29232919 Human Resource Accounting Auditing

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HUMAN RESOURCEHUMAN RESOURCE

ACCOUNTING ACCOUNTING


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DEFINITION OF DEFINITION OF

H.R.ACCOUNTINGH.R.ACCOUNTING The process of identifying and

measuring data about humanresource and communicatingthis information to intrestedparties .

- AMERICAN ACCOUNTING ASSOCIATIONCOMMITTEE


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DEVELOPMENT OF DEVELOPMENT OF H.R.ACCOUNTINGH.R.ACCOUNTING

-According to Eric G Falmholtz

FIRST STAGE (1960-1966) beginning of academic interest in the area of HRA

SECOND STAGE (1966-1971)

The focus here was more on developing andvalidating different models of HRA


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THIRD STAGE (1971-1976)

This period was marked by a widespread interest inthe field of HRA . R.G.Barry experimentscontributed substantially during this stage

FOURTH STAGE (1976-1980)

This was the period of decline in the area of HRA

FIFTH STAGE (1980 onwards )

There was a sudden renewal of interest in the field of HRA


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OBJECTIVES OF H.R.ACCOUNTINGOBJECTIVES OF H.R.ACCOUNTING

Provide 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 ordepriciating over a period of time.

Assist in the development of effectivemanagement practices. To motivate individual persons in theorganization to increase their worth by training.


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PURPOSE OF HR ACCOUNTINGPURPOSE OF HR ACCOUNTING

Use of resources to achieve the immediate andlong-run goals of the organization.

Traditional accounting involves treatment of human capital and non-human capitaldifferently.

Conventional treatment on human resource.


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ASSUMPTIONS UNDERLYING IN ASSUMPTIONS UNDERLYING INH.R.ACCOUNTINGH.R.ACCOUNTING

People are valuable organizational resource.

Human Resource value is influenced by

management style.

HRA information is needed.


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METHODS OF H.R.ACCOUNTINGMETHODS OF H.R.ACCOUNTING COST APPROACH

- Historical Cost Approach- Replacement Cost

- Standard cost method- Present value- Opportunity Cost method- Economic Value method

ECONOMIC VALUE APPROACH


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USES OF HR ACCOUNTINGUSES OF HR ACCOUNTING

- Grojer and Johansson

As a political tool, used to demonstratemismanagement of human resource.

As a pedagogical instrument for analyzing andstructuring.

As a decision making aid to ensure that

decision on HR are more rational from themana ement oint of view.


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ADVANTAGES OF HR ADVANTAGES OF HR ACCOUNTING ACCOUNTING

Foresee the changesProvides different methods of testing

Increase productivityBrings high returnHelps individual employee to aspire

Provides scope for advancementHelps potential investor judge a company


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LIMITATIONS OF HRLIMITATIONS OF HR ACCOUNTING ACCOUNTING

Not easy to value human asset.Results in dehumanizing human resource.No evidence.

HR is full of measurement problem.Employees and Unions may not like theideas.

Unrealistic.Lack of Empirical evidence.


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HUMAN RESOURCE AUDIT


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HUMAN RESOURCE AUDIT HUMAN RESOURCE AUDIT

HR Audit is a tool which helpsassesss effictiveness of HR functionsof an organization.


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NATURE OF HUMAN RESOURCENATURE OF HUMAN RESOURCE AUDIT AUDIT

H R M A c t i v i

t i e s

H R M A u d

i t H R M O u t c

o m e s


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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

WHY TO CONDUCT AN HR AUDIT ?WHY TO CONDUCT AN HR AUDIT ?


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SCOPE OF AUDIT SCOPE OF AUDIT

Audit of human resource function.

Audit of managerial compilance.

Audit of human resource climate.- Employee turnover.- Absenteeism.

- Safety records.- Attitudes survays.

Audit of corporate strategy.


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BASIC PRINCIPLES OF AUDITS

1. Identify the Scope2. Develop a Questionnaire3. Collect Data4. Benchmark Findings5. Provide Feedback about

Results6. Create Action Plans7. Foster Climate of Continuous

Improvement


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APPROACHES TO HUMANAPPROACHES TO HUMANRESOURCE AUDITRESOURCE AUDIT

Comparative Approach,Outside Authority Approach,Statistical Approach,Compliance Approach, andManagement By Objectives(MBO) Approach


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TYPES OF AUDIT TYPES OF AUDIT

INTERNAL AUDIT : The internal audit is conducted by the

company's own ataff as a part of their control

activities.

EXTERNAL AUDIT :

The external audit is conducted by outsidersspecifically employed for this purpose. Theadvantage is to get the unbiased evaluationby competent people of the manpowermanagement function.


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1. Determine who will conduct the audit.

Internal vs. External

2. Secure senior management commitment.

a. Are they ready to fix whats broken, even if it costs $$$$?

b. Do they agree with the methodology?

c. Will they allow access to all departments/information?

d. Will they publicly support the process?

PRE REQUESTIES OF AUDITPRE REQUESTIES OF AUDITPROCESSPROCESS ::


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3. Define the parameters.

a. Who will be audited?

b. What do you want to audit?

c. What audit tools will you use?

d. How will the process be rolled out?

e. How will results get reported?

f. Who will get the results?

4. Introduce the audit process to your managers.


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H.R.AUDIT PROCESSH.R.AUDIT PROCESS

PRE-AUDIT INFORMATION

PRE-AUDIT SELF ASSESSMENT

ON-SITE REVIEW

RECORDS REVIEW

AUDIT REPORT


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Documents

29232919 Human Resource Accounting Auditing