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In This Guide
Introduction 3
Supporting accountability 5 Transparent 8
Performance analysis 24 Financial performance 26
Directors' or equivalent report 28 Statement of responsibilities 30 Governance Report 32 Remuneration and staff report 35 Sustainability reporting 38
Introduction
Annual reports are a key means by which an entity tells the story of its year. Public annual reporting, done well, enables stakeholders to understand – with trust and confidence – an entity's strategy and the risks it faces, how much money has been spent and on what, and what has been achieved as a result. It enables stakeholders to hold the entity to account effectively.
In this second Good Practice Guide published by the Office of the Comptroller and Auditor General, I set out some good practice principles for excellence in annual reporting by public bodies and provide some illustrative examples from organisations. These examples are drawn from my review of the annual reports which underpinned my report Annual Reporting published in November 2021.
The key elements I consider to be good practice in the single annual report are summarised below.
Single Annual Report Supporting accountability Transparent
Accessible Understandable
Performance Report Accountability Report Financial Statements
Strategy Directors' or equivalent report Prepared under a suitable framework
Risks A statement of responsibilities Suitably assured Operations A governance report
Performance analysis A remuneration and staff report
Financial performance
My reviews of the annual reports and accounts of Jersey entities in 2020 and 2021 identified that organisations can do more to produce fully integrated reports, where annual reports more closely complement and narrate the financial performance of the organisation. In some instances, annual reports are being produced without including a commentary on financial performance or a set of financial statements.
Key areas where annual reports could be improved include:
• setting out objectives, analysing associated risks and summarising performance, including Key Performance Indicators (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.
My 2021 review of annual reports also considered the extent to which entities are reporting performance against a range of sustainability and environmental measures. Whilst some entities are reporting performance against environmental measures, I found that few entities are reporting against a wider range of sustainability measures.
I encourage all public organisations in Jersey to perform better in respect of annual reporting and to engage early with internal and external stakeholders when considering the content and presentation of their annual reports.
I also urge public organisations to present a balanced and objective narrative of what they have achieved during the year, together with the challenges they have faced along the way. Too often the annual reports I reviewed were characterised as a list of achievements rather than a fair, balanced and understandable narrative of the year.
The extracts within this Guide have been taken from various annual reports and links to the full reports are included for information. I hope that organisations will find this Guide to be useful as they start to consider their public annual reporting for 2021 and beyond.
Lynn Pamment
Comptroller and Auditor General
The best reports:
• tell the story of the organisation in a fair and balanced way
• comply with relevant reporting requirements; and
• include clear action points to take forward.
The Jersey Electricity Report and Accounts 2020 includes benchmarking of service standards using the UK Institute of Customer Services as well as performance against previous years. This helps to ensure that performance is reported in a fair and balanced way:
Jersey Electricity Report and Accounts 2020 jec_annualreport_2020.pdf
The Jersey Care Commission Annual Report 2020 includes clear details of What more needs to happen?' across
all its priority areas:
Jersey Care Commission Annual Report 2020 JCC-2020-AnnualReport.indd (carecommission.je)
The best reports include:
• frank and honest analysis
• consideration of the challenges an organisation is facing
• appropriate use of data; and
• quantification of risks and performance measures.
The Jersey Teachers' Superannuation Fund Annual Report 2020 uses clear summary data as part of its reporting of investment performance:
Jersey Teachers' Superannuation Fund Annual Report 2020
R JTSF 2020 Annual Report- FINAL SIGNED 20210520 SS.pdf (gov.je)
The States of Jersey Annual Report and Accounts 2020 includes transparent reporting of data by department across a range of Key Performance Indicators:
States of Jersey Annual Report 2020
R Government of Jersey Annual Report and Accounts 2020.pdf
The best reports:
• highlight key trends in the financial statements
• include concise summaries of key points; and
• consider how the organisation engages with key stakeholders and meets their needs.
The Jersey Post Business Review 2020 uses diagrams to highlight key messages and trends and considers how the organisation engages with key stakeholders:
Jersey Post Business Review 2020 annual_report_2020_.pdf (jerseypost.com)
Jersey Post Business Review 2020 annual_report_2020_.pdf (jerseypost.com)
The Jersey Competition Regulatory Authority 2020 Annual Report and Accounts includes a concise and clear summary of performance against stated objectives for the year:
Jersey Competition Regulatory Authority Annual Report and Accounts 2020 jcra-2020-annual-report-and-accounts.pdf
The best reports use:
• plain English to explain difficult concepts
• infographics and diagrams to communicate important messages; and
• clearly integrated structure to help users navigate it effectively.
The States of Jersey Annual Report and Accounts 2020 uses infographics and diagrams to communicate complex data:
States of Jersey Annual Report and Accounts 2020
R Government of Jersey Annual Report and Accounts 2020.pdf
The best reports include:
• 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; and
• strategy clearly linked to performance measures and risks
The Jersey Water 2020 Annual Report sets out a clear statement of purpose and strategic outcomes that form a basis for the structure of the commentary in the company's operating review. The performance against each strategic outcome is reported clearly including identifying strategic priorities for 2021:
2020 Annual Report and Financial Statements Jersey Water 76462-JW-Annual-Report-Year-Ending-September-2020_v16_WEB.pdf (jerseywater.je)
The Jersey Financial Services Commission Annual Report 2020 included a clear narrative on delivery against strategic objectives during 2020:
Jersey Financial Services Commission Annual Report 2020 jfsc-annual-report-2020.pdf (jerseyfsc.org)
The best reports include:
• 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; and
• a description of how the dynamic of the risk profile has changed over time, including developments in relation to specific risks disclosed.
The Jersey Electricity Report and Accounts 2020 set out clearly the direction of travel for the company's principle risks together with planned and implemented mitigations. The principal risks identified reflect the external as well as the internal environment and the commentary also considers the impact of COVID-19 on the risk profile:
Jersey Electricity Report and Accounts 2020
The States of Jersey Development Company Annual Report and Consolidated Financial Statements 2020 included a specific commentary on COVID-19 risks:
States of Jersey Development Company Annual Report and Consolidated Financial Statements 2020
2020-annual-report-accounts.pdf (jerseydevelopment.je)
The best reports include:
• 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; and
• consideration of capital investment and how it achieves value for money.
The Ports of Jersey Annual Report 2020 included a clear description of the impact of the COVID-19 pandemic on its operations:
Ports of Jersey Annual Report 2020 Annual reports | Ports of Jersey
The best reports include:
• 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 Key Performance Indicators aligned to strategic objectives and making appropriate use of financial and non-financial data
• balanced assessment of goals achieved and performance against targets; and
• graphics used to illustrate performance.
The Andium Homes Annual Report 2020 included a detailed analysis of performance including performance against target for key performance indicators:
Andium Homes Annual Report 2020 Andium Homes Annual Report 2020
The best reports include:
• a financial review detailing financial performance
• a fair and balanced reflection of financial performance which is consistent with the underlying financial statements
• an explanation of the adoption of the going concern basis where this might be called into doubt, for example where there are significant net liabilities that will be financed from resources voted by States Assembly in the future; and
• discussion of actual performance against expected/budgeted performance.
The Jersey Financial Services Commission Annual Report 2020 included a review of financial performance that was consistent with the underlying financial statements and discussed actual performance against expected/budgeted performance:
Jersey Financial Services Commission Annual Report 2020 Annual report 2020 Jersey Financial Services Commission (jerseyfsc.org)
Directors' or equivalent report
The best reports include:
• 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; and
• information on personal data related incidents where these have been formally reported to the Data Protection Authority.
The Jersey Competition Regulatory Authority 2020 Annual Report and Accounts included all key elements of best practice and confirmed that there were no personal data related incidents during the year:
Jersey Competition Regulatory Authority Annual Report and Accounts 2020
jcra-2020-annual-report-and-accounts.pdf
The best reports include:
• 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; and
• 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.
The Jersey Electricity Report and Accounts 2020 set out a clear statement of responsibilities:
Jersey Electricity Report and Accounts 2020 jec_annualreport_2020.pdf
The best reports include:
• 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; and
• a summary of any significant lapses of protective security.
The Jersey Water 2020 Annual Report included a commentary on how the board evaluates performance within its governance report:
2020 Annual Report and Financial Statements Jersey Water
76462-JW-Annual-Report-Year-Ending-September-2020_v16_WEB.pdf (jerseywater.je)
The JT Progress Report 2020/21 included information on the actions proposed and being taken in response to an external review of board effectiveness:
JT Progress Report 2020/21 About us - JT Global
The best reports include:
• 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; and
• exit packages – summary data on the use of exit packages agreed in year.
The States of Jersey continue to publish the most comprehensive remuneration and staff report including fair pay disclosures and staff sickness absence:
States of
Jersey Annual Report and Accounts 2020
R Government of Jersey Annual Report and Accounts 2020.pdf
The JT Progress Report 2020/2021 'Our people' section set out approach to diversity, inclusion and belonging:
JT Progress Report 2020/21 About us - JT Global
The best reports adopt the Task Force on Climate-related Financial Disclosures recommended disclosures as well as wider reporting on performance against sustainable development goals.
Governance Strategy Risk Management Metrics and Targets
Disclose the organisation's Disclose the actual and potential Disclose how the organisation Disclose the metrics and targets used governance around climate-related impacts of climate-related risks and identifies, assesses and manages to assess and manage relevant risks and opportunities. opportunities on the organisation's climate-related risks. climate-related risks and
businesses, strategy and financial opportunities where such planning where such information is information is material.
material.
Recommended disclosures
- Describe the Board's oversight of a) Describe the climate-related risks a) Describe the organisation's a) Describe the metrics used by the climate-related risks and and opportunities the processes for identifying and organisation to assess climate - opportunities. organisation has identified over assessing climate-related risks. related risks and opportunities in the short, medium and long term. line with its strategy and risk management process.
- Describe management's role in b) Describe the impact of climate- b) Describe the organisation's b) Disclose Scope 1, Scope 2 and, if assessing and managing climate- related risks and opportunities processes for managing climate- appropriate, Scope 3
related risks and opportunities. on the organisation's businesses, related risks. greenhouse gas emissions, and
strategy and financial planning. the related risks.
- Describe the resilience of the c) Describe how processes for c) Describe the targets used by the organisation's strategy, taking identifying, assessing and organisation to manage climate - into consideration different managing climate-related risks related risks and opportunities climate-related scenarios are integrated into the and performance against targets. including a 2 degree or lower organisation's overall risk
scenario. management.
Source: Recommendations of the Task Force on Climate-related Financial Disclosures
The Annual Report 2020 for the Ports of Jersey included a sustainability report that comments on performance using a wide ranging framework:
Ports of Jersey Annual Report 2020 Annual reports | Ports of Jersey
The Jersey Electricity Report and Accounts 2020 included a specific commentary on climate related risks and opportunities:
Jersey Electricity Report and Accounts 2020 jec_annualreport_2020.pdf