HUMAN RESOURCE ACCOUNTING

INTRODUCTION:
Human resource accounting (HRA) may be considered as such an accounting system which recognizes the human resources as an asset and records it in the books of accounts after measuring its value in the same way as other physical resources. Such accounting may generate and significant information relating to human resources. Human resource accounting is a system devised to asses and communicates the value of human resource of an organization. The impact of human resource on the affairs of business has to be reflected in firms financial statements.

DEFINITION:
Human resource accounting is the measurement of costs and value of the people for the organization. Flamholtz

Human resource accounting is the measurement and quantification of human organizational inputs such as recruiting, training experience and commitment. Stephen knauf

According to American Accounting Association Committee, Human resource accounting is the process of identification and measuring data about human resource, and communicating this information to interested parties. Human resource accounting is an attempt to identify and report investments made in human resource of an organization. Basically it is an information system that tells the management what changes over time are occurring to human resources of the business. R.L.Woodruff

CHARACTERISTICS OF HUMAN RESOURCE ACCOUNTING:

1. HRA is a system of accounting in which identification of human resources is made. All categories of people employed in the organization from top management to bottom are included in human resource accounting. 2. It involves measurement of cost and value of human resource is made. 3. It involves recording the valuation of human resources in the books of accounts. Record is also maintained for the changes occurring in human resources over a period of time. 4. It involves disclosure of the information in the financial statements of an organization for communication.

ADVANTAGES OF HUMAN RESOURCE ACCOUNTING:

1. Helps in planning and executing HR policies. 2. Helps in calculating return on investment. 3. Motivates employees. 4. Save executive time in meetings. 5. Indicator of the health of the enterprise. 6. Improves decision-making process. 7. Decision about further recruitment. 8. Judgment of negative effects of the program.

DISADVANTAGES OF HUMAN RESOURCE ACCOUNTING:

1. Non-availability of standard. 2. Opposition of trade unions. 3. Expenditure on HRA.

4. Variety of methods

HUMAN RESOURCE AUDIT

INTRODUCTION:
An audit is an examination and verification of accounts and records. Auditing has been a routine exercise in the area of finance, especially because it is a statutory obligation. However, in case of human resource, audit is a systematic and comprehensive analysis of all activities and results of a personnel program. It assures a complete review, at regular intervals, of the effectiveness and utility of the various personnel functions and activities, policies and procedures.

DEFINITION:
HR audit evaluates the HR activities in an organization with a view to their effectiveness and efficiency. Biles and schuler

HR audit is concerned with the gathering, analyzing information, and then deciding what actions need to be taken to improve performance. Storey and sisson

HR audit is a tool to measure an employers compliance with its legal obligations in managing its workforce and chart any corrective actions that might be needed. Stephen F. Ruffino

CHARACTERISTICS OF HUMAN RESOURCE AUDIT:

1. An HR audit is an independent, objective and critical examination of the HR functions of an organization. 2. It establishes a benchmark for measuring the actual performance of the HR department so as to identify the performance and efficiency gaps.

3. An HR audit is done by internal employees or the external consultants with expertise in HR management and basic knowledge in law and auditing. 4. The HR audit is normally carried-out at regular intervals in the organization. 5. The HR audit report is normally sent to the senior management for necessary action in order to ensure better regulative and other compliances by the HR department.

BENEFITS OF HR AUDIT:
1. Fostering strategic business plans. 2. Clarity of role of HR function. 3. Organizational competency analysis. 4. HR system analysis. 5. Return on investment analysis. 6. Increased focus on human resources and human competencies. 7. Strengthening performance improvement mechanisms.

HUMAN RESOURCE ACCOUNTING AND AUDIT

SUBMITTED BY, M.SHANMUGA PRIYA DEPARTMENT OF MANAGEMENT STUDIES ALPHA COLLEGE OF ENGINEERING

SUBMITTED TO, MR. P. SELVAM DEPARTMENT OF MANAGEMENT STUDIES ALPHA COLLEGE OF ENGINEERING