I’ve got lots of additional costs, how should I present this in my accounts?

Whilst there is no concept of “exceptional items” within FRS 102 there is a similar concept that when items of income or expense are material, their nature and amount should be disclosed separately. Such disclosure can be made either on the face of the Statement of Comprehensive Income or in the notes.  The Accounting Regulations also includes similar wording. 

Additional costs that are incurred by a entity as a result of COVID-19 are likely to be significant for many businesses and therefore for the purposes of understanding the underlying trade during a financial period it will be beneficial for such companies to separate out these costs whether this be on the face of the Statement of Comprehensive Income or in the notes.

Care must be taken to ensure that these are both referred to in the Strategic/Directors’ Reports (where necessary) and also defined in the company’s accounting policies. In the accounting policies it will be important to define that any amounts shown as exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size of incidence. Sufficient narrative will also be required to be included in the notes to explain the costs incurred.

The company may also wish to present additional line items, headings and subtotals in the Statement of Comprehensive Income (and in the Income Statement, if presented), when such presentation would provide a better understanding of the entity’s financial performance during the period.