Hotel operation runs without breaks – 24 hours every day for seven days. Maintaining the load of check-ins and check-outs, catering to different kinds of guests and optimizing occupancy are some common challenges hoteliers are familiar with. For smooth running, the front office must routinely review and verify the accuracy of accounting records. Night audit is the process that intends to fulfil this need.
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”.
Functions of the Night Audit –
Most hotels have a standard practice of having an “accounting day or hotel day”.
This is defined as the daily charging period of the hotel. The night audit closes the books on one hotel day and opens the books on another. The main purpose of a night audit is to verify the accuracy and completeness of guest and non-guest records. But it also helps to carry out the following additional functions:
- Verifying entries of guest and non-guest accounts.
- Balancing all front office accounts.
- Resolving room status discrepancies.
- Monitoring guest credit limitations.
- Producing operational and managerial reports.
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.
What does a Night Auditor do?
Typically, a night auditor tracks room revenues, occupancy percentages, and other standard operating metrics. In addition to this, the auditor prepares a daily summary of the cash, check, and credit card activities that occurred during the day at the front desk. These numbers reflect the front office’s financial performance. The night auditor also summarizes and reports the results to front office management. The hotel’s accounting division (which is primarily responsible for back office auditing) may also use night audit data in preparing
additional statistical analyses.
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
The Night Audit Process –
The night audit process focuses on two major areas: the findings of front office accounting errors (if any) and the creation of accounting and management reports. From an accounting point of view, a night audit ensures the front office accounts match the back-office data through cross-referencing. Discrepancies found during a night audit need to be corrected so that the front office accounting system is balanced.
The following standard steps are common to the sequence of a night audit:
- Complete outstanding postings.
- Reconcile room status discrepancies.
- Balance all departmental accounts.
- Verify room rates.
- Verify no-show reservations.
- Post room rates and taxes.
- Prepare required reports.
- Prepare cash receipts for deposit.
- Clear or back up the system.
- Distribute reports.
Night audit procedures may be performed manually, mechanically, or electronically. If you are using an automated, computer-based system, some of these steps may be combined.
Night Audit Simplified with Hotelogix –
If you use traditional or manual systems, the complete night audit process can get tedious and time consuming. Hotelogix’s powerful PMS allows you to automate this process and double check all records sent to the front desk with ease. Hotelogix’s in-built system empowers the night auditor to spend more time auditing transactions and analyzing front office activities than bookkeeping.
Advantages of using Hotelogix PMS –
- Easy Monitoring: Since Hotelogix offers an automated system, you can balance accounts and verifying account postings with a simple procedure. Hotelogix’s intelligent system compares guest ledger and non-guest ledger audit data with the front office daily report for balancing. When these documents are out-of-balance, there is usually an internal computer problem or an unusual data handling error.
- Retains Transaction History:
Hotelogix’s cloud-based accounting system stores previous balance information for guest and non-guest accounts, along with appropriate transactional details in its electronic database. You can train your front office staff within a few minutes about the necessary data required to automatically carry out a night audit process or do it manually.
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