IN THE NAME OF ALLAH,

THE MOST MERCIFUL,

THE MOST
BENEFICIENT…
 GROUP “B”
Group Members:
 Muhammad Ahmad (Group Leader)

 Nadia Shoukat

 Saqib

 Sadaf

 Muhammad Shahid

 Ehsaan Elahi Zaheer

HUMAN RESOURCE
ACCOUNTING
Introduction To HRA
‘ The most valuable of all capital is that invested
in human beings.’
- Alfred Marshall
 An attempt to identify and allocate investment
made in the human resources.

 An information system reporting the cost and

value of the human factor to the organization.
 Characteristics Of HRA

 Its system of accounting in which identification of

human resources is made.

 Investment made in human resources is recorded.

 Measurement of costs and values are made.

 Characteristics of HRA

 Helps the management to gain knowledge of the

various aspects of employees.
 Changes occurring in human resources over a
period of time are also recorded.
 Communicates information through financial
statements to interested parties.
History

 First Stage(1960-66)

 Second Stage(1966-71)

 Third Stage(1971-76)
History

 Forth Stage(1977-80)

 Fifth Stage(1980-Onwards)
Objectives Of HRA

 Proper management of human resources

 Provides a sound and effective basis of human asset

control.
 Improvement of human resources.

 Depicting the true value of the organization.

Objectives Of HRA
 Provides quantitative information on human
resources,helping managers and investors in
making decisions.

 It allows management personnel to monitor

effectively the use of human Resources.

 Communicates the worth of human resources to

the organization and to the public.
Methods/Models Of HRA
 Historical Cost Method:

Actual cost incurred for recruiting, hiring,

training and developing the human resources of
the organization are capitalized and amortized
over the expected useful life of the human
resources.
 Methods/Models Of HRA
Replacement Cost Method:

 This is the measure of the cost to replace a

firm’s existing human resources.
 This method has the advantages of adjusting the
human value of price trends in the economy.
Methods/Models Of HRA
Opportunity Cost Method:

 Human resource of an organization has to

be valued on the basis of the economist’s
concept of opportunity cost .
 It is value of benefit foregone by putting it
to present use.
HRA- A Challenge To HRM

 Encouraged HR professionals towards

strategic and business focused approach in
managing their human capital.

 Knowledge –based organizations to value

and invest significantly in human capital.
CREATIVE
ACCOUNTING
Introduction
 What is Creative Accounting

 It is process of using the rules, the

flexibility provided by them.

 This flexibility is helpful in financial

omissions ,financial statements
Continuing…

 Also called Aggressive Accounting.

 Major purpose is the manipulation of

financial numbers .

 Assets and liabilities may also be

manipulated.
Purpose
 It is a snapshot of the company situation

 Accounting techniques may be used to

produce more meaningful figures and avoid
unjustified market pessimism.

 Helps Auditors to distinguish fraud from

error by identifying the presence of intention.
Why Creative Accounting

More Profit Less Profit

More Assets Fewer Assets
More Liabilities Fewer Liabilities
Creative Accounting Practices

 Income smoothing
 Changing Accounting Principles
 Overstating Cost
 Expenses into assets
More in Creative Accounting
 Inflating profits and EPS
 Reporting Profits without generating
equivalent cash.
 Reporting lower borrowing
 Off balance sheet financing
 Foreign exchange rates effecting values of
Assets.
SOCIAL ACCOUNTING
Social Accounting
 Introduction

 Social accounting as an approach began

developing in the UK in the early 1970’s.

 A way of demonstrating the extent to which

an organisation is meeting its stated social or
ethical goals .
Evolution
 Early developed in UK.
 NEF (Pioneered of Social Accounting)
 SEAAR.
 ISEA
 AA 1000
 AA 1000 S
Conclusions
 In the corporate world,social accounting is
one of the first major stepping stones in
improvements in corporate social
responsibility.
 Social accounting has given new face to
accounting.
Continuing…
 It is helpful As more organisations involved
in the field of enterprise development
experiment with social and ethical
accounting, auditing and reporting.
 The concept of social accounting is growing
in recognition and sophistication
THANK YOU