Office of the Comptroller and Auditor General: Annual Report and Accounts for the year ended 31 December 2018

Office of the  Comptroller  and Auditor General

Annual Report and Accounts for the year ended 31 December 2018

R.50/2019 jerseyauditoffice.je

Contents

Introduction by the Chairman of the Board of Governance 03

Section 1: Performance Report 04

• Overview  05
  • Performance Analysis  11
    • Priorities for 2019  16

Section 2: Accountability Report 17

• Corporate Governance Report 18 Remuneration and Staff Report  23
  • Accountability Statement and Audit Report 24

Section 3: Annual Accounts 27

• Statement of Comprehensive Net Expenditure 28
  • Statement of Financial Position  29

Statement of Comparison of Budget and Actual Amounts 30   Notes to the Financial Statements 31

Introduction

Introduction by the Chairman of the Board of Governance

This Annual Report reviews the second full year since the creation of the Board of Governance. Last year, I explained how the new Board had been busy putting in place appropriate governance arrangements meeting the highest standards but designed to match the scale and special characteristics of Jersey. This year, I am able to report that the new structure is working well. Moreover, it was strengthened by completing the team the appointment of Grace Nesbitt, a senior civil servant from Northern Ireland, as our third non-executive member.

The role of the Board is to ensure that the resources provided to the Comptroller

and Auditor General (C&AG) are used properly, e ciently and e ectively . We are satisfied that this requirement has been fulfilled. The final section of this annual report contains an accountability report giving more detail about the Board and its work.

We are not responsible for the content of the reports published by the C&AG. Indeed, a key part of our role is to ensure the independence of the o ce holder in her investigations and reports. But, to assist the Board in discharging its responsibilities, the C&AG updates us regularly on her work programme.

It has been another busy year for the C&AG and her small team. Reports on important public services have been delivered, as this annual report highlights. Some dealt with recurrent topics to ensure satisfactory progress is being made. Others shone a light on specific sectors and bodies, analysing their strengths and weaknesses. All of the work aims to help government and public bodies to improve, so as to give the people of Jersey better services and better value.

The Board seeks to achieve continuous improvement in its own work. We were glad that savings were achieved by changes of o ce location and sta ng, ensuring a better match with the C&AG s requirements. The 2018 year ended with our looking ahead to achieve the best possible successor to Karen McConnell when her seven-year term ends on 31 December 2019 and then to ensure a smooth transition.

We thank Karen for her work in developing the systems of robust scrutiny, which have given rise this year to the valuable reports listed in Key Outputs , as well as support given to the Public Accounts Committee of the States Assembly to help it perform

its duties. That Committee plays a vital role, including by follow-up on the C&AG s reports.

Above all, the aim of this small organisation is to help Jersey s public bodies individually and collectively to improve. By publishing the reports, the whole public sector can be stimulated to learn, adapt and advance. They have only to read, heed and act.

Peter Price

Chairman of the Board of Governance 30 April 2019

Section 1 Performance Report

The C&AG has chosen to discharge her responsibilities through the Jersey Audit O ce ( the JAO ). The Performance Report summarises the work of the C&AG and the JAO in 2018. It comprises:

   an overview, including a statement by the C&AG, highlights of 2018 and a

summary of the JAO including its purpose;

   a performance analysis including an assessment of performance against

priorities; and

   the C&AG s priorities for 2019.

Statement by the Comptroller and Auditor General

2018 was a year of major change for the States of Jersey. The new Chief Executive took up post and completed his due diligence work. Legislation to reinforce corporate working, including establishing the position of Principal Accountable O cer, was adopted. Implementation of a new Target Operating Model, including establishment of new departments and appointment of senior o cers, commenced. Other change initiatives are in progress.

These changes provide an opportunity to break down the silo mentality that I have identified in previous reports to the States Assembly. They also facilitate accelerated implementation of the many agreed recommendations that remain outstanding. I have reported recurring themes from my work to the Public Accounts Committee (PAC). PAC is undertaking a programme of hearings focussing on those themes.

Change brings with it risks to the operation of e ective internal control and good governance. That means that an even sharper focus in these areas is necessary.

In 2019 I am focussing on:

   following up on the implementation of previous recommendations in key areas

such as financial management, where a substantial change programme is in progress;

   key areas of corporate governance and internal control; and

   supporting the PAC in its work, especially its reviews of recurring themes from my

previous reports.

2019 will be the final year of my fixed term as C&AG. During my term of o ce I have worked to ensure that a team and structures are in place to provide resilience in the JAO s operations. In 2018 I started, working with the Board of Governance, to plan for the transition to my successor. I shall continue to do so through 2019.

At the same time I shall continue to promote the e ective, accountable management of the JAO so that I can continue to deliver and demonstrate the delivery of high quality, independent public audit on behalf of the people of Jersey.

I look forward to 2019, confident that the JAO is in a strong position to help me through the challenges of my final year as C&AG and to provide the same level of support to my successor.

Karen McConnell

Comptroller and Auditor General 30 April 2019

2018 Highlights

Exhibit 1: Key outputs for 2018

2018 Highlights

Exhibit 1: Key outputs for 2018

Exhibit 2: Key themes from the work of the JAO in previous years

Financial management

Decision making

Performance management

Management information

Source: 2017 annual report

In the course of the year, the C&AG or the Deputy C&AG engaged with the States Assembly by:

   attending meetings and hearings of the Public

Accounts Committee and providing support for the Committee through:

- providing induction for new independent members; and

- working with the Committee to help it develop an e ective approach to monitoring the implementation of proposed improvements to governance arrangements.

   providing training for new members of the States

Assembly; and

   at the request of Scrutiny Panels and where relevant

to work undertaken, providing briefings to assist the Panels in their consideration of the impact of proposed changes.

The 2017 Annual Report highlighted recurring themes from the JAO s work (see Exhibit 2). The new PAC has decided to hold a series of hearings with the

Chief Executive of the States focussing on some of those themes.

The C&AG:

   liaised regularly with the Chief Executive, Treasurer of

the States and other senior o cers. In the course of the year, the C&AG briefed the Directors General on the recurring themes emerging from her work; and

   attended meetings of the States Audit Committee. In the course of the year, the C&AG also:

   provided evidence to support the Jersey Law

Commission s report Designing a Public Services Ombudsman for Jersey;

   contributed to the evidence for the external review

on the States implementation of the United Nations Convention against Corruption; and

   contributed to an e-workshop as part of the National

Audit O ce s UK Overseas Territories Project.

About the C&AG and the JAO

The role of the C&AG

The C&AG is appointed by the States Assembly and is independent of government. Her responsibilities are to:

   report to the States Assembly on the e ectiveness of internal control, general corporate governance arrangements

and economy, e ciency and e ectiveness ( value for money ); and

   appoint auditors of the accounts of the States (including the Social Security Fund, the Social Security (Reserve)

Fund, the Health Insurance Fund and the Long-Term Care Fund) and certain other specified entities.

She may not be directed in how she discharges her responsibilities. Her role is to evaluate the implementation of policy, but she does not question policy decisions. The C&AG s responsibilities are summarised in Exhibit 3.

Exhibit 3: Responsibilities of the Comptroller and Auditor General

Reporting to the  Appointing States Assembly auditors of

accounts

Internal control Corporate  Value for money The States Other specified

governance bodies

As required by statute, the C&AG publishes a Code of Audit Practice, setting out how she discharges her functions.

The role of the JAO

The C&AG has chosen to discharge her responsibilities through the JAO which she leads. The Code of Audit Practice sets out the core values of the JAO (see Exhibit 4).

Exhibit 4: Core values of the JAO

JAO resources

In addition to audit firms that are appointed to audit the accounts of the States and certain other specified bodies, the C&AG is supported by a Deputy C&AG and maintains a pool of a liates with appropriate skills and experience to undertake work on her behalf. The JAO works out of serviced accommodation in St Helier.

Key issues and risks

The key issues and risks faced by the C&AG in delivering her objectives relate to:

   managing within available resources;

   maintaining the quality of the JAO s work;

   achieving economy, e ciency and e ectiveness in the operation of the JAO;

   ensuring good governance of the JAO, including in a period of transition to a new C&AG; and    maintaining the reputation of the JAO.

More information on how the C&AG has approached these issues and risks is provided the C&AG s Accountability Report (see page 19 below).

Section 1:  Performance Report Section:1  Performance Report

How the JAO is performing against its priorities

The 2017 Annual Report set out priorities from its publication in September 2018 to December 2019. Exhibit 5 sets out the progress made in delivering these priorities up to 31 December 2018 and the further work planned for 2019.

Exhibit 5: Priorities for September 2018 to December 2019

Section 1:  Performance Report Section:1  Performance Report

How the JAO is performing against its priorities

Exhibit 5: Priorities for September 2018 to December 2019

Section 1:  Performance Report Section:1  Performance Report

Auditors appointed by the Comptroller and Auditor General

The C&AG appoints firms of accountants to audit the accounts of the States and certain other specified

bodies. Annually, the C&AG seeks, obtains and evaluates feedback from the bodies to which she appoints auditors on their performance and engagement.

In the course of the year, the C&AG met regularly with the firm appointed to audit the accounts of the States to keep abreast of progress and to share information of common interest.

In accordance with contractual terms, the C&AG reviewed and, where appropriate, approved requests to carry out non-audit services made by the audit firms that she had appointed. She only did so where she was satisfied that

performing such work would not give rise to an actual or perceived threat to the independence of the audit firm or to the C&AG.

The States are keen to bring forward the preparation

and audit of their annual financial statements. The existing contract was tendered based on completion of the audit in accordance with the statutory timetable. Earlier completion has a substantial impact on the audit approach and the timing and nature of resource inputs. Following discussions with interested parties, the C&AG therefore decided to terminate the existing contract

early (at the completion of the 2018 audit) and invite new tenders based on an advanced timetable for preparation and audit of the financial statements.

Financial performance

Resources for the C&AG are allocated through the States MediumTerm Financial Plan.

The C&AG operated within the allocated budget delivering an underspend of £54,000 in 2018 (see Exhibit 6).

Exhibit 6: Financial performance 2018

Underspend against  Chairman of

Other costs:  final budget,  the Board of

accommodation -  £54,000 Governance, £2,000

related, £19,700 Comptroller and Auditor General,

Other costs: general,

£98,800 £43,700

Audit of the accounts of the O ce of the Comptroller and Auditor General, £4,200

Audit of the accounts  Employee and of the States of  similar costs: other,

Jersey, £314,600 £281,400

Source: Statement of Comprehensive Net Expenditure (page 28) and Statement of

Comparison of Budget and Actual Amounts in the Annual Accounts (page 30)

Section 1:  Performance Report Section:1  Performance Report

Expenditure has remained broadly consistent between 2015 and 2018 (see Exhibit 7).

Exhibit 7: Expenditure 2015 to 2018

£800,000

£700,000 Other costs

Audit of the accounts of the £600,000 States of Jersey

£500,000 Employees and

similar costs

£400,000 Comptroller and Auditor

General and Chairman of the

Board of Governance £300,000

£200,000

£100,000

£0

2015 2016 2017 2018 Source: Annual Accounts 2015 to 2018 Further information on the financial performance is provided in the Annual Accounts.

Comparing performance with other audit offices

In her 2017 Annual Report, the C&AG compared the JAO s performance against a group of seven audit o ces from British Overseas Territories, Canadian Provinces, Australian States and Territories and an independent country, with populations ranging from 61,000 to 525,000. This analysis is repeated below (Exhibit 8) and, where more recent information is available, has been updated.

As noted in the 2017 Annual Report, there are inherent problems in making comparisons because of di erences in the responsibilities of the audit o ces, their business models, prevailing costs in the economy, budgetary arrangements and applicable accounting frameworks. However, the overall message remains that the C&AG provides a significant volume of reports to the States Assembly at comparatively low cost.

Section 1:  Performance Report Section:1  Performance Report

Exhibit 8: Comparison of performance with other audit offices

Source: JAO analysis

Environmental impact

During the year, the JAO continued to work to reduce its environmental impact:

   the major environmental impact of the JAO relates to air travel to and from Jersey. The C&AG sought to minimise

the use of air travel by e ective use of remote working from the UK, including the use of telephone and video conferencing;

   this was the first full year following a move to smaller and more environmentally sustainable accommodation.

Perriorities for 2019formance Analysis

Section 1:  Performance Report Section:1  Performance Report

Priorities for 2019

A key priority is securing a smooth transition to the incoming C&AG at the end of the year.

In addition, the priorities set out in the 2017 Annual Report remain relevant:

Delivering value for money.

Delivering relevant, insightful work that supports improvement.

Section 2

Accountability Report

The Accountability Report provides key accountability information to the States Assembly. It comprises:

   the Corporate Governance Report;

   the Remuneration and Sta Report; and

   the Accountability Statement and Audit Report.

Comptroller and Auditor General's Report

I served as C&AG throughout the period and personally  to complete a declaration of interests. No Board directed the activities of the JAO. members declared significant company directorships The Board of Governance of the O ce of the  or other interests that may have conflicted with their Comptroller and Auditor General comprised Peter Price  responsibilities. No member of the Board had any other (Chairman), Professor Russel Griggs (Independent  related-party interests.

Member), Grace Nesbitt (Independent Member from 6  There were no personal data related incidents during December 2018) and me (ex o cio). the year reported to the O ce of the Information All members of the Board of Governance have  Commissioner.

Statement of Responsibilities of the Comptroller and Auditor General

Under the Comptroller and Auditor General (Jersey) Law 2014, I am required to prepare annual accounts. The accounts are prepared on an accruals basis.

I confirm that, as far as I am aware, there is no relevant audit information of which the external auditors are unaware. I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the external auditors are aware of that information.

In preparing these accounts, I have adopted International Public Sector Accounting Standards issued

Governance Statement My responsibilities

I have responsibility for maintaining e ective governance and a sound system of internal control that supports the achievement of the JAO s policies, aims and objectives, while safeguarding the public funds and assets.

How I discharged my responsibilities

Given the small size of the JAO, I perform my functions without a formal management team. In my absence I delegate my responsibilities to the Deputy C&AG.

I secure an e ective system of governance and a sound system of internal control including by:

   preparing, communicating and implementing

appropriate policies and procedures, in areas such as complaints and data security;

   to the extent appropriate to the circumstances of the

JAO, using the corporate financial and other systems of the States of Jersey. For financial systems, a

by the International Public Sector Accounting Standards Board and, in particular, I have:

   observed the relevant accounting and disclosure

requirements and applied suitable accounting policies on a consistent basis;

   made judgements and estimates on a reasonable

basis; and

   prepared the accounts on a going concern basis.

I confirm that this Annual Report and Accounts as a whole is fair, balanced and understandable.

Service Level Agreement is in place. Using such systems means that the JAO does not maintain its own bank account with the attendant risks;

   monitoring expenditure against budget;

   seeking professional advice from the States where

necessary and appropriate, including from the Law O cers Department and the States corporate procurement team;

   maintaining a contracts register and a gifts and

hospitality register; and

   reviewing the performance of the appointed auditors. Risk management

I operate a risk register that captures those risks with the potential to have a significant adverse impact on the operation of the JAO. The risk register is organised around key themes as summarised in Exhibit 9.

Exhibit 9: Key Risks

Exhibit 9: Key Risks

Theme Key areas and actions in year

Governance There are risks to the continuity of the work of the JAO arising from the end of

my fixed term, non-renewable appointment on 31 December 2019. A recruitment process is in progress to allow appointment of my successor in good time. I and the Board of Governance have focussed on the steps necessary to secure a smooth transition.

The Board of Governance has undertaken a full programme of work to discharge its statutory responsibilities.

Reputation I recognised the risk that, during a period of change for the States, my work

might lack impact or be seen as not relevant.

I have structured arrangements for the compilation of my Audit Plan including consultation with key o cers and the Public Accounts Committee.

I have ongoing liaison with members of the States Assembly, PAC, the Chief Executive of the States, the Transition Team, senior States o cers and the Audit Committee.

Personal data related incidents

There were no protected personal data related incidents reportable to the O ce of the Information Commissioner in 2018 for my O ce. Neither were there any other personal data related incidents.

The Board of Governance

The Board of Governance, established under the Comptroller and Auditor General (Board of Governance) (Jersey) Order 2015, is responsible for keeping under review whether the resources provided to me by the States Assembly have been and are being used properly, e ciently and e ectively.

The Order provides for the membership of the Board to comprise 2 or 3 independent members appointed by the States, plus the C&AG, with a quorum of the C&AG and at least 2 independent members. In 2016, the States appointed a Chairman and one other independent member to the Board. In 2018, the Board formed the view that it would be beneficial if a third independent member was appointed to:

   reduce the risk of the Board being unable to operate as a result of being inquorate; and    increase the breadth of skills and experience on the Board.

Following a recruitment process undertaken in accordance with Jersey Appointments Commission guidance, in December 2018 the States Assembly appointed Grace Nesbitt as an independent member of the Board of Governance.

The membership of the Board is detailed in Exhibit 10.

Exhibit 10: Membership of the Board of Governance Peter Price , Chairman

Peter Price has had an extensive career in law, politics, and wider public service, including 15 years as a member of the European Parliament, where he served as Chair of the Budgetary Control Committee.

Previous appointments include as a Non-Executive Director of the Wales Audit O ce, a Non- Executive Director of the Welsh Ambulance Services NHS Trust and a Governor of Thames Valley University.

Professor Russel Griggs OBE, Independent Member

Russel Griggs is an experienced business professional and has worked in a number of large private businesses as well as in large organisations and projects in the public sector.

He has held a wide range of executive and non-executive roles in private, public, and charitable institutions, including the Lending Standards Board, Scott ish Mines Restoration Trust, Marie Curie Cancer Trust and the Audit Committee of the Department of Employment and Learning in Northern Ireland. He is a former Board member of Audit Scotland and served as Chair of its Remuneration Committee.

Grace Nesbitt OBE, Independent Member

Grace Nesbitt is a senior human resources professional in the Northern Ireland Civil Service. Grace is currently responsible for Public Service and Civil Service Pensions with 100 sta and a budget of £300 million.

Grace is also an independent member of two public sector audit committees and a Director of a Social Enterprise Company which provides training and work opportunities for disadvantaged adults.

Karen McConnell, Comptroller and Auditor General

Karen McConnell was appointed by the States Assembly in 2013 and in 2014 her appointment was extended to 2019. Prior to taking up post, Karen held a variety of senior positions at the UK Audit Commission, including leading the Audit Practice and its 900 sta through the transition of outsourcing the Commission s work to the private sector during 2011 and 2012. Being directly accountable to the Chief Executive and the Board for the performance of the Audit Practice, during that time Karen also delivered a budget of £106 million income and £60 million expenditure and oversaw a complex work programme at 232 health bodies and 429 principal local government bodies (including police, fire and probation).

Karen is a Non Executive Director of East and North Hertfordshire NHS Trust and chairs its Finance and Performance Committee.

The board is responsible for:

   scrutinising the use of resources by and the governance arrangements of the C&AG;

   reporting any concerns to the Chief Minister and the

Chairman of the Public Accounts Committee;

   if requested by the Chairman of the Public Accounts

Committee, advising on the appointment of auditors of the accounts of the C&AG;

   reviewing any estimates submitted by the C&AG to

the Chairman of the Public Accounts Committee for the purposes of the Medium Term Financial Plan or the budget;

   reviewing the audited accounts of the C&AG; and

   if requested by the C&AG, advising on the

appointment, remuneration and terms and conditions of the Deputy C&AG.

The Board also has a power to prepare an assurance report on the expenses of the C&AG.

How the Board of Governance discharged its responsibilities

The Board met three times in the course of 2018. All members of the Board attended all those meetings. The Board focussed in particular on the arrangements for securing a smooth transition to the incoming C&AG when my term of o ce comes to an end.

The Board also:

   reviewed the risk register prepared for the JAO;

   monitored the financial performance of the JAO,

including the expenses incurred by the C&AG;

The Board did not report any matter to the Chief Minister and Chairman of the Public Accounts Committee.

During 2018, the Board reviewed its own e ectiveness and agreed that:

   no changes were required to its Standing Orders, Code of Conduct and Relationship Code; and

   no significant changes to its way of working were

necessary.

Quality of data used

Both the Board of Governance and I rely on financial information drawn from the States of Jersey s financial systems that are subject to review and scrutiny by the Deputy C&AG and an a liate working for me. Both the Board of Governance and I are satisfied that such financial information is acceptable for the purposes for which it is used.

Review of e ectiveness

I have responsibility for reviewing the e ectiveness of

the system of internal control. My review is informed by my own work, the work of those working for me, the work of the Board of Governance and information received from the States. Based on that review I am satisfied with the arrangements in place for governance, risk and internal control.

Significant internal control weaknesses

I am able to report that there were no significant weaknesses in the JAO s system of internal controls in 2018 that a ected the achievement of the JAO s key policies, aims and objectives.

   reviewed the gifts and hospitality register maintained

for the JAO;

Karen McConnell

   received and reviewed the report from the external

auditors appointed by the Chairman of the PAC on  Comptroller and Auditor General the 2017 accounts; and 30 April 2019

   published an assurance statement on my 2017

expenses. During 2019, the Board has prepared an assurance statement for my 2018 expenses and this is included within this Accountability Report.

RemunerRemunerPerformance Analysisation and Sation and Staff Reportaff Reportt

Section 2:  Accountability Report Section:1  Performance Report

The JAO relies on the services of eight independent contractors, including the C&AG, the Deputy C&AG and an additional contractor appointed in September 2018.

Expenditure on these independent contractors is reported in the Annual Accounts and expenditure on the C&AG and on the Deputy C&AG is identified separately. The remuneration of independent contractors comprises only fees and they do not receive any bonuses, non-cash benefits or pension benefits.

The C&AG is remunerated at a daily rate under the terms of a contract entered into on behalf of the Chief Minister and the Chairman of the PAC.

The remuneration of the Chairman of the Board of Governance is reported in the Annual Accounts. His remuneration is determined by the States Assembly.

The JAO has had no States employees assigned to it since October 2017. No payments in compensation for loss of o ce were made in the year.

Report of the Board of Governance of the O ce of the Comptroller and Auditor General to the States Assembly on the expenses of the Comptroller and Auditor General.

Article 5(7) of the Comptroller and Auditor General (Board of Governance) Jersey Order 2015 provides that the Board may prepare an assurance report upon the annual expenses of the Comptroller and Auditor General.

Scope of our work

We have through the course of 2018 and in preparing this statement:

   received an analysis of the expenses incurred by and on behalf of the Comptroller and Auditor General for travel

and subsistence for the year ended 31 December 2018;

   assessed the reasonableness of those expenses in light of the role of the Comptroller and Auditor General;    sought explanations for any unusual items; and

   evaluated the reasonableness of such explanations.

Statement

No matters have arisen from our work that we wish to draw to the attention of the States Assembly.

Peter Price Chairman

For and on behalf of the Board of Governance of the O ce of the Comptroller and Auditor General

30 April 2019

Independent Auditor's Report to the Comptroller and Auditor General

Opinion Who we are reporting to

We have audited the financial statements of the O ce of the Comptroller and Auditor General ( (the O ce

of the C&AG ) for the year ended 31 December 2018 which comprise the Statement of comprehensive net expenditure, Statement of financial position, Statement of comparison of budget and actual amounts and

the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Public Sector Accounting Standards (IPSAS).

In our opinion, the financial statements:

  give a true and fair view of the state of the O ce of

the C&AG s a airs as at 31 December 2018 and of its total comprehensive net expenditure for the year then ended;

  are in accordance with International Public Sector

Accounting Standards; and

  are in accordance with the requirements of the

Comptroller and Auditor General (Jersey) Law 2014.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report. We are independent of the

O ce of the C&AG in accordance with the ethical requirements that are relevant to our audit of the financial statements in Jersey, including the FRC s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained

is su cient and appropriate to provide a basis for our opinion.

This report is made solely to the Comptroller and Auditor General, 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 auditor s 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.

Other information

The Comptroller and Auditor General is responsible for the other information. The other information comprises the information included in the Annual Report and Accounts, other than the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in

our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of the Comptroller and Auditor General for the financial statements

As explained more fully in the Statement of Responsibilities of the Comptroller and Auditor General set out on page 19, the Comptroller and Auditor General is responsible for the preparation of the financial statements in accordance with the Comptroller and Auditor General (Jersey) Law 2014.

In preparing the financial statements, the Comptroller and Auditor General is responsible for applying

the going concern principle, applying appropriate accounting policies in a consistent manner and making reasonable and prudent judgements and estimates.

Auditor s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the

audit of the financial statements is located on the Financial Reporting Council s website at: www.frc.org. uk/auditorsresponsibilities. This description forms part of our auditor s report.

Grant Thornton Limited Chartered Accountants

St Helier, Jersey, Channel Islands 30 April 2019

Section 3

Annual Accounts

O ce of the Comptroller and Auditor General: Annual Accounts for the year ended 31 December 2018

Statement of comprehensive net expenditure For the year ended 31 December 2018

Statement of financial position

For the year ended 31 December 2018

Statement of comparison of budget and actual amounts For the year ended 31 December 2018

Notes 2018 Net revenue expenditure £

Original budget 18 817,400 Adjustments 18 1,000 Final budget 18 818,400 Actual on comparable basis 764,400 Performance di erence 54,000

Notes to the financial statements

1. General Information   the Statement of Financial Position includes Receivables from non-exchange transactions

These financial statements were authorised for issue by

representing the amounts payable by the States of the Comptroller and Auditor General on 30 April 2019.

Jersey s Social Security Funds to meet the liabilities The Comptroller and Auditor General is a corporation  of the proportion of the costs of the audit of the

sole established by the States of Jersey under the  financial statements of the States falling on the Social Comptroller and Auditor General (Jersey) Law 2014.  Security Funds;

The financial activities of the O ce of the Comptroller

   the Statement of Financial Position includes

and Auditor General are included within the financial

Receivables from non-exchange transactions statements of the States of Jersey.

representing the amounts payable by the States of The O ce of the Comptroller and Auditor General s  Jersey s Consolidated Fund to meet the liabilities of principal activity is serving as a supreme audit  the Comptroller and Auditor General; and

institution for Jersey and is located in Jersey.

   no Cash Flow Statement is prepared as there are no The financial statements cover the individual entity as  cash flows specifically attributable to the O ce of no other entities have been identified for inclusion within  the Comptroller and Auditor General.

the financial statements in accordance with applicable

accounting standards.

b) Recognition of expenditure

Expenditure in respect of fees for the audit of the

2. Statement of compliance and basis of

annual financial statements of the States of Jersey preparation

and the O ce of the Comptroller and Auditor General The financial statements have been prepared in  are recognised in the period to which the financial accordance with and comply with International Public  statements relate. Expenditure is stated net of the Sector Accounting Standards (IPSAS). The financial  amount falling on the Social Security Funds as full statements are presented in pounds sterling which is  responsibility for the portion of the cost of the audit of the functional and reporting currency of the O ce of  the Social Security Funds rests with the Social Security the Comptroller and Auditor General and all values are  Funds and the Comptroller and Auditor General is rounded to the nearest one hundred pounds.  acting as an agent in respect of this amount.

The financial statements are prepared on the basis of  Expenditure in respect of fees for other work undertaken historical cost unless otherwise stated. The financial  for the O ce of Comptroller and Auditor General is statements are prepared on an accruals basis. recognised in the period in which the service is provided.

Expenditure is reported net of Goods and Services Tax.

3. Summary of significant accounting policies

a) Reporting financial performance c) Property, plant and equipment

The expenses of the O ce of the Comptroller and  The O ce of the Comptroller and Auditor General s Auditor General are directly met by the States of Jersey  policy is to recognise property, plant and equipment and no cash or equivalent is advanced to the O ce of  in the financial statements at cost less accumulated the Comptroller and Auditor General. Therefore: depreciation where the cost of an individual item or

   these financial statements include a Statement of  group of items exceeds £10,000. No such items were

Comprehensive Net Expenditure as the O ce of the  held at 31 December 2018 (or 31 December 2017). Comptroller and Auditor General receives no income;

Notes to the financial statements

4. Leases contribution to PECRS. Although PECRS plans to make specified payments to former employees in retirement,

Operating leases are leases that do not transfer

the O ce of the Comptroller and Auditor General does substantially all the risks and benefits of ownership

not have any legal or constructive obligation to pay

of the leased item to the O ce of the Comptroller

further contributions if PECRS does not hold su cient and Auditor General. Operating lease payments are

assets to pay employee benefits relating to employee recognised as an operating expense on a straight-line

service in the current or prior periods. The contributions basis over the lease term.

to PECRS are therefore charged in the year in which they become payable.

5. Provisions Short-term employee benefits

Provisions are recognised when the O ce of the  The cost of short-term employee benefits, such as Comptroller and Auditor General has a present  payment for annual leave, is recognised in the period in obligation (legal or constructive) as a result of a past  which the employee provides the related service.

event, it is probable that an outflow of resources

embodying economic benefits or service potential will be

7. Related parties

required to settle the obligation and a reliable estimate

can be made of the amount of the obligation. The Comptroller and Auditor General regards a related

party as a person or entity with the ability to exercise The O ce of the Comptroller and Auditor General

significant influence over the O ce of the Comptroller does not recognise contingent liabilities but discloses

and Auditor General.

details of any contingencies in the notes to the financial

statements, unless the possibility of an outflow of

resources embodying economic benefits or service

8. Changes in accounting policies and estimates

potential is remote.

The Comptroller and Auditor General recognises the The O ce of the Comptroller and Auditor General does

e ects of changes in accounting policy retrospectively. not recognise contingent assets but discloses in the

The e ects of changes in accounting policy are applied notes to the financial statements details of any possible

prospectively if retrospective application is impractical. assets whose existence is contingent on the occurrence

or non-occurrence of one or more uncertain future  There are no changes in accounting policy compared events not wholly within the control of the Comptroller  with the financial statements for the year ended 31

and Auditor General. December 2017.

The O ce of the Comptroller and Auditor General recognises the e ects of changes in accounting

f) Employee benefits

estimates prospectively by including them in net

The O ce of the Comptroller and Auditor General  expenditure.

received the services of a member of sta employed by

the States of Jersey who was a member of the Public

Employees Contributory Retirement Scheme (PECRS).  i) Classification of expenses

The costs of that member of sta are included in the  The O ce of the Comptroller and Auditor General Statement of Comprehensive Net Expenditure. adopts an expenditure classification that is relevant to

Retirement benefits the circumstances of the O ce.

The States of Jersey on behalf of the O ce of the

Comptroller and Auditor General made a fixed

Notes to the financial statements

10. Budget information adjustment to the carrying amounts of assets and liabilities within the next financial year, as described

The annual budget for the expenditure of the O ce of

below. The Comptroller and Auditor General based her the Comptroller and Auditor General is prepared on

assumptions and estimates on parameters available the basis of near cash expenditure as defined in the

when the financial statements were prepared. However, Jersey Financial Reporting Manual (which is based

existing circumstances and assumptions about future on European Union-adopted International Financial

developments may change due to circumstances arising Reporting Standards). The budget classification used is

beyond the control of the Comptroller and Auditor

that adopted by the States of Jersey.

General. Such changes are reflected in the assumptions when they occur.

11. Significant judgements and sources of estimation  Restructuring provisions were raised and reviewed and uncertainty the Comptroller and Auditor General determined an

The preparation of the financial statements of the O ce  estimate based on the information available. Additional of the Comptroller and Auditor General in conformity  disclosure of the estimate of the provisions is included in with IPSAS requires management to make judgements,  Note 10. The provisions are measured at the Comptroller estimates and assumptions that a ect the reported  and Auditor General s best estimate of the expenditure amounts of expenses, assets and liabilities, and the  required to settle the obligations at the reporting date.

disclosure of any contingent liabilities, at the end of

the reporting period. However, uncertainty about these

12. New IPSAS

assumptions and estimates could result in outcomes

that require a material adjustment to the carrying  The Comptroller and Auditor General has adopted IPSAS amount of the asset or liability a ected in future  39 Employee Benefits for the first time in these financial periods. statements. Its adoption has no impact on the reported

financial position or performance of the O ce.

In the process of applying the accounting policies, the

Comptroller and Auditor General has made judgements  The Comptroller and Auditor General has determined which have an e ect on the amounts recognised in the  that:

financial statements. The most significant judgements

IPSAS 40 Public Sector Combinations for which relate to:

first time adoption is required for financial periods

   the accounting policy for the recognition of  beginning on or after 1 January 2019 but early expenditure on fees for the audit of the States of  adoption is permitted is not relevant to these

Jersey disclosed in Note 3 b) above;  financial statements; and

   the accounting policy for audit fees in respect of the  IPSAS 41 Financial Instruments for which first time States of Jersey Social Security Funds disclosed in  adoption is required for financial periods beginning

Note 3 b) above; and on or after 1 January 2022 but early adoption is permitted will have no impact on the reporting

   the accounting policy for retirement benefits

financial position or performance of the O ce. disclosed in Note 3 f) above.

The Comptroller and Auditor General has identified an assumption concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material

Notes to the financial statements

4. Employee and similar costs: other

The sta costs for the States employee includes an employer contribution of £(400) (2017: £10,900) to the Public Employees Contributory Retirement Scheme.

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

This expenditure is stated net of a charge to the States of Jersey s Social Security Funds of £61,400 (2017: £60,000).

Notes to the financial statements

6. Other costs: general

7. Other costs: accommodation-related

Notes to the financial statements

8. Trade receivables from exchange transactions

9. Trade payables from exchange transactions

Notes to the financial statements

10. Provisions

The provisions relate to a restructuring of the operations of the O ce undertaken in 2017 and was calculated on the basis of the Comptroller and Auditor General s assessment of the most likely amount and timing of payments necessary to discharge contractual obligations. Uncertainty is related to the actual amounts and timing of sums necessary to discharge those contractual obligations.

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

As the States of Jersey meet the liabilities of the O ce of the Comptroller and Auditor General, the O ce of the Comptroller and Auditor General is not exposed to any liquidity risk.

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

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

12. 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.

Notes to the financial statements

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

su cient 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 su cient resources to perform her functions.

The duty to ensure that su cient resources are provided is discharged by the States meeting the costs of O ce 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 audit of the States accounts relating to those Funds.

13. Operating lease payments

Future minimum lease payments under an operating lease relate to o ce accommodation and associated equipment and amount to £53,000 (2017: £78,400), £18,800 (2017: £20,400) of which is payable within one year, with the remaining £34,200 (2017: £58,000) being payable between 2 to 5 years inclusive.

Lease payments recognised as an expense during the period amounted to £20,700 (2017: £19,200).

14. Contingent liabilities

At the end of the financial year the O ce of the Comptroller and Auditor General had no contingent liabilities (31 December 2017: nil).

15. Segment information

For management purposes the O ce of the Comptroller and Auditor General is treated as comprising only two business units - one covering the governance of the

O ce of the Comptroller and Auditor General and one covering all other expenditure.

Expenditure attributable to the governance business unit comprises:

  the remuneration and expenses of the independent

members of the Board of Governance established under the Comptroller and Auditor General (Board of Governance) (Jersey) Order 2015;

  a proportion of the remuneration of the Comptroller

and Auditor General reflecting the time spent preparing for and attending meetings of the Board;

  a proportion of the remuneration of the Deputy

Comptroller and Auditor General reflecting the time spent in his capacity as Secretary of the Board;

  the fee for the audit of the accounts of the O ce of

the Comptroller and Auditor General; and

  other costs directly related to the work of the Board.

The O ce of the Comptroller and Auditor General operates in only one geographic location and therefore no segments are monitored geographically.

Notes to the financial statements Reportable segments 2018

Notes to the financial statements Reportable segments 2017

Notes to the financial statements

16. Events after the reporting period Auditor General reported in the Annex to the Financial Report and Accounts of the States of Jersey and that

There are no material non-adjusting events after the

reported in these financial statements as a result of: reporting date.

   use of a di erent definition of expenditure;

   use of di erent accounting policies;

17. Reconciliation of performance against budget to

Statement of Comprehensive Net Expenditure   use of di erent estimation procedures;

   use of a di erent unit of rounding; and

There is potential for di erences between the financial

performance of the O ce of the Comptroller and    adoption of financial statements on di erent dates.

Performance against budget for the year ended 31

December 2018 can be reconciled as follows: 2018 £

Near cash expenditure for the O ce of the Comptroller and Auditor General

reported on page 169 of the Financial Report and Accounts of the States of Jersey 779,000

Less: Reduction to opening restructuring provision reflected in the Comptroller and Auditor

General s 2017 accounts (9,300) Less: In year decrease in restructuring provision to reflect improved information (4,000) Less: Other adjustments  (400) Less: Adjustment for di erent unit of rounding (900) Total comprehensive net expenditure 764,400

18. Di erences between original budget, final budget and actual

Original budget 2018 represents the sum for the year ended 31 December 2018 included in the Medium Term Financial Plan as Amended, approved by the States Assembly on 1 December 2016.

 Final budget 2018 shows an in-year budget adjustment for the year ended 31 December 2018 notified by the Treasurer of the States to the Comptroller and Auditor General on 19 June 2018. The increase in budget over

that in the Medium Term Financial Plan reflects an uplift in budget to reflect pay awards for 2018.

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

Budget and actuals cover the activities of the O ce of the Comptroller and Auditor General.

The principal reason for the variance of actual performance against budget is lower than budgeted expenditure on employee and similar costs: other.

Jersey Audit O ce

De Carteret House, 7 Castle Street, St Helier, Jersey JE2 3BT T  +44 1534 716800

E  enquiries@jerseyaudito ce.je

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