1.

Human Resource Accounting (HRA) means to measure the cost and value of the people (i.e. of employees and managers) in the organisation. It measures the cost incurred to recruit, hire, train and develop employees and managers. HRA also finds out the present economic value of its employees and managers. After measuring the cost and value of its employees and managers, the organisation prepares a report. This report is called HRA Report. It is shown to the top level management. It can also be shown to the employees, managers and outside investors. HRA FOR MANAGING HUMAN RESOURCES Benefits, objectives, advantages of human resource accounting HRA:1. Information for manpower planning HRA provides useful information about the cost and value of human resources. It shows the strengths and weakness of the human resources. All this information helps the managers in planning and making the right decisions about human resources. Thus, it provides useful information for Manpower Planning and Decision Making. 2. Information for making personnel policies HRA provides useful information for making suitable personnel policies about promotion, favorable working environment, job satisfaction of employees, etc. 3. Utilization of human resources HRA helps the organisation to make the best utilization of human resources. 4. Proper placements HRA helps the organisation to place the right man in the right post depending on his skills and abilities. 5. Increases morale and motivation HRA shows that the organisation cares about the employees and their welfare. This increases their morale and it motivates them to work hard and achieve the objectives of the organisation. 6. Attracts best human resources Only reputed organisations conduct HRA. So, competent and capable people want to join these organisations. Therefore, it attracts the best employees and managers to the organisation.

7. Designing training and development programs HRA helps the organisation to design (make) a suitable training and development program for its employees and managers. 8. Valuable information to investors HRA provides valuable information to present and future investors. They can use this information to select the best company for investing their money.

Position of HRA in India

In India, very few companies use HRA. It is not compulsory in India. Infosys Technologies and BPL are the leading companies in India, which use HRA. HRA reports give useful information to the company management, employees and investors.
2.

The main reason why human resource accounting have taken a long period to be incorporated in the company's final report is the difficulty or challenge of assigning monetary value to various human asset cost, investment and employees worth. There are mainly two methods that are used in assigning monetary value to employee cost, investment or worth. This includes: 1. the cost approach 2. the economic value approach The cost approach is based on the actual cost incurred by the company in relation with employees. The economic value approach considers human resource as asset and tries to identify the future earning resulting from use of human asset.

MEASURE THE EFFECTIVENESS OF HR PROGRAM

Average revenue by employee

To calculate this number, divide your overall revenue by total number of employees. Your goal is to increase the average revenue by employee year over year. If you hire and retain quality employees, they will be more productive and generate more revenue. Establishing effective hiring programs and ensuring that the company is offering appropriate benefits, pay, training, and development opportunities are all areas where HR can improve revenue per employee.

Employee Turnover
To calculate your overall turnover, compare the total number of replacement hires to the total number of employees. Your goal is to reduce the turnover among your top performers and find an acceptable level of turnover for your average and low performing employees. A more advanced metric is to drill down into the specific reasons that employees are leaving so that you can resolve those issues for your top and average employees.

Employee Engagement/Satisfaction
Engaged employees are more productive employees. The best method to determine employee engagement is to ask the employees directly. There are many different survey methods that measure engagement.

Workplace Compliance
With strong compliance programs, including training on anti-harassment, and nondiscrimination, your workplace should see a decrease in regulatory audit findings, the number of workplace injuries, accidents, and employee lawsuits. To measure the effectiveness of your compliance programs you can track:

Total number of lawsuits o Cost of defense as a % of revenue Lost time to accidents and injury Total number of employee complaints

3.

Human Engineering Accounting is an applied science that coordinates the design of devices, systems, and physical working conditions with the capacities and requirements of the worker.

4.

Human resources accounting strives to quantify the intangible qualities that individuals bring to a business. While long recognized as a business asset, human capital has historically proven problematic for accountants and economists to evaluate. A clearer understanding of this area of accounting is necessary as businesses become increasingly dependent on the knowledge and capabilities of employees in the information age. According to a 1998 study by the School of Business at the University of Stockholm, the main problem with HR accounting is the perception that it is not based on a business strategy, possibly due to difficulties quantifying human resource capital in a manner suitable to record on a financial statement. It is very difficult to accurately calculate on-the-job training costs for new employees and to assign dollar values to the intellectual or physical capabilities of staff.
Operational Problems

Until recently, the "value" of an enterprise as measured within traditional balance sheets, e.g. buildings, production plant, etc., was viewed as a sufficient reflection of the enterprise's assets. However, with the growing emergence of the knowledge economy, this traditional valuation has been called into question due to the recognition that human capital is an increasingly important part of an enterprise's total value. This has led to two important questions:

how to assess the value of human capital in addition to an enterprise's tangible assets and how to improve the development of human capital in enterprises. The emergence of methods for accounting human resources aimed at measuring, developing and managing the human capital in an enterprise, can thus be said to reflect the need for improving measuring and accounting practices as well as human resource management.

Defining human resource accounting Human resource accounting (HRA) as an approach was originally defined as the process of identifying, measuring and communicating information about human resources in order to facilitate effective management within an organisation. It is an extension of the accounting principles of matching costs and revenues and of organising data to communicate relevant information in financial terms. The accounting of human resources can be seen as just as much a question of philosophy as of technique. This is one of the reasons behind the variety of approaches and is further underlined by the broad range of purposes for which accounting human resources can be used, e.g. as an information tool for internal and/or external use (employees, customers, investors, etc.), and as a decision-making tool for human resource management (investments in human resources as well as personnel management in general).
Some Problems are:

i) There is no proper clear-cut and specific procedure or guidelines for finding cost and value of human resources of an organization. The systems which are being adopted have certain drawbacks.

ii) The period of existence of human resource is uncertain and hence valuing them under uncertainty in future seems to be unrealistic. iii) There is a fear that HRA may dehumanise and manipulate employees. iv) For e.g., an employee with a comparatively low value may feel discouraged and develop a complex which itself will affect his competency to work. v) The much needed empirical evidence is yet to be found to support the hypothesis that HRA as a tool of the management facilitates better and effective management of human resources. vi) In what form and manner, their value to be included in the financial statement is the question yet to be classified on which there is no consensus in the accounting profession. vii) As human resources are not capable of being owned, retained and utilized, unlike the physical assets, there is problem for the management to treat them as assets in the strict sense. viii) There is constant fear of opposition from the trade unions as placing a value on employees would make them claim rewards and compensations based on such valuation. ix) Another question is, on value being placed on human resources how should it be amortized. Is the rate of amortization to be decreasing, constant or increasing? Should it be the same or different for different categories of personnel? x) In spite of all its significance and necessity, tax laws do not recognize human beings as assets. xi) There is no universally accepted method of human asset valuation. xii) As far as our country is concerned human resource accounting is still at the developmental stage. Much additional research is necessary for its effective application.

5.

ACCOUNTING Information System (AIS) is a complex and fast growing area particularly in the field where human asset is involved. The information pertaining to Human Asset (HA) is something which is difficult to measure is the general belief. The result is that managers take decisions on the basis of whatever information is made available to them. One wrong decision regarding the most valuable asset (HA) may ruin the organisation and at present there is no generally accepted comprehensive HAA model which provides information for both cost and value of Human beings in the organization that can be used by the decision makers. Human Asset Accounting Information System (HAAIS) should be able to make a distinction between efficient and inefficient employees; effective and ineffective employees; experienced and inexperienced employees; et.al. There is virtually no comprehensive information system which helps the decision makers in taking decisions like, (a) whether to retain this employee or to fire him; (b) whether to give increments to the employees or to reduce their pay packets; (c) Impact of empowerment and Job satisfaction on the contribution made by employees; (d) Impact of team work, synergy, and organisation culture on the overall performance; et.al. Further at the conceptual level also there is a need to develop models which can satisfy the above-mentioned needs. Some of the issues which requires immediate attention needs to be discussed. The value of human resource depends upon the contribution in achieving organisational goals. However, it is difficult to measure separately the contributions made by different assets to the output. The assets other than human are recorded at the cost incurred in getting the right to use and hold those assets as a surrogate measure of value but Human Resource Assets are deprived off this treatment.

Although the periodic reporting principle makes it obligatory to classify between revenue expenses and capital expenditures on the basis of their expected benefits, so as to show the Capital Expenditures as Assets of the Organisation at the date of financial reporting and match the current costs with the current benefits to show the profits during the period being reported, the expenditures incurred on Human Resource Assets are charged from the Income Statement in the year of expenditure under the present practices. This would have been correct, had there been no periodic reporting so that at the end of the venture whatever more is left is profit (less is loss). But due to the longer uncertain life of the business concerns, periodic reporting is necessary, hence the need for classifying between capital and revenue. To make the above objectively verifiable the Accountants generally use historical cost by assuming the Going Concern Concept. The Going Concern concept of accounting says that the principles of accounting can effectively be applied and used only when we assume that the business has a life which is not definite. If this is so, one logical deduction can be that the job positions shall also continue for a period which is not definite. That means the job positions held by human beings are utilised by the organisations for a longer period. It, therefore, can be concluded that benefits received by the organisation, from human acting as a resource holding different job positions, are for a longer period. The identification of benefits and the costs involved in continuously getting these long term benefits are the major elements of Human Resource Accounting. The matching of the costs involved with the benefits from Human Resource in the relevant period and capitalisation of the residual costs are required for financial reporting for which no model exists which is generally acceptable to accountants. Many people accept while giving speaches that Human Resource Asset is the most important asset of the organisation, even then this asset could not find place in the Balance Sheet of Companies which is a contravention of the convention of disclosure. The HAAIS has been classified under two broad areas, i.e., HA Financial Accounting Information System (HAFAIS) and HA Management Accounting Information System (HAMAIS). HAFAIS focuses on the inconsistencies in the generally accepted accounting principles (GAAP) and provides a model that is compatible with the accounting principles and hence can be integrated in the annual reports of organizations. HAMAIS provides relevant information that can be used for taking any type of decision pertaining to human beings of the organisation. It can be concluded that it is the human beings who can reengineer the organisation on the path of success, hence decision makers should take due recognition of the same by developing information systems which can provide relevant information about human assets. The information system should consider both the cost and value of human beings and should be able to make inter-firm and intra-firm comparisons making use of external information including global benchmarks as well. The author visualizes that human asset would get due recognition in corporate reporting and decision making apart from a shift from Human Resource Management to Human Response Management.
6.

Human Factors Integration is concerned with providing a balanced development of both the technical and human aspects of equipment procurement. It provides a process that ensures the

application of scientific knowledge about human characteristics through the specification, design and evaluation of systems. Stage 1 Initial Literature Review of Existing HF Methods A literature review was conducted in order to create a comprehensive database of existing HF methodologies. The purpose of this literature review was to provide the authors with a comprehensive systematic database of available HF methods and their associated author(s) and source(s). It is intended that the database will be used by HF practitioners who require an appropriate technique for a specific analysis. The database allows the HF practitioner to select the appropriate technique through the subject classification of HF methods (e.g. mental workload assessment techniques, situation awareness measurement techniques, etc.). For example, if an analysis of situation awareness is required, the database can be used to select a number of appropriate methods. HF methods and techniques, including the following categories of technique: Data collection techniques. Task analysis techniques. Cognitive task analysis techniques. Charting techniques. Human error identification (HEI) techniques. Mental workload assessment techniques. Situation awareness measurement techniques. Interface analysis techniques. Design techniques. Performance time prediction/assessment techniques. Team performance analysis techniques. Stage 2 Initial Methods Screening Before the HF techniques were subjected to further analysis, a screening process was employed in order to remove any techniques that were not suitable for review with respect to their use in the design and evaluation of systems. Techniques were deemed unsuitable for review if they fell into the following categories: Unavailable The technique should be freely available in the public domain. The techniques covered in this review included only those that were freely available. Inapplicable The applicability of each technique to complex systems was evaluated. Those techniques deemed unsuitable for the use in the design of systems were rejected. In addition, anthropometric, physiological and biomechanical techniques were not reviewed. Duplication HF techniques are often reiterated and presented in a new format. Any techniques that were very similar to other techniques already chosen for review were rejected. Limited use Often HF techniques are developed and not used by anyone other than the developer. Any techniques that had not been applied in an analysis of some sort were rejected.

Stage 3 Methods Review The HF design and evaluation methods were then analysed using the set of pre-determined criteria. The criteria were designed not only to establish which of the techniques were the most suitable for use in the design and evaluation of systems, but also to aid the HF practitioner in the selection and use of the appropriate method(s). The output of the analysis is designed to act as a HF methods manual, aiding practitioners in the use of the HF design methods reviewed. Descriptions of Method Review Criteria

7.

Physics: Accounting for human activity through physics does not require anything more than a switch of mind. Objectivity needs first to be recognized as an epistemological principle that should mostly be ignored when modelling human activity, lest it is decided that methods from physics should not apply to man out of principle. Secondly, it needs to be understood that two dimensions of human activity are specific at coordinating behaviour and should be regarded in earnest as of a physical nature. The notion of field is appropriate when referring to both language and the economy. Language needs to be analyzed as a field allowing "action at distance"; the way it provides the economy with its structuring process needs to be fully acknowledged and explained. It has now become possible to encompass most aspects of human activity within the scope of theoretical physics. Bringing this task to fruition requires but a slight change of perspective in the way all manners of human activity are currently envisaged. As a way of introduction, a brief portrait of theoretical physics is depicted in such a manner that the expansion of physics into the human realm becomes evident in the process of exposition.

Theoretical physics is defined here as a composite model of the workings of nature whereof the four main components are classical mechanics, quantum mechanics, thermodynamics and relativity theory. The reason for distinguishing these four components is double. Firstly, the combining of them is currently not seamless; secondly, it is the rationale underlying the current imperfect articulation of these four components which surprisingly opens physics to its expansion into the human world. Physiology: The physiology of exercise is a broad concept that addresses the central issue as to how the body adapts itself to the demands of physical activity. Physiology is the academic study of the various processes, systems, and functions of the human body as influenced by the performance of physical activity. Body composition is the most visible of the physiological changes often observed to have occurred through exercise. The body is constructed from body fat, lean muscle mass, and the organs and skeletal bone, the dimensions of which are not altered through exercise. Body composition is affected by two distinct exercise mechanismsthrough a reduction in the percentage of body fat in a subject, and through the increase of lean muscle mass developed through specialized exercise. Psychology: Characteristic for our time is the intensive development of interdisciplinary research connecting psychology with neurophysiology, with cybernetics, and logical- mathematical disciplines, and with sociology and cultural history; this in itself cannot lead to the resolution of the fundamental, methodological problems of psychological science. Leaving them unresolved only increases the tendency toward a dangerous physiological, cybernetic, logical, or sociological reductionism and threatens psychology with a loss of its subject, its specificity. The principal difficulties in psychology posed by the binomial plan of analysis and by the postulate of directness, which hides behind it, gave rise to persistent attempts to overcome it. One of the lines along which these attempts were made stressed the fact that the effects of external action depend on their interpretation by the subject, on those psychological intervening variables that characterize his internal state. Economics:

8.

India like the rest of the country has not given much consideration to issues related to human resource accounting. In India this concept is struggling for acceptance and has not been introduced so far as a system. Indian companies act does not require company to furnish information retaliated to personnel cost in their annual report. However in the past decade there has been a growing trend toward measurement and reporting of human asset. Human resource accounting was first used in public sector by Bharat Heavy Electrical ltd (BHEL) in fiscal year 1972-73. Later other organization both in public and private organization started to furnish information related to human resource in the annual report.

Bharat Heavy Electrical ltd (BHEL)

The company was the first to report data on human resource in India and has continued to furnish information relating to personnel cost in it annual report. The company use Lev & Schwartz model in valuing it human resource with the following assumption (Patra et al 1987). 1. Normal career growth according to present policies. If any vacancy arises it is filled with a level immediately below. 2. The present pattern of employee compensation is followed. This includes both direct and indirect benefit as well as the effect of wage revision. 3. Weightage for change in efficiency due to skills, experience and age. 4. A discount rate of 12% is used in calculating the present value of employees. The value of human resources from fiscal year 1978-79 to 1990-91 is presented in the table below

Cement Corporation of India

The company produce and market cement and fall under the cement industry. Cement industry plays an important role in the growing Indian economy. India is the second largest producer of cement in the world. The boom in the housing market and infrastructure has boosted cement industry significantly. Cement production rose by 8.13% in year 2007/08 to 168.31 million tones against 155.66 million tones recorded the prior year. As demand for cement increase along with economic growth all cement players are expected to increase their capacity with demand expected to be over 220 million tone by the end of 2009- 10. The industry is expected to record growth of 10% per annum in the coming years. Human resource in this organization is considered important and constitutes a large portion of the total resource. The organization describe human resource as 'Mother Resources' as it act as the medium through which other resources viz. material, machines and money are organized, coordinated, directed and controlled. Maximum realization of the potentialities of this 'Mother Resources' is of crucial importance for the success of this organization. The corporation determines the economic value of human asset by discounting the expected future earnings of worker and taking into consideration promotional policies and the salary scale. The valuation in based on principles and guidelines enunciated in the model developed by Lev

and Schwartz (1971), Eric Flamholtz (1974), and Taggi and Lau (1974) with appropriate modification done. The value of human resource is illustrated in the following table. The company also report on it human resource in term of age and professionalism where 49.18% in fiscal year 2008 represent those between 26 -50 years and 15.35% of the total workforce represent technically and professional qualified, degree/diploma holders.

Reliance industries
It is the largest private sector player in the upstream oil and gas exploration and production sector. The company was the first in private sector to cross US$ 1 billion mark in net profit and is ranked among the top 150 in profit generation. In financial year 2003/04 the company reported a net profit of US $1,180. During the same year the market capitalization of the company was US $ 17.2 billion (Rs 75,132 crore), making it the most valuable private company in India. As at 31 March 2004 the company had 11,858 employees. Though the company does not include valuation of employees in their annual report, it has it has furnished report relating to employee professionalism and age as illustrated in the following table This indicates that engineers comprise the highest number of staff in the organization. Furthermore majority of people in the organization are between 26 -35 years.

Hindustan copper limited

Despite the poor performance of the economy in year 2009 the company was able to report a revenue of Rs 5,680 crore and profit before interest and tax of Rs 3,665 crore. This was due to low cost operation, robust balance sheet and strong organic growth line. Production of lead and zinc rose by 17% in financial year 2009 compared to 2008. in the same period production of saleable silver increased by 31% while wind power generation increased by 122%. Hindustan copper limited is a public sector undertaking which market copper wire bar copper cathodes and various by product such as copper sulphate, anode lime, sulphuric acid etc. the company value it human resource based on Lev and Schwartz economic model.

Human resource accounting provides quantitative information about the value of human resource, which helps the top management to take decisions regarding the adequacy of human resources. Based on these insights, further steps for recruitment and selection of personnel are taken. Outside the organization, quantitative data on the most valuable asset has an impact on the decision of investors, clients, and potential staff of the company. When proper valuation and accounting of human resources is not done then management may not be able to recognize the negative effects of certain programs, which are aimed at improving profit in the short run. If not recognized on time this programs could lead to fall in productivity levels, high turn over rate and low morale of existing employees.