In my previous article, Internal Controls & Audits: Keys to a Resilient Hospitality Business, I discussed the value of internal control and internal audits within the hospitality industry. When controls are properly designed and operate effectively, they foster consistency, improve service quality, strengthen accountability, and provide clear training and guidance. But how are controls properly designed, and how can management ensure they are operating effectively, especially in an industry defined by constant motion, high employee turnover, limited staffing resources, and rising operational costs? There are steps organizations can take; this article applies the five Ws and H to provide a practical, structured approach to designing and implementing internal control.
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Before designing and implementing internal control, it is important to understand what internal control is and why it exists. Internal control refers to the overall system of key controls, policies, processes, and procedures that help organizations operate efficiently, protect assets, support compliance and reduce financial and operational risks. The chart below illustrates how these elements work together to form an effective internal control environment.
How
Building and maintaining an effective internal control environment can be accomplished through three key phases:
· Phase 1 – Design In the first phase it is important to identify and document key controls. Key controls are essential safeguards that address significant areas of risk or concern related to operations, guest service, and compliance. Once identified, each key control should be clearly documented, beginning with a policy and supported by defined processes and/or detailed procedures. Proper documentation ensures clarity, consistency, and continuity.
· Phase 2 – Implement In the second phase, the focus shifts to communication and training. An internal control environment can only operate effectively when employees are aware of key controls and understand how to apply them. Policies, processes, and procedures must be communicated clearly, made easily accessible, and reinforced through training. This ensures control moves from documentation into practice and remains effective despite staffing changes or operational pressures.
· Phase 3 – Examine In the examination phase, organizations monitor design and validate effectiveness through regular reviews or internal audits. Controls should be reviewed at least annually, with higher-risk areas assessed more frequently using a practical, rotational approach. This ensures all key controls are evaluated over time without overwhelming management or staff. When controls are confirmed to be working as intended, management can rely on them to support efficient operations, protect assets, and manage risk.
Who
Building an effective internal control environment requires teamwork and leadership. Leaders set the tone at the top; when management takes controls seriously, employees are more likely to follow.
· Internal employees, from valet to kitchen staff, can assist in documenting daily tasks and capture institutional knowledge before it leaves with employee turnover.
· External advisors, such as risk advisory or internal audit professionals, can provide expertise and assistance in identifying, documenting or reviewing key controls — allowing operators to focus on running the business while strengthening oversight and effectiveness.
· Industry organizations, such as RIHA, RestaurantOwner.com and HFTP offer valuable tools, templates, education, and training resources.
· Technology, such as property management systems, point-of-sale systems, and even AI, can help document, monitor, and automate controls.
When
Timing plays an important role in control implementation. Designing and implementing controls during slower seasons, midweek lulls, or off-peak shifts allow operators to be proactive and productive in managing risk through internal control. Reviews may occur weekly, monthly, quarterly, or annually, depending on risk. Tools such as self-audits or checklists provide continuous monitoring and support compliance with regulatory agencies.
Where
Internal control documentation must be accessible and visible to all employees. Whether stored electronically, in binders, on shared drives, or posted in employee areas, controls should be current and easy to locate. Accessibility is especially important in high-turnover environments, ensuring employees can follow procedures even when management or training resources are unavailable.
Why
An effective internal control environment positively impacts hospitality organizations. When controls are properly designed, they are intentionally documented to address the organization’s highest risks and operational realities. When controls are operating effectively, management communicates expectations, trains employees, and performs regular reviews to confirm controls are being followed and remain relevant. When leadership embraces the value of internal control, implementation becomes a practical way to balance daily operational demands while maintaining effective oversight as the business, staffing, and guest expectations evolve. As a result, internal control becomes an “invisible workforce” that promotes consistency, accountability, and clear guidance across the organization, supporting sustainable success.
Citrin Cooperman’s Restaurants and Hospitality Industry Practice understands the evolving needs of the hospitality business owner. We have helped our loyal clientele raise their financial efficiencies, reduce costs, and structure their business to thrive in any environment. For more information, reach out to Lynnette Martinez.
“Citrin Cooperman” is the brand name under which Citrin Cooperman Advisors LLC and Citrin Cooperman & Company, LLP, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards.
Lynnette Martinez is a manager in Citrin Cooperman’s Risk Advisory and Compliance Practice. She provides compliance-related internal control services and outsourced internal audit services to companies in a variety of industries, including restaurant and hospitality. Lynnette can be reached at lmartinez@citrincooperman.com.
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