PRESENTATION ON HUMAN RESOURCE ACCOUNTING

Presented by: Itisha Bajaj Megha Dhariwal Nishtha Srivastava Prateek Mishra Vishal Gupta

WHAT IS HR ACCOUNTING?
According to The American Accounting Association on HRA :

Human Resource Accounting is the process of identification and measuring data about human resource and communicating this information to interested parties

EVOLUTION OF H.R ACCOUNTING

STAGE 4 (1976-80) STAGE 5 (1980 onwards) STAGE 3

(1971-76)

STAGE 2 (1966-71)

STAGE 1 (196066)

FEATURES OF HUMAN RESOURSE ACCOUNTING

Valuation of human resources.

Recording the valuation in the books of accounts.

Disclosure of the information in the financial statement of the business.

METHODS OF HRA

Cost Approach Method

The Economic value approach.

Non- Monetary Methods for determining value.

Measurement of Group Value

COST APPROACH
Cost is the sacrifice incurred to obtain some anticipated benefits and services. All cost have two portion.

COST

Expense

Asset

Two types of cost are of special importance in HRA: Historical cost : It is the cost of HR that is sacrificed to acquire and develop the resource. These includes recruiting, selection, hiring, placement, orientation and on the job training.

Replacement cost: It is the cost that would have to be incurred if the present employees are to be replaced.

Non monetary methods for determining value:

This method is used to assess the economic value of HR not in monetary terms. Rather they rely on ratings and rankings. Behavior management techniques to assess the benefits gained from HR. The Skills or capability inventory. Performance evaluation Assessment of potential Attitude measurement.

Importance Of HRA
It helps in decision making in the following matters : Employment, locating, and utilization of HR. Transfers, promotions, training and retrenchment of HR planning of physical asset vis--vis HR Identifying the causes for high turn over at various levels. Locating the real cause of ROI. It helps employees in improving their performance.

LIMITATIONS

No proper clear cut and specific procedure or guidelines for finding cost and value of HR of an organization. The period of existence of HR is uncertain and hence valuing them under uncertainty seems to be unrealistic. Lack of empirical evidence. There is problem for the management to treat them as asset in the secret sense. In what form and manner, there value to be included in the financial statement is the question yet to be classified. There is no universally accepted method of Human asset valuation. Tax do not recognize human beings as assets. As far as India is concerned HRA is still at the developmental stage.

BENIFITS

Discloses the values of human resources. It helps in proper interpretation of Return on Capital Employed(ROE). It helps in evaluating the expenditure incurred towards the employee. Helps the management in the employment, location and utilization of HR. It also help in deciding the transfers, promotion, training and retrenchment of HR.

It helps in understanding and assessing the strength and weakness of an organization.

It helps identify the cause of high labor turnover.

PURPOSE

The purpose of HRA is recognisation of the value of all resources used by the organization as well as it includes the management of HR which will enhance the quality and quantity of goods and services.

It is basically adopted to treat HR as an asset to generate idea about HR, to assign value to HR and to present human asset in balance sheet.

THANK YOU