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.