Hi friends I am a student doing MBA with HR as my specialization. I want to know about HR Audit..How does it work and what is the difference from HR accounting? Thank you
From India, Kochi
1From India, Kochi
TREESAGRACE,
SOME USEFUL MATERIALS FOR YOUR USE.
The Human Resources (HR) Audit
- is a process of examining policies, procedures, documentation,
systems, and practices with respect to an organization’s HR functions.
The purpose of the audit is to
reveal the strengths and weaknesses in the nonprofit’s human resources system, and any issues needing
resolution. The audit works best when the focus is on analyzing and improving the HR function in the
organization.
The audit itself is a diagnostic tool, not a prescriptive instrument. It will help you identify what you are
missing or need to improve, but it can’t tell you what you need to do to address these issues. It is most
useful when an organization is ready to act on the findings, and to evolve its HR function to a level where
its full potential to support the organization’s mission and objectives can be realized.
-------------------------------------------------------------------------------------------------------
Who should conduct the audit?
The team that is responsible for the audit should represent a cross-section of the organization’s staff,
including line staff, middle and upper management, and those responsible for HR functions.
----------------------------------------------------------------------------------------------------------
How should it be conducted?
The audit process consists of a series of questions covering the eight primary components of the HR
function:
§ Roles, head count, and HR information systems (HRIS)
§ Recruitment
§ Documentation
§ Training, development, and career management
§ Compensation and benefits
§ Performance measurement and evaluation
§ Termination and transition
§ Legal issues and personnel policies
PLUS OTHERS [ DEPENDS ON THE INDIVIDUAL ORGANIZATIONS ]
The team works to collect information to answer the HR audit questions in each of these categories. The
focus is on how these activities and tasks are actually performed in the organization. The first step is to
collect all the pertinent information. The process of getting information, in and of itself, can be quite
informative.
------------------------------------------------------------------------------------------------
How are needed improvements identified?
Once information is gathered, the audit team reviews each major section and notes disparities between
paper (what we think or say we do) and practice (what we actually do, as revealed by the answers to the
audit questions). This can then be compared to best practice (what we should do to best support our
organization’s mission).
A cautionary note: Finding out what is insufficient and inadequate is the first step toward
improvement. If deficiencies are identified, it is important to take steps to correct those deficiencies.
Organizations should take that first step only when they are ready to act on the findings, and to make
necessary improvements in their HR skills, processes, and systems.
----------------------------------------------------------------------------------------------------------
How is follow-up and correction done?
Improving the HR system takes some time. A workplan — with a timeline, accountability, and
deliverables — should be created after the team reviews the completed audit and identifies areas where
improvement is needed. Follow-up and review should be a regular management function, performed on
an ongoing basis.
------------------------------------------------------------------------------------------------
Questions?
The Human Resources Audit
Roles, Head Count, & Human Resource Information Systems (HRIS)
§ How many employees are currently on staff?
§ How many employees are:
- Regular
- Probationary
- Temporary
- Full Time
- Part Time
- Exempt
- Non-Exempt
§ What is the definition of a part-time employee? (i.e., What is the maximum number of hours an
employee can work to be considered part-time?)
§ What is the minimum number of hours an employee has to work to be considered full-time?
§ How long is the probationary period?
§ Are employees aware of their status?
§ How long can an employee be temporary?
§ How many employees have supervisory responsibility?
§ Are there currently up-to-date job descriptions for all employees? If not, which ones don’t have
descriptions?
§ Are independent contractors used? If so, how many are being used? And, for what functions?
§ Is the 21 point test for Independent Consultants being used for classification?
§ Have issues related to classification of employees been raised?
-------------------------------------------------------------------------------------
Recruitment
§ How did the work force get to be the current size?
§ What are some of your organization’s future needs for personnel?
§ What are the procedures for hiring in your organization?
§ What recruitment sources are used? (e.g., advertisements, referrals from other agencies, personal
contacts)
§ Are current employees given appropriate consideration for promotion or lateral position changes?
§ Who does the preliminary screening of candidates?
§ Who selects candidates for interviews?
§ Is training provided for those who conduct interviews?
§ How is the recruitment, screening, and selection process documented?
§ What is the interview process that is used (e.g., individual, sequential, panel)?
§ Who holds final authority to hire?
§ Who checks references?
§ How are the reference checks documented?
§ Who makes the offer of employment?
§ Where is the hiring paperwork generated?
§ Who negotiates compensation packages?
§ List the practices you believe are unique to your organization.
§ What is the turnover rate (percent of employees leaving each year) in your organization? Has
this changed over time?
§ Who gives references for former employees?
---------------------------------------------------------------------------------------
Documentation
§ Where and with whom are the personnel files currently held?
§ What documents are held in personnel files?
§ How are the following documented by your organization?
- Hiring: Application, Interviewing,
and Reference Checks
- Compensation and Benefits
- Transitions
- Paid Time Off
- Training
- Discipline
- Work History
- Work Assignments
- Significant accomplishments
- Emergency contact information
- Performance evaluation and
performance management
- Termination
§ How long are files held and where are they stored after employees leave?
§ What is the interface between HR and Finance?
§ Is a payroll service used, and if so, which one?
§ Does the payroll service provide all governmental employment filings?
§ Is there training of managers and employees about personnel files, and policies and procedures
for accessing them?
§ How is Paid Time Off documented?
§ When requests for information are made to your organization, who fills the request?
§ Is an HRIS system being used, and if so, which one?
-------------------------------------------------------------------------------------------
Training, Development and Career Management
§ Who is responsible for new employee orientation?
§ What are the elements of the new employee orientation program?
§ Where and to whom do new employees go when they have questions about your organization or
their jobs?
§ Is there a formal training program for employees and managers? If so, please describe it.
§ What training and development initiatives have occurred in your organization?
§ How are managers and supervisors trained and prepared for their roles?
§ What is the average length of time an employee stays with your organization? Does this vary by
position type?
§ How much does your organization spend annually (in total and per employee) on employee
training and development? Does this vary by position type?
----------------------------------------------------------------------------------------------
Compensation and Benefits
Basic Compensation Questions
§ Is there a formal compensation program?
§ How are wages set?
§ Are formal salary ranges set?
§ If formal salary ranges are set, are they made public to employees?
§ How are jobs rated?
§ How frequently are jobs re-evaluated or updated?
§ Are any salary surveys used? If so, which ones?
§ Are pay ranges revised as a result of these surveys? How frequently?
§ Who in your organization (what position) administers the compensation program?
§ Are merit increases given, and if so, are they integrated with performance evaluation?
§ Is there a bonus system, and if so how is it structured?
§ How is the compensation program and total compensation package communicated to employees?
§ What are the “cultural issues” or beliefs related to compensation in your organization?
§ How is employee communication regarding compensation and benefits delivered in your
organization?
-------------------------------------------------------------------------------------------------------
Health and Welfare Benefits
§ Describe the health insurance program provided by your organization.
§ Are dependents covered, and if so, in part or in full?
§ Are domestic partners covered?
§ What are the eligibility requirements for health insurance and other benefits?
§ Which of the following health and wellness benefits are offered, and what are the limits and
requirements for coverage?
- Dental
- Vision
- Disability
- Employee Assistance Program
- Life Insurance
- Other wellness benefits
- Flex benefit plan
- Other benefits
-------------------------------------------------------------------------------------------
Pension and Retirement
§ What is the pension or retirement plan?
§ What is the vesting period?
§ Can employees contribute?
§ Can pretax dollars be put into some form of deferment plan?
---------------------------------------------------------------------------------------------
Paid Time Off
§ What holidays are paid and who is eligible for them?
§ Is there a PTO system, or is it split between vacation and sick leave? If it is straight PTO, what
are the rates of accrual and caps?
§ What is the vacation schedule, and how is it earned?
§ What is the eligibility requirement for vacation?
§ Is there a cap to limit the amount of vacation accrued?
§ Are employees permitted to substitute sick leave for vacation?
§ How is unused accrued vacation treated?
§ Can employees contribute sick leave to other employees, and if so, what are the limits?
-----------------------------------------------------------------------------------------------
Performance Management And Evaluation
§ Describe the past and current performance appraisal system in your organization.
§ If a performance appraisal instrument is used, please attach a copy. (If the instrument differs by
position, please attach all instruments.)
§ What type of process is used (360o–supervisor only–peer evaluation–outcome)?
§ What type of training is used in relationship to performance evaluation?
§ What is the role of the supervisor/manager in performance appraisal?
§ What is the focus of performance management in your organization?
§ How often and consistently is the process used?
-------------------------------------------------------------------------------------------------
Termination And Transition
§ Is your organization an “at-will” employer?
§ What other causes or conditions of termination of employment exists?
§ What procedures are used for
- Termination for Cause
- Job Closure
- Resignation
§ What level of approval is needed before a termination can occur?
§ Is there any formal checklist or legal review prior to termination?
§ Are exit interviews performed for all employees who leave?
§ What documentation is required for all employee transitions?
§ How are references handled in your organization?
§ Who is responsible for internal communications regarding difficult terminations? (i.e.,
communicating the termination to other employees.)
---------------------------------------------------------------------------------
Legal Issues / Personnel Policies
§ To your knowledge, are all employees appropriately classified?
§ What personnel policies are currently being used? (Please attach a copy)
§ When was the last time these policies were reviewed and updated?
§ Is there a disparity between policies and practices?
§ Who has organizational responsibility for legal or employment questions?
§ Is harassment training regularly provided?
§ How are employee grievances dealt with?
================================================== ===
================================================
HR ACCOUNTING
HR Accounting is an attempt to identify and record investment made in the human resources.
Its an information system reporting the cost and value of the human factor to the organization.
‘the process of identifying and measuring data about human resources and communicating information to interested parties.’
CHARACTERISTICS OF HR ACCOUNTING
Its a system of accounting in which identification of human resources is made.
Investment made in human resources is recorded.
Measurement of costs and values are made.
Changes occurring in human resources over a period of time are also recorded.
Communicates information through financial statements to interested parties.
Helps the management to gain knowledge of the various aspects of employees which is necessary to take vital decisions for the progress of the organization.
HRA is a part of MIS.
Joint efforts of behavioral scientists, accountants and managements are needed for the working and development of HRA
OBJECTIVES OF HR ACCOUNTING
Proper management of human resources
Improvement of human resources.
Depicting the true value of the organization.
Provides quantitative information on human resources which helps the managers and investors in making decisions.
HRA communicates the worth of human resources to the organization and to the public
METHODS OF ACCOUNTING
Historical Cost Method:
Actual cost incurred for recruiting, hiring, training and developing the human resources of the organization are capitalized and amortized over the expected useful life of the human resources.
Replacement Cost Method:
This is the measure of the cost to replace a firm’s existing human resources. This method has the advantages of adjusting the human value of price trends in the economy.
Opportunity Cost Method:
In this method, the human resource of an organization has to be valued on the basis of the economist’s concept of opportunity cost which is value of benefit foregone by putting it to present use.
Present Value Of Future Earnings Method:
It recognizes an individual’s expected economic value to the enterprise during his remaining service period. An estimate about the future earning is made, and these earnings relate to the period which extents to the date of retirement of the employees. Such earnings are discounted by an appropriate range to get the present value.
==================================================
===========================================
regards
LEO LINGHAM
From India, Mumbai
SOME USEFUL MATERIALS FOR YOUR USE.
The Human Resources (HR) Audit
- is a process of examining policies, procedures, documentation,
systems, and practices with respect to an organization’s HR functions.
The purpose of the audit is to
reveal the strengths and weaknesses in the nonprofit’s human resources system, and any issues needing
resolution. The audit works best when the focus is on analyzing and improving the HR function in the
organization.
The audit itself is a diagnostic tool, not a prescriptive instrument. It will help you identify what you are
missing or need to improve, but it can’t tell you what you need to do to address these issues. It is most
useful when an organization is ready to act on the findings, and to evolve its HR function to a level where
its full potential to support the organization’s mission and objectives can be realized.
-------------------------------------------------------------------------------------------------------
Who should conduct the audit?
The team that is responsible for the audit should represent a cross-section of the organization’s staff,
including line staff, middle and upper management, and those responsible for HR functions.
----------------------------------------------------------------------------------------------------------
How should it be conducted?
The audit process consists of a series of questions covering the eight primary components of the HR
function:
§ Roles, head count, and HR information systems (HRIS)
§ Recruitment
§ Documentation
§ Training, development, and career management
§ Compensation and benefits
§ Performance measurement and evaluation
§ Termination and transition
§ Legal issues and personnel policies
PLUS OTHERS [ DEPENDS ON THE INDIVIDUAL ORGANIZATIONS ]
The team works to collect information to answer the HR audit questions in each of these categories. The
focus is on how these activities and tasks are actually performed in the organization. The first step is to
collect all the pertinent information. The process of getting information, in and of itself, can be quite
informative.
------------------------------------------------------------------------------------------------
How are needed improvements identified?
Once information is gathered, the audit team reviews each major section and notes disparities between
paper (what we think or say we do) and practice (what we actually do, as revealed by the answers to the
audit questions). This can then be compared to best practice (what we should do to best support our
organization’s mission).
A cautionary note: Finding out what is insufficient and inadequate is the first step toward
improvement. If deficiencies are identified, it is important to take steps to correct those deficiencies.
Organizations should take that first step only when they are ready to act on the findings, and to make
necessary improvements in their HR skills, processes, and systems.
----------------------------------------------------------------------------------------------------------
How is follow-up and correction done?
Improving the HR system takes some time. A workplan — with a timeline, accountability, and
deliverables — should be created after the team reviews the completed audit and identifies areas where
improvement is needed. Follow-up and review should be a regular management function, performed on
an ongoing basis.
------------------------------------------------------------------------------------------------
Questions?
The Human Resources Audit
Roles, Head Count, & Human Resource Information Systems (HRIS)
§ How many employees are currently on staff?
§ How many employees are:
- Regular
- Probationary
- Temporary
- Full Time
- Part Time
- Exempt
- Non-Exempt
§ What is the definition of a part-time employee? (i.e., What is the maximum number of hours an
employee can work to be considered part-time?)
§ What is the minimum number of hours an employee has to work to be considered full-time?
§ How long is the probationary period?
§ Are employees aware of their status?
§ How long can an employee be temporary?
§ How many employees have supervisory responsibility?
§ Are there currently up-to-date job descriptions for all employees? If not, which ones don’t have
descriptions?
§ Are independent contractors used? If so, how many are being used? And, for what functions?
§ Is the 21 point test for Independent Consultants being used for classification?
§ Have issues related to classification of employees been raised?
-------------------------------------------------------------------------------------
Recruitment
§ How did the work force get to be the current size?
§ What are some of your organization’s future needs for personnel?
§ What are the procedures for hiring in your organization?
§ What recruitment sources are used? (e.g., advertisements, referrals from other agencies, personal
contacts)
§ Are current employees given appropriate consideration for promotion or lateral position changes?
§ Who does the preliminary screening of candidates?
§ Who selects candidates for interviews?
§ Is training provided for those who conduct interviews?
§ How is the recruitment, screening, and selection process documented?
§ What is the interview process that is used (e.g., individual, sequential, panel)?
§ Who holds final authority to hire?
§ Who checks references?
§ How are the reference checks documented?
§ Who makes the offer of employment?
§ Where is the hiring paperwork generated?
§ Who negotiates compensation packages?
§ List the practices you believe are unique to your organization.
§ What is the turnover rate (percent of employees leaving each year) in your organization? Has
this changed over time?
§ Who gives references for former employees?
---------------------------------------------------------------------------------------
Documentation
§ Where and with whom are the personnel files currently held?
§ What documents are held in personnel files?
§ How are the following documented by your organization?
- Hiring: Application, Interviewing,
and Reference Checks
- Compensation and Benefits
- Transitions
- Paid Time Off
- Training
- Discipline
- Work History
- Work Assignments
- Significant accomplishments
- Emergency contact information
- Performance evaluation and
performance management
- Termination
§ How long are files held and where are they stored after employees leave?
§ What is the interface between HR and Finance?
§ Is a payroll service used, and if so, which one?
§ Does the payroll service provide all governmental employment filings?
§ Is there training of managers and employees about personnel files, and policies and procedures
for accessing them?
§ How is Paid Time Off documented?
§ When requests for information are made to your organization, who fills the request?
§ Is an HRIS system being used, and if so, which one?
-------------------------------------------------------------------------------------------
Training, Development and Career Management
§ Who is responsible for new employee orientation?
§ What are the elements of the new employee orientation program?
§ Where and to whom do new employees go when they have questions about your organization or
their jobs?
§ Is there a formal training program for employees and managers? If so, please describe it.
§ What training and development initiatives have occurred in your organization?
§ How are managers and supervisors trained and prepared for their roles?
§ What is the average length of time an employee stays with your organization? Does this vary by
position type?
§ How much does your organization spend annually (in total and per employee) on employee
training and development? Does this vary by position type?
----------------------------------------------------------------------------------------------
Compensation and Benefits
Basic Compensation Questions
§ Is there a formal compensation program?
§ How are wages set?
§ Are formal salary ranges set?
§ If formal salary ranges are set, are they made public to employees?
§ How are jobs rated?
§ How frequently are jobs re-evaluated or updated?
§ Are any salary surveys used? If so, which ones?
§ Are pay ranges revised as a result of these surveys? How frequently?
§ Who in your organization (what position) administers the compensation program?
§ Are merit increases given, and if so, are they integrated with performance evaluation?
§ Is there a bonus system, and if so how is it structured?
§ How is the compensation program and total compensation package communicated to employees?
§ What are the “cultural issues” or beliefs related to compensation in your organization?
§ How is employee communication regarding compensation and benefits delivered in your
organization?
-------------------------------------------------------------------------------------------------------
Health and Welfare Benefits
§ Describe the health insurance program provided by your organization.
§ Are dependents covered, and if so, in part or in full?
§ Are domestic partners covered?
§ What are the eligibility requirements for health insurance and other benefits?
§ Which of the following health and wellness benefits are offered, and what are the limits and
requirements for coverage?
- Dental
- Vision
- Disability
- Employee Assistance Program
- Life Insurance
- Other wellness benefits
- Flex benefit plan
- Other benefits
-------------------------------------------------------------------------------------------
Pension and Retirement
§ What is the pension or retirement plan?
§ What is the vesting period?
§ Can employees contribute?
§ Can pretax dollars be put into some form of deferment plan?
---------------------------------------------------------------------------------------------
Paid Time Off
§ What holidays are paid and who is eligible for them?
§ Is there a PTO system, or is it split between vacation and sick leave? If it is straight PTO, what
are the rates of accrual and caps?
§ What is the vacation schedule, and how is it earned?
§ What is the eligibility requirement for vacation?
§ Is there a cap to limit the amount of vacation accrued?
§ Are employees permitted to substitute sick leave for vacation?
§ How is unused accrued vacation treated?
§ Can employees contribute sick leave to other employees, and if so, what are the limits?
-----------------------------------------------------------------------------------------------
Performance Management And Evaluation
§ Describe the past and current performance appraisal system in your organization.
§ If a performance appraisal instrument is used, please attach a copy. (If the instrument differs by
position, please attach all instruments.)
§ What type of process is used (360o–supervisor only–peer evaluation–outcome)?
§ What type of training is used in relationship to performance evaluation?
§ What is the role of the supervisor/manager in performance appraisal?
§ What is the focus of performance management in your organization?
§ How often and consistently is the process used?
-------------------------------------------------------------------------------------------------
Termination And Transition
§ Is your organization an “at-will” employer?
§ What other causes or conditions of termination of employment exists?
§ What procedures are used for
- Termination for Cause
- Job Closure
- Resignation
§ What level of approval is needed before a termination can occur?
§ Is there any formal checklist or legal review prior to termination?
§ Are exit interviews performed for all employees who leave?
§ What documentation is required for all employee transitions?
§ How are references handled in your organization?
§ Who is responsible for internal communications regarding difficult terminations? (i.e.,
communicating the termination to other employees.)
---------------------------------------------------------------------------------
Legal Issues / Personnel Policies
§ To your knowledge, are all employees appropriately classified?
§ What personnel policies are currently being used? (Please attach a copy)
§ When was the last time these policies were reviewed and updated?
§ Is there a disparity between policies and practices?
§ Who has organizational responsibility for legal or employment questions?
§ Is harassment training regularly provided?
§ How are employee grievances dealt with?
================================================== ===
================================================
HR ACCOUNTING
HR Accounting is an attempt to identify and record investment made in the human resources.
Its an information system reporting the cost and value of the human factor to the organization.
‘the process of identifying and measuring data about human resources and communicating information to interested parties.’
CHARACTERISTICS OF HR ACCOUNTING
Its a system of accounting in which identification of human resources is made.
Investment made in human resources is recorded.
Measurement of costs and values are made.
Changes occurring in human resources over a period of time are also recorded.
Communicates information through financial statements to interested parties.
Helps the management to gain knowledge of the various aspects of employees which is necessary to take vital decisions for the progress of the organization.
HRA is a part of MIS.
Joint efforts of behavioral scientists, accountants and managements are needed for the working and development of HRA
OBJECTIVES OF HR ACCOUNTING
Proper management of human resources
Improvement of human resources.
Depicting the true value of the organization.
Provides quantitative information on human resources which helps the managers and investors in making decisions.
HRA communicates the worth of human resources to the organization and to the public
METHODS OF ACCOUNTING
Historical Cost Method:
Actual cost incurred for recruiting, hiring, training and developing the human resources of the organization are capitalized and amortized over the expected useful life of the human resources.
Replacement Cost Method:
This is the measure of the cost to replace a firm’s existing human resources. This method has the advantages of adjusting the human value of price trends in the economy.
Opportunity Cost Method:
In this method, the human resource of an organization has to be valued on the basis of the economist’s concept of opportunity cost which is value of benefit foregone by putting it to present use.
Present Value Of Future Earnings Method:
It recognizes an individual’s expected economic value to the enterprise during his remaining service period. An estimate about the future earning is made, and these earnings relate to the period which extents to the date of retirement of the employees. Such earnings are discounted by an appropriate range to get the present value.
==================================================
===========================================
regards
LEO LINGHAM
From India, Mumbai
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HR Audit questionaire (2).xls
HR Audit Questionnaire.d oc
HR Audit.pdf