Human Resource Reporting – All you need to know about HRR

Personnel Reporting– Humans are considered central to accomplishment of productivity, well above devices, technology and cash. Human Resource Reporting is an effort to identify, quantify and report investments made in human resources of an organisation that are not currently accounted for under standard accounting practice.

Human Resource Reporting

The necessity of Human resource reporting developed primarily as a result of the growing issue for human relations management in industry considering that the sixties of this century. Behavioural researchers (like R Likert, 1960), interested in the management of organisations, mentioned that the failure of accountants to value human resources was a major handicap for efficient management.

Lots of people pointed out that it is extremely hard to value human resources. Traditionally human resources are dealt with simply as any other services bought from outside the organization unit. The treatment of human resources as assets is desirable with a view to making sure comparability and efficiency of financial statements and more efficient allocation of funds as well as offering more helpful information to management for decision-making purposes.

The committee on HRA of the American Accounting Association specified HRA as “the process of identifying and determining information about human resources and interacting this details to interested celebrations”. Expenditures relating to the human organisation are charged to current earnings rather of being dealt with as financial investments to be amortised over the economic service life, with the result that the magnitude of net income is considerably distorted.

Nevertheless, Personnel Accounting (HRA) involves accounting for the company’s management and staff members as human capital that offers future advantages. In the HRA approach, expenditures associated to human resources are reported as properties on the balance sheet instead of the standard accounting technique which treats costs related to a company’s human resources as expenses on the earnings statement that lower earnings.

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