Cash Integrity Audits - Experience Dictates: Execute them correctly, or don’t do them at all

Cash, money, revenues… however you call it; at the end of the day “obtaining it” is what a hotel or any business is fundamentally about and - in the same breath - “cash money” is as strong a temptation as can possibly exist to any hotel staff members.

In the Middle East, hotels have played a traditional role as “entertainment venues for local residents” and still do – in some countries more than others. In the past, hotels sometimes offered the only outlets for particular types of social gatherings. Good meals, a comfortable place to have a coffee with friends, an informal setting for a formal meeting; hotels have always played a central role in Middle Eastern society - at both the social and professional levels.

This is the main reason that your average 5 Star property in most Arab countries will likely contain two or three times the number of Food & Beverage Outlets as their counterparts in Europe and the USA. Certainly, in Europe there exists the issue of “space constraint”…, but you get the point (I once conducted a cash integrity program for a hotel in the GCC that had, and still has, 12 restaurants and 7 bars!).

In specific instances overnight guests pay cash, and local residents – who obviously can’t sign their F&B purchases to a room, pay cash or with credit cards (though the hotels do prefer cash to avoid the credit card fees). So, cash payments are significantly important to hotels’ Finance executives because of their positive impact on the operation’s total revenues. Then, how to protect the hard-earned cash from the consequences of temptation on hotel staff?

Enter the “Cash Integrity Audit”.

To clarify: Cash integrity audits are not concerned with hotel purchases, nor staff theft of hotel & guest property – these are separate issues for another discussion. The purpose of this type of audit is to conduct unannounced checks (cash tests) on the hotel staff’s handling of hotel clients’ cash purchases, and the staff’s compliance with the standard operating procedures that govern these situations.

A cash integrity audit can consist of a series of independent cash transactions, or a complete audit of all areas where cash transactions take place on a regular basis at the hotel or resort. One transaction is called a "cash test".

The main underlying principle is that the proper execution of a cash test is critical; without which the hotel will be wasting its money… or cash! To illustrate this point, I am going to point out several commonly believed falsehoods, or fallacies.

Fallacy #1. A finance director can get “someone” to help him/her do the audit effectively: In the absence of companies specializing in this very specialized area of hotel mystery shopping, finance executives have invariably resorted to getting their acquaintances and friends to conduct what can best be described as “informal cash tests” on their behalf – which is better than nothing, but not by much…! This may work for the simple transactions, such as ‘foreign exchange at the front desk’, yet even then – if the correct items of data surrounding the transaction aren’t properly recorded, it’s a wasted effort. More importantly; when one considers the amount of time it would take a finance director to indoctrinate and train a person to capably execute a full cash integrity audit of a hotel, then the proposition becomes untenable because finance directors – by nature of their responsibilities and the long hours they must work – simply don’t have the time. And, just as significantly, they probably won’t be aware of the multitude of different scenarios that staff members are willing to employ to get the hotel’s cash into their own pockets. Experience dictates.

Fallacy #2. Any mystery shopper company can execute these cash integrity audits: Not so, I’m afraid. As in the previous example, simple transactions might fall under the capabilities of a “jack of all trades” mystery shopping service, but there is absolutely no substitute for experience in the realm of cash integrity auditing – and the more of it, the better. A clear example of this would be an instance involving an overnight stay for a full hotel audit – send an inexperienced mystery shopper, and see what happens… I can mention one occasion when a Dubai mystery shopper company sent a Filipina girl from Dubai to check in at a 5 Star hotel resort in the seaside town of Aqaba, Jordan to conduct a full hotel cash integrity audit. In this instance, the company in Dubai showed poor judgement on two levels:

1. Filipina women in Jordan invariably have two professions – maids or nurses, neither of which fits the profile of a typical 5 Star resort guest (nor did she have the jewelry and chic luggage to suggest that she was anything but a normal Filipina).

2. The Dubai company obviously hadn’t screened or trained her well enough – or both, because her nervousness at check-in alerted the front desk manager, and secondly; when asked “if she was all right” by Filipinas that worked at a hotel restaurant where she was conducting one of the cash tests, she even went so far as to admit her visit’s purpose to her fellow nationals! I’ll bet this hotel ended up passing that cash integrity audit with flying colors! Experience dictates.

Fallacy #3. If the cash integrity auditor doesn’t always catch hotel staff thieving, then they don’t know what they are doing / aren’t professional enough: ethically speaking, this is the most dangerous of all assumptions! Why? Because the auditing company (and let’s assume that the cash integrity audit service company is capable) might very well feel pressured to resort to cash-test methods that are questionable – and can backfire on hotel management in the end. I refer here to situations where the cash test auditor will feel it necessary to attempt to bribe a staff member and expose them. Does this qualify as a cash-test? Certainly. Is it logical to assume that a low paid staff member will respond to a nice bribe? The answer is: even more certainly! The methods employed by a cash integrity company are a critical element of the process – human nature and ethics must be part of the equation. And could it be that instances of catching thieves have been reduced because the cash integrity program is actually working...? Experience dictates.

Fallacy #4. A cash integrity program of 4 complete hotel cash integrity audits per year is sufficient: Not so; in fact, I would go so far as to say that it isn’t worth the hotel entering into such a contract – unless they only want to show compliance with their hotel brand headquarters’ cash integrity execution guidelines - such as for part of a “Quarterly Self-Assessment”. In order for a cash integrity program to be truly effective – and consequently do its part in protecting the bottom line - it needs to be conducted on a regular basis. The hotel managers will know where there is a higher likelihood of cash integrity fraud taking place at their property – an experienced cash integrity audit company will most certainly know where this is likely to occur in general, and more importantly the methods that staff may employ to steal the hotel’s cash. Experience dictates.

Fallacy #5. All hotel mystery shopper companies are capable of conducting cash integrity audits: From our correspondence and communications with the large multinational hotel mystery shopping companies, we have discovered that many of them stay away from offering this particular service for several reasons;

A. They don’t want to get involved in the hotel’s financial aspect, preferring to audit the operations side of hotels instead.

B. Being aware that some hotel employees may be dismissed as a result of their misdeeds that were exposed during a cash integrity audit, they choose not to enter into this service provision based upon their ethics – or the imposed ethical statutes of organizations such as ESOMAR, which state that employees should not be fired as a result of member mystery shopper company’s reports and results.

C. Hotel finance directors are not willing to pay the fees relevant to the service’s value to the hotel(s).

D. They have tried to provide cash integrity audits, but have since decided not to; for reasons of intricacy, ethics, or both.

The point is that, when choosing a company to help with your cash “loss prevention” a hotel needs to choose carefully and wisely, and not make any assumptions – or have unrealistic expectations – of its mystery shopper company. Experience dictates.

Inal Quandour and Brand Integrity Auditors have conducted cash integrity audits for internationally recognized hotel brands in Egypt, Jerusalem & Palestine, Jordan, Qatar and Dubai since 2004. Interested? Visit us at www.biahotelmystery.com