The ability to assign Materiality Thresholds at a Group or Sub-Group level within FloQast Flux provides greater visibility and clarity to decision-makers of your organization when analyzing the material changes of accounts within a grouping. By focusing on the financial story driven by these Grouped Materiality thresholds, your Executive Team, CFO's, and Controllers can make more strategic decisions with greater precision and enhanced transparency during strategic corporate board meetings.
What does Flux Group Level Materiality look like?
You can arrange your GL accounts into groups using the grouping template within a FloQast Flux Report. The balances of these GL accounts will be summed to a group-level total. This summary line can be made actionable by setting a materiality threshold for this group-level total. If the materiality threshold for the group is exceeded, then an explanation is required! The designated assignee(s), a field for an explanation, and a sign-off toggle will all be present in the app.
How do I get started with Group Level Materiality?
1. If you are an Admin or Manager in FloQast, you can hover your mouse over the grouped line on a Flux Report (Ex. Total Income Group in screenshot below) and click on the gear icon (Circle #1 below). A slide-out screen will appear for the group level.
2. The group-level materiality threshold can then be set as a dollar amount or a percentage by entering a value in the text box and selecting $ or % from the dropdown menu.
3. You can also choose "more options" to use advanced materiality settings, such as $ and/or %
4. If you don't wish to specify a group-level materiality threshold, then you can instead leave the "Never show as Material" option selected. The group-level totals will still be summed and displayed for you like they always have, but these totals will be strictly informational and will never show as material fluctuations. This also means that group-level sign-offs will not be present (if any were assigned) since sign-offs are only displayed for material fluctuations. Sub-groups and/or individual accounts within this group are still eligible to have their own unique materiality settings.
5. Once you are satisfied with your Group Level threshold settings, you can decide whether this threshold should be applied to All Periods or only the particular period you are viewing. The default will be all, but you may toggle over to "this period only" if making a one-off change.
6. Clicking Save will apply your new Group-Level materiality. Don't forget to assign your preparer(s) and reviewer(s) now that this Group has an explanation required anytime it is material!
Can only the Group Level be considered material?
Once you have set a group-level materiality threshold, this might be the only level that you wish to be considered material. For example, account 1000 might have a material fluctuation within the Cash group, but you wish to leave your explanation at the overall Cash group level.
7. In this case, you can deactivate materiality at individual account level within this group. There is a "deactivate" button available within this group-level slide-out. Clicking this will disable the more granular materiality at the account level (and any sub-groups, if there are additional sub-groups that roll up to this group you are editing). Instead, the only the group-level fluctuation will be judged against the materiality threshold that you have just set. Account-level balances will still be visible like that always have, and explanations can even be left, but these explanations won't be required nor will assignees be displayed at the lower levels.
When you click the "Deactivate" button, a quick info screen will appear with a confirmation prompt. You can click "Deactivate" again to proceed. The lower-level materiality thresholds can always be added back at a later time using the settings for that specific account/sub-group!