We are the Public Accounts Committee (PAC). It is our role to make sure public money has been applied for the purpose intended by the States, extravagance and waste are being eradicated and sound financial practices are being applied throughout the administrations of the States. Instead of holding Ministers to account we hold the Chief Executive and Accountable Officers to account for their actions. We also follow up on the work of the Comptroller and Auditor General (C&AG) to make sure their recommendations are being taken forward by the Government.
The Annual Report and Accounts contains a breakdown of the activities and initiatives carried out by the different elements of the States of Jersey, including government departments, non-ministerial departments, funds and some subsidiary companies.
The Annual Report provides information on how the Government of Jersey has performed over the course of the year in the context of its objectives (‘the Performance Report’) and on how the States is governed (‘the Accountability Report’). It also provides information on the financial performance of the States of Jersey covering both assets and liabilities and income and expenditure
EVIDENCE CONSIDERED
We undertook a 'desktop' review of the Annual Report and Accounts 2021 in order to identify key themes and issues. We also requested information from the Government on the processes it uses to inform the various sections of the report.
We then held a public hearing with the Treasurer of the States in order to question them on the processes and key themes we found and gather more information about the manner in which the accounts were put together
In total, the PAC made 19 findings and 8 recommendations within its report.
So what did we find out?
The PAC found the following key points in relation to the Annual Report and Accounts 2021
Accessibility of the Report
The key users of the financial statements within the Annual Report and Accounts are the States Assembly; however, other bodies such as the Corporate Strategy Board, States of Jersey Risk and Audit Committee, and the Jersey taxpayer are also considered to be key users of the overall information. The Annual Report and Accounts 2021, at 411 pages, is considerably longer than other larger jurisdictions, including the United Kingdom and Australia. This is also the case when compared to similar-sized jurisdictions. This is due to be addressed in future iterations of the annual report and accounts and the PAC has recommended that an executive summary is included which outlines the key messages and overall picture of Government finances and performance over the year being reported.
60% of respondents to the PAC’s States Member survey believed the information provided in the States of Jersey Annual Report and Accounts 2021 was useful in their role as a States Member. 64% of respondents believed that ‘Understandability’ was an area of the States of Jersey Annual Report and Accounts 2021 that could be improved, 36% of respondents felt that accessibility could be improved and 64% of respondents felt that supporting accountability within the report could be improved. We recommended that briefing on the previous year’s report should be provided to all incoming States Members after an election and the newly elected Council of Ministers. Feedback should also be sought from key stakeholders in relation to their perception of the annual report and accounts and its contents.
Responsibility for the production of the Annual Report and Accounts sits with the Treasurer of the States under Article 38 of the Public Finances (Jersey Law) 2019. However, the PAC has found that the information given during the hearing suggests a different approach in practice. The current timescale for completion and sign off of the accounts is deemed timely for an organisation the size of the States of Jersey.
Performance Reporting
The PAC found that, whilst the performance report within the 2021 annual report and accounts does appear to be presented in a fair and balanced way, it does not appear to meet the Jersey Financial Reporting Manual's guidance with respect to information being presented in an understandable way. Non-Ministerial Departments and States Owned Entities are not included within the performance report section of the annual report and accounts. Performance analysis of these departments and entities is included within their own annual report and accounts where these are produced.
It is intended for the 2023 annual report and accounts that the Government of Jersey will remove departmental reporting with a view to maintaining a higher-level analysis of Government objectives. The PAC has recommended that within the 2022 annual report and accounts, information within the performance report is presented in a more understandable manner including infographics alongside narratives as to whether key performance indicators have been met, not met or exceeded.
Quarterly departmental performance updates are provided on the gov.je website. However, the Public Accounts Committee has been unable to determine at this stage how accessible these are to members of the public who may wish to track government performance over a given period. Work is ongoing within Government to address how it presents statistics more broadly with a view to making open data available which can be tracked across several years. The PAC has recommended that as part of the Annual Social Survey in 2023, the Government of Jersey should seek to include questions to gauge the level of public understanding of how they can access and track government performance.
The PAC found that it is not always possible to track longer-term outcomes within the performance data contained within the annual report and accounts. It has recommended that a process is developed whereby, at the end of a States Assembly term of office, government performance data can be examined across the four-year term showing the wider performance that follows the ‘golden thread’ from Common Strategic Priority to individual services.
Accountability Reporting
The risk reporting within the annual report and accounts does not appear to quantify the risks faced by the organisation or, in some cases, clearly link them to strategic objectives of the States of Jersey. There is an acceptance from the Government of Jersey that further work is required in order to strengthen the link and reporting between risk management and the strategic objectives of the Government of Jersey. The PAC has recommended that by the presentation of the 2023 annual report and accounts, the report contains clear information which quantifies risks and details the link between risk and the overall objectives of the organisation.
Financial Reporting
There is a commitment to the production of fully consolidated accounts by 2024, however, the production of fully consolidated accounts is dependent on the successful implementation of the Integrated Technology Solution.
Lessons Learned and post-pandemic strategy
There is an acknowledgement that one area that could be improved upon for future reports is the use of links to more in-depth detail within the annual report and accounts, with the report itself focusing at a higher-level in terms of key performance data and key objectives. It is also acknowledged that future iterations of the annual report and account will require a better narrative to highlight actual spend against budget.
The introduction of Ministerial Plans within the current term of the States Assembly will feed into the reporting from 2023 onwards, however, the detail of how this will be done is yet to be confirmed. It is expected that this will simplify the reporting process and create links between Ministerial priorities and departmental objectives. The 2022 Annual Report and Accounts will include reporting on two different sets of strategic priorities due to the General Election. It is intended that the report will lean more towards the work of the new and current Government in order for the performance measures to flow through to 2023 until the end of the current term of office.
CONCLUSION
In conclusion, the PAC has found a number of key themes arising from its review which it hopes will be addressed in future versions of the annual report and accounts.
One area of the report that the PAC feels needs further attention is the performance report section. The 2021 annual report and accounts ran to over 400 pages, half of which were taken up by departmental performance reporting. It is the view of the PAC that this makes it difficult for readers to cross-reference performance to financial information and also difficult to assess the overall performance of Government.
Finally, the PAC is also concerned about the lack of quantification of risk within the annual report and accounts. Whilst it notes that significant internal reporting is done in relation to risk, the PAC would like to see greater quantification of risk in the annual report and further detail of the links between the risks faced by the organisation and how these feed into organisation wide and departmental objectives.
The Committee would like to thank the Accountable Officers for providing it with information to assist in its review and it would also like to place on record its thanks to the Treasurer of the States and the Director General of Strategic Policy, Planning and Performance for their attendance at the public hearing on 28th November 2022.