Travel$ense User's Guide (PDF, 139 MB) - NBAA

162TRAVEL$ENSEIt generally is recognized that the value of an individual’s time is greater than hisor her salary alone. Fringe benefits, social security, furniture and otheraccommodations are but a few of the additional direct costs that must beborne by a company, in addition to the direct salary received by an individualemployee.There are other aspects of value received from individual employee effort,however, that go beyond direct salary moneys paid out – these aspects can beconsidered under the heading of human resource accounting.The field of human resource accounting, which recognizes people, their training,skills and experience as a human capital asset, is developing into a mature,recognized science. Human resource accounting is premised on the conclusionthat the human factor is vitally important to success in business. Many studieshave been conducted that indicate profits are to a large degree the result ofcontributions of management personnel, who possess the skills and experienceto direct the efficient use of material resources of business. Incompetentmanagement is the chief cause for business failure. 1Traditional accounting recognition of human resources has treated people onlyas a period cost, or expenditure, measured in terms of employeecompensation. There are no provisions under asset accounting for the humancapital values corporations employ. This, however, does not mean that humanresources have no value over and above employment costs. They havesubstantial values that merely are not recognized under traditional periodaccounting principles.Another example of a difference between a cost and an unrecognized valueunder traditional accounting concerns property. Property is normally carriedunder traditional accounting at book value, acquisition cost less applicableaccumulated depreciation. The market value of the property often isconsiderably more than the book value, but the true value will not berecognized until disposal of the property, when a gain is recorded. The onlytime some value of human resources may be recognized under traditionalaccounting is under the intangible asset account of “goodwill” in the sale of abusiness.Unlike with traditional accounting practices, human resource accounting placesa value on people, rather than a cost, thereby recognizing the importance ofhuman resource contributions to an organization. Such values have long beenrecognized and appraised in the insurance industry in the offering andunderwriting of key man insurance policies for businesses. A key man may bethought of as a valuable asset who is insured by his firm against possible loss in1 Smith, J.C., Key Man Protection, Life and Health Insurance Handbook, Richard D. Irwin, Inc., Homewood,Ill., 3rd Ed. 1973 p. 647.Copyright © 1999, National Business Aviation Association, Inc.