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Measuring HR
Contribution
HR Accounting
&
Audit
Guided by:
Dr. Umakanta Nayak
Team Presentation
Subhransu Sekhar
Swain
Reg No : 200402100001
Mrutyunjaya
Mishra
Reg No : 200402100009
Sunanda
Priyadarshini
Reg No : 200402100026
Chandrachuda
Pati
Reg No : 200402100056
Rahul Nayak
Reg No :
200402100018
Abhishek Panda
Reg No :
200402100046
Biswajit Gouda
Reg No :
200402160003
“Your greatest assets
come up and down the
lift every day.
- John McGrath
Balance Sheet
1.
HR Accounting
Human Resource Accounting is quantification of
economic value of employee.
HR Accounting
Present Value Factor
(Not Considered)
Historical Cost
Approach
Replacement Cost
Approach
Opportunity Cost
approach
Standard Cost
Approach
Present Value Factor
(Considered)
Present Value of
Future Earnings
Model
Reward Valuation
Model
Net Benefit Model
Certainty Equivalent
Net Benefit Model
Aggregate Payment
Approach
Historical Cost Approach
✦ Author – Brummet, Flamholtz
Actual Money Incurred in :
1. Recruitment
2. Selection
3. Hiring
4. Training
5. Development
Replacement Cost Approach
✦ Author – Rensis Likert, Eric G.
Flamholtz
Actual Money Incurred in :
1. Recruitment
2. Selection
3. Hiring
4. Training
5. Development
Opportunity Cost Approach
✦ Author – Hekimian & Jones
Dept
Marketing Finance Operations
Dept
Marketing Finance Operations
50000
35000
Standard Cost Approach
✦ Author – David Watson
Actual Money Incurred in :
1. Recruitment
2. Selection
3. Hiring
4. Training
5. Development
Present Value of Future Earnings Model
✦ Author – Lay & Schwartz
25 Years 60 Years
Year of Service = 35 Years
Year Salary Present
Value Factor
(10%)
1st 6lpa 0.909
2nd 6lpa 0.826
3rd 6lpa 0.751
35th 6lpa XXX
Sum
50,000 per month
50,000*12 = 6,00,000
Reward Valuation Model
✦ Author – Flamholtz
Year Salary Present
Value Factor
(10%)
1st – 15th 6lpa XXX
16th – 30th 10lpa XXX
31st – 35th 20lpa XXX
Sum
25 Years 60 Years
15 Years 15 Years 5 Years
Net Benefit Model
✦ Author – Morse
Year Benefit Cost
(X’s Salary)
Net Benefit Present Value
Factor (*10%)
1 20 lpa 2 lpa 18 lpa 0.909
2 30 lpa 3 lpa 27 lpa 0.826
3 40 lpa 8 lpa 32 lpa 0.751
4 60 lpa 16 lpa 44 lpa 0.683
5 80 lpa 20 lpa 52 lpa 0.621
SUM
Certainty Equivalent Net Benefit Model
✦ Author – Pekin Ogan
Year Benefit Cost
(X’s Salary)
Net
Benefit
Present
Value
Factor
(*10%)
Certainty
Equivalent
Factor
(*X)
1 20 lpa 2 lpa 18 lpa 0.909 XXX
2 30 lpa 3 lpa 27 lpa 0.826 XXX
3 40 lpa 8 lpa 32 lpa 0.751 XXX
4 60 lpa 16 lpa 44 lpa 0.683 XXX
5 80 lpa 20 lpa 52 lpa 0.621 XXX
SUM
Aggerate Payment Approach
✦ Author – Prof. S.K. Chakraborthy
Group
Employee
Managerial
Non-
Managerial  Average
tenure
 Average
Salary
Objectives of HR Accounting
✦ To consider people as its asset.
✦ To monitor effectiveness.
✦ To develop a better approach.
2.
HR Audit
The process of identifying and measuring data
about human recources and communicating this
information to interested parties.
Objectives of HR Audit
✦ To evaluate the performance.
✦ To identify the short-comings.
✦ To verify the current practices.
Approaches of HR Audit
Comparative
Outside the
authority
Statistical
Compliance
Management
by Objective
Types of HR Audit
According to
Auditor
Internal
External
According to
Frequency
Planned
(Regular)
Upon Request
According to
Goal
Compliance
Audit
Continuous
Improvement
Audit
Thank You!

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Measuring HR Contribution & HR Audit

  • 2. Team Presentation Subhransu Sekhar Swain Reg No : 200402100001 Mrutyunjaya Mishra Reg No : 200402100009 Sunanda Priyadarshini Reg No : 200402100026 Chandrachuda Pati Reg No : 200402100056 Rahul Nayak Reg No : 200402100018 Abhishek Panda Reg No : 200402100046 Biswajit Gouda Reg No : 200402160003
  • 3. “Your greatest assets come up and down the lift every day. - John McGrath
  • 5. 1. HR Accounting Human Resource Accounting is quantification of economic value of employee.
  • 6. HR Accounting Present Value Factor (Not Considered) Historical Cost Approach Replacement Cost Approach Opportunity Cost approach Standard Cost Approach Present Value Factor (Considered) Present Value of Future Earnings Model Reward Valuation Model Net Benefit Model Certainty Equivalent Net Benefit Model Aggregate Payment Approach
  • 7. Historical Cost Approach ✦ Author – Brummet, Flamholtz Actual Money Incurred in : 1. Recruitment 2. Selection 3. Hiring 4. Training 5. Development
  • 8. Replacement Cost Approach ✦ Author – Rensis Likert, Eric G. Flamholtz Actual Money Incurred in : 1. Recruitment 2. Selection 3. Hiring 4. Training 5. Development
  • 9. Opportunity Cost Approach ✦ Author – Hekimian & Jones Dept Marketing Finance Operations Dept Marketing Finance Operations 50000 35000
  • 10. Standard Cost Approach ✦ Author – David Watson Actual Money Incurred in : 1. Recruitment 2. Selection 3. Hiring 4. Training 5. Development
  • 11. Present Value of Future Earnings Model ✦ Author – Lay & Schwartz 25 Years 60 Years Year of Service = 35 Years Year Salary Present Value Factor (10%) 1st 6lpa 0.909 2nd 6lpa 0.826 3rd 6lpa 0.751 35th 6lpa XXX Sum 50,000 per month 50,000*12 = 6,00,000
  • 12. Reward Valuation Model ✦ Author – Flamholtz Year Salary Present Value Factor (10%) 1st – 15th 6lpa XXX 16th – 30th 10lpa XXX 31st – 35th 20lpa XXX Sum 25 Years 60 Years 15 Years 15 Years 5 Years
  • 13. Net Benefit Model ✦ Author – Morse Year Benefit Cost (X’s Salary) Net Benefit Present Value Factor (*10%) 1 20 lpa 2 lpa 18 lpa 0.909 2 30 lpa 3 lpa 27 lpa 0.826 3 40 lpa 8 lpa 32 lpa 0.751 4 60 lpa 16 lpa 44 lpa 0.683 5 80 lpa 20 lpa 52 lpa 0.621 SUM
  • 14. Certainty Equivalent Net Benefit Model ✦ Author – Pekin Ogan Year Benefit Cost (X’s Salary) Net Benefit Present Value Factor (*10%) Certainty Equivalent Factor (*X) 1 20 lpa 2 lpa 18 lpa 0.909 XXX 2 30 lpa 3 lpa 27 lpa 0.826 XXX 3 40 lpa 8 lpa 32 lpa 0.751 XXX 4 60 lpa 16 lpa 44 lpa 0.683 XXX 5 80 lpa 20 lpa 52 lpa 0.621 XXX SUM
  • 15. Aggerate Payment Approach ✦ Author – Prof. S.K. Chakraborthy Group Employee Managerial Non- Managerial  Average tenure  Average Salary
  • 16. Objectives of HR Accounting ✦ To consider people as its asset. ✦ To monitor effectiveness. ✦ To develop a better approach.
  • 17. 2. HR Audit The process of identifying and measuring data about human recources and communicating this information to interested parties.
  • 18. Objectives of HR Audit ✦ To evaluate the performance. ✦ To identify the short-comings. ✦ To verify the current practices.
  • 19. Approaches of HR Audit Comparative Outside the authority Statistical Compliance Management by Objective
  • 20. Types of HR Audit According to Auditor Internal External According to Frequency Planned (Regular) Upon Request According to Goal Compliance Audit Continuous Improvement Audit
  • 21.