Office of the Comptroller and Auditor General – Annual Report and Accounts for the year ended 31 December 2015 and Annual Accounts for the year ended 31 December 2014

Office of the Comptroller and Auditor General

Annual Report and Accounts for the year ended 31 December 2015

and

Annual Accounts for the year ended

31 December 2014

R.101/2016

Contents

Preface  1

Annual Report and Accounts for the year ended 31 December 2015  2 Annual Report  3 Statement of Responsibilities for the Annual Accounts  12 Independent Auditor's Report  13 Annual Accounts  14

Annual Accounts for the year ended 31 December 2014  27 Statement of Responsibilities for the Annual Accounts  28 Independent Auditor's Report  29 Annual Accounts  30

Preface

All those responsible for the application of public funds have a responsibility to account for their use.

The Comptroller and Auditor General (Jersey) Law 2014 enhanced the accountability requirements for the Office of the Comptroller and Auditor General (operationally known as the Jersey Audit Office). The new Law meant that, in addition to preparing an Annual Report I have an obligation to prepare Annual Accounts that are audited by an auditor appointed by the Chairman of the Public Accounts Committee.

For 2014 I published an Annual Report in advance of publishing Annual Accounts as an auditor had not at that stage been appointed. The Annual Accounts for 2014 have now been audited and I am therefore publishing them alongside my Annual Report and Accounts for 2015.

At the same time, I have decided to publish my Annual Audit Letter separately from the Annual Report and Accounts. The Annual Audit Letter summarises the findings from my audit work. Publishing it separately provides a clear distinction between reporting on the results of my work and demonstrating accountability for the public funds made available to the Jersey Audit Office.

Karen McConnell

Comptroller and Auditor General

20 September 2016

Office of the Comptroller and Auditor General

Annual Report and Accounts for the year ended 31 December 2015  

Prepared in discharge of the responsibility in Article 19 of the Comptroller and Auditor General (Jersey) Law 2014

Introduction

1. The Jersey Audit Office which I lead is a key component of the systems of scrutiny and accountability for public expenditure in Jersey.
2. This Annual Report is a key means by which I demonstrate my accountability for the public funds entrusted to me. It:

• explains the role and objectives of the JAO;
• outlines how the JAO operates;
• highlights what the JAO has achieved;
• summarises the resources used by the JAO; and
• outlines plans for the future.

3. Further information about the JAO and its work may be found on its website athttp://www.jerseyauditoffice.je.

What are the aims and objectives of the JAO?

4. Working through the JAO I assist the States Assembly and the wider public in holding to account those responsible for:

• safeguarding public resources;
• accounting for the use of public resources; and
• using public resources economically, efficiently and effectively.

5. My objectives stem from the Comptroller and Auditor General (Jersey) Law 2014 (the 2014 Law') and relate primarily to:

• the appointment of auditors to audit the accounts of the States and certain other entities; and
• reviewing and reporting to the States Assembly on internal control, corporate governance and economy, efficiency and effectiveness of States-funded bodies, independently-audited States bodies and States- aided independent bodies.

6. Public audit is undertaken on behalf of the public and in the public interest. It strengthens accountability to the States Assembly that authorises resources and to citizens as taxpayers and users of public services. It is therefore an important link in the chain of accountability (see Exhibit 1).

Exhibit 1: the role of the C&AG

C&AG

Departments & Non Ministerial Bodies

Accountability for funds voted

States Assembly

How does the JAO operate?

7. The JAO has established core values by which it operates and which are set out in the Code of Audit Practice that I am required to prepare (see Exhibit 2).

Exhibit 2: JAO core values

Independence. Auditors should be independent of those they audit and be seen to be. Subject to statutory and professional responsibilities, they should comply with Ethical Standards issued by the United Kingdom Financial Reporting Council. They should not undertake any work that might impair their independence or might reasonably be perceived to do so.

Audit work recognises both costs and benefits. In planning audit work auditors should consider the materiality or significance of the sums involved. In making recommendations they should recognise that there are costs of implementing audit recommendations as well as benefits that might arise.  

Audit is undertaken as efficiently as possible. The C&AG and audit firms appointed by the C&AG will discuss the timetable for their work and the information they require. They will seek to rely on the work of internal audit where relevant to their responsibilities.  

Auditors report in public, accessibly, without fear or favour. As audit is an essential element of public accountability, reporting should be publicly available except where there is a compelling case (such as commercial confidentiality) for it not to be. Audit reporting should be accessible and relevant to stakeholders.

Auditors adopt a constructive and positive approach. In discharging their statutory and professional responsibilities, auditors should adopt a constructive and positive approach, supporting and encouraging worthwhile change. In undertaking their work and making recommendations they should recognise the particular circumstances of the island.

Confidentiality and data security are balanced with public accountability. The C&AG and audit firms appointed by the C&AG should comply with statutory and professional requirements relating to the security, holding and disclosure of information received or accessed in the course of their work.

8. Confidence in public audit is pivotal. An essential requirement for securing that confidence is independence of myself and the JAO from both the legislature and the executive. That independence is enshrined in the 2014 Law that:

• prevents any person from directing me in the discharge of my functions. Whilst I have a statutory duty to attend meetings of the States Assembly's Public Accounts Committee and liaise with it, nobody in the legislature or executive can direct me as to what work I undertake, when I undertake it, how I undertake it, what I conclude or what I report; and
• gives a statutory protection from award of damages for any action taken in good faith in discharge of my functions.

9. But the JAO does more to demonstrate the highest standards of integrity, objectivity and independence. It:

• maintains a register of threats to independence and, where necessary, appropriate safeguards;
• adopts strict policies to avoid the offer or acceptance of gifts or hospitality that might give rise to a perceived threat to independence. It also maintains a register of gifts and hospitality received, declined and offered;
• in appointing auditors to the States and other entities, ensures that those auditors are independent of those entities; and
• requires auditors appointed to the States and other entities to obtain prior approval to undertaking non-audit work for the States or entities controlled by the States.

What has the JAO achieved in the last year?

10. Since my previous annual report I have:

• appointed auditors to other entities where the 2014 Law made me responsible for appointment: the Jersey Financial Services Commission, the Jersey Competition Regulation Authority, the Jersey Advisory and Conciliation Service and the Jersey Gambling Commission;
• issued and kept up to date my annual and three-year audit plan;
• received correspondence from members of the public and considered whether additional audit work is appropriate;
• delivered a full programme of audit work, with an increased focus on value for money and following up on the implementation of previous audit recommendations, leading to publication of reports to the States Assembly (see Exhibit 3);
• attended, or been represented at, meetings of the Public Account Committee, including public hearings;
• attended, or been represented at, and contributed to meetings of the States' Audit Committee;
• liaised closely with Price waterhouseCoopers LLP, the auditors of the States' accounts;
• shared my views on effective financial management in the public sector by accepting an invitation to speak at a lunch held by the Institute of Directors Jersey.

Exhibit 3: Reports to the States Assembly

What resources has the JAO used?

11. The JAO team comprises eight people, all engaged on a part-time or a call-off basis, with a total of over 150 years' experience in public audit (see Exhibit 4). Further details of expertise and experience of team members can be found on the Jersey Audit Office website at http://www.jerseyauditoffice.je/pages/TheTeam.aspx. (see Exhibit 4).

Exhibit 4: JAO staffing

12. In the course of the year I have also drawn upon specialist input from:

• the United Kingdom National Audit Office on my review of eGovernment; and
• Price waterhouseCoopers LLP. In addition to serving as auditors of the States accounts, they:

• evaluated and tested the regularity' of income and expenditure in the States accounts and reported the results of their work to the Treasurer of the States and the Audit Committee. This work was designed to be supportive to the States in advance of moving to giving a formal opinion on regularity; and
• advised on best practice on employment contracts as part of my review Follow-up of the Use of Compromise Agreements'.

13. In the course of the year ended 31 December 2015 the JAO incurred net expenditure of £759,400 (see Exhibit 5).

Exhibit 5: JAO net expenditure 2015

Other costs: office-

related £15,300

Employee & similar costs: C&AG £84,800

Other costs: audit of SoJ accounts £299,200

Employee & similar costs: other £308,700

Other costs: general £51,400

14. The net expenditure represented:

• expenditure as a portion of gross public expenditure up to 50% below that for the public audit functions for equivalent jurisdictions;
• a 0.5% increase over 2014;
• an underspend of £27,100 against the core allocation included in the MTFP; and
• an underspend of £243,000 against the final budget, reflecting substantial unspent allocations carried forward from the previous year. Of this underspend only £35,000 was carried forward to 2016.

15. The Annual Accounts of the JAO published with this Annual Report provide further detail of the financial performance and position of the JAO, including the remuneration of the C&AG and Deputy C&AG. The Annual Accounts

include the report of the auditor appointed by the Chairman of the Public Accounts Committee.

What are the JAO's priorities?

16. The Comptroller and Auditor General (Board of Governance) (Jersey) Order 2015 provides for the establishment of a Board of Governance for the JAO, responsible for scrutinising the use of resources by, and governance arrangements of, the JAO. On 14 September 2016, the States Assembly adopted a proposition to appoint a Chairman and another independent member of the Board with immediate effect. A key priority for the JAO is working with the Board so that the Board has access to information necessary, including Key Performance Indicators and information on risks and risk management, for it to perform its functions.
17. The environment in which the States is operating is challenging with financial constraints and an imperative for reform. That environment has a knock-on impact on the JAO. In this context the key priorities for the JAO are:

• maintaining a focus on follow-up of previous audit recommendations. The key principle of public audit is supporting and driving worthwhile change. Follow-up reviews to evaluate the extent and the effectiveness of implementation of previous audit recommendations and any barriers to implementation;
• maintaining a focus on value for money which is of particular importance given the financial constraints faced by the States;
• maintaining a focus on effective governance and internal control as these essential foundations for high quality public services can come under pressure when an organisation undergoes major change;
• drawing out common themes from the JAO's work, to identify the underlying barriers to and levers for change; and
• focussing its work on improving financial management within the States as a key pillar for delivery of change.

Karen McConnell

Comptroller and Auditor General

20 September 2016

Statement of responsibilities for Annual Accounts

I am required by the Comptroller and Auditor General (Jersey) Law 2014 to prepare the Annual Accounts of the Office of the Comptroller and Auditor General.

In preparing the Accounts, detailed in the following pages, I have:

• applied the going-concern principle;
• applied appropriate accounting policies in a consistent manner; and
• made reasonable and prudent judgements and estimates.

I confirm that, so far as I am aware, there is no relevant audit information of which the auditor of these Accounts is unaware; and I have taken all steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the auditor is aware of that information.

Karen McConnell

Comptroller and Auditor General

20 September 2016

Independent auditors' report to the Comptroller and Auditor General

We have audited the financial statements of the Office of the Comptroller and Auditor General for the year ended 31 December 2015 which comprise the Statement of comprehensive net expenditure, Statement of financial position, Statement of comparison of budget and actual amounts, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Public Sector Accounting Standards (IPSAS).

This report is made solely to the Comptroller and Auditor General and in accordance with Article 19 of the Comptroller and Auditor General (Jersey) Law 2014. Our audit work has been undertaken so that we might state to the Comptroller and Auditor General those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Comptroller and Auditor General, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Comptroller and Auditor General and auditors

The Comptroller and Auditor General is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Office of the Comptroller and Auditor General's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Comptroller and Auditor General; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information on pages 1 to 12 in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report.

Opinion on the financial statements In our opinion the financial statements:

• give a true and fair view of the state of the Office of the Comptroller and Auditor General's affairs as at 31 December 2015 and of its total comprehensive net expenditure;
• have been properly prepared in accordance with International Public Sector Accounting Standards; and
• have been prepared in accordance with the requirements of the Comptroller and Auditor General (Jersey) Law 2014.

Grant Thornton Limited Chartered Accountants

St Helier, Jersey, Channel Islands 20 September 2016

Statement of comprehensive net expenditure For the year ended 31 December 2015

Notes  2015  2014

£ £

Expenses

Employee and similar costs: Comptroller  84,800  76,100 and Auditor General

Employee and similar costs: other

Other costs: audit of the accounts of the States of Jersey

Other costs: general Other costs: office-related

Total comprehensive net expenditure

4  308,700  270,500 5  299,200  331,600

6  51,400  59,100 7, 11  15,300  18,200

759,400  755,500

Statement of financial position

Notes 31 31 December December

2015 2014

£ £

Assets Current assets

Receivables from non-exchange transactions: States of Jersey Social Security Funds

Receivables from non-exchange transactions: States of Jersey Consolidated Fund

Total assets

3(a) - 60,700 3(a) 320,000 324,400 320,000 385,100

Liabilities Current liabilities

Trade payables from exchange 8 transactions

Total liabilities Net assets

320,000 385,100 320,000 385,100

0 0

Statement of comparison of budget and actual amounts For the year ended 31 December 2015

Net revenue expenditure  Notes

Original budget  16 Adjustments  16 Final budget  16 Actual on comparable basis

Over/(Under)spend against budget

2015 £

786,500 215,900 1,002,400 759,400 (243,000)

Notes to the financial statements 1 General Information

These financial statements were authorised for issue by the Comptroller and Auditor General on 20 September 2016.

The Comptroller and Auditor General is a corporation sole established by the States of Jersey under the Comptroller and Auditor General (Jersey) Law 2014 (previously the Public Finances (Jersey) Law 2005). The financial activities of the Office of Comptroller and Auditor General are included within the financial statements of the States of Jersey.

The Office of the Comptroller and Auditor General's principal activities are serving as a supreme audit institution for Jersey and is located in Jersey.

The financial statements cover the individual entity as no other entities have been identified for inclusion within the financial statements in accordance with applicable accounting standards.

2 Statement of compliance and basis of preparation

The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS). The financial statements are presented in pounds sterling which is the functional and reporting currency of the Office of the Comptroller and Auditor General and all values are rounded to the nearest one hundred pounds.

The financial statements are prepared on the basis of historical cost unless otherwise stated. The financial statements are prepared on an accrual basis.

3 Summary of significant accounting policies

1. Reporting financial performance

The expenses of the Office of the Comptroller and Auditor General are directly met by the States of Jersey and no cash or equivalent is advanced to the Office of the Comptroller and Auditor General. Therefore:

• these financial statements include a Statement of Comprehensive Net Expenditure as the Office of the Comptroller and Auditor General receives no income;
• the Statement of Financial Position includes Receivables from non-exchange transactions representing the amounts payable by the States of Jersey's Social Security Funds to meet the liabilities of the proportion of the costs of the audit of the financial statements of the States falling on the Social Security Funds;
• the Statement of Financial Position includes Receivables from non-exchange transactions representing the amounts payable by the States of Jersey's Consolidated Fund to meet the liabilities of the Comptroller and Auditor General; and

• no Cash Flow Statement is prepared as there are no cash flows specifically attributable to the Office of the Comptroller and Auditor General.

2. Recognition of expenditure

Expenditure in respect of fees for the audit of the annual financial statements of the States of Jersey and the Office of the Comptroller and Auditor General are recognised in the period to which the financial statements relate. Expenditure is stated net of the amount falling on the Social Security Funds as full responsibility for the portion of the cost of the audit of the Social Security Funds rests with the Social Security Funds and the Comptroller and Auditor General is acting as an agent in respect of this amount.

Expenditure in respect of fees for other work undertaken for the Office of Comptroller and Auditor General is recognised in the period in which the service is provided.

Expenditure is reported net of Goods and Services Tax.

3. Property, plant and equipment

The Office of the Comptroller and Auditor General's policy is to recognise property, plant and equipment in the financial statements at cost less accumulated depreciation where the cost of an individual item or group of items exceeds £10,000. No such items were held at 31 December 2015 (or 31 December 2014).

4. Leases

Operating leases are leases that do not transfer substantially all the risks and benefits of ownership of the leased item to the Office of the Comptroller and Auditor General. Operating lease payments are recognised as an operating expense on a straight-line basis over the lease term.

5. Provisions

Provisions are recognised when the Office of the Comptroller and Auditor General has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The Office of the Comptroller and Auditor General does not recognise contingent liabilities but discloses details of any contingencies in the notes to the financial statements, unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

The Office of the Comptroller and Auditor General does not recognise contingent assets but discloses in the notes to the financial statements details of any possible assets whose existence is contingent on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Comptroller and Auditor General.

6. Employee benefits

The Office of the Comptroller and Auditor General receives the services of a member of staff employed by the States of Jersey who is a member of the Public Employees' Contributory Retirement Scheme (PECRS). The costs of that member of staff are included in the Statement of Comprehensive Net Expenditure.

Retirement benefits

The States of Jersey on behalf of the Office of the Comptroller and Auditor General makes a fixed contribution to PECRS. Although PECRS plans to make specified payments to former employees in retirement, the Office of the Comptroller and Auditor General does not have any legal or constructive obligation to pay further contributions if PECRS does not hold sufficient assets to pay employee benefits relating to employee service in the current or prior periods. The contributions to PECRS are therefore charged in the year in which they become payable.

Short-term employee benefits

The cost of short-term employee benefits, such as leave pay, is recognised in the period in which the employee renders the related service.

7. Related parties

The Comptroller and Auditor General regards a related party as a person or entity with the ability to exercise significant influence over the Office of the Comptroller and Auditor General.

8. Changes in accounting policies and estimates

The Comptroller and Auditor General recognises the effects of changes in accounting policy retrospectively. The effects of changes in accounting policy are applied prospectively if retrospective application is impractical.

There are no changes in accounting policy compared with the financial statements for the year ended 31 December 2014.

The Office of the Comptroller and Auditor General recognises the effects of changes in accounting estimates prospectively by including them in net expenditure.

9. Budget information

The annual budget for the expenditure of the Office of the Comptroller and Auditor General is prepared on the basis of near cash' expenditure as defined in the Jersey Financial Reporting Manual (which is based on European Union-adopted International Financial Reporting Standards). The budget classification used is that adopted by the States of Jersey.

10. Significant judgements and sources of estimation uncertainty

The preparation of the financial statements of the Office of the Comptroller and Auditor General in conformity with IPSAS requires management to make judgements, estimates and assumptions that affect the reported amounts of expenses, assets and liabilities, and the disclosure of any contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

In the process of applying the accounting policies, the Comptroller and Auditor General has made judgements which have the most effect on the amounts recognised in the financial statements.

The most significant judgements in relation to the preparation of the financial statements relate to:

• the accounting policy for the recognition of expenditure on fees for the audit of the States of Jersey disclosed above;
• the accounting policy for audit fees in respect of the States of Jersey Social Security Funds disclosed above; and
• the accounting policy for retirement benefits disclosed above.

The Comptroller and Auditor General has not identified any key assumptions or other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities.

11. New IPSAS  

The Comptroller and Auditor General has determined that the following IPSASs for which first time adoption is required for financial periods beginning on or after 1 January 2017 but early adoption is permitted are not relevant to the financial statements:

• IPSAS 34 Separate Financial Statements;
• IPSAS 35 Consolidated Financial Statements;
• IPSAS 36 Investments in Associated and Joint Ventures;
• IPSAS 37 Joint Arrangements; and
• IPSAS 38 Disclosure of Interests in Other Entities.

4 Staff and similar costs: other

2015 2014

£ £

Deputy Comptroller and Auditor General Affiliates

Non-audit services provided by the auditors of the States of Jersey

States of Jersey employee and communication & administrative support

73,200 46,300 101,200 95,000

34,100 38,700 100,200 90,500 308,700 270,500

The staff costs for the States of Jersey employee includes an employer contribution of £5,400 (2014: £5,100) to the Public Employees' Contributory Retirement Scheme.

5 Other costs: audit of the accounts of the States of Jersey

This expenditure is stated net of a charge to the States of Jersey's Social Security Funds of £58,300 (2014: £60,700).

6  Other costs: general

2015  2014

£ £

Other professional services bought in ICT support

Communications

Travel and accommodation: Comptroller and Auditor General

Travel and accommodation: Deputy Comptroller and Auditor General

Travel and accommodation: other

Audit fee: Office of the Comptroller and Auditor General

Administration

7  Other costs: office-related

Premises and maintenance Printing and stationery

10,000  20,000 10,500  10,500 2,500  2,800

8,900  8,100

4,700  3,400 9,400  9,300

4,000  4,000 1,400  1,000

51,400  59,100

2015  2014

£ £

14,800  16,100 500  2,100

15,300  18,200

8  Trade payables from exchange transactions

2015  2014

£ £

Trade payables  23,000  30,000 Accruals  297,000  355,100

320,000  385,100 Trade payables are non-interest bearing and are normally settled on 30-day terms. 9  Financial instruments – financial risk management

The fair value of receivables from exchange transactions is equal to their carrying value due to the short-term maturities of these instruments.

As the Office of the Comptroller and Auditor General has no assets arising from exchange transactions, the Office of the Comptroller and Auditor General is not exposed to any credit risk.

As the States of Jersey meets the liabilities of the Office of the Comptroller and Auditor General, the Office of the Comptroller and Auditor General is not exposed to any liquidity risk.

As the Office of the Comptroller and Auditor General does not enter into any contracts for supply of goods or services not denominated in sterling, the Office of the Comptroller and Auditor General is not exposed to any currency risk.

As the Office of the Comptroller and Auditor General does not have any interest- bearing assets or liabilities, the Office of the Comptroller and Auditor General is not exposed to any market risk.

10  Related party disclosures

Terms and conditions of transactions with related parties

Karen McConnell is engaged as Comptroller and Auditor General and Stephen Warr en is engaged as Deputy Comptroller and Auditor General on a self-employed basis. Purchases from Karen McConnell and Stephen Warr en are made at terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured, interest-free and settled in cash. There have been no guarantees provided or received from any related party payable.

Key management personnel

The key management personnel, as defined by IPSAS 20 Related Party Disclosures, comprise Karen McConnell, as Comptroller and Auditor General, a corporation sole established by Article 2 of the Comptroller and Auditor General (Jersey) Law 2014 and Stephen Warr en, Deputy Comptroller and Auditor General who is empowered under Article 16 of the Comptroller and Auditor General (Jersey) Law 2014 to discharge the functions of Comptroller and Auditor General in Karen McConnell's absence. Karen McConnell and Stephen Warr en are engaged on a self-employed basis and total expenditure on their engagement is reported in the Statement of Comprehensive Net Expenditure.

States of Jersey

Article 9 of the Comptroller and Auditor General (Jersey) Law 2014 places a duty on the States to ensure that the Comptroller and Auditor General is provided with sufficient resources to perform her functions. Article 50 of the Public Finances (Jersey) Law 2005 placed a duty on the Chief Minister to ensure that the Comptroller and Auditor General is provided with sufficient resources to perform her functions.

The duty to ensure that sufficient resources are provided is discharged by the States meeting the costs of Office of the Comptroller and Auditor General.

States of Jersey Social Security Funds

The Social Security Fund, Social Security (Reserve) Fund, Health Insurance Fund and Long-Term Care Fund established by the States of Jersey meet the portion of the cost of the of the audit of the States' accounts relating to those funds.

11 Operating lease payments

Future minimum lease payments under a non-cancellable operating lease relate to an office building and amount to £6,600 (2014: £6,600), all payable within one year.

Lease payments recognised as an expense during the period amounted to £13,600 (2014: £14,200).

12 Contingent liabilities

At the end of the financial year the Office of the Comptroller and Auditor General had no contingent liabilities (31 December 2014: nil).

13 Segment information

For management purposes the Office of the Comptroller and Auditor General is treated as a single business unit with no separate financial information for activities or groups of activities. The Office of the Comptroller and Auditor General operates in only one geographic location and therefore no segments are monitored geographically.

The Comptroller and Auditor General has formed the view that there is no distinguishable activity or group of activities of the Office of the Comptroller and Auditor General for which it is appropriate separately to report financial information for the purpose of evaluating past performance in achieving objectives and making decisions about the future allocation of resources.

14 Events after the reporting period

There are no material non-adjusting events after the reporting date.

15 Reconciliation of performance against budget to Statement of Comprehensive Net Expenditure

There is potential for differences between the financial performance of the Office of the Comptroller and Auditor General reported in the Annex to the Financial Report and Accounts of the States of Jersey and that reported in these financial statements as a result of:

• use of a different definition of expenditure;
• use of different accounting policies;
• use of different estimation procedures;
• use of a different unit of rounding; and
• adoption of financial statements on different dates.

Performance against budget for the year ended 31 December 2015 can be reconciled as follows:

2015 £

Near cash expenditure for the Office of the Comptroller  757,000 and Auditor General reported on page 224 of the

Financial Report and Accounts of the States of Jersey

Adjustment for different unit of rounding  (300)

Plus: Expenditure on non-audit services not recognised in a

previous period in States' accounts  10,000 Plus: Over-statement of payables at 31 December 2014  200

Less: Additional accrual for audit fees for the Office of the

Comptroller and Auditor General at 31 December 2014  (4,000)

Less: Additional accrual for sums payable to affiliates at 31

December 2014  (3,500) Total comprehensive net expenditure  759,400

16  Differences between original budget, final budget and actual

Original budget 2015' represents the sum for the year ended 31 December 2015 included in the Medium Term Financial Plan approved by the States Assembly on 8 November 2014.

Final budget 2015' represents the final budget for the year ended 31 December 2015 notified by the Treasurer of the States to the Comptroller and Auditor General on 7 April 2015.

The budget is prepared on an accruals basis using the States of Jersey budget classification.

Budget and actuals cover the activities of the Office of the Comptroller and Auditor General.

The adjustment from the original budget to final budget reflects primarily the substantial unspent allocation carried forward from previous years. This increase in budget is the primary reason for the underspend against budget.

Office of the Comptroller and Auditor General Annual Accounts for the year ended 31 December 2014

Prepared in discharge of the responsibility under Article 19 of the Comptroller and Auditor General (Jersey) Law 2014

Statement of responsibilities for Annual Accounts

I am required by the Comptroller and Auditor General (Jersey) Law 2014 to prepare the Annual Accounts of the Office of the Comptroller and Auditor General.

In preparing the Accounts, detailed in the following pages, I have:

• applied the going-concern principle;
• applied appropriate accounting policies in a consistent manner; and
• made reasonable and prudent judgements and estimates.

I confirm that, so far as I am aware, there is no relevant audit information of which the auditor of these Accounts is unaware; and I have taken all steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the auditor is aware of that information.

Karen McConnell

Comptroller and Auditor General

20 September 2016

Independent auditor's report to the Comptroller and Auditor General

We have audited the financial statements of the Office of the Comptroller and Auditor General for the year ended 31 December 2014 which comprise the Statement of comprehensive net expenditure, Statement of financial position, Statement of comparison of budget and actual amounts, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Public Sector Accounting Standards (IPSAS).

This report is made solely to the Comptroller and Auditor General and in accordance with Article 19 of the Comptroller and Auditor General (Jersey) Law 2014. Our audit work has been undertaken so that we might state to the Comptroller and Auditor General those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Comptroller and Auditor General, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Comptroller and Auditor General and auditors

The Comptroller and Auditor General is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Office of the Comptroller and Auditor General's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Comptroller and Auditor General; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information on pages 1 to 12 in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report.

Opinion on the financial statements In our opinion the financial statements:

• give a true and fair view of the state of the Office of the Comptroller and Auditor General's affairs as at 31 December 2014 and of its total comprehensive net expenditure;
• have been properly prepared in accordance with International Public Sector Accounting Standards; and
• have been prepared in accordance with the requirements of the Comptroller and Auditor General (Jersey) Law 2014.

Grant Thornton Limited Chartered Accountants

St Helier, Jersey, Channel Islands 20 September 2016

Statement of comprehensive net expenditure For the year ended 31 December 2014

Notes  2014 £

Expenses

Employee and similar costs: Comptroller and Auditor  76,100 General

Employee and similar costs: other

Other costs: audit of the accounts of the States of Jersey

Other costs: general Other costs: office-related

Total comprehensive net expenditure

4  270,500 5  331,600

6  59,100 7, 11  18,200

755,500

Statement of financial position

Notes  31  1 December  January

2014  2014

£ £

Assets Current assets

Receivables from exchange transactions

Receivables from non-exchange transactions: States of Jersey Social Security Funds

Receivables from non-exchange transactions: States of Jersey Consolidated Fund

Total assets

100 3(a)  60,700  -

3(a)  324,400  321,900 385,100  322,000

Liabilities Current liabilities

Trade and other payables from  8  385,100  322,000 exchange transactions

Total liabilities  385,100  322,000 Net assets  0  0

Statement of comparison of budget and actual amounts For the year ended 31 December 2014

Net revenue expenditure  Notes

Original budget  16 Adjustments  16 Final budget  16 Actual on comparable basis

Underspend against budget

2014 £

768,700 490,700 1,259,400 755,500 (503,900)

Notes to the financial statements 1 General Information

These financial statements were authorised for issue by the Comptroller and Auditor General on 20 September 2016.

The Comptroller and Auditor General is a corporation sole established by the States of Jersey under the Comptroller and Auditor General (Jersey) Law 2014 (previously the Public Finances (Jersey) Law 2005). The financial activities of the Office of Comptroller and Auditor General are included within the financial statements of the States of Jersey.

The Office of the Comptroller and Auditor General's principal activities are serving as a supreme audit institution for Jersey and is located in Jersey.

The financial statements cover the individual entity as no other entities have been identified for inclusion within the financial statements in accordance with applicable accounting standards.

2 Statement of compliance and basis of preparation

The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS). The financial statements are presented in pounds sterling which is the functional and reporting currency of the Office of the Comptroller and Auditor General and all values are rounded to the nearest one hundred pounds.

Whilst the expenditure of the Office of the Comptroller and Auditor General has previously and continues to be reflected in the financial statements of the States of Jersey, Article 19 of the Comptroller and Auditor General (Jersey) Law 2014 imposed a new duty on the Comptroller and Auditor General to prepare financial statements. These are therefore the first financial statements for the Office of the Comptroller and Auditor General.

The financial statements are prepared on the basis of historical cost unless otherwise stated. The financial statements are prepared on an accrual basis.

3 Summary of significant accounting policies

1. Reporting financial performance

The expenses of the Office of the Comptroller and Auditor General are directly met by the States of Jersey and no cash or equivalent is advanced to the Office of the Comptroller and Auditor General. Therefore:

• these financial statements include a Statement of Comprehensive Net Expenditure as the Office of the Comptroller and Auditor General receives no income;
• the Statement of Financial Position includes Receivables from non-exchange transactions representing the amounts payable by the States of Jersey's Social Security Funds to meet the liabilities of the proportion of the costs of the audit of the financial statements of the States falling on the Social Security Funds;

• the Statement of Financial Position includes Receivables from non-exchange transactions representing the amounts payable by the States of Jersey's Consolidated Fund to meet the liabilities of the Comptroller and Auditor General; and
• no Cash Flow Statement is prepared as there are no cash flows specifically attributable to the Office of the Comptroller and Auditor General.

2. Recognition of expenditure

Expenditure in respect of fees for the audit of the annual financial statements of the States of Jersey and the Office of the Comptroller and Auditor General are recognised in the period to which the financial statements relate. Expenditure is stated net of the amount falling on the Social Security Funds as full responsibility for the portion of the cost of the audit of the Social Security Funds rests with the Social Security Funds and the Comptroller and Auditor General is acting as an agent in respect of this amount.

Expenditure in respect of fees for other work undertaken for the Office of Comptroller and Auditor General is recognised in the period in which the service is provided.

Expenditure is reported net of Goods and Services Tax.

3. Property, plant and equipment

The Office of the Comptroller and Auditor General's policy is to recognise property, plant and equipment in the financial statements at cost less accumulated depreciation where the cost of an individual item or group of items exceeds £10,000. No such items were held at 31 December 2014 (or 1 January 2014).

4. Leases

Operating leases are leases that do not transfer substantially all the risks and benefits of ownership of the leased item to the Office of the Comptroller and Auditor General. Operating lease payments are recognised as an operating expense on a straight-line basis over the lease term.

5. Provisions

Provisions are recognised when the Office of the Comptroller and Auditor General has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The Office of the Comptroller and Auditor General does not recognise contingent liabilities but discloses details of any contingencies in the notes to the financial statements, unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

The Office of the Comptroller and Auditor General does not recognise contingent assets but discloses in the notes to the financial statements details of any possible assets whose existence is contingent on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Comptroller and Auditor General.

6. Employee benefits

The Office of the Comptroller and Auditor General receives the services of a member of staff employed by the States of Jersey who is a member of the Public Employees' Contributory Retirement Scheme (PECRS). The costs of that member of staff are included in the Statement of Comprehensive Net Expenditure.

Retirement benefits

The States of Jersey on behalf of the Office of the Comptroller and Auditor General makes a fixed contribution to PECRS. Although PECRS plans to make specified payments to former employees in retirement, the Office of the Comptroller and Auditor General does not have any legal or constructive obligation to pay further contributions if PECRS does not hold sufficient assets to pay employee benefits relating to employee service in the current or prior periods. The contributions to PECRS are therefore charged in the year in which they become payable.

Short-term employee benefits

The cost of short-term employee benefits, such as leave pay, is recognised in the period in which the employee renders the related service.

7. Related parties

The Comptroller and Auditor General regards a related party as a person or entity with the ability to exercise significant influence over the Office of the Comptroller and Auditor General.

8. Changes in accounting policies and estimates

As 2014 represents the first year of the adoption of accruals-based IPSAS and, as the Comptroller and Auditor General has elected not to present comparative information in these financial statements, no changes in accounting policies are required.

The Office of the Comptroller and Auditor General recognises the effects of changes in accounting estimates prospectively by including them in net expenditure.

9. Budget information

The annual budget for the expenditure of the Office of the Comptroller and Auditor General is prepared on the basis of near cash' expenditure as defined in the Jersey Financial Reporting Manual (which is based on European Union-adopted International Financial Reporting Standards). The budget classification used is that adopted by the States of Jersey.

10. Significant judgements and sources of estimation uncertainty

The preparation of the financial statements of the Office of the Comptroller and Auditor General in conformity with IPSAS requires management to make judgements, estimates and assumptions that affect the reported amounts of expenses, assets and liabilities, and the disclosure of any contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

In the process of applying the accounting policies, the Comptroller and Auditor General has made judgements which have the most effect on the amounts recognised in the financial statements.

The most significant judgements in relation to the preparation of the financial statements relate to:

• the accounting policy for the recognition of expenditure on fees for the audit of the States of Jersey disclosed above;
• the accounting policy for audit fees in respect of the States of Jersey Social Security Funds disclosed above; and
• the accounting policy for retirement benefits disclosed above.

The Comptroller and Auditor General has not identified any key assumptions or other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities.

11. New IPSAS  

The Comptroller and Auditor General has elected in preparing these financial statements to adopt IPSAS 33 for First Time Adoption of Accrual Based IPSAS for which first time adoption is required for financial periods beginning on or after 1 January 2017 but early adoption is permitted. In reliance on IPSAS 33, the Comptroller and Auditor General has elected not to present comparative information for financial performance in the previous period.

The Comptroller and Auditor General has determined that the following IPSASs for which first time adoption is required for financial periods beginning on or after 1 January 2017 but early adoption is permitted are not relevant to the financial statements:

• IPSAS 34 Separate Financial Statements;
• IPSAS 35 Consolidated Financial Statements;
• IPSAS 36 Investments in Associated and Joint Ventures;
• IPSAS 37 Joint Arrangements; and
• IPSAS 38 Disclosure of Interests in Other Entities.

4  Staff and similar costs: other

2014 £

Deputy Comptroller and Auditor General  46,300 Affiliates  95,000

Non-audit services provided by the auditors of the States of

Jersey  38,700 States employee and communication & administrative

support  90,500 270,500

The staff costs for the States employee includes an employer contribution of £5,100 to the Public Employees' Contributory Retirement Scheme.

5  Other costs: audit of the accounts of the States of Jersey

This expenditure is stated net of a charge to the States of Jersey's Social Security Funds of £60,700.

6  Other costs: general

2014 £

Other professional services bought in  20,000 ICT support  10,500 Communications  2,800 Travel and accommodation: Comptroller and Auditor General  8,100

Travel and accommodation: Deputy Comptroller and Auditor

General  3,400 Travel and accommodation: other  9,300 Audit fee: Office of the Comptroller and Auditor General  4,000 Administration  1,000

59,100

7  Other costs: office-related

2014 £

Premises and maintenance  16,100 Printing and stationery  2,100

18,200

8  Trade and other payables from exchange transactions

2014 £

Trade payables  30,000 Accruals  355,100

385,100

Trade payables are non-interest bearing and are normally settled on 30-day terms. 9 Financial instruments – financial risk management

The fair value of receivables from exchange transactions is equal to their carrying value due to the short-term maturities of these instruments.

As the Office of the Comptroller and Auditor General has no assets arising from exchange transactions, the Office of the Comptroller and Auditor General is not exposed to any credit risk.

As the States of Jersey meets the liabilities of the Office of the Comptroller and Auditor General, the Office of the Comptroller and Auditor General is not exposed to any liquidity risk.

As the Office of the Comptroller and Auditor General does not enter into any contracts for supply of goods or services not denominated in sterling, the Office of the Comptroller and Auditor General is not exposed to any currency risk.

As the Office of the Comptroller and Auditor General does not have any interest- bearing assets or liabilities, the Office of the Comptroller and Auditor General is not exposed to any market risk.

10 Related party disclosures

Terms and conditions of transactions with related parties

Karen McConnell is engaged as Comptroller and Auditor General and Stephen Warr en is engaged as Deputy Comptroller and Auditor General on a self employed basis. Purchases from Karen McConnell and Stephen Warr en are made at terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year end are unsecured, interest-free and settled in cash. There have been no guarantees provided or received from any related party payable.

Key management personnel

The key management personnel, as defined by IPSAS 20 Related Party Disclosures, comprise Karen McConnell, as Comptroller and Auditor General, a corporation sole established by Article 2 of the Comptroller and Auditor General (Jersey) Law 2014 and Stephen Warr en, Deputy Comptroller and Auditor General who is empowered under Article 16 of the Comptroller and Auditor General (Jersey) Law 2014 to discharge the functions of Comptroller and Auditor General in Karen McConnell's absence. Karen McConnell and Stephen Warr en are engaged on a self-employed basis and total expenditure on their engagement is reported in the Statement of Comprehensive Net Expenditure.

States of Jersey

Article 9 of the Comptroller and Auditor General (Jersey) Law 2014 places a duty on the States to ensure that the Comptroller and Auditor General is provided with sufficient resources to perform her functions. Article 50 of the Public Finances (Jersey) Law 2005 placed a duty on the Chief Minister to ensure that the Comptroller and Auditor General is provided with sufficient resources to perform her functions. The duty to ensure that sufficient resources are provided is discharged by the States meeting the costs of Office of the Comptroller and Auditor General.

States of Jersey Social Security Funds

The Social Security Fund, Social Security (Reserve) Fund, Health Insurance Fund and Long-Term Care Fund established by the States of Jersey meet the portion of the cost of the of the audit of the States' accounts relating to those funds.

11 Operating lease payments

Future minimum lease payments under a non-cancellable operating lease relate to an office building and amount to £6,600, all payable within one year.

Lease payments recognised as an expense during the period amounted to £14,200. 12 Contingent liabilities

At the end of the financial year the Office of the Comptroller and Auditor General had no contingent liabilities (1 January 2014: nil).

13 Segment information

For management purposes the Office of the Comptroller and Auditor General is treated as a single business unit with no separate financial information for activities or groups of activities. The Office of the Comptroller and Auditor General operates in only one geographic location and therefore no segments are monitored geographically.

The Comptroller and Auditor General has formed the view that there is no distinguishable activity or group of activities of the Office of the Comptroller and Auditor General for which it is appropriate separately to report financial information for the purpose of evaluating past performance in achieving objectives and making decisions about the future allocation of resources.

14 Events after the reporting period

There are no material non-adjusting events after the reporting date.

15  Reconciliation of performance against budget to Statement of

Comprehensive Net Expenditure

There is potential for differences between the financial performance of the Office of the Comptroller and Auditor General reported in the Annex to the Financial Report and Accounts of the States of Jersey and that reported in these financial statements as a result of:

• use of a different definition of expenditure;
• use of different accounting policies;
• use of different estimation procedures;
• use of a different unit of rounding; and
• adoption of financial statements on different dates.

For the year ended 31 December 2014, the performance against budget can be reconciled as follows

2014 £

Near cash expenditure for the Office of the Comptroller  748,000 and Auditor General reported on page 147 of the Annex

to the Financial Report and Accounts of the States of

Jersey

Adjustment for different unit of rounding  (400) Plus: Over-statement of payables at 1 January 2014  600 Plus: Additional accrual for audit fees for the Office of the  4,000

Comptroller and Auditor General at 31 December 2014

Plus: Additional accrual for sums payable to affiliates at 31  3,500 December 2014

Less: Over-statement of payables at 31 December 2014  (200) Total comprehensive net expenditure  755,500

16 Differences between original budget, final budget and actual

Original budget 2014' represents the sum for the year ended 31 December 2014 included in the Medium Term Financial Plan approved by the States Assembly on 8 November 2014.

Final budget 2014' represents the final budget for the year ended 31 December 2014 notified by the Treasurer of the States to the Comptroller and Auditor General on 4 March 2014.

The budget is prepared on an accruals basis using the States of Jersey budget classification.

Budget and actuals cover the activities of the Office of the Comptroller and Auditor General.

The adjustment from the original budget to final budget reflects primarily the substantial unspent allocation carried forward from previous years. This increase in budget is the primary reason for the underspend against budget.

KAREN McCONNELL COMPTROLLER and AUDITOR GENERAL

JERSEY AUDIT OFFICE, LINCOLN CHAMBERS (1ST FLOOR), 31 BROAD STREET, ST HELIER, JE2 3RR T: 00 44 1534 716800   E: enquiries@jerseyauditoffice.je  W: www.jerseyauditoffice.je