ACCOUNTING FOR HUMAN ASSETS

Accounting information is prepared and submitted to interested parties with the aim of influencing their behaviour and decisions. If an accounting system is to provide information which can be used to help interested parties, such as managers, to control the future activities of the organisation and make well‐informed decisions, the system should record in money terms every financial or economic fact which affects the income or financial position of the organisation. The functions of management can be described briefly as forecasting, planning, organising, co‐ordinating and controlling the use of resources with a view to achieving the stated objectives of an undertaking. The resources available to management include physical resources such as plant and machinery, financial resources, patents, trade marks, the reputation the company has with customers and creditors, and the human resources within the organisation. To the extent that an accounting system fails to record and present relevant information on any of these resources it can be regarded as inadequate as a source of information for control and decision‐making.