Prepared by: Mr. Amit A Rajdev, Faculty of Accounts, VMPIM, GNU.

1.1 Introduction

The first attempt to value the human beings in monetary terms was made by Sir William Petty as early as 1691.

Petty was of the opinion that labor was the father of wealth and it must be included in any estimate of national wealth.

1.2 Concept

The American Accounting Society Committee on human resource accounting defines it as follows:

HRA is the process of identifying and measuring data about human resources and communicating this information to interested parties

1.2 Concept

In simple words,

Human Resource Accounting is the art of, valuing, recording and presenting systematically the worth of human resources in the books of account of an organization
1. 2. 3.

Valuation of Human Resources. Recording the valuation in the books of Accounts. Disclosure of the information in financial statements.

1.3 Valuation of Human Resource

Historical Cost Approach Replacement Cost Approach Opportunity Cost Approach

1.4 Recording & Disclosure

Prof. N. Dasgupta has suggested to record human resources on both the assets as well as liabilities sides of the balance sheet. On the asset side, it should be shown after fixed asset classifying into two parts: 1) value of individuals and 2) value of firms investment. On the liabilities side, it should be shown afte the capital as Human Assets Capital.

1.5 Objections Against HRA

1.

Human beings can not be owned like other physical assets. They, therefore, cannot command any value.

2.

Tax laws do not recognize human beings as assets. Hence, human resource accounting remains as a theoretical concept.

1.5 Objections Against HRA

3.

There is no generally accepted model for valuation of human resources. The mode of presentation has also yet to be codified.

4.

The valuation of human resources depends on a large number of abstract factors not measurable in precise monetary terms. Hence, the valuation lacks objectivity and preciseness.

Thank You..