STATE INSTITUTE OF HOTEL MANAGEMENT, JABALPUR

Affiliated to National Council for Hotel Management and Catering technology, Noida
Under Madhya Pradesh Tourism, Government of Madhya Pradesh
nd
BSC 2 year 3 RD SEMESTER
FRONT OFFICE OPERATIONS

UNIT – 5
NIGHT AUDITOR
Night auditing is actually the audit process of taking inventory of the day’s
work. In other words, it is the activity of checking and confirming that whatever
transaction has been done during the day is correct and complete. Any mistakes
made during the day are corrected and balanced. The audit is done during night
and hence it is called as ‘Night Auditing’.
What is the night audit process?
The night audit, by definition, is a daily review of guest account transactions
recorded at the frontdesk against revenue transactions. This accounting practice
guarantees that all departments of the hotel are working in sync. It also ensures
reliability and thoroughness of front office accounting. Since the front office
audit also includes active non-guest accounts.
A successful night audit process in a hotel balances guest and non-guest
accounts. It also maintains a record of account statements, helps to
appropriately monitor account credit and delivers timely reports to the
management. Regular night audits increase the likelihood of correct account
settlement.
Before the introduction of automated front office systems, the most preferred
time to perform the audit was late evening or early morning hours. Since guest
interaction was reduced to a minimum and front office auditors could work with
zero interruption, it came to be known as “night audit”.
Who is a Night Auditor?
Carrying out the night audit requires attention to detail, especially with
accounting. A night auditor is an experienced hospitality professional who is
familiar with the nature of cash transactions that affect the front office
accounting system. He is also responsible for any discrepancies that may arise
during the audit. Night auditors are finance masters with a thorough
understanding of hospitality functions. More often than not, night auditors are
senior front desk personnel like managers.
Functions of Front Office Audit
The main purpose of front office audit is to verify the accuracy and
completeness of the guest and non-guest accounts against revenue centre
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FRONT OFFICE 3 SEMESTER COMPILED BY : MS. CHAHAK CHADHA
 STATE INSTITUTE OF HOTEL MANAGEMENT, JABALPUR
Affiliated to National Council for Hotel Management and Catering technology, Noida
Under Madhya Pradesh Tourism, Government of Madhya Pradesh
nd
BSC 2 year 3 RD SEMESTER
FRONT OFFICE OPERATIONS

transaction report. Specifically the front office audit is concerned with the
following functions.
1. Verifying posted entries to guest and non-guest accounts.
2. Balancing all front office accounts.
3. Revolving guest credit transactions against establish limits.
4. Generating operational and managerial reports.
It is important to understand that the front office audit is concerned with only
front office activities. The audit of food, beverage in room refreshment centre,
banquets, and other revenue outlets is usually the responsibility of the
accounting department and accrue the day after these outlets close. Very large
hotels may require extensive staffs to audit food, beverage and other revenue
producing department.
In some small hotels, the front office auditor may perform several parts of a
complete audit in addition to the front office audit since there are fewer revenue
outlets in small hotels and the outlets are less complex.
Cross Checking
Hotel departs may generate paper work to document transaction. For each
revenue center transaction, the originally revenue center classifies and records
the transaction type (cash, charge, or paid out) and its monitory value. Front
office personnel may review on online postings to ensure that the appropriate
guest or non-guest electronic folio has been properly accessed. In addition,
revenue centers not interfaced to the front office system may need to use a
voucher to communicate transactional information to the front office for
posting.
The front office auditor relies on transaction documentation to prove that proper
front office accounting procedures have been followed. The auditor’s review of
daily posting of daily posting reconcilers front office accounts with revenue
center and departmental records.
Credit Monitoring
Software responsible for monitoring the credit limits of guest and non-guest’s
accounts helps maintain the integrity of the front office accounting system.
Establishing line of credit or credit limits depends on many factors. Such as

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FRONT OFFICE 3 SEMESTER COMPILED BY : MS. CHAHAK CHADHA
 STATE INSTITUTE OF HOTEL MANAGEMENT, JABALPUR
Affiliated to National Council for Hotel Management and Catering technology, Noida
Under Madhya Pradesh Tourism, Government of Madhya Pradesh
nd
BSC 2 year 3 RD SEMESTER
FRONT OFFICE OPERATIONS

credit card company floor limits, the hotels house limits and the guest’s status or
reputation as a potential credit risk. The front office auditor should be familiar
with these limits and how they relate to each guest and non-guest account. At
the close of each business day. The front office auditor should identify guest and
non-guest accounts that have reached or exceeded assigned credit limits (front
office software can flag these accounts automatically). These accounts are
typically called “High balance accounts” a report lighting high balance accounts
or a high balance report. Should prepare for appropriate front office
management action.
Verify No show
The front office auditor may also be responsible for cleaning the reservation file
or filling and posting charges to no-show accounts. When initiating the
electronic posting of no-show charges. The front office auditor must be careful
to verify that the reservation was guaranteed and the guest never registered with
the hotel. Some times duplicate reservations may be made for a guest or a
guest’s name may be misspelled and another record accidentally created by the
front office staff or system. If these are non identified by front office
reservations staff. The guest may actually arrive but appear to be a no-show
under the second reservation.
Cancellations
No show billings must be handled with extreme care. A front desk agent who
does not record cancellation properly may cause clients to be billed in correctly.
In correct billing may lead the credit card company to reevaluate its legal
agreement and relationship with the hotel. In correct billing may also cause the
hotel to less the guest’s future business and the business of the travel agencies or
intermediary that guaranteed the reservation front office staff must at here to
establish no show procedures when handling reservation cancellation or
modification.
What is the Night Audit Posting Formula?
Regardless of how the night audit is conducted, the basic account posting
formula applies:
Previous Balance + Debits – Credits = Net Outstanding Balance
PB + DR – CR = NOB

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FRONT OFFICE 3 SEMESTER COMPILED BY : MS. CHAHAK CHADHA
 STATE INSTITUTE OF HOTEL MANAGEMENT, JABALPUR
Affiliated to National Council for Hotel Management and Catering technology, Noida
Under Madhya Pradesh Tourism, Government of Madhya Pradesh
nd
BSC 2 year 3 RD SEMESTER
FRONT OFFICE OPERATIONS

Night Auditing process

1. Transfer sheet wise total of all guest ledger transcripts in to the
recapitulate sheet. Total each column of the recapitulation sheet.
2. Check all paid and endorsed bills of the day separate out paid bills and
endorsed bills.
3. Separate endorsed bills into the once payable in foreign currency and
other payable in Indian currency.
4. Prepare city ledger transfer with the endorsed bills. Totals of city ledger
transfer must tally with the total of the transfer credit in the recapitulation
sheet.
5. Prepare master food and beverage sales summary from the sales summary
received from different food and beverage sales outlets.
6. Tally room sale prepared by the receptionist in the night receptionist with
the room count and house count of the recapitulation sheet.
7. Tally room count and house count prepared by the receptionist with the
room count and house count of the recapitulation sheet.
8. Check all non food and beverage sales summaries from their sales points
with the help of supporting vouchers credit sales must tally with the total
credit sale indicated for the respective sales point in the recapitulation
sheet.
9. Compare duplicate copies of the restaurant vouchers with the restaurant
sales summaries to check that entries in cash and credit columns are in
order.
10.Total credit sale of mater food and beverage sales summary should tally
wit the total of the food sales in the recapitulation sheet.
11.Check all cash receipts with the FOC & MC cash receipt and their
corresponding entries in the FOC & MC cash books.
12.Check all paid out vouchers and allowance vouchers. Prepare summary
of paid out’s and allowances. Total of the paid out and allowances must
tally with their respective total in the recapitulation sheet.
13.Prepare cross sales summary.

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FRONT OFFICE 3 SEMESTER COMPILED BY : MS. CHAHAK CHADHA
 STATE INSTITUTE OF HOTEL MANAGEMENT, JABALPUR
Affiliated to National Council for Hotel Management and Catering technology, Noida
Under Madhya Pradesh Tourism, Government of Madhya Pradesh
nd
BSC 2 year 3 RD SEMESTER
FRONT OFFICE OPERATIONS

14.Prepare cash turn over statement. Total of cash turned in and impressed
should be equal to the amount of cash in the cash book.
15.Prepare trial balance and ensure that it tallies.
Preparing Night Audit Report
The front office auditor typically prepares reports that indicates that status of
front office activities and operations. Among those prepared for management
preview are the final department detail and summary reports, the daily
operations reports, the high balance report and other reports specific to the
property.
Final department detail and summary report are produce and may be filled along
with their source documents for accounting divisions review. These reports
help to prove that all transactions where properly posted and accounted for.
The daily operations report summaries the days business and provides insight
into revenues, receivables, operating statistics and cash transactions related to
the front office. This reports is typically consider the most important out come
of the front office auditor. The high balance report identities guest whose
charges are approaching an account credit limit designated by the hold (house
limit).
The software of an automates front office system may be programmed to
produce many management reports on demand. For example, the high balance
report may be produced at any time during the day as a continuing check on
guest transactions and account balances. Another important report is the daily
summary or flash report. The daily summary provides a snap short of important
operating statistics of the previous day, as well as month to date totals. The
hotel manager find this summary report very informative and easy to read, they
often read it at the start of a work shift. The daily summary may also show an
accompany and rate forecast for the new business day, altering management to
changes that may have happened over night.

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FRONT OFFICE 3 SEMESTER COMPILED BY : MS. CHAHAK CHADHA