20.

HUMAN
RESOURCES
ACCOUNTING: AN
OVERVIEW
20. HUMAN
RESOURCES
ACCOUNTING: AN
OVERVIEW
HUMAN RESOURCES ACCOUNTING: SIX
BASIC QUESTION

1. What is “human resource accounting?

2. What is the history of human resource accounting from 1960
to the present?
3. What is its role in managing people?
4. How can we account for human resources?
5. What are the practical application of HRA?
6. What should an organization do to account for its human
resources?
CONCEPT OF HUMAN RESOURCE
ACCOUNTING
 The process of identifying&measuring data about human
resources&communicating this information to interested
parties
 Accounting for people as an organizational resources
HISTORY OF HUMAN RESOURCE
ACCOUNTING
 Growing recognition of importance of human assets
 Impetus for Development of Human Resource
Accounting
 Part
of recognition that people comprise human capital or
human asset
 Early research in human resource accounting
 RH Hermanson (1964)
 Brummet, Flamholtz,&Pyle

 Subsequent reesearch on human resources accounting

HUMAN RESOURCE ACCOUNTING’S
MANAGERIAL ROLE
 Acquisitionof human resources
 Acquisition & development policy

 Allocation of Human Resources

 Conservation of Human resources

 Utilization of Human resources

 Evaluation&reward of Human resources

MEASUREMENT OF HUMAN RESOURCE
COST & VALUE

 MEASURING HUMAN RESOURCE COST

Original cost
 Sacrifice that was actually incurred to acquire &
develop people
Replacement cost
 Sacrifice that would have to be incurred today to
replace human resources presently employed
Opportunity cost
 Value of human resources in their most favorable
alternative use
MEASUREMENT OF HUMAN
RESOURCE COST & VALUE (2)
 MEASURING HUMAN RESOURCE VALUE
 Nonmonetary measurement of human value
 Based on premise that a person’s value is a product of attributes he

brings to an organization & characteristics of the organization itself

 Monetary measurement of human value
 Estimate time period expected renders service to an organization

 Identify the service states that the person may occupy

 Measure the value derived by the organization if the individual

occupies the state for a specified time period

 Estimate the probability that a person will occupy each state at

specified future times

A CONTINUUM OF HUMAN
RESOURCE ACCOUNTING SYSTEM
(TABLE 20-2, PAGE 486)
 HRA SYSTEM I
 HRA SYSTEM II

 HRA SYSTEM III

 HRA SYSTEM IV

 HRA SYSTEM V
 20. SOCIAL
ACCOUNTING
DEFINITION&SCOPE
 The ordering, measuring, analysis of the social &
economic consequences of governmental &
entrepreneurial behavior
HISTORICAL BACKGROUND
 MOVEMENTS:
 Civilrights movement (early 1960s)
 Women’s rights movement
 Environmental movement
 Consumer right’s movement

 CORPORATE RESPONSE
 Good corporate/good citizens
 Fought against regulation

 RESPONSE OF THE ACCOUNTING PROFESSION

apply their expertise to determine the program
effectiveness
ACCOUNTING FOR SOCIAL COSTS &
BENEFIT
 THEORY FOR SOCIAL ACCOUNTING
 Social contract
 MEASUREMENT
 DETERMINING SOCIAL COSTS BENEFITS
 QUANTIFICATION OF THE COSTS & BENEFIT
 PLACING VALUE ON THE FINAL AMOUNT
REPORTING OF SOCIAL PERFORMANCE
 SOCIAL AUDITING
 SOCIAL REPORTS

 DISCLOSURE IN ANNUAL REPORTS

 DEVELOPMENTS ABROAD

 CURRENT RESEARCH