CHAPTER 10

THE ACCOUNTING DEPARTMENT AND THE ADMINISTRATIVE (NON-

CORE) DEPARTMENT

Learning Objectives:

At the end of the discussion, you are expected to:

• Discuss the importance of the accounting department.
• Discuss the accounting terms used in the hotel operations.
• Outline the organizational chart of the accounting department and its
functions.
• Discuss the role of the administrative (non-care) department in the
hotel organization.

The significance of accounting has never been more apartment than in today's market,
with the struggling economy and the job market in decline. Though the loss of jobs may be
happening in many fields the one that continues to pay strong is accounting. The reasons for
this are the same reasons that accounting is such an important aspect in the economy and in
society.

Before we can begin to understand the importance of accounting, we first must

understand what accounting is. Accounting can be defined as the theory and system of setting
up, maintaining and auditing the books of a firm. It is the art of analyzing the financial position of
a business through its sales, purchasing, and overhead. These records must be kept in
chronological order and must be summarized in a useful format. It is also responsible for
identifying information on the transactions, analyzing it and then interpreting each and every
document.

Now that we have begun to understand what

accounting means we can begin to examine how
important accounting really is. The first way in which it
is important is that an accounting education can be
applied to any job industry. For instance, a secretary
uses accounting in managing a company’s check
book. Also, the executives must be able to analyze the
success of their business through analyzing the
accounting statements from the present. These are
just two of the many job positions found in any
company. Another reason that accounting is important
to all businesses is because of the fact that the
business world has now come under much scrutiny.
As a result, much more is accountable for their financial practices. This has occurred because of
the events of the Enron and WorldCom scandals. For this reason, nearly all businesses require
their employees to have a general knowledge of accounting.

Another way in which accounting is such an important aspect to any business is that
accountants are responsible for providing information that is used to determine the present and
future economic stability of the organization. It has been proven that companies that use good
accounting practices have a competitive advantage over their opponents. Also, they have the
ability to improve their decision-making abilities. Those that do not use practices face an inability
to compete in the market and make decisions simply on a hunch.

Not only is accounting way important in the business world it is also beneficial for
ordinary people to know as well. Each and every person uses these accounting skills in their
daily lives when making financial investment decisions. They also use it when assessing their
interest rates in order to pay off their house mortgages. The final way in which they can use
these skills is to balance their check books and to calculate the rates of their car payments.

Within the accounting department can be found the forensic accountants these are
individuals who use the audit and investigative skills to assist in legal matters and to make
recommendations in order to minimize future risks. Their jobs also can be extended into civil
matters, for instance to find any hidden assist in certain divorce cases. These individuals are
just as important as regular accountants because of the fact that they are also in high demand.
The reason though that their jobs are so important is because of the fact fraud is becoming
much easier to commit. These actions are a result of the fact that technology has increased
significantly and that gives people individuals the ability to commit fraud on a massive scale and
get away it very easily.

The significant of accounting not only is clearly vital in the business world but it also can
be shown that it plays a part on the individual scale as well. For these reasons and many more it
can be shown that accounting clearly is if not close to the most important skill in today's society
and will continue to be in the future.

Hotels follow the general principles of accounting, but due to the unique nature of guest
accounting, hotel accounting departments use terms that may not be familiar to accountants in
other industries. Accounting terms related to the management of the quest payments, charges
and disputes can be confusing to outsiders, but they represent everyday concepts in the hotel
industry.

Folio
The record of all credits and debits associated with a quest or group is called an account and an
account can be organized by sections, or folios. Common folio divisions include one each for
room charges, food and beverages charges and miscellaneous charges. Multiple folios are
often used with convention guest accounts, as the hotel room rate may be paid by group while
the individuals are responsible for their additional or incidental changes.
Separation of folio allows printing options, which is useful for blind rates- when the group room
rate must remain unknown to the guest. At checkout, a convention guest can present payment
for incidental charges and receive a printed receipt for only the folios that contain the charges
for which she paid. The balance from the room charges folio remains to the quest and is
transferred to the group account for later billing.

Room Charge
Quest that we have a credit card on file for an account are eligible to sign for charges to guest
rooms. At the point of sale, guest sign a receipt authorizing the charge be paid by the method of
payment on the account. The charge is then posted to the appropriate folio for the charge type.
The alternative to a room charge is using another method of payment for services, such as cash
or credit. Guest without credit cards on file are considered cash-only guests and do not have
room charging privileges.

Posting
Any charges posted to a guest account are posted, either manually or through the hotel's
computer system. Computer-posted charges are known as interface postings and these are
common from hotel outlets that use a cash register and point of sale system, such as a
restaurant or gift shop.

When room charge is designated as the payment type, the cashier enters the guest room
number and the point-of-sale system interface with the property management system to post the
charge, manual charges are posted by a hotel employee, usually front desk or accounting.
These charges might come from outlets without a point of sales system but are most commonly
interfacing postings that did not go through due to system outage or incorrect room information.

Late Charge
A late charge occurs when a guest signs for a room charge after checking out of the hotel.
Common late charges include breakfast or mini bar charges and manual posting due to system
outage. Since the guest had a credit card on file, the front desk is able to use same card to pay
for the charges. If the credit card declines, an invoice is mailed to the guest's address of record.

Advance Deposit
Advance deposits are prepayments for guest rooms or other hotel services. These deposits are
commonly used to secure reservations for weddings or conventions held at the hotel. In most
catering or group events, the deposits are required 72 hours before the event occurs. The
deposits are posted to the group account and charges are posted against the account as they
occur.

Allowance
An allowance is a reversal of a posting. Allowance can occur due to duplicate posting, disputes
or bad dept. Although avoided payment through the point-of-sale system can create a negative
interface posting, this is a correction instead of an allowance because revenue is not reduced.
Allowance is always manual post, and department managers generally review and research
large allowances that would seriously impact revenue prior to authorizing posting.

Organizational Chart of the Accounting Department

Sample Organizational Chart of the Accounting Staff

Duties of the Accounting Staff

1. Controller
A hotel controller is a senior financial manager in the hospitality industry. Employed by a hotel or
an organization that operates many hotels, the controller is an accounting professional who
oversees financial reporting, investments, risk management and flow analysis, among other
financial aspects of the business. Hotel controllers are top-tier executives and such usually
reports to the CEO or board of directors of the organization. These professionals have a long list
of responsibilities, including the preparation of tax returns, financial statements, forecasts,
budgets, profit and loss statements and compliance reports for the business. Often controllers
supervise other departments such as accounting, collections and billing and payroll. He is
responsible for current accounting standards and federal and state regulatory requirements, and
audits that are necessary to ensure compliance.

2. Secretary
Secretary performs many clerical and administrative duties that are necessary to run an
organizational efficiently. Your secretarial duties will vary according to your specific job title. For
example, as an executive secretary, you'd perform few clerical duties and instead, focus on
supporting high-level executives, supervising office staff. Conducting research and arranging
meetings. If you become a medical secretary, you'll create medical histories for patients and
transcribe medical reports. As a legal secretary, you'd prepare legal documentation such as
subpoenas and motions. In general, secretaries organize paperwork and electronic files, mange
projects, arrange meeting, conduct research and communicate through phone, mail and e-mail.
You may be responsible for creating spreadsheets, developing presentations or reports,
composing correspondence and managing databases. Other duties can include purchasing
supplies, managing stockrooms, greeting visitors and handling travel arrangements.
3. Assistant Controller
In a big hotel, you may see one, or a few, assistant controllers. In smaller hotels, there may not
be any. The controller divides the various functions to be performed so that the workload will be
even. For example, one might be responsible for daily transactions while another works on
special projects, budgets, analysis, and the like.

4. General Cashier
Pause for a minute and think how many cash banks are there in a large hotel a few at the front
office, at least one in the restaurant, at least one in the gift shop, and so on. The general cashier
is the person who is in charge of all the cash banks in the hotel. He or she also makes all
deposits of checks and credit card receipts.

5. Front Office Cashiers

The duties of a front-office cashier are often incorporated with the front-office personnel. When
guests check out, it is the duty of these cashiers to charge the guests the correct amount and
secure a form of payment.

6. Night Auditor
Night auditors get their name because of the hours they work. At the end of the day after most
hotel guests have retired, these auditors begin recording charges to guests' accounts and
verifying the revenue for the hotel. However, with computers and various technologies, the hotel
industry can post charges instantaneously. Some hotels have actually changed the night
auditors to become day auditors.

7. Food and Beverage Controller

This is a fun and challenging position, as it has both accounting and food and beverage
components. While performing all analyses of food cost percentage, yields on meat, and menu
costing, the food and beverage controller also works with the chef to design new menu items,
taste new products, and even be a mystery diner to taste-test the menus in other food service
establishments.

8. Account Payable
A key area in accounting, accounts payable ensures that all bills are paid on time and all
discounts are taken minimizing the costs of the hotel. Accounts payable clerks work closely with
the purchasing department to verify all invoices to the hotel.

9. Guest and City Ledgers

A hotel keeps two ledgers the guest ledger is associated with the guests staying at the hotel
while city ledger contains all other billings. It is important that the accounting department has a
person in accounts receivable working with the city ledger so that hotel is able to bill and collect
revenues due.

10. Banquet Auditor

Besides revenues charged to guest rooms, a large hotel earns the bulk of its food and beverage
revenues through banquet staff, the sales office staff and the accounts receivable clerks.

11. Credit Manager

A big hotel has its own credit manager whose function is to check and grant credit. In today's
business world, many transactions are done on credit rather than cash or cashier checks. It is,
therefore, the credit manager's responsibility to conduct such investigations to be sure that a
person or company is creditworthy.

12. Payroll
Payroll employees calculated the pay rate with the hours worked to do the payroll so paychecks
are released on time. Payroll functions also include filing all payroll taxes and tip credits for
tipped employees, as well as keeping track of vacation, sick pay, and other payroll-related
deductions.

13. Operation Analyst

This is a nice position to have in a hotel. An operation analyst performs analyses to help
managers operate the hotel more effectively. From guest's statistics to revenue trends, the
operations analyst does it all. However, not all hotels are able to afford an analyst on the payroll.
If this is the case, an assistant controller often performs these duties. For smaller hotels where
there is not an accounting office on the property, this is done at the regional level.

14. System Manager

Since the various accounting functions cover the entire hotel operation, the systems manager or
systems analyst, whose job is to take care of all technology issues, is normally founded within
the accounting department. In a smaller hotel, the controller or an assistant controller may take
on this responsibility. Normally, this position is found at a regional or corporate level and system
level and analyst will be dispatched to assist the property when needed.

Kindly check the video link below for discussions about Accounting Department.

VIDEO GUIDE:
Please check the video guide below of ‘Structure of Accounting Department’
https://www.youtube.com/watch?v=G0wC5i-G5wQ

Security Department
The department works for maintaining the safety and security of the guests, staffs and the entire
hotel properties. Security department comes into action when there is theft, fire and any
emergency case. The very department is also responsible for the lost and found procedures
also.

Maintenance Department
This department mandates the protection of the building's/owner's assets; the structure from the
façade or building envelope, to the integrity of the floors, walls, ceilings and all of the furniture,
fixtures, and equipment (FF&E) contained therein.
Aside from the base building, office building is quite easier to maintain. Generally, offices and
shops within commercial buildings are subject to various lease arrangements, with the tenant
often being responsible for all. Maintenance and repairs within their space and proportionate
costs of the utilities and taxes. The same concept being applied to apartments and
condominiums.
Hotels are much more extensive and demanding. The maintenance department has the
responsibility for everything in the building as well. Depending on the organizational structure of
the hotel, some elements are assigned to other departments. The Security or Loss Prevention
department may take on the task of fire systems but ultimately this is the responsibility of the
engineering department as the building operators to monitor for regulatory compliance.

Communication Department
The communication department may assume the name of "public relation" or "public affairs"
department. The department must work closely with other departments to ensure it understands
the dynamics of the organization and the information it needs to communicate. The
communication department plays as a crucial role in an organization's success. As technologies
expand, the duties of a communication department may change. The department might hire a
computer programmer to develop the website, or have a designer produce new online content
on a daily basis. These professionals might work solely for the communications department, or
handle work for various departments in the organization. The department may need to contract
specialized workers to produce content such as videos

Purchasing Department
The purchasing department is responsible for everything related to ordering materials and
dealing with vendors. A good purchasing department will minimize cost of purchased goods,
screen vendors for quality a track orders from initiation to reception. The quality of the
purchasing department can have a significant impact on a business's profit margins.

Electronic Data Processing Department

This department is responsible for monitoring and repair of the hotel computer system. This is
also provides various service to hotels including basic troubleshooting support for hardware and
software problems. Technicians generally train to improve their analytical skills polish and
knowledge of computer system.