Annual Reporting

Contents

Summary  3

Introduction  3 Key findings  4 Conclusion  5

Objectives and scope of the review 6

Detailed findings  7

Overall content and structure 7

Performance Reports 14

Accountability reports 20

Overall best practice principles 26

Sustainability reporting 28 Appendix One  34

Audit Approach  34 Appendix Two  37

Summary of Recommendations 37

Summary

Introduction

1. Annual reports are a key means by which an entity tells the story of its year. Public annual reporting, done well, enables stakeholders to understand – with trust and confidence – an entity's strategy and the risks it faces, how much money has been spent and on what, and what has been achieved as a result. It enables stakeholders to hold the entity to account effectively.
2. In 2020 I reviewed the annual reports and, where available publicly, the annual accounts produced by the States of Jersey and 37 Jersey entities that were either:

• identified by the States of Jersey in its annual report as controlled by the States; or

• established by the States Assembly and required to prepare an annual report and/or accounts.

3. I considered the content of all the annual reports and accounts reviewed against a set of good practice criteria I had developed encompassing:

• minimum content that I consider to be best practice for accountability to public stakeholders

• essential elements of a good annual report; and

• overarching principles for good public reporting.

4. The implementation of the recommendations contained in my 2020 Report Annual Reporting and my 2021 Thinkpiece Public Audit in Jersey is part of the work of the Arm's Length Bodies Oversight Board established by the Government of Jersey. The implementation of some of the recommendations will require changes to legislation. Appendix Two of this Report details the recommendations and areas for consideration noted in my 2020 Report that remain relevant.
5. My 2020 Report Annual Reporting concluded that All entities should aspire to improve the content and accessibility of their public annual reports. Strategic objectives should be reported transparently, should be assessed against risks and should be measured against relevant, quantifiable key performance indicators (KPIs) on a consistent basis'.  I encouraged entities to adopt good practice on a voluntary basis until such time as new formal requirements are introduced.

6. In 2021 I have carried out a similar review of the annual reports and accounts for 2020 that were available at 30 September 2021 for the States of Jersey, the same 37 Jersey entities reviewed during 2020 and an additional 14 entities. The purpose of my review was to assess progress being made in improving annual reporting and to identify and share good practice examples.
7. Over recent years, the practice of reporting by organisations about sustainability, across environmental, social and economic measures, has increased.  A recent report by the Chartered Institute of Public Finance and Accountancy (CIPFA)[1] however found that public sector organisations are lagging behind their private sector counterparts when it comes to sustainability reporting. In carrying out my review in 2021 I have added a particular focus on sustainability reporting.
8. The annual reports and accounts of the entities I have considered are detailed in Appendix One to this report.
9. To assist entities in improving their performance I have published a second Good Practice Guide updated for 2021 that draws out examples from the better performing entities.

Key findings

10. The key findings from my review in 2021 are as follows:

• although the content of most 2020 annual reports did not meet best practice, there was an overall improvement from the previous year. The COVID-19 pandemic provided a focus for entities to tell a clearer story about their purpose, the decisions taken and the arrangements put in place to address challenges caused by the pandemic

• a small number of entities made more fundamental improvements to their annual reports and addressed key issues raised in my 2020 Report and Good Practice Guide

• a significant number of entities' annual accounts could not be located on the entities' websites and, for these entities, limited financial information was reported publicly

• despite the potential for the COVID-19 pandemic to delay the publication of annual reports, there was a slight improvement in timeliness of public reporting compared to 2020. Where deadlines for annual reports are set, most entities met the required deadlines

• only 15% of entities produced a single annual report comprising an identifiable performance report, accountability report and financial statements. Few performance or accountability reports were signed or dated by the Chief Executive or equivalent

• the overall content of 73% of annual reports was poor or very poor compared to best practice. Key areas where annual reports could be improved include:

• setting out objectives, analysing associated risks and summarising performance, including KPIs to measure performance against objectives
• providing information on governance arrangements and operations (including structures and delivery models); and
• reporting on remuneration and other workforce matters; and

• some entities are reporting performance against environmental measures. However, few entities are reporting against a wider range of sustainability measures.

Conclusion

11. Annual reports are a fundamental part of ensuring the accountability of entities. Few States established or States controlled entities have made significant progress in improving their annual reports for 2020 and significant improvements are needed for most entities to meet best practice.
12. All entities should consider the issues raised in this report and my Good Practice Guide and seek to improve the accessibility and content of their 2021 annual reports. Annual reports should be clearer about entities' objectives (and the extent to which objectives have been met), governance arrangements, operations, remuneration and workforce matters. Entities should ensure that their reports are publicly available and are easy to locate.
13. The States should take the lead in developing their own sustainability reporting and in developing minimum requirements for sustainability reporting by States established and States controlled entities.

Objectives and scope of the review

14. This review has considered the 2020 annual reports of the States of Jersey, States controlled entities and entities established by the States, against updated criteria encompassing:

• minimum content that I consider to be best practice for accountability to public stakeholders

• essential elements of a good annual report; and

• overarching principles for good public reporting.

15. The review identifies the progress being made by entities in improving their annual reporting. It also identifies good practice to share through the publication of a Good Practice Guide 2021.
16. The review has not followed up the specific recommendations made in my 2020 Report but instead evaluates the progress being made by entities, on a voluntary basis, to improve their annual reporting. The recommendations from 2020 that remain relevant in 2021 are shown in Appendix Two.

Detailed findings

Overall content and structure

17. In 2020 I identified the minimum content that I would expect to be included in an annual report, namely:

• a single report comprising:

o a performance report

o an accountability report; and

o the financial statements

• the performance report should be:

o a fair, balanced and understandable report analysing the entity's performance; and

o signed and dated by the Chief Executive or equivalent

• the accountability report should:

o explain the composition and organisation of the entity's governance structures, remuneration and staff policies and how they support the achievement of the entity's objectives; and

o include a directors' (or equivalent) report, a statement of responsibilities, a governance statement and a remuneration and staff report; and

• the financial statements for similar entities should be prepared to a consistent accounting framework to enable cross-entity comparison.

18. Exhibit 1 summarises the key elements I consider to be good practice in the single annual report.

Exhibit 1: Good practice single annual reports

Single Annual Report

Supporting accountability Transparent

Accessible Understandable Performance Report  Financial Statements

Strategy

Prepared under a suitable framework

Risks

Suitably assured

Operations

 Performance

analysis  

 Financial performance

Source: Jersey Audit Office

19. My 2020 Report found that many entities did not produce a single' report. It found that whilst most entities' reports included a commentary on performance, these were not signed by the Chief Executive or equivalent. My 2020 Report also found that most entities included a limited commentary on governance but that not all included a statement of responsibilities or a governance statement and that reporting on remuneration and staff was generally weak.
20. I have reviewed the content of annual reports against best practice identified by the UK National Audit Office and against those content requirements placed on

UK public sector bodies that I consider to be best practice. The criteria I used in 2021 reflect the most up to date best practice I have identified.

21. I have also considered the extent to which entities have embraced sustainability reporting best practice in their annual reports.

Statutory and other requirements for annual reports

22. As noted in my 2020 Report, the States have not set out their expectations for the structure or minimum contents of annual reports. The requirements for annual reports vary from one entity to another as summarised in Exhibit 2.

Exhibit 2: Requirements for Annual Report and Accounts

Entity  Requirements for Annual Report and Accounts

States of  Set out in the Jersey Financial Reporting Manual (JFREM) and to Jersey  be submitted to the States Assembly by 31 May.

Unlisted  Prepare accounts in accordance with any generally accepted companies  accounting principles' under Article 105 of the Companies

(Jersey) Law 1991.

Produce within seven months of the year end of the company for public companies and ten months of the year end of the company for private companies.

No prescribed content for annual reports.

Jersey  Jersey Electricity plc is the only company controlled by the States Electricity  listed on the UK Stock Exchange.

plc  Accounts are prepared under International Financial Reporting

Standards within seven months of the year end.

Annual report is required to comply with the UK listing rules and the UK corporate governance code.

Other States  Most, but not all, required to prepare annual reports by the controlled  legislation under which the entity is established. The legislation and  typically sets out:

established  what the annual reports should cover – usually just the entity's entities

activities, but in some cases specific content is required

• to whom the annual report should be submitted – usually to the States Assembly; and

• by when annual reports should be submitted – for most entities there are specific deadlines, some are required to submit as soon as practicable' but for some there are no deadlines at all.

Source: Jersey Audit Office analysis of requirements

Content and structure of 2020 annual reports

23. Most 2020 annual reports included similar content and had the same structure as the previous year. As a result, the overall content and structure of annual reports continue to fall short of best practice:

• only 15% of entities produced a single annual report comprising an identifiable accountability report, performance report and financial statements (Exhibit 3); and

• 73% of entities had poor or very poor content compared to best practice (Exhibit 4).

Exhibit 3: Single annual reports comprising a performance report, an accountability report and financial statements

All three elements reported

15%

One or more

elements missing

56%

Some elements incomplete or not easily identifiable 29%

Source: Jersey Audit Office review of 2020 annual reports

Exhibit 4: Content of annual reports compared to best practice

Good 5%

Very poor

51% Fair 22%

Poor 22%

Source: Jersey Audit Office review of 2020 annual reports

24. As I reported in 2020, performance reports and accountability reports were rarely signed by the Chief Executive or equivalent. In addition, many entities did not include a statement of responsibilities, a governance statement or adequate information on remuneration and staff.

Improvements in content and structure compared to previous years

25. Although the overall content and structure of 2020 annual reports fell below best practice, there was an overall improvement from the previous reports as shown in Exhibit 5.

Exhibit 5: Content of annual reports compared to best practice: direction of travel

Declined 9%

Improved 36%

No change

55%

Source: Jersey Audit Office review of 2019 and 2020 annual reports

26. The COVID-19 pandemic provided a focus for entities to tell a clearer story about their purpose, the decisions taken and the arrangements put in place to address challenges caused by the pandemic. This was the main driver behind the improvement in content noted in the 2020 annual reports.
27. A small number of entities made more fundamental changes and included additional content in their 2020 reports. The Jersey Competition Regulatory Authority (JCRA) made the biggest improvement in 2020. Whilst being a separate entity, the JCRA had previously reported as part of a joint annual report with Guernsey. For 2020 however the JCRA prepared its first annual report as a single entity. In doing so it took the opportunity to revise the structure and content of the Annual Report referring specifically to my Annual Reporting Good Practice Guide.
28. In contrast, a small number of entities omitted important information that had been provided in the prior year.

Timeliness of production of annual reports

29. Despite the potential for the COVID-19 pandemic to delay the publication of annual reports, there was a slight improvement in timeliness as shown in Exhibit 6.

Exhibit 6: Reporting month of 2020 annual reports compared to 2019

Reported in a later

month

18% Reported in an earlier month

27%

Reported in the same month 55%

Source: Jersey Audit Office review of 2019 and 2020 annual reports

30. As in the previous year, where deadlines for annual reports were set, most entities met them. As shown in Exhibit 7, as at 30 September 2021:

• 27 out of 32 entities with a deadline met the deadline

• five had missed their deadlines

• 10 entities published annual reports despite the absence of a deadline; and  

• nine entities had not published an annual report.

Exhibit 7: Annual reports published within deadlines as at 30 September 2021

30 25 20 15 10 5 0

Deadline met Published without a Deadline missed Not published at 30 deadline September 2021

2020 2019

Source: Jersey Audit Office review of 2019 and 2020 annual reports

Performance Reports

31. Performance reports should be:

• balanced, fair and understandable; and

• tell the full story of an entity, including both positive and negative aspects of performance so users can have confidence in any judgements and so it is clear that reporting is trustworthy and transparent.

32. Performance reports that exhibit best practice include the following elements. Strategy

• A statement of the purpose and activities of the entity including in respect of a brief description of the business model and environment, organisational structure and priorities or any other organisational strategic objectives and goals, objectives and strategies.

• The key issues and risks that could affect the entity in delivering its objectives, how they have changed, how they have been mitigated and any emerging risks that may affect future performance.

• Clarity around purpose, strategic objectives and key programmes/projects.

• Balanced view of progress against objectives.

• Details of plans to implement priorities.

• Strategy clearly linked to performance measures and risks.

Risks

• Clear articulation of the organisation's risk management process.

• Risks that reflect the external environment and implications to the entity (for example, COVID-19).

• Clear links between risks, strategic objectives and the performance report narrative.

• Quantified risks and realistic planned and implemented mitigations.

• A description of how the dynamic of the risk profile has changed over time, including developments in relation to specific risks disclosed.

Operations

• Clear explanation of different delivery models used, the reasons for using these models and how they achieved value for money.

• Narrative around how business operations support wider public sector (or other) objectives.

• For significant contracted-out services: discussion of how these contracts are awarded and how the entity manages the ongoing contract.

• Consideration of capital investment and how it achieves value for money.

Performance analysis

• A statement from the entity's lead Minister or Chief Executive or equivalent providing their perspective on the performance of the entity over the period.

• A performance analysis showing how the organisation has performed against priorities (or any other organisational strategic objectives and goals) using qualitative and quantitative information and prior year trend information where possible. Performance data against each of the indicators used to monitor performance against priority outcomes should be provided. Any financial information provided should link to the financial review.

• Non-financial information including on environmental protection, social responsibility, respect for human rights, anti-corruption and anti-bribery matters and diversity.

• Information on environmental matters including the impact of the entity's business on the environment and identifying where its performance contributes towards the delivery of Sustainable Development Goals (SDGs).

• Quantified KPIs aligned to strategic objectives and making appropriate use of financial and non-financial data.

• Balanced assessment of goals achieved and performance against targets.

• Graphics used to illustrate performance.

Financial performance

• A financial review detailing financial performance.

• A fair and balanced reflection of financial performance which is consistent with the underlying financial statements.

• An explanation of the adoption of the going concern basis where this might be called into doubt, for example where there are significant net liabilities that will be financed from resources voted by States Assembly in the future.

• Discussion of actual performance against expected/budgeted performance.

2020 performance reports

33. Most 2020 performance reports were similar to the previous year although several were improved by the inclusion of discussion of the challenges presented by the COVID-19 pandemic and the organisation's response. The commentaries on the COVID-19 pandemic resulted in more balanced annual reports by including positive and negative aspects of performance and a fuller discussion of risks.
34. Out of 33 performance reports reviewed in both 2021 and 2020, the quality of the reports for nine were improved, for 21 were unchanged and for four had declined as shown in Exhibit 8. The four 2020 performance reports that scored less well than the previous year had omitted useful information included in the previous year.

Exhibit 8: Performance reports: direction of travel

Declined 12%

Improved 26%

No change

62%

Source: Jersey Audit Office review of 2019 and 2020 annual reports

35. Despite the encouraging overall improvement seen in 2020, most performance reports did not meet best practice. My review assessed that 51% of performance reports demonstrate poor compliance with best practice and 22% demonstrate very poor compliance with best practice as shown in Exhibit 9.

Exhibit 9: Performance reports: compliance with best practice

Very poor Good 22% 12%

Fair 15%

Poor 51%

Source: Jersey Audit Office review of 2020 annual reports

36. The key areas for improvement are the same as I reported in 2020 and are summarised in Exhibit 10.

Exhibit 10: Performance reports - areas for improvement

Best practice  Areas for improvement

Financial  Some organisations do not provide any financial information at all performance  within their annual reports and do not make the financial statements

available online either.

• Where organisations do provide a commentary on financial performance it tends to reflect the financial statements and compares performance to previous years rather than to budget. It is therefore often difficult to understand whether the financial performance is in line with expectations for the year.

Source: Jersey Audit Office review of 2020 annual reports

Accountability reports

37. Accountability reports should be signed and dated by the Chief Executive or equivalent. They should contain at least two sections:

• a corporate governance report, which as a minimum should include:

o the directors' or equivalent report

o a statement of responsibilities; and

o a governance statement; and

• a remuneration and staff report.

38. Entities should provide at least a short overview of these sections and explain how they contribute to the entity's accountability and best practice in the context of corporate governance norms and codes.
39. Accountability reports that exhibit best practice include the following elements.

 Directors' or equivalent report

• The names of the chairman and chief executive.

• The composition of the individuals or management board having authority or responsibility for directing or controlling the major activities of the entity during the year.

• Details of entity directorships and other significant interests held by members of the management board which may conflict with their management responsibilities.

• Information on personal data related incidents where these have been formally reported to the Data Protection Authority.

 A statement of responsibilities

• An explanation of the responsibilities of the chief executive or equivalent.

• Where the report includes audited financial statements, a statement to confirm that, as far as they are aware, there is no relevant audit information of which the entity's auditors are unaware, and the directors (or equivalent) have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the entity's auditors are aware of that information.

• A statement from the directors (or equivalent) to confirm that the annual report as a whole is fair, balanced and understandable and that they take personal responsibility for the annual report and the judgments required for determining that it is fair, balanced and understandable.

 A governance report

• A narrative statement explaining the governance structure of the entity, including information about any board committee structure, its attendance records and the coverage of its work.

• Transparent information about how the office holder or entity board works effectively to govern the entity including information about the quality of the data used by the office holder or board, and why the office holder or board finds it acceptable.

• An assessment of the effectiveness of the office holder's or board's performance.

• Highlights of any board committee reports.

• A risk assessment, including the entity's risk profile and how it is managed.

• A summary of any significant lapses of protective security.

 A remuneration and staff report

• The policy on the remuneration of directors (or equivalent) for the current and future years.

• Each component and the overall single total remuneration figure for each director (or equivalent), including:

salary and allowances

performance pay or bonuses payable

non-cash benefits

accrued pension benefits; and

compensation for loss of office and other severance payments.

• For each of salary and allowances, performance pay and bonuses payable and non-cash benefits:

the percentage change from the previous financial year in respect of the highest paid director; and

the average percentage change from the previous financial year in respect of the employees of the entity taken as a whole.

• The lower quartile, median and upper quartile remuneration of the reporting entity's staff.

• The ratio between the lower quartile, median and upper quartile staff remuneration and the mid-point of the banded remuneration of the highest paid director (or equivalent) and an explanation for any significant changes in the ratio between the current and prior year.

• Number of senior staff (or equivalent) by band.

• Staff numbers and costs.

• Staff composition.

• Sickness absence data.

• Staff policies applied during the financial year in respect of disabled persons.

• Other relevant employee matters such as: other diversity issues; employment issues including employee consultation and/or participation; health and safety at work; trade union relationships; and human capital management.

• Expenditure on consultancy.

• Off-payroll engagements – summary data on the use of off-payroll arrangements.

• Exit packages – summary data on the use of exit packages agreed in year.

Accountability report – 2021 findings

40. Despite accountability reports remaining largely unchanged, many provided additional useful material on governance arrangements in respect of the COVID - 19 pandemic. As a result, I have assessed that 33% of accountability reports are improved compared to those I reviewed in 2020 as shown in Exhibit 11.

Exhibit 11: Accountability reports: direction of travel

Declined 12%

Improved 33%

No change

55%

Source: Jersey Audit Office review of 2019 and 2020 annual reports

41. However, there are still some significant omissions in accountability reports:

• only five of the 41 annual reports reviewed included both a corporate governance report and a remuneration report. Most included neither; and

• 85% of accountability reports demonstrated poor or very poor compliance with best practice as shown in Exhibit 12.

Exhibit 12: 2020 Accountability report – compliance with best practice

Good 5%

Fair 10%

Very poor Poor 71% 14%

Source: Jersey Audit Office review of 2019 and 2020 annual reports

42. The key areas for improvement are similar to those I reported in 2020 and are summarised in Exhibit 13.

Exhibit 13: Accountability reports - areas for improvement

Best practice  Areas for improvement

Directors' or  Few entities gave information on directors' other interests or on equivalent  data breaches. This lack of information means it is not clear that in report  all cases there were no directors' other interests and no data

breaches.

A statement of  Only five annual reports reviewed included a full statement of responsibilities  responsibilities. 18 did not include any form of statement.

• The remaining annual reports did not include specific statements to confirm that there was no relevant audit information of which the entity's auditors were unaware and/or to confirm that the annual report and accounts as a whole were fair, balanced and understandable.

Source: Jersey Audit Office review of 2020 annual reports

Overall good practice principles

43. There are, in my view, four overall principles for good practice in annual reports as shown in Exhibit 14.

Exhibit 14: Overall principles for good practice annual reporting

Supporting

Accountability

• telling the story of

the organisation in a fair and balanced way

• compliance with relevant reporting requirements; and

• clear action points to take forward.

 Accessibility

• highlights key trends in the financial statements

• concise summaries of key points; and

• consideration of how the organisation engages with key stakeholders and meets their needs.

Transparency

• frank and honest analysis

• consideration of the challenges an organisation is facing

• appropriate use of data; and

• quantification of risks and performance measures.

Understandable Use of:

• plain English to explain difficult concepts

• infographics and diagrams to communicate important messages; and

• clearly integrated structure to help users

navigate it effectively.

Source: National Audit Office Good Practice in Annual Reporting February 2021

Supporting Accountability

44. Last year, I noted that 2019 annual reports often focussed on entities' achievements with limited commentary on the things that had not gone to plan. In contrast, almost all annual reports for 2020 discussed how entities had addressed the challenges of the COVID-19 pandemic. As a result, 2020 annual reports generally told a more balanced story of the year.
45. However, the stories told in annual reports were often not focussed on the entities' strategic objectives and few annual reports set out clear actions for future years. The absence of specified content for annual reports also made it difficult for entities to demonstrate that they had complied with relevant reporting requirements.

Transparency

46. Other than in relation to the COVID-19 pandemic, there was minimal consideration of the challenges faced by entities. Most describe key risks, but risks are rarely quantified and discussion of the potential impact and mitigating actions is limited.
47. Most entities continued to include an array of data in their annual reports. However, few set targets for strategic objectives, report performance for KPIs or provide a frank and honest commentary.

Accessibility

48. Eight of the reports reviewed contained all elements of good practice in terms of accessibility. For other entities, there is scope to improve:

• integration of financial data throughout the report consistent with the financial reporting contained in the financial statements; and

• consideration and reporting of how the entity engages with its key stakeholders and how the entity meets their needs.

49. For a significant proportion of entities, their annual accounts could not be located on entities' websites.

Understandable

50. Reports were generally well written in plain English. Some entities used infographics to enhance the understandability of the content of the report to the lay reader. There is, however, scope for more entities to adopt this approach to make content more understandable.
51. Whilst all reports had a clear structure, it was not always easy to use the structure to understand where relevant content could be found.

Sustainability reporting

52. Over recent years there has been an increasing interest in sustainability reporting by entities across the world. The CIPFA research found that sustainability reporting in the public sector is still in its infancy.  CIPFA notes that the lack of data, the absence of a consistent and accepted framework and the lack of a requirement or mandate to produce a sustainability report were often cited as key impediments for a public sector entity to prepare a sustainability report'.

States of Jersey

53. Under the Jersey Financial Reporting Manual (JFREM), the States of Jersey are expected to provide information on environmental matters including the impact of the entity's business on the environment. The JFREM states that It is envisaged that such reporting will be integral throughout the annual report and accounts and not a separate standalone report'.
54. The JFREM requirements are based on the UK requirements for central government departments. In the UK, the Financial Reporting Manual (FReM) mandates some sustainability reporting in line with various pieces of legislation. Furthermore, UK government departments are required to follow the sustainability reporting guidance that is mandated for most government entities and requires reporting against certain environmental targets (Greening Government Commitments (GGC) 2016–2018 covered greenhouse gases, flights, waste, water and paper).
55. The States of Jersey Annual Report 2020 includes a specific Environmental Sustainability Report that sets out details of the performance of the States in respect of greenhouse gas emissions, waste and finite resource consumption in respect of water and paper.

56. The Public Finances (Jersey) Law 2019 requires the Council of Ministers to take into account the sustainable wellbeing of current and future generations when it develops the Government Plan. This means that sustainable wellbeing is now intended to be central to the way Government of Jersey makes decisions and designs public services.
57. The Jersey Performance Framework has been introduced to measure the progress Jersey is making towards achieving sustainable wellbeing. It includes different aspects of sustainable wellbeing as shown in Exhibit 15.

Exhibit 15: The Jersey Performance Framework

Source: Government of Jersey website

58. The Jersey Performance Framework is supported by a series of Island Outcomes and Indicators. These Outcomes and Indicators are long term whole Island measures of performance and are numerous, as shown in Exhibit 16. In some instance, Outcomes and Indicators are still being developed.

Exhibit 16: Number of Island Outcomes and Indicators

Area  Overall  Island  Indicators

outcome  outcomes

statements

Community

Children  5  13  43 Health and wellbeing  5  14  46 Safety and security  1  4  7 Vibrant and inclusive  2  4  23

community

Economic

Affordable living  1  2  15 Business environment  Not developed Not developed Not developed Jobs and growth 1  7  33 Environmental

Built environment  3  9  33 Natural environment 1  2  12 Sustainable resources 1  5  11

Source: Jersey Audit Office analysis of the Jersey Performance Framework

59. The indicators in the Jersey Performance Framework are different to the performance indicators used to report on the services delivered by individual Government departments. The Jersey Performance Framework indicators are long term sustainability measures rather than in year performance measures.
60. The States of Jersey Annual Report 2020 includes reporting of performance delivery indicators for each Government department. In addition, as noted above, the States of Jersey Annual Report 2020 includes a specific environmental sustainability report that reports on some aspects of the environmental segment of the Jersey Performance Framework.

61. A more holistic sustainability report for the States of Jersey would include an analysis and commentary of performance using the Jersey Performance Framework.

States established and States controlled entities

62. Only eight States established or controlled entities reviewed included information on environmental measures. The information included ranged from a commentary on environmental policy through to reporting of environmental impact measures. Seven of these eight entities also included some information on wider sustainability measures although the information reported was often limited to a commentary related to social responsibility activities.
63. None of the entities reviewed used the Jersey Performance Framework to report on sustainability.

Climate related disclosures

64. The Taskforce on Climate-related Financial Disclosures (TCFD) was established in December 2015 by the Financial Stability Board. In 2017, the TCFD published a report which set out four core elements of recommended climate-related financial disclosures that apply to organisations across sectors and jurisdictions:

• Governance: The organisation's governance around climate-related risks and opportunities.

• Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning.

• Risk Management: The processes used by the organisation to identify, assess and manage climate-related risks.

• Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.

65. While reporting using the TCFD is not currently mandatory, several companies across the world have begun to use this as a disclosure framework. The TCFD also recently published its 2020 Status Report providing an overview of current disclosure practices in terms of their alignment with the TCFD's recommendations. The report found that 'Disclosure of TCFD-aligned information increased by six percentage points, on average, between 2017 and 2019; and the Task Force applauds the improvements made both in terms of the number of companies reporting and the quality of such reporting. However, companies' disclosure of the potential financial impact of climate change on their businesses and strategies remains low'. The TCFD recommended disclosures are shown in Exhibit 17.

Exhibit 17: TCFD recommendations and supporting recommended disclosures

Governance  Strategy  Risk Management  Metrics and Targets

Disclose the  Disclose the actual  Disclose how the  Disclose the metrics organisation's  and potential  organisation  and targets used to governance around  impacts of climate- identifies, assesses  assess and manage climate-related risks  related risks and  and manages  relevant climate - and opportunities. opportunities on the  climate-related risks.  related risks and

organisation's  opportunities where businesses, strategy  such information is and financial  material.

planning where such

information is

material.

Recommended disclosures

1. Describe the  a)  Describe the  a)  Describe the  a)  Describe the Board's  climate-related  organisation's  metrics used by oversight of  risks and  processes for  the organisation climate-related  opportunities the  identifying and  to assess climate - risks and  organisation has  assessing  related risks and opportunities.  identified over  climate-related  opportunities in

the short,  risks.  line with its medium and  strategy and risk long term.  management

process.

2. Describe  b)  Describe the  b)  Describe the  b)  Disclose Scope management's  impact of  organisation's  1, Scope 2 and, if role in assessing  climate-related  processes for  appropriate,

and managing  risks and  managing  Scope 3 climate-related  opportunities on  climate-related  greenhouse gas risks and  the  risks.  emissions, and opportunities.  organisation's  the related risks.  

businesses,

strategy and

financial

planning.

3. Describe the  c)  Describe how  c)  Describe the resilience of the  processes for  targets used by organisation's  identifying,  the organisation strategy, taking  assessing and  to manage

into  managing  climate-related consideration  climate-related  risks and different climate- risks are  opportunities related scenarios  integrated into  and performance including a 2  the  against targets.  degree or lower  organisation's

scenario.  overall risk

management.

Source: Recommendations of the Task Force on Climate-related Financial Disclosures

66. A limited number of the entities reviewed included reporting on climate-related matters. Some entities disclosed their strategies and policies in respect of climate change but fewer entities disclosed the metrics used to assess climate related risks and opportunities.

Recommendations for the States of Jersey

R1  Set out a public ambition and timetable for the production of an annual

sustainability report based on the Jersey Performance Framework and the TCFD recommended disclosures. This report should include the publication of targets alongside actual performance and comparative data with other jurisdictions where this is available.

R2  Consider whether the sustainability report referred to in R1 should form part of the

Annual Report or be a separate report.

R3  Consider the degree of independent assurance that should be provided over the

data contained within the sustainability report referred to in R1.

R4  Introduce a set of minimum requirements for sustainability reporting by States

established and States controlled entities. In doing so, consider how to apply the Jersey Performance Framework and the TCFD recommended disclosures in the context of States established and States controlled entities.

Recommendation for States established and States controlled entities

R5  Develop the content of annual reports to include sustainability reporting using a

framework appropriate to the entity.

Appendix One Audit Approach

The review encompassed a desk based review of the latest published annual reports and financial statements of the following entities against good practice criteria:

Entity name  Documents reviewed Andium Homes  Annual Report 2020

Annual Report and Audited Financial Bank Depositors Compensation Scheme  

Statements 31 January 2021

Care Commission  Annual Report 2020 Charity Commissioner Annual Report 2020 Charity Tribunal  Annual Report 2020 Children's Commissioner Annual Report 2020 Consumer Council  Annual Report 2020

Jersey Office of the Information Data Protection Authority

Commissioner 2020 Annual Report

Digital Jersey  Annual Review 2020

Director of Civil Aviation  Annual Report 2020

Employment Tribunal  Annual Report 2020

Financial Services Commission Annual Report 2020

Financial Services Ombudsman Annual Report 2020

Gambling Commission 2020 Annual Report and Accounts

Government of Jersey London

Financial Statements 31 December 2020 Office

Report of the Independent Prison Independent Prison Monitoring Board

Monitoring Board for 2020

2020 Annual Report

Jersey Advisory and Conciliation Service Board Members' Report and Financial

Statements for the year ended 31 December 2020

Jersey Appointments Commission Annual Report 2020

Entity name  Documents reviewed

Reports and Financial Statements 31 Jersey Business  

December 2020

Jersey Competition Regulatory Authority Annual Report and Accounts 2020 Jersey Electricity  Report and Accounts 2020

Jersey Overseas Aid Commission Annual Report 2020

Annual Report and Financial Statements Jersey Legal Information Board

31 December 2020

Jersey Post International Limited  Business Review 2020 Jersey Sport  Annual Report 2020 Jersey Teachers' Superannuation Fund Annual Report 2020

Annual Report and consolidated Jersey Telecom  statements 31 December 2020

Progress Report 2020/21

2020 Annual Report and Financial Jersey Water

Statements

Multi-Agency Public Protection

Annual Report 2020 Arrangements

Office of the Comptroller and Auditor

Annual Report and Accounts 2020 General

Police Complaints Authority Annual Report 2020

Ports of Jersey  Annual Report 2020

Prison Service  Annual Report 2020

Public Employees Pension Fund Annual Report 2020

Public Lotteries  Report for 2020

Safety Council  Annual Report and Accounts 2020 States Assembly  Annual Report 2020

States Employment Board Annual Report 2020

States of Jersey  2020 Annual Report and Accounts

Annual Report and Consolidated Financial States of Jersey Development Company

Statements 2020

Visit Jersey  Financial Statements 31 December 2020

The annual reports of the following States established and States controlled entities were not reviewed as they were not available publicly at the time of the fieldwork.

In addition, Statistics Jersey is a States established entity but is not required to produce an Annual Report.

Appendix Two

Summary of Recommendations

Recommendations and Areas for Consideration from my 2020 Report that remain relevant

Recommendations for the States of Jersey

R1  Reintroduce the requirement for the Chief Executive to sign the performance

report.

R2 Introduce a consistent requirement for all States controlled unlisted companies to

make their financial statements publicly available.

R3 Introduce a consistent set of requirements for the accounting framework to be

adopted by States controlled unlisted companies.

R4  Introduce a consistent set of minimum requirements for the annual reports of

States controlled unlisted companies. These minimum requirements should include information regarding performance and accountability of the companies as well as minimum requirements for financial information disclosure.

R5  Introduce a consistent set of minimum requirements for the annual reports of other

States controlled entities. These minimum requirements should include information regarding performance and accountability of the entities as well as minimum requirements for financial information disclosure.

R6  Introduce a requirement for Statistics Jersey to produce an annual report.

R7 Introduce a consistent set of minimum requirements for the annual reports of all

entities established by the States Assembly. These minimum requirements should include information regarding performance and accountability of the entities as well as minimum requirements for financial information disclosure.

R9  Introduce a consistent requirement for all entities controlled by the States or

established by the States Assembly to publish an accountability report comprising a directors' (or equivalent) report, a statement of responsibilities, a governance report and a remuneration and staff report as part of their annual report.

Recommendations for all entities

R8  Improve the public annual reporting of performance to include all of the elements

of best practice identified in this report.

R10  Review the contents of the annual report to include best practice accountability

reports including a directors' (or equivalent) report, a statement of responsibilities, a governance report and a remuneration and staff report.

R11  Review and update the content of the next annual report to embrace the best

practice principles noted in this report.

Areas for consideration by the States of Jersey

A1  Consider whether to introduce a requirement for States controlled entities above a

consistent size threshold, to produce stand-alone audited financial statements prepared under a suitable accounting framework such as FRS102.

A2  Consider adopting consistent provisions about deadlines for the preparation,

submission and publication of annual reports.

Recommendations from my 2021 Report

Recommendations for the States of Jersey

R1  Set out a public ambition and timetable for the production of an annual

sustainability report based on the Jersey Performance Framework and the TCFD recommended disclosures. This report should include the publication of targets alongside actual performance and comparative data with other jurisdictions where this is available.

R2  Consider whether the sustainability report referred to in R1 should form part of the

Annual Report or be a separate report.

R3  Consider the degree of independent assurance that should be provided over the

data contained within the sustainability report referred to in R1.

R4  Introduce a set of minimum requirements for sustainability reporting by States

established and States controlled entities. In doing so, consider how to apply the Jersey Performance Framework and the TCFD recommended disclosures in the context of States established and States controlled entities.

Recommendation for States established and States controlled entities

R5  Develop the content of annual reports to include sustainability reporting using a

framework appropriate to the entity.