These are income and expenses that would not have been earned or incurred if the COVID-19 pandemic had not occurred and are not expected to recur once the effects have largely receded. When determining the impacts of COVID-19, we believe that a company should consider as COVID-19-related only the income and expenses that are incremental and directly attributable to COVID-19. It encourages issuers to provide quantitative information on the impacts in the notes.ĭetermining COVID-19-related income and expenses For example, in its recent public statement the European regulator, ESMA 1, calls for caution regarding any separate presentation of the impacts in the income statement because of their pervasiveness. For example, it would be inappropriate to present or disclose only the expenses relating to COVID-19 – and omit the related income – if both income and expenses are affected.Ĭompanies should also consider any relevant regulatory guidance on the presentation and disclosure of COVID-19 impacts in the financial statements. Instead, it should consider disclosing them in the notes, providing quantitative (when possible) and qualitative information and stating whether it has identified only some or all of the impacts.Ī company needs to ensure that its chosen presentation is not misleading and is relevant to the users’ understanding of its financial statements. In these circumstances, we believe that the company should not present them in the income statement. In other cases, the impacts of COVID-19 may be so pervasive that the company is unable to determine the overall impacts of COVID-19 on a non-arbitrary basis. Instead, it may be appropriate to disclose them in the notes. In these cases, it may be less meaningful to present the impacts separately in the income statement. In some cases, the company may be able to determine the impacts of COVID-19 but finds that they are pervasive – e.g. Companies need to assess carefully whether they are able to determine COVID-19 impacts on a non-arbitrary basis, in order to provide relevant and reliable information to users of their financial statements.
the pervasiveness of those impacts on the company and.Whether a company presents its COVID-19 impacts on the face of the income statement or discloses them in the notes will depend on:
Under IAS 1 Presentation of Financial Statements, when items of income or expense are material, a company discloses their nature and amount separately, either on the face of the income statement or in the notes. Determining where to present COVID-19 impacts in the financial statements
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