This study report the relationship between human characteristics and Human Resource Accounting Disclosure (HRAD) level in 15 randomly selected companies of Bangladesh. The relationships are determined using a HRAD index under a number of assumptions. The result of study shows that companies averagely disclose 25% of the total HRAD items. In this study, HRAD has been found significantly related with the size of the company, category of the company (Financial or Non-financial) and overall profitability. However, HRAD has less influence on the age of the company.
Human Resource accounting in a nut shell
Human Resources (HR) are the energies, skills, talents and knowledge of people which are, or which potentially can be applied to production of goods or rendering useful services. Human Resource Accounting (HRA) is the process of identifying and measuring data of human resources and communicating this information to interested parties. Human Resource Accounting is not a new concept in economics. Economists consider human capital or resources as a crucial factor of production, and they explore different ways of measuring its investments in education, health and other areas. Accountants have recognized the value of human resources for at least 70 years ago. Research into true human resource accounting began in the 1960s by Rensis Likert(Bowers,1973). Likert defends long term planning by strong pressure on human resources ‘qualitative variables, resulting in grater benefit in long run. The basic objective of human resource accounting is to facilitate the effective and efficient management of human resources (Porwal, 1993). According to sveiby’s (1997) human capital, intellectual capital and structural capital concept are similar to other assets. He also argued that organizations acquire HR to generate future revenues, and therefore Human Resources should be considered when valuing a company by capitalizing instead of expensing them in the current period. The crux of argument is that human, intellectual and structural capital should be treated as other assets. Since assets are reported on the statement of financial position (Balance sheet), these also should be reported along with physical assets. But it is very tough to quantify expertise, knowledge and competence of human resources as those matters are not physical assets of a company. Moreover, the monetary unit assumption of accounting does not allow reporting the value of the company’s employee in the company’s financial reporting because value of HR is difficult to measure in terms of monetary unit. As a result, though companies all over the world are showing their expense related to human resources in the financial statements, they are not able to show the expertise of their ‘Human Capital’ and how those resources are utilized, in the financial statements. For this reason, stakeholders are being reprieved of getting important information about the human resources of their organizations (Hoosain, Khan and Yasmin 2004)
Moreover, the development of human resource accounting is necessary to provide a firm with an accurate financial report to guide its decisions (Brummet et al., 1968). Tom stewart supports the importance of external reporting of intellectual capital. As a result, external reporting aspect of HRA can play a significant role to facilitate the utilization of human resources in an organization. In the developed countries, it is very common phenomenon that companies have formal HRA reporting aspect in their annual report. But developing countries like Bangladesh, HRA is a very new concept and it is still in naïve stage. Though it is not mandatory fo the companies in Bangladesh to disclose HRA information, they are making some voluntary disclosure (Hoosain, Khan and Yasmin 2004). Hence, this study attempts to explore...