human resource information system, accounting and auditing

1. INFORMATION
SYSTEMS,
ACCOUNTING &
AUDITING
PRESENTED BY:
CHANDAN CHOUDHARY
TRAPTI AGGARWAL
VIKAS
NEHA SHARMA
PRATEEK SHARMA

2. 2

3. 3
HRIS
HRIS can be defined as:
• “HRIS can be briefly defined as integrated systems
used to gather, store and analyze information
regarding an organization’s human resources.”
(Hedrickson, 2003, p.381).
• HRIS “One which is used to acquire, store,
manipulate, analyze, retrieve and distribute
information about an organization’s human
resources.” (Tannenbaum 1990)

4. 4
Who uses HRIS and how is it
used?
• Reporting and
compliance
• Payroll and
compensation
analysis
• Benefits
administration
• Applicant tracking,
skills inventory
HR
Professional
• Performance
management and
appraisal
• Recruitment and
resume processing
• Team and project
management
• Training and skills
testing
• Management
development
Functional
Managers
• Self-service benefit
options
• Career planning
• Training and
development
Individual
Employees

5. 5
Benefits of HRIS
Benefits of
HRIS
Increased
Efficiency
More Transactions
with Fewer
Resources
Increased
Effectiveness
More Accurate
Information &
Simplification of
Processes

6. 6
Traditional HRIS
• Monitor absences
• Salary structures
• Training information
• Recruitment
• Media response
• Current information
• Medical information
• Global administration
Administrative
Uses

7. 7
HRIS in Business Decision Making
• Budget control
• Applicant tracking and
screening
• Skills matching
• Appraisals
• Feedback
• Manpower planning
• Succession planning
• Skills monitoring
• Training needs analysis
• Global analysis
Analytical
Processes

8. 8
Application of HRIS
• Environmental scanning
• Tracks quality and productivity
improvements
Strategic
Management
• Tracks promotions, transfers, hiring and
termination rates
• Maintains and prints EEOC data in the
required form
• Prints applicant flow and utilization reports
for affirmative action programs
Workforce
Planning and
Employment
• Outlines career path development
• Tracks, education, skills and training
programs
• Registers employees in courses
• Evaluates employee performance
Human
Resource
Development

9. 9
CONTINUED…
• Tracks salary survey information
• Tracks retirement planning, tuition
reimbursement, COBRA & HIPAA info.
• Facilitates benefit administration and salary
analysis across job classifications
Total
Rewards
• Stores employee discipline records
• Records union data & labor distribution
data
• Maintains attitude survey results
Employee
and Labor
Relations
• Identifies accident and illness trends
• Tracks safety records, insurance and
workers’ comp. claims
• Monitors high-risk conditions and accidents
Risk
Management

10. SOME EXAMPLES OF HRIS
• Bamboo
• Clearcompany HRM
• SimpleHR
• People-Trak HRMS
• Skandia Navigator

11. The Skandia Navigator is an early model to analyze
intangible assets, pioneered by Leif Edvinsson at Skandia.
The architecture of the SN is built of 5 focus areas or
perspectives, each capturing different areas of interest:
• Financial focus
• Customer focus
• Human focus
• Process focus
• Renewal and development focus
SKANDIA NAVIGATOR MODEL

14. • Process of examination and evaluation of policies,
procedures and practices to determine the
effectiveness of personal management
• Covers three things
1. Measurement and evaluation of personnel programs,
policies and practices
2. Identification of gaps between objectives and results
3. Determination of what should and shouldn’t be done
in future
Human Resource Auditing

15. Objectives of
HR Audit
To review the
organizational
system, HR sub-
systems, to find
efficiency of the
organisation in
atrracting &
retaining human
resources
To find
effectiveness of
various personnel
policies and
practices
To know about
the functioning of
various units and
implementation
of policies
To review and
modify personnel
systems.

16. Need for HR audit
• Increase the size of an organisation
• Changing philosophy of management towards HR
• Increase strength and influence of trade unions
• Increase dependence of organization on the HR
system and its effective functioning

17. • Identifies the contribution of HR department
• Improves the professional image of HR department
• Encourages responsibility among members of HR
department
• Classifies the HR department duties
• Stimulates uniformity of personnel policies and
practices
• Finds critical personnel problems
• Ensures timely compliance with legal requirements.
• Reduces human resource costs
Benefits of HR Audit

18. The HR audit usually covers three parameters, namely,
1. the HR policies and practices,
2. the HR professionals and
3. the HR department.
Scope of HR Audit

19. With respect to each of these, the Audit tries to find out :
1. The actual state;
2. The congruence between the desired/professed state and
the actual state;
3. The alignment with the overall organisational strategy and
goals; and
4. The compliance with the laws and regulations.

20. Auditing HR Practices
All HR departments provide several services that may be clustered
into six key domains staffing, training and development, appraisal,
rewards, oraganisation governance and communication.
Four types of assessments.
1. The HR strategies, the distribution of responsibility, the resource
utilisation, and the competencies of the HR portfolio.
2. The second type of assessment is that of customer value.
3.Cost benefit or utility analyses of HR functions
4. Research, involving HR experiments

21. Auditing HR Professionals
1. Developing a Model of Competencies
2. Collect data using the Model
3. Summarise data and give feedback to the HR professionals
4. Create action plans
5. Continuous Improvement
Auditing HR Function or Department
There are overall indicators of HR functions, such as
ratio of total employees to HR professionals
the performance of the department against the plan the
ratio of expenditure on HR to total sales general costs and
other such measures.

22. There is no uniform norm regarding how often the HR Audits should
be conducted in an organisation.
Generally, it differ in case of different organisations depending
upon:
• the purpose of the Audit,
• the periodicity of changes in the external business environment,
• the frequency of changes in the strategies, policies, and
personnel within the organisation,
• the rapidity of technological changes which are expected to
impact the psychology of people,
• the speed of change in the legal, socio-economic and political
conditions.
THE FREQUENCY OF HR
AUDIT

23. • 1. Comparative approach
2. Outside authority approach
3. Statistical approach
4. Compliance approach
5. Management by objectives
(MBO) approach
Approaches to
Human Resources
Audit

24. • Comparative approach
In this, the auditors identify Competitor Company as the
model. The results of their organization are compared with
that Company/ industry.
• Outside authority approach
In this, the auditors use standards set by an outside
consultant as benchmark for comparison of own results.
• Statistical approach
In this, Statistical measures are performance is developed
considering the company’s existing information.

25. • Compliance approach
In this, auditors review past actions to calculate
whether those activities comply with legal requirements
and industry policies and procedures.
• Management by objectives (MBO) approach
This approach creates specific goals, against which
performance can be measured, to arrive at final
decision about organization’s actual performance with
the set objectives.

26. Though this process may vary from organisation to organisation, it
essentially follows the stages described below.
1) Briefing and orientation: This is a preparatory meeting of key staff
members to:
i) discuss particular issues considered to be significant
ii) chart out audit procedures, and
iii) develop plans and program of audit.
2) Scanning material information: This involves scrutiny of all
available records and documents pertaining to the personnel as well
as personnel handbooks and manuals, material on recruitment,
computer capabilities, and all such other information considered
relevant.
AUDITING PROCESS

27. 3) Surveying employees: Surveying employees involves interview
with key managers, functional executives, top functionaries in the
organizations, and even employees representatives. The purpose is
to identify and enumerate issues of concern, present strengths,
anticipated needs and managerial philosophies on human resources.
4) Conducting interviews: The key issue here is to list the pertinent
and probing questions. The decision on these questions depends on
the scope and purpose of the Audit as well as on the culture of the
organisation. The skill of the interviewer lies in getting relevant and
correct information without threatening the interviewees.
5) Synthesising: The data thus gathered is synthesized to present the
current situation priorities staff pattern, and issues identified.

28. 6) Reporting: Like planning meetings for briefing and orientation,
the results of the audit are discussed within several rounds with the
managers and staff specialists. Based on the findings and the
discussion during the meetings, then a final report is prepared and
presented formally to the Management. This report should include
1. the “state of the organisation” report,
2. the assessment of effectiveness and efficiency of various areas
covered by the Audit,
3. a legal compliance/ areas of concern report, and
4. critical recommendations for improvement

29. There are several techniques that may be employed in conducting an HR
Audit, especially in collecting data.
Interviews:
Interview of key HR stakeholders can provide a valuable insight into the
strengths and weaknesses of the HR practices, professionals and
department, as perceived by the stakeholders. Interviews can be part of
either an exploratory or descriptive mode of inquiry.
Questionnaires:
In HR Audits, questionnaires may be used for generating data that serves as
input to the HR Scorecard.
Some of the commonly used questionnaires include the HRD Audit
Questionnaire, a102 item Map your HRD Practice Profile (see La Piana
Associates, Inc, 2002) the HRD Climate Survey, the Training Effectiveness
Questionnaire, Performance planning to name a few.
COMMON RESEARCH TECHNIQUES
IN HRA

32. HUMAN RESOURCE ACCOUNTING
DEFINITION:
“Human Resource Accounting is the process of identifying and
measuring data about human resources and communicating
this information to interested parties.”
- American Accounting Society Committee on HRA
Human Resource Accounting is the process of assigning,
budgeting, and reporting the cost of human resources incurred
in an organization, including wages and salaries and training
expenses.

33. OBJECTIVES OF HUMAN
RESOURCE ACCOUNTING
• To furnish cost value information for making proper and effective
management decisions about acquiring, allocating, developing and
maintaining human resources in order to achieve cost effective
organisational objectives.
• To monitor effectively the use of human resources by the management.
• To have an analysis of the human assets i.e. whether such assets are
conserved, depleted or appreciated.
• To aid in the development of management principles. and proper
decision making for the future by classifying financial consequences of
various practices.
• In all, it facilitates valuation of human resources recording the valuation
in the books of account and disclosure of the information in the financial
statement.

34. ADVANTAGES OF HUMAN
RESOURCE ACCOUNTING
• It offsets uncertainty and change, as it enables the
organisation to have the right person for the right job at the
right time and place.
• It provides scope for advancement and development of
employees by effective training and development.
• It helps individual employee to aspire for promotion and
better benefits.
• It aims to see that the human involvement in the
organisation is not wasted and brings high returns to the
organisation.
• It helps to take steps to improve employee contribution in
the form of increased productivity.

35. •It provides different methods of testing to be used, interview techniques
to be adopted in the selection process based on the level of skill,
qualifications and experience of future human resources.
•It can foresee the change in value, aptitude and attitude of human
resources and accordingly change the techniques of interpersonal
management

36. COMPANIES PRACTICING
HUMAN RESOURCE ACCOUNTING
The companies, who are presently reporting human assets valuation include:
• Bharat Heavy Electrical Ltd (BHEL).
• Steel Authority of India Ltd (SAIL).
• Oil and Natural Gas Commissioning (ONGC).
• Cement corporation of India (CCI).
• Mineral and Metal trading Corporation of India.(MMTC).
• Oil India Ltd
• Project and Equipment corporation of India.(PEC).
• Hindustan Zinc Limited (HZL)

37. • Southern Petrochemicals Industries Corporation Ltd
(SPIC).
• Engineers India limited
• Electrical India Ltd.
• Infosys Technologies Ltd.
• National Thermal Power Corporation Ltd (NTPC).

38. For Example:
• Oil and Natural Gas Corporation Limited (ONGC): This Company
considers the rate of interest, at which the Government of India
advances them loans, as the discount rate. It divides total employees
into four categories as under (a) Managerial and Supervisory (b)
Clerical (c) Skilled Workers (d) Unskilled Workers.
• Minerals and Metals Corporation of India (MMTC): MMTC started
human resource valuation and reporting practice in the year 1982 by
using a modified model of human resource valuation given by Lev
and Schwartz under the head of “Human Asset Accounting”.
• Project and Equipment Corporation of India (PEC): PEC have been
following the human resources accounting practice from the year
1980-81 and it report group wise and in total in terms of employees
and also it reports human resources value group wise as well as in
total.

39. HUMAN RESOURCE
VALUATION APPROACHES
Some of the models to valuation of Human Resources are:
STOCHASTIC REWARDS MODEL:
• Stochastic Rewards Model was developed by Eric G. Flamholtz.
• This model identified some major variables that are help to determine
the value of an individual to the organization.
• He determined the movement of employees from one organization to
another as Stochastic Process.
• Employee value is the product of individual conditional value and the
profit that the individual offers to the organization in his/her service life.
• The conditional value comprises of productivity, transferability and
promotability, skills and activation levels are also the determinants of an
individual’s conditional value.

40. Replacement Cost Model :
• According to this model the value of employee is estimated as the
cost of replacement with a new employee of equivalent ability and
efficiency.
• There are two costs, individual replacement cost and positional
replacement cost in this model.
• Cost of recruiting, selecting, training and development and
familiarization cost are account in individual replacement cost.

41. Opportunity Cost Model :
• Opportunity cost is the maximum alternative earning that is
earning if the productive capacity or asset is put to some
alternative use.
• Quantifying HR value is difficult under this method. Because
alternative use of HR within the organization is restricted and at
the same time the use may not be identifiable in the real
industrial environment
LEV AND SCHWARTZ COMPENSATION MODEL:
• This model developed in 1971 by Lev and Schwartz for valuing
human resources and is used by public sector like SAIL and BHEL.
• It is based on future earnings of an employee till his retirement.
• Lev & Schwartz also recommended the use of cost of capital of
the organizations for the purpose of discounting the future
earnings of the employees to arrive at the present value.

42. Historical Cost Method:
•This method was developed by William C. Pyle and adopted in 1969
by R. G. Barry Corporation, a leisure footwear company in Columbus,
Ohio, USA.
• Historical cost method calculates actual cost incurred on recruiting,
selecting, hiring and training and development of human resource
(HR) which is equal to the value of workforce.
• The economic value of HR increases overtime and they gain
experience. However, according to this model, the capital cost of HR
decreases through amortization.

43. SKANDIA’S NAVIGATOR:
• The Skandia Navigator is an early model to analyze intangible assets,
pioneered by Leif Edvinsson at Skandia.
• The SN comprises a holistic view of performance and goal achievement
with respect to intangibles.
• The architecture of the SN is built of 5 focus areas or perspectives, each
capturing different areas of interest:
- Financial focus
- Customer focus
- Human focus
- Process focus
- Renewal and development focus