A user runs the Time by Employee report by navigating to Reports > Project/Time Tracking > Time by Employee Report. An employee under subsidiary A also appears in subsidiary B.
The time by Employee report is based on time tracking records. So the subsidiary that is set on the time tracking records will be followed. The reason why one employee who is associated in Subsidiary A can also be found/can create time tracks under another subsidiary is because if the only record associated to the Employee Record is a Time Entry, then the employee's Subsidiary can still be changed. But if there are transactions already created against the Employee Record, then we can no longer change the subsidiary of the employee.