...–H4020 Human Resource Accounting HUMAN RESOURCE ACCOUNTING UNIT – I The Non accounting of human resources and the change occurring therein, of an organization may provide a poor picture of the profits and profitability of the organization. Likert Objectives of the Study: This unit aims to provide a basis for the conceptual framework of Human Resource Accounting. An attempt is made to highlight the following aspects. Development of the Concept of HRA An Historical Score Card Meaning and Definition of HRA Importance Objectives of Human Resource Accounting Limitations of Human Resource Accounting HRA for managers & HR Professionals Investment in Human Resources Quality of Work Force and Organizations’ Performance Efficient use of Human Resource Enumerating the Assets Calculating the Market Value of Assets Human Capital. 1 MBA –H4020 Human Resource Accounting INTRODUCTION To ensure growth and development of any orgnisation, the efficiency of people must be augmented in the right perspective. Without human resources, the other resources cannot be operationally effective. The original health of the organization is indicated by the human behaviour variables, like group loyalty, skill, motivation and capacity for effective interaction, communication and decision making. Men, materials, machines, money and methods are the resources required for an organization. These resources are broadly classified into two categories, viz., animate and inanimate (human and physical)...
Words: 55189 - Pages: 221
...Human resource accounting Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. Historical cost approach This approach is developed by Brummet, Flamholtz and Pyle but the first attempt towards employee valuation made by R. G. Barry Corporation of Columbus, Ohio in the year 1967. This method measures the organization’s investment in employees using the five parameters: recruiting, acquisition; formal training and, familiarization; informal training, Informal familiarization; experience; and development. The costs were amortized over the expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were written off. Limitations * The valuation method is based on false assumption that the dollar is stable. * Since the assets cannot be sold there is no independent check of valuation. * This method measures only the costs to the organization but ignores completely any measure of the value of the employee to the organization (Cascio 3). Replacement Cost approach This approach measures the cost of replacing an employee. According to Likert (1985) replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff. Limitations * Substitution of replacement...
Words: 5106 - Pages: 21
...HUMAN RESOURCE ACCOUNTING UNIT – I The Non accounting of human resources and the change occurring therein, of an organization may provide a poor picture of the profits and profitability of the organization. Likert Objectives of the Study: This unit aims to provide a basis for the conceptual framework of Human Resource Accounting. An attempt is made to highlight the following aspects. Development of the Concept of HRA An Historical Score Card Meaning and Definition of HRA Importance Objectives of Human Resource Accounting Limitations of Human Resource Accounting HRA for managers & HR Professionals Investment in Human Resources Quality of Work Force and Organizations‟ Performance Efficient use of Human Resource Enumerating the Assets Calculating the Market Value of Assets Human Capital. INTRODUCTION To ensure growth and development of any orgnisation, the efficiency of people must be augmented in the right perspective. Without human resources, 1 the other resources cannot be operationally effective. The original health of the organization is indicated by the human behaviour variables, like group loyalty, skill, motivation and capacity for effective interaction, communication and decision making. Men, materials, machines, money and methods are the resources required for an organization. These resources are broadly classified into two categories, viz., animate and inanimate (human and physical) resources. Men, otherwise ...
Words: 54154 - Pages: 217
...Human Resource Accounting Human Resource Accounting is the process of assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages and salaries and training expenses. Human Resource Accounting is the activity of knowing the cost invested for employees towards their recruitment, training them, payment of salaries & other benefits paid and in return knowing their contribution to organisation towards it's profitability. Contemporary Issues •Human Resource Audit ◦Objectives and benefits of Human Resource Auditing ◦Human Resource Auditing Process •Human Resource Accounting ◦Methods of Human Resource Accounting •Human Resource Information Systems •Outsourcing and Crowdsourcing •Employer Brand •Temping or Temporary Staffing •Attrition •Call centers •Exit interviews •Stress Management •Balanced scorecard •Competency mapping •Human Resource Benchmarking •Employee absenteeism The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties”. HRA, thus, not only involves measurement of all the costs/ investments associated with the recruitment, placement, training and development of employees, but also the quantification of the economic value of the people in an organisation. Flamholtz (1971) too has offered a similar...
Words: 1576 - Pages: 7
...much debate as to whether the human resources of an organization can be considered as an asset and treated accordingly in the accounting system. There are two schools of thought. One says that human resource is an asset and the other does not agree with this. Now let us see what is an asset? Asset is anything which is owned by the entity to derive service in future and should have legally enforceable claim. As such there is no guarantee of deriving benefits from the existing Human resources in future and has no sales value like other assets. Therefore, legally, human resource is not an asset claims one school of thought. Besides, company law also does not consider it as an asset. But the other school is of the opinion that the "human...
Words: 1313 - Pages: 6
...Functions of Human Resources BUS 303 Human Resources Management Instructor September 22, 2014 This paper gives a full depiction and dissection of the Human Resource Management (HRM) capacity. Main topics discussed are: Compensation and benefits, EEO and affirmative action, human resources development, safety and health, human resources planning, recruitment, and selection; compensation and benefits, and employee and labor relations. Included in this paper are also subsidiary points examined including: the fundamental capacities of Human Resource Management, arranging and anticipating human asset necessities, recruitment and determination, evaluation, assessment and worker inspiration. The connections between fruitful business and Human Resource Management are analyzed and in addition how Human Resource Management procedures could be consolidated into business methods to enhance benefit. The historical backdrop of the improvement of human asset administration might be followed back to the early 1900s. Human asset director’s unique capacity was to fundamentally deal with the relationship in the middle of organizations and worker's guilds. Galbraith and Nathanson were among the first association scholar to examine unequivocally the idea of human assets systems in the setting of key administration (Mathis & Jackson, 2011). They created a model for the human asset administration work that partitioned the human asset administration capacity into four fundamental sub...
Words: 2059 - Pages: 9
...of International Business and Cultural Studies Human resource accounting and international developments: implications for measurement of human capital Maria L. Bullen Clayton State University Kel-Ann Eyler Wesleyan College Abstract Human Resource Accounting (HRA) involves accounting for expenditures related to human resources as assets as opposed to traditional accounting which treats these costs as expenses that reduce profit. Interest and contributions to growth in HRA have been evident in a number of countries. The strong growth of international financial reporting standards (IFRS) is an indication that the environment for international financial accounting is one that potentially encourages the consideration of alternative measurement and reporting standards and lends support to the possibility that future financial reports may include nontraditional measurements such as the value of human resources using HRA methods. Keywords: Human Resource Accounting, Human Capital, Intellectual Capital, International Accounting, International Financial Reporting, International Financial Reporting Standards Human Resource Accounting, Page 1 Journal of International Business and Cultural Studies Introduction Human Resource Accounting (HRA) involves accounting for the company’s management and employees as human capital that provides future benefits. In the HRA approach, expenditures related to human resources are reported as assets on the balance sheet as opposed to the traditional...
Words: 8132 - Pages: 33
...that human resources or people are the most valuable asset. The reasons why businesses don’t usually value human assets are: (1) in practice we just haven't worked out a proper way to value these people and it is difficult; (2) some companies also believe that they do not own people and therefore should not account for them. However, companies do benefits from their employee’s work. In companies such as Apple, human resources are core to the business success due to their knowledge, skills and creativity. They represent a valuable resource and should be placed on the left side of the balance sheet. The benefit of treating employee as valuable assets is that companies which invest in their employees create a positive environment so that they can work and perform better financially. One example of an organization that has done this is Infosys (The Commerce Pedia, 2012), the giant Info Technology services firm in India. The entire workforce within the firm was assigned a value using an accounting model that calculates all of its employees’ collective worth. By doing this, Infosys has a significant commitment to investing in employees across all functions and levels of experience and the firm can take managerial decisions based on the availability and the necessity of human resources. After considering the influence of the human capital investment, the accounting equation should be revised as “assets = liabilities + owners' equity”, where the assets include human assets and material...
Words: 344 - Pages: 2
...Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.4, No.18, 2013 www.iiste.org Problem with Human Resource Accounting and A Possible Solution Md. Mustafizur Rahaman1* Md. Amzad Hossain2 Tabassum Akter3 1. Lecturer, Department of Accounting, Bangladesh University of Business & Technology (BUBT), Mirpur-2, Dhaka-1216, Bangladesh 2. Lecturer, Department of Business Administration, East West University, Plot No-A/2, Jahurul Islam City, Aftabnagar Main Rd, Dhaka 1219, Bangladesh 3. Lecturer, Department of Business Administration, Prime University, Dar-Us-Salam Rd, Dhaka 1216, Bangladesh * E-mail of the corresponding author: mustafizmamun09@gmail.com Abstract The idea of Human Resource Accounting (HRA) has been a debatable issue by academicians, accountants and standards setters universally. This study critically assesses the concept of HRA in order to unveil its strengths and weaknesses. Descriptive and content analyses were used in collecting data through documented texts, journal articles and other publications. The existing models proffered under the HRA were adequately reviewed and objectively criticized so that more comprehensive could be developed. The study revealed that the conceptualization of HRA, the ideas incorporated therein, and arguments are good for the accounting profession and corporate financial reporting. But the existing models yet proposed are not in a state to implement HRA practice worldwide. Hence this paper proposes...
Words: 5870 - Pages: 24
...company: its Human Resources. The people that make up a company are that organization’s unique and biggest asset. Human resources are the set of individuals who make up the workforce of an organization, business sector or an economy. We can say that the people who make up a company's workforce its human resources are considered to be an asset to the company. They give unique position to their own companies. If we want to reach the final destination of the organization, human resource is the road for it. If we look at the developed countries we can see that they’ve a strong position in the world because they know how to properly utilize their work force. But in our country the human resource sector is still running behind of the other countries. This is happening because we’ve enough work forces but we don’t know how to utilize them, we have not enough HR departments in every company in our country. The multinational companies are ruling in our country because they are using the human capital efficiently but the local companies still need fight with them as they haven’t set a formal HR department in their organization. It is the human resources who are operating the whole organization. A company is more likely to be successful if it manages all of its resources. Effective HR departments allow and encourage the company’s employees by investing on the employee to get their best, which in turn contributes to the success of those companies. We believe that Human Resources are the most...
Words: 537 - Pages: 3
...| | | |Assessment Submission Form | | |Student Name |Sathiswaren | |Student Number |12256746 | |Assessment Title |“Human Resource* is the most important asset of an organization.” | |Course |Bachelor Of Science in Logistics Management | |Lecturer |Dr. Chang Chen Sheng | |Tutor (if applicable) |Dr. Chang Chen Sheng | |Date Submitted |14-11-2012 | |OFFICE USE ONLY | | |Date Received | | |OFFICE USE ONLY | ...
Words: 1342 - Pages: 6
...MODULE 1: HUMAN RESOURCE PLANNING Contents 1.0 Introduction 1 2.0 Developing an HR Plan 2 2.1 Forecasting Hiring Needs 2 2.2 Employment Arrangements 14 3.0 Succession Planning 15 3.1 Non-Family Succession 15 3.2 Family Succession 17 4.0 Creating a Personnel Manual 20 5.0 Conclusion 24 TEMPLATES: A. Staff Forecasting Chart B. Employee Attributes Checklist C. Minimum Wage Rates D. Human Resource Planning Checklist E. Management Assessment Form F. Personnel Policy Manual Template CTION Module 1 - p 1 1. INTRODUCTION Many business owners prepare a business plan before starting their business. However, small business owners often do not include human resource planning as part of their over-all business plan. They may start out with only a few employees or none at all. Over time, it is important to properly forecast employment needs. Just as failing to address potential threats in the marketplace can jeopardize the viability of your business, failing to anticipate personnel needs can impact on overall business success. The success of a business is directly linked to the performance of those who work for that business. Underachievement can be a result of workplace failures. Because hiring the wrong people or failing to anticipate fluctuations in hiring needs can be costly, it is important that you put effort into human resource planning. Planning for HR needs will help to ensure your employees have the skills and competencies your business needs to succeed...
Words: 6812 - Pages: 28
...opportunities they provide each other. Human Resource activities - the formal hr policies developed by a company as well as the actual ways these policies are implemented in the daily practices of supervisors and managers. Human Resource Certification Institute (HRCI) - the best-known certification provider for HR professionals. Human Resource code of ethics - a code that states that hr professionals must regard the obligation to implement public objectives and protect the public interest as more important than an employer’s preferences. Human Resource Management (HRM) system - a system developed by an organization to understand, create, coordinate, align, and integrate all of their policies and practices. Human resources - all of the people who currently contribute to doing the work of an organization, as well as those people who potentially could contribute in the future and those who have contributed in the recent past. Intangible human assets - an organization’s assets, comparatively social in nature, that include such organizational characteristics as an employer-of-choice reputation, the depth of employee talent and loyalty, and the ability to innovate and change. Multinational corporations (MNC’s) - firms with operations in multiple countries. Social media - a set of technologies and communication channels targeted at forming and enabling a potentially massive community of participants to productively collaborate. Society of Human Resource Management (SHRM) - an association...
Words: 330 - Pages: 2
...| | | |Assessment Submission Form | | |Student Name |Sathiswaren | |Student Number |12256746 | |Assessment Title |“Human Resource* is the most important asset of an organization.” | |Course |Bachelor Of Science in Logistics Management | |Lecturer |Dr. Chang Chen Sheng | |Tutor (if applicable) |Dr. Chang Chen Sheng | |Date Submitted |14-11-2012 | |OFFICE USE ONLY | | |Date Received | | |OFFICE USE ONLY | ...
Words: 1342 - Pages: 6
...Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.4, No.18, 2013 www.iiste.org Problem with Human Resource Accounting and A Possible Solution Md. Mustafizur Rahaman1* Md. Amzad Hossain2 Tabassum Akter3 1. Lecturer, Department of Accounting, Bangladesh University of Business & Technology (BUBT), Mirpur-2, Dhaka-1216, Bangladesh 2. Lecturer, Department of Business Administration, East West University, Plot No-A/2, Jahurul Islam City, Aftabnagar Main Rd, Dhaka 1219, Bangladesh 3. Lecturer, Department of Business Administration, Prime University, Dar-Us-Salam Rd, Dhaka 1216, Bangladesh * E-mail of the corresponding author: mustafizmamun09@gmail.com Abstract The idea of Human Resource Accounting (HRA) has been a debatable issue by academicians, accountants and standards setters universally. This study critically assesses the concept of HRA in order to unveil its strengths and weaknesses. Descriptive and content analyses were used in collecting data through documented texts, journal articles and other publications. The existing models proffered under the HRA were adequately reviewed and objectively criticized so that more comprehensive could be developed. The study revealed that the conceptualization of HRA, the ideas incorporated therein, and arguments are good for the accounting profession and corporate financial reporting. But the existing models yet proposed are not in a state to implement HRA practice worldwide. Hence this paper proposes...
Words: 5870 - Pages: 24
