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Internal Audit and Process Improvement of Hotel

Internal Audit and Process Improvement of Hotel

 

Board of Directors, look up to the Internal Audit and Process Improvement of Hotel with the greatest level of expectation. To them, the internal audit report gives them a feel of how the business is being conducted, whether the checks and balances are in place, whether there are any areas of concern which, if not addressed, could entail financial unnecessary risk for the company; all this and more.

We draw an audit plan after analysing risks and objectives of the client. We focus on Operational and Process audit, and review of existing internal controls / procedures. Our recommendations are specific and practical which help to better utilize existing resources, thus blocking the gaps for revenue leakages, cost saving and improved profitability.

We believe that a right corporate decision making is at the heart of a successful business. We provide expert services through our qualified and experienced professionals.

Risks in Hotel Industry

Every business potentially faces challenges or risks. The type and level of risk can vary wildly from business to business. Market survey studies show that the hotel industry is one of the industry carrying various categories and high level of risks.

Risk in Hotel Industry

The list below outlines the category of most common threats or risks to hotel industry

  • Operational Risk: Adherence to policies, procedures, strategies and statutory compliance
  • Financial Risk: Accounting Risk, excessive cost or lack of efficiency
  • Forensic Risk: Identify theft and fraud, data privacy and security which results in direct revenue leakage
  • Strategic Risk: Through competitors, suppliers, customers, agents, advisers
  • Knowledge Risk: Training issues with employees, business opportunity loss
  • Compliance Risk: Internal audit, control and supervisory mechanism over the staff

 

 

Reasons and Advantages to get internal audit

Internal audits can help to identify risks, which may lead an entity to fail in achieving its performance and profitability targets. Reasons and advantages to use internal audit are as follows below:

Reasons and Advantages to get internal audit

 

 

 

 

 

 

 

 

 

 

 

 

Internal audit also helps;

  1. To ensure that the standard accounting practices which have to be followed by the organization are strictly followed.
  2. To undertake special investigations for the management.
  3. To assist management in achieving the most efficient administration of the operation by establishing procedures which comply with the company’s operating policies.

What we will do for our client

After a thorough study, analysis and given our extensive experience, we understand that the major areas in hotel industry are covered under departments namely; front office, sales & reservation, food & beverage including banquet and minibar, procurement, stores, system (IT), human resource (HR), housekeeping, engineering, security, business center, parlor and health club.

Broad areas that we cover under above mentioned departments are as follows below:

Revenue – Room Revenue

  • Contracting and rate allotment process, Correctness of room rates charged
  • Guest Profile and Reservation creation
  • Check in and check out process
  • Advance collection process and authenticity of credit extension process
  • Authenticity of allowances
  • Review of registration card, Invoices
  • Tracking of no show, cancellations, upgrades, upselling, levy of retention, paid outs, bills on hold, early check in, late checkout, complimentary report, discrepancy report etc.
  • Adherence to income audit procedure

Revenue – Food and Beverage Revenue including Banqueting

  • Menu Management, Pricing
  • Billing
  • Staff / House Use Meals
  • Minibar revenue
  • Liquor Control – physical verification, density check, slow moving – non moving item, movement of liquor and deriving of loss, if any
  • Void KOT, Non chargeable KOT, Reprint Bill, Split Bill, Modified Bill, Void Bill, Complimentary, and Discounts offered
  • Process of tracking function booking (Confirm / Tentative) and premium dates revenue
  • Cost Benefit analysis for banquet functions
  • Advance collection process and authenticity of credit extension process, Final bill settlement
  • Tracking of cancellation and retention charges therein
  • Complimentary or discounted in house parties
  • Adherence to cost controller procedure

Revenue – Others

  • Communication, Business Centre, Arcade, Health club, Beauty Parlor, Laundry, House Keeping, Disposal / Sale of Scrap.

Expenditure

  • Annual rate contracting for goods and services – Vendor evaluation, Negotiation process and adequacy of minutes
  • Bill verification and passing procedure
  • Travel agency commission payment, utility monitoring and adequacy of insurance coverage
  • Vendor master and adherence to contracting rates
  • Requisition for purchase, Indents and Purchase Order
  • Maintenance of various levels – Minimum, Maximum and Reorder Level, Reorder quantity
  • Quality check, Meat fish and poultry storage, Storage of items, physical verification, Expiry status
  • Tracking and control over in circulation stock – Crockery, Glassware, Silver ware and linen
  • Adherence to standard operating procedures (SOP)

Fixed Asset

  • Capital Budget and Approval
  • Procurement Process – Quotations, Evaluation of Quotes and Award of contract
  • Receipt, Verification and Installation
  • Warranty and record maintenance
  • Bill verification and passing procedure
  • Accounting and Fixed Asset updation
  • Idle fixed assets, write offs, disposal and maintenance of fixed assets.
  • Preventive maintenance

Financial Management and Reporting

  • Journal voucher booking process, Inter unit reconciliation, book closing procedures and ledger scrutiny
  • Receivable Management – Provisions and Write off
  • Cash Management – General Cash, Outlet Cash, Petty Cash and Front Office Cash
  • Bank Process – Daily Banking, Bank Reconciliation, Bank Account opening and maintenance
  • Advances and Deposits

HR

  • Employee records – Personal files, attendance and leave records
  • Manpower MIS and contract
  • Payroll processing, perquisite and reimbursement process
  • Training, recruitment and separation process

Security and Guest Services

  • Awareness – Alerts, exercises and drills
  • Safety – Structural and Premises
  • Blast protection, Patrol programme, Patrol monitoring process and CCTV coverage
  • Identification of guest
  • Key control process, Vehicle checks and Incident reporting process
  • Safety – Smoke detector and water sprinkler
  • Guest satisfaction and feedback system, recording and redress of complaint, bell desk operations
  • Microbiological testing
  • Encashment of foreign exchange
  • Lost and found control
  • Health club and beauty parlor facility

System and Others

  • User registration and de registration process
  • User training and awareness on data safety and security, confidentiality of critical data
  • System usage and monitoring, Maintenance of system
  • Server and Network security, Data backup process
  • Room maintenance system
  • Control over LPG leakage
  • Adequate control over heating system, power generators, air conditioning and power generation, oil fuel storage, fire extinguishers and personnel protection equipments.
  • Safe use of Plant & machinery and Electrical services, maintenance of equipment and machines.

Statutory Compliances

  • Tax charge, remittance, return, assessment and adherence to procedures for various tax laws, as applicable.
  • Generally, the tax laws applicable to Hotel industry are Luxury tax, service tax, PF Act, ESIC compliance, Gratuity Act, Payment of Bonus Act, Income tax act, minimum wages act, Contract labor act, PFA compliance, Shops and establishment act, Standards of weight and measure act, Licensing and state Excise compliance.

Above mention coverage of areas shall be modified in accordance with the applicability and the requirement of Company.

Why Hetuh Consultancy Private Limited

Our experienced professionals’ (chartered accountants and MBAs) have cumulative experience of working for the top 10 chartered accountants firms, similarly, a proportion of our professionals’ have substantial internal audit experience of 10 years or more in top brands of Five Star hotels. Namely, a few of them are Taj Hotels (IHCL), Marriott etc. Our experience extends from domestic property to international property and audit from the perspective of owning company to managing company. Besides auditing the hotel industry, our professionals have experience in conducting audits of other large groups like Reliance, Escorts, Tata, ICRA, Aviva, HDFC, WIPRO etc.

How will you benefit

We will endeavor to draft the report in such a way that there will be no disagreements with the auditee as to the contents of the report, and to frame the recommendations, keeping in mind the ground realities and the practical aspect of implementing such recommendations.

Our report will be drafted in such a manner so as to constitute;

  1. Background – If required to give the background about the exception / observation
  2. Observation – Exceptions noted
  3. Level of risk – Risk of exceptions is categorized in High, Medium or Low
  4. Impact – Implication that is effected or may be effected due to exception noted
  5. Recommendation – Specific recommendations will be given instead of general recommendations, so as to enable the line person to implement it exactly in the manner that it ought to be.

 

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F-268, Lane No. 21, Laxmi Nagar,
Delhi-110092, India
Call us: +91-9810409213, 011-45540560
Website: http://hetuhfinancial.com/
Email: contact@hetuhfinancial.com