presentation on human resource accounting including accounting fundamentals and basic concepts for beginners as well as for experts.

1. HUMAN RESOURCE ACCOUNTING
Azad khan

2. Definition Of Human Resource
Accounting:
• American Accounting Association (1980) has
defined human resource accounting as follows:
“Human resource accounting is the process of
identifying and measuring data about human
resources and communicating this information to
interested parties”
According to Flameouts, “Human resources
accounting is the measurement of costs and value of
the people for the organization”

3. Characteristics Of HR Accounting
• It is a system of accounting of HR
• It involves measurement of cost and value of
human resources is made.
• In involves recording the valuation of human
resources in the books of accounts.
• It involves disclosure of the information in the
financial statement of an organisation for
communication.

4. Objectives Of HR Accounting:
• To facilitate effective and efficient management
within an organization for human resources.
• To provide information of changes in the structure of
manpower to the management.
• To provide basis to the future investors in making
better decisions about investment in human resources.
• To provide qualitative information on human
resources.
• To measure the costs incurred on human resources by
firms.

5. • To evaluate the return on investment on human
capital.
• To communicate the organization and the public at
large about the worth of human resources of an
organization.
• To know whether the human resources have been
properly utilized and allocated.
• To help the persons interested in the human resources
are giving a return equivalent to their worth or not.
• To help in development of Management principles
by clarifying the financial consequences of the
various practices

6. Methods of Human Resource
Accounting:
1. Historical cost method,
2. Replacement cost method,
3. Opportunity cost method,
4. Capitalization of salary method,
5. Economic valuation method,
6. Return on efforts employed method,
7. Adjusted discounted future wags method,
8. Reward valuation method.

7. Need and Importance:
1. It develops effective managerial decision
making.
2. It enhances the quality of management.
3. It prevents misuse of human resources.
4. It helps the efficient allocation of resources.
5. It increases human asset productivity.
6. It improves their morale, cooperation, job
satisfaction and creativity.

8. 7.It develops human efficiency.
8.It influences the individual behavior, attitude
and thinking in desired direction
9. It helps in long term investment decisions.
10.It provides good basis of human asset
control.
11.It helps the development of management
principles.
12.It ensures good monitoring of effective uses
of human resources.

9. Advantages of Human Resource
Accounting:
1. Helps in Planning & executing HR policies,
2. Motivates Employees,
3. Indicator of the Health of the Enterprise,
4. Decision about Further Recruitment,
5. Helps in calculating ROI,
6. Save executive time in meetings,
7. Improves decision making process,
8. Judgment of negative effects of the programme.

10. Disadvantages Of HR Accounting:
• No availability of standard
• Opposition of trade union
• Expenditure on HRA
• Variety of method create confusion
• Uncertainty about continuance of employees
• Lack of perfect knowledge about future
earning of HR

11. Limitations:
1. “There is no proper clear-cut and specific
procedure or guidelines for finding cost and value
of human resources of an organization.
2. The period of existence of human resource is
uncertain and hence valuing them under
uncertainty in future seems to be unrealistic.
3. There is no universally accepted method
of human asset valuation.

12. References
• Human Resource Accounting on Scribd
• What is Human Resource Accounting by CharteredClub
• Human resource accounting - interests and conflicts, CEDEFOP
• Accounting for People: Taskforce and Beyond
• The Pacioli Institute for intellectual capital accounting and financial
reporting