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Analytics mindset
PSU Hotel
Background
Data analytics has been an important part of the audit process for many years. However, several
significant changes in technology and data availability have created exciting new challenges for the audit
profession, including:
The amount and types of data available for audit have expanded rapidly.
There has been a significant increase in computing power for analyzing data.
Almost all audit evidence is now electronic in nature.
In addition, audit clients are using their data in more sophisticated ways, delivering additional and relevant
insight and value. As clients improve their data collection and analyses, they expect auditors similarly to
improve and offer higher quality and more efficient audits. In this era of big data, the use of data analytics
during the external audit has also received additional interest from regulators and standard setters who
continue to underscore the need for a continued focus on the quality of audit work and audit evidence and
greater levels of professional skepticism. As a result, auditors have begun to challenge existing practices
and look for new ways to embed analytics into all aspects of the audit process.
The analytics mindset
Because the audit is being transformed with more focus on the use of data analytics and more
sophisticated technology tools, auditors need to have an analytics mindset, which is the ability to:
Ask the right questions
Extract, transform and load (ETL) relevant data
Apply appropriate data analytics techniques
Interpret and share the results with stakeholders
Auditors who have an intellectual curiosity and an inquisitive nature are much more likely to effectively
interpret and respond to the results of analytics. Further, critical thinkers will be more likely to design
future analytics to provide the audit evidence needed for a particular risk or situation. While auditors
currently are not expected to be experts at using a specific analytics tool, they should understand enough
about technology to have an intelligent conversation with analytics architects, the personnel responsible
for developing analytics that use the existing information systems infrastructure.
Too often auditors are intimidated by the black box that stores and processes data, including journal
entries, but the reality is that the black box is becoming a more important part of the audit every day.
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Audit of PSU Hotel
PSU Hotel is a hotel and conference center located near a major university in a relatively small city. You
are a new member of the audit team assigned to audit PSU Hotel for fiscal year 2016 (FY16), ended June
30, 2016. All other engagement team members are returning to the engagement this year. You have
joined the audit in the planning phase taking place after PSU Hotels FY16 year-end. Your firm has been
the auditor of PSU Hotel and its corporate parent for the last two years. This is the first year that the audit
will be incorporating data analytics into the audit.
As a new member of the audit team, it is very important to understand the business context of your client
before you begin auditing. It is also important to have strong insights about the industry in which the client
operates to understand how the clients operations, business risks and opportunities might compare with
the industry. This not only aids your audit work, but also can empower you to add more value to the audit
by making recommendations to help your client improve its business, manage risks better, invest in
technological advances and more.
Information available for these types of insights can come from many sources and can come at a price
(e.g., subscriptions to industry publications). Many audit firms have professionals dedicated to performing
and collecting this research on your behalf. Research might provide information about key performance
indicators, key competitors, significant business risks, typical revenue streams, industry trends and more.
You are fortunate that you have a research team that has provided you with some of this information and
the team is still working to get access to subscription-only content.
Beyond learning about the clients operations and its industry, you also need to learn about the general
ledger (GL) data and accounting information systems that underlie the financial statements. As an
auditor, you might work with specialists to help you understand how the data flows through the accounting
systems and the risks and controls around various processes. These specialists also can help with the
capture and delivery of the accounting data.
On this audit, you are fortunate to work with these specialists. You have received a download of 100% of
the financial data from the accounting system for fiscal year 2015 (FY15) and FY16 from your data
capture team. All ETL procedures already have been performed to cleanse the data, load the data
appropriately into your audit analytics tool and maintain the data integrity. PSU Hotels Accounting
Department staff provided you with a description of all of the data fields, descriptions of the business
units, chart of accounts, employee job descriptions and an approved employee authorization list by level
(for those employees approved to use the different accounting systems).
Required
The case requirements listed below align with the analytics mindset competencies to help you understand
how you are developing your analytics mindset.
Ask the right questions:
Review the following accounting and operational background of PSU Hotel.
Review the background provided by your research team about the hotel sector within the
hospitality industry.
ETL relevant data:
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Familiarize yourself with an overview of the accounting and operational data in the background of
PSU Hotel (data fields) and the appendix, including the business unit descriptions, GL chart of
accounts, employee job descriptions and approved employee authorization list by level.
PSU Hotel background
Overview
PSU Hotel is a hotel and conference center located near a major university in a relatively small city in the
United States. It has 200 rooms and suites, as well as facilities for meetings and other social occasions,
such as weddings, reunions, etc. The hotel contains a full-service restaurant, a self-service casual caf
and a coffee shop. It also has a small gift shop offering snacks and sundry items.
The university attracts a significant number of visitors to the city, including for sports events, graduations,
major conferences, festivals and arts productions. There are 12 other mid-scale hotels within one mile of
PSU Hotel and close to the university collectively containing 1,423 rooms, which are the primary
competitors of PSU Hotel. Emerging competitors of PSU Hotel include websites that facilitate the rental of
individual homes, or even rooms in homes, during major events like football games (for example,
rentlikeachampion.com or gamedayhousing.com). Although this type of room provider is still relatively
new and currently has a minimal impact on PSU Hotels operations to date, management is aware of the
potential of this to be a significant competitive force in the future.
Room rates vary based on the room type and date of occupancy. For example, a regular room can range
from $99 per night to $400 per night depending on the demand. Suites range from $175 to $650 per
night. Certain businesses and university departments that use the hotel frequently have special
discounted rates generally, $99 per night. The average daily room rate for FY15 was $116.31 and for
FY16 it was $117.88 (more detail about occupancy is provided in the information that follows).
Conferences and other catered events make up a significant amount of PSU Hotels revenue. The
University conducts many conferences and training events at the hotel each year, as well as athletic
banquets, graduation parties and fundraising galas. Additionally, the venue attracts many non-university
events due to its delicious catered dinners, tasteful dcor and meticulously maintained grounds.
PSU Hotels operations are carried out by approximately 180 on-site employees who manage guest
services, food and beverage operations, and routine administrative functions. The hotel is part of a larger
corporate hotel organization that owns and operates hotels near universities across the United States.
The corporate office manages or coordinates many of the administrative functions, like IT security,
marketing and accounting. For example, all revenue collected by the hotel is processed first on-site, but is
sent to corporate for verification and to be recorded in the GL.
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Calendar of events and corporate office closure
There are several key events that occur during the year that are likely to result in high occupancy and
higher nightly rates. The following table shows the key events occurring in FY15 and FY16, but note that
hotel occupancy and rates may increase in the days immediately surrounding these events as well.
Further, there may be other events, such as conferences, reunions or weddings, which occur throughout
the year and also may drive occupancy and catering services.
In FY16, PSU Hotel expanded its large catering contract with the university by $435,000 to provide
dinners for athletic teams in addition to lunches, which were previously provided in FY15. In FY15, PSU
Hotel provided lodging services for a large biennial conference that took place on various dates
throughout April that included 1,281 hotel rooms and $133,000 in revenue. Since this conference is
biennial, it is not held every year and, thus, there was no FY16 revenue.
A graph of catered event activity is provided in the general operating procedures. There also is a table
following that shows the dates the corporate office was closed for holidays in both FY15 and FY16.
Calendar of events
FY15: 7/1/20146/30/2015 FY16: 7/1/20156/30/2016
Day of the week Date Event Day of the week Date Event
Saturday 8/30/2014 Football Saturday 9/5/2015 Football
Saturday 9/20/2014 Football Saturday 9/19/2015 Football
Saturday 9/27/2014 Football Saturday 9/26/2015 Football
Saturday 10/4/2014 Football Saturday 10/3/2015 Football
Saturday 11/15/2014 Football Saturday 10/17/2015 Football
Saturday 11/22/2014 Football Saturday 11/7/2015 Football
Saturday 11/29/2014 Football Saturday 11/21/2015 Football
Friday 12/19/2014 Graduation Friday 12/18/2015 Graduation
Friday 4/24/2015 Marathon Friday 5/6/2016 Marathon
Saturday 4/25/2015 Marathon Saturday 5/7/2016 Marathon
Friday 5/8/2015 Graduation Friday 5/13/2016 Graduation
Monday 6/8/2015 Music festival Monday 6/13/2016 Music festival
Tuesday 6/9/2015 Music festival Tuesday 6/14/2016 Music festival
Wednesday 6/10/2015 Music festival Wednesday 6/15/2016 Music festival
Thursday 6/11/2015 Music festival Thursday 6/16/2016 Music festival
Friday 6/12/2015 Music festival Friday 6/17/2016 Music festival
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Corporate holiday schedule (office closed)
FY15: 7/1/20146/30/2015 FY16: 7/1/20156/30/2016
Day Date Holiday Day Date Holiday
Friday 7/4/2014 Fourth of of July*
Monday 9/1/2014 Labor Day Monday 9/7/2015 Labor Day
Thursday 11/27/2014 Thanksgiving* Thursday 11/26/2015 Thanksgiving*
Friday 11/28/2014 Thanksgiving* Friday 11/27/2015 Thanksgiving*
Thursday 12/25/2014 Christmas* Friday 12/25/2015 Christmas*
Friday 12/26/2014 Christmas* Monday 12/28/2015 Christmas*
Monday 12/29/2014 Christmas* Tuesday 12/29/2015 Christmas*
Tuesday 12/30/2014 Christmas* Wednesday 12/30/2015 Christmas*
Wednesday 12/31/2014 Christmas* Thursday 12/31/2015 Christmas*
Thursday 1/1/2015 New Years Day* Friday 1/1/2016 New Years Day*
Monday 1/19/2015 Martin Luther
King, Jr. Day
Monday 1/18/2016 Martin Luther
King, Jr. Day
Monday 5/25/2015 Memorial Day Monday 5/30/2016 Memorial Day
*The hotel also is closed on these holidays and the adjacent the weekends and some holiday-adjacent
days ( for FY15 was December 23 through January 1 and in FY2016 it was closed
from December 23 through January 3). For , the hotel is closed every other year
based on a football event. For FY15, it was open. Per the 2016 occupancy reports, there were no
occupants from December 23 through January 3. In 2015, there were no occupants from December 23
through January 1.
Unusual events
Hotel renovation: PSU Hotel underwent a large, interior renovation during FY16. It included painting,
new carpet, new linens, replacement of fixtures, etc. To minimize the impact of the renovation on
hotel revenues, the construction occurred during November, December and January, when there are
fewer athletic events and the university is closed for the winter break. The following table describes
the impact of the renovation on available rooms.
Rooms out of order
Total rooms out of
inventory
Number of days out
of order each month
Total daily room
rentals lost
November 2015 109 4 436
December 2015 109 21 2,289
January 2016 108 7 756
Total 3,481
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Mechanical failure: In August 2015 (FY16), the hotel refrigerator and freezer system malfunctioned,
resulting in considerable spoilage and loss of perishable foods.
General operating processes
Reservations: Individuals can make a reservation over the phone or online. Online reservations can
be made through the hotels website or through a third party (e.g., Orbitz or Kayak). Credit card
information is collected at the time of reservation, although the card is not charged until checkout or
when the check-in time was missed (in the event of a no-show).
Guest check-in: Upon arrival at the hotel, guests go to the front desk and provide their name to the
clerk. Clerks usually can find the guests name in the GuestSystem (GuestSYS), the property
management system (PMS) used for room-related transactions, using the guests name and the date.
Clerks confirm with the guest the number of nights of the reservation and then print the occupancy
agreement for the guest to review. The guest initials by their name and contact information, as well as
by the agreed-upon room rate. Guests also are asked to provide their credit card, which may be the
same or different than the one used when reserving the room, for incidentals and room charges (e.g.,
guests can charge their meals to their rooms). Clerks then activate a key card (or two cards if
requested by the guest) and designate the guests room account as open, which means the guest
has arrived and expenses can be charged to the account.
Guest checkout: Room charges and incidentals are recorded and charged to guest accounts in the
GuestSYS and applied to the guests bills throughout their stay. At approximately 3:00 a.m. on the
date of checkout, final bills are printed from the GuestSYS by the night auditor, the clerk who
performs nightly reconciliations and guest billing, for all guests who will be checking out that day.
Then, a member of the housekeeping staff slips the bill under the door of each guest. Guests can call
the front desk to check out or can they can check out with the clerk at the front desk. Any additional
charges that a guest might incur between the time the bill is printed and checkout will be applied to
the guests bill and will be charged to the credit card on file. If guests do not check out formally, their
room charges and incidentals are charged to the credit card on file. Customers can pay with a credit
card, cash or check. Credit card payments are recorded as CREDIT CARD RECEIPT as the source
of the transaction. Check or cash payments are recorded as CASH RECEIPT as the source of the
transaction. Refunds for overpayments can be issued via check or credit card and appear with
CREDIT CARD RECEIPT or CHECK as the source of the transaction.
Recording guest charges: There are two different subsystems used to record guest charges at the
hotel: (1) GuestSYS, which is used to record all transactions related to a guests room; and (2) Pointof-Sale System (POS), which is used to record all incidentals and food and beverage charges. Room
charges are entered in the GuestSYS on the day of checkout. Transactions related to incidentals and
food and beverage charges are entered individually in POS on the date of the transaction. Credit card
transactions are processed and recorded in these subsystems the following day, once the daily
reports are reconciled with the receipts. Transactions from both systems roll up into the GL, which is
maintained by the corporate accounting office.
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There generally is a lag of one to four days between the time a guest charge occurred and when it is
recorded to the GL by the corporate accounting office. The lag occurs because corporate accounting
verifies that the money has been received by the bank before recording it in the system. Additionally,
the lag is longer near weekends and holidays, when the corporate accounting office is closed. But,
there always is at least a one-day lag because corporate accounting processes receipts the day after
they are sent from the hotel. In the GL, the Entry Date, is the field that identifies the date the
transaction was posted to the subsystems (i.e., GuestSYS or POS). Generally, this is one day after
the activity occurred (e.g., the guest checked out of the hotel). The Effective Date is the date upon
which the transaction is posted in the GL and recognized as revenue. The corporate office therefore
is recognizing revenue throughout the year based on this date rather than on the date that it is
meeting its performance obligations, which you would consider the right effective date for proper
accounting treatment. However, the corporate office performs year-end cutoff procedures to account
for this at a level of materiality that, year over year, would suit corporate and ensure that amounts are
properly stated.
Conference and catering revenues: Conferences and catered events make up a significant
revenue stream for PSU Hotel and are the basis for typically 75% to 90% of all food and beverage
(dining) revenue. Gross margin on dining revenue is typically between 75% and 85% on a monthly
basis. Catered events are all coordinated and managed by the catering manager, who works with the
event organizer to manage all of the event details. Customers planning a catered event will complete
an event contract that records all of the details about the event, including the number of guests, meal
preferences, the number of required hotel room reservations and other details. Often, customers will
pay for the entire event (including both hotel rooms and food and beverage charges) with a check or
credit card and the catering manager processes these payments by completing the necessary
paperwork and initiating the journal entry to book the revenue. Because of the high volume of catered
events conducted by the university, sometimes the university will pay for all events that occurred
during the month with one payment, which is then processed by the catering manager. Customers
can pay with a credit card, cash or check. Credit card payments are recorded as a CREDIT CARD
RECEIPT as the payment method of the transaction. Checks or cash payments are recorded as a
CASH RECEIPT as the source for the transaction. Refunds for overpayments can be issued via
check or credit card and appear with CREDIT CARD RECEIPT or CHECK as the source for the
transaction.
Generally, there is a two- to three-week lag between the time the event occurs and when the
processing is complete and the payment is posted to the GL. The table and graph below from a
management report show the number of events by month. Note that the food and beverage revenue
for events can vary widely based on the menu chosen by the customer planning the event.
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Other sales revenues: PSU Hotel has several other minor revenue streams. (1) The hotel maintains
vending machines on the premises that earn a small amount of revenue. The number of machines
has fluctuated during FY15 and FY16, resulting in somewhat inconsistent revenue. (2) There is an
ATM on the premises and the hotel earns $500 per month in fees from this machine. (3) There are
various fees that the food services division charges for catered events, such as bartender fees,
private server fees, extended time and space rentals, special linens, etc.
Other income: PSU Hotel does not have investments, but earns a small percentage of interest from
its cash.
Purchasing and payment transactions: The hotel makes many purchases of food and beverage
items and maintenance supplies. For each purchase, there is an initiator from the Requisitioning
Department and a separate approver. Approvers include the hotel manager, assistant managers,
accounting managers and the director of Food Services. For purchases more than $2,500, two
approvers, including the hotel manager, are required. None of the approvers can approve a
transaction that they initiated. A matrix showing the system authorization level for each employee is
included in the appendix.
and human resources: PSU Hotel typically employees between 175 and 200 employees
across four divisions: Administrative, Front Desk, Food and Beverage, and Maintenance. Some
employees are paid an hourly wage, while others are paid a salary. See the table in the appendix that
describes the number of employees in each position in each division during 2016.
Equity: PSU Hotel has one (equity) investment account. The change in this account represents net
income.
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Accounting overview
PSU Hotel has a fiscal year-end of June 30. Therefore, each fiscal year runs from July 1 through June 30.
You have received a download of the complete data from the accounting system for FY15 and FY16.
This includes PMS data from the GuestSYS about room revenue; POS data related to food and beverage
revenue and other guest charges; purchasing data from the purchasing system and payroll data; and
various accounting entries, such as depreciation of fixed assets. The following fields are available for your
analysis.
Data fields
Field name Field description
AccountClass Specific classification of account (e.g., payroll expenses). Typically, aligned
with the face of the financial statements. See the appendix.
AccountType Type of account (e.g., asset, liability). See the appendix.
Amount Total amount of the journal entry line item (may be positive or negative).
BusinessUnit The business unit (e.g., hotel, food and beverage) of the journal entry. See the
appendix.
Credit Credit amount of the entry.
Debit Debit amount of the entry.
EffectiveDate Date the entry was posted to the GL as occurring. See more information in the
general operating processes descriptions.
EntryDate Date that the entry was entered into the subsystem or GL, depending on the
type of transaction. See more information in the general operating processes
descriptions.
GLAccountName Name of the GL account from the chart of accounts. See the appendix.
GLAccountNumber GL account number from chart of accounts. See the appendix.
JEDescription Description of the transaction. May include vendor or guest name, etc.
JEIdentifier Unique identifier for each journal entry.
Period Indicates which month within the fiscal year the transaction occurred. The
fiscal year runs from July to June. For example, July 2015 is the first month of
FY16 and the period is recorded as 2016-01. The period for January 2016 is
2016-07.
PreparerID The employee ID for the employee who initiated the transaction. (See the
appendix for information about authorized preparers.) For transactions
recorded initially in a subsystem (e.g., GuestSYS or POS), the preparer ID is
listed as the system and not the employee.
Source Describes the payment type or other source type of the transaction (CASH
RECEIPT, CHECK, CREDIT CARD RECEIPT, CREDIT MEMO, PAYROLL
JV, PAYROLL MANUAL JV, PAYROLL S/B JV, PURCHASE CARD,
REGULAR JV)
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Occupancy data
The following charts provide an overview of hotel occupancy during FY15 and FY16.
Total number of rooms occupied
FY July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Total
2016 3,142 2,878 3,164 3,842 2,806* 899* 2,722* 3,750 3,608 3,474 3,439 4,299 38,023
2015 3,344 3,755 3,234 3,548 3,336 2,076 2,750 3,429 4,263 4,215 3,367 4,386 41,703
Five-year average 3,235 2,687 3,458 3,504 3,056 1,398 2,678 3,545 3,875 3,698 3,639 4,110 38,883
*Renovation month
Occupancy rate (percentage of rooms occupied)
FY July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Average
2016 52.5% 48.1% 54.7% 64.2% 48.5% 15.0% 45.2% 67.0% 60.3% 60.0% 57.5% 74.3% 53.9%
2015 55.9% 62.8% 55.9% 59.3% 57.6% 34.7% 46.0% 63.5% 71.3% 72.6% 56.3% 75.8% 59.3%
Five-year average 53.2% 44.2% 58.8% 57.7% 52.0% 23.0% 44.1% 64.6% 63.8% 62.9% 59.9% 69.9% 54.5%
0
1,000
2,000
3,000
4,000
5,000
July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June
Rooms occupied
2016 2015
0%
20%
40%
60%
80%
July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June
Occupancy rate
2016 2015
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The following information is contained in the appendix for the background of PSU Hotel.
Business unit descriptions
Chart of accounts
Employee job descriptions
Approved employee authorization list by level
Appendix Business unit descriptions
Business unit Description
Hotel Transactions related to guest rooms and overall hotel operations.
Includes payroll for administrative staff, clerks and interns.
Housekeeping Transactions related to the Housekeeping Department. Primarily includes
payroll for housekeepers and housekeeping supplies.
Hotel Marketing Transactions related to hotel marketing and advertising, including
supplies.
Hotel Pantry Transactions related to the hotel convenience store, including some food
and beverage costs.
Food Service Transactions related to food and beverage service. Includes all guest
transactions in the hotel restaurants, catering-related transactions and
food service payroll.
Maintenance Transactions related to the hotel Maintenance Department. Primarily
includes payroll for maintenance, grounds keepers and related supplies.
Interest Interest from the cash operations account.
Oper General Transactions related to corporate accounting functions, e.g., monthly
depreciation entries.
Appendix GL chart of accounts
GL account number
(GLAccountNumber)
GL account name
(GLAccountName)
Account type
(AccountType)
Account class
(AccountClass)
11845 Operating Bank Account Assets Cash
11200 Petty Cash Assets Cash
12987 Food Service Conference Accounts Receivable Assets Accounts Receivable
13100 Prepaid Expenses Assets Prepaid Expenses
14250 Hotel Pantry Inventory Assets Inventory
14260 Food Service Inventory Assets Inventory
16100 Land and Improvements Assets Plant, Property and Equipment
16200 Buildings & Building Improvements Assets Plant, Property and Equipment
16290 Accumulated Depreciation – Building & Improvements Assets Plant, Property and Equipment
16500 Equipment Assets Plant, Property and Equipment
16590 Accumulated Depreciation – Equipment Assets Plant, Property and Equipment
21103 Accounts Payable Liabilities Accounts Payable
21900 Other Short-term Liabilities Liabilities Other ST Liabilities
22100 Payroll Liability Liabilities Accrued Payroll
22110 Payroll Deductions Liability Liabilities Accrued Payroll
29100 Other Non-current Liabilities Liabilities Other LT Liabilities
31000 Investment in Plant Equity Investments
32000 Retained Earnings Equity Retained Earnings
40910 Interest on Investment Revenue Other Income
43180 Rents – Hotels Revenue Sales-Hotel
43310 Sales – Dining Halls Revenue Sales-Dining
43440 Sales – Other Revenue Sales-Other
GL account number
(GLAccountNumber)
GL account name
(GLAccountName)
Account type
(AccountType)
Account class
(AccountClass)
43620 Vending Operations Revenue Sales-Other
43770 Other Enterprises Revenue Sales-Other
51110 Monthly Payroll Expenses Payroll Expense
51120 Salaried Bi-Weekly Expenses Payroll Expense
51130 Hourly Bi-Weekly Expenses Payroll Expense
51140 Overtime Expenses Payroll Expense
51200 Interns Expenses Payroll Expense
51240 Overtime – Interns Expenses Payroll Expense
51400 FICA – OASDI Expenses Payroll Taxes
51402 FICA – HI Expenses Payroll Taxes
51510 Retirement – Pension Expenses Retirement Benefits
51531 Retirement – 401k Expenses Retirement Benefits
51610 Group Health Insurance Expenses Other Expenses
51620 Group Life Insurance Expenses Other Expenses
51700 Insurance – Employee Liability Expenses Other Expenses
51800 Unemployment Security Expenses Other Expenses
51850 Workmen Compensation Expenses Other Expenses
64100 Travel Expenses SG&A
64150 Travel – Mileage Expenses SG&A
70300-FS Cost of Goods Sold Expenses COGS-Food
70300-HP Cost of Goods Sold Expenses COGS-Hotel Pantry
71200 Motor Vehicle Expenses Expenses SG&A
GL account number
(GLAccountNumber)
GL account name
(GLAccountName)
Account type
(AccountType)
Account class
(AccountClass)
71400 Supplies and Materials Expenses SG&A
71410 General Office Supplies Expenses SG&A
71420 Postage Expenses SG&A
71500 Repairs and Maintenance Expenses SG&A
71740 Natural Gas Expenses SG&A
71900 Rents – Other Than Real Estate Expenses SG&A
72000 Other Expenses SG&A
72702 Other Expenses SG&A
72712 Conferences and Workshops Expenses SG&A
72714 Non-Employee Travel Expenses SG&A
72715 Relocation Expenses – Nontaxable Expenses SG&A
72716 Relocation Expenses – Taxable Expenses SG&A
72722 Dues & Memberships Expenses SG&A
72723 Subscriptions Expenses SG&A
72725 Registration Fees Expenses SG&A
72732 Freight or Express Shipments Expenses SG&A
72760 Other Services Expenses SG&A
72765 Support Services Expenses SG&A
73300 Software Expenses SG&A
74200 Publications Expenses SG&A
74201 Advertising – General Expenses SG&A
74203 Advertising – HR Expenses SG&A
GL account number
(GLAccountNumber)
GL account name
(GLAccountName)
Account type
(AccountType)
Account class
(AccountClass)
74220 Printing – On Campus Expenses SG&A
74300 Equipment – Non-Inventory Expenses SG&A
74306 Computers and Peripherals 100.00-499.99 Expenses SG&A
74318 Equipment – Audio/Visual Expenses SG&A
74328 Equipment – Computers & Peripherals Expenses SG&A
75110 Other Per Diems Expenses SG&A
75113 Consultant Expenses SG&A
75210 Reimbursable Expense Expenses SG&A
76910 Telecommunications – Data Expenses SG&A
76930 Telecommunications – Other Expenses SG&A
76932 Telecommunications – Cellular Expenses SG&A
84320 Other Equipment Expenses SG&A
86100 Depreciation Expense – Building Expenses Depreciation Expense
86200 Depreciation Expense – Equipment Expenses Depreciation Expense
74308 Equipment Purchases 3000.00-4999.99 Expenses SG&A
75220 Direct Expense Expenses SG&A
75300 Contracts Expenses SG&A
76030 Computer Charges Expenses SG&A
Appendix Employee job descriptions
Job title
Number of
employees Job description
Administrative
Hotel manager 1 Oversees all operations (hotel and food and beverage). Has
approval authority for purchases, guest comps, changes to rates
and staffing decisions.
Assistant manager 2 Assists the hotel manager in all operations (hotel and food and
beverage). Has approval for purchases, guest comps and
changes to room rates.
Outlets manager 1 Supervisor responsible for guest relations. Works closely with the
hotel manager, executive chef, director of Food Services and
dining commons manager to ensure guests have a positive
experience.
Sales associate 1 Administrative employee responsible for sales and marketing for
the hotel and conference center.
Administrative assistant 1 Executive assistant to the hotel manager.
Accounting manager 2 Accounting personnel responsible for booking adjusting journal
entries, other administrative journal entries and processing
payroll. Accounting managers have approval authority for all
hotel and food-and-beverage-related transactions.
Food and Beverage
Baker I 1 Employee responsible for preparing baked goods for the
restaurant and caf.
Baker II 1 Employee responsible for preparing baked goods for the
restaurant and caf. Also coordinates menu of baked goods with
executive chef.
Catering manager 1 Responsible for coordinating all catered events at the hotel and
conference center. Has approval authority for all catering event
purchases, as well as other food and beverage purchases.
Cook I 2 Employee responsible for meal preparation for the restaurant and
caf.
Cook II 2 Employee responsible for meal preparation for the restaurant and
caf. Assists the executive chef in menu design.
Dining commons manager 1 Employee responsible for guest-facing aspects of the hotels food
and beverage services (e.g., the front of the house). Has
authority to approve food-and-beverage-related purchases and
other transactions.
Director of Food Services 1 Supervisor responsible for all activities related to food and
beverage services throughout the hotel. Has authority to approve
food-and-beverage-related purchases and transactions.
Job title
Number of
employees Job description
Executive chef 1 Manages the meal preparation operations and creates menus.
Has the authority to initiate food-and-beverage-related
purchases.
Food Operations manager 2 Manages all food and beverage operations, including the
restaurants and pantry.
Food Service supervisor 2 Kitchen employee who monitors food inventory levels. Has
authority to initiate food-and-beverage-related purchases and
transactions.
Food Service worker I 2 Kitchen employee involved in food preparation (zero to three
years of experience).
Food Service worker II 4 Kitchen employee involved in food preparation (more than three
years of experience).
Kitchen utility worker 14 Line kitchen employee. May be responsible for food preparation,
dishes, etc.
Materials handler 1 Kitchen employee who maintains food storage, including loading
and unloading food deliveries.
Retail food sales manager 1 Food services supervisor primarily responsible for Food Pantry
and caf sales. Has authority to approve all food-and-beveragerelated transactions.
Waiter/waitress 30 Server in the restaurant or caf. Has access to the POS to enter
customer orders and payments.
Front Desk
Front desk supervisor 3 Supervisory employee who works at the front desk, processes
guest check-ins and checkouts, takes reservations and manages
guest requests. Has access to the GuestSYS (property
management system) to process guest reservations and
payments. Oversees the front desk clerks and interns.
Clerk 50 Works at the front desk, processes guest check-ins and
checkouts, takes reservations and manages guest requests. Has
access to the GuestSYS (property management system) to
process guest reservations and payments.
Intern 40 Student employee who works at front desk, processes guest
check-ins and checkouts, takes reservations and manages guest
requests. Has access to the GuestSYS (property management
system) to process guest reservations and payments. While
taking classes, interns are limited to part-time employment status
and are not subjected to .
Night auditor 1 Front desk clerk who works the overnight shift and is also
responsible for balancing the revenue and expense transactions
that occurred during the day at the hotel.
Job title
Number of
employees Job description
Maintenance
Building services worker 3 Hotel employee who performs repairs and cleanup, as needed.
Center housekeeper 1 Hotel employee responsible for managing the cleanliness of the
conference center.
Grounds keeper 1 Hotel employee responsible for maintaining the grounds.
Housekeeper 11 Hotel employee responsible for cleaning guest rooms,
conference center and restaurants. Housekeepers also record
minibar usage in guest rooms and complete occupancy reports to
track daily room usage.
Housekeeping supervisor 1 Hotel employee responsible for managing housekeeping staff.
Laundry worker 2 Hotel employee who launders hotel and restaurant linens and
guest laundry.
Maintenance worker 1 Hotel employee responsible for daily upkeep and maintenance of
property.
Utility worker 1 Hotel employee responsible for maintenance of the electrical,
plumbing and other systems.
Total employees 189
Appendix Approved employee authorization list by level
ID Job title First Name Last Name Business unit
Annual
salary
POS
access
GuestSYS
access
Initiation
authority
Approval
authority Employee email
3811 Accounting Manager David Brown Administrative $42,000 1 1 1 1 [email protected]
1922 Accounting Manager Victoria Simpson Administrative $42,500 1 1 1 1 [email protected]
1840 Administrative Assistant David Peters Hotel $26,309 1 1 1 0 [email protected]
2164 Assistant Manager Alexander Knox Hotel $40,500 1 1 1 1 [email protected]
2811 Assistant Manager Brian Gibson Hotel $40,500 1 1 1 1 [email protected]
9518 Catering Manager Yvonne Chapman Food Service $34,000 1 0 1 1 [email protected]
7483 Center Housekeeper Mary Chapman Hotel $52,863 0 0 1 0 [email protected]
8969 Dining Commons Manager Gavin McGrath Food Service $46,487 1 1 1 1 [email protected]
9749 Director Food Services Nicola Fraser Food Service $95,000 1 1 1 1 [email protected]
1036 Executive Chef Vanessa Metcalfe Food Service $77,532 1 0 1 0 [email protected]
5851 Food Operations Manager Elizabeth Rees Food Service $47,318 1 0 1 0 [email protected]
7770 Food Operations Manager Carolyn Slater Food Service $49,907 1 0 1 0 [email protected]
1493 Food Service Supervisor Deirdre Clarkson Food Service $28,000 1 0 1 0 [email protected]
6548 Food Service Supervisor Sebastian Hill Food Service $27,576 1 0 1 0 [email protected]
2231 Food Service Supervisor Andrea White Hotel $26,000 1 1 1 0 [email protected]
7388 Food Service Supervisor Joan Ball Hotel $28,610 1 1 1 0 [email protected]
5920 Food Service Supervisor Carl Dowd Hotel $26,001 1 1 1 0 [email protected]
3203 Grounds Keeper II Stephanie McLean Hotel $25,977 0 0 1 0 [email protected]
0721 Hotel Manager Brandon Burgess Hotel $90,825 1 1 1 1 [email protected]
6309 Housekeeper Joe Poole Hotel $22,134 0 0 1 0 [email protected]
4180 Housekeeping Supervisor Trevor Roberts Hotel $28,938 0 0 1 0 [email protected]
7266 Housekeeping Supervisor Tim Simpson Hotel $25,445 0 0 1 0 [email protected]
3864 Maintenance Supervisor Rodney Wilkins Hotel $31,330 0 0 1 0 [email protected]
9250 Materials Handler Adrian Coleman Hotel $30,257 0 0 1 0 [email protected]
4490 Night Auditor Michelle Arnold Hotel $26,000 1 1 1 1 [email protected]
9690 Retail Food Sales Manager Tracey Thomson Food Service $40,000 1 1 1 1 [email protected]
The detailed employee listing above provides detailed payroll and computer access data for employees with journal entry initiation or approval authority only. For data about all
employees who are active during FY15 and FY16, see the data file.
For the access fields, 1 indicates that the employee has access to the applicable subsystem and the authority to initiate or approval transactions.
For the authority fields, 1 indicates that the employee has the authority to initiate or approve transactions.
Not shown is that all waitstaff employees have access to the POS and all clerks and interns have access to the GuestSYS.
Page | 21
Hospitality industry background
What is the hospitality industry?
The hospitality industry is made up of companies focused on customer service. It includes hotels, resorts,
restaurants, airlines, cruise lines, theme parks and other fields within the tourism industry. The hospitality
industry depends heavily on the availability of leisure time and disposable income. Therefore, economic
trends can have a significant impact on the performance of the industry. Additionally, since the industry is
based on providing excellent customer service, customer satisfaction and loyalty are very important.
Different levels of service can be sought and expected within this industry. In addition, the industry is
heavily influenced by weather patterns and seasonality; therefore, strategic pricing and packages are
used to attract customers during off-peak or off-season time frames. This industry typically incurs higher
fixed costs than other industries and utilizes outsourcing more heavily for certain aspects of operations to
convert fixed costs into variable costs.
The hospitality industry has many sectors. PSU Hotel is part of the hotel (lodging) sector within the
hospitality industry.
Key performance indicators (KPIs)
For an analytics mindset, it is important to understand the metrics that your client uses to measure
performance. This will help you ask the right questions. There are a variety of KPIs commonly used by
hotels to measure performance. We highlight several below.
Average room rate (ARR) measures the operating performance of the hotel. It represents the
calculation of the average realized room rental for a given period and often is used to compare
revenue between hotels to improve price positioning. When calculated daily, it is referred to as the
average daily rate (ADR).
=
Occupancy rate is the ratio of rented (or occupied) rooms divided by the total number of rooms
available during a given time period. This metric provides information about cash flows because it can
be used to predict future revenues and, if there is a low occupancy rate, it also may suggest that
strategic changes need to be made to increase occupancy.
=
Vacancy rate is the opposite of the occupancy rate. It is the ratio of the number of empty rooms
divided by the total number of rooms available during a given period of time.
=
Page | 22
Revenue per available room (RevPAR) shows a hotels ability to rent its available rooms at an
average rate and often is used to compare revenue between hotels. It is calculated as the ratio of
room revenue divided by the number of rooms available (or, alternatively, the ARR multiplied by the
occupancy rate):
=
Gross margin describes the profitability of the hotel, not including indirect fixed costs. It is calculated
as the ratio of net sales less the cost of goods sold to the net sales. It is typically calculated only for
non-lodging and meeting room sales because there is not cost of goods sold for those revenues.
Profit margin ratio describes the profitability of the hotel. It is calculated as the ratio of hotel income
to net sales.
=
Profit margin can also be examined at the department (or business unit) level, such as:
Rooms profit margin: ratio of room income to net sales
=
Food and beverage profit margin: ratio of food and beverage income to net sales
=
Labor cost percentage describes the operating efficiency of the hotel and can be calculated at the
hotel level or for individual business units (e.g., hotel, food and beverage). It is calculated as the ratio
of total payroll and related expenses to net sales
= +
Food and beverage cost percentage describes the profitability of the hotels food and beverage
services. It is calculated as the ratio of the cost of food and beverage sold to net food and beverage
sales.
=
Typical hotel revenue streams and supporting systems
Room revenue revenue from the sale of rooms is generally the largest source of revenue. Billing is
typically done through a property management system (PMS).
Retention charges revenue is from late cancellation or a no-show penalty for a customers failure to
fulfill their commitment.
% =
Page | 23
Food and beverage revenue:
Restaurants billing is typically done through a point of sale system (POS system).
Minibar generally, this is limited to beverages and snacks. Guests are billed based on a form
they complete to record their consumption, and housekeeping records this upon replenishment of
the minibar.
Events rates vary and usually include food, beverage and space rental.
Communication revenue revenue is related to a guests use of in-room telephones and internet.
Billing is typically done through a PMS.
Business center revenue charges are related to business services, e.g., printing, copying and
computer usage. Billing is typically done through a POS.
Health club and spa revenue revenue or fees relate to use of health club facilities, beauty
treatments, etc. Billing is typically done through a POS.
Laundry revenue revenue is collected for laundering guest clothing and shining their shoes.
Typically this is billed through the POS.
Outlook for the hotel industry
Growth
The hotel industry is among the largest and fastest-growing industries in the world. RevPAR has
increased in each of the last several years. Given the current economic outlook and expected trends in
travel, an increase in RevPAR is expected to continue well into the future. Hotels are expecting a high
occupancy rate and a 5% increase in room rates in the next few years as well. Historically, when there
are high occupancy rates and high room rates, there also will be an increase in the development of new
hotels. For example, during 2016, approximately 132,000 new rooms were under construction in the
United States.1 The majority of this new growth is in the upscale or upper mid-scale chain category (e.g.,
members of the Hilton or Marriott family chains).
Competition
Traditional hotels are facing increasing competition from lodging options offered through the sharing
economy (e.g., Airbnb or VRBO). These competitors often provide larger and more home-like
accommodations than a hotel. Further, these competitors allow guests to search for and book rooms
easily online and via apps. Traditional hotels must consider how they can better compete with these
services. Enhanced digital investments can include booking, check-in, mobile keys, payment, in-room
service and social media platforms. In addition, traditional hotels must differentiate themselves using
dimensions that these online competitors do not include, such as customer service, food and beverage,
and other services.
Evolving technology: opportunities and risks
The hotel industry faces several challenges and opportunities related to new technology. These include:
Page | 24
Information technology (IT) systems: IT systems within the hospitality industry are typically complex
because of the number of systems used. Rarely do hotels use a single unified enterprise resource
planning system, and instead there is generally a different IT system used for each process or
department (e.g., food and beverage data is processed and stored in a different system than the front
desk or procurement).
Analytics: The use of analytics often has a direct impact on revenue for hotel management
companies. In the revenue management department, companies can now leverage data from a
multitude of sources, including online search behavior, air traffic, competitor sales and future
reservations to better forecast demand and optimize pricing. As the hospitality industry captures
enormous volumes of diverse data sets, the effective use of analytics is dramatically changing how
hospitality businesses are run. Embracing data analytics will not only enhance the guest experience,
but also drive top- and bottom-line results for hotel owners and management companies. In addition,
those dealmakers who leverage data analytics in their diligence are likely to benefit from enhanced
returns.2
Cybersecurity risk: Hotels collect an abundance of customer data and must maintain customers data
privacy. The average security breach costs hotel companies an estimated US $4.0 million, and such
breaches remain a serious threat to the global hospitality sector. Companies must be prepared to
quickly detect an attack, correctly diagnose the causes and mitigate financial and reputational
damage. Confronting a security breach requires seamless integration of people, processes and
tools.3
Robotic process automation (RPA): RPA is an off-the-shelf advanced software technology that
businesses can acquire from select vendors and set up for their own particular needs. As a virtual
employee, a robot or bot accesses and manipulates other computer applications through their user
interfaces, which enables it to automate high-volume, repetitive tasks with fewer errors. Given the
many benefits of RPA, adoption is expected by more hotel companies. However companies should
bear in mind that while RPA could possibly eliminate some jobs where the tasks performed are
routine, they will need to retain the key people who are experienced in running accounting, HR and
other operations so they can apply that experience in managing RPA.4
1 Industry Update: PKF Hospitality Research Extends Record U.S. Occupancy Forecast through 2017, Hospitality Net,
http://www.hospitalitynet.org/news/4073153.html, accessed September 1, 2017.
2 Industries: Real Estate, Hospitality & Construction Global hospitality insights: top thoughts for 2017, EY,
http://www.ey.com/gl/en/industries/real-estate/ey-global-hospitality-insights-top-thoughts-for-2017, accessed September 1, 2017.
3 Ibid.
4 Ibid.
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