HUMAN RESOURCE ACCOUNTING (HRA) PRACTICES IN INDIA

Double entry accounting:

Success of corporate undertakings purely depends upon the quality of human resources. The conventional accountings of human resources are not recognized as physical or financial assets.;

; Though Human Resources Accounting was introduced way back in the 1980s, it started gaining popularity in India after it was adopted and popularized by NLC.; Human Resources accounting, also known as Human Asset Accounting, involved identifying, measuring, capturing, tracking and analyzing the potential of the human resources of a company and communicating the resultant information to the stakeholders of the company.; It was a method by which a cost was assigned to every employee when recruited, and the value that the employee would generate in the future.; Human Resource accounting reflected the potential of the human resources of an organization in monetary terms, in its financial statements.

The two main components of Human Resources Accounting were investment related to employees and the value generated by them.; Investment in human capital included all costs incurred in increasing and upgrading the employees’ skill sets and knowledge of human resources.; The output that an organization generated from human resources was regarded as the value of its human resources.; Human Resources accounting is used to measure the performance of all the people in the organization, and when this was made available to the stakeholders in the form of a report, it helped them to take critical investment decisions.All the models stressed that human capital was considered an investment for future earnings, and not expenditure.

Human resources accounting system consists of two aspects namely:

a); The investment made in human resources

b); The value human resource;

The human resource investment usually consists of the following items:-

3); Training cost

From the above discussions, it is felt that, Human resource accounting provides quantitative information about the value of human asset, which helps the top management to take decisions regarding the adequacy of human resources.