How to present the expenses related to COVID-19?

How to present the expenses related to COVID-19?

Companies need to identify exceptional items and determine how to present these in the financial statements.


Fred Versteeg

Partner Department of Professional Practice

KPMG Nederland


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What’s the issue?

Companies may suffer expenses as a consequence of COVID-19 and the ensuing measures taken around this, such as impairments, restructurings and social distancing measures. These expenses would not occur under ‘normal’ circumstances and might not be considered by the company to be part of the ordinary business operations. The question arises how to present these expenses.

Getting into more detail

Dutch GAAP does not make a distinction between ordinary and extraordinary activities in the presentation on the face of the profit and loss account. The profit and loss account must be presented in accordance with the law, including the Annual Accounts Formats Decree. These models generally do not permit exceptional income or expense to be presented separately in the profit and loss account. In other words, all items of income and expense should be classified according to their nature or function under the relevant income or costs on the face of the profit and loss account. However, in certain circumstances it would be possible to present exceptional items on the face of the profit and loss account; a specification may be added to the items of the models thereby presenting a breakdown.

Exceptional items are income and expenses arising from events or transactions which belong to the ordinary activities, but on the basis of the nature, the size or the incidental character must be disclosed separately in the notes and on a gross basis, for the purpose of providing a good insight into the result from and development in the ordinary activities of the company. It is expected that the incidental or non-recurring or additional costs as a consequence of COVID-19 meet the definition of exceptional items and therefore need to be disclosed separately. Companies need to ascertain that these items are determined consistently and reliably and transparent disclosure on the judgements made in this case may be warranted.

If an exceptional item is recognised in multiple other items of the profit and loss account, the total financial effect of this exceptional item must be disclosed as well as the manner in which this exceptional item is recognised. This must take place by providing a specification (including the amounts) of the line items where the exceptional items are recognised.

Actions for management to take now

  • Identify COVID-19 related transactions which are exceptional by size or frequency
  • Determine if it is possible to present exceptional items separately on the face of the profit and loss account
  • Disclose the financial impact of exceptional items separately per category and in total

More Information

Please contact Fred Versteeg for any further queries.

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