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HUMAN RESOURCE ACCOUNTINGAND AUDITKRISHNA MISHRA (73)KESHAV KUMAR (75)BIKASH KR. GUPTA(76)KK GUPTE (77)OM PRAKASH SAH (78)PREPARED BY :

Human ResourceAccounting is, Theprocess ofidentifying and measuring data about human resource and communicating this information to interested parties.

HISTORICAL DEVELOPMENTOFH.R.ACCOUNTINGAccording to Eric G Falmholtz FIRST STAGE (1960-1966):beginning of academic interest in the area of HRASECOND STAGE (1966-1971):-The focus here was more on developing and validating different models of HRA

Cont..THIRD STAGE (1971-1976):This period was marked by a widespread interest in the field of HRA R.G.Barry experiments contributed substantially during this stage FOURTH STAGE (1976-1980):This was the period of decline in thearea of HRA

FIFTH STAGE (1980 onwards ) :There was a sudden renewal of interest in the field of HRA

People are valuable organizational resource.

Human Resource value isinfluenced by management style.

HRA information is needed.

ASSUMPTIONS UNDERLYINGH.R.ACCOUNTING

OBJECTIVES OFH.R.ACCOUNTINGProvide cost value information about acquiring, developing, allocating and maintaining HR. Enable mgmt. to effectively monitor the use of HR. Find whether human asset is appreciating or depreciating over a period of time. Assist in thedevelopment of effective management practices. To motivate individual persons in the organization to increase their worth by training. In planning physical resource vis--vis HR by giving valuable information.

PURPOSE OF HR ACCOUNTING Use ofresources to achieve the immediate and long-run goals of the organization.

Traditional accounting involves treatment ofhuman capital and non-human capital differently.

Conventionaltreatmentonhumanresource.

USES OF HR ACCOUNTING

According to Grojerand Johansson - As a political tool, used to demonstrate mismanagement ofhuman resource. As a pedagogical instrument for analyzing and structuring. As a decision making aid to ensure that decision on HR are more rational from the management point of view.

METHODS OF H.R.ACCOUNTINGHistorical Cost MethodReplacement Cost MethodStandard cost methodOpportunity Cost methodCapitalization Of Salary MethodEconomic Value methodDiscounted Present Value of Future Earning Method

Discounted Present Value of Future Earning Method -

This method recognizes human as wealth producing source of income. Steps- Employees are classified into homogeneous groups Earnings of each groups estimated.There present value of earnings calculated.

Help management in recruitment planning. Provides valuable feedback to manager. Helps in decision making. Helps potential investor judge a company.

LIMITATIONS OF HR ACCOUNTINGNot easy to value human assets. HR is full of measurement problem. Employees and Unions may not like the idea. Lack of Empirical evidence.

HUMANRESOURCE AUDITThewordAUDITcomesfromtheLatin verbaudilewhich means, to listen

HR Audit is a tool whichhelps assess effectiveness ofHR functions ofan organization.

HUMANRESOURCE AUDIT

WHY CONDUCT AN HR AUDIT ?

Ensure compliance Improve HR practices Train your managers Prepare for potential government audit or litigation Gain an understanding of departments environment Show a good faith effort Correct errors

NATURE OFHUMAN RESOURCE AUDITHRMActivitieHRMOutcomesHRMAudit

SCOPE OF AUDITAudit of human resource function.

Audit of managerial compliance.

Audit of human resource climate.-Employee turnover.- Absenteeism.-Safety records. - Attitudes surveys.Audit of corporate strategy.

BASIC PRINCIPLES OF AUDITS1.Identify the Scope2. Develop a Questionnaire3. Collect Data4. Benchmark Findings5. Provide Feedback about Results6. Create Action Plans7. Foster Climate of Continuous Improvement

APPROACHES TO HUMAN RESOURCE AUDIT RESOURCE AUDITComparative Approach,

Outside Authority Approach,

Statistical Approach,

Compliance Approach, and

Management By Objectives (MBO)

TYPES OF AUDITINTERNAL AUDIT :The internal audit is conducted by the company's own staff as a part of their control activities.EXTERNAL AUDIT :The external audit is conducted by outsiders specifically employed for this purpose. The advantage is to get the unbiased evaluation by competent people of the manpowermanagement function.

BEFORE YOU BEGAIN THE AUDIT PROCESS:

2.Secure senior management commitment.a. Are they ready to fix whats broken, evenif itcosts $$$$?b. Dotheyagree with themethodology?c. Willtheyallowaccesstoalldepartments/information?d. Willtheypubliclysupportthe process?

1.Determine who will conduct the audit. Internal vs. External

3.Define the parameters.

a. Who will be audited?b. What do youwant to audit? c. What audittools will youuse? d. How will theprocess be rolled out? e. Howwillresultsgetreported? f. Whowillgettheresults?

4. Introduce the audit process toyour managers.

H.R.AUDIT PROCESSPRE-AUDIT INFORMATIONPRE-AUDIT SELFASSESSMENTON-SITE REVIEWAUDIT REPORT RECORDS REVIEW

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