16 May 2011
The general considerations for audit of a hotel are: i) Study the constitution. That is, whether it is a public or a private limited company. (certain income-tax benefits to the hotel establishments are available only if it is a public limited company.) ii) Examine if the hotel is affiliated to any chain of hotels, whether national or international. Read the terms of affiliation and ensure compliance. These hotels may be awarded star status depending on the facilities provided. Ensure that the facilities are provided as per the star category requirement. (Often an auditor is asked to issue a certificate to this effect.) iii) Examine if the hotel has a reciprocal arrangement with another hotel. Understand the significant accounting and other policies of the hotel, especially with reference to checkout time of the guests, discount structure, corporate clientele benefits, appropriation and allocation of overheads into various departments or profit centres, and so on. iv) Understand the various profit centres identified by the hotel, such as coffee shop, bar, restaurant, conference halls, banquets, outside catering, and so on. v) Study the internal control procedures of the hotel with particular reference to a) purchase of edibles, stores and kitchen, b) consumables such as soaps, shampoos, guest toiletries, c) occupancy of rooms of the hotel, and so on. vi) Carry out audit of profit centres independently and confirm the profit or loss at each profit centre — coffee shop, restaurant, or bar. vii) Examine the internal control procedures for taking orders, serving food and collection of bills. viii) Examine internal control for serving the food with reference to quantity or quality. Income from this centre would be sale of food, liquor, and so on.
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