Restaurant Site Review

Discussion Standard Operating Procedures 1 Site has policies and procedures manual, including inventory receipt Cash Control 2 Cash deposits are made daily Inquire as to existence and use. Testing TRUE FALSE

Document procedure

Obtain prior month's deposit tickets and verify deposits were made daily. Observe one morning's bank deposit preparation and verify there are no personal checks. Observe one morning's bank deposit preparation and verify there are no personal checks.

3 No personal use of reserve fund

4 Employees can not swipe personal credit cards and receive cash

5 Reserve fund is counted by closing/opening manager

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Observe one night's and one morning's reserve fund verification. Document who performed the count, did it balance, and at what point during the night/day was is performed. Cash Verification Sheet is consistently Verify site uses the cash Observe one night's close and verify completed verification sheet as a tool to the proper use of the verification ensure propriety of server drop. sheet. Determine whether it is signed by the server and the closing manager. In the morning, the bookkeeper reviews Observe the bookkeeper complete Ask the bookkeeper to show you an the sales information that is their review noting that the cash example of a day where he was accumulated in Input System which over/short is never more than $10. required to reconcile a difference of indicates the dollar amount of sales and Document their procedures. more than $10.00 and show you how the forms of payment. The bookkeeper Document the process the the differences were resolved. then compares these amounts to the bookkeeper goes through when receipts and cash that they receive. there is a difference of more than $10.00. Use of surprise cash counts for bar Management inquiry. If yes, review last week's results. Server and bartender tip-out is controlled Document server and bartender tip- Observe one night's tip-outs and by manager out procedures. verify the manager is responsible for ensure propriety of tip amount and distributes tips. Verification of bartender cash drawer is Management inquiry. Observe one's night's check out a blind count. procedure and verify that the bartender is not able to print out a server check out report. Page 1

Inquire as to the site's policy regarding the use of the reserve fund to cash personal and/or payroll checks. Inquire as to the site's policy regarding the use of the reserve fund to cash personal and/or payroll checks. Inquire as to frequency of reserve fund verification

Restaurant Site Review

11 Utilization of paid outs fund Discussion Management inquiry. If there is not petty cash, document procedures for emergency purchases and how they are tracked. Testing TRUE FALSE

Asset Control 12 Restaurant safe is adequately secured

Observe

Ask a non-management employee what the combination of the safe is to ensure they do not know.

13 Each safe has a drop slot where bags and other valuables can be dropped into the safe without having to open the safe with a combination. 14 The bag used to transport money to and from the local bank is locked with a key that is kept in the safe. 15 Only the managers' and bartenders' id or swipe cards have the ability to access the cash register at the bar. 16 Gift certificates are properly secured 17 Existence of reconciliation procedures for gift certificates

Observe that the safe has a drop slot and does not need to be opened to deposit money. Observe that the bag used to transport the cash has a lock on it and is kept in the safe. Have a server attempt to access the cash register at the bar.

Observe Document procedures, include Test most recent reconciliation. who is responsible, how often it is performed, and how exceptions are handled. 18 Monthly a gift certificate inventory is Observe the gift certificate Trace your test counts to the performed at the restaurant. inventory and perform test counts, appropriate support in Vision. as appropriate. Document the Ensure all differences are reconciled. restaurant's procedures for the inventory. Document, based on your discussion with them, how they know what procedures to follow 19 Custody and recording functions for gift Verify proper segregation between certificates are properly segregated and responsibility for physically verify they are maintained in one central maintaining certificates and location. recording the sale. Operations Management 20 Servers are required to complete a server check-out report at the end of their shift, it is review by a manager.

Inquire as to policy.

Observe during closing procedures.

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Restaurant Site Review

Discussion 21 All order tickets in Input System and all servers need to be closed out of Input System before the day can be closed in Input System. 22 Manager is always working while restaurant is open. 23 Bookkeeper compare the Input System report to the supporting documentation the following morning. 24 Department of health inspects the restaurants annually. 25 Bookkeepers, or managers only, enter the invoices by the invoice date not the date of entry into the system, therefore any invoices not entered on the date received are still appropriately accounted for in a cut-off situation. Testing Attempt to close out the day in Input System before all order tickets are closed. Document what happens Observe during duration of review. Morning after observing closing, verify agreement of prior night's backup documentation. Obtain copy of last inspection. Management inquiry Observe procedures. TRUE FALSE

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Restaurant Site Review

Discussion 26 Invoices are entered on the day received Management inquiry and mailed to corporate at least twice a week. 27 QB A/P invoice input screen has a drop Management inquiry down box listing the appropriate general ledger accounts to be charged. 28 Vendor payable are entered in the system based on invoices received Document procedures, verify that only invoices are used to create payables, not packing slips. Management inquiry Testing Observe procedures. TRUE FALSE

Observe procedures.

29 Purchase orders contain all necessary information to allow for verification when items are delivered and invoices are received. Only managers can receive inventory 30 A server needs to enter an ID number into the Input System terminal before they can enter an order. 31 A manager's id or swipe card needs to Discuss with a manager why and be used to void a transaction that has how transactions are voided and been entered into Input System. what information the manager obtains from a server before he/she voids a transaction 32 The manager observes the activity of the Observe the manager monitoring restaurant and has the ability to review the restaurant and have them an active ticket on the Input System . attempt to review three active This allows them to ensure that the tickets. Discuss this control with a servers are charging the customers for manager and document their the food they are bringing them. procedures. Ask if they have ever identified a server not charging a customer. 33 Voids and complimentary meals are Management inquiry documented and monitored Inventory Control 34 Subsequent to entering the physical Management inquiry. inventory into the Visions system the GMs review the cost of food % as reported on the P&L. 35 The restaurant submits a P&L as well as Management inquiry. back up for their physical inventories twice a month.

Select a sample of 10 system entries and trace them back to the supporting invoice. Review sample of 10 P.O. for inclusion of all necessary information (delivery date requested, quantity, unit cost, vendor). Attempt to enter an order without using a server's id number. Document what happens Attempt to void a transaction without using the manager's id or swipe card. Document what happens

Observe after inventory is completed.

Review documentation of most recent submission.

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Restaurant Site Review

36 The Quickbooks maintains an expense ledger which tracks the total of all invoice entered into the system during the period, results are used to calculate the estimated Cost of Sales. 37 The restaurant calculates the Cost of Sales number in Excel based on purchases per QB, sales per Input System, and ending inventory per the Excel spreadsheet. 38 GMs review the cost of sales percentages on the P&L at period end for reasonableness and consistency with corresponding periods for subsequent years. 39 At least one member of restaurant management is present and involved in the physical count of inventory. 40 Discussion Management inquiry. Testing Trace total expenses for one food type per the ledger to the Cost of Sales line on the P&L. TRUE FALSE

Management inquiry.

Confirm calculation.

Management inquiry.

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Observe the presence of at least one member of management during the physical inventory count. Liquor inventory count and control Management inquiry, including Observe procedures procedures are adequate segregation of duties between custody of empty bottle and responsibility for replenishing. Also verify liquor is stored in a secured area. Excel spreadsheet inventory cost Management inquiry Select a sample of 5 items from the properly reflects most current invoice inventory listing and trace the cost to prices. Prices are updated on the the most recent invoice. Verify only Monday before each physical inventory. the GM and bookkeeper have the ability to update prices. After invoices for protein items are Trace the costs entered for five entered into Vision for payment at the protein invoices in the A/P system to restaurant, the latest cost in the the inventory system to determine if inventory system is automatically the latest cost information was updated. updated. Liquor reconciliation of inventory and Management inquiry Observe one night's closing sales are adequate procedure to verify reconciliation is performed and discrepancies are investigated. Only authorized individuals have access Inquire as to site policy. Observe throughout duration of to bar area, table ordered liquor can only review. be obtained by bartender. Information Systems Page 5

Restaurant Site Review

45 System access is terminated for unauthorized employees 46 Accurate data upload from Order Entry to General Ledger for gift certificates 47 System access updates restricted to system administrator 48 Use of unique passwords for Input System Site Security 49 Alarm code, locks and combinations are changed after manager change 50 Back door remains locked from morning until close 51 The safe, store, and liquor cabinet are locked when not in use. 52 Fire safety and exit procedures posted. Human Resources 53 Unclaimed employee paychecks secured Discussion Inquire as to policy for terminating access. Inquire as to procedure and whether operating effectively. Inquire as to site policy. Testing TRUE FALSE

Attempt to access system using system ID, other than administrator.

Inquire as to policy.

Inquire as to site policy. Inquire as to site policy. Observe throughout duration of review. Discuss with a manager who has Attempt to open the safe and liquor access to the keys and how control cabinet when not in use to ensure is maintained. that they are locked. Inquire as to site policy. Observe throughout duration of review. Inquire as to policy. Locate unclaimed paychecks, verify kept in locked cabinet, only manager access. Review most recent report and note that is was signed by the GM.

54 A report is submitted to the GMs at the Inquire as to policy. end of every month detailing employees pay rates. The GM indicates what employees have been terminated and whose pay rates need to be adjusted. Report is faxed back to Corporate. 55 A report listing all of the employees who Inquire as to policy. have not been active for more than a month is submitted to the restaurants and GMs respond to corp as to which employees have been terminated and should be changed from active status. 56 Each employee must use their personnel ID number to enter time into the Input System . 57 Managers review the payroll data at pay Inquire as to policy. period end for any unapproved hours worked and for reasonableness.

Review most recent report and note that is was signed by the GM.

Attempt to enter orders before ID is entered. Obtain most recent report and review for excessive overtime. Page 6

Restaurant Site Review

58 Tips reported by employees are monitored by Management Discussion Determine if there are procedures to monitor percentage of tips reported. Testing Obtained daily report of tip percentage, verify between 14%20%. TRUE FALSE

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