What standards relate to the allocation of Parent company to subsidiary company expenses?

Unfortunately I am not aware of a specific standard however this is a very common practice. Essentially, the business cannot operate without administrative functions and these areas touch every aspect of the business and this is the justification for allocation.

The allocation of these parent "corporate" costs to operational P&L areas are a type of cost accounting or activity based costing concept that helps management be aware of the total cost of operation, rather than having knowledge of only the costs they control individually.

If this is a new implementation you may get some push back from those VP's who have not had their budgets impacted by allocations of overhead in the past.

Appears you are the Treasurer, you might have a better time discussing this with your Controller who will be well versed in company policy.

One source of guidance would be to look into the various accounting references regarding carve out financial statements. They try to explain what costs and expenses should be reflected on the subsidiary's books if it had been a stand alone company.

In addition to the good information previously posted, I can provide a little more history. Many years ago (and in some cases currently), businesses "allocated" corporate overheads to subs based on sales revenues. Newer techniques and technologies allow for improved methods, such as ABC (mentioned by Valerie above). If you want a true picture of how the subs are consuming corporate overheads, you need to understand what is driving those corporate overheads. For example, if your corporate HR dept consumes resources because of the high employee turnover of just one particular sub, then it would misstate the P&L of all of the subs if the HR costs were allocated based on revenues rather than the driver (employee turnover).

The standard that will play here is that of "Related party Transactions". Also you will go further to find out the basis of their charges (per headcount, volume of sales or nature of transactions). Note, what we are looking at is the SG&A cost which falls within the fixed cost element.