Human Resource Accounting - A New Dimension

18 Pages Posted: 10 Feb 2007

See all articles by Dr. Amitabh Deo Kodwani

Dr. Amitabh Deo Kodwani

Indian Institute of Management (IIM) rohtak; Institute of Management Technology, Ghaziabad

Ravindra Tiwari


Date Written: January 15, 2007


Human resource accounting (HRA) is an attempt to identify, quantify and report investment made in Human resources of an organization that are not presently accounted for under conventional accounting practice. Businesses which require a considerable creativity or are science-based show a significant difference between market value and net book value. This difference is for intangible assets (including human skills). However the Human Resources are yet to get recognition in Balance Sheet. Businesses are not properly accounting for it in Books of Accounts. Auditor certifies in his report that balance sheet shows true position of business in spite of the fact that it is not showing the value of human resources. Researches in this field have been slow and researchers are not able to develop a model which are free from major limitations. Major limitation of existing models is that they are not able to identify two effects on Human Capital creation which is back bone of accounting. In this article I have discussed efforts done in this field by researchers and proposed a model for valuation and accounting of Human resources. This proposed model is not altogether new model but it is an extension of Lev and Schwartz Model (L&S) because at one point it uses Lev & Schwartz Valuation principles. It also remove major weakness of L&S model such as it is able to account for Human Resource in balance-sheet. This model also encourages employee to achieve high level of performance.

Keywords: Models for Human Resource Accounting, Performance Improvement, Human Resource Management, Human Resources, Accounting for Human Resources, Modern Accounting Concepts

JEL Classification: M41, M44, G12, M12, J24

Suggested Citation

Kodwani, Amitabh Deo and Tiwari, Ravindra, Human Resource Accounting - A New Dimension (January 15, 2007). Canadian Accounting Association (CAAA) 2006 Annual Conference, Available at SSRN: or

Amitabh Deo Kodwani

Indian Institute of Management (IIM) rohtak ( email )

Maharshi Dayanand University
Delhi Rd
Rohtak, Haryana 124001


Institute of Management Technology, Ghaziabad ( email )

Raj Nagar
Hapur Road
Ghaziabad, Uttar Pradesh 201001
+918295566118 (Phone)


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