200 a—athhageo. — 14,500 Sonus lo ataly Pee oO +. Georalown axtipyply, - 6,206 ~ ey 86 B LOIS 3200 \ =. 36.000 = 400 i a . REVENUE + Shes hransiont uv ~ SAGs Gransienrt FW = a Shale ormmanent " Scanned with CamScanner30,290 E00 C5an pale G90 es Scanned with CamScanner— sing afe Balance fFUpart Gt. From the gollewing * Steer. exctuactele eC. LAO OAT? FORTIET. Ls L7Z, COC 32,096 5000 LL 5Q° 2 4529 wens AZOCO _.. .- 2.2 3,600 3,006 4000 3 800 4509 4,200 y 42,500 oon, Merton 1, F5,000 . 23900 . 242500 £22 ALChAWCE Foams .~ 4.000 ~ 238500 — NET REVENUE Scanned with CamScanner=. 235m [S205 7; aa -=: 463,200. ._ es Scanned with CamScannerCPL Ma 8,220 LI 30832 Caerer. tanrcoc 2 ! ; ba he Rs -- bake ce er eos ~ 30,66,5 Df gp Mmraaielad gasiga — $66, ig 3 7 2 : Yen. sem ~ Ley Fanny ~Perenanieeie 7 ! Altowance roory | NET REVENUE, Scanned with CamScannerDn ana eH Scanned with CamScanner