"Our employees are our greatest assets, and the ability to attract and retain them is the key driver of our future success". This is one of the familiar dialogs of modern corporate world. Human resources—the most important intangible asset of every organization, often faces the problem of improper valuation, lack of perfect accounting system and practical difficulties in disclosing their value in financial statements. In this article, an attempt is made to focus on the accounting aspects of human resources as an asset, and the problems associated with it.

In today's knowledge-based society, knowledge has become the key determinant for economic and business success. It has been proved that employees are the most vital and valuable resources of an organization as their knowledge, skill and talent help the organization in its growth and development. It has also been noticed, that while all other resources depreciate in value with time and use, the human resource appreciates in value with greater knowledge and experience. Out of the 4M's associated with every organization, i.e., money, material, machines and men, the first three find a place in the balance sheet, but the fourth one, the most vital one, on which the success and failure of every organization depends, still remains unrecognized. Human resource is one of the important factors which should be recognized prior to any other M's, but its application still remains a susceptible issue and still the Accounting Standard Boards of different countries have not been able to formulate any specific Accounting Standard for measurement and reporting of such valuable elements.

Behavioral scientists initiated efforts to develop appropriate methodology for finding out the value of human resource to the organization. They were against the conventional accounting practice for its failure to value the human resource of an organization along with physical resources. The traditional concept suggested that expenditure on human resource is treated as a charge against revenue as it does not create any physical asset. At present, there is a change in this concept and the expenses incurred on any asset, including human resources, should be treated as capital expenditure, as it yields benefits, which can be derived for a long period of time and can be measured in monetary terms. Hence, when it was felt that the measurement of abilities of all employees in terms of monetary value is necessary, the system of Human Resource Accounting (HRA) took its inception. HRA is the measurement of the cost and value of people to the organization. It involves measuring costs incurred by the organization to recruit, select, hire, train and develop employees and judge their economic value to the organization.

Human Resource Accounting Policies and Practices, Intangible assets, Accounting systems, Accounting Standards, Balanced Scorecard, Economic value added Services, TATA motors, Godrej, Wipro Technology, Human Resource Accounting, HRA, Financial statements.