Accounting for revenue at crowne plaza west hanoi hotel residence

Aditional services...18 CHAPTER 4: REVENUE ACCOUNTING AT CROWNE PLAZA WEST HANOI HOTEL & RESIDENCE...22 4.1.. Accommodation revenue recognition and control process...43 CHAPTER 5: DISCUS

TABLE OF CONTENT

ACKNOWLEDGEMENT

STATUTORY DECLARATION

ABBREVIATION

LIST OF FIGURE

CHAPTER 1: INTRODUCTION 1

1.1 Rationale 1

1.2 Research Objectives 2

1.3 Research Methodology 2

1.3.1 Method of collecting data 2

1.3.2 Data analyzing method 3

1.4 Scope of research 3

1.5 Research Structure 3

CHAPTER 2: THEORETICAL BASIS OF REVENUE ACCOUNTING 4

2.1 Overview of Revenue 4

2.1.1 Definition of Revenue 4

2.1.2 Objectives of Revenue 4

2.1.3 Revenue classification 5

2.1.4 Accountants’ responsibility for Revenue 6

2.2 Accounting for Revenue under International Accounting Standards 6

2.2.1 Revenue recognition under International Accounting Standards 6

2.2.2 Revenue Control under International Accounting Standards 9

2.3 Accounting for Revenue under Vietnamese Accounting Standards 10

2.3.1 Revenue recognition under Vietnamese Accounting Standards 10

2.3.2 Revenue Control under Vietnamese Accounting Standards 14

CHAPTER 3: CHARACTERISTICS OF REVENUE ACCOUTNING WITHIN A HOTEL 16

3.1 Operational characteristics of a hotel 16

3.1.1 Functions and duties of a hotel 16

3.1.2 Operational characteristics of a hotel 16

3.2 Characteristics of revenue at a hotel 17

3.2.1 Accommodation Service 17

3.2.2 Food & Beverage Service 18

3.2.3 Aditional services 18

CHAPTER 4: REVENUE ACCOUNTING AT CROWNE PLAZA WEST HANOI HOTEL & RESIDENCE 22

4.1 Overview of Crowne Plaza West Hanoi Hotel & Residence 22

4.1.1 General information of Crowne Plaza West Hanoi Hotel & Residence 22

4.1.2 Establishment and development process of Crowne Plaza West Hanoi Hotel & Residence 22

4.2 Overview of Accounting Department and Organization chart among departments related to Revenue 22

4.2.1.Organization chart of Accounting Department 22

4.2.2.Organization and relation among departments related to Revenue 27

4.3 Cycle of recording and controlling revenue at Crowne Plaza West Hanoi Hotel & Residence 28

4.3.1.Overview of Revenue at Crowne Plaza West Hanoi Hotel & Residence 28

4.3.2.Food & beverage revenue recognition and controlling process 33

4.3.3 Accommodation revenue recognition and control process 43

CHAPTER 5: DISCUSSION AND RECOMMENDATION ABOUT REVENUE ACCOUNTING OF CROWNE PLAZA WEST HANOI HOTEL & RESIDENCE 61

5.1 Strength of Revenue Control of Crowne Plaza West Hanoi Hotel & Residence .61

5.2.Weakness of Revenue Control of Crowne Plaza West Hanoi Hotel & Residence .62

5.3.Recommendation for Revenue Control Accounting at Crowne Plaza West Hanoi Hotel & Residence 62

CHAPTER 6: CONCLUSION 65

Firstly, I would like to thank to the Center for Advanced Educational Programs fortheir efforts of supporting students to have great internship opportunities and completethis internship program

Secondly, I express my gratefulness to my supervisor: Dr Le Kim Ngoc Her valuableadvice, broad knowledge and careful instruction strongly support me to carry out myinternship

Thirdly, I give my sincere thanks to the Crowne Plaza West Hanoi Hotel, especially

Mr Tu Duc Hoang, the income supervisor at the accounting department of CrownePlaza West Hanoi Hotel His enthusiastic support and useful information help me a lot

in fulfilling this task

Finally, I desire to express my gratitude to all lecturers at National EconomicsUniversity Their lessons, guidance and experience are great packages for me in myway up the career ladder

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submitted Barchelor Thesisindependently I did not use any outside support except for the quoted literature andother sources mentioned at the end of this paper

I clearly marked and separately listed all the literature and all other sources whichIemployed producing this academic work, either literally or in content

Hanoi, 12/06/ 2017

Signature

Nguyen Thu Thao

ABBREVIATION

AR Account Receivable

CPWH&R Crowne Plaza West Hanoi Hotel & Residence

F&B Food and Beverage

LIST OF FIGURE

Figure 2.1: Revenue audit objectives 15

Figure 4.1 Organization chart of Accounting Department 23

Figure 4.2 Department Relation in Recording Revenue 27

Figure 4.3 Cycle of Recording revenue on system 29

Figure 4.4 Price set up process 34

Figure 4.5 Banquet Revenue Control process 38

Figure 4.6 Open check test process 41

Figure 4.7 Accommodation Revenue Recognition process 43

Figure 4.8 Accommodation rate setup process 45

Figure 4.9 Profoma invoice control process 54

CHAPTER 1: INTRODUCTION

Tourism is a "non-smoke" industry that brings great benefits not only to the local butalso to the nation Tourism not only brings economic benefits but also brings socialand cultural benefits In recent years, along with the development of internationaltourism, tourism has become a key economic sector of many countries Vietnam isalso a country with tourism economy development Our country is considered to be thesafest and friendliest destination in the world, which is an advantage in contributing toboost the development of Vietnam's tourism industry

Hanoi City is highly appreciate as one of the most famous tourist cities of Vietnam.With cultural heritage and many sightseeings, Hanoi is not only the capital of Vietnambut also a place with full of amazing things to explore Therefore, tourism has brought

to this city a significant source of revenue Especially, every years, Hanoi organizesmany festivals They are great opportunities for tourism businesses in the city topromote their image and attract tourists to their businesses

Parallel with the increase in international and domestic visitors, hotel construction andbusiness explode Hotel system in Hanoi increased quickly and the top concern of allthese businesses is profit Profit directly affects the existence and development of thebusiness Especially in the process of international economic integration and especiallywhen Vietnam has joined WTO, becoming the 150th member of this organization,business efficiency is a matter of top concern of companies and enterprises To findout if the business is profitable, it is necessary to ask accountants to analyze therevenue and determine the business results Turnover is the total value of economicbenefits that an enterprise derives from the results of its business activities contributing

to the increase in equity The higher the sale is, the faster the growth of the businessget Revenue must be sufficient to offset the cost and profit to continue to reproduce.Thus, revenue settlement and defining business performance in an organization playvery important roles Accounting for revenue analysis and business performance is one

of the key components of business accounting for the fastest and most reliableeconomic information, especially when the economy is on the fast track In the fiercecompetition period, every business has made full use of its existing capabilities toincrease profits to expand its market share

Seeing the meaning and importance of revenue accounting and business results incurrent business of Vietnam, along with the knowledge gained during school time withthe time I practice at the Crowne Plaza West Hanoi Hotel & Residence and decided to

take the subject of "Accounting for Revenue at Crowne Plaza West Hanoi Hotel &Residence" to be the subject of my thesis.

1.2 Research Objectives

There are three main objectives of my research The first objective is to describe thecurrent situation of accounting for revenue in Crowne Plaza West Hanoi Hotel &Residence Especially, operating activities of Crowne Plaza West Hanoi Hotel &Residence related to many types of revenue Therefore, the accounting for revenue isessential for the operation of the firm

The second objective is pointing out some problems at accounting for revenue ofCrowne Plaza West Hanoi Hotel & Residence After a period of working as an intern

at CPWH&R, I realized that the revenue accounting system here had somedisadvantages which may cause limitations of human resource and qualitymanagement and even give chances to the loss of revenue

Consequently, the third objective of this research is giving some recommendations tosolve problems as well as improve the effectiveness of the accounting for revenue atCPWH&R

1.3 Research Methodology

1.3.1 Method of collecting data

Data collected comprises of primary information and secondary information Primarydata is obtained through survey and observation In the meantime, secondary data ispicked up from firm’s books, vouchers, and other related sources of information Toillustrate more, data is collected by following ways:

Inquiry: It provides personal opinions and assessments about the situation ofaccounting process by interviewing accountants, director and other staffs at CrownePlaza West Hanoi Hotel & Residence The purpose of those interviews is to deliver asubjective view refers to the accuracy of the information attained during the researchperiod

Observation: In my internship period, I purposefully pay attention to the operationsystem of the firm, especially in accounting department, for example, observing thetask assignments of accountants Thereby, I can understand the characteristic, process

of company and accounting for revenue in actual circumstances

In obtaining secondary data for extensive knowledge about accounting on revenueframework and real situation at the hotel, I acquired data from various sources of data

as following:

- Vietnamese Accounting Standards

- Crowne Plaza West Hanoi Hotel & Residence’s accounting documents, journals,books, reports, and financial statements in the year 2016

- Accounting websites and forums

1.3.2 Data analyzing method

Comparing technique: During this study, the comparing technique is applied inparalleling accounting models with condition in actual, linking with the involvingbooks to recognize similarities and dissimilarities

Mathematical technique: This technique is utilized to compute the revenue, the balancesituation and other related requirements … with the purpose of obtaining the correctaccounting figure for examining the accuracy of data collected

1.4 Scope of research

The study concentrates on the accounting for Revenue and the current situation ofaccounting for Revenue at Crowne Plaza West Hanoi Hotel & Residence

- Space range: Crowne Plaza West Hanoi Hotel & Residence

- Time range: in the year 2016

In spite of efforts during the period, the report has some inevitable limitations because

of my shortage in practice experience, knowledge and restriction of time Based on thetheory of accounting for revenue and the current practice at Crowne Plaza West HanoiHotel & Residence accompanied by its strengths and limitations, I have suggestedsome recommendations with hope that they would be beneficial for the improvement

of the company

1.5 Research Structure

- Chap 1: Introduction

- Chap 2: Theoretical basis of Revenue Accounting

- Chap 3: Characteristics of Revenue Accounting within a Hotel

- Chap 4: Current situation of Revenue Accounting at Crowne Plaza West Hanoi Hotel

& Residence

- Chap 5: Discussion and Recommendation

CHAPTER 2: THEORETICAL BASIS OF REVENUE

ACCOUNTING

2.1.1 Definition of Revenue

The income generated from sale of goods or services, or any other use of capital orassets, associated with the main operations of an organization before any costs orexpenses are deducted Revenue is shown usually as the top item in an income (profitand loss) statement from which all charges, costs, and expenses are subtracted to arrive

at net income Also called sales, or (in the UK) turnover

Turnover is an important indicator because the turnover is the basis for determination

of the tax payable to the National budget, which is used to offset the business capitaland expenses incurred in the course of operation of the enterprise, Corporate profitsare also determined from sales Sales target refers to the business situation of thebusiness, thereby orienting the development of business in the future In addition,revenue is a factor that confirms the existence and development of enterprises in themarketplace Therefore, the analysis to find out the cause of the increase or decrease inturnover in the business period is very important

According to International Accounting Standards, revenue is the gross inflow ofeconomic benefits during the period arising in the course of the ordinary activities of

an entity when those inflows result in increases in equity, other than increases relating

to contributions from equity participants

According to Vietnamese Accounting Standards, revenue is measured at the fair value

of the consideration received or receivable Revenue is determined by thestraightforward value of the amounts collected or to be collected after deducting tradediscounts, rebates on sales and value of returned goods

2.1.2 Objectives of Revenue

Sales revenue is an important financial source to help businesses cover expenses in thecourse of production and business activities, thus contributing to the continuation oftheir business processes Consuming goods or consuming slow will lead to financialstress

If the enterprise makes full and timely sales, it will speed up the flow of workingcapital, create favorable conditions for enterprises to organize capital, reduce thecapital mobilized from the party Also, it will reduce the cost of capital

Sales turnover is an important basis for determining the final financial results forbusiness activities of enterprises, thus creating conditions for enterprises to fulfill theirobligations towards the State.

Sales turnover is very important for commercial enterprises, so the increase in revenue

is significant for both business and society

Increasing sales is an increase in the amount of money that a business has and alsoincrease sales that are accepted by the market Total revenue is proportional to totalprofit On the one hand, if the revenue increases, the profit of the business increasesaccordingly Therefore, businesses need to find effective measures to increase sales

Normal business activities

Financial activities

Abnormal activity

Business activities are generally understood as production and consumption ofproducts; Purchase materials and goods and provide services In each of the aboveactivities can be composed of many different operations

Financial activities are activities related to short-term and long-term financialinvestment such as investment in securities, investment in joint-venture capital,lending and real estate business

2.1.4 Accountants’ responsibility for Revenue

Revenue accountants must possess the ability to work independently and makeexecutive financial decisions with ease Though many duties are performedindependently, excellent communication skills are required as well as strategic andvariable problem solving abilities The occupation requires self-motivation, analyticaptitude and exceptional multitasking ability The desire to work in a challenging

environment is usually a prerequisite Managerial skills are often required when senior

or revenue accountants are responsible for supervising entire accounting departments.Revenue accountants are responsible for a wide variety of duties and responsibilitiesand handle all financial aspects of a company The primary responsibility involvesintense monitoring of accounts payable and receivable Revenue accountants are incharge of the daily reconciliation between bank and company accounts as well ashandling daily receipts, monthly revenue intake sheets, spreadsheet files and inter-company reports and communications to investors, partners and stakeholders They arealso required to ensure that all monthly transactions are accurately recorded, and theyadditionally assist financial analysts in updating revenue tracking sheets andprocessing royalties Other activities typically include participating in monthly,quarterly and yearly accounting cycles and preparing monthly financial statements

Revenue accountants regularly work directly with clients, monitoring and managingtheir accounts The main priority of the position is ensuring that payments are receivedfrom clients in a prompt and timely manner In this occupation, you may interactclosely with marketing personnel and advertising departments to develop ways ofincreasing company revenue Though a considerable portion of the workload iscompleted independently, revenue accountants generally interact with the companyassociates involved in company financial procedures

2.2 Accounting for Revenue under International Accounting Standards

2.2.1 Revenue recognition under International Accounting Standards

The primary issue in accounting for revenue is determining when to recogniserevenue Revenue is recognised when it is probable that future economic benefits willflow to the entity Tand these benefits can be measured reliably This Standardidentifies the circumstances in which these criteria will be met and, therefore, revenuewill be recognised It also provides practical guidance on the application of thesecriteria

Revenue is the gross inflow of economic benefits during the period arising in thecourse of the ordinary activities of an entity when those inflows result in increases inequity, other than increases relating to contributions from equity participants

This Standard shall be applied in accounting for revenue arising from the followingtransactions and events:

(a) the sale of goods;

(b) the rendering of services;

(c) the use by others of entity assets yielding interest, royalties and dividends

The recognition criteria in this Standard are usually applied separately to eachtransaction However, in certain circumstances, it is necessary to apply the recognitioncriteria to the separately identifiable components of a single transaction in order toreflect the substance of the transaction For example, when the selling price of aproduct includes an identifiable amount for subsequent servicing, that amount isdeferred and recognised as revenue over the period during which the service isperformed Conversely, the recognition criteria are applied to two or more transactionstogether when they are linked in such a way that the commercial effect cannot beunderstood without reference to the series of transactions as a whole For example, anentity may sell goods and, at the same time, enter into a separate agreement torepurchase the goods at a later date, thus negating the substantive effect of thetransaction; in such a case, the two transactions are dealt with together

Revenue shall be measured at the fair value of the consideration received orreceivable Fair value is the amount for which an asset could be exchanged, or aliability settled, between knowledgeable, willing parties in an arm’s length transaction.The amount of revenue arising on a transaction is usually determined by agreementbetween the entity and the buyer or user of the asset It is measured at the fair value ofthe consideration received or receivable taking into account the amount of any tradediscounts and volume rebates allowed by the entity

(c) the amount of revenue can be measured reliably;

(d) it is probable that the economic benefits associated with the transaction will flow tothe entity;

(e) the costs incurred or to be incurred in respect of the transaction can be measuredreliably.

 Rendering of services

When the outcome of a transaction involving the rendering of services can beestimated reliably, revenue associated with the transaction shall be recognised byreference to the stage of completion of the transaction at the end of the reportingperiod The outcome of a transaction can be estimated reliably when all the followingconditions are satisfied:

(a) the amount of revenue can be measured reliably;

(b) it is probable that the economic benefits associated with the transaction will flow tothe entity;

(c) the stage of completion of the transaction at the end of the reporting period can bemeasured reliably;

(d) the costs incurred for the transaction and the costs to complete the transaction can

When the outcome of the transaction involving the rendering of services cannot beestimated reliably, revenue shall be recognised only to the extent of the expensesrecognised that are recoverable

 Interest, royalties and dividends

Revenue shall be recognized on the following bases:

(a) interest shall be recognized using the effective interest method as set out in IAS 39,paragraphs 9 and AG5– AG8;

(b) royalties shall be recognized on an accrual basis in accordance with the substance

of the relevant agreement;

(c) dividends shall be recognized when the shareholder’s right to receive payment isestablished

2.2.2 Revenue Control under International Accounting Standards

Revenue is a one of the important thing in the business sectors, included these servicebusiness, especially in hotel industry This is because most of the activity that runs inthe hotel is related with revenue, such as receiving money from the hotel guest,laundry service and food and beverages service Therefore, they decide to conduct anaudit program of revenue cycle in the hotel services

 Objectives of Revenue Control

The Audit Objectives for the revenue cycle are:

- To ascertain that all billable services are properly reported and accurately reflected

in the financial statements

- To determine that adjustments to revenue are appropriate and approved

- To determine that Company procedures and policies regarding revenue recordingand reporting are carried out in accordance with current requirements

- To ensure that controls and procedures in use are efficient, effective andeconomical

 Responsibility of Income Auditor in Revenue Control

An income auditor conducting an audit is responsible for obtaining reasonableassurance that the financial statements taken as a whole are free from materialmisstatement, whether caused by fraud or error Owing to the inherent limitations of

an audit, there is an unavoidable risk that some material misstatements of the financialstatements may not be detected, even though the audit is properly planned andperformed

The potential effects of inherent limitations are particularly significant in the case ofmisstatement resulting from fraud The risk of not detecting a material misstatementresulting from fraud is higher than the risk of not detecting one resulting from error.This is because fraud may involve sophisticated and carefully organized schemesdesigned to conceal it, such as forgery, deliberate failure to record transactions, orintentional misrepresentations being made to the auditor Such attempts atconcealment may be even more difficult to detect when accompanied by collusion.Collusion may cause the auditor to believe that audit evidence is persuasive when it is,

in fact, false The auditor’s ability to detect a fraud depends on factors such as theskillfulness of the perpetrator, the frequency and extent of manipulation, the degree ofcollusion involved, the relative size of individual amounts manipulated, and the

seniority of those individuals involved While the auditor may be able to identifypotential opportunities for fraud to be perpetrated, it is difficult for the auditor todetermine whether misstatements in judgment areas such as accounting estimates arecaused by fraud or error

Furthermore, the risk of the auditor not detecting a material misstatement resultingfrom management fraud is greater than for employee fraud, because management isfrequently in a position to directly or indirectly manipulate accounting records, presentfraudulent financial information or override control procedures designed to preventsimilar frauds by other employees

When obtaining reasonable assurance, the auditor is responsible for maintainingprofessional skepticism throughout the audit, considering the potential formanagement override of controls and recognizing the fact that audit procedures thatare effective for detecting error may not be effective in detecting fraud Therequirements are designed to assist the auditor in identifying and assessing the risks ofmaterial misstatement due to fraud and in designing procedures to detect suchmisstatement

2.3 Accounting for Revenue under Vietnamese Accounting Standards

2.3.1 Revenue recognition under Vietnamese Accounting Standards

Revenue only includes the total value of the economic benefits the business has earned

or will earn Third-party payments that are not a source of economic interest, do notincrease the owner's equity of an enterprise will not be considered revenue (Example:When the agent collects the proceeds from the sale of goods to the entity The owner ofthe goods, the turnover of the agent is only the commission Capital contributions ofshareholders or owners increase equity, but not revenues

Revenue is measured at the fair value of the consideration received or receivable

Turnover arising from the transaction is determined by the agreement between thebusiness owner and the buyer or the property user It is determined by the fair value ofthe amounts collected or to be collected after subtracting (-) trade discounts,discounted payments, discounted goods sold and returned value of goods sold

For cash or cash equivalents not received immediately, the revenue is determined byconverting the face value of future receivables to the present value at the time ofrecognition of revenue in Current interest rate The actual value at the time ofrecognition of revenue may be less than the nominal value expected in the future

When goods or services are exchanged for goods or services of similar nature andvalue, such exchanges are not considered to be a transaction generating revenue.

When goods or services are exchanged for other goods or services are not dissimilar,such exchanges are considered to be transactions generating revenue In this case theturnover is determined by the fair value of the goods or services received, after theadjustment of the amounts or equivalents of additional payment or collection Wherethe fair value of the goods or services received can not be determined, the revenueshall be determined as the fair value of the goods or services exchanged, afteradjustment of the amounts or be equivalent to cash extra paid or extra receive

The standard transaction recognition in this standard is applied separately for eachtransaction In some cases, transaction recognition standards need to be appliedseparately to each component of a single transaction to reflect the nature of thetransaction For example, when the price of a product has a predetermined amount forthe after-sales service, the revenue from the after-sales service will be postponed untilthe company delivers the service That Transaction recognition standards are alsoapplied to two or more trade related and concurrent transactions This case mustconsider them in the overall relationship For example, if a business sells a product andconcludes another contract for the acquisition of the same goods over a period of time,both contracts and revenue are not recognized

 Sale of goods

Sales revenue is recognized when all five following conditions are met:

(A) The Company has transferred substantially all the risks and rewards associatedwith ownership of the goods or merchandise to the buyer;

(B) The enterprise no longer holds control over the goods such as the owner of thegoods or the control of the goods;

(C) the amount of revenue is determined fairly reliably;

(D) An enterprise has obtained or will receive economic benefits from the sale ofgoods;

(E) Determining the costs associated with the sale

The enterprise must determine the timing of the transfer of most of the risks andbenefits associated with the ownership of the goods to the buyer on a case-by-casebasis In most cases, the timing of the transfer of the majority of the risks coincides

with the time of transfer of the benefits associated with the legal ownership or control

of the goods to the buyers

Where an enterprise is still exposed to most of the risks associated with the ownership

of the goods, the transaction is not considered to be a sale and the revenue is notrecognized Enterprises also bear the risk associated with the ownership of goods invarious forms, such as:

(A) The enterprise shall also be responsible for ensuring that the property is operatednormally, which is not covered by the normal warranty provisions;

(B) when payment for sales is uncertain due to the buyer of the goods;

(C) when the goods are delivered for installation and installation is an important part

of the contract that the business has not yet completed;

(D) When a buyer has the right to cancel a purchase for any reason stated in the salescontract and the business is uncertain about the likelihood of the goods being returned.Sales revenue is recognized only when it is probable that the enterprise will receiveeconomic benefits from the transaction Where the economic benefits from a saletransaction are uncertain, only the revenue is recognized when the uncertainty hasbeen met (for example, when the business is uncertain whether the government is Willthe department accept foreign currency remittance? If the turnover has beenrecognized in cases where the money is not yet collected, when determining whetherthe receivable debt amount is not collected, it must be accounted into the productionand business expenses in the period, which shall not be recognized as revenuedecrease When determining the receivable amount (bad debt), the provision for baddebts must be set up without any reduction in turnover Bad debts, when actuallydetermined as unsolicited, shall be covered by the reserve for bad debts

of a service transaction is determined when all four (4) conditions are met:

(A) Revenue is determined fairly reliably;

(B) It is probable that the economic benefits associated with the transaction will flow

be made without decreasing the turnover Bad debts, when actually determined asunsolicited, shall be offset by the reserve for bad debts

 Interest, royalties and dividends

Turnover arising from interest, royalties, dividends and dividends is recognized whenthe following two conditions are met:

(A) It is probable that the economic benefits associated with the transaction will flow

to the Company;

(B) The revenue is determined fairly reliably

The actual interest rate is the interest rate used to convert future amounts received inthe period during which the other party uses the asset to the initial recognition value atthe time of transfer of the asset to the user Interest income comprises distributions ofdiscounts, premiums, interest received in advance or differences between the carryingamount of the debt instrument and its value at the time of maturity

Revenue is recognized when it is probable that an enterprise will receive economicbenefits from the transaction When it is impossible to recover an item that has beenpreviously recorded in the sales, the amount that is likely to be irrecoverable oruncertain can be accounted for as incurred

2.3.2 Revenue Control under Vietnamese Accounting Standards

In the financial statements of the enterprise, revenue is an important item, directlyaffecting the financial items and items Revenue is also the basic criterion that peopleare concerned about the financial status of the business Businesses use it to analyze

their solvency, potential or business performance, prospects for future growth, andpotential future risk Therefore, this item of fraud is unavoidable Hence, the audit ofrevenue items is one of the most important and mandatory items in the process ofauditing corporate finance reports.

 Objectives of Revenue Control

The Vietnamese Standards on Auditing No 200 "The basic objectives and principlesgoverning the audit of the financial statements", paragraph 11 states: "The purpose ofthe IFRS audit is to help the auditor and the auditing company to give their opinion Isthe financial statement prepared on the basis of current (or accepted) accountingstandards and regimes, in compliance with relevant laws and fair and reasonable in allmaterial respects? "

The purpose of financial audit also helps the auditor to see the shortcomings andmistakes to overcome in order to improve the quality of information of the unit Forrevenue items on the financial statement, auditing targets are usually directed to asshown in the table below:

General Auditing Objective Auditing Revenue Objectives

Reasonable objective Revenue from sale of recorded goods is reasonably

availableAppearance Actual revenue has been incurred

Completion Sales are recorded in full

Rights and obligations Consumable products are owned by the unit

Accurate arithmetic

Sales operations are recorded in appropriate detail,calculated and accrued

Classification and presentation Sales of goods are properly categorized

Valuations Sales are properly priced

Timely Sales of goods are recorded periodically

Figure 2.1: Revenue audit objectives

A reasonable overall objective implies reviewing and evaluating the total amountrecorded on the item of revenue on the basis of a general commitment on the liability

of the manager and the information obtained through the fieldwork of the auditor Inrelation to the selection of other common goals If auditor does not realize that theoverall rational goal has been achieved then it is necessary to use other common goals,including:

Existing Objective: Revenue is recognized as actually incurred and has beencompleted corresponding to the amount paid or accepted by the customer Goodsaccepted to be shipped to the customer are genuine There are no recorded revenuestreams where customers do not exist or exist but have not accepted the purchase

Complete Objective: Every sales and revenue statement is recorded, the business doesnot leave out any revenue when it meets the criteria for revenue recognition

Objectives of rights and obligations: The sold goods under the ownership of theenterprise are not the goods consigned to the agent, the property received or kept Atthe same time the revenue recorded must also belong to the enterprise corresponding

to the material responsibility that the business must perform with the customer

Precise arithmetic objectives: Business records in the general ledger, appropriatedetails and matching the aggregate numbers Revenue, discount, trade discounts,returned goods are calculated accurately based on Quantity and specific unit price ofeach sale

Classification and presentation objectives: Sales operations are classifiedappropriately, using detailed accounts to account for revenue, properly classify sales tooutside and internal sales, between discounts And commercial discount

The objectives of the audit of revenue items must be specified by the work thatcorresponds to each of the objectives of the internal audit in particular and the internalcontrol system in general

 Responsibility of Income Auditor in Revenue Control

Revenue audit must meet the following requirements:

Income evidence that the revenue planning and internal control system of theenterprise has ensured that the accounting of revenue is honest, reasonable and inaccordance with the regulations of the State.

To gather enough evidences proving that all arising operations on turnover areaccounted fully in accounting books

Obtaining sufficient evidence to demonstrate that all transactions in revenue areaccounted for and correctly classified, correctly and accurately calculated

CHAPTER 3: CHARACTERISTICS OF REVENUE

ACCOUTNING WITHIN A HOTEL

3.1.1 Functions and duties of a hotel

A hotel is a travel agency: accommodation, catering and other complementary services

to meet the needs of leisure, dining, entertainment and other tourist needs duringguests’ stay at the hotel In addition, the hotel strictly follows the economic contractsthat the company has signed with its customers, develops and implements well-definedplans, constantly improving the management level, Micro activities At the same timestep by step improve the quality of prestige service for the company in the tourismmarket in the region and the world

3.1.2 Operational characteristics of a hotel

Hotel products cannot be stored, cannot be used for consumption or advertising, canonly be produced and consumed on the spot If a hotel room is not rented today,tomorrow cannot be rented twice at the same time Therefore, the goal of hotelbusiness is to be filled with guests

The location and organization of the hotel business is an important determinant of thehotel business The location must be convenient for guests and the hotel business

The hotel is a special type of business where the human factor is emphasized Thenumber of staff must be ensured in the process of serving guests Hotel staff are notvery high-level people compared to many customers, customers are money, educatedpeople, they are located in the key rooms This is the opposite But hotel managerswant employees to be the key to success in the hospitality business and must have apositive attitude, a demand for progress so the hotel business process is a cycle Neverterminate the interview process, recruit training and terminate a certain number ofemployees

Business objects and services of the hotel industry are diverse in terms of occupationalcomposition, sex, age, education, lifestyle, preferences For any object, the hotelmust also nest Serving enthusiastic, caring, must turn the complaints of guests intocompliments For the quality of service, always think that each customer has to beconsidered as the only one and it is difficult to replace The satisfaction of thecustomer by ensuring a good service will be more effective than the service Theproblem with this is that customer loyalty is increasing because making customershappy is sometimes far less costly than spending large amounts of money onadvertising for attracting customers

3.2 Characteristics of revenue at a hotel

Due to the increasing demand of guests at various accommodation establishments andthe need to expand the range of business to diversify products to increase revenues andprofitability as well as the requirement of competition among hotels In order to attractcustomers, the hotel is expanding and diversifying its business Besides the two mainservices of accommodation and dining, the hotel also offers other services such asconferences, souvenir sales, entertainment and other necessary services Therefore,revenue is also divided into several categories:

 Revenue from accommodation service

 Revenue from food & beverage service

 Revenue from additional services

3.2.1 Accommodation Service

Accommodation business includes the business of accommodation and additionalservices In the process of "producing" and selling the services, the resident businessestablishment does not create new or new products but through the use of the hotel'stechnical facilities and service activities Employees are shifting the value frommaterial to currency in the form of depreciation Therefore, the resident business is not

in the field of material production but in the service business

Accommodation business is a business activity not a material manufacturing sector, itprovides bedroom service and other additional services to guests during temporarystays at tourist destinations for the purpose shrink

3.2.2 Food & Beverage Service

Food & Beverage service at hotel includes three groups of activities:

 Material production: processing food for guests

 Circulation: selling processed products

 Organizing activities: creating conditions for guests to consume food on the spotand provide relaxation for the guests

These 3 activities always have a close and bonded relationship Lacking one of thesethree activities will not only break the unity between them, but also bring about achange in the nature of the food & beverage service in tourism For example, no foodprocessing cannot be called the food business; If there is no circulation, it will not be abusiness but a social activity Lack of serving functions becomes the activity of thefood store

As a result, food & beverage in the hotel includes food processing activities, sellingand serving consumption of food and beverages and providing other services to meetthe needs of eating and drinking

3.2.3 Aditional services

Additional services are other services besides accommodation and catering to meet theneeds of guests, such as laundry service, outdoor sports recreation services, relaxationservices

Additional services business comes later than other business activities but it is playing

an increasingly important role in the hotel business Additional services in the hotel aredivided into three main groups:

 Group one: Additional services to meet the daily needs of the guests (laundry,telephone, etc.)

 Group two: Services to meet the needs of entertainment (dance floor, casino,swimming pool, tennis court, etc.)

 Group three: Services to enhance the comfort of guests (spa, room service, etc.)

3.3 Revenue Accountant’s responsibility

Under the direct supervision of the Assistant Manager of Finance and Manager ofFinance & Business Support, and within the limits of Hotels policies and procedures,responsible for ensuring all revenues generated in the hotel are recorded accurately anddiscrepancies reported on a timely basis The Revenue Accountant produces the dailyrevenue report and reconciles all revenues against cash banked and accounts receivablemovements for each day The Revenue Accountant also ensures that all revenues arerecorded and reported on a daily basis and all control procedures are in place relating

to the income process

Essential Duties and Responsibilities:

Accountants who are in charge of revenue need to meet up these standards:

They need properly check and finalize daily room revenue report including:

o Control to ensure that any discrepancies between housekeeping and front officeroom status are reported Total rooms available for sale agree with the contractedrooms available

o Market segmentation correctly reflects the source of business and correctly reflects

in the GL

o Verified the room rate with agreements or reservation, check allowance for roomrevenue Room revenue as per PMS is corrected in GL

o Do physical rooms check

o Check mini bar revenue, laundry revenue telephone and other revenue

o Check rebate report, discount report, complementary and house use report, no showposting, late check out … To ensure that every complimentary room, house useroom, discount or rebate of revenue must have adequate explanation in theapproval form

Revenue Accountants will reconcile all credit card collections again cashier summaryand again lists received from bank They finalize food cover report and photocopiesvarious documentation for food and beverage control and the Finance Department.Revenue Accountants key in revenue journal and distributes to Outlet Mangers andmanagement

Moreover, they control dockets used in all outlets, maintaining correct sequence used

at all times, accounting for dockets and making sure canceled dockets are recordedaccordingly Revenue Accountants control all food and beverage sales by:

o Correct recording of guest checks on a timely basis

o Performs spot checks on outlet checks used

o Having all voided checks, corrections and unsettled checks approved by theRestaurant Supervisor or Manager

o Monitors the buffet controls, especially over cash settled checks to prevent reuseensuring all revenue is recorded

o Ensure banquet controls are being adhered to

o Reconciles total outlet sales to total charges

Income auditors ensure all rebates and miscellaneous charges are supported bydocumentation detailing the charges All rebate credits must be in accordance withFinance Policy The rebate credits, miscellaneous charges and paid outs must besummarized and sent to the Finance Manager and General Manager for review daily

On the other hand, Revenue Accountants ensure that programs involving coupons,certificates, and vouchers are adequately controlled and safeguards are in place

As they need to reconcile all revenue with the real post on system, RevenueAccountants audit daily collection of the General Cashiers Summary against the bank

in slip and audit and reconcile advance payments and ensures payments have beenapplied

Finally, revenue accountants should complete these additional tasks: works withGeneral Cashier to check all float totals regularly and keeps control on registers inoutlets; Reconciles revenues on a daily basis via back up page; Performs variousspecial projects as requested and assigned by management; Adhere to Hotel Handbookand general policies and procedures; Adhere to Finance Policies and Procedures

CHAPTER 4: REVENUE ACCOUNTING AT CROWNE PLAZA WEST HANOI HOTEL & RESIDENCE

4.1 Overview of Crowne Plaza West Hanoi Hotel & Residence

4.1.1 General information of Crowne Plaza West Hanoi Hotel & Residence

 Company name: Crowne Plaza West Hanoi Hotel & Residence

 Head office: 36 Le Duc Tho, My Dinh, Nam Tu Liem, Ha Noi

 Website: https://www.ihg.com/crowneplaza/hotels/us/en/hanoi/hanch/hoteldetail

 Owner: Tran Hong Quan Trading Co., Ltd

 Hotel and apartment management: InterContinental Hotels Group

4.1.2 Establishment and development process of Crowne Plaza West Hanoi Hotel & Residence

Crowne Plaza West Hanoi Hotel & Residence officially went into operation onNovember 06th, 2011 under the investor Tran Hong Quan Trading Co., Ltd Situated

in the new economic hub of the capital, the hotel is a landmark of commercialcomplexes and high-end apartments, just minutes from the National ConventionCenter and the National Stadium The hotel has 393 rooms, fully equipped with themost modern facilities, supported by buffet bar, lobby bar

4.2 Overview of Accounting Department and Organization chart among departments related to Revenue

4.2.1.Organization chart of Accounting Department

CPWH&R organizes its Accounting Department in the centralized structure as in thefigure 4.1 Accounting system of the company performs according to centralizationand it is decentralized clearly The Manager of Finance and Business Support is thehead of the accounting department, followed by Assistant Manager of Finance andPurchasing Manager, and other accountants for many sections: Revenue, AccountReceivable, Account Payable, Cost, Payroll, General Cashier

Figure 4.1 Organization chart of Accounting Department a) Manager of Finance and Business Support

The Manager of Finance and Business Support (MF) is responsible for analyzing andpresenting financial reports in an accurate and timely manner; clearly communicatingmonthly and annual financial statements; collating financial reporting materials for alldonor segments, and overseeing all financial, project/program and grants accounting

Revenue

Accountant

Cost clerk Receiving/Store

Accounts Receivable Supervisor

Secretary Paymaster

Accounts Payable Supervisor

Accounts Payable Clerk

General Cashier Manager of Finance and Business Support

MF coordinates and lead the annual audit process, liaise with external auditors and thefinance committee of the board of directors; assess any changes necessary Overseeand lead annual budgeting and planning process, administer and review all financialplans and budgets; monitor progress and changes; and keep senior leadership teamabreast of the organization’s financial status Manage organizational cash flow andforecasting Implement a robust contracts management and financial management/reporting system; ensure that the contract billing and collection schedule is adhered toand that financial data and cash flow are steady and support operational requirements.Besides all tasks above, MF need to update and implement all necessary businesspolicies and accounting practices; improve the finance department’s overall policy andprocedure manual; effectively communicate and present the critical financial matters

to the board of directors

b) Assistant Manager of Finance

Assistant Manager of Finance is responsible for the supervision of all members of theAccounting Department, providing functional guidance to Executive Committee andDepartment Heads Moreover, assistant manager interacts with hotel’s legal counsel,insurance companies, tax consultants, auditors, commercial and government banks toeffectively control the assets of the business and to provide business support

c) Purchasing Manager

As a purchasing manager one should work with suppliers to negotiate contracts forpurchase of required goods and keep accurate records of transactionstrends. Purchasing manager also assists the Finance and Operational Departments inthe monitoring, reporting and controlling of Cost of Sales in the hotel, including auditand control, financial analysis and reporting, budgeting, forecasting etc

d) General Ledger Officer

General Ledger Officer (GL) is in charge of reviewing and correcting daily revenuejournal; controlling all balance sheet accounts by preparation of monthly accountreconciliations and actions accordingly Besides that, GL specifically reviews theaccounts payable balance to ensure accuracy and proposes action and follow up to betaken to ensure a clear balance with limited over 90/120 day amounts

On the other hand, GL need to complete all following tasks: code and input manualcheques; prepare bank reconciliations; reconcile and finalize tax; review accountspayable monthly inventory reconciliations; review accounts payable purchase journal;

review travel agency commission payments; maintain replacement reserve cash book;review and prepare input in the general ledger from various sources; review food andbeverage control reconciliations and journal; review accounts payable/ inventoryinterface; prepare balance sheet record and identify and reconcile all items therein;audit payroll; prepare monthly invoices for other IHG hotels, General Manager, Storeand Shop rentals; prepare all journal vouchers for month-end closing; prepare monthlyFinancial Statements for distribution to Department Heads and Executives, as directed

by Finance Manager

e) Credit Manager

Girst of all, Credit Manager (CM) need to ensure adherence to the hotel’s creditpolicy CM reports directly to and communicates with the Director/Manager ofFinance and Business Support on all matters pertaining to credit and collection ofguest and city ledger accounts; cooperates, coordinates and communicates with guestsand other departments in matters concerning issuance of credit, follow up outstandingaccounts and assisting with credit requirements; liaises closely with the City LedgerSupervisor in reviewing and maintaining the Aged Trial Balance of AccountsReceivable

CM need to monitor the special billing arrangements for groups and conventions asrequired to ensure that postings are in line with customer requirements; reviews cityledger daily for correct postings of charges and take corrective action where necessary;monitor and pursue collection of overdue accounts

On the other hand, CM need to complete all following tasks: review bad debts listingmonthly to prepare collect ability analysis for monthly provision for doubtful debts;respond to and resolve account queries in conjunction with accounts receivable; assist

in control and collection of outstanding guest and city ledger accounts

f) Cost Controller

Cost Controller is incharge of these following tasks: analyse F&B reports; calculateF&B costs; compare invoices, requisitions, sales &prepare reports showing cost vssales; control Receiving/Store/Cost; spot checks on purchasing, receiving, storing,issuing functions and bar inventories; conduct monthly food & butcher tests todetermine yields; work with the executive chef to prepare standard recipe cost detail;pre-cost all restaurant and banquet menus of all purchases and prepared items; developinformation to pre-cost all food items purchased; compare menus vs food cost vs sales

price; control portion and minimizes- wastages and pilferages; spot check the storestatus of the other in house physical stores.

g) Income Auditor Supervisor

Under the direct supervision of the Assistant Manager of Finance and Manager ofFinance & Business Support, and within the limits of Hotels policies and procedures,responsible for ensuring all revenues generated in the hotel are recorded accurately anddiscrepancies reported on a timely basis The Income Auditor produces the dailyrevenue report and reconciles all revenues against cash banked and accounts receivablemovements for each day The Income Auditor also ensures that all revenues arerecorded and reported on a daily basis and all control procedures are in place relating

to the income process

4.2.2.Organization and relation among departments related to Revenue

Revenue is gained through a process which need relation among departments:

Figure 4.2 Department Relation in Recording Revenue

-

The price list should be approved by the Front Office Manager and General Manager

A copy of the price list should be forwarded to the Income Auditor, Accounts Dept The Business Centre Guest Service Agent (GSA) is responsible for posting all charges

to the POS promptly that the guests incurred during the use of the Business Centre’sfacilities such as: requesting facsimile & long distance call, photocopy, typing andsecretarial service

The GSA should ensure the following tasks are completed before the end of his/hershift:

Voucher,posting all charges tothe POS/PMS immediately

Approved by the

Front Office

Manager, Manager

Finance and Business

Support and General

-Send thirt copy to the FrontOffice Reception for guests’

verification

-Print out the summary reportand forward it to theAccounts Departmenttogether with second copy of

the checks

-First copy kept in FB

A copy of the price list

from POS/PMS

In case of cancellation, the

Business Centre GuestService Agent may voidthe check in thePOS/PMS, with guest’ssignature and with theapproval of therespective Manager,before posting Reasonfor any void has to beindicated The 2 copies

of the void check have

to be forwarded toIncome Auditor.

+ Batch and send the White copies of the checks to the Front Office Reception forguests’ verification

+ Print out the batch summary report and forward it to the Accounts Department

The Income Auditor will review the physical batch of checks and verify them againstthe summary from POS

In case of cancellation, the Business Centre Guest Service Agent may void the check

in the POS, with the approval of the respective Manager, before posting Reason forany void has to be indicated The white copy of the void check has to be forwarded tothe Front Office Reception

4.3 Cycle of recording and controlling revenue at Crowne Plaza West Hanoi Hotel & Residence

4.3.1.Overview of Revenue at Crowne Plaza West Hanoi Hotel & Residence

There are three types of revenue at the hotel:

 Revenue from accommodation service

 Revenue from food and beverage service

 Revenue from other services

Figure 4.3 Cycle of Recording revenue on system

After recognizing revenue in the three categories of accommodation, food & beverageand other services, data will be transferred to the Opera accounting system FromOpera, the data will be posted to the SUN account, the accounting system records thefinal revenue of the hotel Income auditor gets the revenue report everyday

SUN (final accounting system to