1 / 8

Human Resource Accounting

Human Resource Accounting. By CA. Pramod Prabhu. S.H., B.Sc, P.G.D.B.A., A.C.A, C.I.S.A (U.S.A). HRA - Meaning.

bunme
Download Presentation

Human Resource Accounting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Human Resource Accounting By CA. Pramod Prabhu. S.H., B.Sc, P.G.D.B.A., A.C.A, C.I.S.A (U.S.A)

  2. HRA - Meaning • Can be defined as the process of accounting which identifies, quantifies & measures human resources for the use of management to cope up with the changes in its quantum & quality so that equilibrium could be achieved in between the required resources & the provided HR • Thus, basically it is an information system that tells the management the changes taking place over time to the HR in the organisation. it also involves measuring the cost & value of the people in the organisation • Some Indian PSUs using HRA: • BHEL, SAIL, ONGC, NTPC , Hindustan shipyard etc.

  3. HRA – Basic Premise • People are valuable resources of an organisation • Usefulness of manpower is determined by the manner in which they are managed • Info on investment & value of HR is useful for decision making for an enterprise

  4. HRA – Objectives • Provide info about earning potential of employees • Provide comparative info on costs & benefits associated with investment in human assets • Measure efficiency of employee by finding productivity & profitability • Assist management in taking decisions on investment in human resources

  5. HRA – Importance • Helps understand & assess inner strength of an organisation & helps management to steer the company through trying situations • Helps management in proper utilisation of HR • Helps employees in improving their performance & bargaining power, as they can assess their contribution against expense incurred on them • Helps decide on transfers, promotion, training & retrenchment of HR • Provides valuable info for persons interested in making LT investments in the firm • Provides a basis for planning of HR • Helps locate the real cause for low ROI, like improper/under utilisation of physical/human assets • Helps identify causes for high labour TO at various levels & take remedial measures • Assists evaluate training expenses against corresponding benefits obtained

  6. HRA Models • Historical cost method of valuation – Valuing at costs already incurred • Replacement cost method • Standard cost method • Opportunity cost method • NPV method: • a. Lev & Schwartz model • b. Morse model (Net benefit model) • c. Hermanson’s model • d. Flamholtz’s rewards valuation model • e. Pekin ogan model • f. Jaggi & Lau model

  7. HRA - Objections • There is a difference between Hr & other assets. HR cannot be valued like other assets • The different methods of valuation of HR vary & give varying results • Tax laws do not recognise HR asset. it remains only a theoretical concept • Factors for HR valuation are abstract & are not precisely measurable in monetary terms • Uncertainty about continuance of employees • Lack of perfect knowledge about future earnings of HR

  8. THANK YOU

More Related