Human Resource Accounting -Conceptual Framework
“Human Resource Accounting – an intangible asset : Comparative & Correlation analysis of disclosures in Annual Reports”
1. Introduction:
In present scenario, despite the global change, Human Resource Accounting is major issue for research & analysis in management. Human resource has always been taken as a ‘soft & light issue’ whose contribution generally can not be measured in monetary terms. There is no role of recording investments, benefits rendered by employees, valuation & accounting of human resource in conventional financial accounting. human resources is not considered in the different balance sheet models, and only in the profit and loss statement human resource costs / expenditure are taken in account, such as salaries and staff welfare expenses (including pensions). The number of employees classified in categories is mentioned only in the explanatory report, the same as the board of directors' payment. Recent literature has focused on a broader measurement, namely that of "intellectual capital." Despite those who consider intellectual capital a new approach, it is really an extension of HR accounting since without the underlying concept of HR investment there can be no intellectual capital development. As human resource is being taken as intellectual asset of the organization and worth three or four times the tangible book value. Human capital also provides expert services such as consulting, financial planning and assurance services, which are valuable, and very much in demand. As it is the combination of HR & Accounting, joint efforts of behavioral scientists, accountants and managements are needed for the working and development of HRA.
Figure 1.1
[pic]
There are two reasons for including human resources in accounting [Ripoll and Labatut, 1994]. First, people are a valuable resource to a firm so long as they perform services that can be quantified. Second, the value of a person as a resource depends on how he is employed. So management style will
1. Introduction:
In present scenario, despite the global change, Human Resource Accounting is major issue for research & analysis in management. Human resource has always been taken as a ‘soft & light issue’ whose contribution generally can not be measured in monetary terms. There is no role of recording investments, benefits rendered by employees, valuation & accounting of human resource in conventional financial accounting. human resources is not considered in the different balance sheet models, and only in the profit and loss statement human resource costs / expenditure are taken in account, such as salaries and staff welfare expenses (including pensions). The number of employees classified in categories is mentioned only in the explanatory report, the same as the board of directors' payment. Recent literature has focused on a broader measurement, namely that of "intellectual capital." Despite those who consider intellectual capital a new approach, it is really an extension of HR accounting since without the underlying concept of HR investment there can be no intellectual capital development. As human resource is being taken as intellectual asset of the organization and worth three or four times the tangible book value. Human capital also provides expert services such as consulting, financial planning and assurance services, which are valuable, and very much in demand. As it is the combination of HR & Accounting, joint efforts of behavioral scientists, accountants and managements are needed for the working and development of HRA.
Figure 1.1
[pic]
There are two reasons for including human resources in accounting [Ripoll and Labatut, 1994]. First, people are a valuable resource to a firm so long as they perform services that can be quantified. Second, the value of a person as a resource depends on how he is employed. So management style will