Annual Reporting

16 October 2023

jerseyauditoffice.je  R.153/2023

Contents

Summary  3

Introduction  3 Key Findings  4 Conclusions  5

Objectives and scope of the review 6

Detailed findings  7

Overall content  7

Timeliness of publication of annual reports 11

Performance reports 13

Accountability reports 15

Overall Good Practice Principles 18

Setting requirements for annual reporting 21 Appendix One – Annual reports and accounts reviewed 31 Appendix Two – Scoring methodology for 2022 annual reports 36 Appendix Three – Summary of Recommendations 46

Summary

Introduction

1. An annual report is 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 each year since 2020 I have published a report on Annual Reporting accompanied in each year by a Good Practice Guide. I have also sought to encourage and to share best practice through delivery of workshops, the publication of Frequently Asked Questions (FAQs) and the publication of Annual Report Self-Assessment Tools.
3. Consistent with my 2020, 2021 and 2022 reviews, for this 2023 report I have reviewed the annual reports and, where available publicly, the annual accounts produced by the States of Jersey and by Jersey entities that are either:

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

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

4. I have reviewed 38 annual reports for 2022 that were published by 31 July 2023. The full list of annual reports I have considered since 2020 is set out in Appendix One. I have considered the content of all the annual reports and accounts reviewed against a set of criteria that encompassed:

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

• essential elements of a good annual report; and

• over-arching principles for good public reporting.

5. The scoring methodology for assessing 2022 annual reports is set out in Appendix Two.
6. To assist entities in improving their performance I am also publishing a third Good Practice Guide updated for 2023 that draws out examples from the better performing entities.

Key Findings

7. In each of the last three years I have reported that annual reports of States controlled and States established entities have been getting better. This trend has continued for a fourth year. For 65% of 2022 annual reports I have reviewed I have noted improvements. As a result, in overall terms:

• 76% of 2022 annual reports now have good or fair content compared to best practice (66% for 2021); and

• 82% of 2022 annual reports are good or fair compared to best practice principles (79% for 2021).

8. The States of Jersey are making progress in implementing the wider recommendations from my 2022 report. However further work is still required to:

• set out minimum annual reporting requirements for States controlled and States established entities; and

• implement sustainability reporting.

9. Larger entities are able to devote greater resources to preparing their annual reports and they tend to be glossier and more attractive to read. Typically, they include more best practice content than I have found in those of smaller entities. However:

• this is sometimes in addition to existing content and can make annual reports overly long and complex; and

• some smaller entities succeed in providing best practice content whilst keeping their annual reports relatively brief.

10. Performance reports are generally stronger than accountability reports within annual reports. The key area for improvement in accountability reports concerns staffing issues, particularly remuneration of board members and of senior staff at smaller entities.
11. There has been little change in the timeliness of the publication of annual reports. Where reporting deadlines are set, 77% of entities met their deadline (75% for 2021 reports).
12. The States of Jersey have made improvements to their own annual report. I assessed the 2022 annual report as good. However, I note two important areas of inconsistency that need to be addressed:

• as in previous years, the States of Jersey are not required by the Jersey Financial Reporting Manual (JFReM) to consolidate all of their subsidiaries into their Group financial statements. The JFReM requirements are not compliant with International Financial Reporting Standards. The States of Jersey are aware of this and are working towards compliance in future years. Out of seven subsidiaries that are material to the States of Jersey Group, only three are consolidated; and

• there is an opportunity to enhance further the public financial reporting by Government departments.

Conclusions

13. I am pleased to see year-on-year improvements in the annual reports of States controlled and States established entities that I have reviewed. I encourage these entities to consider how to address the matters raised in this report and to use my updated Good Practice Guide to make further improvements.
14. I am also pleased to see progress made by the States of Jersey in improving their own annual report and in implementing some of my wider recommendations from 2022. Appendix Three consolidates recommendations from my previous reviews with those arising from issues identified in this report. I will continue to monitor the progress being made to address these recommendations.

Objectives and scope of the review

15. The review has evaluated the 2022 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

• over-arching principles for good public reporting.

16. These criteria and the scoring methodology are set out in Appendix Two.
17. The review sought to identify the progress being made by entities in improving their annual reporting. It also sought to identify and share good practice through the publication of an updated Good Practice Guide.

Detailed findings

Overall content

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

Accessibility Understandable

Performance Report  Financial Statements

 Strategy

Prepared under a suitable framework

 Risks

Suitably assured

 Operations

 Performance analysis

 Financial performance

Source: Jersey Audit Office

19. Entities need to adapt good practice to their circumstances. For example:

• where entities are not required to prepare financial statements, I would expect annual reports to present other relevant financial information

• exceptionally, where an entity has no income and expenditure, for example because costs are incurred by a third party, I would expect this to be explained; and

• where an entity does not engage any staff, for example because services are contracted out, I would expect the annual report to set out the arrangements that are in place.

20. Of the annual reports reviewed for 2022, 79% included information on performance, accountability and (where relevant) finances. This represents a significant improvement compared to 2019 and 2020 and is a further improvement compared to 2021 annual reports (see Exhibit 2).

Exhibit 2: 2022 annual reports including information on performance, accountability and (where relevant) finances

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2019 2020 2021 2022

All relevant elements reported One or more relevant elements missing

Source: Jersey Audit Office analysis of annual reports

21. In each of the last three years I have reported that annual reports of States controlled and States established entities have been getting better. This trend has continued for a fourth year:

• 65% of entities improved the content of their 2022 annual reports compared to 2021, with 21% making significant improvements; and

• 76% of entities now produce an annual report with content I judge as fair or good compared to best practice (see Exhibit 3).

Exhibit 3: Overall assessment of the content of annual reports 2019 to 2022

100% 90% 80% 70% 60%

50% 40% 30% 20% 10% 0%

2019 2020 2021 2022

Good Fair Poor Very poor

Source: Jersey Audit Office analysis of annual reports

22. As for 2020 and 2021 annual reports, entities generally made improvements to their 2022 annual reports by retaining the same structure and style as in previous years and seeking compliance with good practice by including additional content.
23. While including additional content typically provides more complete and useful information, entities also need to ensure that they consider the needs of their stakeholders:

• larger entities, especially those with glossy and detailed annual reports, may need to review how they tell the story of the year. For example, could the key issues be presented more effectively and succinctly?

• smaller entities may need to pay particular attention to proportionality when applying best practice. For example, if an entity's governance arrangements are straightforward, it may be sufficient to describe these more simply, and in less detail, than larger entities with more complex arrangements

• many reports would benefit from better signposting, especially the larger and more complex annual reports. For example, few annual reports provide an overview of key sections to explain their purpose and summarise key messages; and

• few performance and accountability reports are signed and dated by the chief executive, accountable officer or equivalent.

24. Exhibit 4 sets out how three entities made significant improvements to their 2022 annual reports.

Exhibit 4: Entities making significant improvements

Entity  Areas of improvement

Jersey Sport  The Jersey Sport annual report has, for many years, been attractively

presented, easy to read and informative.

The 2022 annual report builds on this strong base by setting out more clearly key information such as Jersey Sport's strategy, key objectives, risks and performance.

As a result, it is easier to understand what Jersey Sport is trying to achieve and the progress it has made during the year.

JT  Until 2021, JT produced two public reports: one was focussed

primarily on the financial statements, the other on performance and corporate governance issues.

For 2022, these were brought together in a single report that provides an overview covering all three areas. As a result, it is easier for stakeholders to gain an understanding of JT's story for the year.

Jersey Legal  The 2021 JLIB annual report comprised the audited accounts and a Information  single narrative commentary covering aspects relating to performance Board (JLIB)  and accountability.

For the most part, the 2022 annual report retains a similar narrative style but makes significant improvements by structuring its contents around good practice and providing additional information in line with my Good Practice Checklist. For a small entity, the accountability section is particularly impressive, especially the clear remuneration and staff report.

Source: Jersey Audit Office analysis of 2021 and 2022 annual reports

Timeliness of publication of annual reports

25. There was little change in respect of timeliness of publication of annual reports for 2022.
26. For 2022, one half of entities reported in the same month as for 2021, one quarter reported in an earlier month and one quarter in a later month (see Exhibit 5).

Exhibit 5: Reporting dates for 2022 annual reports compared to 2021 annual reports

Reported in a later  Reported in an month earlier month

25% 25%

Reported in the same month 50%

Source: Jersey Audit Office analysis of 2021 and 2022 annual reports

27. For those entities with annual reporting deadlines,there was a slight improvement in the percentage of entities that met their deadline (see Exhibit 6).

Exhibit 6: Annual reports published within deadlines

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2019 2020 2021 2022

Deadline met Deadline missed

Source: Jersey Audit Office analysis of 2019 to 2022 annual reports

Performance reports

28. Performance reports should be:

• balanced, fair and understandable; and

• tell the full story of an entity, including both positive and negative aspects of performance.

29. For 2021, I assessed 66% of performance reports as good or fair which was a marked improvement from previous years. For 2022 annual reports, I updated my methodology for assessing performance reports. This means that the results are not directly comparable to prior years. However, it is clear that performance reports have continued to improve. Using the updated methodology:

• 84% of performance reports are good or fair compared to the minimum content I would expect to be reported (see Exhibit 7); and

• 71% of performance reports are good or fair when compared to best practice (see Exhibit 8).

Exhibit 7: 2022 performance reports compared to minimum standards

Very poor 3%

Poor 13%

Good 55%

Fair 29%

Source: Jersey Audit Office analysis of 2022 annual reports

Exhibit 8: 2022 performance reports compared to best practice

Very poor 16%

Good 37%

Poor 13%

Fair 34%

Source: Jersey Audit Office analysis of 2022 annual reports

30. The main areas that improved during 2022 annual reporting

• clearer descriptions of organisational priorities

• fuller discussion of risks facing the entity; and

• more explicit analyses of performance against priorities.

are similar to 2021:

31. These remain the key areas to address for those entities I assess as having poor and very poor performance reports.
32. There is also scope for further improvements to performance reports, including for those assessed as fair or good. The key areas are:

• quantifying performance measures and risks and showing how they align with the entity's strategy and priorities

• being clearer as to whether or not performance is satisfactory and what action is being taken to address poor performance; and

• discussion of the entity's operating model and how it achieves value for money.

Accountability reports

33. Accountability reports should be signed and dated by the chief executive, accountable officer 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.

34. Entities should provide at least a short overview of these sections and explain how they contribute to the entity's accountability and practice in the context of corporate governance norms and codes.
35. For 2021 annual reports, I assessed 58% of accountability reports as good or fair which represented an improvement from previous years. For 2022, I updated my methodology for assessing accountability reports which means the results are not directly comparable to prior years. However, there were undoubtedly further improvements made by entities in accountability reporting in 2022 annual reports. The results from my assessments using the revised methodology are:

• 81% of 2022 accountability reports are good or fair compared to the minimum content I would expect to be reported (see Exhibit 9); and

• 63% of 2022 accountability reports are good or fair when compared to best practice (see Exhibit 10).

Exhibit 9: 2022 accountability reports compared to minimum standards

Very poor 8%

Poor 11%

Good 60%

Fair 21%

Source: Jersey Audit Office review of 2022 annual reports

Exhibit 10: 2022 accountability reports compared to best practice

Very poor

16%

Good 24%

Poor 21%

Fair 39%

Source: Jersey Audit Office review of 2022 annual reports

36. The rate of improvement for accountability reports is slower than for other elements of the annual report. 19% of 2022 accountability reports are still poor or very poor compared to minimum standards and 37% are poor or very poor compared to best practice.
37. The key areas where accountability reports fall short of best practice are:

• staff reporting and disclosure of remuneration of board members and of senior officers

• disclosure of potential conflicts of interest of board members and senior officers (this is in addition to the process for managing conflicts which is often well described); and

• highlights of the board and committee reports, an assessment of the board's performance and the actions being taken to make improvements.

38. Overall, there was an improvement in the information provided on staff and remuneration. However, in my view this continues to be the most important area for improvement, particularly for smaller entities. I repeat the comments I made in my 2022 report:

• staff and remuneration reporting is fundamental to ensuring transparency and accountability of public entities

• balancing transparency with protecting information relating to individuals is challenging and this is an important area for the States of Jersey to consider in setting any minimum requirements; and

• until the States of Jersey set out their minimum requirements for staff and remuneration reporting, improvements in accountability reports may remain limited.

Overall Good Practice Principles

39. There are, in my view, four overall principles for good practice in annual reports, as shown in Exhibit 11.

Exhibit 11: Overall principles for good practice annual reporting

  Supporting Accountability Transparency

• telling the story of the  •  frank and honest analysis organisation in a fair and

• consideration of the challenges

balanced way

an organisation is facing

• compliance with relevant  •  appropriate use of data; and reporting requirements; and

• quantification of risks and

• clear action points to take  performance measures. 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.

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 January 2022

40. These principles should be evident across the sections of the annual report.
41. The proportion of annual reports demonstrating fair or good compliance with best practice principles now stands at 82%. Compliance has improved markedly over the first three years of my review, with a further improvement for 2022 annual reports (see Exhibit 12).

Exhibit 12: 2019 to 2022 annual reports compared to best practice principles

100% 90% 80% 70% 60% 50%

40% 30% 20% 10% 0%

2019 2020 2021 2022

Good Fair Poor Very poor

Source: Jersey Audit Office review of 2019 to 2022 annual reports

Supporting Accountability

42. As reported in previous years:

• most annual reports tend to emphasise positive aspects of performance and would tell a more balanced story by discussing areas where performance has been disappointing

• some entities, particularly those with regulatory roles, report on their findings or observations of other bodies, but provide limited information about their own organisation; and

• most annual reports included actions for future years but these were sometimes not easy to identify or not clearly set out.

Transparency

43. Many annual reports provide a significant amount of information and discuss what entities have done, their challenges and the risks they face. However, it is not always clear whether entities have achieved what they set out to achieve,

performed well or managed their risks successfully. Transparent annual reports focus on communicating these messages effectively by, for example:

• providing a clear line of sight to show how activities, performance measures, challenges and risks are derived from strategic objectives

• quantifying performance measures and risks

• being clear about whether performance is satisfactory and risks have been addressed; and

• providing short but insightful narrative to help stakeholders understand the context of the information provided.

Accessibility

44. The best annual reports have clearly been designed with stakeholders in mind by, for example, providing short summaries to highlight important messages.
45. An increasing percentage of the annual reports reviewed provide a commentary on finances in addition to audited accounts or other financial statements. However, for 2022 annual reports reviewed I was unable to locate any meaningful financial information (whether published as part of the annual report or elsewhere) for five entities.

Understandable

46. As in previous years, reports were generally well written in plain English. More reports are using tables, graphs and infographics to enhance understandability. As I reported last year however, there is scope for more entities to adopt this approach.
47. Also as reported in previous years, there is scope for entities to improve signposting within their annual reports. This is particularly relevant for annual reports that rely primarily on text to communicate messages and as entities seek to include more information to meet best practice.

Setting requirements for annual reporting

48. In 2022 I consolidated the recommendations from all of my previous reports into five recommendations. The current status of the implementation of these recommendations is summarised in Exhibit 13.

Exhibit 13: Current status of previous consolidated C&AG recommendations

Recommendation Current status  Evaluation

R1 Finalise and set out  Recommendation accepted with  Progress is being minimum requirements for  target implementation date of 31  made.

annual reports and accounts  March 2024.

for States established and  The States are currently in the

States controlled entities. In  process of determining which

doing so, consider:  entities meet the definition of

• setting out different  States established and States

requirements depending  controlled.

on the nature and size of  Further work is then required to:

entities

• identify the Accountable

• specifying minimum  Officer holding lead

requirements for  responsibility

reporting on performance,

accountability and  include States established and

finances  States controlled entities in the

Accountable Officer

• requiring specific  appointment letters issued by

disclosures of  the Principal Accounting

remuneration of directors  Officer; and

and staff

• introduce requirements into

• for entities required to  the Public Finances Manual for

publish financial  Accountable Officers to take

statements:  steps to ensure that the States

• specifying the  controlled and States

accounting framework;  established entities for which

and  they are responsible meet

• specifying the degree  minimum annual reporting

of independent  standards.

assurance that should  Officers have reported that this

be provided over the  further work is on track.

financial statements;

and

• for all entities, setting out the requirements for making the annual report and accounts public.

R2 Introduce a requirement  Recommendation accepted with a  Progress is being for Statistics Jersey to  target date of December 2024.  made.

produce an annual report.  Legislation is required to effect

this change and is planned as part

of wider changes designed to

preserve the independence of

Statistics Jersey.

Reported by officers as being on track.

R3 Set out a public ambition  The States of Jersey annual  Good progress is and timetable for the  sustainability report is currently  being made. production of a States of  published as an appendix to the  Further work

Jersey annual sustainability  States of Jersey Annual Report  required to realise report. In doing so, consider: and Accounts.  the States'

• the Jersey Performance  The 2022 sustainability report was  ambitions over Framework and the  significantly improved from  the next two Taskforce on Climate- previous years and sets out the  years.

Related Financial  States of Jersey's ambition for

Disclosures (TCFD)  further improvements for

recommended disclosures sustainability reporting over the

• whether the sustainability  next two years'.

report should form part of

the States of Jersey

Annual Report and

Accounts or be a separate

report

• publishing targets alongside actual performance and comparative data with other jurisdictions where this is available; and

• the degree of independent assurance that should be provided over the data contained within the sustainability report.

R4 Set out minimum  Recommendation accepted with a  Limited progress requirements for sustainability  target date of December 2023. has been made. reporting by States  Limited progress is reported by

established and States  officers.

controlled entities. In doing

so, consider how to apply the

Jersey Performance

Framework and the TCFD

recommended disclosures.

For all entities:  

R5 Continue to improve  Good progress is annual reporting. In doing so,  Ytheear oentitn yeiesar im reviepwroeved ments across  being made.

consider:  demonstrated as set out

• any minimum  throughout this report. Implementation of requirements set out by  recommendations the States of Jersey R1 to R4 will support further

• how to improve reporting  improvements in on performance,  2023 annual accountability (including  reporting and director and staff  onwards. remuneration) and

finances

• how to use an appropriate  framework to improve  sustainability reporting;  and  

• other good practice  identified in this report  and my Good Practice  Guide.  

Source: Jersey Audit Office analysis

Reporting by the States of Jersey Group

49. The 2022 States of Jersey Group annual report was improved from 2021 and I assessed it as good in each of the areas I reviewed:

• overall content

• performance reporting

• accountability reporting; and

• best practice principles.

51. The improvement in performance reporting was particularly strong:

• all minimum performance reporting items were disclosed

• it was far easier to understand how the Common Strategic Policy drives activity; and

• information on performance targets and risk was more comprehensive.

51. I was also pleased to note that:

• the annual report was easier to navigate, for example through improved signposting of its content and publishing (and providing a link to) a separate document setting out Government department annual reports

• there was improved presentation of sustainability issues and extended sustainability reporting to include social issues; and

• the States of Jersey carried out a self-assessment of their 2022 annual report to identify areas for improvement in future years.

52. However, there are opportunities to improve further the financial reporting:

• at the States of Jersey Group level; and

• for Government departments, States controlled entities and States established entities.

53. As in previous years, and in line with the JFReM, the States of Jersey Group 2022 accounts consolidated three of their material subsidiaries, but not the States' four largest subsidiaries. Instead, the Group accounts include these subsidiaries at fair value. The States are aware that the current approach does not comply with International Financial Reporting Standards and intend to move to fully consolidated accounts on a staged basis from 2024.

54. Full consolidated accounts prepared on a consistent basis would provide better financial information to support policymakers and enhance scrutiny and accountability. Full consolidated accounts would also provide additional information to external users such as credit rating agencies.
55. The States have not yet prepared a project plan or a clear timetable to support their ambitions.
56. There is a lack of consistency in the financial reporting requirements of Government departments, States controlled entities and States established entities:

• the Statement of Outturn Against Approvals contained in the States of Jersey annual report shows how each department has performed against its budget. However the States do not set minimum requirements for more granular financial reporting in Government department annual reports. Such minimum requirements could, for example, set out requirements to report expenditure against budget at sub-head level; and

• as reported in my July 2023 Thinkpiece Mid-Term Reflections, there is a lack of consistency in the financial information that individual States established and States controlled entities are required to publish. For example:

• some entities, such as limited companies, are required to publish audited accounts that follow relevant accounting practice; and
• others are not required to prepare accounts or have no audit requirement.

57. In my view, all Government departments, States established and States controlled entities should disclose or publish relevant financial information to assist stakeholders in assessing the performance of the entity. Where financial transactions of an entity are included within the States of Jersey Accounts, the relevant financial information could be disclosed either within the States of Jersey Accounts or within the entity's own annual report, or both.

Recommendations for the States of Jersey

R1 Set out a project plan and timetable for the preparation and publication of full

consolidated States of Jersey Group accounts.

R2 Set out minimum requirements for more granular financial reporting in

Government department annual reports.  

Developments in sustainability reporting

58. The purpose of sustainability reporting is to encourage organisations to take positive action to address environmental, social and governance (ESG) issues by:

• setting out the organisation's ESG ambitions; and

• reporting the progress it is making in achieving these ambitions.

59. Sustainability reporting includes, but is wider than, reporting on climate change (see Exhibit 14).

Exhibit 14: Potential areas of sustainability reporting

Area  Potential reporting issues

Environment  Climate change

• Use of natural resources

• Polluting discharges

• Waste

• Biodiversity and ecosystem conservation

People    Employees and workforce

• Social matters

Human rights  Reporting criteria used  

• Supply chains

• High risk areas for civil and political rights

• Impacts on indigenous and local communities

• Conflict-affected areas

• Data protection

Anti-corruption  Commitment to fight against corruption

• Whistleblowing channels

General positive  Impact of products/services impacts  Opportunities

Source: Jersey Audit Office Annual Reporting Workshop 2022

60. There is a range of international frameworks in place and being developed. These include:

• Task force on Climate-related Financial Disclosures (TCFD) – created by the Financial Stability Board to improve and increase reporting of climate-related financial information

• International Sustainability Standards Board (ISSB) – established by the trustees of the International Financial Reporting Standard (IFRS) Foundation to develop reporting standards that will result in a high-quality, comprehensive global baseline of sustainability disclosures focussed on the needs of investors and the financial markets

• International Public Sector Accounting Standards Board (IPSASB) - develops accounting standards and guidance for use by public sector entities. IPSASB is currently researching and scoping public sector specific sustainability projects

• UN Sustainable Development Goals (SDGs) – in 2015 the UN published 17 SDGs in an urgent call for action by all countries in a global partnership. The SDGs recognise that ending poverty and other deprivations must go hand-in- hand with strategies that improve health and education, reduce inequality and spur economic growth – all while tackling climate change and working to preserve our oceans and forests; and

• Global Reporting Initiative (GRI) – the GRI publishes standards for sustainability reporting that are designed to be used by any organisation regardless of size or sector.

61. The States of Jersey have developed their own Performance Framework (Exhibit

15). This comprises a set of measurements by which the Island's progress towards sustainable wellbeing goals can be judged. The Framework consists of two parts:

• Island outcome indicators; and

• service performance measures.

Exhibit 15: Jersey Performance Framework (Island Outcomes and Sustainable Wellbeing)

Source: Government of Jersey

62. The States of Jersey have not set out minimum reporting requirements for entities in respect of sustainability. However, 23 out of the 38 annual reports reviewed for 2022 refer to climate change or sustainability issues. This compares to 21 out of 38 for 2021 (see Exhibit 16).

Exhibit 16: Annual reports referring to climate change/sustainability issues and relevant reporting frameworks

25 20 15 10 5 0

Climate Jersey Performance TCFD UN SDGs change/sustainability Framework

2022 2021

Source: Jersey Audit Office analysis of 2021 and 2022 annual reports

63. Although this increase is modest, I also noted that the quality of the climate and sustainability reports was generally higher in 2022, with eight annual reports referring to the Jersey Performance Framework compared to just one in 2021 annual reports. Some entities noted that they were looking to develop and improve reporting on climate and sustainability in future years.
64. In the absence of minimum sustainability reporting requirements, it is pleasing to see improvements by some entities on a voluntary basis. In my view, however, unless minimum sustainability reporting requirements are established by the States of Jersey there is a risk that entities may not implement improvements to reporting at an appropriate pace.

Appendix One

Annual reports and accounts reviewed

The reviews for each year encompassed a desk-based evaluation of the latest published annual reports and financial statements of the following entities available at the time of the fieldwork. For the 2022 annual reports, I reviewed annual reports available at 31 July 2023. The criteria used are set out in Appendix Two.

Years reviewed Documents

Entity

reviewed

2019  2020  2021  2022 Andium Homes  Annual Report        

Bureau des Iles

Not available in Anglo -

any year Normandes

Care  Annual Report       Commission

Channel Islands  Not available in

Brussels Office  any year

Charity  Annual Report         Commissioner

Charity Tribunal  Annual Report     Children's  Performance  For 2018      

Commissioner  Report   to 2019

Complaints  Not available in Panel  any year

Criminal Injuries

Three year  For 2016 Compensation

report  to 2018 Board

Jersey Office of

Data Protection  the Information         Authority  Commissioner

Annual Report

Annual report

Digital Jersey  and financial        

statements

Director of Civil  the States         Aviation

Assembly

Financial

Services  Annual Report       Commission

Financial

Services  Annual Report         Ombudsman

Gambling  Annual Report         Commission  and Accounts

Government of

Jersey London  Financial    

Statements

Office

Independent

Prison  Annual Report         Monitoring

Board

Jersey Advisory

and Conciliation  Annual Report         Service

Jersey

Appointments  Annual Report         Commission

Jersey Bank  Annual Report  For year  For year  For year  For year Depositors  and Audited  to 31  to 31  to 31  to 31 Compensation  Financial  January  January  January  January Scheme  Statements  2019  2021  2022  2023

Jersey Business   Annual Report        

and Accounts

Jersey

Competition  Annual Report         Regulatory  and Accounts

Authority

Jersey

Consumer  Annual Report  For 2018  

Council

Jersey Electricity  Annual Report        

and Accounts

Jersey

Employment

and  Annual Report         Discrimination

Tribunal

Jersey Finance  Annual Report      

Jersey Heritage  Annual Report   and the Archivist

Jersey Law  Not available in Commission  any year

Jersey Legal  Annual Report

Information  and Financial         Board  Statements  

Jersey Overseas  Annual Report  For 2018     Aid Commission

Jersey Post

International  Business Review  For 2018       Limited

Jersey

Probation and  Aanndn Straual Repotegic rt     After-Care

Priorities

Service

Jersey

Resolution  Annual Report   Authority

Jersey Sport  Annual Report  For 2018       Jersey Teachers'

Superannuation  Annual Report         Fund

Annual Report

and

JT  consolidated        

financial

statements

For year

Jersey Water  Aanndn Fualin Repoancialrt  to 30      

September

Statements

2019

Mental Health  Not available in Tribunal  any year

Multi-Agency

Public  Annual Report    

Protection

Arrangements

Office of the

Comptroller and  Annual Report      

and Accounts

Auditor General

Police

Complaints  Annual Report         Authority

Ports of Jersey  Annual Report         Prison Service  Annual Report  

Public

Employees'  Annual Report         Pension Fund

Public Lotteries  Report  

Safety Council  Financial      

Statements  

States Assembly  Annual Report      

States

Employment  Annual Report         Board

States of Jersey  Annual Report        

and Accounts

Annual Report

States of Jersey  and

Development  Consolidated         Company  Financial

Statements

States of Jersey  Annual Report   For 2018  

Police

Not required to Statistics Jersey  produce an

Annual Report

Tenancy  Not available in Deposit Scheme  any year

Annual Report

Visit Jersey  and financial        

statements

Appendix Two

Scoring methodology for 2022 annual reports

Throughout this report I have categorised annual reports as Good', Fair', Poor' or Very Poor'. The categorisation is based on the following boundaries:

• Good = 75% or more of the relevant score available

• Fair = 50% to 74% of the relevant score available

• Poor = 25% to 49% of the relevant score available; and

• Very poor = less than 25% of the relevant score available.

The scoring methodology for individual 2022 annual reports is set out in the following tables.

Overall Content

Criteria  Mark  Guidance notes

available

1. The annual report and accounts  Good practice annual reports typically include:  set out three distinct sections.

• a performance report However, provided all three areas are covered and are easily identifiable,

• an accountability report; and alternative structures may be

• the financial statements. appropriate.

Where entities are not required to

2 to 3

publish audited financial statements, other relevant financial information should be provided (for example an income and expenditure statement).

Exceptionally, where the entity has no income or expenditure, this section should be marked out of two.

Total for overall content 2 to 3

Performance Report - minimum

Criteria  Mark  Guidance notes

available

2. Performance reporting is fair,

1

balanced and understandable.

3. The performance report tells the  This should include both positive andfull story of the entity.  negative aspects of how the entity

has performed across the year, so

1  that users can have confidence in any

judgements and so that it is clear that reporting is trustworthy and transparent.

4. The annual report demonstrates  This is typically achieved by the most that the Accountable Officer,  senior executive officer signing and Chief Executive, or equivalent  dating:

1

has taken ownership of the  a distinct performance report; or reporting of performance.

• the annual report as a whole.

5. The performance report  A going concern statement is only contains:  required where there are reasons for

• a statement of purpose going concern to be called into doubt. This means that for most

• a statement from the lead  entities this section should be Minister, Chief Executive or  marked out of seven.

equivalent setting out their

Exceptionally, where an entity has no perspective on how the entity

income or expenditure, a financial has performed

review may also not be required. In

• the key issues and risks that  such cases this section should be could affect the entity in  marked out of six.

delivering its objectives

• a performance analysis

showing performance  6 to 8 against priorities (and any

other organisational strategic

objectives and goals)

• information on environmental matters

• other non-financial information such as social responsibility, respect for human rights, anti-corruption and anti-bribery matters and diversity

• a financial review; and

available

• where relevant, an explanation of the adoption of the going concern basis.

Total for Performance Report

9 to 11 minimum

Performance Report – best practice

Criteria  Mark  Guidance notes

available

8. Operations:  Discussion of the delivery model

• discussion of the entity's  should describe how the entity

delivers its activities (for example in - delivery model

house teams, contractors). It may also

• narrative around how  include discussion of:

business operations support

wider Government (or other)  the reason for using the entity's

delivery model

objectives

• for significant contracted-out  how it achieves value for money; and

services, discussion of how  2 to 4

these contracts are awarded  different delivery models.

and how the entity manages  Where there are no significant

the ongoing contract; and contracted out services, the mark

• consideration of capital  available for this section should be investment and how it  reduced by one.

achieves value for money. Where there is no capital investment

(or any capital investment is not material) the mark awarded for this section should be reduced by one.

9. Measures of success:

• quantified key performance indicators (KPIs) aligned to strategic objectives

• balanced assessment of  3 goals achieved and

performance against targets;

and

• graphics used to illustrate performance.

10. Financial performance: Exceptionally, where the entity has no

• an understandable and fair  income or expenditure, this section is reflection of financial  not marked.

performance which is

consistent with the

underlying financial  0 to 2

statements; and

• discussion of actual performance against expected/budgeted performance.

Criteria  Mark  Guidance notes

available

11. External factors:  External drivers might include the

• an annual report that  cost of living crisis, the UK's EU exit and the continuing impact of the

considers the external

COVID-19 pandemic.

drivers that influence and

impact on current objectives;  2

and

• innovative reporting on sustainability and climate change.

Total for Performance Report -

16 to 20 best practice

Accountability Report – minimum

Criteria  Mark  Guidance notes

available

12. The annual report demonstrates  This is typically achieved by the most that the Accountable Officer,  senior executive officer signing and Chief Executive, or equivalent  dating:

1

has taken ownership of  a distinct accountability report; or accountability reporting.

• the annual report as a whole.

13. The accountability report  Good practice annual reports includes information on: typically set out this information in

• the governance structure  two distinct reports on:

• the board's (or equivalent)  corporate governance; and commitment to high  remuneration/staffing

standards of governance However, provided all issues are  how the board (or  4 to 5  covered and are easily identifiable, equivalent) works effectively  alternative structures may be

to govern the entity appropriate.

• remuneration of board  Where an entity has no staff or members (or equivalent) and  equivalent, this section should be other senior staff; and marked out of four.

• staffing or equivalent (such as a contracted-out workforce).

Total for Accountability Report

5 to 6

- minimum

Accountability Report – best practice

Criteria  Mark  Guidance notes

available

and safety at work, trade  prefer to provide a commentary on union relationships and  key issues such as gender balance. human capital management

(for example career

management and

employability, pay policy);

and

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

19.  For entities that do not employ  This section applies only to entities any staff the annual report sets  that do not employ any staff. out clearly:

• that it does not employ any staff; and

• how the entity carries out its

activities (for example all  0 to 2 activities delivered by board

members, staff provided by

the Government of Jersey,

appointment of

contractors/affiliates, use of

volunteers)  

Total for Accountability Report

13 to 21

- best practice

Best Practice Principles

Appendix Three

Summary of Recommendations

I have made two recommendations for the States of Jersey in this report:

R1  Set out a project plan and timetable for the preparation and publication of full

consolidated States of Jersey Group accounts.

R2  Set out minimum requirements for more granular financial reporting in

Government department annual reports.

In 2022, I consolidated my recommendations from all of my previous reports on annual reporting into five recommendations. These recommendations remain relevant, and their current status is set out below.

Recommendation Current status  Evaluation

R1 Finalise and set out  Recommendation accepted with  Progress is being minimum requirements for  target implementation date of 31  made.

annual reports and accounts  March 2024.

for States established and  The States are currently in the

States controlled entities. In  process of determining which

doing so, consider: entities meet the definition of

• setting out different  States established and States

requirements depending  controlled.

on the nature and size of  Further work is then required to:

entities

• identify the Accountable

• specifying minimum  Officer holding lead

requirements for  responsibility

reporting on

performance,  include States established and

accountability and  States controlled entities in the

finances  Accountable Officer

appointment letters issued by

• requiring specific  the Principal Accounting

disclosures of  Officer; and

remuneration of directors

and staff  introduce requirements into

the Public Finances Manual for

• for entities required to  Accountable Officers to take

publish financial  steps to ensure that the States

statements:  controlled and States

• specifying the  established entities for which

accounting  they are responsible meet

framework; and  minimum annual reporting

• specifying the degree  standards.

of independent

assurance that should

be provided over the  Officers have reported that this financial statements;  further work is on track.

and

• for all entities, setting out the requirements for making the annual report and accounts public.

R2 Introduce a requirement  Recommendation accepted with a  Progress is being for Statistics Jersey to  target date of December 2024. made.

produce an annual report. Legislation is required to effect this

change and is planned as part of

wider changes designed to

preserve the independence of

Statistics Jersey.

Reported by officers as being on track.

R3 Set out a public ambition  The States of Jersey annual  Good progress is and timetable for the  sustainability report is currently  being made. production of a States of  published as an appendix to the  Further work Jersey annual sustainability  States of Jersey Annual Report and  required to realise report. In doing so,  Accounts.  the States'

consider:  The 2022 sustainability report was  ambitions over

• the Jersey Performance  significantly improved from  the next two Framework and the  previous years and sets out the  years.

Taskforce on Climate- States of Jersey's ambition for

Related Financial  further improvements for

Disclosures (TCFD)  sustainability reporting over the

recommended  next two years'.

disclosures

• whether the sustainability report should form part of the States of Jersey Annual Report and Accounts or be a separate report

• publishing targets alongside actual performance and comparative data with other jurisdictions where this is available; and

• the degree of independent assurance that should be provided over the data contained within the sustainability report.

R4 Set out minimum  Recommendation accepted with a  Limited progress requirements for  target date of December 2023. has been made. sustainability reporting by

States established and States  Limitofficeerds. progress reported by

controlled entities. In doing

so, consider how to apply the

Jersey Performance

Framework and the TCFD

recommended disclosures.

For all entities:

R5 Continue to improve  Year on year improvements across  Good progress is annual reporting. In doing  the entities reviewed  being made.

so, consider:  demonstrated as set out  Implementation of

• any minimum  throughout this report. recommendations requirements set out by  R1 to R4 will the States of Jersey support further

• how to improve reporting  improvements in 2023 annual

on performance,

reports and accountability (including

onwards. director and staff

remuneration) and

finances

• how to use an appropriate framework to improve sustainability reporting; and

• other good practice identified in this report and my Good Practice Guide.

49 | Annual Reporting