What it is
Restaurants are cash and volume businesses with thin margins. Sales come from a point-of-sale system, cash is handled by many staff, tips run through payroll, sales tax is collected for the state, and the largest costs are food, beverage and labor.
The program covers POS to bank reconciliation, tips and payroll tax, sales tax, gift cards and loyalty, inventory and prime cost analytics, franchise fees and royalties, leases with percentage rent, third-party delivery and long-lived assets. Steps carry an assertion, a sample-size note, a W/P reference and sign-off.
When to use it
- Planning the audit of a restaurant, bar, quick-service or multi-unit operator.
- When the client uses third-party delivery, gift cards, franchise agreements or percentage rent.
- To document how you test completeness of cash sales.
What’s inside
- Cash, POS reports, deposits and completeness of sales
- Payroll, tips, minimum wage compliance and sales tax
- Inventory, cost of sales and prime cost analytics
- Gift cards, franchise fees, leases and long-lived assets
- Tie-outs and general procedures
Standard cited
This template follows AU-C 330 / ASC 606 / ASC 842. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
How do you test completeness of restaurant sales?
Reconcile POS sales by day and tender type to bank deposits and card processor statements, then analyze sales against covers, average check and cost of sales. Test voids, comps and discounts for unusual patterns by employee and shift, since they can hide skimming.
What is prime cost?
Cost of sales plus labor, as a percentage of sales. It is the single most useful analytic on a restaurant file because a large shift points to unrecorded sales, waste, theft or a payroll problem. Compare by period and by location.
How are gift cards accounted for?
Sales of gift cards create a contract liability. Revenue is recognized on redemption, and breakage is recognized in proportion to redemption if the entity can estimate it, subject to unclaimed property laws (ASC 606-10-55-46 to 55-49). Test the liability rollforward and the breakage method.
Related templates
- Audit Program: Cash and Bank
- Audit Program: Payroll
- Inventory Observation Memo and Test Count Sheet (AU-C 501)
- Bank Reconciliation Template (Excel)
Last updated 11/05/2026. All free templates.