Human resourse accounting

8/8/2019 Human resourse accounting

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IN THE NAME OF ALLAH,

THE MOST MERCIFUL,

THE MOST

BENEFICIENT


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GROUP BGroup Members:

Muhammad Ahmad (Group Leader)

Nadia Shoukat

Saqib

Sadaf

Muhammad Shahid

Ehsaan Elahi Zaheer


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HUMAN RESOURCE

ACCOUNTING


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Introduction To HRA The most valuable of all capital is that invested

in human beings.

- Alfred Marshall

An attempt to identify and allocate investment

made in the human resources.

An information system reporting the cost and

value of the human factor to the organization.


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Characteristics OfHRA

Its system of accounting in which identification of

human resources is made.

Investment made in human resources is recorded.

Measurement of costs and values are made.


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Characteristics ofHRA

Helps the management to gain knowledge of the

various aspects of employees.

Changes occurring in human resources over a

period of time are also recorded.

Communicates information through financial

statements to interested parties.


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History

First Stage(1960-66)

Second Stage(1966-71)

Third Stage(1971-76)


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History

Forth Stage(1977-80)

Fifth Stage(1980-Onwards)


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Objectives OfHRA

Proper management of human resources

Provides a sound and effective basis of human asset

control.

Improvement of human resources.

Depicting the true value of the organization.


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Objectives OfHRA Provides quantitative information on human

resources,helping managers and investors inmaking decisions.

It allows management personnel to monitoreffectively the use of human Resources.

Communicates the worth of human resources tothe organization and to the public.


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Methods/Models OfHRA Historical Cost Method:

Actual cost incurred for recruiting, hiring,training and developing the human resources of

the organization are capitalized and amortized

over the expected useful life of the humanresources.


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Methods/Models OfHRAReplacement Cost Method:

This is the measure of the cost to replace a

firms existing human resources.

This method has the advantages of adjusting the

human value of price trends in the economy.


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Methods/Models OfHRAOpportunity Cost Method:

Human resource of an organization has to

be valued on the basis of the economists

concept of opportunity cost .

It is value of benefit foregone by putting it

to present use.


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HRA- A Challenge To HRM

Encouraged HR professionals towards

strategic and business focused approach inmanaging their human capital.

Knowledge based organizations to valueand invest significantly in human capital.


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CREATIVEACCOUNTING


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Introduction What is Creative Accounting

It is process of using the rules, theflexibility provided by them.

This flexibility is helpful in financialomissions ,financial statements


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Continuing

Also called Aggressive Accounting.

Major purpose is the manipulation offinancial numbers .

Assets and liabilities may also bemanipulated.


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Purpose It is a snapshot of the company situation

Accounting techniques may be used toproduce more meaningful figures and avoidunjustified market pessimism.

Helps Auditors to distinguish fraud fromerror by identifying the presence of intention.


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Why Creative Accounting

More Profit Less Profit

More Assets Fewer Assets

More Liabilities Fewer Liabilities


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Creative Accounting Practices

Income smoothing

Changing Accounting Principles

Overstating Cost

Expenses into assets


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More in Creative Accounting Inflating profits and EPS

Reporting Profits without generating

equivalent cash.

Reporting lower borrowing

Off balance sheet financing

Foreign exchange rates effecting values of

Assets.


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SOCIAL ACCOUNTING


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Social Accounting Introduction

Social accounting as an approach begandeveloping in the UK in the early 1970s.

A way of demonstrating the extent to whichan organisation is meeting its stated social orethical goals .


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Evolution Early developed in UK.

NEF (Pioneered of Social Accounting)

SEAAR.

ISEA

AA 1000

AA 1000 S


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Conclusions In the corporate world,social accounting is

one of the first major stepping stones in

improvements in corporate socialresponsibility.

Social accounting has given new face to

accounting.


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Continuing It is helpful As more organisations involved in

the field of enterprise development

experiment with social and ethical accounting,auditing and reporting.

The concept of social accounting is growing

in recognition and sophistication


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THANK YOU

Human resourse accounting

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