presentation on human resource accounting

8/4/2019 Presentation on Human Resource Accounting

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PRESENTATION ON HUMAN

RESOURCE ACCOUNTING

Presented by:

Itisha Bajaj

Megha Dhariwal

Nishtha Srivastava

Prateek Mishra

Vishal Gupta


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WHAT IS HR ACCOUNTING?

According to The AmericanAccounting Association on HRA :

Human Resource Accounting is the

process of identification and measuring

data about human resource andcommunicating this information tointerested parties


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EVOLUTION OF H.R ACCOUNTING

STAGE1 (1960-66)

STAGE 2(1966-71) STAGE 3

(1971-76)

STAGE 4(1976-80)

STAGE 5(1980onwards)


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FEATURES OF HUMAN RESOURSE

ACCOUNTING

Valuation of human resources.

Recording the valuation in the books ofaccounts.

Disclosure of the information in the financial

statement of the business.


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METHODS OF HRA

Cost Approach Method

The Economic value approach.

Non- Monetary Methods for determining value.

Measurement of Group Value


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COST APPROACH

Cost is the sacrifice incurred to obtain some

anticipated benefits and services.

All cost have two portion.

COST

Expense Asset


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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, orientationand on the job training.

Replacement cost:

It is the cost that would have to be incurred if

the present employees are to be replaced.


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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 assessthe benefits gained from HR.

The Skills or capability inventory.

Performance evaluation Assessment of potential

Attitude measurement.


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Importance Of HRA

It helps in decision making in the followingmatters :

Employment, locating, and utilization of HR.

Transfers, promotions, training andretrenchment 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 theirperformance.


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LIMITATIONS

No proper clear cut and specific procedure or guidelines forfinding cost and value of HR of an organization.

The period of existence of HR is uncertain and hence valuingthem under uncertainty seems to be unrealistic.

Lack of empirical evidence.

There is problem for the management to treat them as asset inthe secret sense.

In what form and manner, there value to be included in thefinancial statement is the question yet to be classified.

There is no universally accepted method of Human assetvaluation.

Tax do not recognize human beings as assets.

As far as India is concerned HRA is still at thedevelopmental stage.


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BENIFITS

Discloses the values of human resources.

It helps in proper interpretation of Return on CapitalEmployed(ROE).

It helps in evaluating the expenditure incurred towards theemployee.

Helps the management in the employment, location and

utilization of HR.

It also help in deciding the transfers, promotion, training andretrenchment of HR.


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It helps in understanding andassessing the strength and weaknessof an organization.

It helps identify the cause of high laborturnover.


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PURPOSE

The purpose of HRA is recognisation of the value of allresources 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 presenthuman asset in balance sheet.


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THANK YOU

presentation on human resource accounting

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