Optimization of finance shared services centre's chargeback method - (a case study)

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Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2017

Department

Laskentatoimen laitos

Major/Subject

Mcode

Degree programme

Accounting

Language

en

Pages

40 + app. 4

Series

Abstract

The case company has recently established a shared services department with an objective to provide services, such as finance and accounting services, to its associate companies. These associate companies are operating in different countries, are subjected to different tax requirements, and have varied need for services and resources. Costs driven by these customers should be allocated efficiently and fairly. Thus, ‘one fit all’ chargeback approach is not sustainable in long run and may raise concern from tax authorities, associate companies, and SSC itself when trying to cover its expenses and managing to operate efficiently. Such complex situation has triggered a need for reassessment of current chargeback model. This is a commissioned case study. The main objective of this thesis is to perform a thorough evaluation of current chargeback model, discuss findings, and recommend solutions that might solve the current issues and act as a tool for future needs. A thorough analysis of all stakeholders having direct impact on current model was performed. In addition, two relevant chargeback methods were chosen and feasibility analyses were carried out for comparison. In the end, findings from all three analyses were compared and discussed. The main finding of this study demonstrated that existing issues are not directly caused by price or allocation methods rather are more operational related. The study showed no conflict between case provider and stake holders because of fees charged, and the likelihood of such occurrence is minimum unless there is a significant change in tax law or in the criteria for managers’ performance appraisal. Modification or replacement of current model will not fix these issues rather strategic action from both parties is recommended.

Description

Thesis advisor

Malmi, Teemu

Keywords

chargeback method, shared services center, transfer pricing, arm's length principle, inter-company pricing

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-201706135557

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[gradu] Kauppakorkeakoulu / BIZ