Application of Human Resources Accounting at Haydom Lutheran Hospital
processes of all organizations are operated by human resource, thus valuation
of this resource is very necessary and information concerning the valuation
should be given to the management, investors and others through financial
statements. Human resource accounting is fundamentally an information system
that tells management what changes are happening over time to the human
resources of the business. In the early 1990s, industries were familiar with
the value and importance of human assets. When service sector started to
contribute to a country’s economy, the importance of human assets got prominence
(Kamal Gosh Ray, 2010).
Resource Accounting (HRA) is concerns with accounting for the organization’s management
and employees as human capital that provides future profit. In the HRA approach,
expenditures connected to human resources are reported as assets on the balance
sheet as contrasting to the traditional accounting approach which treats costs associated
to a organization’s human resources as operating expense on the income
statement that reduce profit. HRA suggests that in adding up to the measures
themselves, the process of measurement has significance in decision-making concerning
organizations. Though the origins and early development of HRA occurred typically
in the United States, interest and contributions to development in the field
have been evident in a number of other countries (Porwal L .S, 2007).
resources accounting can be defined as a process of accounting which
quantifies, identifies and measures human resources to help management to cope
up with the changes in its quality and quantum so that equilibrium could be
achieved in between the needed resources and the provided human resources.
human resource accounting is the art of recording, valuing, and presenting
systematically the value of human resources in the books of account of the
company. This definition brings out the following significant characteristic
features of human resource accounting such as valuation of human resources,
recording the valuation in the books of account and exposé of the information
in the financial statements of the business (Baker & McKenzie 2010).
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