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Akansha answered on
May 25 2020
Impact of human resource accounting on the profitability of a firm
Impact of human resource accounting on the profitability of a firm
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Abstract
The key to research are to study impacts of the human resources accounting on company's profit abilities. The survey results show that there is a positive co
elation between human resources cost indicators (training costs, development costs, and employee numbers) and organizational profits. It also found that there were the important relationships between the training costs, bank profits and development costs. However, numbers of employees do not have an important impact on bank's profits. However, organizational performance depends on performances of individuals who build up the organization. That are, organizations do not exist in vacuum; some (employees) may work with each other to achieve their goals. Therefore, among other things, it is recommended that the organization should strengthen the education and training of its staff in order to avoid wasting knowledge-rich investments. In addition, the accounting standards committee should incorporate its accounting standards for valuation and disclosure of the human resources accounting.
Contents
Abstract 2
Introduction 3
Research Problem & Research Objective 4
Research Methodology 14
Conclusion 14
References 16
Appendix 18
Introduction
HR is a group of people who make up an organization or a business entity. Human resources include the energy, talents, skills as well as knowledge of those who may and may apply to production of the products or provide useful service. Success of any organization depends on how human resources can effectively optimize the capacity of other resources such as land, equipment, and funds, so human resources are the largest assets that companies dispose of. In today's economy, HR has been identifying as the one of the major source of competitive advantages for a lot of associations. In particular, the private sector organizations are widely diverse, and the focus on human resources has special strategic value for the development of the organization. The research topics proposed in this paper are to analyze impacts of the HRA on profitability of company. The quantification of the value of the HR helps organization to respond to change in its quantity furthermore quality in order to achieve a balance between the resources required and the human resources provided. Therefore, it is necessary to take measures to effectively manage people who meet their needs and expectations in order to increase productivity. Therefore, a co
ect assessment of human resources accounting will enable managers to make appropriate decisions on human resources investment. It will also provide comparative information on the costs and benefits associated with human assets investment. Some empirical studies have been conducted on the issue of human resource accounting in corporate organizations. Some of these studies emphasized the need to capitalize human capital assets in company's balance sheets, instead of write-offs as expenses in profit and loss accounts. Human resources are a group of people who make up an organization or a business entity. According to XYZ, it includes the energy, talents, and skills moreover knowledge of those who may or may apply to production of the products or provide useful service. Success of any organization depends on how human resources can effectively optimize the capacity of other resources such as land, equipment, and funds, so human resources are the largest assets that companies dispose of. It is true that information about human assets has not been noticed and presented in the financial statements of the organization, and it is difficult to measure or assess the actual profits of the company. The growth trend of measuring and reporting human assets in the company's annual report is particularly inconspicuous in the financial reports of company organizations. The company organizes the expenses of the training, recruitment, and familiarization furthermore growth of HR into present profit and loss accounts, underestimates profits and exaggerates loss, and does not count toward expenses which are also related to the HR, even if they essentially conceal the value of net and assets.
Research Problem & Research Objective
The research question under this circumstance is to analyze the impacts of the HRA on company's profitability (Raymond Asika, 2017). This paper analyzes the HRA and also its impact on company's profitability. The study goals are to analyze various aspects of HRA, the impact of the human resources accounting moreover how HRA affects the organization's profit abilities.
Theoretical Background or Literature review
The use of human resources accounting took place in the 1960s, and since then it has become more and more important because it also emphasizes the social and environmental issues of the organization. These organizations also shifted their focus from products to services, reviving the organization’s interest in human resource accounting (Uysal, 2017). Different organizations use different methods to consider human resources; some organizations use assessment methods while others use intangible assessment methods. HRA are the procedure of identifying, recording, and reporting that emphasizes organization's investment in the human resources. This is not considered in traditional accounting. The company's resource-base theory combines the concept of the organizational financial or strategic organization. The basic theory of this vision is this that if the organizations may gain and also maintain a competitive advantages, they can succeed. The Competitive advantage are achieved through the implementation of value creation strategies that the competitor cannot simply duplicate or maintain, along with that there is no ready-made alternatives. In the order to grow the competitive advantages, 2 conditions are required (Alvarez Dominguez, 2011). First, assets are available to rival firms should change among competitor. The Second are, these resources should be immobile (ie not simply accessible). Types of resources associated with the organization, such as physics, manpower (employees' experience and knowledge); and organizations (structures; systems that plan, supervise, and control activities; social relationships within and between organizations and external supporters). In the era of the technology moreover financial system, human capitals plays a vital and axial part in organization. The HRA has
oad understanding of the organization's key resource, namely human resources. The HRA are the
anch of the new accounting, which is transient and usually involves a series of policy and also measures associated to different aspects of the HR (Sayyad, 2017). Paying attention to the organization’s mainly significant assets is that HR and HRM are keys to organizational success. To achieve this important issue, it must be based on empirical research and human resources accounting information measurement and reporting methods to review and evaluate human resources data with accounting knowledge. . There is no doubt that human resources organization without data could not be complete and decisions are made, and HRA are a practical approach to human resources accounting that is devoted to the development of human resources decision makers, apply accounting principle in organizations, moreover is ongoing The level of basic research on human resources accounting information “affects individual performance of employees. Although the concept of human resource accounting began many years ago, this concept still lacks universal acceptability (Zhou, Hong and Liu, 2013). Many authors and scholars have already assessed how humans in the organization are the financial statements of these organizations have been studied and reported. The human resources accounting and reporting of corporate organizations is still in its infancy in India.ACC Limited is a company that invests heavily in the HR as well as applies HRA in some method. 1. The company’s investment in human capital development is usually not reflect in balance sheets as an asset, but is presented in the profit and loss statement. The major challenges encountered in identifying human resources as assets are largely determined by Because of its characteristics; it quantifies and reports in monetary terms (Ali, 2017). thus, this The research attempts to clearly articulate impact of the HRA on corporate profitability and conducts some empirical studies on human resource accounting issues in corporate organizations, some of which emphasize the need to capitalize human capital assets in corporate balance sheets. Instead of writing off as an expense in loss and benefit account, (Sayyad, 2017) tried to put value of the human capitals on balance sheets in the balance sheet in his work on the valuation of human assets. (Sayyad, 2017)pointed out that Resource accounting helps to solve most of the personnel-related issues in the company's organization. (Steen, Welch and McCormack, 2011)further asserts that when companies have pools of human resources that cannot be imitated or replaced by competitors; they can obtain a sustainable competitive advantage. (2009) studied the relationship between the corporate characteristic furthermore HRA disclosure or also concluded that the businesses with superior profitability plan to disclose more HRAI...