Exceptional items

Special items, or exceptional items, are costs or profits that need to be separately disclosed in order to provide a better view of the accounts. Companies usually go further and disclose profit numbers without special numbers. These should provide a better view of underlying trends and sustainable performance.

Special items arise from outside the usual course of a company's business, they are very often one-off items that will not recur.

Examples of special items include profits on disposals, restructuring costs and other unusual profits or losses. Some may recur (for example re-organisations may last several years) but they should clearly not be things that keep recurring.

There is obvious room for manipulation in what is classified as a special item and what is not.

In practice, there is little real difference between special/exceptional items under IFRS and exceptional items under UK GAAP. However UK standards specify the term "exceptional" and provide a tight definition of these items, whereas IFRS define items that need to be separately reported and leave it at that (not specifying terminology).

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