Paper: 07, Front Office Operation and Management

Module: 16 Night Auditing

Principal Investigator Prof. S. P. Bansal

Vice chancellor
Indira Gandhi University, Meerpur, Rewari, Haryana

Co-Principal Investigator Dr. Prashant K. Gautam

Director, UIHMT
Panjab University, Chandigarh

Dr. Ankush Ambardar

Paper Coordinator Assistant Professor
Department of Tourism & Hotel Management
Kurukshetra University, Kurukshetra

Dr. Ankush Ambardar

Content Writer Assistant Professor,
Department of Tourism & Hotel Management
Kurukshetra University, Kurukshetra
Tel

Prof. Manjula Chaudhary

Content Reviewer Professor
Department of Tourism & Hotel Management
Kurukshetra University, Kurukshetra

Tourism & Front Office Operations and Management

Hospitality Cash Section and Night Auditing
 Items Description of Module

Subject Name Tourism and Hotel Management

Paper Name Front Office Operations and Management

Module Title Cash Section and Night Auditing

Module Id Module no-16

Pre- Requisites Knowledge of Basic Hotel Accounting

Objectives To study the functions of cash section and night auditing at

hotel front office

Keywords Posting, manager’s report, high balance report, discount

QUADRANT-I

Module: 16 Night Auditing

1. LEARNING OUTCOME
2. INTRODUCTION
3. 3.1 Job Description of Cashier
3.2 Functions of Cash Section
3.3 Job Description of Night Auditor
3.4 Process of Night Auditing
3.5 Formats used at Cash Section and Auditing
4. SUMMARY

1. LEARNING OUTCOME
After completing this module students will be able to:
i. Understand main functions of cash section at front office in hotels.
ii. Process of night auditing.
iii. Job description of cash section personnel.
iv. Formats used at cash section.

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 CASH SECTION AND NIGHT AUDITING

2. INTRODUCTION: The cash section of the front office department plays a vital role in recording
and maintenance of various transactions held at front office and other point of sales in the hotel. The
section also verifies the guest and non-guest accounts of the front office accuracy and completeness.
The section is responsible to post charges to guest accounts, receive payments at check-out and during
the stay. Coordinates the billing of credit card and corporate and bill to company guest accounts with
the accounting division.All guest accounts are balanced by the cashier at the close of each shift. He /
She normally entails answering guest inquiries regarding fees and services. The section also conducts
periodic reviews of various accounts of the guests to make sure that the departmental accounts are
balanced against the guest accounts.
Night auditing is responsible to check the accounting records on daily basis. The auditor summarizes
and compiles information for the hotel’s financial records. Moreover, he/she tracks revenue, occupancy
percentage and other important front office operating statistics. The auditor works at the graveyard
shift and prepares the summary of cash and credit payment activities, reflecting the hotels financial
performance for a day. Posting of room charges and room taxes to guest accounts including guest
transactions not posted during the day by the front office cashier is even done by the auditor.

The cash section ofis actually an integral part of accounts section of the hotel but practically the
members of the staff are answerable to front office manager. Hence the front office manager is head of
the cash section on front office as the transaction held by guests are directly or indirectly dealt by the
front office section in coordination to other point of sales in the hotel. The cashiers at the front office
work directly under the supervision of the night auditor, who heads the cash section at the front desk.
The night auditor is assisted by the senior cashier and cashier depending on the size of the hotel for
carrying out operations and management of the cash.

Finance Controller
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 Front Office Manager

Night Auditor

Senior Cashier (GSE Cash)

Cashier (GSA Cash)

3.1 Job Description of Cashier:

Guest accountancy in hotels requires efficiency and accuracy. The task of front office cashier centers
on guest accounting cycle. The cashier posts charges to guest accounts. The hotels point of
sales/revenue centers communicate about any purchases to the front desk. Hotels having property
management systems have point of sales integrated for the posting of any charges in the guest
accounts. In manually handled hotels the information needs to be communicated without any delay or
mistakes. This is done to ensure charges are settled at the guest checkout. The cashier also have to
handle payments at the checkouts through various modes like credit card, cash, bill to company, etc.
The cashier at the end of each shift have to balance guest accounts. The cashier of a hotels also handles
banking services, foreign exchange, lockers/safe deposit boxes. Duties and responsibilities performed
are:
 The cashier operates front office posting software.
 Obtains the house bank from accounts section and keeps it balanced.
 Helps in completing guest check-in procedure.
 Perform variety of banking services for guests, like check cash and foreign currency exchange.
 Keeps follow up on all deposit dues / deposit to be paid by the guests.
 Posting of charges to guest account and non-guest accounts.
 Handling paid-out transaction if any during the day.
 Transfer guest balances to other accounts as required.
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  The cheques are cashed for guests following the approval policy.
 Helps in completing guest check-out procedures.
 Settles guest and non-guest accounts.
 Dispenses guest records after the guest checkout.
 Handles various modes of payment like cash, traveller'scheque, credit cards and bill to
company.
 Front office cashiers assume responsibility for any cash used in processing front desk
transactions.
 Adjustments of discounts is done by the cashier wherever applicable.
 Clarifies customers question or concerns about the charges on their bills.
 Maintains adequate supplies of outlet stationery for cashiers.
 Assists with distribution of month end reports as directed by accounts or front office manager.
 Maintains a track of all high balance guests.
 Check and follow up on all bills on hold.
 Check the billing instructions are correct for all expected departure guests.
 Provide on-the-Job training to new staff members.
 At the close of the shift balances department totals.
 At the close of shift balances cash.
 Issues and manages safe deposit boxes.
 He/she assists front desk staff on check-in as and when required.

3.2 Functions of Cash Section:

The cash section performs a large number of important roles and functions that is significant from the
point of view of the operations and management of front office department. The main functions
performed by front office cash section are:
a) Recording of advance deposits paid by guests at the time of reservation: The front office cash
section receives and records any advance payment made by the guest at the time of reservation

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 made at the hotel. Most of the guests pay advances to guarantee their reservation and the same
is recorded by the cash section.
b) Establishing and processing the mode of payment at the arrival of guest in the hotel: The
cashier needs to establish method of payment by the guest at his arrival and the same has to
mentioned on the registration card and after confirming the mode of settlement of bill by the
guest various official procedures are done. The mode of settlement can be cash, credit card, bill
to company, travellers’ cheque, travel agent voucher, etc.
c) Opening guest folio at the time of guest arrival: Once the guest arrives in the hotel and after
his/her registration with the hotel, the cashier opens guest folio or guest account manually or
automatically depending on the system of front office. The importance of opening a guest
account is to record all financial transactions held by the guest and the hotel during the stay of
the guest in the hotel.
d) Recording transactions during occupancy stage of the guest cycle: During the entire guest
cycle, the cash section tracks, posts and records all the financial transactions of guest. The
transactions made at various point of sales other than front desk like restaurants, bars, coffee
shop, spa, etc is posted by the cashier on the guest account. The vouchers or the bills received
by the cashier from various point of sales is even recorded and kept for checkout time.
e) Disbursement of paid-outs to guests: Sometimes guests asks to clear or pay taxi bill or other
small transactions, the cash section disburses such petty amounts. The cashier prepares
vouchers to support such transactions between the guest and front office.
f) Preparation of vouchers like account allowance and account correction: The cash section
prepares account allowance vouchers in order to give discounts to guests due to poor service or
products offered to the guestsduring the stay.Moreover in order to rectify any posting error in
the folios like a posting error, the cash section prepares account correction voucher.
g) Foreign currency encashment: The cash section of the front office in hotels is also responsible
for exchanging foreign currency produced by foreigners with valid passport and visa at the time
of arrival, occupancy or departure of the guest. The cashier also provides a copy of encashment

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 certificate to the guest and a copy is sent to accounts section with currency for further collection
in domestic currency. A summary of foreign currency exchanged in each shift is prepared.
h) Help in checkout and settlement of guests: At the time of departure of the guest, the cash
section helps in processing account settlement. The cash section confirms the proper settlement
of bill by the guest at the time of departure.
i) Processing regular night audits of front office and guest accounts: The cash section also
performs the important functions of performing routine night audits to verify the accuracy of
accounts of guests to resolve any discrepancy found. Various managerial and operational
reports are also prepared and further distributed to concerned persons or sections.
j) Providing safe deposits facilities: The safe deposit lockers are located at the back of front office
handled by the cashier. In case of guest requests, safe deposits are provided by cash section to
keep valuable items in safe custody of hotels.
k) Preparing summary of various transactions: The cashier needs to prepare the summary of
various financial transactions held during each shifts.
3.3 Job Description of night auditor:

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Hospitality Cash Section and Night Auditing
 Source: http://www.hospitality-school.com/wp-content/uploads/2016/05/what-is-night-auditor-
hotel.jpg

 Trains front office cashier in night auditing.

 Verify all postings and balance.
 Checks and posts room charges and taxes to guest accounts.
 Processes vouchers like guest charges voucher and credit card vouchers.
 Post charges to the guest accounts that have not been posted or were incurred at the graveyard
shift.
 Transfer charges and deposits to master accounts.
 Checks to see that all charges are assigned to the appropriate departments.
 To verify that all transactions performed at the front desk are supported by documentary
evidence and signatures as necessary and that they have been correctly posted and allocated in
to PMS system.
 Verify that all charges posted from the POS Software reached the correct guest folios and even
not missing.
 Prepare for the end of day procedure.
 Follow the night audit checklist.
 Must have complete knowledge of emergency procedures.
 Balance the day’s charges, making corrections as necessary.
 Prints up and files reservations for the next business day.
 Verifies that room rates are correct and posts those rates to guest accounts.
 Monitors the current status of coupon, discount, and other promotional programs.
 Is able to function as a front desk agent especially in terms of check-in and check-out
procedures.
 Tracks room revenues, occupancy percentages, and other front office statistics.
 Prepares a summary of cash, check, and credit card activities.

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  Check figures, postings, and documents for accuracy.
 Record, store, access, and/or analyze computerized financial information.
 Prepare important management reports which details the results and further summarizes results
of operations for management.
 Run end of day process in property management software (PMS).
 Operates PMSand other front office equipment's.
 Respond to guest needs, special requests and complaints and inform the respective manager.
 On times help in performing check-in and check-out.

3.4 Process of Night Auditing:

The Front office Audit is usually referred as Night Audit because hotels generally perform it during the
late evening hours. The most convenient time to perform the audit is during the late evening and early
morning hours as it helps the front office personal to work with minimal interruption and also most of
the hotel outlets and revenue centres are closed during this time.The audit is a daily review of guest
account transactions recorded against revenue centre transactions. The routine helps guarantee the
accuracy, reliability and thoroughness of front office accounting.

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Hospitality Cash Section and Night Auditing
 Source: https://thumbs.dreamstime.com/z/auditor-holding-magnifying-glass-tablet-over-blue-
background-46358919.jpg

a) Post all departmental charges in guest and non-guest accounts: This is considered to be the first
step of night auditing as the auditor makes sure that all the postings of guest accounts are
properly completed. Hence the night auditor confirms that all transactions have been posted to
proper accounts as they are received at the front desk before start of the audit. The auditor also
verifies that all the vouchers for revenue center transactions are posted and have reached the
front desk.
b) Look for any room status discrepancies: The second step in night auditing is important as the
errors in room status can lead to lost and uncollectable room revenue and omissions of error.
Hence the status of guest rooms is checked after matching the reports from both the front office
and housekeeping departments. It becomes important for front office to maintain room status
information effectively and post room rates only for occupied rooms only. The registration rack
is even checked to rectify the occupancy status of guest rooms.
c) Conduct trial balance: The night auditor balances all the departmental postings against the front
office accounts. The auditor balances all the revenue center departments using the source
documents that originated in the revenue center. The same is termed as trial balance and only
after performing it, the front office cashier posts room rates and taxes in the accounts of the
guests.
d) Verifying no-show reservations: The night auditor verifies all confirmed guaranteed reservation
with the hotel but did not register in the hotel on the date. The verification of no-show
reservation enables the night auditor to post retention charges in to the account of the no-show
guests who had a guaranteed reservation.
e) Posting room rates and taxes: The auditor verifies the various room rates and taxes that are to
be posted in the guest account in order to make sure about posting of right room rate in right
guest account. Once the room rate and taxes are posted, a room rate and tax report is generated
for the front office management review.

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 f) Preparation of Reports: This is one of the important process of night auditor to prepare various
management and operational reports. The following are the important reports generated by
night auditor:
High balance report
Daily operational report
Managers’ report
VIP’s report
Groups report
Flash sales summary report
g) Deposition of cash: In this step, the night auditor counts all the cash collected in the cashiers’
cash box and separates the cash bank of the float, which is allotted at the beginning of the shift
for carrying out departmental transactions between the guests and cashier. The rest of amount
collected is kept in front office cash deposit envelope and the details are mentioned stating the
denominations and any overage or shortage is also stated.
h) Ending the day: In this step the night auditor balances each guest accounts less the settlements
if any made by the guest. The balance is zeroed out or closed for the particular day and is
moved as the opening balance of the next day. The night auditor begins a fresh business day for
the hotel to carry on its business for the next day.
i) Distribution of reports: The final step in night auditing process involves distribution of reports
prepared. It is essential responsibility of night auditor to handover reports to authorised and
designated individuals due to the confidential nature of the reports. The reports are practically
distributed by bell boys early in the morning to the relevant departments.

3.5 Formats used at Cash Section and Auditing:

Guest Account Sheet: It is the statement detailing the financial transactions between the guest and the
hotel. The charges posted into the account of guest get printed at the time of bill settlement during the
departure from the hotel.

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 HOTEL ABC GUEST ACCOUNT SHEET

GUESTS NAME: ________________ ARRIVAL DATE: ____________________

ROOM NUMBER: _______________ DEPARTURE DATE: _________________

DATE DESCRIPTION CHARGE CREDIT

I agree that I am liable for the above statement and if the person, company or association
by me as being responsible for the payment of the same does not do so, that my liability for
such payment shall be joined and several with such person, company or association.

__________________ GUEST
SIGNATURE

Paid-out Voucher: The paid out voucher is an important document used for tracking paid-outs
disbursed by the front office on behalf of the guest to settle petty bills like taxi, snacks, tobacco, etc.

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 Hotel XYZ PAID OUT
No…………….

Date…………..

Name of
Guest________________________________________________________________

Room Account
No._____________________________________________________________

DETAILED EXPLANATION

RUPEES (IN WORDS)

PREPARED BY AUTHORISED BY AUDITED SIGNATURE OF

RECEPIENT

Guest Receipt: The cashier gives receipt to the guest when he/she settle account through cash, credit
card at any stage of guest cycle. The receipt is even provided for exchanging foreign currency with the
hotel.
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 HOTEL ABC

RECEIPT

DATE………………..

Received from
_______________________________________________________________

___________________________________________________________________________

The sum of rupees

____________________________________________________________

___________________________________________________________________________

Cash/Credit Card/Cheque No…………………

Date……………………Bank……………………

Station……………………………On Account……………………………………….

Rs…………………………A/C Code……………………..Cashier…………………..

Receipt valid subject to encashment of cheque

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 Encashment Certificate: The certificate is a license given from the Reserve Bank of India which all
standardized hotels hold by them for exchanging the foreign currencies given by the guest.

FOREIGN CURRENCY ENCASHMENT CERTIFICATE

Guest Name__________________________ Reg.

Date_________________ No______

Passport No__________________________ Room No____

Nationality____________

T. Cheque No. or Amount Type of Exchange Rate

Currency Note Money
No.

Rs. Ps.

State name of
Bank in case of
TravellersCheque

Guest Sign___________ Approved by_______________ Cashier_______________

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 Summary of Foreign Currency Exchanged: This format gives the detailed report of all the foreign
currency exchanged in a hotel in a particular shift of the day.

SUMMARY OF FOR FOREIGN CURRENCY EXCHANGED

DATE………... SHIFT FROM………….TO…………..CASHIERS

NAME…………………..

FOREIGN TYPE OF AMOUNT @ TC CN INDIAN

EXCHANGE CURRENCY CURRENCY
CERTIFICATE
NUMBER

12898 U.S. 100.00 1356486 Rs. 6439

DOLLAR (64.39)

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 Safe Deposit Lockers Card: The safe deposit lockers card is issued to guests who avail locker facility
in hotels.

SAFE DEPOSIT LOCKER CARD

(FRONT SIDE OF THE CARD)

HOTEL ABC LOCKER NO………ROOM

NO………

NAME_______________________________________________________________________

PERMANENT ADDRESS_______________________________________________________

_____________________________________________________________________________

AUTHIRIZED
SIGNATURE

DATE________201____ KEY DELIVERED

BY____________

NOTE: I/WE SHALL NOT HOLD THE MANAGEMENT OF HOTEL LIABLE FOR ANY
LOSS OF, THEFT OF OR SHORTAGE IN THE CONTENTS OF THE SAFE DEPOSIT BOX
LOCKER WHICH IS BEING USED BY ME/US EXCLUSIVELY.

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 SIGNATURE/S OF THE GUEST

(BACK SIDE OF THE CARD)

DATE TIME SIGNATURE CASHIER

NOTE:- A CHARGE OF RS. WILL BE LEVELED FOR THE LOSS OF THE SAFE
DEPOSIT KEY

5. SUMMARY: Every business entity requires an efficient cash handling personnel and hotel is not an
exception. The cash section of is actually an integral part of accounts section of the hotel but
practically the members of the staff are answerable to front office manager. Hence the front office
manager is head of the cash section on front office as the transaction held by guests are directly or
indirectly dealt by the front office section in coordination to other point of sales in the hotel. The cash
section in hotels include the night auditor and front office cashiers who are responsible to post charges
to guest accounts, receive payments at check-out and during the stay. Coordinates the billing of credit
card and corporate and bill to company guest accounts with the accounting division.The auditor works
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 at the graveyard shift and prepares the summary of cash and credit payment activities, reflecting the
hotels financial performance for a day. Posting of room charges and room taxes to guest accounts
including guest transactions not posted during the day by the front office cashier is even done by the
auditor.

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