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Introduction.
Human resource accounting (HRA)...
Human resources, like any other asset, bring with them several costs.
WHAT IS HRA?
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”. HRA, thus, not only involves measurement of
all the costs/
investments associated with the recruitment, placement, training
and development of
employees, but also the quantification of the economic value of
the people in an organization.
Objective
Advantages
HRA
Approaches to HRA
"Suppose that tomorrow all the jobs are empty, but you still have
available all the rest of the resources: buildings, factories, industrial
plants, patents, stocks, money, and so on; except, of course, for the
personnel. How much time would it take you to recruit the necessary
personnel, train it until they are able to assume all the existing functions
at the present competitive level and integrate it in the organization in the
same way they now are?"
Even though Likert's proposal is very unlikely, it enables calculating the cost of totally
substituting (or replacing) human resources. To calculate substitution cost, figure in the cost
of sacrifice to replace a human resource that is already employed. This cost includes exit
costs of the leaving employee and recruiting and training of the
replacement.
3. Opportunity Costs
Some authors consider that opportunity costs are not the alternative to
historical costs or substitution costs, but estimates these costs without
mistake. Opportunity costs are considered as "an asset value when [they
are] the target of an alternative use"
The bid price is arrived by calculating the actual or expected rate for
capitalization of the differential earning supposed to be earned by the
employee
5. Expense model
According to Mirvis and Mac, (1976) this model focuses on attaching dollar
estimates to the behavioral outcomes produced by working in an
organization. Criteria such as absenteeism, turnover, and job performance
are measured using traditional organizational tools, and then costs are
estimated for each criterion. For example, in costing labor turnover, dollar
figures are attached to separation costs, replacement costs, and training
costs.
Conclusions
Definition:
HR Audit means the systematic verification of job analysis and
design, recruitment and selection, orientation and placement,
training and development, performance appraisal and job
evaluation, employee and executive remuneration, motivation
and
Scope of Audit:
Benefits of HR Audit:
1. Pre-Audit Information:
Auditor engagement:
3. Pre-Audit Self-Assessment:
4. On-site Review:
This phase involves an on-site visit at the client's facility interviewing staff
regarding HR policies and practices. A very in-depth HR audit checklist is
completed.
5. Records Review:
6. Audit Report:
Besides classifying needs in each of the above areas, the HR audit also
cites relevant laws, cases and research to support the recommendations.
Conclusion:
The auditors always prepare and submit an audit report to authority of the
organization, which may be clean or qualified. The clean report indicates
the appreciative of the department's function, but the latter one
represents the gaps in performance and therefore contains remarks and
remedial measures. HR Audit is very much helpful to face the challenges
and to increase the potentiality of the HR personnel in the organization.