Title: Supporting Transfer Pricing in Unanet
The purpose of this document is to describe the method for handling transfer pricing across multiple currencies. Unanet supports two physical architecture models in support of transfer pricing. In the first model, multiple instances of Unanet are configured, one for each entity that supports a specific currency. In the second model, a single instance of Unanet is configured, but entities are segregated by the person’s organization and it is understood that all costs associated with a person’s organization are in the currency of that entity.
The best way to visualize the configuration is through an example. Take the example of an employee in Division I (USD currency) working on a project “owned” by Division II (Euro currency). From the perspective of the Division I employee, Division II is the customer. From the perspective of Division II, the Division I employee is a subcontractor to the work performed on behalf of one of their clients. Let’s assume Division II’s customer is a company named Acme Explosives.
What’s covered in this document:
For employees that cross charge, a pseudo user will be created under the cross charge organization (Division II). The pseudo employee user name will be set to the employee’s username with a suffix of the cross charge organization. For example, the employee (JSMITH) that cross charges to Division II will have a pseudo user created with a username of JSMITH.DIVII.
Two projects are created to support this example. The Project Code associated with both projects will be identical. The Project Organization (Customer) will vary between the two projects. The Project Organization for the Division I project will be set to Division II and the Project Organization for the Division II project will be set to ACME. Remember that Division II is the customer of Division I and ACME is the customer of Division II.
Refer to the example below.
Division I Project
DIvision II Project
Project Labor Category Setup
Project labor categories will be established as a means of setting the bill rates. The same labor category will be applied to both the Division I and Division II projects.
- The bill rate on the labor category for the Division I project will represent the cross charge rate established between Division I and Division II for that labor category.
- The bill rate for the Division II project will be the established bill rate negotiated on the contract for the ACME customer.
The Division I employee is assigned to the Division I project with the Project Organization of Division II. The assignment will set the appropriate labor category and the cost rate will default to the employee’s cost rate.
No assignment is required for the project owned by Division II.
This section describe the workflow process to support project cross charges.
Step 1 - User Enters Timesheet
- The Division I employee reports time to the Division II project with the Project Organization of Division II.
- At the end of the time period, the user submits their timesheet.
- ASSUMPTION: The project approver is set to the Division II project manager. This setup allows a Division II employee to approve time applied by the Division I employee. Note this approval is only possible if a single instance of Unanet is deployed.
Step 2 - Create Transfer Timesheet
- Once the timesheet is fully approved, a process is executed that looks at time applied to projects where the Project Organization for the project is different than the Person Organization of the employee. This time represents all labor that needs to be cross charged.
- New timesheets are automatically created that apply the hours to the peered project under the cross charge organization. In this case, a new timesheet will be created that applies the same amount of time to the Division II project where the Project Organization is ACME and the username is set to the pseudo user.
- The labor category will be set to the same labor category applied to the Division I project.
- The timesheet will be created to set the cost rate of the labor to the bill rate established for the Division I employee.
- The bill rate for the labor will be picked up from the project labor category bill rate.
- The timesheets are created and automatically set to LOCKED.
To better understand the workflow, take a look at the example below. In this example, the cross charge rate is $120/hour, the hourly rate of the Division I employee is $50/hour and the bill rate to the customer (ACME) is $180/hour.
Coop Project (automatically created)
Labor Category Bill Rate
Person Cost Rate
Timesheet Bill Rate
Timesheet Cost Rate
Step 3 - Export from Unanet to the General Ledger
The existing standard process to export timesheets from Unanet to General Ledger is executed. This export will exclude all transfer timesheets.
Step 4 - Export from Unanet to Accounts Payable
A new export will be created that exports all transfer timesheets to AP. These are the timesheets automatically created in Step 2 and represent the time the Division I employee worked as a subcontractor to Division II. The labor will be aggregated by pseudo employee sending the Vendor ID of the pseudo employee company (Division I) in the AP transaction. The AP transaction will post a debit to a Transfer Labor Contra account and the credit will be Due To Division I (the default AP account for Division I as a vendor).