Hotel Night Audit and the Night Auditor

Night audit is a daily task performed by the hotel night auditor at the end of the day to audit and reconcile the day’s financial transactions and guest records.

What is night audit in PMS? And why does a night auditor crunch numbers in the wee hours in the corner of the accounting department? Hotels are complicated businesses open 24/7, sell various products and services, employ staff on multiple shifts in different departments throughout the day, and handle payments in and out all day.

And its primary product, accommodation or rooms, is sold nightly. This and the above points force hotels to check, balance, and close their books daily with a financial reconciliation and start a new ‘Business Date’ for the next day in the property management system (PMS).

Any accounting software in hospitality collects data from PMS to close the accounting period at the end of every month (or as per the accounting period).

What is A Night Audit In A Hotel?

As described above, before closing the current business date (operating day), hotels check and balance every transaction and ensure all hotel ledgers (more on ledgers later) are balanced.

If any wrong entry is left unchecked, the hotels cannot go back to past dates and correct them, which results in wrong figures and statistical data being stored, reported in the PMS, and finally taken into the accounting system. It will continue to affect future business dates in PMS and the accounting system.

Because of this, an EOD or ‘end of day’ process, an auditing task, becomes crucial in the hotel industry.

• Definition of hotel night audit: Night auditing is a reconciliation task a hotel’s night auditor performs daily during the wee hours after every transaction posting for the day is complete. During this financial reconciliation, the night auditor verifies guest accounts and charges, prepares financial reports for the management, and rolls over the system for a new business date.
• Importance of the night audit in hotel: Properties record revenue and payment transactions (or postings) in the hotel folio. Each transaction is posted manually by a cashier, posted by another by a third-party system such as a POS at the restaurants, or posted automatically by a PMS (Property Management System), such as nightly room charges and taxes.

However, no method of posting a transaction is error-free or mistake-free. It can be due to a typo, posting to a different room, system errors, or even functional or operational issues, such as a reservation having the wrong rate code for a booking. Or, there can be situations where a charge that is supposed to be posted is not posted.

During the night audit, the auditors check transactions, guest bill by bill, and room by room. Suppose a business date is closed with any wrong posting or a missing transaction, and the business date is closed; it will reflect in the management reports, and the hotel team will have a hard time correcting it and justifying it.

Imagine a wrong charge being posted to a guest in-house, and the guest finds out at checkout the next day? Or, even worse, a charge that is supposed to have been posted, and the guest has already checked out?

Auditing before closing the day avoids these situations.

Who is a Hotel Night Auditor?

In hospitality management, a hotel’s night auditor is part of the financial department, although he often interacts with the Front Office team and occasionally with others.

In a departmental structure, the night auditor comes above the cashiers and below the Income Auditor. He often reports to the Income Auditor or, rarely, directly to the Assistant Financial Controller.

The advantages and disadvantages of being a night auditor are work hours. He starts the duty just before midnight or sometimes after, depending on the hotel’s size and how busy the day is. Sometimes, during the weekends in a hotel with many restaurants and bars, the night auditor might start much earlier than other days to finish the auditing (End of Day) process in time for the hotel to begin its new day.

The advantage is that he works in a calm and quiet environment without interference from other staff or bosses. Meanwhile, he hardly or once a week gets to sleep during the night (If he can still do that after getting used to sleep during the daytime).

Meanwhile, it is hard for a night auditor to attend to any personal work inside the hotel or outside; for example, to meet the Human Resources department or attend a bank, he has to stay awake after his duties.

Key Role and Responsibilities of a Hotel Night Auditor

A night auditor must ensure a hotel’s business date (operating date) is closed without any financial or statistical discrepancies.

Then, he has to prepare (in PMS systems) summarized and detailed reports on statistics, financials, accounting, and auditing for the managers, as some of these reports are crucial during the morning briefing of the departmental head with the general manager.

He ensures his tasks are completed on time and complying with the hotel’s SOP (Standard Operating Procedures).

The section, The Night Audit Process Explained, details what a night auditor does.

Differences Between Night Auditors and Day Staff

When comparing a night auditor with a day staff member, it should be noted that people often refer to a Front Desk agent or a Shift Leader’s responsibilities. Let’s see the difference when a night auditor can be compared and not with a front desk staff member.

In hotels that are not large and busy, night auditors handle Front Desk management and guest operations in addition to doing the accounting checks and auditing at the end of their shift to roll over the date.

So, in the above situations, night auditors are expected to handle Front Desk activities, Guest services, and guest interaction tasks in addition to performing reconciliation and financial auditing.

In bigger and busier hotels, night auditors typically need more time to focus on other tasks, so they are hired only for auditing tasks.

Usually, these are mentioned in the job description and the hiring contracts.

Importance of Night Audit In Hotel

The night auditor and the night manager are different individuals in a large, upscale hotel.

The night manager, part of the Front Office team, is responsible for guest relations or handling guest-related operational matters. The night auditor, part of the Finance Department, focuses entirely on reconciling financial transactions.

However, as earlier stated, in smaller hotels, the scenario is different; a night auditor handles not only reconciliation and auditing but also guest relations and attends to guests’ operational needs such as:

• The main tasks are late-night front desk operations, hotel guest relations, and assisting the FO team on a busy night, as few staff members are usually present at night.
• Handling guest calls, outside calls, and departmental calls. And help with any wake-up call requests.
• Handling guest issues during the night and interacting with relevant departments, the manager on duty, or the hotel manager when necessary.
• Handling late walk-ins (without prior booking), check-ins, and checkout processes (including room blocking, posting any payments and charges, creating room keys, and guest-related stationery).
• Handling room discrepancies such as status discrepancies with housekeeping, skips, sleeps, and person discrepancies.

Night Audit Process In Hotel

Even though hotels use modern Property Management Systems (PMS), no system can audit, reconcile, or discover unsuspecting human errors in the operation or a well-planned fraudulent activity that can ultimately impact overall revenue management and hotel accounting.

However, the systems are super fast at processing and reporting data, organizing data, automating processes, and integrating with other third-party systems implemented to enhance the guest experience.

So, the Night Audit process involves a mix of humans and computers; a night auditor handles nearly 80% of workloads manually, and the system completes 20%.

Hotel Night Audit Checklist – Overview of the Night Audit Workflow (What Is Night Audit Checklist?)

Regardless of what PMS a hotel uses, every night auditor goes through different and detailed steps within the logical group of tasks. However, among the hotels, there can be differences at a detailed level due to SOPs and systems in use — But they all have the same goal:

1. Preparation of the reports
2. Checking, auditing & reconciliation
3. Running the Night Audit process in the system
4. Printing final reports

A Step-By-Step Breakdown of Typical Night Audit Tasks

Preparation With The Reports

The process starts after the hotel’s last revenue center or outlet is closed and the POS system’s night audit is completed. At this stage, the night auditor prints all required reports in PMS that he will use during the next phase of the process. It can include but is not limited to:

• Cashier reports from PMS to tally payments and the float of each cashier.
• Journal reports by cashiers, rooms, payment type, and by outlet that will be used to verify postings (both charges and payments).
• Print rate check report. This is to ensure that each guest room is charged or will be charged as per the rate code (simply put, the agreed rate) unless a discount has been offered to the guest.
• Guest activity reports, such as arrivals, checked guests, due out, checked out, etc., are needed to take necessary action, such as determining whether reservations should be no-shows, canceled, or due out guests have been checked out or stay extended before the day closure.
• Print reports from other systems, such as telephone, POS, or any systems that post charges to the guest bills. Collect copies of outlet checks to verify all revenue and payments from other systems and tally the PMS.
• When Oracle PMS is used, check to ensure the Lost Interface posting room (usually room PM 9500) is empty or emptied with appropriate action. Note: When a posting from a third-party system doesn’t find the guest in-house or the bill is open, the posting ends up in this room).
• Prints guest profile reports where crucial statistical information is missing, such as guest country, nationality, etc., and takes necessary action. Note: No standard report; it differs from hotel to hotel based on what the hotel considers essential data.

Note: The above are ordinary and necessary reports that can help with auditing. However, hotel-to-hotel reports may differ since every hotel has its SOP (Standard Operating Procedure) and policies. Some chain hotels like Marriott, Hyatt, and others have standard night audit task lists.

Checking, Auditing & Reconciliation

Reconciling daily financial transactions:

• Ensure all payments are received according to what has been recorded in the systems. For instance, cash collection should equal what is recorded for cashier drops by payment type, such as cash, VISA, MASTER, AMEX, etc., and take appropriate action when there is an imbalance.
• POS systems, a different system than PMS, manage outlets/restaurants. Ensure the restaurant cashiers’ payment collection tallies what is recorded in the POS. It all tallies with the PMS as every transaction is sent to PMS in an integrated env. or posted manually. The night auditor checks for any imbalances between what is posted in the POS systems and received at the PMS outlet check by check and takes necessary action if there is any imbalance.

Verifying guest accounts and charges:

• Like the payments discussed above, night auditors must ensure all charges are posted to guest rooms, no duplicate charges are posted, and no charge goes missing.
• Verify that all guests’ rates are correctly recorded in the reservations and that proper hotel procedure has been followed when a discount is given.
• Reservations with deposits that must be ‘cancelled’ before the rollover: Check for any FO/Reservation team notes to change the arrival date before cancelling any reservations with deposit. Or, when confirmed, the appropriate penalty is charged against the guest.
• The reservations not canceled become No-show reservations after the rollover (These are arrival reservations on that day). Check FO/Reservation team notes to change the arrival date before running the night audit.
• Check for departure / due outs for those still needing to check out. Either check out or extend the stay.
• And the night auditor closes his cashier.
• Suppose the auditor cannot immediately resolve discrepancies requiring other managers or staff involvement. In that case, he can safely move such rooms to fictitious rooms (known as ‘PM rooms’ among the Opera PMS users) and make a note for daytime staff to handle those cases.

Running the Night Audit Process in The System

Once the night auditor completes the above tedious manual tasks, he is ready to move on to the PMS, start the day’s rollover process, and relax while the system finishes the rest of the functions. (He is lucky to call IT or product support if he doesn’t face any PMS errors.)

Typically, the below processes run in the PMS:

• (Auto) Posting room and any fixed charges, including packages and taxes that are part of the room charge, such as Bed and Breakfast.
• Roll the business date.
• Updating Front Office / Housekeeping room statuses. Front Office room statuses include Stay Over to Due Out, Housekeeping status, and Clean to Dirty.
• Updating statistical data in the system: market segmentation, inventory, reservation, guest and other profiles, and financial-related statistical data are updated. 
• Financial Management: Hotels use different ledgers, such as the Deposit Ledger, Front Ledger (Guest Ledger), Account Receivable Ledger (City Ledger), and Trial Balance. The system populates these critical reports.

Printing Final Audit Reports

With modern PMS systems, the night auditors don’t have to send the reports to relevant managers. The systems can be set up to send specific reports as email attachments to appropriate department heads.

During the night audit, systems print many reports (as set up by the hotel management or support staff). However, other reports are saved as soft copies at the night audit except for the crucial reports. These reports are available for the users to print on demand, even later.

Some crucial reports at the night audit:

• Manager Report — Revenue: As the name suggests, this report is significant for general and hotel managers. This report gives an overall picture of how well the hotel did during the last business day in one or two pages. It provides room revenue, food and beverage, miscellaneous, and non-revenue (taxes). 
• Manager Report—stats: Room occupancy stats and ADR (average daily revenue), individual occupancy and allotments (groups), total out-of-order/service rooms, cancellations, no-shows, extended stays, early departures, complimentary and house-use, and day-use rooms.
• Guest Ledger: This report gives the current balance associated with guests in-house for the last business day with transaction details. Since it is printed at the end of the business day, it can not be reprinted backdated.
• Deposit Ledger: Guest deposit details.
• AR Ledger: Accounts Receiveable details. It contains all the postings made to the city ledger and all bills (invoices) of guests who were checked out to the city ledger (Direct Bill or on a credit basis for company guests, for example)
• Trial Balance: It shows the detailed revenue collected yesterday (last business day), plus summarized information about all ledgers discussed above.
• AR Aging: This is the Accounts Receivable aging report as of yesterday. It gives an idea of what the companies, travel agents, and other sources owed as of last night’s audit.
• Guest Traces: This report records guests’ requests and complaints and shows whether the hotel staff resolved them. It is also crucial as the hotel managers are highly keen and focused on how the staff satisfies their guests.
• Then comes many other detailed reports as to what a hotel wants. 

Challenges Faced by Hotel Night Auditors

• Depending on the hotel’s size, the night auditor might have to work alone during night shifts. If the hotel is smaller, night auditors’ Shift responsibilities become more challenging as they have to focus on Front Desk operations in addition to typical night auditor tasks.
• Managing unexpected situations, such as intoxicated or unruly guests, when the auditors have to look after Front Desk operations. Sometimes, this unexpected can come in the form of system failures.
• We have experienced seeing night auditors leave in the afternoon due to unexpected system faults that delay their tasks while the support staff fixes them.

What Are The Types of Night Auditors?

• Night Auditor: A regular full-time night auditor who is employed only for daily auditing of hotel accounts and bills. He is also responsible for the rollover of PMS systems.
• Senior Night Auditor: In a large hotel, night auditing tasks can be performed by more than one employee. Usually, an experienced night auditor leads the team with juniors. Usually, this team doesn’t consist of more than three members.
• Junior Night Auditor: It could be a fresher who is being trained on the job by the senior night auditor.
• Night Manager: A night manager looks after the hotel Front Desk and Guest Relations during the night hours. In some hotels, where the real auditing can be performed the next day by an income auditor during the date-time, he might handle night auditing at the systems only.

Skills and Qualifications Required for a Hotel Night Auditor 

• Essential skills: Patience as in any other challenging role, attention to detail, basic accounting knowledge, ability to collaborate with other staff of any level, and detail.
• Educational requirements: Usually, like in any role, experience beats any paper qualifications. However, a minimum of high school is essential. Additional trade certifications and the experience he gains can help him move further in his Hotel management career.
• Experience needed: Experience as a Front Desk staff member or a cashier will help a lot in facing the daily challenges of the job. Due to the monotonous nature of the role, any newbie with the basic skills can become excellent quickly.

Future of the Night Audit Role

Thanks to advancements in property management systems (PMS), the future of the night auditor role is becoming a Day Auditor.

Even now, some major chain hotels let Night Managers (Not night auditors) handle the rollover. So, how is this possible?

We take Oracle’s Opera PMS here. There is a parameter-controlled feature, “Income Audit.” Once enabled, it enables any user with the appropriate permission to shift to a new business day. Then what happens to the actual auditing? Read on.

Once the day is rolled over, the hotel can continue regular operations on a new business day. In contrast, the actual auditing and printing of final reports for the past business day is kept pending for a later date or time.

Later, a designated night auditor, income auditor, or any finance employee can go into a specific PMS option and do the auditing, complete the day, and print the reports of that past business day—no Night shift work!

So, the night auditors can keep their traditional designation while working during the day.

FAQs about Hotel Night Audit

What does a hotel night auditor do?

He works only at night, has to handle difficult guests and requests at night, and rarely has to leave much later in the morning or afternoon due to system failures that delay his work.

What time is the night audit in a hotel?

There is no defined timing. However, night auditors start the process only after the possible last bill is posted in the system. It can mean that night auditors have to wait until the last revenue center such as an F&B outlet or bar closes its operations.

How much do hotel night auditors earn?

Exact remuneration cannot be confirmed since it differs from region to region and hotel to hotel. However, a hotel night earns in the range of a Front Office Shift Leader and below an Income Auditor.

Is night auditor a manager?

No. He can be a team leader in a small group of night auditors where the hotel needs more than a single person to do the task.

What skills are needed to become a hotel night auditor? 

Knowledge of hotel operations and cashiering, ability to work at the Front Desk at night, and collaboration with all other departments in the hotel as and when needed.

What challenges do night auditors face?

He works only at night, has to handle demanding guests and requests at night, and rarely has to leave much later in the morning or afternoon due to system failures that delay his work.

Conclusion

In any business, auditing protects business interests by preventing financial wrongdoings, whether intentional or unintentional, and enforcing compliance with the rules, regulations, and standard operating procedures. 

Fortunately, in the hotel industry, the night audit process ensures all the above and avoids any discrepancies being forwarded to the next business date.

And, daily, it guarantees (supposed to) an error-free, clean business day for the hotel to depend on for its guest operations.

• Importance of Night Audits
• Becoming a Night Auditor