Human Capital Accounting: Global Theoritical Model

2001

Research Journal of Finance and Accounting, 2014

Human Resource is the most valuable asset an organization can possess. Investment in it ultimately brings about growth in the future earnings of an entity. Today, in accounting parlance, it is treated in financial statements as an expense item rather than as an intangible asset which has capacity to generate future stream of incomes. Nontreatment of human resource as an asset obviously distorts the value of economic information presented in financial statements to internal and external decision makers on the real and potential value of the organization most valuable asset. This study focuses on the usefulness of Human Resource Accounting and the need to promote its wide acceptance through International Financial Reporting Standards. This study using First Bank Nigeria Ltd as a case study adopted the Flamholtz's Historical Cost of Hiring Human Capital model to determine the value of human resources. Secondary data obtained from the annual reports and accounts of First Bank Nigeria Ltd from 2012-2013 was used. It was discovered that the Gearing, Earnings per Share and Return on Assets of the bank showed better results when human resource value was inputted in the financial report than when human resource value was not inputted in the financial report from 2012 to 2013.It was recommended that the International Accounting Standard Board should develop and issue an International Financial Reporting Standard on treatment of human resources as an asset.

Industrial Relations, 1976

Who will buy this wonderful morning? Such a sky you never did see. Who will tie it up with a ribbon? And put it in a box for me.' HUMAN RESOURCE ACCOUNTING (HRA), the subject of considerable recent discussion, is somewhat like the wonderful morning in the stage musical, Oliver. No one has been able to tie it up and put it in a box. Like the song's elusive morning, it remains a theory that is not yet ready for practical application. Why have very few bought this new form of accounting? Perhaps because traditional accounting systems have been tailored to manufacturing firms where physical or financial assets predominate. But, in service-oriented organizations-including growth firms such as computer software companies and entertainment agencies, as well as higher education and governmental unitshuman resources might be more important than physical or financial assets, and financial statements could be more informative if they reflected their value. The most apparent reason for the nonacceptance of HRA is an absence of demonstrated usefulness. Although a lot of effort has been devoted to developing human asset values within and outside of the accounting system, the gap between theory and practice remains substantial. This article is a summary of human resource accounting theory to date, its ultimate potential and present short-"The authors are, respectively,

Journal of Human Resource Costing & Accounting, 2011

Purpose -The purpose of this paper is to examine the differing perceptions or conceptualizations that have contributed to prevailing views held by accountants on the measurement and reporting of human resources. Design/methodology/approach -The study provides an analysis of extant literature and presents a theoretical framework on the relationship between HR, intellectual capital and goodwill. Findings -The lack of traction in the progress of accounting for people is due to several factors including tension between employees and management, the demands of internal and external stakeholders, and the historic roots of accounting for labour.

2010

Employees are the most important assets of an enterprise and its success or failure depends on their qualifications and performance. Human resources are not properly evaluated because the enterprises consider the wages, actually an investment in the qualification and improvement of the staff as expenditure and and not as an investment in the most important asset of an enterprise -the human capital. The current accounting system is not able to provide the actual value of employee capabilities and knowledge. This indirectly affects future investments of a company, as each year the cost on human resource development and recruitment increases. Human resource accounting is a direct part of the social accounting and aims to provide information on the evaluation of one of the most important components of the organization, namely human capital.This article seeks to show the importance of human resources for an enterprise, what human resource accounting is, which would be its implications and what are its main objectives.

2008

It has been increasingly argued in accounting and managerial literature the organization s failure to account for its human resource can have several a' consequences on the overall organizational effectiveness. In this wise the research discussed efforts done in this field by researchers and proposed a model known as I{ identifying and reporting investments made in human resources of an organization are not presently accounted for under conventional accounting practice. This IQR 1 is a three step model which classifies employees into separate Para-homogenous g and determines economic value of the various groups identified and gives the variable determined accounting treatment in the organizations books of account. On applyi1 IQR Model in this study, it was found that, total present value of employees (Junior, Senior) increases from year to year because they acquire skill and knowledge ove1 while on or off-the-job unlike physical assets. Some recommendations were made l on the co...

Journal of Corporate Accounting & Finance, 2016

This article examines the issue of how organizations value human capital-are they treated as the intellectual resource within the asset side of the ledger, or are they an expense that drains the company of cash and risks their competitive advantage? The article will focus on the idea that the value of the human capital assets should be measure and considered part of the organizations market value. The exploration of knowledgebased economies has strengthened the argument for setting value to those producing creative and innovative processes within the organization. Central to this article is the belief that human capital is an accountable asset that must be valued on corporate financial statements as Infosys has adopted since 2008. While some would argue that financial value cannot be attached to labor, this argument does not seem to be supported in the knowledge-based economy. If an organization's most valuable asset is its people, then the argument must be broached that accounting standards (such as the Financial Accounting Standards Board [FASB] and generally accepted accounting principles [GAAP]) should keep current with the 21st century. If a true comparison of organizations takes place, can that comparison ignore its human capital?

Accounting, 2016

This study interrogates the meaning and conceptual nuances of human capital accounting and additionally highlights its empirical dimensions. A critical aspect of the concerns of the study borders on the validity of an interdisciplinary interpretation of the trajectories of human capital accounting. The methodology of the study is purposively the literature review. The study has attempted to underscore the essential aspects of the critical developments in the subject matter of human capital accounting. It has also tried to draw attention to the shortcomings of earlier studies, while showing the strengths of the influential types of such previous researches. Finally, the interdisciplinary thesis of the problem of the study was upheld, as having a large measure of validity. The empirical import of the concept of human capital accounting however, remains contentions. Consequently, continuous interdisciplinary research-engagement is recommended as an outcome of the study.

Journal of Techno-Social

The accounting component of human capital has not yet been fully adopted and implemented in corporate financial reporting of corporate organizations. Determining the impact of human resource accounting on turnover, earnings per share, and capital employed of corporate performance of the listed businesses in the Nigerian stock exchange is the goal of the current study. The results of the study demonstrate that (I) human resource accounting significantly influences business turnover, (ii) human resource accounting significantly influences earnings per share, and (iii) human resource accounting significantly influences return on capital employed. In conclusion, the financial reports would be more useful for making decisions if human resources were included as an asset rather than reported in the traditional manner. Therefore, the study suggests that the listed firms adopt a culture of valuing and disclosing education, training, and ongoing retraining of their human resources to enhance...

Industrial Relations, 1976

5 Jacob G. Birnberg and Nicholas Dopuch, “A Conceptual Approach to the Framework for Disclosure,” Journal of Accountancy, CXV (February, 1963), 59. Also, see Roger H. Hermanson, Accounting for Human Assets, Occasional Paper No. 14, Bureau of Business ...

Vol. 12 No. 8 (2021), 2021

Accounting has been classifying and recording all data related to transactions creating changes on assets and total liabilities and equity of business. Accounting has also roles of assisting managers for making decisions and of serving real, comparable, clear and in time information to outside and inside. Besides, one of most important assets of businesses is labor, in other words, human capital. However, it is not quite possible to able to see human capital asset in balance sheets. In this study, it was explained that human capital assets should be shown in balance sheets as cost factor and its expense process.

Changes in the accounting profession and in the way organizations are managed and operated over the past several decades have led to the identification of a new factor that makes up a substantial part of the value of an organization: human capital. The value that employees add to organizations, however, has been difficult to measure because of the many elements that comprise it and aspects of human nature and free will that are involved. Many models have been proposed to capture the value that organizations gain from employees, but none have succeeded in full. Additionally, strict financial reporting regulations would require an accurate and uniform method of accounting for human capital in order to give much relevance to the data collected. Despite its complex nature, the field of human asset accounting continues to gain momentum and is headed in the right direction. The development of a universal method of accounting for human capital would provide a much more exact valuation of organizations and have deep benefits for owners, managers, investors, accountants, and human resource employees. This paper examines the history of human asset accounting and its feasibility in current financial reporting environments. Additionally, it demonstrates the importance of human asset accounting, different approaches toward human asset accounting, and how beneficial an accurate method could prove to be in financial reporting. Finally, the paper recommends that, as a precursor to measurement, the development of general quantitative and qualitative human capital disclosures, with real company examples, be included in a company's sustainability reporting.

2020

Theory of human resource remains a source of concern to regulators, financial statement users, analyst and other concern individual. Hence, determining relevant theories of human resource by an entity still remains hectic as there are several theories that try to suggest an objective, reliable and fair treatment of human resources as either expenses or assets. Therefore, current study aims to review conceptually the various theories of human resources. The study is conceptual in nature, where several human resources theories were reviewed. It has been concluded that several theories have been used to underpin studies of human resource nature. The study recommends that more attention should be given to study of this nature by researches and practitioners in order to ascertain how to properly capture human resource related costs in the financial statement.

International Journal of Research in Commerce and Management, 2013

All the headings should be in a 10 point Calibri Font. These must be bold-faced, aligned left and fully capitalised. Leave a blank line before each heading. SUB-HEADINGS: All the sub-headings should be in a 8 point Calibri Font. These must be bold-faced, aligned left and fully capitalised.

IOSR Journal of Business and Management, 2016

Human resource accounting (HRA) is the process of identifying, measuring and communicating data regarding human resources to the interested parties for pertinent decision making. Human resource is very vital component to run an organization efficiently and effectively and hence it is imperative to include all the transactions relating to human resources under conventional accounting practices, though there exist a constant debate among the academicians, accountants and standard setters as how to derive appropriate way out to recognize, measure and accounting treatment procedure of human resources and thus it becomes the real challenge of HRA. The present study aims to focus on practical challenges of HRA by bringing the views of different researchers on this concept, its practicability and valuation methods. Descriptive and content analysis were used through documented texts and journal articles in conducting the study. This paper proposes a way out of the challenges of HRA in line with the existing framework of accounting that can aid the standard setters and accountants.