1. Hotel Basic Accounting and
Cost Control #12
By : Dino Leonandri

2. Internal control
hospitality operations to effectively carry out their duties, they need
information which is provided by the management accounting system.
This information should at all times be current as well as accurate.
Management will use the information to make decisions and implement
procedures that will help to safeguard the assets of the organization,
enhance their efficiency, increase sales, and also maximize their
profitability.

3. Internal control

4. Internal Control
Internal control comprises the plan of organization and all of the coordinate
methods adopted within a business to safeguard its assets, check the
accuracy and reliability of its accounting data, promote operational efficiency,
and encourage adherence to prescribed managerial policies. This definition is
possibly broader than the meaning sometimes attributed to the term.
It recognizes that a system of internal control extends beyond those matters
which relate directly to the functions of the accounting and financial
departments. A well developed system of internal controls might include
budgetary controls, standard costs, periodic operating reports, statistical
analyses, a personal training program and an internal staff audit

5. Internal Control
Two control sub-groups can be derived from the above definition:
1. Accounting controls · Safeguard assets – requires the prevention of theft
as well as their proper maintenance, and spoilage reduction. · Ensure the
accuracy and reliability of accounting data – this is needed in order to help
management make the correct decisions as well as prevent legal actions
and fines from government.
2 Administrative controls · Promote operational efficiency – to ensure that their
products and services will be delivered without incurring unnecessary costs. ·
Encourage the observation of management’s policies – to ensure that all the
employees keep to the internal

6. Internal Control
Controls are of two types:
· Preventive controls, which are designed to discourage errors or irregularities
such as assigning a cash bank to each waiter, and
· Detective controls, which are designed to discover errors or irregularities
after they have occurred as well as monitor

7. Special characteristics of the hospitality industry from an internal control
perspective
• Volume of cash transactions
Despite the expansion of electronic means of settling transactions using
credit and debit cards and the use of charge accounts, many transactions
still have to be carried out using cash especially in the bars and
restaurants. Some of these outlets also operate all day and night and this
would require many shift changes. These revenue departments do
accumulate lots of cash in the course of the day and this makes it easier
for the cash to be stolen.
• Size of the business Most
hospitality properties are considered to be small even if they are part of a
large chain. The various revenue departments most of the time operate
separately. This separation makes it difficult for the properties to have
enough resources that will enable them establish robust control systems
that economies of large scale can create.
• Employee turnover and job status
Most of the jobs in the industry are carried out by relatively lowskilled
employees (clerks, waiters, cashiers etc) receiving lower wages and
considered lower in social status ranking.

8. Front of house internal control proposals
Room revenue
• Establishing prices
• Authorize room rates to be charged
• Communicate approved room rates to appropriate parties
• Authorize deviations from approved rates
• Accepting reservations
• Obtain complete and accurate reservation information
• Accept reservations in accordance with established policies
• Checking in the guest
• Receive reservation information in a timely manner
• Established approved methods of payment
• Obtain necessary guest information
• Train front desk personnel
• Obtain evidence of guest check-in
• Maintain current room status information
• Recording room revenue
• Bill all occupied rooms
• Post charges in a timely and accurate manner
• Provide a statement of charges to the guest
• Authorize rebates and allowances
• Checking out the guest
• Close out guest records in the guest ledger
• Update the current room status

9. THANK YOU
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