Human resource accounting is concerned with the development of theory and methods of measuring the cost and value of people to formal organizations. Its ultimate objectives are (1) to develop a theory of the nature and determinants of the value of people to formal organizations and (2) to develop valid and reliable methods of measuring the cost and value of people to organizations. The need for measures of human resource cost and value has been discussed extensively during the past few years (Likert, 1961, 1967; Hermanson, 1964; Hekimian and Jones, 1967; Brummet, Flamholtz, and Pyle, 1968, 1969; Flamholtz, 1969, 1971a; and Lev and Schwartz, 1971). The need for a theory of human resource value has received less attention (Flamholtz, 1969, 1971a).

Abstract This article presents criticisms of aspects of the major concepts, methods, and implications of human capital measurement and reporting proposed by Baruch Lev and Ada Schwartz. Although Lev and Schwartz do not formally define the concept of human capital, they do state that it is a source of income embodied in a person. Neither the set of services an individual can potentially provide nor the value of those services to an organization are "embodied" or inherent in the person. Rather, an individual's service potential is a function of the interaction between the person's skills and the role or set of tasks he performs in a given situation. A major limitation of the valuation model proposed by Lev and Schwartz is that it ignores the possibility and probability that the individual will exit from the organization for reasons other than death or retirement. Thus the application of the model may very significantly overstate an individual's expected service life, and, in turn, overstate or inflate the value of human capital.

Abstract Reviews the book `Accounting for the Human Factor,' by Lee D. Parker, Kenneth R. Ferris and David T. Otley.

Abstract Reviews the book `Accounting From the Outside,' edited by Anthony G. Hopwood.

Abstract The article focuses on the problems faced by the accountants in measuring human resources. Although financial reports do not recently provide the information necessary to answer all the questions related to this problem, a growing number of corporate managers are showing concerns that their accounting systems are not adequate. As corporate managers make expenditures which they justify as investments in human resources , accountants reflect them as immediate charges to income without considering the timing of expected benefits. Human resource information is essential for each of the several phases of management's planning and control functions. Management of human resources should assist in recognizing and defining problems . There is some evidence to indicate a degree of meaningful correlation between profitability of organizations and their expenditures on acquisition, training, and relation of human resource. This suggests that firms with a high human asset investment ration will ultimately generate high profits.