Está en la página 1de 2


Rationale of Human Resource Valuation and Auditing The human resource valuation system cannot be considered to be a complete system of accounting unless it is followed by an equally competent system of auditing. Application or use of human resource accounting, therefore, must also be followed by a separate HR audit to ascertain whether or not the performance of the managers has been true and fair in the overall interests of the organization they serve. The application and usefulness of human resource valuation depends on the future efforts and experiments to be made by practising managers, accountants and academicians. It also needs support from the professional bodies and government. In the absence of human resource valuation, the management may not realize the negative effects of certain programmes aimed at improving profits in the short run. Such programmes may result in decreased value of human assets due to a fall in productivity levels, high labour turnover and low morale. The main rationale behind the human resource valuation can be understood by going through the following discussion. 1. Guarantee to Customers/Clients: A human resource valuation assures customers quality and consistency. The valuation of human resource is a means of guarantee available to customers and outsiders that the enterprise is through its personnel efficient to honour commitments. 2. Establishing Investor Confidence: The performance of an organisation depends mainly upon the quality of its human capital. This can be understood by the fact that human resource is the main product delivering assets. Just like an industrial unit will have tangible fixed assets like plant & machinery, even the least deterioration in the quality of the human capital assets of a service provider clearly reflects on the organisational performance. In the current competitive scenario, it is pertinent to communicate to investors that their human resource is quite efficient to deliver high returns on relatively low investments. Even in sectors other than those with heavy capital investments, the investors need to be assured that the personnel is capable enough to be trusted with the formers investments. 3. Planning Outgo: An HR valuation study assists management to project the future expenditure of personnel costs like training and development costs, salary and benefits, compensation costs, retirement benefits etc. Lets take the example of recent full computerization of the public sector banks. Earlier, these banks mostly relied on hand written or typed documents, which was time consuming, so full computerization was sought. HR valuation was done to ascertain the computer usage knowledge and technical compatibility of the employees. It was found that most of the employees are not adequately computer literate. Based on this finding, a sufficient budget for training the employees, to make them adapt to the technological shift, was chalked out and training sessions were conducted.

4. Monitoring Performance: An HR valuation report play quite a significant role in monitoring efficiency of personnel and in designing the HR strategy. The organisation can analyse if its investment in human capital has paid off or not. Such a valuation tabulates a database on personnel details, which serves as a basis of MIS reports on returns on personnel cost, return on human capital. 5. Employee Motivation: Depicting the value of human resource in the balance sheet and other reports can achieve a high level of motivation among the personnel associated with the organisation and can thereby communicate to them that the management perceives them as assets and not merely expenses. 6. Costing Exercise: An HR valuation report helps the management to make a conscious move to capture its costs related to HR department by developing a human resource accounting system, which compliments the HR valuation exercise. The organisation can provide cost clarity to all its stakeholders in all areas related to the human resources of the company. 7. Assessing Segment Efficiency: Audit of human resources could help in finding out the efficiency of every segment. Human resource audit could enable the appraisal of the performance of various managers. The basic function and management of human resources is also greatly facilitated. Hence human resource valuation and audit activity could be helpful in improving the efficiency of human resources in the changing business scenario.