Scope and Audit Responsibilities of Internal Auditors (for Hospitality Division)
Scope of Work
Finance & Accounts Department
• Reviewing & verifying proper Accounting system/ Book keeping Verification
of flow of revenue from Point of sale to Accounting system.
• Trial balance
o General Ledger Scrutiny
o Review of Journal Entries, Cash Book and Bank book
o Verification of expenses with regards to system, procedure and propriety
o Inter Unit Reconciliations-Reconciliation of account current with Head
Office account.
• Cash & Bank
o Physical Verification of Cash
o Review of General Control over cash handling, cash insurance (for safe, in
transit, fidelity)
o Control over stock of Cheques and its utilization.
o Approval of vouchers, completeness and supporting for cash/cheque
receipts and cash payments
o Checking of TDS deductions and timely payments.
o IOU/Suspense vouchers.
o Control over receipts of cheques.
• Night audit procedures
• Loans & advances
o Sanctioning/Approvals
o Security
o Accounting Controls
o Recovery Procedures
• Fixed Assets
o Review of Procurement Process
o Emergency Sanctions
o Capitalization
o Inter Unit Transfers
o Fixed Assets Register
o Physical Verification and codification
o Depreciation accounting
o Disposal and write-offs
o Repair and Maintenance account
o Existence of Equipment AMC
o Adequacy of Insurance cover
o In case addition to fixed assets made at head office level, whether proper
documents have been obtained and the capital account reconciled?
• Statutory Compliance
Compliance with regards to timely deposit of statutory dues in government
treasury and filing of returns etc. under:
o Income Tax Act (TDS)
o Sales tax Act
o Prevention of Food and Adulteration Act.
o ESIC/PF /EPF Act.
o Luxury tax
o Service tax
o Entertainment and Other taxes.
• Engineering division
o Physical Verification of Engineering stores
o Vendor Evaluation, selection and performance assessment procedures
o Control over issue of work orders
o Review of procedures for receipts/issue of materials.
o Response time.
o Adherence to policies and procedures
o Process for evaluating efficiency and effectiveness of the department.
o Review of Guest complaint redressal system including response time.
• Billing
o Verification of Invoices-timeliness and accuracy
o Foreign Exchange bills
o Agreement vis-à-vis billing
o Review of process/ system of billing
• HR and Training
o Checking of Payroll
o Pre employment scrutiny of employees
o Adherence to norms for Contract labour
o Overtime procedures
o Performance evaluation Procedures
o Trailing policies and procedures
o Provisions of Gratuity and Leave encashment
o Checking of full and final settlement of employees
o Recovery of any dues towards employees who have left the services
• F&B Department
o Review of F&B daily cost report, F&B month end reconciliation and other
reports generated
o Physical verification of F&B stores , kitchen, stewarding and accounting for
excess/shortage, if any
o Periodic checks of production Vs portions sold.
o Production planning
o KOT drill –billing, cancellation of orders , complimentary (approvals etc)
o Liquor control –physical verification, Excise records, outlet records,
consumption analysis including control over mini bars.
o Ascertainment of wastages during production
o Review of Menu Cycles, price fixation
o Process of communication of menus to F&B
o Dish costing.
• Banquets and ODC
o Rack rates Vs Offered rates
o Billing –function prospectus, bills etc.
o Procedure for pax verification
o Procedure for outdoor catering
o Bar Inventory procedures
• Recreational Areas
o Telephones
o Billing (guest/administrative)
o STD/ISD baring procedures.
o Laundry
o Procedure-receipt, service, billing, guest instructions, identification/ tagging
o Process of costing and pricing
o Hire charges of board rooms/offices
o Rent and Other income
o Business Centre
o Billing including complimentary use ( approvals)
o License agreements for shop space/ counters/pastry shop etc.
• Purchase
o Vendor evaluation, contracting and performance assessment
o Evaluation of process of placing orders including quotations
o Bill passing / processing procedures
o Adherence to credit norms
o Review of process of placing of orders, monitoring deliveries and receiving
food stuff including the documentation done.
o Checking of quality of materials received and materials ordered.
• Stores
o Physical verification of inventory
o Stocking arrangements and Process of Issue (FIFO /LIFO)
o Identification of slow/Non moving stock
o Procedure of identification of self life items , control over expiry , treatment
etc.
o Treatment of shortage /excess in inventory
o Review of Inventory levels
o Review of receipts/issue procedures
o Control over scrap items
• Credit control
o Adherence of Credit Policy
o Credit extension procedures
o Review of credit Committee meeting minutes etc.
o Analysis of debtors Ledger
o Monitoring and follow-up of overdue accounts
o Status of legal cases, if any.
• House keeping
o Lost and Found items
o Inventory holding –physical verification, record keeping etc.
o Procedure- records, checking of rooms at the time of check-out , re-
ordering, house –laundry, house keeper’s occupancy report/bill.
o Work orders-tailoring / Carpet cleaning.
o Policy on discards.
• Security
o Gate passes-goods (returnable or non returnable), contractors, visitors.
o Control over keys.
• Front Office
Review of internal controls over front office department & other
departments.
Reception
o Review of the Guest Registration cards & Guest profiles in software.
o Arrival /departure register
o Key checks
o Guest complaints/Suggestions
o Special Promotions/ Schemes
o No show & retention charges
o Day use rooms
o Authorisation, documentation for discounts, complimentary stays, House
use rooms, adhoc discounts, up gradations.
o Extension of credit
o FO occupancy status
FO cash
o Credit card procedures
o Allowances and paid outs.
o Physical verification of cash.
o Bills on hold
o Breakfast /meal coupons.
• MIS
o Timeliness and responsibility to generate MIS.
o Adequacy of information
o Monthly MIS reconciliation with Trial Balance and other records.
• General
o Verifying all accounting policies and practices being implemented and
being followed in day to day accounting.
o Analytical Review of Budget & Actual figures provided by the respective
department.
o Inter department information/reconciliation.
o Examine the delegation of authority to various departmental Heads, vis-à-
vis financial power and cross control over their function and exercise of
authority.
o Analysis of normal and abnormal losses and quantification in all possible
areas.
o Providing suggestion for optimum resource utilization. Analysis of optimum
resource utilization.
o Over all analysis of Internal Controls.
