BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
TURMUSH FAROVONLIGINI OSHIRISH MASALALARI
24-may 2024-yil
633
DEVELOPMENT OF ACCOUNTING AND ANALYSIS
METHODOLOGY OF INVESTMENTS IN HUMAN CAPITAL
Ochilov Olmos Ikrom ugli
PhD, doctorate student of
Tashkent state university of economics
Abstract.
The article reveals issues of improving the accounting and
analysis of human capital and investments in business entities. The
interpretation of investments in human capital as an element of financial
statements is explained and a methodology for their reflection in accounts and
reports is proposed. When analyzing investments in human capital, an analysis
of factors influencing the return on investment in employee training was carried
out.
Keywords:
accounting, accounting object, human capital, investments in
human capital,
accounting standards, return on employees, return on investments
in education, PESTLE analysis.
Human capital is one of the most important objects of investing in
business entities. On the other hand, it plays a key role in business development.
According to the World Bank human capital is driver of development [1]. That
is why governments also pay a great attention to enhance volume of investments
in human capital. For example, the President of the Republic of Uzbekistan
Shavkat Mirziyoyev emphasizes that ‘In developed countries, a lot of attention
is paid to investing in the full cycle of education, that is, investing in a child's
upbringing from 3 to 22 years old. Because this investment brings 15-17 times
profit to the society. In our case, this indicator is only 4 times. Therefore, we
must pay more attention to human capital and mobilize all opportunities for
this.’ [2].
Accounting point of view, human capital is intangible assets which are not
listed in the balance sheet of the company according to current accounting
standards. It can easily be seen as the economic value of a worker's experience
and skills. Any business unit can easily gain targeted profit with a good team of
employees. This is why they have to invest carefully in assets like education,
training, intelligence, skills, and other things employers look for. Employers
expect their employees to work hard and ensure good products in their company.
A lot of experts, businessmen and scientists believe that the more a company
invests in employees, the more productive and profitable they can be.
Human capital assessment and accounting problems appeared in the early
60s of the 20th century with the formation of the theory of "human capital" by
T. Schultz and G. Becker, laureates of the Nobel Prize. [3]. The formation of
this theory served as the basis for recognizing human capital as an accounting
object. In particular, E. Flamholtz was one of the first to consider human capital
as a resource of the enterprise and consider it an asset of the company from the
BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
TURMUSH FAROVONLIGINI OSHIRISH MASALALARI
24-may 2024-yil
634
point of view of accounting. He singled out three criteria for recognizing human
capital as an asset: future economic benefit, ownership or control by an
economic entity, expression in monetary terms [4].
Jac Fitz-enz recognizes human capital as an asset of the company and
considers it a strong financial lever, a valuable and productive resource [5]. L.A.
Chaikovskaya and Yu.O. Bystrova, having researched issues of accounting and
evaluation of investments in human capital, defined human capital as follows:
"Human capital is the sum of assets and liabilities associated with highly
qualified personnel" [6].
Theoretical issues of human capital are being studied by Uzbek scientists
for a long time. In particular, the scientists S.S. Gulyamov, K.Kh.
Abdurakhmanov, A.V. Vahabov, B.Kh. Umurzakov, A.A. Artikov, N.K.
Zokirova, Sh.G. Akramova et al. have researched various aspects of human
capital recently.
Although human capital is being studied in depth by representatives of
various sectors of the economy, human capital and investments in it remain
insufficiently studied as an object of accounting. In this regard, only M.E.
Polatov conducted partial research. In his papers on accounting and auditing of
intellectual capital, he studied human capital as a component of intellectual
capital and recognized the need to take it into account. [7]
It should be noted that the recognition, assessment, analytical and
synthetic accounting of human capital or intellectual capital as an object of
accounting and disclosure of information about them in financial statements is a
separate research topic. Having thoroughly studied the scientific and research
work on the account of investments in human capital, we would like to dwell on
the aspects that reveal its content as an object of account. When it comes to
investments in human capital, first of all, it is closely related to the concept of
human capital. After all, the question arises as to which object the investments
are directed to. Before considering whether or not investments in human capital
are accounting objects of entities, we need to clarify the question of whether
human capital itself is an investment of entity or not. According to Article 5 of
the Law of the Republic of Uzbekistan "On Investments and Investment
Activities", investments are divided into capital, financial and social types by the
intended object. Investments in the development of human potential, skills and
production experience, as well as in the elaboration of other forms of intangible
assets, are included in the social investments. Therefore, it is possible to invest
in human capital and it can be an investment object. Based on the analysis of the
literature and scientists who have conducted research on human capital and
investments in it, the following conclusions can be made.
First, investments in human capital can be divided into four groups
according to the source of implementation. These are: by individuals, by family,
by the enterprise you work for, and by the state. Investments in human capital
are made in these four directions.
BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
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635
Second, the purpose of economic entities investing in human capital is to
gain economic benefits in the future.
Third, investments in human capital can take the form of any asset or
expense. This is the basis for considering investments in human capital in the
form of accounting objects such as assets, costs and liabilities.
Based on the above-mentioned opinions and scientific conclusions made
as a result of research, investments in human capital are considered an object of
accounting and the author’s definition to the investments of human capital as an
accounting object is as follows:
investments in human capital are investments
directed to human capital by economic entities in order to obtain economic and
social benefits in the future
.
There are two important points to note in the definition. The first is the
purpose of investing in human capital. We touched on this above and tried to
explain its content. The second aspect goes back to the concept of human
capital. It is possible to invest in human capital with a deep understanding of the
concept.
It should be recognized that the theory of human capital is currently a
subject of interdisciplinary research, which gives rise to many interpretations
based on the characteristics of each discipline. From the formation of the theory
of human capital to the current stage of development, we found it appropriate to
give a definition of human capital as follows, having thoroughly studied the
definitions and approaches given to the essence of this concept.
Human capital
is a set of physical, mental and entrepreneurial skills (competence) that bring
economic and social benefit to a person himself, his family, workplace and
society.
It can be concluded that investments in human capital carried out by
economic entities should be aimed at developing human physical, mental
(intellectual) and entrepreneurial abilities.
Factors affecting the effectiveness of investments in human capital and
their determination are one of the important issues of modern management.
Today, the evaluation of the efficiency of the economic entities operating in our
republic is carried out on the basis of the "REGULATION on the criteria for
evaluating the efficiency of the activities of joint-stock companies and other
economic entities with a share of the state". The following indicators mentioned
in this Regulation serve to evaluate the efficiency of human capital investments
of business entities.
1. Labor productivity. 2. Training costs per employee. 3. Labour turnover
ratio.
In fact, ensuring the stable pace of the indicators shown above directly
depends on the volume of investments in human capital and their rational use.
However, since there is no functional relationship between the increase in the
volume of investment in human capital and the change in the above indicators
that ensure its effectiveness, we are not able to calculate the effect of each factor
separately. However, we can calculate the impact of sales profitability, return on
BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
TURMUSH FAROVONLIGINI OSHIRISH MASALALARI
24-may 2024-yil
636
investment in education and investment in education per employee on employee
profitability (sum of profit per employee), which is considered as the most basic
indicator for assessing the profitability of investments in human capital, based
on the following functional relationship.
Р
х
= Р
с
∗ ТИ
қ
∗ ТИ
б
(1)
Hereafter:
Р
х
– employee profitability;
Р
с
– sales profit;
ТИ
қ
- return on
investment in education;
ТИ
б
– investment in education per employee.
In order to reveal the method of calculating the profitability of employees
and the factors affecting it based on practical data, we will compile the
following table using the data of JSC "Gijduvon cotton ginning" (Table 1).
BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
TURMUSH FAROVONLIGINI OSHIRISH MASALALARI
24-may 2024-yil
637
Table No.1
Analysis of indicators related to employee profitability
N
o
Indicators
Abb
r.
Last
year
Reporting
year
Deviation
1.
Net profit for the reporting
period, th.s.
NP
8608577
16900658
8292081
2. Sale, thousand sum
S
1352809
42
299301580
16402113
8
3.
Investments
in
employee
training, th.s.
IET
28278
7520
-20758
4.
Annual average number of
employees, man
NE
568
592
24
5. Sales profitability
Р
с
0,064
0,056
-0,008
6.
Return
on
investments
in
education, th.s.
RIE
4783,96
39800,74
35016,78
7.
Investments in education per
employee, th.s.
IEE
49,79
12,70
-37,09
8.
Return on employees, thousand
sum
Р
х
15155,95
28548,41
13392,46
The table shows that the amount of net profit and net sales of the enterprise
has increased significantly compared to the previous year. However, this growth
does not have qualitatively positive dynamics, because the sales margin
decreased by 0.008 or 0.8 percent. It can also be observed that the average
number of employees of the enterprise has increased by 24 people, and the
investment in education has decreased by 20,758 thousand sum. Return on
investment in training and employee profitability, respectively 35,016, 78
thousand sum and 13,392,46 thousand sum increased, the increase of net income
and profit amounts was positive, and the decrease in the amount of investments
in education had a negative effect.
We found it appropriate to use the logarithm method to calculate the factors
affecting the employee profitability indicator. This is due to the fact that the
calculation result in the logarithm method does not depend on the location of the
factor in the model, and the level of accuracy is much higher than other
methods. Calculation of the effect of factors on the result using this method is
carried out by the following formulas cited in the literature on the theory of
economic analysis.
1.
Р
х
Рс
= ∆Р
х
∗
ln(Р
с
1
:Р
с
0
)
ln(Р
х
1
:Р
х
0
)
=13392,46*
ln(0,056:0,064)
ln(28548,41:15155,95)
= - 2824,21
2.
Р
х
ТИқ
= ∆Р
х
∗
ln(ТИ
қ
1
:ТИ
қ
0
)
ln(Р
х
1
:Р
х
0
)
= 13392,46 ∗
ln(39800,74:4783,96)
ln(28548,41:15155,95)
=
45112,29
3.
Р
х
ТИб
= ∆Р
х
∗
ln(ТИ
б
1
:ТИ
б
0
)
ln(Р
х
1
:Р
х
0
)
= 13392,46 ∗
ln(12,70:49,79)
ln(28548,41:15155,95)
=
−28895,62
BARQAROR IQTISODIY OʻSISH ORQALI AHOLI
TURMUSH FAROVONLIGINI OSHIRISH MASALALARI
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638
The sum of the effects of each factor should be equal to the change in
employee productivity calculated as the result indicator.
Р
х
=
Р
х
Рс
+
Р
х
ТИқ
+
Р
х
ТИб
= (−2824,21) + 45112,29 + (−28895,62)
= 13392,46
As a result of factor analysis, the following conclusions can be reached.
During the reporting period, the decrease in sales profitability by 0.008 or 0.8%
reduced the profitability of employees by 2824.41 thousand soums, and the
decrease in investment in education per employee by 37.09 thousand soums
reduced the result to 28895.62 thousand soums. An increase in the return on
investment in employee training by 35,016.78 thousand soums caused an
increase in the profitability of employees by 45,112.29 thousand soums.
The above-mentioned factor analysis models are used in cases where the
influence of factors on the result is functional. However, there are also a number
of stochastically related factors that have a significant impact on the state of
investments in human capital and their effectiveness. These factors are
commonly called external factors. Since it is not possible or difficult to
accurately calculate the impact of these factors’ value. In practice, several
business assessment tools, such as a SWOT analysis, competitor analysis, and
other scenario planning tools are used to evaluate external factors of business
performance. As a result of the research, it was concluded that it is appropriate
to use PESTLE analysis in evaluating the external factors affecting the
efficiency of investments in human capital. A brief description of the
classification of external factors affecting the effectiveness of human capital
investment using this method is given below.
Table No.2 PESTLE analysis for human capital investments of entity
1
Political
factors
Economic
factors
Social
factors
Technologic
al factors
Legal
factors
Environment
al factors
lack of
effective
state policy
on
personnel
minimum
wage
religious
factors,
ethnic
views and
national
values
technologica
l
infrastructur
e and its
condition
labor law
and its
enforceme
nt
environment
in the area
where the
enterprise is
located
political
crises in
public
administrati
on
personal
income tax
rate
composition
, quality and
developmen
t of human
capital
level of
development
of
innovative
development
s and
intellectual
property
objects
developmen
t of internal
regulatory
documents
for
personnel
managemen
t
problems
related to
weather,
water and
ecology in the
area where
the enterprise
is located
1
Made by author
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639
Factors belonging to each group mentioned in the table have an impact on
the life cycle of investments. In the factor analysis of investments, we believe
that it is necessary to draw conclusions based on the study of indirect and
external factors, in addition to direct and internal factors affecting them.
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