You are on page 1of 26

 Human Resources Auditing is also known as

Human Resource Accounting. According to


American Accounting Association’s Committee
on Human Resource Accounting(1973), “ HRA is
the process of identification and measuring data
about human resources and communicating this
information to interested people”.
HRA, thus, not only involves measurement of
all the cost/investments associated with the
recruitment, placement, training and
development of employees, but also the
qualification of the economic value of the
people in an organisation.
 The concept of HRA was not new in India. HRA
was pioneered by public sector companies like
Bharat Heavy Electronics Ltd. (BHEL) and Steel
Authority of India Ltd.
 Globalization
 Growth of the organisation
 Managing the value chain for business
competitiveness
 Building organisational capabilities
 Adopting to positive change
 Making technology viable
 Attracting and retaining intellectual capital
 Transforming the organisation.
Approaches to HUMAN RESOURCE AUDIT

The following approaches are adopted for the


purpose of evaluation:

•Comparative Approach
•Outside Authority Approach
•Statistical Approach
•Compliance Approach
•Management by Objectives(MBO)
Approach
•COMPARATIVE APPROACH
In this, auditors identify Competitor Company as the
model. The results of their organization are compared
with that Competitor Company.

•OUTSIDE AUTHORITY APPROACH


In this, auditors use standards set by an outside
consultant as benchmark for comparison of own
results.

•STATISTICAL APPROACH
In this, Statistical measures are performed and
developed considering the company’s existing
information.
•COMPLIANCE APPROACH
In this, auditors review past actions to calculate
whether those activities comply with legal requirements
and industry policies and procedures.

•MANAGEMENT BY OBJECTIVES(MBO)
APPROACH
This approach creates specific goals, against which
performance can be measured, to arrive at final
decision about organization’s actual performance with
the set objectives.
• Defined • Too operaqtional
recruitment
process
• Good manual
records
• Computerised HR
system

Strength Weakness

Opportunity Threat

•Line manager’s
•Reduced Bureaucracy
•Training and skill
own system
development •Use of external
•Improved information consultants
 The working environment and Facilities
 Training and Development
 Work Performance Evaluation Systems
 Promotion, transfer and Demotion
 Disciplinary procedures and measures
 Recruitment (procedures and selection
criteria)
 Appointments and its process
 Job classification , grading and Job
assignments
 Remuneration , employment benefits
 How effective are the training , development and career
planning activities in preparing people for selection and
placement into new positions in the organization ?
 Is there any organisational chart ?
 Does the chart show reporting relationships ?
 Does the HR Department have a mission statement ?
 Is there a job description for each position in the department
?
 To what position does the top HR position report ?
 Is the organisation chart updated as changes occur ?
 Are all potential sources of recruitment identified and
evaluated?
 Is the current remuneration program enough to motivate
employees?
 Does the organization have high quality of work life?