HUMAN RESOUCE

ACCOUNTING AND
INFORMATION SYSTEM
 HUMAN RESOURCE ACCOUNTING (HRA)

• Human Resource Accounting is “a process of identifying and measuring

data about human resources and communicating those information to
interested people” (according to American Association of Accountants)
• HRA is the art of valuing, recording and presenting systematically the
worth of human resources in the book of account of an organization.
• HRA tries to place a value on organizational human resource by
formulating a human resource balance sheet and human resource
presented as assets.
• HRA shows the investment the organization makes in its people and
how the value of these people changes over time.
 OBJECTIVES

 To provide cost value information about acquiring, developing, allocating and

maintaining human resources so as to meet organizational goals.
 To enable management to effectively monitor the use of human resources.
 To find whether human assets are appreciating or depreciating over a period
of time.
 To assist the development of effective management practices by classifying the
financial consequences of various practices.
 Advantages

o Shows the strengths and weakness of existing workforce in an organizations.

o Helps managements in recruitment planning.
o It provides valuable feedback to managers regarding the effectiveness of HR
polices and practices.
o It helps potential investors judge a company better on the strength of the
human assets utilized therein.
o It helps management in taking appropriate decisions regarding the use of
human assets in an organization.
 Limitations

o It is not easy to value the human assets in an organization

o HRA is full of measurement problem.
o Employees and unions may not like the idea.
o There is no empirical evidence.
 HUMAN RESOUCES INFORMATION SYSTEM (HRIS)

• The HIRS is method by which an organization collects, analyses and

reports information about people and jobs.
• It applies to information needs at macro and micro levels.
• HIRS is basically a data base system that offers important information
about employees in a central and accessible location.
 Objectives

• To offer an adequate, comprehensive and on-going information system

about people and jobs.
• To supply up-to-date information at a reasonable cost.
• To offer data security and personal privacy

Need

• Costly Exercise
• Inaccurate
• Fragmentation
• Difficult to Analyse
 Setting Up HRIS

HRIS requires consistent supports and continued blessings of top management.

Employees at various levels must extend their cooperation fully. An
organization, which wants to set up HRIS, should:

 Plan
 Design
 Implement
 Evaluate
Computerized HRIS

A computerized HRIS is designed to monitor, control and

influence movement of people from the time they join the organization till the
time they decide to leave the organization.