Development of a Model for Human Capital Reporting in Accounting

Looking at human resources as an asset can be traced back to seventeenth century when William Petty (1690), Kentilon (1755), and Adam Smith (1776), for the first time raised the importance of human resources in the organization as an capital. In general, many studies show that the reports regarding the human capital influences the decision made by stake holders and their interpretation and this signifies the importance of human capital reporting, However, so far, there hasn’t been any significant progress in the field of human capital reporting. This study, using grounded theory, proposes a model for advancing human capital reporting. Although in an ideal situation, presenting the significance of human resources on the financial statements (like other physical properties) is the best form of human resources management, but considering the current situation and limitations, at least in the near future, the proposed model in this study suggests a step by step approach for the development of human capital reporting.