What is Human Resource Accounting? Discuss with reference to a few definitions of human resource accounting.
Human Resource Accounting is a new branch of accounting. It is based on the traditional concept that all expenditure of human capital formation is treated as a charge against the revenue of the period as it does not create any physical asset. But now-a-days this concept has changed and the cost incurred on any asset (as human resources) should be capitalized as it yields benefits measurable in monetary terms.
Some Definitions of HRA.
- Assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages, salaries and training expenses.
- A specialized HR audit that continually attempts to quantify the value of organizational human resources.
- The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties.
- Flamholtz (1971) too has offered a similar definition for HRA. They define HRA as the measurement and reporting of the cost and value of people in organizational resources.