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AN APPRAISAL OF HUMAN CAPITAL PERFORMANCE AND REPORTING IN PRIVATE ORGANIZATIONS A STUDY OF ZENITH BANK NIGERIA PLC

AN APPRAISAL OF HUMAN CAPITAL PERFORMANCE AND REPORTING IN PRIVATE ORGANIZATIONS

A STUDY OF ZENITH BANK NIGERIA PLC

 

 

CHAPTER ONE

INTRODUCTION

1.1Background of the Study 

It is a common belief in this contemporary global business environment that knowledge has become the key determinant far economic and business success. Most it not all organization belived that their human resource constitute the most valuable element in their asset portfolio.

Employees and embodies with valuable resource called human capital (HC) which relates to the knowledge, behaviour, experience, attitude, corporate culture, to mention  but a few, that when put together become  of economic value to an organization. 

In another related view, the oxford dictionary (Accounting edition) defined as the skills, generally or specific, acquired by an individual in the course training and work experience in an organization 

In 1961 Nobed Laureate, Therdon W. Schult in his Article, American Economic Review “Investment in human capital, explain what H.C is, as the ability and skills of a certain group of people or an individual person  that have economic value.

In the last few years, the awareness to give recognition to HC asset and other related intangible by organization came up with the believe that they worth much more than other fix assets. As such an attempt is being made to put a value to these tangibles and to bring this hidden value to book. In this way, it becomes pertinent and imperative far forms to measure, evantify and report these assets in monetary terms and show then on the balance sheet. 

This concept/idea has been well received by human resource oriented firms, such as these which engage in accounting, law, software, banking, management consultancy among others. Practical application to show this in the balance sheet is limited and for this reason with the emergence of a growing knowledge economy, this traditional presentation of the financial statement has been questioned due to the recognition that HC is an increasingly important part of an enterprise total asset.

In this way, this has posed a challenger to human resource professionals at all level to search for ways to utilize and present HC performance system so as to optimize the value of people in their organizations.

This research work look at the way in which the management of an organization (a firm) can appreciate the proper utilization, performance and presentation of human asset in its financial statement with the mind set that “our people is our main asset.

 

1.2Statement of the Problem

The growing need for investment in HC has brought about a vital role for organizations to properly manage their human resources. Hence, HC performance and reporting is becoming an important aspect in this modern are of accounting/economy.

Based pm the generally Accepted Accounting principle (GAAP), statement of Accounting Standard (SAS), and other related state, organizations financial reports show in their balance sheets-land and buildings, plant and machinery, investment in securities among others. Labour and entrepreneur which are human capital asset of the firms are not reported in the main financial statement of the organization. Instead, it is written of as a period cost against the income statement for that year. This problem has militated against the full disclosure of “sufficient” information that is needed in the financial statement.

For instance, analysis felt the HC valuation and reporting was an investor-friendly disclosure, and assured state-holders that the company had the night human asset (employees) to meet its future business requirements.

Some times, investment made by organization on their HC assets, if it value and measured the amount the cost in cured in the procurement of fixed assets. While she later is recognized and treated based on accounting standards and conventions. The former is given insignificant consideration and its treatment. The resultant effect is that such expenditure and unimportant beyond the cost in cured for the development of employees, knowledge and technical know-know is for the continuous and future growth of the economy.   

Considering this abnormal in the present traditional financial statement, it has become pertinent, to bring about a change in the attitude and manner by which HC reporting are less considered in business organization and create a way through presentation could be appreciated by firms not only in terms of morale boosting but terms of curving a niche in the industry through profitability and competitive edge.

 

1.3Objective of the Study 

The objectives of this study are as follows: 

To assess how information on HC asset of an organization can be presented in the financial statement. .... 


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