Problem with Human Resource Accounting and A Possible Solution

Abstract

The idea of Human Resource Accounting (HRA) has been a debatable issue by academicians, accountants and standards setters universally. This study critically assesses the concept of HRA in order to unveil its strengths and weaknesses. Descriptive and content analyses were used in collecting data through documented texts, journal articles and other publications. The existing models proffered under the HRA were adequately reviewed and objectively criticized so that more comprehensive could be developed. The study revealed that the conceptualization of HRA, the ideas incorporated therein, and arguments are good for the accounting profession and corporate financial reporting. But the existing models yet proposed are not in a state to implement HRA practice worldwide. Hence this paper proposes a solution in line with existing framework of accounting that could be adopted by the standard setters. The study, however, recommends that more interest should be accorded to the concept of HRA in order to stimulate more comprehensive researches aimed at simplifying the concept and boosting its applicability.

Key Words: Human Resource Accounting (HRA), Human Capital, Intellectual Capital, Matching principle, IAS, International Financial Reporting Standards (IFRS)