Human resource accounting “our main asset is our people’

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In this changing and challenging times, when technology is becoming a great leveler, We are sure that. it is people and people alone, who can make the difference and catapult the organisation to greater and yet unconquered heights- We believe that the talent innovation, creativity, business acumen and capabilities of people are the single most dependable source of competitive strength to the organisation. Human resources play the most important part in the development of an enterprise. Human resource accounting (HRA) is a measure the value of employees, which helps management, take the vital decisions related to human resources in order to increase productivity. It requires the measurement of the performances of an organisation and the optimum use of the resources under its direct and indirect control.

Purpose — The purpose of this paper is to establish that the competitive position of a firm depends on its specific assets. The most specific asset that an enterprise has is its personnel. It takes advantage to their interdependent knowledge and this is the reason why some firms are more productive then others. With the same technology, a solid human resource team makes all the difference. The value of a person as a resource depends on how he is employed; therefore, management style also influences the human resource value.

This paper examines the various models of human resources accounting (HRA) for valuing human in an organization. It gives an overview of the HRA models adopted by the public sector and software companies in India. The paper mentions the advantages and the hurdles in adopting HRA models in India. Finally, the paper also examines how ethos and culture effect the quality of work and how they can be accounted in books of accounts.

Challenge :— Fill past decade, the “value” of an enterprise was measured as an asset within traditional balance sheets, e.g. buildings, production plaint. etc. This was viewed as a sufficient reflection of the enterprise’s assets. However, with the emergence of the knowledge economy, this traditional valuation has been called into question due to the recognition that human capital is an increasingly important part of au enterprise’s total value. But the quest ion arises that how the value of human capital can be assessed. Providing adequate and valid information on human resources in statistical terms and within traditional balance sheet has proved extremely difficult.

Design/methodology/approach—Through this paper an attempt has been made to account for Human Resource maintaining the key parameters: correctness, transparency, prudence, and timeliness. A detailed revision is made of the main costs related to human resources: training and selection costs and exit costs. This analysis is made from the points of view of external and internal (or managerial) accounting on the basis of historical costs and opportunity costs.

Findings— Despite the fact that human resource functions are being diverted to low cost service providers the work ethos plays an important role in ensuring quality and productivity. Unfortunately the work ethos or culture of service providers is yet to he incorporated in the accounting system. It is a challenge to incorporate the ethos value hut it would he achieved by measuring the final result from different service providers.

Practical implications — The methodology proposed in this paper can represent a potential guideline for a wide range of researches concerning the quality of accounting information.

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