HR Accounting deals with holistic performance by quantifying the value of people. It mainly focuses on valuing human capital and maximizing the value. Accounting is majorly four things
• Recording: Recording all transactions (inflows and outflows)
• Classifying: total amount, assets, value etc. – preparing a ledger or trial balance
• Summarizing: To find out the profits and losses, listing out incomes and expenses
• Interpretation of result: comparing past and present results and deciding strategies
Human Resource means providing right man for right job to get results and managing the bottom line by identifying potential and performance. Human Resource is still considered as a support function where …show more content…
But in HRA these two are taken as benefit accounts, which result in fiscal advantages.
Historical development of HR Accounting:
• Stage 1: Derivation of basic HRA concepts (1960-1966)- Support for treating people as assets and accounting for their value
• Stage 2: Basic academic research developing measurement models (1967-1970)- Developing and assessing the validity of models for measuring HR cost and Value
• Stage 3: Significant academic research and growth (1971-1977) Rapid growth of interest in HR accounting
• Stage 4: Reducing interest in HRA (1978-1980)
• Stage 5: Resurgence of interest in HRA (1981-present)
Every methods have pros and cons, HRA provides an excellent overview of the HR activities happening in the organizations but also lacks in organizational support, accuracy etc.
Human …show more content…
The major difference is cost based accounting deals with the past data and lacks relevance where as value based accounting takes in account the future outlook. Financial statements are the face of the organization and with value based accounting one expects make it more meaningful, reliable, less biased and complete. Information should be provided to the information users (Shareholders and stakeholders) to make important decisions, implement strategy, managing processes effectively that would impact the organization in the present and reach future