ARE YOU RUNNING A HOTEL BUSINESS, BUT THE SALES FIGURES ARE NOTE MAKING SENSE?

(1f) Frauds and Abuses Committed by Hotel Employees on Guests

Frauds committed by hotel staff on guests may not have immediate direct impact on the hotel revenue and profitability but will result in damage of the hotel reputational and brand and will cause loss of loyal and potential customers or litigations from aggrieved guests which are additional costs for the hotel and will certainly have long term negative effects on the hotel revenue and profitability. Listed below are the most common frauds that hotel employees can commit on guests:

• Asset concealment – stealing of guest valuables including laptops, money, jewelry and clothing
• Identity theft – stealing of guest payment cards and sensitive identity details
• Loyally points /gift voucher theft –
• Fraudulent sales –

(2) Back Office Fraud Schemes – Inventory, Finance and Accounts, Petty Cash, Pool Car, Telepone and Other Assets

(2a.1) Hotel Stores/Inventory Frauds and abuses

Typical hotel inventory items include: raw food materials, meat, sea foods, condiments, toiletries, beddings, drinks, gym items, event center items, mini-shop items, etc. The common fraud and abuse scheme that can impact hotel inventory items are theft or pilfering of the hotel inventory items. These have been discussed below::

• False inventory sales – taking inventory items and selling to enrich oneself.
• Inventory larceny – taking record inventory items away for personal use.
• Requisition and transfer scheme – making legitimate requisitions for inventory items such as expensive drinks, beddings, food condiments but diverting them for personal use.
• Inventory Padding happens in two ways as follows: Intentionally miscounting inventory items and false recording during physical stock counts or stacking empty cartons and containers and recording them as guanine inventory. during stock count
• Misuse – waste or excessive usage of inventory items.

(2a.2) Finance, Accounts, HR, Admin and Procurement Fraud Schemes

We assume that cash collections for all sales (room booking, restaurant, bar, minim shops/marts and others) and lodgment in the banks are done by different front office or customer service staff. In this case, the finance and accounts department does the following:

• holds petty cash and makes disburses for procurement of petty items,
• processes vendor and contractor payments
• prepares staff salaries and the bank payments
• processing statutory remittances to the regulatory agencies
• record keeping, accounting and financial reporting.

Based on the above assumptions, the most common frauds committed by the finance and accounts personnel are as follows:

• Cash larceny – pilfering or stealing petty cash.
• Fraudulent disbursements happen in a number of ways and include the following:
• Intentional over payments to vendors accounts and then requesting for refunds which are diverted to personal accounts
• Personal Purchases Reimbursable Claims scheme happens when an employee makes personal purchases and submits invoices for payments. This often happens more with petty cash
• Intentional overpayment staff salaries accounts and then sharing the excesses with the staff
• Payments to ghost vendors accounts for personal gains
• payment to ghost employee salaries accounts for personal gains
• Misstatement of the financial and business performance reports for personal gains. This may include understatement or overstatement to hide cash or asset thefts or underperformance. Overstatement of the financial reporting may also happen as a result of inflating the sales figures (quantity and price) so as to claim commission or sales bonuses or to hide underperformance
• Withholding remittance of statutory deductions and diverting to private accounts
• Cheque Fraud scheme happens in two ways as follows:
• Cheque tampering when the finance and account staff tampers with the valid approved cheques for payment. This include changing the cheque figures. or payee
• Cheque Signature forgery/Forged Maker happens when the finance and account staff write cheque for a fictitious names and signs forged signature.
• Authorized Maker happens when the staff of the hotel has authorized signatory to the bank account but them writes cheque and signs for personal gains