Example Of Article Review On Human Resource Management

Published: 2021-06-18 05:20:20
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Jaarat (15) says that human resource is a vital entity in every business entity since it controls and directs other resources. The accounting department recognizes the human resource as an important asset in stating the financial position. Whenever there is, a lack of measurement in the use of the financial resource, the human resource in the company is accountable. According to Jaarat (15), a model for measuring and recognizing human resource in the statement of financial position can better the organization.
Jaarat (16) confirms that human resource is the most expensive resource in every business entity. This resource applies directly through direct labor and indirectly through automation. Human resource adds value by managing the use of assets to increase the owners’ equity through the return on assets. Previously, there was no recognition of HR in the financial statements. In this decade, it is important to measure and recognize HR and enlarge its disclosure to reduce criticisms. The recognition of HR in the financial statements can also attract gains recognized from holding the HR assets. Lack of recognition of HR can lead to misleading financial statements. This can affect the financial position and performance that attribute to HR. In addition to this, it can affect the fair presentation of financial statement to reduce criticism and the value of HR negatively.
HR accounting attracts experts in the field in the local and international dimensions. Jaarat (17) displays disciplines and methods to measure the cost of HR to increase the efforts in HR accounting. Jaarat (17) explains a conceptual framework of accounting system to apply for the HR for better evaluation of the human capital. HR accounting focuses mainly on costs classified as HR assets such as training, hiring, and replacement.
HR accounting focuses on the cost incurred by the entity in order to increase the value. It is important to centralize concepts that relate to HR accounting by identifying the costs and applying a balanced scorecard that depend on strategic management. Jaarat (18) argue that, in most business entities, the accounting profession lacks the depiction in the financial statements. There has been several tries to propose options and modules to measure HR and recognize it in the financial statements. Conceptual Framework for Financial Reporting sets out the preparation and presentation of the financial statements. The applicability of including HR in the assets obtains economic benefits in the business entity. The timeliness of acquiring assets comes before obtaining benefits from it that apply to HR. This is because the flow of benefits and services can come after the process of hiring.
Jaarat (22) says that the concept of the asset to the entity attributes to the inflow of benefits in the HR as well as an asset in the company. The criterion concerning the recognition to HR relates to the benefits inflow to the entity and reliable measurement. There is no acceptable way to measure benefits obtained from HR due to adoption of a measure of HR assets that lack reliability. Measurement concept encompasses the assignment of monetary elements in the financial statement.
The criteria for recognizing an item in the financial statement relates with the value granted in the conceptual framework for financial reporting. Jaarat(24) explains that a business entity considers intangible asset as suitable HR assets. The International Accounting Standards (IAS) mentions goodwill and intangible asset that call for the capitalization and amortization to reduce errors. Workers in an organization look for an appropriate way to represent the resources. HR needs qualitative presentation in the financial statement.
HR is superior to warrant its measure in monetary terms since there is no resource that has real value as humans. The control of the entity over the human resource is not like the control of other assets. Workers support the benefit paid by the entity does to the following reasons: The entity aims to achieve profits by reducing the expenses such as HR costs. The entities pay amounts to employees and fail to address compensation that compares with the impairment of assets. The income tax remitted by the organization is a double face weapon by the entity since it reduces the taxable profit while satisfying the employee.
The information about accounting and financial policies represents the most important resource in the entity. The entity must find the right way to present them qualitatively in the financial system (Jaarat 29). Another option is the sufficient disclosures in the annual report about HR. Human resources represent the source that adds value in an entity through the process of training and equipping workers. This calls for HR recognition, measurement, presentation, and disclosures. The employees create value that is by goodwill and fair representation (Jaarat 31).
The net fair value of the asset and cost of acquisition relates to goodwill. This can lead to misleading financial statements when treating the difference as goodwill. The proposed module to measure HR in the entity has to work in collaboration with the workers directly or indirectly. Jaarat (32) asserts that measurement acts as a criterion for recognition. In this case, the proposed module only focuses on suggesting the measurement base for HR. The losses that attribute to capitalized employees benefits result from the impairment of HR assets without gaining any benefits.
Works Cited
Jaarat, Khaled Jamal. "Human Resources Accounting Between Recognition and Measurement: An Empirical Study." Journal of Business Studies Quarterly 5.2 (2013): 15-40. Business Source Complete. Web. 18 Feb. 2014.

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