Having well-written policies and procedures is an essential foundation for any successful hotel operation. However, simply having these policies is not enough. True operational excellence comes from testing and reviewing these controls regularly to ensure they are followed consistently. This process of internal control review not only strengthens compliance but also fosters a culture of accountability and integrity throughout the organization. When we test our controls, we create real compliance — and that is what this is all about.

Top 10 Internal Control Review Checklist Items

1. Use of Purchase Orders Ensure purchase orders (POs) are used for all items except food and specifically exempted items, and that they are completed in advance of any purchases. This establishes a foundation of control over procurement.
2. Written Approvals for Purchases Confirm that all POs receive written prior approval from the Director of Finance and General Manager, and that emergency purchases are minimized and properly authorized.
3. Three-Way Match Before Payment Verify that before payment, each purchase order, receipt, and final invoice are matched accurately (three-way match). This step is critical in preventing payment errors and fraud.
4. Separation of Duties in Receiving Ensure that individuals receiving goods are independent of the purchasing and approval processes, safeguarding objectivity and reducing the risk of unauthorized receipts.
5. Verification of Packing Slips and Invoices Confirm that receiving staff collect packing slips or invoices, compare them against POs, and note any discrepancies immediately. Missing or incorrect items should be refused or returned with proper documentation.
6. Food and Beverage Receiving Sign-Offs Require that all food items are dated and signed by the employee receiving them, and that invoices are signed off by the Executive Chef. Similar sign-offs apply to alcohol to maintain strict accountability.
7. Vendor Credit Memos Review goods returned to vendors and ensure a corresponding credit slip or memo is prepared and submitted to accounts payable, preventing overpayments and supporting accurate record keeping.
8. Proper Expense Report Approvals Confirm all expense reports have appropriate approvals: Director of Finance and General Manager approvals, with additional oversight as required for senior-level expense reports.
9. Stamped or Perforated Paid Invoices Ensure all paid invoices have attached check stubs and backup documentation, and that they are stamped or perforated as paid with the corresponding payment date clearly marked.
10. Quarterly Reconciliation of Supplier Invoices Verify that all supplier invoices are reconciled to outstanding accounts payable on a quarterly basis, maintaining accurate liabilities and improving financial transparency.

Conclusion

Internal controls are not just a compliance exercise — they are the backbone of sound hotel financial management. Without proper controls and regular reviews, we lose our ability to manage the business effectively. This can lead to lost money, wasted time, higher staff turnover, and ultimately, reduced profitability and lower team morale. By rigorously testing and reinforcing these controls, we protect our assets, foster trust, and create an environment where team members can focus on delivering great guest experiences and driving performance. In short, robust internal controls make our business more profitable, more fun, and more sustainable.

At Hotel Financial Coach I help hotel leaders and teams with financial leadership coaching, webinars and workshops. Learning and applying the necessary financial leadership skills is the fast track to greater career success and increased personal prosperity. I significantly improve individual and team results with a proven return on investment.

Call or write today and arrange for a complimentary discussion on how you can create a financially engaged leadership team in your hotel.

Contact David at (415) 696-9593.
Email: david@hotelfinancialcoach.com
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