Setup Considerations: Payroll Intercompany Accounting
You can use this topic to help make decisions when planning your configuration and use of intercompany accounting. It explains:
- Why to set it up.
- How it fits into the rest of Workday.
- Downstream impacts and cross-product interactions.
- Security requirements and business process configurations.
- Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.
What It Is
Intercompany accounting enables you to cost a portion of a worker's pay to multiple companies. You can also budget payroll expenses across an organization.
Business Benefits
Intercompany accounting enables you to:
- Reduce post-payroll reclassification adjustments.
- Maintain tax reporting to 1 company while costing to multiple reporting companies.
- Manage payroll costing within an organization.
- Maintain accurate accounting across multiple companies.
- Perform intercompany settlements.
Use Cases
You can use intercompany accounting to split a worker's costing allocation when your organization operates business with 2 or more distinct but related companies. Examples:
- A hospitality organization.
- An entertainment organization.
- A university with a teaching hospital.
- A governmental consortium.
- A multi-brand retail group.
Questions to Consider
Question | Considerations |
|---|---|
How does enabling the intercompany accounting feature affect tax reporting? | Tax reporting doesn't change when you enable intercompany accounting feature. Tax reporting always follows the tax ID associated with a worker's position. |
How can you restrict cost centers to specific companies in Workday? | You can use the Create Cost Center task to restrict cost centers to specific companies. Workday validates the configured company and cost center rules while costing to multiple companies. |
Recommendations
Intercompany accounting has a significant impact on payroll journals. Depending on your use case, Workday recommends that you assess intercompany accounting journal lines before you complete payroll. Once you enable intercompany accounting and complete payroll processing, you can't disable it.
Requirements
Before enabling intercompany accounting, set up the required company to initiate intercompany transactions with other companies using the
Edit Company Intercompany Profile
task. The companies listed on this task have the same account set.Limitations
An end user can't enter a costing company directly in Time Tracking. Costing functionality follows the standard rules for costing time tracking entries.
Workday Payroll doesn't support currency conversion for intercompany accounting.
Tenant Setup
To use intercompany accounting, access the
Maintain Payroll Accounting Options
task and select the Intercompany Accounting - Enable
check box in the General
tab.Security
Users with security enabled for these domains can set up intercompany accounting:
Domains | Considerations |
|---|---|
Set Up: Tenant Setup - Payroll domain in the System functional area. | Enables users to access the Edit Tenant Setup - Payroll task. |
| Enable users to access the Edit Company Intercompany Profile task. |
Business Processes
Business Process | Considerations |
|---|---|
Assign Costing Allocation
| When you enable intercompany accounting, Workday prompts you for a costing company when you launch the Assign Costing Allocation business process. You can also initiate the Assign Costing Allocation task as a subprocess of several other business processes. Example: Add Additional Job . |
Create Payroll Accounting Adjustments
| Workday prompts you for a costing company when you launch the Create Payroll Accounting Adjustments business process. You can also initiate the Create Payroll Accounting Adjustments task as a subprocess of the Effort Certification business process. |
Reporting
To review accounting lines including the costing company for a specific pay period and pay group, run the
Payroll Accounting by Period/Pay Group
report.Integrations
No impact.
Connections and Touchpoints
Workday provides a costing company context on:
- Actuals
- Accounting adjustments
- Costing allocations
- Costing for grant begin and end dates for award (CAN, FRA, UK, USA)
- Effort certification
- Employee deductions
- Employer paid expenses
- Fringe benefits
- Fringe benefit recovery (CAN, FRA, UK, USA)
- Forward accruals
- On-demand payments
- One-time payments
- Manual payments
- Payroll input
- Period activity pay
- Salary over the cap (CAN, FRA, UK, USA)
Workday also includes payroll originating transaction types when you settle intercompany items.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships across your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.