​HR word – Human resource accounting

Human resource accounting is the process of identifying and reporting investments made in the human resources of an organization that are presently unaccounted for in the conventional accounting practices. It is an extension of standard accounting principles. Measuring the value of human resources can assist organizations in accurately documenting their assets.

Objectives

To furnish cost value information for making proper and effective management decisions about acquiring, allocating, developing, and maintaining human resources in order to achieve cost effective organizational objectives.To monitor effectively the use of human resources by the management.To have an analysis of the Human Asset, i.e. whether such assets are conserved, depleted, or appreciated. To aid in the development of management principles and proper decision making for the future, by classifying financial consequences of various practices.

Methods

Approaches to human resource accounting (HRA) were first developed in 1691. The next approach was developed from 1691-1960, and the third phase was post-1960. There are two approaches to HRA. Under the cost approach, also called the “human resource cost accounting method” or model, there is an acquisition cost model and a replacement cost model. Under the value approach, there is a present value of future earnings method, a discounted future wage model, and a competitive bidding model under.