FRONT OFFICE OPERATIONS – Year 2 – Semester 3 / 4 2015 - 18

NIGHT AUDIT (END OF DAY PROCESS)

“Night Audit” or “End Of Day” is a mandatory procedure conducted by all hotels globally to review and
close their accounting business day. It can be explained as a daily review of accounting transactions
recorded at the Front Desk against transactions recorded at various revenue centers in the hotel.

It is important to note that Front Office is the custodian of all guest related records and transactions.
Hence, it is necessary that all such records and transactions be audited on a daily basis. A successful
night audit will have the following impact on the hotel’s operations :

 The night audit closes the previous business date and opens and new business date. Effectively,
the hotel’s accounting books are closed and a new accounting day begins after the audit.
 All transactions are summarized and verified during the night audit. This guarantees the
accuracy and reliability of accounting done by Front Office.
 The audit helps the hotel maintain accuracy of reservation and revenue related data which has
an important impact on the business plans and forecasts of the hotel.
 The audit creates time bound and detailed reports on a daily basis. These reports are often
relied on by the hotel’s management to review financial progress.
 The hotel’s PMS creates a backup of all data during night audit. Having all past records available
is very useful for hotel operations in the long run.

The EOD (End Of Day) procedure is usually conducted at night since the guest movement is low at this
time. Hence, the process is also termed as Night Audit. As a thumb rule, Night Audit must be conducted
after the calendar date changes. However, guest movement in the hotel may continue even after the
calendar date changes. Hence, the hotel must wait for all revenue centers to close operations according
to guest movement before conducting the audit. Historically, hotels would have a designated night
auditor to conduct End Of Day procedures. Most hotels now allocate the “Night Auditor” responsibility
to the night shift Duty Manager and the Front Desk team.

THE NIGHT AUDIT PROCESS

The standard procedures to be completed for Night Audit are explained below. However, it is important
to remember that the requirements of hotels may differ as per geographic area and style of business.
Hence, all hotels localize their night audit procedure to suit their operational requirements.

1. Review Management Discounted Rate Reservations.

Most hotels accept reservations at either published tariff (Rack / BAR rate) or at contracted
rates. Few reservations may be offered a discounted rate by management. In most hotels,
General Manager, Director of Sales, Director of Finance and managers in Front Office are
authorized to offer discounted rates. The night auditor must identify all such discounted

Author : Yadnyadatta Walimbe (For Use By IIHM Pune For Educational Purpose Only)
 FRONT OFFICE OPERATIONS – Year 2 – Semester 3 / 4 2015 - 18

reservations in house and ensure valid approval is available on record for the reservation. Any
discrepancy must be highlighted to the reservations department for follow up of approval.
2. Review Complimentary & House Use Room Reservations.
Some guests may be offered a complimentary room by the hotel management for business
development. Hotels may also provide rooms when required for house use (internal usage). All
complimentary and house use rooms must be approved by the General Manager. The night
auditor must verify all such reservations to ensure that valid approval is available on record. Any
discrepancy must be highlighted to reservations and finance teams for further follow up.
3. Review & Close Housekeeping Room Discrepancies.
The housekeeping department provides a room discrepancy report to Front Office after morning
& evening service is completed. The duty manager on shift is responsible to ensure any room
status discrepancy is checked and closed on the shift. Since a room status discrepancy may also
impact the occupancy and room rates, the night auditor must ensure that there is no
discrepancy at night. If any room status discrepancy is identified by the auditor, it must be
checked and closed as per the situation before night audit is conducted.
4. Review Market Segment Codes For In House Guests.
Every reservation has a relevant market segment code attached for internal segmentation.
Having the appropriate market segment attached is important for hotels to prepare future
business strategies. The night auditor must check a report listing all in house reservations to
identify incorrect market segments and make corrections.
5. Ensure Billing Discounts / Corrections Are Passed Where Applicable.
Hotels often offer discounts to regular guests and contracted companies to boost revenue for its
outlets. These discounts are updated on the guest reservation and informed to all outlets on a
daily basis. Revenue generating outlets are responsible to ensure all such discounts are given to
guests at the point of sale. The night auditor must check the bills of all guests to ensure any
applicable discount has been provided. If not done already, the night auditor must ensure
necessary correction posting is done on the same business date. Not doing this may result in
guest dissatisfaction at departure and would be shown as a loss of revenue in later business
dates.
6. Verify Allowances / Rebates Passed During The Day.
Since an allowance / rebate results in a loss of revenue for the hotel, the Front Desk cashier
must get the appropriate manager’s approval when a charge is rebated. The allowance voucher
generated by the PMS must have proper explanation for the allowance with approval signature.
At end of day, the night auditor must review a PMS report for all allowances done that day and
tally the same with the allowance vouchers. Any discrepancy must be highlighted and closed.
Any doubtful allowance discrepancy may be followed up the next morning with the staff
responsible and accordingly closed.
7. Conduct Bucket Check
This process may be conducted every shift or only during night shift. “Bucket” refers to files or
storage space created in the Front Office for reg cards, reservation correspondence and
supporting POS cheques of occupied rooms. Once all arrivals & departures for the day are
completed, the night auditor must conduct a final bucket check. All vacant room buckets must
be empty and occupied room buckets must have appropriate documentation available. Also, it

Author : Yadnyadatta Walimbe (For Use By IIHM Pune For Educational Purpose Only)
 FRONT OFFICE OPERATIONS – Year 2 – Semester 3 / 4 2015 - 18

must be ensured that all occupied room reg cards have guest signature. Any discrepancy
identified here must be sorted before the business date is changed.
8. Review Pending Arrivals & Charge No Show Reservations.
Once all expected arrival guests have checked in, the hotel’s business date can be changed. At
this stage, any pending arrivals must be checked to identify No Show reservations. Any
reservation where the guest may arrive can be retained for the next day while all reservations
where the guest is not expected to arrive must be marked as No Show. Once the business date
is changed, all No Show reservations are charged the room retention fee as per the hotel’s
policy.
9. Tally F&B Transactions of POS vs PMS.
All F&B outlets use their POS (Point Of Sale) system which must be tallied and closed before
night audit. The night auditor must then tally the transaction reports of all outlets to ensure
revenue details are matching as per PMS records. Any discrepancy may be checked with the
outlet concerned. Historically, the night auditor would check every F&B transaction. With POS
and PMS technology being widely used now, the auditor can complete this task much faster by
checking only the totals.
10. Close and Audit F&B POS.
At this stage the night auditor must close all F&B POS and audit the POS software. This process
records all POS accounting data and starts a new business date in the POS. The POS cannot be
used from this stage till the business date is changed in the PMS since it may result in accounting
variance. During this time, F&B outlets must record transactions manually and later update
them in the POS.
11. Review Rate Variance Report (RVR).
The rate variance report displays the room rates being charged to all in house rooms. Checking
the rate variance report is critical to avoid any incorrect rate being charged. Hotels may employ
different methods to reconfirm that all rates charged are accurate. One option is to tally the rate
variance report against the individual rooms reg card. Another option may be to tally RVR
against a list of rates. Where the room rates are exclusive of taxes, it must also be ensured that
the accurate tax is charged. An error during RVR check will result in a room rate allowance in the
next business date.
12. Balance & Close Front Desk Cash Float.
All cash floats at Front Desk must be balanced and closed before night audit. Any cash received
from guests during the business day should be dropped in the house safety vault with relevant
reports attached. Also, the EDC machine batch must be tallied against invoices and closed. Once
the business date is changed, a new cashiering day is started. The night shift cashier thus
operates the cash float twice, pre audit and post audit.
13. Roll Business Date.
By this stage, all pre audit procedures must be completed and the hotels accounting must be
balanced. In this procedure, the night auditor must change the business date on the hotel PMS.
Effectively, the new business date of the hotel starts with this step. Any revenue or accounting
corrections done hereafter are restricted and will be considered as loss.
14. Backup Data on PMS & Print Backup Reports.
When the business date is rolled, the PMS automatically creates a back up of available data.
Some hotels using older technology may have to separately create a copy of this data back up.

Author : Yadnyadatta Walimbe (For Use By IIHM Pune For Educational Purpose Only)
 FRONT OFFICE OPERATIONS – Year 2 – Semester 3 / 4 2015 - 18

Once the new date begins, a set of reports know as “Backup Reports” is printed and kept at
Front Desk. Every hotel may customize their list of back up reports. These reports are critical for
smooth operations in case of unexpected system failures.
15. Review Credit Ledger / High Balance Report.
The night auditor must review the credit balance due for all in house guests. As per the credit
policy of the hotel, the auditor may instruct Front Desk staff to collect mode of payment or
interim payment from certain guests. For guests having balance in excess of the house limit, an
interim payment may be required.
16. Send Information Invoice To Expected Departure Guests.
Once the new business date is started, the Front Desk cashier must print information invoice
folio for guests expected to check out that day and have the same slipped under the guest room
door. This enables the expected departure guest to review their bills and get any doubts
clarified in advance, thus helping in a smooth billing procedure at departure.
17. Prepare & Distribute Management / Operations Reports.
Every hotel’s management relies on a set of reports to review operational progress of the
previous day. The night auditor must prepare and distribute the required management reports.
A discrepancy note with auditor remarks may be attached to these reports if necessary. Once
this stage is completed, the “End Of Day” process is considered as completed.

Author : Yadnyadatta Walimbe (For Use By IIHM Pune For Educational Purpose Only)