Materiality Thresholds

Materiality Thresholds determine which discrepancies GL Scrutiny flags for review and which are left alone as immaterial.

Note: These are firm level settings. These apply clients/jobs created from now on.

GL Code Materiality Thresholds

Threshold	Description
Aggregate Threshold	The combined dollar value across similar small items before they're flagged together.
High Value Transactions	Any single transaction above this amount is flagged for review.
Transactional Threshold	The dollar value a single line item must reach before it's investigated individually.

GST Specific Materiality Thresholds

Threshold	Description
GST High Variance	The GST variance amount that triggers a flag.
GST Transactional Threshold	The per-transaction GST discrepancy worth investigating.
GST Aggregate Variance Threshold	The combined GST variance across the job before it's investigated.

Each row carries a Value, a Custom toggle, and an Active toggle. Every threshold change is recorded, providing a visible history of who changed a value and when.

Materiality Benchmark

Choose the benchmark GL Scrutiny uses to calculate materiality:

• Revenue – Owner-managed SME, 0.5–1%

• Profit Before Tax – Profit-oriented, 5%

• Total Expenses – Break-even / NFP, 0.5–1%

• Total Assets – Asset-holding, 1–2%

Once a benchmark is selected, three values are set as a percentage of it:

• Overall materiality (OM) – 1% of benchmark

• Performance materiality (PM) – 50% of OM

• Clearly trivial (CT) – 5% of OM

Anomaly Buckets

Each bucket can be toggled on or off individually.

• Significant Movements – accounts whose total moved a long way from last year, at least 50% of OM in dollars, and either a swing of 25% or more, or a movement over 1% of the benchmark. Each finding lists the transactions behind most of the change.

• Broken Relationships & Ratios – checks that the usual ratios still stack up against last year: gross margin, wages as a share of sales, how long debtors and creditors take to pay, and the implied interest rate. Flagged when one moves outside its normal range.

• Transaction Outliers – individual transactions worth checking first, either a handful of lines that make up most of an account's total, or single lines far bigger than everything else in that account.

• Unusual Postings – entries that look out of the ordinary: possible duplicate payments, round-dollar amounts, manual journals in accounts that are normally automatic, entries bunched at year end, and entries with little or no description.

• New & Ceased Accounts – accounts used this year but not last year, or used last year and not this year, anything above 5% of OM. Worth checking the coding is right and the activity really did start or stop.

• Firm Rules – the firm's own rules from the GL Rule Builder, run over every transaction (for example, “entertainment over $5,000”). Rules marked critical show as Tier 1, high and medium as Tier 2, low as Tier 3.

Sensitivity

• Year-on-year movement gate – percentage slider (default 25%) controlling how much movement is needed before an anomaly is raised.

• Profit & loss accounts only – toggle to suppress balance-sheet movements and focus only on trading performance. Off by default.

How to Access

Firm Settings → Configurations → Thresholds