HUMAN RESOURCE

ACCOUNTING

INC
GUNTUR
PUTTU GURU PRASAD
 Need for H R A

 With the growing emergence of the “knowledge

economy” the traditional valuation has been called
into question due to the recognition that human
capital is an increasingly important part of an
enterprise total value. This has led to two
important questions
 How to assess the value of human capital in
addition to an enterprise tangible assets and
Need for H R A
 How to improve the development of human
capital in enterprise
 It is an extension of the accounting principles
of matching cost and revenues and of
organizing data o communicate relevant
information in financial terms
 It can be used as a information tool for
internal/external use (for emp, cust, invstr )and
as a decision making tool for HRM
Approaches to HRA
 The American accounting association
committee has defined HRA is the
Process of identifying and measuring
data about human resources and
communicating this information to
interested parties to facilitate effective
management with in the organization
The aspects of HRA
 Valuation of human resource
 Recording the valuation in the books of
accounts
 Presenting the information ion the
financial statements of communication
Valuation of HR
 Historical cost approach
 Replacement cost approach
 Opportunity cost approach
 Standard cost approach
 Present value approach
 Net benefit model
 Reward valuation approach
 Total cost concept
 Aggregate payment approach
Importance of HRA
 It helps in decision making in The following matters
 Employment , locating and utilization of human resources
 Transfers, promotions, training and retrenchment of
human resources
 Planning of physical assets vis-à-vis human resources
 Identifying the causes for high turnover at various levels
and taking preventive measures to contain it
 Locating the real cause of low return on investment
 It helps individuals employees in improving their
performance and bargaining power
HRA in India
 In view of growing importance of HRA
many companies in India voluntarily
giving information about their human
resources like BHEL, SAIL, MMTC,
NTPC, ONGC, EIL
Assumption underlying HRA
 People are valuable organizational resources capable of
providing present and future services to the organization
and such future services have economic value to the
organization and can be measured
 The information relating to the human resource would
facilitate various management decisions on acquisition
,compensation, training and development