HR Accounting

The past few decades has showed a progressive change in the economy i.e. transformation from manufacturing to services economy. Earlier the emphasis was in manufacturing sector and importance was given more on physical assets and HR was treated as an investment whereas, the new globalize economy has changed the way corporate look at the HR. i.e. the knowledge, skills & abilities of all the human resources of an organization are now being treated as an asset for the organization. The acquisition & retention of talents are considered to be of vital importance in today’s competitive scenario. In earlier days human resource functions were only confine to the administration of staff related function and so human resource function were not considered in accounting. With the recent changes and fast pace globalization a new concept of “Human resources accounting” has come up. HRA can be described as a process of accounting that involves measurement of all the costs/Investments associated with the recruitment, placement, training and development of Employees, and the quantification of the economic value of the people in an organization. The HRA concept lays emphasis on the development & growth of the human resources of the country as a whole thereby increasing the wellness of the society. The practical implication of HRA concept has a long term implication on the profitability and the stability of the organization. It is therefore seen that the senior management now a days go for HR Accounting and audits before arriving at any decision in order to avoid any short term myopia. It is seen that with the development of the small concept such HRA an organization can excel in its field by aiming various benefits starting from excellent performance to corporate social responsibility.

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