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HUMAN RESOURCE
ACCOUNTING AND
VALUATION
PRESENTED BY
SHAMNA MOHAMMED KUTTY
ROLL NO:48
Human Resource
Accounting-Meaning
Accounting for the human resources deals with
the
measurement of costs which are associated
with
recruiting, selecting, training, placing and
developing
the employees of an organization. This also
involves
measuring the present economic value of
human
Definition
American Accounting Association has defined
Human
Resource Accounting (HRA) as a process of
identifying and measuring data about human
resources and communicating this information
to the
interested parties.
Advantages of Resource
Accounting
1. It helps in giving valuable information to
Cont
3. HRA can change the attitude of mangers,
thereby,
they would try to maximise the expected
value of human resources and effective use
of human
resources in the organization.
suitable
promotion policy, congenial work
environment and
job satisfaction to the people.
Problems in Human
Resource Accounting
1. There is no well-set standard accounting
practice
for measuring the value of human
resources.
2. The valuation of human resources is based
on the
assumption that the employees may
remain with
the organization for certain specified
Cont
3. There is a possibility that human resource
may
oppose the use of HRA. They may want
parity of
wages/salaries and value of the employees.
Valuation of Human
Assets.
Valuation of the human asset is the most
important
aspect of Human Resources Accounting. A
recent
trend in todays corporate world is to measure
the
value of intangible assets such as goodwill,
patent,
brands and now human assets.
Methods of HR
valuation
The major methods of valuation of human
assets are
historical cost, replacement cost, standard
cost,
present value of the future earnings and
expected
realisable value.
1.Historical Cost Method:
Cont
Learning cost involves expenses incurred on
training
and development. This method is very simple
in its
application but it does not reflect the true
value of
human assets. For example, an experienced
employee
may not require much training and therefore
his value
may appear to be low though his real value is
Cont
2. Replacement cost method:
Cont
Cont
4. Present value of future earnings Method:
Cont
This method is based on the assumption,
and this
is true also, that there is no direct
relationship
between cost incurred on an individual and
his
value of organization.
Individual
attributes
Instrument
al
individual
determinan
ts
Cognitive
abilities
personalit
y traits
Skills
Activation
level
attributes
Organizatio
nal
structure
Managemen
t system
Role
Rewards
Elements of
Conditional
value
Promotabilit
y
Productivity
Transferabilit
y
Individual
condition
al value
Satisfactio
n with
organizati
on
Instrumental org
Org
determinants
attribute
s
Model of the determinants of an individual
value to an Organization
IERV
Promota
bility of
maintain
ing org
member
s
Questions??
?
Thank You!!!