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R.158/2022 jerseyauditoffice.je
In This Guide
Introduction 3 Overarching principles 5
Strategy 7 Risks 12 Operations 15 Performance analysis 17 Financial performance 21 External factors 23
Accountability report 26 Financial statements 31
Annual reports are a key means by which an entity tells the story of its year. Public annual reporting, done well, enables stakeholders to understand – with trust and confidence – an entity's strategy and the risks it faces, how much money has been spent and on what, and what has been achieved as a result. It enables stakeholders to hold the entity to account effectively.
In this third Good Practice Guide published by the Office of the Comptroller and Auditor General, I set out some good practice principles for excellence in annual reporting by public bodies. I also provide some illustrative examples drawn from my review of the annual reports which underpinned my report Annual Reporting published on 7 November 2022.
My reviews of the annual reports and accounts of Jersey entities for 2019, 2020 and 2021 identified that most entities have made improvements to their annual reports, some significantly. However, progress in respect of accountability and sustainability reporting has been slower. In particular, remuneration and staff reporting (including disclosure of directors' pay and directors' interests) often falls below best practice.
The extracts within this Guide have been taken from various annual reports and links to the full reports are included for information. The key elements I consider to be good practice in a single annual report are summarised below.
Single Annual Report
Supporting accountability Transparent
Accessible Understandable
Performance Report Accountability Report Financial Statements
Strategy Directors' or equivalent report Prepared under a suitable framework
Risks A statement of responsibilities Suitably assured Operations A governance report
Performance analysis A remuneration and staff report
Financial performance
External factors
I hope that organisations will find this Guide to be useful as they start to consider their public annual reporting for 2022 and beyond. Lynn Pamment
Comptroller and Auditor General
Supporting accountability
The best reports:
• tell the story of the organisation in a fair and balanced way
• comply with relevant reporting requirements; and
• include clear action points to take forward.
Transparent
The best reports include:
• frank and honest analysis
• consideration of the challenges an organisation is facing
• appropriate use of data; and
• quantification of risks and performance measures.
These principles should be evident across all parts of the Annual Report.
Accessibility
The best reports:
• highlight key trends in the financial statements
• include concise summaries of key points; and
• consider how the organisation engages with key stakeholders and meets their needs.
Understandable
The best reports use:
• plain English to explain difficult concepts
• infographics and diagrams to communicate important messages; and
• a clearly integrated structure to help users navigate it effectively.
Strategy Risks Operations Performance Financial External Account- Financial
analysis performance factors ability statements
This Guide draws on examples of good practice from within each of the sections of an annual report. Each section includes examples where entities have made their annual reports more understandable to the reader through use of graphics, clear language, aids to make reports easier to navigate and signposting. In considering which examples to use, I reviewed Annual Reports of 38 Jersey entities which were available publicly at 31 July 2022.
The examples will not be an exhaustive list of good practice but are presented to provide ideas for all entities to think about as they plan their annual reporting for 2022 and are those that I think best portray the principles of good annual reporting.
Supporting Accessibility accountability
Transparent Understandable
The best reports include:
• a statement of the purpose and activities of the entity, including:
o a brief description of the business model and environment
o organisational structure and priorities; and
o any other organisational strategic objectives and goals
• clarity around purpose, strategic objectives and key programmes/projects
• balanced view of progress against objectives
• details of plans to implement priorities; and
• strategy clearly linked to performance measures and risks.
Jersey Water sets out its purpose, what it does (including some basic statistics), its values and its four customer outcomes in a clear graphic on a double page spread.
2021 Annual Report and Financial Statements The Jersey New Waterworks Company Limited Jersey-Water-Annual-Report-2021.pdf (jerseywater.je)
The Jersey Advisory and Conciliation Service, one of the smallest States established or States controlled entities, sets out its purpose, what it does and its strategic aims. This is accompanied by a simple graphic showing how it seeks to achieve its strategic aims.
Jersey Advisory and Conciliation Service 2021 Annual Report 2021-jacs-annual-report-accounts.pdf
Jersey Finance sets out its four strategic objectives, how it categorises its activities to support delivery of the strategic objectives and how successful it has been in delivering each of the activity categories.
Jersey Finance Annual Report 2021 https://www.jerseyfinance.je/who-we-are/annual-report-2021/
The best reports include:
• clear articulation of the entity's risk management process
• the key issues and risks that could affect the entity in delivering its objectives, how they have changed, how they have been mitigated and any emerging risks that may affect future performance
• risks reflect the external environment and implications for the entity (for example, the COVID-19 pandemic)
• clear links between risks, strategic objectives and the annual report narrative
• quantified risks and realistic planned and implemented mitigations; and
• discussion about how the dynamic of the risk profile has changed over time, including developments in relation to specific risks disclosed.
Jersey Telecom (JT) sets out its approach to risk management and links its principal risks to its four areas of focus for 2022-23.
JT Annual Report for the year ended 31 December 2021 https://www.jtglobal.com/global/jt-together/
For each of its principal risks Jersey Electricity provides a description of the risk, risk owner, risk trend, risk appetite and mitigating actions.
Jersey Electricity Annual Report and Accounts 2021 https://www.jec.co.uk/investors/figures-reports/
The best reports include:
• discussion of the different delivery models, the reasons for using these models and how they achieve value for money
• narrative around how business operations support wider Government (or other) objectives
• for significant contracted-out services, discussion of how these contracts are awarded and how the entity manages the ongoing contract; and
• consideration of capital investment and how it achieves value for money.
The States of Jersey Development Company (JDC) provides:
• a summary of ownership and lines of reporting flowchart that summarises JDC's operating model and how this adds value; and
• a stakeholder graphic, that sets out how JDC's activities have supported the States of Jersey and other stakeholders.
States of Jersey Development Company 2021 Annual Report and Consolidated Financial Statements 2021-annual-report-accounts.pdf (jerseydevelopment.je)
The best reports include:
• a statement from the entity's lead Minister or chief executive, accountable officer or equivalent providing their perspective on the performance of the entity over the period
• a performance analysis showing how the organisation has performed against priorities (or any other organisational strategic objectives and goals) using qualitative and quantitative information and prior year trend information where possible. Performance data against each of the indicators used to monitor performance against priority outcomes should be provided. Any financial information provided should link to the financial review
• non-financial information including on environmental protection, social responsibility, respect for human rights, anti-corruption and anti-bribery matters and diversity
• information on environmental matters including the impact of the entity's business on the environment and identifying where its performance contributes towards the delivery of United Nations Sustainable Development Goals (SDGs)
• quantified Key Performance Indicators (KPIs) aligned to strategic objectives and making appropriate use of financial and non-financial data
• balanced assessment of goals achieved and performance against targets; and
• graphics used to illustrate performance.
Jersey Business provides a one-page performance analysis in the form of a narrative table. For each of the Jersey Business 2021 objectives, the table sets out what was planned, what was delivered, and the difference made.
Jersey Business Annual Report and Accounts 2021 https://www.jerseybusiness.je/wp-content/uploads/2022/05/Annual-Review-Accounts-2021.pdf
Digital Jersey also summarises its performance in a single page table by setting out each KPI outcome and rating performance as red, amber or green. This is supported by a balanced commentary.
Digital Jersey Limited Annual report and financial statements 31 December 2021 https://www.digital.je/wp-content/uploads/2022/05/DJ-Annual-Report-2021-PROOF1262-1.pdf
Andium Homes analyses its performance for each of its five Key Strategies by publishing the 2021 target and actual performance for the relevant KPIs and providing a short commentary.
Andium Homes Annual Report 2021 Andium-Homes-Annual-Report-2021.pdf (andiumhomes.je)
The best reports include:
• a financial review detailing financial performance
• a fair and balanced reflection of financial performance which is consistent with the underlying financial statements
• an explanation of the adoption of the going concern basis where this might be called into doubt, for example where there are significant net liabilities that will be financed from resources voted by the States Assembly in the future; and
• discussion of actual performance against expected/budgeted performance.
In addition to publishing audited financial statements, Digital Jersey summarises its financial performance for the year in the form of narrative overview, a table comparing actual expenditure with budget and a simple graph.
Digital Jersey Limited Annual report and financial statements 31 December 2021 https://www.digital.je/wp-content/uploads/2022/05/DJ-Annual-Report-2021 - PROOF1262-1.pdf
The best reports include:
• consideration of the external drivers that influence and impact on current objectives (including factors such as the COVID-19 pandemic and the UK's EU Exit); and
• innovative reporting on sustainability and climate change.
The States of Jersey Development Company's (JDC) annual report has a detailed section on Environmental, Social and Governance (ESG) issues and reports. In presenting ESG the annual report sets out:
• 15 reporting areas (five each for environmental, social and governance) showing how these contribute to relevant UN SDGs; and
• JDC's activities in each of the reporting areas.
States of Jersey Development Company 2021 Annual Report and Consolidated Financial Statements 2021-annual-report-accounts.pdf (jerseydevelopment.je)
The best reports include an accountability report that encompasses:
Directors' or equivalent report
A statement of responsibilities
A governance report
A remuneration and staff report
The Ports of Jersey annual report encompasses all the key elements of a good practice accountability report within a clearly defined section on governance. The governance section opens with a statement from the Chairman of the Board and concludes with a statement of directors' responsibilities for the accounts.
Ports of Jersey Annual Report 2021 POJ Annual Report 2021 | Ports of Jersey
Andium Homes provides a range of good practice staff and remuneration disclosures including on fair pay, remuneration policy, directors' pay and on the gender pay gap.
Andium Homes Annual Report 2021 Andium-Homes-Annual-Report-2021.pdf (andiumhomes.je)
Where entities are required to prepare financial statements, the best reports include financial statements that are:
Prepared under a suitable framework; and
Suitably assured.
The Data Protection Authority (DPA) annual report includes the audited financial statements and independent auditor's report. The financial statements are prepared under the UK Financial Reporting Standard (FRS) 102. The DPA has applied the small entities regime under FRS 102(1A) and taken advantage of the exemption from preparing a statement of cash flows.
Jersey Office of the Information Commissioner Annual Report 2021 joic-2021-annualreport_online.pdf (jerseyoic.org)
The Jersey Probation and After-Care Service publishes an annual report but is not required to publish financial statements. Instead it provides accountability by setting out summary financial information.
Jersey Probation and After-Care Service Annual Report for 2021 and Strategic Priorities for 2020-2023 ID Probation Service Annual Report 2021.pdf (gov.je)