The non-accounting of human resources and the change occurring therein in an organization may provide a poor picture of the profits and profitability of the organization. "Human Resource Accounting" is the offshoot of various research studies conducted in the areas of accounting and finance. Human resource is an asset whose value appreciates over time when placed, applied, and developed in the right direction. Human Resource Accounting is the measurement of the cost and value of people to the organization. It involves measuring costs incurred by organizations to recruit, select, hire, train, and develop employees and assess their economic value to the organization.
"Human Resource Accounting is the process of identifying and measuring data about human resources and communicating this information to interested parties." In simple terms, it is an extension of the accounting principles of matching costs and revenues and organizing data to communicate relevant information in financial terms.
Historical Scorecard of Human Resource Accounting:
The concept of considering human beings as an asset is an old one. The importance that Emperor Akbar gave to the nine jewels (courtiers) is strong evidence of the same. The history of our freedom movement would not be complete without mentioning distinguished freedom fighters such as Shri Motilal Nehru, Mahatma Gandhi, Sardar Vallabh Bhai Patel, and several others, but no effort was made to assign any monetary value to such individuals in the Balance Sheet of the Nation.
Objectives of Human Resources Accounting:
• Improve management by analyzing investment in HR
• Consider people as assets
• Attract and retain qualified people
• Profile the organization in financial terms.
There are many limitations that make management reluctant to introduce HRA. Some of the attributes include:
• There is no clear-cut and specific procedure or guidelines for finding the cost and value of human resources in an organization. The systems being adopted have certain drawbacks.
• The period of existence of human resources is uncertain, making valuing them under future uncertainty unrealistic.
• There is a fear that HRA may dehumanize and manipulate employees.
• The much-needed empirical evidence to support the hypothesis that HRA, as a management tool, facilitates better and effective management of human resources, is yet to be found.
• The question of in what form and manner their value should be included in the financial statement remains unanswered, with no consensus in the accounting profession.
• As human resources are not capable of being owned, retained, and utilized like physical assets, there is a problem for management to treat them as assets in the strict sense.
Human Resource Accounting Disclosures:
Public Sector Enterprises:
1. Bharat Heavy Electricals Limited (BHEL)
2. Steel Authority of India Limited (SAIL)
3. Cement Corporation of India Limited (CCI)
4. Oil and Natural Gas Commission (ONGC)
5. Electronics India Limited
6. Engineers India Limited
7. Hindustan Shipyard
8. National Thermal Power Corporation Limited (NTPC)
Private Sector Enterprise:
1. Infosys
By Priti Shah
Laurent & Benon Management Consultants Ltd, a public limited company with its corporate office in Gurgaon and a Pan-India presence. We, as an organization, strive to offer the right Human Resource Solutions at the right time and enable our clients to enhance the net worth of their human resource capital.
For further information, please visit us at: http://www.laurentandbenon.co.in/
Visit our blog at: http://laurentandbenon.blogspot.com/
From India, Pune
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"Human Resource Accounting is the process of identifying and measuring data about human resources and communicating this information to interested parties." In simple terms, it is an extension of the accounting principles of matching costs and revenues and organizing data to communicate relevant information in financial terms.
Historical Scorecard of Human Resource Accounting:
The concept of considering human beings as an asset is an old one. The importance that Emperor Akbar gave to the nine jewels (courtiers) is strong evidence of the same. The history of our freedom movement would not be complete without mentioning distinguished freedom fighters such as Shri Motilal Nehru, Mahatma Gandhi, Sardar Vallabh Bhai Patel, and several others, but no effort was made to assign any monetary value to such individuals in the Balance Sheet of the Nation.
Objectives of Human Resources Accounting:
• Improve management by analyzing investment in HR
• Consider people as assets
• Attract and retain qualified people
• Profile the organization in financial terms.
There are many limitations that make management reluctant to introduce HRA. Some of the attributes include:
• There is no clear-cut and specific procedure or guidelines for finding the cost and value of human resources in an organization. The systems being adopted have certain drawbacks.
• The period of existence of human resources is uncertain, making valuing them under future uncertainty unrealistic.
• There is a fear that HRA may dehumanize and manipulate employees.
• The much-needed empirical evidence to support the hypothesis that HRA, as a management tool, facilitates better and effective management of human resources, is yet to be found.
• The question of in what form and manner their value should be included in the financial statement remains unanswered, with no consensus in the accounting profession.
• As human resources are not capable of being owned, retained, and utilized like physical assets, there is a problem for management to treat them as assets in the strict sense.
Human Resource Accounting Disclosures:
Public Sector Enterprises:
1. Bharat Heavy Electricals Limited (BHEL)
2. Steel Authority of India Limited (SAIL)
3. Cement Corporation of India Limited (CCI)
4. Oil and Natural Gas Commission (ONGC)
5. Electronics India Limited
6. Engineers India Limited
7. Hindustan Shipyard
8. National Thermal Power Corporation Limited (NTPC)
Private Sector Enterprise:
1. Infosys
By Priti Shah
Laurent & Benon Management Consultants Ltd, a public limited company with its corporate office in Gurgaon and a Pan-India presence. We, as an organization, strive to offer the right Human Resource Solutions at the right time and enable our clients to enhance the net worth of their human resource capital.
For further information, please visit us at: http://www.laurentandbenon.co.in/
Visit our blog at: http://laurentandbenon.blogspot.com/
From India, Pune
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Human Resource Accounting.pdf
Human Resource Accounting.doc