HUMAN RESOURCEACCOUNTING

U.KALPANADEVI MBA

DEFINITION

American Association of Accountants(AAA),

“HRA is a process of identifying

and measuring data about human resources

and communicating this information to

interested parties”.

OBJECTIVES OF HRA Provide cost value information about acquisition,

development,allocation and maintenance of

human resources so as to achieve organisational

goals in an effective manner.

Enable management of the organisation to

effectively monitor the use of human resources.

Ascertain whether human assets are

conserved,appreciated or depreciated during a

given period of time.

Assist in the development of effective

management practices .

ADVANTAGES OF HRA

HRA provides useful information about the human capital in

the organisation.

It throws light on the strengths and weakness of the

employees working in the organisation.

HRA also facilitates management to evaluate the effectiveness

of HR policies and practices.

It provides valuable information for present as well as

potential investors.

Helps to control various types of human resource costs.

LIMITATIONS There are no clear – cut guidelines to

differentiate the ‘cost’ and ‘value’ of human

resources.

HRA also suffers from measurement

problems.

There is also a fear that the employees and

trade unions may not accept the idea.

There is no empirical evidence available for

effective management of human resources

in an organisation.

METHODS OF HUMAN RESOURCE VALUATION

I. Monetary methods

a) Historical Cost Method

b) Replacement Cost Method

c) Opportunity Vost Method

d) Asset Multiplier method

II. Non Monetary Methods

a) Expected Realisable value method

b) Discounted Net Present Value of Future

Earnings.