Human Resource Accounting – A Theoretical Approach

Abstract

Human resources are most important assets of an organization and the value of this asset yet to appear in financial statement. Human resources are the only assets that appreciate over a period. Accounting of human resource in financial statement is very essential. Human Resource Accounting is the measurement of the cost and value of human resources to the organization. It involves measuring cost incurred by the organizations to recruit, select, hire, train and develop employees and judge their economic value to the organization. With the accelerated growth in science and technology, the value of human capital is gradually increasing. Human resources are required at all levels of the organization. Human resource alone can produce an output larger than the input. No machine can operate without the human input. Like all resources, people possess value because they are capable of rendering future services. Therefore, the value of human resource is treated as valuable assets to theorganization. Thus companies must recognize and appreciate the value of their human assets.

This article highlights the concept of human resource accounting and the methods to assess the human assets value and also depicts the phases in design and implementation of Human Resource Accounting System.