This has been a tumultuous year for the Hospitality sector, with numerous challenges and risks arising from the pandemic, along with ongoing uncertainties. Social distancing and health guidelines throughout 2020 have changed many services to patrons, as well as the flow of people through venues. This has had a dramatic effect on Food & Beverage offerings and gaming performance.
During this year PKF has provided support and advice to its Hospitality clients to help them navigate and pivot around the constant challenges, while protecting the businesses going forward. Across our various service lines at PKF we had the following common learnings and observations which are our RECOMMENDED FOCUS AREAS FOR THE HOSPITALITY SECTOR IN 2021:
1. Audit & Assurance
- Assess any changes in the control environment. Were they relaxed to facilitate the changes in the business? Ensure overarching controls remain to detect any inappropriate behaviour.
- Potential fraud needs to be mitigated through effective fraud assessment and management – fraud escalates in times of adversity.
- Follow up any identified anomalies in a timely manner—and ensure that someone in the business is accountable for doing so.
2. Business Advisory
- Review current financial trends and the ability to meet financial objectives and working capital needs in the short and medium terms.
- Obtain familiarity with banking covenants under existing finance facilities.
- Ensure future effects of any deferred liabilities have been accounted and any payment arrangements cleared and confirmed in writing.
- Consider a second opinion in relation to Government stimulus entitlements.
3. Risk Management, Governance & Culture
- Consider how culture is being overseen and driven, starting at the top and across the organisation.
- Consider if Business Continuity Planning manages the risk of pandemic and similar events in the future – are these tested?
- Review policies around Key Risk & Governance – are they clearly articulated, communicated and continually updated?
- Consider appropriateness of Whistleblowing framework – does it comply and serve its purpose.
- Revisit your reporting processes and delegations to ensure timely compliance, and to avoid exposure to penalties.
- Review calculation of GST on electronic gaming and member points - this area continues to cause confusion.
- Ensure Award Wages and Workplace Compliance are priority areas of consideration following recent corporate failures.
- Perform AML/CTF independent reviews to ensure ongoing compliance with legislation.
6. Cyber Security
- Cyber security is a continually evolving environment that requires ongoing Audit, Education, Remediation and Re-evaluation. It should not be considered in isolation but as part of the overall risk management.
- In-house or outsourced IT providers should be independently reviewed and challenged, and staff need to be continually educated on emerging risks eg phishing.
PKF is a multi-disciplinary accounting firm with national coverage which provides support to the Hospitality sector around their external & internal audit, accounting, tax and advisory needs, including the above areas. Please contact your local office for any assistance.