In the government-wide statement of activities, special items and extraordinary items should be:

In the government-wide statement of activities, special items and extraordinary items should be reported separately within a single category to provide clarity and transparency regarding the nature and impact of these items on the financial statements. This distinction helps users understand the exceptional events that can significantly affect the financial position of the government, ensuring they are appropriately highlighted.

Special items are typically significant transactions that are either unusual in nature or infrequent in occurrence but do not meet the criteria for extraordinary items. Extraordinary items, on the other hand, are usually events that are both unusual and infrequent. By presenting them separately within a single category, stakeholders can better assess the implications of such events without conflating them, which could lead to confusion or misinterpretation of a government’s financial performance.

Reporting them as a single item or omitting them entirely would not provide the necessary granularity, and combining them under extraordinary items would misclassify special items, degrading the accuracy of the financial information presented. Thus, the correct approach to ensure proper financial reporting is to present these items separately yet within a coherent category.