How can you prepare for audits and financial reporting in hospitality?

1 Understand the requirements

The first step to prepare for audits and financial reporting is to understand the requirements and expectations of your stakeholders, such as owners, investors, lenders, regulators, or franchisors. Depending on the type and scope of your audit or report, you may need to provide different documents, data, and evidence to support your financial statements and performance. For example, you may need to comply with specific accounting standards, tax laws, or contractual obligations. You should also be aware of the deadlines and formats for submitting your audit or report, and communicate with your auditor or report recipient regularly.

2 Organize your records

The second step to prepare for audits and financial reporting is to organize your records and documents in a systematic and consistent way. This will help you save time and avoid errors when you need to access, review, or present your financial information. You should keep track of your income, expenses, assets, liabilities, equity, and cash flows, and categorize them according to your chart of accounts. You should also maintain a clear and complete audit trail, which shows the source and destination of every transaction, and the authorization and approval of every action. You should use reliable and secure software and systems to store and manage your records, and backup your data regularly.

3 Reconcile your accounts

The third step to prepare for audits and financial reporting is to reconcile your accounts and verify the accuracy and completeness of your financial data. This means comparing your records with external sources, such as bank statements, invoices, receipts, or third-party reports, and identifying and resolving any discrepancies or errors. You should reconcile your accounts on a regular basis, such as monthly or quarterly, and document the process and results. You should also review your internal controls and procedures, and ensure that they are effective and efficient in preventing fraud, waste, or mismanagement.

4 Analyze your performance

The fourth step to prepare for audits and financial reporting is to analyze your performance and identify the key drivers and trends of your financial results. This will help you understand your strengths and weaknesses, and provide insights and recommendations for improvement. You should use relevant and meaningful financial ratios and indicators, such as occupancy, average daily rate, revenue per available room, gross operating profit, net operating income, or return on investment, to measure and compare your performance with your goals, budgets, or benchmarks. You should also use graphical and visual tools, such as charts, tables, or dashboards, to present your data in a clear and concise way.

5 Prepare your reports

The fifth step to prepare for audits and financial reporting is to prepare your reports and statements according to the required standards and formats. You should follow the generally accepted accounting principles (GAAP) or the international financial reporting standards (IFRS), depending on your jurisdiction and audience, and ensure that your reports are consistent, comparable, and transparent. You should also include relevant and sufficient disclosures, notes, and explanations to support your figures and assumptions, and address any questions or issues that may arise. You should also proofread and review your reports for accuracy, clarity, and completeness, and seek feedback from your auditor or report recipient.

6 Learn from feedback

The sixth and final step to prepare for audits and financial reporting is to learn from feedback and implement changes or improvements based on the findings and recommendations of your auditor or report recipient. You should view audits and financial reporting as opportunities to enhance your financial management and performance, and not as threats or burdens. You should also monitor and evaluate the impact and outcomes of your actions, and adjust your plans and strategies accordingly. You should also celebrate your achievements and recognize your team members for their contributions and efforts.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?