“Cost allocation & Transfer Pricing” app built by EY helps in forward-looking automation of the cost allocation and transfer pricing process and aligns with finance operations and transformation projects. It provides companies with insights, like cost incurred by different cost centers, markup charged on the incurred cost and calculations for transfer pricing. It also helps in simplifying driver based cost allocation process and generation of reports to stabilize the recovery process, which in turn helps resolve queries from business units, countries, tax authorities and regulators.
Landing dashboard that lists down the steps guiding end users through the process of allocating incurred costs to different charging hubs. It also shows the summarized view of the total cost incurred and recovered/unrecovered costs by different cost incurring hubs. It also displays cost allocated to various regions with the recovered & unrecovered constituents.
Cost data loaded by BU / department / operating unit gets mapped to corresponding cost centers. The prior month YTD costs by CC are used to forecast YTD costs for current months. These are then converted from the incurring local currency to the reporting currency values.
Data loaded for drivers like Headcount, RWA, Floor Space and Revenue by charging hubs to be used while allocating costs to respective charging hubs.
This dashboard takes as user input driver wise recharge percentage for different CCs and displays the bifurcation of base cost and mark-up amount to be allocated for various allocation drivers.
This dashboard takes capping amount applicable for different charging hubs, as user input and shows the bifurcation of recovered and unrecovered costs from different countries by cost incurring hubs (based upon the capping condition).
The dashboard displays summarized view of allocated cost by cost incurring hubs, their region-wise allocation and recovery ratios.
Costs incurred by various business units, departments and operational units are mapped to respective cost centers (CC). This helps in analyzing cost incurred by CC and assigning it to different cost incurring hubs (CIHs)
Provision of calculating year to date cost values for the current month based on the prior month's actual cost incurred by GL for different CCs
Automates conversion of the cost incurred in local currencies of cost centers into reporting currency using global average rates/ closing rates
Automates and simplifies the process of calculating the mark-up amount (based on the mark-up rate for different CCs). Markup amount and cost base from the components of total cost to be allocated to different countries
Driver based allocation
Provides the user with the option of defining drivers, based on which the ratios will be calculated for allocating the cost incurred by various cost incurring hubs
Calculation of recovered amount based upon capping conditions
Provision of defining various cap and conditional limits like recovery up to cost amount/ specified limit for recovering allocated cost from countries. Provide a snapshot of the amount which can be recovered from various countries (up to capping limits) and the amount which will remain unrecovered and has to be absorbed by the CIH
Country / Region / Cost type/ Cost incurring hub wise allocated/recovered/unrecovered costs
Simplified reports that help identify cost and mark-up that has been charged to various countries, and provide a detailed view on region/cost type wise allocated cost. Pre-built dashboards also present complete reports for invoicing and taxation purposes
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