HUMAN RESOURCE

ACCOUNTING
BY: HIMANSHU SHARMA ENROLLMENT NO: 08612501721
 INTRODUCTION
 Human Resource Accounting measure the cost and value of
Employees in the Organization. It measure the total cost
incurred to recruit , train and develop the employee .
 HRA also finds the present economic value of its employees,
after measuring the cost, the organization do some paper work
to prepare report on the valuation of HRA. This report further
present to the top management.
 DEFINIATION
 It is the measurement of the cost and value of the people for the
organization.
 HRA is the process of Identification and measuring data about
human resource and communicate this information to interested
parties.
 HRA is a measurement and qualification of organizational
inputs such as recruiting, training experience and commitiment.
 OBJECTIVES
 Enables the management to monitor the use of Human Resource
 Finding depreciation or appreciation among Human Resource
 Provide cost value information about acquiring, developing,
allocating and maintaining Human Resource.
 Assist in the development of effective management practices by
classifying the financial consequences of various practices
followed by the organization.
 Methods of Human
Resource Accounting
Coast Approach Method
 We have two methods------
 1)Acquisition Cost Method
 In this method organization capitalize on
all cost related to Human resources of the
organization and amortize it in the profit
& loss account throughout from
appointment till retirement
 2) Replacement Cost Approach
 This method use to determine weather to
keep working or replace the worker. It
consider the cost of replacing the human
resource or employee
Value Approach Method
 We have three methods
 1) Present Value Method
 In this method the present value of all future benefits to employee is
determined to know weather the organization can afford the cost and
can be able to gain in the future from cost incurred on human resource.
 2) Value To The Organization Method
 In this method it is determined and measure method the most valuable
employee of the organization is determined and measured weather the
organization is earning profit from the services of that employee.
 3) Expenses Model Method
 In this method the employee into two categories :Decision making
category and decision execution category. And then determine the
actual cost incurred on both categories and determine weather it is
beneficial to the organization or not
Need of Human Resource Accounting

 Formulating Policies and Plans for Human Resource.

 Decisions regarding cost and benefits from human resource.
 Determining the training and development cost.
 Determine the value of Human Resource and benefits from it.
 Ensures proper utilization of resources.
 Determine the value of critical employees and benefit from them
 Limitation
 There is no standard procedure for valuing Human Resource.
 Employee turnover is ignored in valuation.
 It May be possible that the employee is already fully trained and
there is no need to incur any development, training, or
recruitment cost. It will create difficulty for a company to find
out CTC according to acquisition model.
 There is a fear that HRA may manipulate employees
 There is no universal accepted methord of human asset
valuation