Hr accounting ppt

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1. Introduction Objectives of HRA Importance of HRA Limitations Cost of Human Resources Measurements in HRA Cost Approach Contents 2. Process of identifying and measuring data about human resources and communicating this information to interested parties Quantification of the economic value of the people in an organization Measurement and reporting of the cost and value of people in organizational resources : Flamholtz Art of valuing, recording and presenting systematically the worth of human resources in the books of account of an organization Introduction 3. 1. Valuation of human resources 2. Recording the valuation in the books of account 3. Disclosure of the information in the financial statements of the business Contd 4. Improve management by analyzing investment in HR Consider people as its asset Attract and retain qualified people Profile the organization in financial terms To have an analysis of the human asset To aid in the development of management principles, and proper decision making for the future Objectives 5. Furnishes cost/value information for making management decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness Helps the management in the employment, locating and utilization of human resources Helps in deciding the transfers, promotion, training and retrenchment of human resources Assists in evaluating the expenditure incurred for imparting further education and training in employees in terms of the benefits derived by the firm Importance of HRA 6. Management tool designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions Helps in identifying the causes of high labour turnover at various levels and taking preventive measures to contain it Helps in identifying improper or under-utilization of physical assets or human resource or both Provides valuable information for persons interested in making long term investment in the firm Contd 7. No specific procedure for finding cost and value of human resources of an organization Form and manner of including HRA value in the financial statement is not clear Employee with a comparatively low value may feel discouraged Tax laws do not recognize human beings as assets Limitations 8. Cost of Human Resources Acquisition cost -Recruitment Cost -Selection Cost -Placement Cost -Campus Interview Cost Training (Development) cost -Formal Training Cost -On the Job Training Cost -Special Training -Development Programmes Welfare Cost -Medical Expenditure -Canteen Expenditure -Specific and General Allowances -Children Welfare Expenses -Other Welfare Expenditure Other Costs -Safety Expenditure -Ex-gratia -Multi-trade incentives -Rewarding Suggestions 9. Measurements in HRA Historical Cost Replacement Cost Opportunity Cost Standard Cost Cost based approaches: The Lev and Schwartz Model (Present value of future earnings method) The Eric Flamholtz Model (Reward Valuation method) Morse Model (Net Benefit Model) Monetary value based approaches: Likert Model The Flamholtz Model Ogan Model (Certainity Equivalent Net Benefit Model) Non- monetary value -based approaches: 10. Cost It is a sacrifice incurred to obtain some anticipated benefit or service Two portions : Expense Asset COST APPROACH 11. Historical cost Sacrifice that was made to acquire and develop the resource Opportunity cost Money to be spent on HR was spent on something else Replacement cost Cost incurred in the replacement of present employees Types of Cost