HUMAN RESOURCE ACCOUNTING

:CONCEPTUALIZED REALITY

Presented by:
Mohammed Jasim
B.Com Student
(final year)
Christ College ,Vizhinjam
 DEFINITION
A process of accounting

identifies quantifies

measures

Required Human Resources Provided Human Resources

IMPORTANCE OF HUMAN RESOURCE
ACCOUNTING
PROVIDES USEFUL
INFORMATION TO

Financial
Management Employees Investors
Analysts
 HELPS IN DECIDING

RETRENCHMENT

TRAINING
HELPS THE MANAGEMENT

LOCATING HUMAN RESOURCES

UTILIZATION OF
HUMAN
RESOURCES
PROVIDES A BASIS FOR
PLANNING OF PHYSICAL
ASSETS
ASSISTS IN EVALUATING
TRAINING EXPENDITURE AND
BENEFITS DERIVED
IDENTIFY CAUSES OF HIGH
LABOUR TURNOVER AND
PREVENTIVE MEASURES
LOCATING THE REAL CAUSE
FOR LOW RETURN ON
INVESTMENT
ASSESSING THE INNER STRENGTH
OF AN ORGANIZATION
HELPS THE EMPLOYEES

IMPROVING THEIR PERFORMANCE

BARGAINING POWER
HUMAN RESOURCES
ACCOUNTING
 ADVANTAGES
INFORMATION
FOR PROPER
MANPOWER PLACEMENTS
PLANNING

INFORMATION
UTILIZATION
FOR MAKING
OF HUMAN
PERSONEL
RESOURCES
POLICIES
 ADVANTAGES
INCREASES
VALUABLE
MORALE AND
INFORMATION
MOTIVATION
TO INVESTORS

ATTRACTS DESIGNING
BEST HUMAN TRAINING AND
RESOURCES DEVELOPMENT
PROGRAMMES
DISADVANTAGES
NO AVAILABILITY OF STANDARD

OPPOSITION OF TRADE UNION

EXPENDITURE ON HRA

VARIETY OF METHOD CREATE CONFUSION

DISADVANTAGES
UNCERTAINITY ABOUT CONTINUANCE OF
EMPLOYEES

LACK OF KNOWLEDGE ABOUT FUTURE

EARNING OF HR

THE HRA MAY LEADS TO DEHUMANIZATION

EMPLOYEE WITH COMPARATAVELY LOW

VALUE MAY FEEL DISCOURAGED
HUMAN RESOURCE IS
THE GREATEST
ASSET OF ANY
BUSINESS
PROBLEM

THE STRICT
DEFINITION OF THE
WORD “ASSET”
 DEFINITION
 EARNS FUTURE
ECONOMIC BENEFIT
FOR THE BUSINESS

 CAN BE CONTROLLED
BY THE ENTITY
 IMPORTANT TO
ACCOUNT FOR
HUMAN RESOURCE

 USEFUL TO THE
INVESTORS
EXAMPLES
 WHO LEADS THEIR COMPANY

 THE LOWER RUNGS OF THE COMPANY

 ENTRY AND EXIT OF TOP PERFORMERS IN

EVERY DEPARTMENT AT EVERY LEVEL OF THE
COMPANY
A PROPER
QUANTITATIVE
DISCLOSURE OF THE
HUMAN RESOURCE
 METHODS OF HRA
1. HISTORICAL COST METHOD
2. REPLACEMENT COST METHOD
3. OPPURTUNITY COST METHOD
4. CAPITALIZATION METHOD
5. ECONOMIC VALUATION METHOD
6. RETURN ON EFFORTS EMPLOYED METHOD
7. ADJUSTED DISCOUNTED FUTURE WAGES METHOD
8. REWARD VALUATION METHOD
9. STANDARD COST METHOD
10.CURRANT PURCHASING POWER METHOD
 THE NEW IDEA
ACCOUNTING FOR EMPLOYEE
STRENGTH OF AN ENTITY

ACCOUNTING ANY OTHER

ASSET
INTERNAL POLICY
FIVE MAJOR TOOLS TO
RETAIN EMPLOYEES
ENVIRONMENT

OPPORTUNITY GOALS

FINANCIAL
GROWTH
CONSIDERATION
PERSPECTIVE
 SALA
RY
PAY BONU
HIKE S
OFFER

WAGE
TIPS
S
CREATE A RESERVE FOR
THE INCREASED CASH
OUTFLOW
FINANCIAL CONSIDERATION
ASSET

RESERVE
(LIABILITIES)
RESERVE

THE AMOUNT A
COMPANY WILL HAVE
TO INCUR TO RETAIN
ITS EMPLOYEES
ASSET

THE AMOUNT THAT

HAVE BEEN SET ASIDE
TO RETAIN(CONTROL)
THE EMPLOYEE
AT THE EVENT OF UTILIZATION
OF THE RESERVE
ACTUAL
RESERVE DEBITED AGAINST
CASH
OUTFLOW
AT THE EVENT OF UTILIZATION
OF THE RESERVE
PROFIT
ASSET WRITTEN OFF
AND LOSS
ACCOUNT
ADVANTAGES

 THE AMOUNT OF HUMAN

RESOURCE ASSET WILL
BECOME THE MASTHEAD OF
THE COMPANY'S BALANCE
SHEET
HUMAN RESOURCE ASSET
WILL INDICATE :
THE VALUE OF EMPLOYEES

COMPANY'S COMMITMENT TO RETAIN THE

EMPLOYEES

DISCLOSE THE EMPLOYEE TURNOVER

ASSOCIATED RISKS IN THE COMPANY

ADVANTAGES

 HUMAN RESOURCE WILL BE

MEASURE OF LEVERAGE
FOR FINANCIAL ANALYSTS
THE GREATEST ADVANTAGE

 MEASURES THE VALUE OF EMPLOYEES

INDIVIDUALLY

 RECOGNIZES A LIABILITY THAT EVERY COMPANY

BEARS, BUT MANY MIGHT NOT BE AWARE OF

 IT QUANTIFIES THE RISK THAT A COMPANY

FACES, IF ONE OF ITS PROMINENT EMPLOYEE
LEAVES
HRA IN INDIA
We have discussed the hypothesis with several persons and
found varying opinions on the matter. The way ahead for the
theme will be to have more discussions and debate on this
topic, especially in the accounting and HR community to identify
and plug any flaws that persist in this model. I would also like to
try out this model in major HR Intensive companies and ensure
its practicability. We reach out for support from the entire
fraternity for not just this model, but so much more innovation