In the introduction of a new consultation document, published last week, on the apprentice levy, the Secretary of State for Business, Sajid Javid seems to have got her accounting wires crossed. In it Javid raises the concern that unlike money in bank, stock in warehouse, which are considered 'assets' on a balance sheet, employees are listed as 'liabilities'.
This has caused considerable consternation in the accounting world and reported today in accountingWeb. The debate is not about whether humans are assets or liabilities, but the fact that actually employees are not listed as 'liabilities' anywhere on a balance sheet. Javid has got it wrong. The number of employees is listed on the statutory accounts, but that's it.
In recent years, there has been a school of thought promoting the idea of listing employees on balance sheets as assets. In an article in The Guardian, Leon Kaye wrote of how 'CEOs often talk about employees as their greatest asset, it is time for the 21st century ledger to match that rhetoric'. He went on to suggest employees 'should be placed on the left side of the balance sheet, due to their knowledge, skills and labour that together represent a valuable resource.'
Kaye cites Indian companies like ICT services giant, Infosys, and Tata who have for some years assigned a value to their workforces.
So what do we think? Should employees be considered assets? And how should they be accounted for?
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