• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content





Total Views
Views on SlideShare
Embed Views



0 Embeds 0

No embeds



Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

    Hra Hra Presentation Transcript

    • BYMANISHA VAGHELA BY: MANISHA VAGHELA vaghela_manisha13@yahoo.com 1
    • Flow of presentation Introduction Of Human Resource Accounting Definition Of Human Resource Accounting Objectives Of Human Resource Accounting Advantages Of Human Resource Accounting Limitation Of Human Resource Accounting Human Resource Costs Methods Of Human Resource Accounting Conclusion Bibliographyvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 2
    • Introduction of HRA “ one asset is omitted and its worth I want to know, That asset is the value of men who run the show.” That the value of men (human resources) is not measured and reflected in the accounts of business enterprise. Although the success of the business to a greater extent depends upon the abilities, efficiencies and power of these people who actually run the business. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 3
    • HRA may be considered as such an accounting system which recognizes the human resources as an asset and records it is the books of account after measuring its value in the same way as other physical resources. Such accounting may generate and present valuable and significant information relating to human resources. Employees are the greatest assets of an organization and its success or failure depends on the quality and performance of the employees. But traditional accounting systems fail to indicate the value of the most valuable asset.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 4
    • Definition of HRA “ HRA is an attempt to identify and report investments made in human resource of an organization. Basically it is an information system that tells the management what changes over time are occurring to human resources of the business.” vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 5
    •  “ Human resource is the measurement and quantification of organizational input such as recruiting, training experience and commitment.” “ HRA is the process of identifying and measuring data about human resources and communicating this information to interested parties.” “ HRA is the measurement of costs and value of the people for the organization.”vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 6
    • Objectives of HRA1) Provide cost value information about acquisition, development, allocation and maintenance of human resources so as to achieve organizational goals in effective manner.2) Enable management of the organization to effectively monitor the use of human resources.3) Increased managerial awareness of the value of human resources.4) Better decisions about people, based on improved information system. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 7
    • 5) Accountability on the part of management for its human resources.6) Developing new measures of effective manpower utilization.7) Enabling a longer time horizon for planning and budgeting.8) Better human resource planning. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 8
    • Advantages of HRA1) Information for manpower planning2) Information for making personnel policies3) Utilization of human resources4) Proper placements5) Increases morale and motivation6) Attracts best human resources7) Designing training and development programmers8) Valuable information to investors vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 9
    • Limitations of HRA1) The valuation of human assets is based on the assumption that the employees are going to remain with the organization for a specified period. However, this assumption is wrong because employee mobility is very high.2) The human resource accounting may lead to the dehumanization in the organization. If the valuation is not done correctly or the results of the valuation are not used properly. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 10
    • 3) In the case of financial accounting, there are certain specified accounting standards which every organization must follow. However, there are no standards for HRA. Each organization has its own standards for HRA. So, there are no uniform standards for HRA. Therefore, the HRA of two organizations cannot be compared.4) There are no specific and clear cut guidelines for cost and value of human resources of an organization. The present valuation systems have many limitations. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 11
    • 5) The life of a human being is uncertain. So its value is also uncertain. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 12
    • Method of Human Resources Accountingvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 13
    • Method Human Resource Accounting Monetary Non- method Monetary methodvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 14
    • Monetary method1. Historical cost method2. Replacement cost method3. Standard cost method4. Current purchasing power method5. Opportunity cost method6. Economic value method Non-Monetary Method1. Expected Realizable value method2. Discounted net present value of future earning vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 15
    • Historical cost method This method was developed by Rensis Likert. Historical cost method also called Actual cost method. Two types of costs - (a) Acquisition cost (b) Learning cost (a) Acquisition cost : Acquisition cost refers to the expense incurred on recruitment, selection, and placement.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 16
    • (b) Learning cost: Learning cost refer to expenses incurred on training and development. Under this method, the cost of acquisition i.e. selection, hiring, training costs of employees are capitalized and written off over the expected useful life of the employees. In case, the personnel leave the company before the anticipated period of service, then the unamortized portion of costs remaining in the company’s books is written off against the profit and loss account in that year. If the period of service exceeds the anticipated time, then amortization of costs is rescheduled.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 17
    • Advantages This method is sample to understand and easy to work out. The traditional accounting concept of matching cost with revenue is followed in this method. It can provide a basis of evaluating a company’s return on its investment in human resources.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 18
    • Advantages This method is that the effect of HRA can be shown on conventional balance sheet and profit and loss account because the information in these statement is also stated on historical cost basis.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 19
    • Limitation It is very difficult to estimate the number of years an employee will be with the firm. It is difficult to estimate the number of years over which the capitalised expenditure is to be amortised. It is difficult to determine the rate of amortisation. Should it be increasing, or decreasing. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 20
    • Limitation The economic value of human resources increases over time as the people gain experience. But in this approach, the capital cost decreases through amortisation.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 21
    • Replacement cost method This approach was first suggested by Rensis Likert, and was developed by Eric G. Flamholtz on the basis of concept of replacement cost. Under this method, replacement cost refers to the cost of replacing an existing employee. Replacing cost is the cost that would cost to replace the existing human resources with human resources capable of rendering equivalent services. Here, the underlying costs includedvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 22
    • in replacement cost are the cost of recruitment, training and development, opportunity cost for the intervening period till the new recruit attains the efficiency level equal to that of the old employee. According to Likert (1985) replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 23
    • Advantages This method has the advantage of adjusting the human value of price trends in the economy and thereby provides more realistic value in inflationary times. It has the advantage of present oriented. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 24
    • Limitation It may not always be possible to obtain such a measure for a particular employee. It is not always possible to find out the exact replacement of an employee. This method does not reflect the knowledge, competence and loyalties concerning an organization that an individual can build over time. vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 25
    • Limitation It is difficult to find out the cost of replacing human resources and different persons may arrive at different estimates.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 26
    • Human resource costsvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 27
    • Human resource costs Costs incurred on locating, selecting and trainingemployees are the capital component of investment inhuman resources. These are similar to the costs of fixedassets, e.g. purchase price and cost of installation.various types of human resource costsRecruitment costsSelection costsHiring and placement costsOrientation costsTraining costsDevelopment costsvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 28
    • • Recruitment costs: The costs are incurred to identify the possible sources of employees, e.g. , advertising, travel, fees of employment, agency, company’s recruitment, etc.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 29
    • • Selection Cost: Selection is the managerial decision making process as to predict which job applicants will be successful if hired. Cost of application forms, testing, interviews and allocated administrative overheads.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 30
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 31
    • Orientation costs costs incurred to familiarize the new employees Facilities Products Programmers Policies employee Regulation Rulesvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 32
    • • Hiring and Placement Costs: Travel expenses to select employees, expenses for moving to the firm’s place, etc.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 33
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 34
    • • Orientation Costs: Costs incurred to familiarize the new employees with polices, facilities, products, etc. of the firm.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 35
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 36
    • • Training Costs: Trainer’s salary, training facilities, low productivity during training, etc.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 37
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 38
    • • Development Costs: Costs incurred to increase the employee’s capabilities beyond immediate skills required for the job, advancement, e.g. , fees and expenses for attending seminars and executive development programmes.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 39
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 40
    • Review of presentation Introduction of HRA Definition of HRA Objectives of HRA Advantages of HRA Limitation of HRA Human resource costs Method of HRAvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 41
    • Conclusion So, from the above presentation we can easily understood human resource cost related to historical and replacement method. Human resource cost includes Recruitment costs, Selection costs, Hiring and placement costs, Orientation costs, Training costs, Development costs. Also measuring the employee and achieve organisation goal.vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 42
    • Bibliography Human resource management and Industrial relation - Dr. Jayshree Thakare - R. K. Balyar Human resource management - C. B. Gupta vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 43
    •  Human resource management - S. S. Khanka Website Human resource cost.com Human resource method.comvaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 44
    • Questions What is definition of HRA ? How many cost of Human resource cost ? HRA is part of HRM ? - Yes/No What is Historical cost method ? HRA Method useful in organization ?vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 45
    • vaghela_manisha13@yahoo.com BY: MANISHA VAGHELA 46