FOR APPROVAL OF THE TOPIC OF THE THESIS FOR

ADMISSION AS POST-GRADUATE STUDENT

FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN
THE FACULTY OF COMMERCE & MANAGEMENT
OF

SWAMI RAMANAND TEERTH MARATHWADA UNIVERSITY NANDED

ON
HUMAN RESOURCE ACCOUNTING
A TOOL TO EVALUATE HUMAN CAPITAL
AMONG COLLEGE TEACHERS : A COMPARATIVE STUDY
BETWEEN MUMBAI AND NANDED

SUBMITTED BY
SHAIKH RESHMA FAZLUR REHMAN
(M.COM, B.Ed., UGC-NET )

UNDER THE GUIDENCE OF

DR. A.P. JADHAV
(M.COM, B.Ed, M.Phil., PhD)

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 CONTENTS
SR.NO. PARTICULARS PAGE NO.
1 Introduction 3-5
2 Problems of the study 5
3 Hypothesis of the study 5-6
4 Objectives of the study 6-7
5 Scope of the study 7
6 Research Methodology of the study 7-9
7 Significance of the study 9
8 Organisation of Study 10
9 References of the study 11

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 HUMAN RESOURCE ACCOUNTING
A TOOL TO EVALUATE HUMAN CAPITAL
AMONG COLLEGE TEACHERS : A COMPARATIVE STUDY
BETWEEN MUMBAI AND NANDED

1) INTRODUCTION:

Teachers play an important role in development of nation. Teachers are the

building pillars of the nation. We depend on them to educate our children, to
produce the intellectual capital that is the foundation of our future as a society.
The teacher is a representative of the society who inculcates moral percepts.
Teachers therefore, have to play a cardinal role in the building up of the
character of the next generation.

In order to have strong nation building, a country should take efforts to motivate
its teachers to develop themselves in order to facilitate further development of a
country as development begins from within oneself. Colleges depend upon both
teaching and non teaching staff working in it, but major responsibility comes
upon teachers who are the source of student’s knowledge, learning and
development. Therefore, there is a need to have an effective performance
evaluation system and powerful tool to make decision, in order to administer,
evaluate and enhance teacher’s performance.

Presently in India, one of the key motivational and performance evaluation and
appraisal tool for development of degree college teachers is Annual
Performance Indicator, given by the University Grant Commission, which is
often used by universities and college authorities for the purpose of performance
evaluation and decision making in matters such as promotion, rewarding etc.
Academic Performance Indicator (API) evaluates the performance of teachers
on the basis of different categories such as Teaching, Learning and Evaluation
Related Activities, Co-curricular, Extension and Profession Related Activities,
Research and Academic Contribution etc.

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 Human Resource Accounting
Definition:
▪
The American Accounting Association’s Committee on Human Resource
Accounting (1973) has defined Human Resource Accounting as, “the
process of identifying and measuring data about human resources and
communicating this information to interested parties”. 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.
▪
According to Stephen Knauf, ‘HRA is the measurement and
quantification of human organizational inputs such as recruiting,
training, experience and commitment’.

EXPLANATION OF IMPORTANT TERMINOLOGY:

i) Human Capital: “Human capital refer to processes that relate to training,

education and other professional initiatives in order to increase the levels of
knowledge, skills, abilities, values, and social assets of an employee which leads
to employee satisfaction and performance, and eventually the firm
performance.”

ii) Valuation: “Valuation is the process of determining the worth of an asset. Any
asset, physical or financial has a value to the extent that it can satisfy desires,
needs or wants of the holders”.

iii) Assessment: Assessment provides feedback on knowledge, skills, attitudes, and

work products for the purpose of elevating future performances and learning
outcomes. Assessment is done to improve the quality of future performances.

iv) Performance Appraisal: Performance Appraisal is the systematic evaluation

of the performance of employees and to understand the abilities of a person for
further growth and development.

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 2) PROBLEMS OF THE STUDY:

i. Present Disclosure Practices about Human Resource in reports of

colleges do not provide complete transparency about institution’s Human
Resource information.

ii. Teachers’ performances are not linked with their pay for the purpose
of promotion.

iii. Present system of Performance Evaluation of teachers lacks concept of

Human Resource Valuation and its recording at appropriate place.

iv. Increasing depreciation of teachers’ Human Capital is deteriorating

Teachers’ Performance.

v. Present system of Decision Making though satisfactory but lacks

concept of Human Resource Valuation.

3) HYPOTHESES OF THE STUDY:

In order to guide the present research efforts towards a proper direction, the
following set of hypotheses are formulated and will be tested in the course of
study.
i. Human Resource Accounting system is an effective instrument to make
the concept of True and Fair View more inclusive in colleges.1

ii. Human Resource Value of teachers along with Annual Performance

Indicator can serve the purpose of teachers’ promotion and quality
enhancement in a better way.

iii. Human Resource along with Academic Performance Indicator (API) and
other performance evaluation methods or techniques will provide a
complete set of techniques for more appropriate Performance Evaluation.

iv. There is a negative relation between depreciation of Teachers’ Human

Capital and their performance.
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 v. Human Resource along with and other Performance Evaluation methods
or techniques will help authorities to make more appropriate decisions.

4) OBJECTIVES OF THE STUDY:

i. To study information disclosure practices of colleges and making concept

of True and Fair View more inclusive by incorporating Human Resource
Values in financial reports of institutions.

ii. To study Human Resource Accounting and its applicability and

acceptance in corporate sector and identifying and analyzing the impact
of Human Resource Valuation of Teachers on financial position and
decision making of institutions.

iii. To compare and analyze the Human Resource Values of promoted

group of teachers vs. non promoted group of teachers.

iv. To see whether the performances of teachers justify their Human

Resource Values calculated based on salaries decided for them by U.G.C.

v. To study the loop holes of current Performance Evaluation techniques

and develop a relationship between Human Resource values and
Academic Performance Indicator scores of teachers thereby proposing
set of parameters with respect to teachers’ Performance Evaluation.

vi. To study the relationship between Human Capital Depreciation and

Teachers Performance.

vii. To study positive and negative aspects of Annual Performance

Indicators (API) and other techniques of Performance Evaluation.

viii. To develop a system of Ratio analysis for the purpose of teachers’

Performance Evaluation and Decision Making in colleges.

5) SCOPE OF THE STUDY:

The present study works in following scales:

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 i. Studying current information disclosure practice of colleges.

ii. Incorporation of Human Resource value and the capital cost of teachers in
financial reports of colleges giving fair picture of institutions.
iii. Studying and analyzing existing techniques for Performance Evaluation of
teachers and comparing it with Human Resource Values of Teachers.

iv. To develop a system of Ratio analysis for the purpose of teachers

Performance Evaluation and Human Resource Management in colleges.

v. Computation of Human Capital Depreciation and its comparison with

Teachers’ Performance

6) RESEARCH METHODOLOGY OF THE STUDY:

In order to conduct research, following methodology will be adopted.

a) Universe of study:
For the purpose of proposed study, researcher has selected 10% Teachers of
aided degree colleges of University of Mumbai and Marathwada University of
Nanded imparting commerce education accredited by NAAC under new
methodology.

b) Sample of data:-
Random Sampling technique is used in order to draw samples from the
universe.

c) Period of the study: Data of five financial years/academic years will be

considered for the purpose of proposed study.

d) Techniques of data collection:

Study will be based on both primary and secondary sources.

i) Primary Data – Techniques for primary data collection for the

proposed study are as follows:

▪ Questionnaire

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 ▪ Personal Interviews
▪ Telephonic Interview
▪ Observation Method
▪ Email

ii) Secondary Data: Secondary data for the proposed study will be
collected from the following sources

▪ College Reports
▪ College and University Magazines
▪ Websites
▪ Reports of U.G.C. and NAAC
▪ Journals, Magazines and Periodicals

e) Research Technique for data analysis:

i. Ratios and Percentage: To establish the relationship between two

financial figures to facilitate further analysis.

ii. Trends: To find out increasing and decreasing trends in Human

Resource Values and performance scores.

iii. Simple Correlation: To establish relationship between two

variables.

iv. Multiple Correlations: To establish relationship between more than

two variables.

v. Regression: To establish value of one variable, given values of other

variables.

vi. Time Series Analysis: To estimate subsequent value given

proceeding values.

vii. Derivatives: To identify the deviation between variables.

viii. Graphs: For graphical presentation of data.

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 ix. Tabulation: To present data in tabular form to facilitate further
analysis.

7) SIGNIFICANCE OF THE STUDY:

Human Resource Accounting is gaining importance nationally as well as
internationally. Companies such as Infosys, BHEL, SAIL etc. have accepted the
fact that Human Resource can be treated as an important asset of the firm and
placed it in the annual report, but yet to find place in the Educational Sector.
Though it has not found a place in Balance Sheet but it has been used quite often
for knowing worth of employees in monetary terms. This study will play an
important role in moving Human Resource Accounting in Educational system.
The proposed study also aims at providing complete accounting treatment to
Human Resource as asset.

Employees/Workers are important source of productivity and future benefit, but

not recognized as an asset of the firm. In this regard, Human Resource
Accounting played an important role to recognize the worth of
employees/workers to an organization. Teachers who are actual nation builder
and future maker of the country but their worth to the institution, society and
country, is yet to be recognized. This can be made possible by applying concept
of Human Resource Accounting to the field of education. Thus with the help of
this study, researcher will make an attempt to recognize the monetary values of
teachers and linking it and comparing it with their performance.

Human Resource Valuation along with existing Performance Evaluation

techniques will act as a complete set of techniques for the purpose of decision
making. Human Resource Accounting will also prove to be an added tool for
taking different decision relating to productivity improvement and Human
Resource Management.
Organization of the study:-

It deals with chapter scheme of the study.

The brief details of the chapter are explained as under.

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Chapter 1: Introduction.

It starts with the introductory part of the research. It gives brief idea about the Human
Resource Accounting, implications and significance of Human Resource Accounting in
Colleges.

Chapter 2: Review of Literature.

It deals with the past study on the Human Resource Accounting. It shows the literature
regarding linkages of Human Resource Accounting in colleges and its effects on college
teachers.

Chapter 3: Introduction to Human Resource Accounting

This chapter deals with need and objectives of Human Resource Accounting, scope of
Human Resource Accounting, process of Human Resource Accounting, and pre-requisites
of Human Resource Accounting.

Chapter 4: Human Resource Accounting Process/ Methodology

This chapter briefly discusses the process/ procedure to prepare Human Resource
accounts. It also covers the scope of Human Resource Accounting.

Chapter 5: Analysis of selected Colleges/ Profile of respondents

This chapter gives detailed description of history, and current structure of selected
colleges.

Chapter 5: Analysis of Data

Primary data collected by teachers are to be processed through statistical packages. And
data is being evaluated to test the hypothesis mentioned.

Chapter 6: summary of findings and suggestions

It deals with the outcome of the data analysis and interpretation. It shows in detail about
the findings the researcher has found out from the primary survey and researcher will be
giving the suggestions for the same.

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) REFRENCE:

1) Ravindra Tiwari, “Human Resource Accounting-A New Dimension”,

Retrieved May 30, 2012 at 10:00 a.m. from http://papers.ssrn.com/sol3/papers
.cfm? Abstract _id=961570

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2) Frank Di Bernardino and Adrianne Miller, “Human Capital Analytics the
Missing Link: Measuring Financial Returns on the Human Capital Investment”
Vienna Human Capital Advisors, Retrieved June 03, 2012 at 14:00 p.m. from
http://www.viennaindex.comdynamicdata/data/File/Execut iveBri efing.pdf

3) Dr. Amitabh Deo Kodwani and Ravindra Tiwari, “Human Resource

Accounting - A New Dimension” Working Paper Series, Canadian Accounting
Association (CAAA) 2006 Annual Conference, January 15, 2007, Retrieved
June 01, 2012 at 16:00 p.m. from http://ssrn.com/abstract=961570

4) Paresh Shah, “Basic Financial Accounting for Management”, Oxford

University Press, 2007, P.11.

5) The Hindu, Online edition of India's National Newspaper, June 27, 2008,
Retrieved June 15, 2012 at 11:00 a.m. from http://www.hindu.com/2008/06/2
7/stories/20080627606408 00.htm

6) Asif Ahmed, “Human Resource Accounting (HRA): Techniques and

Accounting Treatment”, Retrieved June 18, 2012 at 11:30 a.m. from http://ssrn.
com/author=1447219

7) Board of Studies, The Institute of Chartered Accountants of India, “Auditing

Part 2”, Uttar Pradesh, 2002, P.1.8.

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