Human Resource Accounting
What is Human Resource Accounting?
Human Resource Accounting is the process of identifying and measuring data about Human Resources and
communicating this information to the interested parties. It is an attempt to identify and report the
Investments made in Human Resources of an organisation that are currently not accounted for in the
Conventional Accounting Practices.
Thus, Human Resource Accounting is a term applied by the Accountancy Profession to quantify the cost and
value of employees of their employing organisation.
Objective of Human Resource Accounting
a. The Aim of HR Accounting is to depict the Potential of the Employees in Monetary Terms. This concept
can be examined from 2 directions i.e.
Cost of Human Resources i.e. the expenditure incurred for recruiting, staffing and training the Quality
of the Employees and
Value of Human Resources i.e. the yield which the above investment can yield in the future.
What is the role of human resource accounting?
Human Resource Accounting is the measurement of the cost and value of people to the organization. It
involves measuring costs incurred by the organizations to recruit, select, hire, train and develop employees
and judge their economic value to the organization.
What are the types of human resource accounting?
The Lev and Schwartz Model.
The Eric Flamholtz Model.
Morse Model.
Linkert Model.
Organ's Model.
What are three major aspects in human resource accounting?
Valuation of human resources.
Recording the value of human resources in the books of accounts.
Disclosure of the information in the financial statements of the business.
What are the main functions of HR?
Recruitment and Hiring.
Training and Development.
Employer-Employee Relations.
Maintain Company Culture.
Manage Employee Benefits.
Create a Safe Work Environment.
Handle Disciplinary Actions.
Management Control System and responsibility
What is a Management Control System?
A management control system maintains a detailed level of oversight over the use of resources within a
business. The system assigns responsibility for resource consumption to various individuals, whose
performance is judged based on their ability to manage resources in the most effective manner possible. The
control system works best when performance is tied to the goals of the organization. The information used in
a management control system is based on a budget or other plan that is compared to actual results, with
variances being reported to responsibility centers throughout the organization. Some of the techniques that
can be used in this type of system are:
Activity-based costing
Budgeting and capital budgeting
Program management
Risk management
Target costing
Total quality management
What is management control system in accounting?
A management control system maintains a detailed level of oversight over the use of resources within a
business. The system assigns responsibility for resource consumption to various individuals, whose
performance is judged based on their ability to manage resources in the most effective manner possible.
What does MCS stand for accounting?
Modified Cash Standard (MCS)
What are the types of management control?
These five types of management control systems are
(i) cultural controls,
(ii) planning controls,
(iii) cybernetic controls,
(iv) reward and compensation controls and
(v) administrative controls.
What is the importance of management control in accounting and marketing?
Control management is a process as it helps your business to check errors and put the right corrections in
place and keeps your project management on track. With control management in place, your company
increases its chances of achieving its goals.
Social and environmental
Why is social and environmental accounting?
Environmental accounting, which is a subset of social accounting, focuses on the cost structure and
environmental performance of a company. It principally describes the preparation, presentation, and
communication of information related to an organisation's interaction with the natural environment.
What is social and environmental reporting in accounting?
Social and Environmental accounting and reporting is a means of communication between a company and its
stakeholders. Stakeholders include the internal and external ones, namely; shareholders and investors,
employees, suppliers, society, banks, regulators and government.
What is environmental and social management accounting?
“The management of environmental and economic performance via management accounting systems and
practices that focus on both physical information on the flow of energy, water, materials, and wastes, as
well as monetary information on related costs, earnings and savings.” (IFAC 2005)
