Segregation of Duties – Part 1 – Hotel-Online



David Lund | March 16, 2020

By David Lund

In the business world, protecting your assets is an essential strategy. Without it, you are open to “things” that can cost you a fortune. I was trained with the concept of segregation of duties as a foundation, so in some ways I guess everyone has the same point of view.

Recently, I worked with a client who showed me how bad things can go when you trust someone and fail to have the proper separation and supervision.

Now I know you are thinking about a couple of things right now: “David is very suspicious, and he has no idea who I have to take care of my business and other than that we are so small that I have no choice and I don’t know what to do, I have to trust my manager.

Nothing could be further from the truth. In this piece, I’m going to highlight a few critical things that require separation and how to create that even in the smallest operation.

“Who keeps the guards? “- Plato

With a system comes the ability to monitor, with controls we can monitor the results. When there are no controls, it means there is no system. When there is no system, anything can happen.
In the hospitality industry, we have a great system to follow. This system has natural checkpoints. This is where we need to create the separation so that we can monitor the results. The only obvious exception to this: you do all the bookkeeping / accounting work yourself. For most of you this is not the reality, you need others to work for you.

Income and settlements

This is the area where you are most vulnerable. You need to have a solid system to make sure that the daily balancing of your property management system is in sync with the daily cash and credit card deposits and don’t forget about balancing and verifying taxes payable. and the guest book. Depending on the transaction, you may also need to ensure that down payments and accounts receivable ledgers are also linked to the general ledger.

I know many of you are wearing me out here, but number one practice is to make sure that a separate person performs each task and that you make sure they are balanced. If you hand over the responsibility of performing these two separate functions to the same person, you expose yourself to fraud.

It’s very easy to manipulate checksums and pocket money and even process credits to other credit cards, not to mention directing money to bank accounts other than your own. There are many ways to cook your accounts and books. You need to have a way to make sure that what is processed in your hotel at the end of the day gets to your banks correctly and intact and is correctly recorded and balanced in your income / general ledger. A person, unless it’s you, should never be given these two missions together. Complete stop.

Purchases and Accounts Payable

The second most important area where things can be manipulated is purchasing and accounts payable. You want to have a system in place in your hotel where the functions of request / approval / receipt / payment are separate and by that I mean separate people.

I used to work in a hotel where the maintenance manager ordered items like HVAC filters. He created a purchase order, got it approved, submitted receipt information, and payments were made for the filters. In reality, he was receiving personal items and not filters and because he controlled the receiving function, he could do so for a long time. Only coincidence and loose lips sank his ship. Don’t let something like this happen to you.

In your hotel, ask the managers to use the order forms. See my Three-Way Blog for detailed instructions. (insert link) Have these purchase orders approved by the general manager. Order the goods and ensure that the reception is independent of the person who ordered / requested the goods. In a small operation, for example, have maintenance receive all hotel supplies except their supplies. Ask housekeeping or reception to receive these items. You probably think you are too short for this. Think again.

More to come on segregation of duties in future positions. In the meantime, if you want help with your hotel’s internal checks, give me a call. I can help you design something for your operation to protect your assets.


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