The night audit is a necessary daily process in the hospitality industry, primarily focused on balancing the financial accounts of the hotel. This meticulous review ensures the operational and financial integrity of the establishment before the start of a new business day. It acts as the final check on all transactions, guaranteeing that the hotel’s Property Management System (PMS) is accurate and ready for the incoming day shift.
Defining the Night Audit’s Core Purpose
The fundamental purpose of the night audit is twofold: establishing financial control and ensuring operational continuity. It functions as a daily financial check-up, reconciling all transactions and charges from various revenue centers across the property, such as the restaurant, spa, and gift shop. The primary goal is closing the financial day by verifying that every revenue stream is accurately recorded before the system is rolled over to the next date.
This process involves reconciling the Guest Ledger, which represents the accounts receivable for all currently registered guests. The night auditor compares the total of all departmental charges against the amounts posted to guest folios, aiming for a zero balance, or “balancing the books.” This nightly reconciliation ensures the hotel captures all income generated during the day and prevents future billing errors for guests.
The Critical Role of the Audit Period
The night audit defines and closes the hotel’s specific “business day,” a period distinct from the standard calendar day. This audit period is a fixed cycle, often set to run from a late hour like 3:00 AM to 3:00 AM, regardless of the 24-hour nature of hotel operations. The process ensures that all revenue generated within this specific timeframe is correctly attributed to that business day.
For example, a late-night bar charge posted after midnight is still recorded as part of the previous day’s revenue if it falls before the official audit closing time. The night audit formalizes this cut-off, transitioning the Property Management System to the next business date. This structured end-of-day procedure allows for consistent and accurate daily financial reporting and performance tracking.
Essential Tasks Performed During the Night Audit
The night audit involves a series of procedural steps designed to ensure the accuracy of all financial and operational data within the Property Management System. The auditor cross-references system data with physical records and reports from other departments.
Posting Room and Tax Charges
The posting of room and tax charges is typically the final automated step in the audit. The room rate and applicable taxes are applied to every in-house guest’s folio, formally recording the primary revenue for the day. This large, automated batch posting is performed after the bulk of the day’s ancillary charges have been verified and posted.
Verifying Guest Charges
The night auditor checks all departmental charges—such as those from the mini-bar, in-house dining, or business center—against supporting documentation. They ensure that all vouchers, checks, and tickets from point-of-sale systems match the amounts posted to the guest folios. This verification step identifies and corrects any missing or misposted charges before the guest receives their final bill.
Reconciling Cash and Credit Transactions
A major component of the audit is balancing the daily cash and credit card transactions against the Property Management System totals. The auditor counts and verifies the daily cash drops from all cash-handling departments and reconciles the total against the system’s recorded cash receipts. Similarly, credit card settlements are balanced to ensure the total amount processed matches the total amount due from the payment gateway.
Processing No-Show and Late Check-Out Charges
The night audit includes procedures for handling guests who failed to arrive for their reservation (“no-shows”) or guests who incurred charges after the official check-out time. For no-shows, the auditor processes the applicable penalty fee, typically a one-night room and tax charge, and cancels the reservation. The auditor also ensures any late charges from departed guests are properly routed to accounts receivable or charged to the guest’s card on file.
Key Reports Generated by the Night Audit
The successful completion of the night audit yields a suite of management reports that provide departmental managers and ownership with data for the next day’s operations and long-term analysis. These reports transform raw transactional data into actionable business intelligence.
The Manager’s Report, or Daily Revenue Summary, summarizes the hotel’s performance for the closed business day. It includes headline figures such as occupancy percentage, Average Daily Rate (ADR), and total revenue broken down by source, providing a snapshot of daily profitability. This report is used by management to track daily performance against budget and forecast.
The Detailed Guest Ledger Report provides an itemized snapshot of all outstanding guest balances, showing every charge and payment made on each active folio. This information is valuable for the accounting department to monitor accounts receivable and for the front desk to prepare for check-outs.
High Balance Report
The High Balance Report specifically flags guest accounts that have accrued charges exceeding a pre-set internal credit limit, alerting management to potential payment risks.
Room Status Discrepancy Report
The Room Status Discrepancy Report highlights inconsistencies between the Housekeeping status (e.g., “clean” or “dirty”) and the Front Office status (e.g., “occupied” or “vacant”). Resolving these discrepancies ensures the front desk knows the true availability of rooms for the incoming day’s arrivals. These reports collectively support informed decision-making across all hotel departments.
The Role of the Night Auditor
The individual performing the night audit acts as a hybrid professional, combining front desk responsibilities with primary financial accountability. During the quiet hours, the night auditor manages all front office duties, including late check-ins, security monitoring, and addressing guest requests.
The main focus is the financial responsibility of executing the audit process itself. Success in this position demands strong attention to detail and basic accounting knowledge to accurately reconcile accounts and identify discrepancies. The auditor is responsible for the integrity of the day’s financial records and setting the stage for the morning shift.
Consequences of Inaccurate or Failed Audits
An inaccurate or failed night audit can have negative impacts on the hotel’s operations and financial integrity. If the audit fails to close the day, the Property Management System can be frozen, causing operational chaos the next morning. This results in delayed check-ins and check-outs, as front desk staff are unable to process transactions or access current room status information.
Financially, errors can lead to revenue loss from unposted charges or inaccurate billing. Billing errors can cause disputes with guests, damaging satisfaction and potentially leading to chargebacks or negative reviews. Inaccurate financial reporting, such as incorrect occupancy or revenue figures, can mislead management, resulting in flawed decisions regarding pricing, staffing, and forecasting.