Pranav rm

INSTITUTE OF MANAGEMENT STUDIES
DAVV
PROJECT
ON
RESEARCH METHODOLOGY
TOPIC: APPLICATION OF LEV AND SCHWARTZ MODEL IN HUMAN
RESOURCE ACCOUNTING IN IT COMPANIES
SUBMITTED TO: SUBMITTED BY:
DR. SHINE DAVID PRANAV TODY
Roll no. 63136
MBA ECOMMERCE
2YRS 2ND
SEM
9039009348
tody.pranav@gmail.com

Human resource accounting?
It is the method of computing and classifying the data about human resources in accountancy and
collaborating the required information to the interested parties.
As per flamholtz-"Accounting for people as an organizational resource. It is the measurement of the
cost and value of the people for the organization".
So, it can be said that, it is the process of developing financial valuation for people within institute,
society & monitoring the assessment through time. Although HR valuation has an important
implication for external financial recording, in the modern economic scenario valuing HR has been
greater significance for core HRM decision.
Past of human resource accounting
It is a popular phenomenon among the Indian business world to disclose information regarding the
human resource in annual statements. In this context, it is necessary to conduct a study to assess the
revelation pattern of HRA information in Indian business World.
It was first given or applied by BHEL (Bharat Heavy Electrical Ltd), a top public enterprise, during
the fiscal year 1972-73. Later it was also adopted by other top public and private sector Group in the
subsequent years. Some of them are Hindustan Machine Tools Ltd. Oil and Natural Gas Corporation
Ltd., National Thermal Power Corporation, Cochin Plant Ltd., Madras Plant Ltd., Associated Cement
Company Ltd. and Infosys Technologies Ltd. The number of models in HRA gives us a clear picture
about the Indian enterprises regarding HRA disclosure. Many models are used to value human
capital, some are based on historic cost while the other are based on future earnings. Among the
models available like Flamholtz model and Jaggi and Lev model discount rate fixation and disclosure
pattern, these models were widely used in BHEL, SAIL, and NTPC etc. The lev and Schwartz

model is extensively used in IT companies. As there is no equality among Indian IT enterprise about
HRA disclosure.
Merits of HRA
 Helps in the employment, localizing and consumption of human resources.
 Helps in determining the transfers, promotion, training, and cost-cutting.
 Provides valuable evidence to person in making long term deal.
 Helps in recognizing inappropriate utilization of human resource.
 Helps in recognizing the causes of high labor turnover.
Dmerits of HRA
 The evaluation of human assets is based on conventions.
 No definite way for finding cost & value of human resource of an organization.
 No standards of HRA.
 Employee with a comparatively low value may feel discouraged.
 HRA is full of measurement problem.
Research Objectives:- The main objectives of the study are:
1) To assess the way of presenting HRA information in the financial statement by selected
companies
2) To identify HRA methods and models (mainly the widespread use of Lev & Schwartz model)
which are used to reach at human resource value.
3) How human source are related with the other bookkeeping variables for the purpose of human
monetary reporting in selected companies.
4) Finding depreciation or appreciation among human resources.
5) Assisting in developing effective management practices.

6) Increasing managerial awareness of the value of human resources.
7) For better human resource planning.
8) For better decisions about people, based on improved information system.
What is lev Schwartz model?
This model was given by Baruch Lev and Abaa Schwartz. According to them, the value of human
capital in a person of age X is the present value of his remaining earnings from employments. They
formula for calculating the value of an individual
Where
Vx = value of an individual X years old.
I(t) = individuals annual up to the retirement.
r = rate of reduction.
T = represents retirement age.
This model given by Lev and Schwartz was considered as an improvement over the cost models as it
seeks to value the human resources of an organization on the basis of the economic value of the
employees of total organization
Under this model, the following steps are adopted to determine HR Value.
1) Classification of the entire work force into certain similar groups like skilful, unskilled,
semiskilled etc. and in accordance with different classed and age wise.eg. In Infosys the
arrangement is based on software experts & support staff etc.
2) Construction of average earning stream for each group.eg. At Infosys Incremental earnings based
on group/ age have been considered.

3) Discounting the average earnings at predetermined rate in order to get present value of human
resources of each group.
4) Aggregation of the current value of different groups which signify the capitalized future earnings
of the concern as a whole,
Advantages of lev and Schwartz model
a) This model has introduced economic concept value of HRA
b) Human capital value is found out after considering the remaining period of service of the
employees thus due weightage is given to work life span of the employees
Limitations of lev and Schwartz model
a) The individual’s value to an organization depends upon the role in which an individuals are placed
according to the qualities, traits and skills;
b) An individual may leave the organization for reasons other than death and retirement.
c) Employees may change their roles in their career due to promotion, transfer etc.
Application of lev and Schwartz model in IT companies
HRA information disclosed by some of the companies
Name of the
organization
Hra introduced in
the year
Hra model Discount rate in%
BHEL 1973-74 Lev and Schwartz 12
SAIL 1983-84 Lev and Schwartz
with some reference
from flamholtz jagii
and lev
14
MMTC 1982-83 Lev and Schwartz 12
ONGC 1981-82 Lev and schsartz 12.25
NTPC 1984-85 Lev and Schwartz 12
INFOSYS 1995-96
2006-07
Lev and Schwartz 12.96
14.97

INFOSYS TECHNOLOGIES LTD.
In the fiscal year 1995-96, Infosys Technologies (Infosys) was the first software company to value its
human resources in India. The firm used the Lev & Schwartz Model and esteemed its human
resources at Rs 1.86 billion. Infosys had always given maximum importance to the role of workforces
in contributing to the company's success. Analysts felt that HRA was a step advance in Infosys' focus
on its workforces.
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. (SAIL) in the 1970s.
However, the concept did not gain much popularity and acceptance during that time.
It was first in the mid-1990s, after Infosys started valuing its personnel, that the theory gained
popularity in India. By 2002, HR accounting had been introduced by leading software companies like
Satyam Computers and DSQ Software, as well as top built-up firms like Reliance Industries.
Use of the Lev and Schwartz Method to Value HR in Infosys
Infosys have used the Lev & Schwartz model to compute the value of human resources. The
evaluation is based on the present value of future incomes of workers and on the following
assumptions:
a) Employee reimbursement includes all direct and indirect benefits earned both in India and
overseas.
b) The incremental earnings based on group / age have been considered
d) The future earnings have been discounted at the cost of capital of 10.60% (previous year –
12.18%)
The table showing the value of human resources in infosys
Employees (No.) 2010 2009
Software professionals 106864 97349
Support 6932 7501

Total 113796 104850
Value of human resources
Software professionals 106173 95600
Support 7114 6533
Total 113287 102133
Total income 22742 21693
Total employee cost 12085 11405
Value added 20937 19073
Balance sheet of Infosys ltd
Balance Sheet including intangible assets As at March 31, in crore
2011 2010
ASSETS
Current assets
Cash and cash equivalents 16,666 12,111
Available-for-sale financial Assets 21 2,518
Investment in Certificates of Deposit 123 1,190
Trade Receivables 4,653 3,494
Unbilled revenue 1,243 841
Derivative financial instruments 66 95
Prepayments and other current assets 917 641
Total current assets 23,689 20,890
Non-current assets
Property, plant and equipment 4,844 4,439

Goodwill 825 829
Intangible assets
Brand value 40,509 36,907
Human resources worth 1,35,105 1,13,287
Other Intangible Assets 48 56
Available for sale Fnancial Assets 23 38
deferred income tax 378 346
income tax assets 993 667
Other non-current assets 463 347
Total non-current assets 1,83,188 1,56,916
Total assets 2,06,877 1,77,806
LIABILITIES AND EQUITY
Current liabilities
Trade payables 44 10
Current income tax liabilities 817 724
Client Deposits 22 8
Unearned Revenue 518 531
employee Benefit obligations 140 131
Provision 88 82
Other current liabilities 2,012 1,707

Total current liabilities 3,641 3,193
Non-current liabilities
Deferred income tax liabilities – 114
employee benefit Obligations 259 171
other non current liabilities 60 61
total liabilities 3,960 3,539
Equity
Share capital 286 286
Share premium 3,082 3,047
Reserve surplus 23,826 20,668
Capital Reserves Intangible Assets 1,75,614 1,50,194
Other components of equity 109 72
Total equity attributable to equity holders of the Company 2,02,917 1,74,267
Total liabilities and equity 2,06,877 1,77,806
Benefits encountered By Infosys by assessing its human resources
a) Infosys could regulate whether its human asset was appreciating over the years or not. This
information was important for the company as its success depended solely on the knowledge of
the employees.
b) The company could also use this information internally to compare the performance and
productivity of employees in various divisions.

c) HRA also helped Infosys to decide the reimbursement of workforces. The company ensured that it
compensated each employee according to his / her net worth.
d) HRA also helped Infosys in identifying and retaining valuable employees.
e) It helped organization to take managerial decisions based on the availability and the necessity of
human resources.
f) When human resources get computed it gave Infosys stakeholders and other customers true
insights into the organization and its future potential. It restored faith amongst shareholders.
Disadvantages of evaluation of human capital
Companies use various HRA models and comparing two companies using two different models was
difficult.
a) Companies could also misuse HRA to improve their image .A company could use this to brace up
its image in the stakeholders mind, and change assumption to keep the values positive
b) There could be a concern of the creditability of the numbers reported.
c) The model was based on assumptions and was subjective. Hence figures could be totally
ambiguous.
d) Some employees may be underestimated since a numeric figure did not clearly quantify what their
true capabilities are.
CONCLUSION
The abstract thinking about evaluation of human resources is still in a mounting stage. No model of
HR accounting is accepted by the accounting bodies all over the world. However, still we find some
use of Lev & Schwartz model in most of the public sector and IT based sectors. The case of Infosys
gives as a clear picture about the advantages and disadvantages of this model. However, in other
knowledge based sectors where human resources are considered to be the key elements for
monitoring the business activities to attend their goals successfully, may not be ignored this side.
Hence, considering the great importance of HRA proper initiation should be taken by the
management along with that other specialized & accounting bodies both at the domestic and
international levels for the measurement and recording of such valued assets.

--x—
SATYAM COMPUTERS SERVICES LTD.
Satyam, a Hyderabad based IT consulting and Services Company had already evidenced itself as a
universally reputed one. It was recognized on June 24, 1987. In 2009, it gained a new trademark,’
Mahindra Satyam’. Satyam network is spread over 63 countries. As of March 31, 2008, 50,570
employees were placed in the company man power account. Satyam assists over 654 global
corporations, out of which 185 are Fortune Global 500 or Fortune US 500 Companies. The company
believes that its real strong point lies in both Tangible and Intangible assets. The Company has also
put adequate emphasis on the evaluation of human resources and brand estimation as the information
relating to these two key assets definitely helps investors in taking their decisions. The ‘additional
information to investors’ shown in the annual reports of Satyam includes balance sheet with Tangibles
and Intangibles, human resource accounting, brand value, fiscal value added statement, enterprise
value and financial ratios.
The company uses the Lev and Schwartz model for computing its HR value. HR value is the current
value of the forthcoming earnings up to the retirement age, and the future earnings are discounted by
the weighted average cost of capital for the past years. In the fiscal year 2007, it had been reduced at
15.29 per cent. In the annual report of Satyam, the summary of human resources value is provided.
The category wise number of workers and their per centages, and the values of the particular category
as per both the Indian GAAP and US GAAP are presented in the annual reports. The information
relating to the secondary cost, as a percentage to the HR value, is also provided to reflect the value
addition aspect. In the section, ‘Balance sheet with tangibles and intangibles’ the Brand value and the
human assets value are shown along with the value of other Tangible items. The HR value and the
brand value constitute more than 80per cent of the total balance sheet value (FY 2007 89.73 per cent
FY 2006 87.72 per cent; FY 2005 85.49 per cent).

Satyam reports a number of employees and value of human resources group wise as well as in total . it
reports HRA in Indian rupees as well as in dollars. Satyam also reports percentage share of
development associates HRA and supports it in total HRA. It also displays cost of employees in
rupees as well as in percentage.
VALUE OF HUMAN RESOURCES IN SATYAM
(MARCH 2003 TO MARCH 2009)
Period
HRV
Category Number ` in Cr.
march 2003 Development 9,031 7,800
Support 728 425
Total 9,759 8,225
Support 912 473
Total 14,032 11,787
Support 1,305 700
Total 19,164 16,586
Support 1,710 1,161
Total 26,511 23,364
Support 1,858 1,581
Total 35,670 40,900
march 2008
Development 85,013 92,331
Support 6,174 6,490
Total 91,187 98,821

march 2009
Development 97,349 95,600
Support 7,501 6,533
Total 1,04,850 102,133

Hindustan Petroleum Corporation ltd.
HPCL is considering the human element as key to the organization’s success. Several initiatives from
the development of HR to meet new challenges in the competitive business atmosphere has gained
impetus. HPCL recognizes the values of its human assets who are committed to achieve excellence in
a sphere. HPCL has a mix of energetic youth and experienced seniors, who blend the efforts to
achieve the company goals.The Lev and Schwartz Model is being used by HPCL to compute the value
of HR.
Analysis and interpretation
Following table has been drawn to know human resource value addition over previous year, the
growth of HRV in terms of percentage and value of HR per employee. Fol-lowing formulas are used
to find various values:
-Value addition over the previous year: HRV of current year
– HRV of previous year
-Value addition in percentage: value addition over the previous year/ HRV of previous year*100-
Value of HR per employee: HRV/No. of employee
Financial
year
HR value
(rs crore)
Value addition
over the
previous year
Value
addition
in %
No of
employees
Value of HR
per employee
(rs crore)
2008-09 13147 - - 11264 1.1690
2009-10 15654 2507 19.069 11291 1.3864
2010-11 18493 2839 18.1359 11248 1.6441
2011-12 21412 2919 15.7844 11226 1.9073
2012-13 25287 385 1.7920 11007 2.2973
2013-14 20846 -4441 -17.5624 10858 1.9198
2014-15 25688 4842 23.2275 10634 2.41564
The table shows increasing trend in HRV and no of em-ployees except in the year 201-14. We can say
that HRV is increasing from the year 2008-09 to 2012-13, it was de-creased in 2013-14 and again
increased in 2014-15. High-est value addition in percentage is in the year 2014-15 e.i. 23.23 % and in
the year 2013-14 value of HR is decreased up to 17.56 %. Value of HR per employee is also increas-
ing from the year 2008-09 to 2012-13, decreased in 2013-14, and again increased in the year 2014-15.

The reasons or value addition in HRV may be effective recruitment, proper training and better
employer employee’s relation-ship. In the year 2013-14 HRV is decreased. Here the rea-sons may be
decreased no of employees, ineffective re-cruitment and ineffective training
CONCLUSION
The study reveals that Hindustan Petroleum Corporation limited discloses information regarding human
resource accounting up to a great extent. There is direct relationship between HRV and employees cost,
and also in HRV and total assets. But there is no relationship between net prof-it and HRV of the
company. Proper recruitment, effective training and development, better employer employee’s re-
lationship can lead to greater human resource value which ultimately results in organization’s growth
and success.
--x—
BHARAT HEAVEY ELECTRICALS LTD.
BHEL is the largest engineering and manufacturing enterprise in India in the energy-
related/infrastructure sector, today. BHEL was recognized more than 40 years ago, steering in the
indigenous Heavy Electrical Equipment industry in India with a dream to become self sufficient.The
company has been earning profits continuously since 1971-72 and paying dividends since 1976-
77.BHELcaters to the core sectors of the Indian Economy, viz. Power, Transmission, Industry,
Transportation, Renewable Energy, Oil & Gas and Defence.
BHEL had started providing information related to Human Resource Accounting (HRA) in its annual
report from the financial year 1974-75 by using Lev and Schwartz model. It was the first company in
India that provided HRA. BHEL also started considering efficiency factor for the purpose of Human
Resource Valuation from the year 1980-81.
BHEL divides total workers of the association according to group wise, category wise and also as per
physically challenged employee.The company has classified its employees into six categories based on
skill, type of work, experience and qualifications. In each category 10 to15salary grades have been
identified to facilitate the valuation of human resources.

The company has shown an increase in turnover from 14,525Cr in 2005-06 to 34,154Cr in 2009-10.The
number of employee has increased from 42,601 to 46,274in five years BHEL have declared Value per
employee for 2009-10 as 27.70L which has doubled from 13.34L as declared for 2005-06.Turnover per
employee has also increased from 0.34 Cr in 2005-06 to 0.74Cr in 2009-10.This has shown increased in
2.2 times.
Human Asset Value Analysis in BHEL
Year Turnover
(crore)
Value
added
(millions)
Manpower
(number)
Value per
Employee
(lakhs)
Turnover
per
employee
(crore)
2005-06 14525 5682 42601 13.34 0.34
2006-07 18739 7182 42124 17035 0.44
2007-08 21401 8323 43636 19.00 0.49
2008-09 28033 98940 45666 21.67 0.61
2009-10 34154 131710 46274 27.70 0.074
2010-11 43337 184760 46748 - 0.93
CONCLUSION
BHEL, are also adopting human resource accounting but thesecompanies have disclosing the human
resource accounting in different way like Infosys disclose human resource accounting in balance sheet
by the heading intangible assetsWith the help of Person connection, it is determine that highly positive
correlation between human resource value and total assetsis present
On the basis of study, the employee perception calculated for the various aspects of managerial benefits
of human resource accounting and it conclude that the calculation of human resource value helps in
performance evaluation of employees.If the researcher talk about adopting human resource accounting
models, then it can be concluded that most of the public companies follow HR model for HR
investment decision, but it is not disclosing as HRA thus onlythey wereuse them for their purpose and
few companies are disclosing HRA model like HPCL, Infosys, BHEL.
Hence, considering the great significance of HRA proper initiation should be taken by the government
along with that other professional & accounting bodies both at the national & international levels for the
measurement & reporting of such valuable assets.

Steel Authority of India Limited (SAIL)
SAIL is India's largest steel producing company. With a turnover of Rs. 47,041 Cr, the company is
among the five Maharatnas of the country's Central Public Sector Enterprises. SAIL has 5 cohesive
steel plants, three special plants, and one subsidiary in different parts of the country. The company has
the distinction of being India another largest producer of iron ore and of having the country second
biggest mines network.
SAIL started valuation and reporting of its human resource from the financial year 1983-84.SAIL
follows the human resource evaluation model suggested by Lev and Schwartz by accommodating
some adjustments suggested by Flamholtz and Jaggi and Lev. SAIL uses the constant rate of
discounting the future expected return at 15%.Company also provides the information about Turnover,
Value Added, and Capital Employed, EPS, Net worth per Share, Employee Remuneration and
Benefit. The Net worth has increased from12,386Cr in 2005-06 to 37,069 Cr in 2010-11. Other
current assets include employees, which is put as 14.87Cr forMarch2011 as compared to 18.95 Cr for
March 2010.
Human Asset Value Analysis in SAIL
Year Net sales
(crores)
Net worth
(crore)
Toone crude
steel/man/year
Production
in000,tonnes
Manpower
2005-06 27860 12386 - 13470 138211
2006-07-- 33923 17184 - 13506 132973
2007-08 39508 23004 214 13962 128840
2008-09 43204 28148 215 13411 121295
2009-10 40551 33317 226 13506 116950
2010-11 42719 37069 241 13506 114160
CONCLUSION
As per the above table we can see the manpower reduction in sail which results in high employee
turnover but there is no proper accounting and disclosure of human resource or manpower Proper
initiation should, therefore, be taken by the Central Government and the professional bodies in India

Oil and Natural Gas Corporation (ONGC)
ONGC is the only fully integrated petroleum company in India, operating along the entire
hydrocarbon value chain. It holds largest share of hydrocarbon aggregates in India and Contributes
over 79 per cent of Indian’s oil and gas production. It has refining capacity of about 12 MMTPA and
created a record by turning Mangalore Refinery around from being a stretcher case for referral to
BIFR to the BSE Top 30, within a year.
ONGC declares value per employee and calculate with help of Lev and Schwartz model taking
discounting rate at 8 % .The value per employee has increased to 14.71 million in 2010-11from 13.10
million in2009-10.ONGC was given best Overall Performance Award amongst the upstream Sector
Oil Companies for Oil and Gas conservation programme for 2009 by PCRA.It receivedDalal Street
investment Journal PSU awards 2010 for Excellent Overall Performance in the category of heavy
weights and Highest Market Capitalisation in the category of wealth Builders.It was rated ‘Very
Good’ in MOU Performance Rating for 2008-09 by the Department of Public Enterprises, Ministry of
Heavy Industries in Public Enterprises, GOI.
Human Asset Value Analysis ONGC
Year Net profit
(millions)
Turnover
(millions)
Value per
employee
(millions)
Number of
employees
Expenditure
on
employees
(millions)
ROCE
PBIT/capital
Employed%
2005-06 144308 428009 7.9 34772 30147 57.5
2006-07 156429 569037 8.4 33810 48833 56.7
2007-08 167016 601373 8.8 32996 60484 52.0
2008-09 161263 639493 11.7 33035 47369 49.9
2009-10 168676 602062 13.1 32826 - 50.9
CONCLUSION
“Presently, 33433 employees are working in ONGC in which percentage of Women employees is 5%
of ONGC's workforce. Various programmes for empowerment and development, including
programme on gender sensitization are organized regularly. The highest increase in value of
HRduring the year 2008-09 that is 32.57 % and lowest increase in value of HR in the year 2007-08
that is only 1.89%

National thermal power corporation(NTPC)
NTPC had started providing information related to HRA in its annual report from the financial year
1984-85 by using Lev and Schwartz model (1971) with 12% discount rate. But in 2006-07 to 2010-11
NTPC has not disclosed information regarding HRA model and discount rate while the company has
disclosed some ratio and information regarding HRA like value added per employee, generation
(production) per employee, man mw ratio,Average Salary, wages & benefits per employee per
annum,Average cost of other benefits per employee per annum andAverage cost of employees
remuneration & benefits per annum.
NTPC divides total employees into three groups as under (a) Executives (b) Supervisors (C) and
Workmen. It also presents some ratios similar to Human Resource Value/ Total Resource Value,
Value added / Human Resource Value, Turn over / Human Resource Value.
Human Asset Value Analysis in NTPC
Year Revenue
(millions)
Employee
Strength
Commercial
Generation
Generation
per
employee
mu
Value
added
(millions)
Value
add per
employee
(millions)
Man:
mw
ratio
2005-06 188674 21870 169789 7.81 97206 4.44 0.91
2006-07 170880 23602 188140 7.99 111012 4.70 0.91
2007-08 188670 23674 200280 8.48 127538 5.39 0.87
2008-09 200280 23639 206156 8.76 140548 5.95 0.85
2009-10 206939 23743 218493 9.22 173313 7.30 0.82
2010-11 218840 25144 - 9.27 - - 0.77
CONCLUSION
From the above table it is evidently observable that NTPC is disclosing in all items in case of
employee cost in all the five years while in next categories(Disclosure of ratios related to HR)38.46 %
items have been disclosed in five years. If look at particular of the employee thanfound that
performance of these categories has 70% in all five years. Regarding the overall performance of this
company 60.71 % items have been disclosed in five years there is no changes in HRA disclosure
practices in five years. Besides these, the company won several other awards for its HR practices.
NTPC's website glowed with a picture of its happy employees and a tag line that read "Generating
Smiles Beyond Megawatts."

--x—
Conclusion of lev and Schwartz model
The conceptual thinking about valuation human resources is still in a developing stage. No model of
HR accounting is accepted by the accounting bodies all over the world. However, still we find some
use of Lev & Schwartz model is most public sector units and IT based sectors. In knowledge based
sectors where human resources are considered to be the key features for observing the business
activities to attend their goals successfully, may not overlooked this side. Hence, considering the great
significance of HRA proper instigation should be taken by the government along with that other
professional & accounting bodies both at the national & international levels for the measurement &
reporting of such valuable assets.
Suggestions to lev and Schwartz model
 The model should define the reasons or factors which determine the value of human resource.
 To improve the value of human resource there is a need to identify the various factors and
reason.
 Model should help to generate information which could help the management to make
important decisions regarding human resource development.
 The model should be skilled of computing the worth of human resource operationally. A model
can be made operative only if the information is available when required. Very often, a model
can be hypothetically comprehensive but, if the necessary information is not accessible its
practicality shall be reduced.
 Research should be made to develop the model that can be easily adopted in indian corporate
scenario.
CONCLUSION OF HUMAN RESOURCE ACCOUNTING
Human resource accounting is not new concept in the corporate world. This concept is about the
evaluation of the human resources as assets into the companies. However, in India so far HRA has not
been introduced as a system so to be applied among the companies with proper mechanism

The aim of the research is to study the present status of human resource accounting and disclosure
practice in Indian companies along with this researcher tries to know the perception of shareholder,
investors and employees regarding HRA and their disclosures practices. Proper initiation should,
therefore, be taken by the Central Government and the professional bodies in India in respect of
invention of specific accounting standard and suitable valuation models on the measurement and
reporting of value of HRs. Though it is not an easy task to enlist the suitable items of HR information,
The analysis of disclosure of human resource accounting in India reveals that ONGC is having a better
performance while HPCL have second rank concerning disclosure practise of HRA. NTPC and
Infosys have 3rd
and 4th
rank respectively. Moreover Infosys,NTPC, BHEL, are also adopting human
resource accounting but these companies have disclosing the human resource accounting in different
way like Infosys disclose human resource accounting in balance sheet by the heading intangible assets
While ONGC disclose in Note and separate statement of human resource accounting and also HPCL
disclosed in separate statement that is human resource accounting.
Suggestions in human resource accounting
1) Suggestions to government
 The proper rules and regulation should setup for the measurement of human capital under
accounting standard of India.
 The standards those are created for human resource valuation and measurement helps
increase in productivity of human capital. Along with this it ensures high degree utility to
stakeholders make the uniformity in comparison of human capital value and disclosures.
 Government should make compulsory initiatives for the disclosures value of HR in annual
reports as well as the website of the companies.
2) Suggestion for companies
 Companies has not disclosed the elements of employees cost such as training and
development cost, induction cost etc. The elements of employee cost should be disclosed
separately in various tables.

 Companies should disclose the information regarding the inclusion of variables like
amortisation of human resources, idle time, lock outs, loyalty of employees etc.
 As far as possible the rate of discont future earnings of workers is concerned, it should be
kept constant. Besides, if the change in discount rate is necessary, the valuation of HR
should be shown at the new rate for the last five year so as to make the HR data compatible,
correct and more useful for HR decision.
 Companies should get HRA information audited so that the trustworthiness of HR data can
be ensured.
 Companies should be calculate turnover per employee every year if turnover per is high than
find out reason and trying to minimum value of turnover employee because if turnover is
low than calculation of HRV is more easy and more.
 Companies should be disclosed employees’ classification –based on nature of work, based
on qualifications, and based on grade.
Future of human resource accounting
Historically,human resources accounting and costing focused on how much employees cost an
organization without evaluating the value of the employee to the business.As the world moves into
the information age,intellectual knowledge as a business asset is becoming increasingly
important.Recording,evaluating and assigning value to this immaterial asset is one of the primary
focuses of the evolution of human resources accounting.
With the growing emergence of the knowledge economy, this traditional value has been called into
question due to the acknowledgment that human capital is an increasingly important part of an
enterprises total value. This has led to two important questions.
1) How to assess the value of human capital in addition to an enterprise tangible assets
2) How to improve the development of human capital in enterprises.
The emergence of methods for accounting human resources aimed at computing, evolving and
managing the human capital in an enterprise, can thus be said to reflect the need for improving
calculating and accounting practices as well as human resource management.

References
 http://www.ijsrm.in/v4-i4/1%20ijsrm.pdf
 http://thecommercepedia.blogspot.in/2012/05/case-study-on-human-resource-accounting.html
 http://financemind.blogspot.in/2011/02/human-resource-accounting-practices-in.html
 http://shodhganga.inflibnet.ac.in/bitstream/10603/127481/17/17_chapter-%207.pdf
 http://home.ximb.ac.in/~jcr/cases/Case03-HRA-DEC2013.pdf
 http://newhorizonindia.edu/nhc_kasturinagar/wp-content/uploads/2016/09/HRA.pdf
 https://www.worldwidejournals.com/indian-journal-of-applied-research-
(IJAR)/file.php?val=February_2016_1454308531__181.pdf

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