Now a days, the amount invested by organizations on human resources is very huge and calls for a better way of reporting. The financial information contained in the financial statements of organizations is considered inadequate because of many reasons, among which inability to account and report human resources is one. Money spent on hiring, recruiting, selecting, training and developing human resources will be better accounted for when capitalized rather than expensed.
Human Asset Measurement can create the conditions by which it is possible to quantify the added value that people create in an organization. It is a way of measuring the ratio between the investment in people and the contribution made by people. But even today, very few organizations have a systematic integrated way of balancing the cost of their people with a measure of the value they are able to contribute.
In India and other countries also, few companies are there who provide qualitative and quantitative information in the supplements to the financial statements but still Accounting Boards have not given adequate attention to developing criteria to measure human asset and to show these in the balance sheet. Unless and until, it will be mandatory for the companies to show this information in the balance sheet, it will not benefit to the investors.
The study recommends the organizations to capitalize and report all expenditures/investments on human asset that can improve their quality and productivity. But valuing human beings should be about value rather than cost.
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