Transparency and Excellence in Annual Reporting

27 September 2024

jerseyauditoffice.je  R.152/2024

The purpose of the Comptroller and Auditor General (C&AG), fulfilled through the Jersey Audit Office (JAO), is to provide independent assurance to the people of Jersey on the extent to which public money is spent economically, efficiently and effectively and on whether the controls and governance arrangements in place within public bodies demonstrate value for money. The C&AG's remit includes the audit of financial statements and wider consideration of public funds, including internal financial control, value for money and corporate governance.

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Report by the Comptroller and Auditor General: 27 September 2024

This report has been prepared in accordance with Article 20 of the Comptroller and Auditor General (Jersey) Law 2014.

Contents

Summary  4

Introduction  4 Key findings  5 Conclusions  6

Objectives and scope of the review 7

Detailed findings  8

Overall content  8

Timeliness of publication of annual reports 13

Performance reports 14

Accountability reports 16

Overall Good Practice Principles 21

Setting requirements for annual reporting 24

Reporting for the States of Jersey Group 27

Developments in sustainability reporting 29 Appendix One – Annual reports and accounts reviewed 32 Appendix Two – Scoring methodology for 2023 annual reports 37 Appendix Three – Sustainability Frameworks and the Jersey Performance Framework 49 Appendix Four – Summary of Remaining Open Recommendations 51

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 and feedback sessions, the publication of Frequently Asked Questions (FAQs) and the publication of Annual Report Self-Assessment Tools.
3. Consistent with previous reviews, for this 2024 report I have reviewed the annual reports and, where available publicly, the annual accounts produced for the States of Jersey Group and by Jersey entities that are either:

• identified in the States of Jersey Group 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 40 annual reports for 2023 that were published by 31 July 2024. The full list of annual reports I have considered in each of the years 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 encompasses:

• 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 2023 annual reports is set out in Appendix Two.
6. To assist entities in improving their performance I am also publishing an updated Good Practice Guide updated for 2024 that draws out examples from the better performing entities.

Key findings

7. In each of the last four years I have reported that annual reports of States controlled and States established entities have been getting better. This trend has continued for a fifth year. For the 2023 annual reports I noted there are improvements in 65% of entities reviewed. However the rate of improvement is slowing.
8. In overall terms 75% of 2023 annual reports reviewed were judged as good or fair against the best practice standards and principles that I have identified (30 out of 40 entities reviewed). This compares to 76% of 2022 annual reports reviewed (29 out of 38 entities reviewed).
9. Performance reports continue to be stronger than accountability reports within annual reports. The key area requiring improvement in many accountability reports remains the reporting of staffing matters, particularly remuneration of board members and of senior staff in smaller entities. I note that some entities have particular concerns about data protection, and risks around sharing personal data. However, while some entities disclose this as a reason for not sharing data, others are silent on their reasons for not including information on staff composition, staff policies or other employee matters, such as whether or not the entity employs staff.
10. As noted in my report last year, larger entities can have the ability to devote greater resources to preparing their annual reports. However, my analysis this year shows there is no consistent link between the size of the entity and how closely the content of its annual report matches the good practice principles I have adopted in my assessment. Half of the smaller entities achieve a score of good or fair. However the challenge for smaller entities is to consider how they can improve the content and accessibility of their annual reports within the resources available to them.
11. Six of the entities reviewed missed their 2023 annual report deadlines. Two published their reports within a month of the deadline, one within two months of the deadline and three within three months of the deadline. Four of these six entities have a reporting deadline of 31 March with the remaining two entities having a reporting deadline of 30 April. Five of the six entities also missed their reporting deadlines for their 2022 annual reports. My overall assessment of the 2023 annual reports of five of these entities was either good or fair.
12. Some progress has been made in implementing the wider recommendations from my previous reports. In addition, the 2023 States of Jersey Group Annual Report and Accounts has continued to improve. The inclusion of an In Brief' section, structured around the three sustainable wellbeing themes of the Island Outcomes

as well as corporate performance, includes both positive and negative success measures.

13. There is an ongoing global focus on reporting of sustainability in its widest sense, to encourage entities to take positive action to address environmental, social and governance (ESG) issues. I updated the criteria I use to assess the quality of sustainability disclosures in my review of the 2023 annual reports. I noted a small increase in the number of entities (25 of 40 reports reviewed) referring to climate and sustainability issues, but there is more that can be done to improve reporting on ESG issues.

Conclusions

14. I am pleased to see that the improvement I have noted in prior years in the annual reports of States controlled and States established entities has mostly been maintained, and, in a number of reports, incrementally enhanced. However, the rate of improvement has slowed, and I encourage entities to consider how to address the matters raised in this report and use my Good Practice Guide to make further improvements. This should not necessarily mean adding to the length of reports, but stepping back to evaluate whether the annual report provides a fair, balanced and understandable assessment of what the entity does, and how it achieved its objectives during the year.
15. I am also pleased to note the progress made by the States of Jersey in implementing my recommendations from previous reports. I will continue to monitor progress, particularly in relation to setting minimum requirements for annual reporting, including sustainability reporting, in States controlled and States established entities.

Objectives and scope of the review

16. The review has evaluated the 2023 annual reports of the States of Jersey Group, 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.

17. These criteria and the scoring methodology are set out in Appendix Two.
18. 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

19. Exhibit 1 summarises the key elements I consider to be good practice in a 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

20. 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 or 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.

21. I reviewed the 2023 annual reports for 40 entities. This compares with 38 entities reviewed for my 2023 report. The annual report for one entity reviewed in the prior year was not available by 31 July 2024 but the 2023 annual reports of three additional entities were reviewed.
22. Of the annual reports reviewed, 78% included information on performance, accountability and (where relevant) finances. This is similar to the previous year (79%) even though the specific entities reviewed have changed (Exhibit 2).

Exhibit 2: 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 2023 All relevant elements reported One or more relevant elements missing

Source: Jersey Audit Office analysis of annual reports

23. 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:

• 70% of entities maintained or improved the content of their 2023 annual reports compared to 2022, with 5% making significant improvements; and

• 75% of entities continue to produce an annual report with content I judge as good or fair compared to best practice standards and principles (see Exhibit 3).

Exhibit 3: Overall assessment of the content of annual reports 2019 to 2023

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

2019 2020 2021 2022 2023

Good Fair Poor Very poor

Source: Jersey Audit Office analysis of annual reports

24. I note, however, that the pace of significant improvement has slowed, and there are specific areas within annual reports where performance against best practice has also slowed. I cover these areas in more detail later in my report.
25. Last year I reflected that entities should ensure they consider the needs of their stakeholders when considering whether, and how, to add content to their annual report:

• larger entities may need to review how they tell the story of their year effectively and succinctly

• smaller entities may need to pay particular attention to proportionality when applying best practice

• many reports would benefit from better signposting, for example through 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.

26. These points remain relevant for those bodies where their annual report falls behind others.
27. The three entities that I considered to have the best overall 2023 annual reports are (alphabetically):

• Andium Homes

• Jersey Care Commission; and

• Jersey Electricity.

28. This year, I have analysed in Exhibit 4 below whether there is a correlation between the size of an organisation and the score achieved. For the purposes of this exercise, I grouped entities into the following groups by reported expenditure:

• Very large: expenditure greater than £100 million (labelled 4 in Exhibit 4)

• Large: expenditure from £10 million to £100 million (labelled 3 in Exhibit 4)

• Medium: expenditure from £1 million to £10 million (labelled 2 in Exhibit 4); and

• Small: expenditure less than £1 million, or no expenditure reported (labelled 1 in Exhibit 4).

29. My analysis in Exhibit 4 shows there is no obvious link between the size of the entity and how well the content of their annual report matches the good practice principles I have adopted in my assessment. For example, all bar one medium size organisations are marked as either good or fair. The challenge for smaller entities, although one half of all those bodies achieve a score of good, is to consider how they can improve the content and accessibility of their annual reports with more limited resources available to them.

Exhibit 4: Relationship between size of entity and overall score

4 100%

90%

80% 3

70%

60% 2 50%

40%

30% 1

20%

10% 0 0%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 Organisation size % score

Source: Jersey Audit Office analysis of 2023 annual reports

Timeliness of publication of annual reports

30. For 2023 annual reports, more than half of entities reported in the same month as for 2022 reports, 17% reported in an earlier month and 24% in a later month (see Exhibit 5).

Exhibit 5: Reporting dates for 2023 annual reports compared to 2022 annual reports

Reported in an Reported in a later  earlier month

month 17% 24%

Reported in the same month 59%

Source: Jersey Audit Office analysis of 2022 and 2023 annual reports

31. Six entities reviewed missed their 2023 annual report deadlines with two publishing within a month of the deadline, one publishing within two months of the deadline and the remaining three publishing within three months of the deadline. Four of these six entities have a reporting deadline of 31 March with the remaining two entities having a reporting deadline of 30 April. Five of the six entities also missed their reporting deadlines for their 2022 annual reports. My overall assessment of the 2023 annual reports of five of these entities was either good or fair.

Performance reports

32. Performance reports should be:

• balanced, fair and understandable; and

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

33. In my report last year, I noted that performance reports had continued to improve from previous years, despite the change in my methodology for assessing performance reports. My review of the 2023 reports, which included three that were not reviewed in the prior year, has shown a slight increase in the number of bodies being assessed as meeting good or fair minimum standards, but a reduction when compared to best practice:

• 85% of performance reports are good or fair (84% in the prior year) compared to the minimum content I would expect to be reported (see Exhibit 6); and

• 62% of performance reports are good or fair (71% in the prior year) when compared to best practice (see Exhibit 7).

Exhibit 6: 2023 performance reports compared to minimum standards

Very poor 0%

Poor 15%

Good 60%

Fair 25%

Source: Jersey Audit Office analysis of 2023 annual reports

Exhibit 7: 2023 performance reports compared to best practice

Very poor 15%

Good 22%

Poor 23%

Fair 40%

Source: Jersey Audit Office analysis of 2023 annual reports

34. As well as changes in the mix of the annual reports reviewed, I also changed the criterion for environmental, social and governance (ESG) issues which has impacted the scoring against best practice. I comment further on this later in my report.

Accountability reports

35. 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.

36. 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.
37. I revised my methodology for assessing accountability reports in the previous year. There continue to be improvements made by entities in accountability reporting in 2023 reports:

• 82% of accountability reports are good or fair (81% in the prior year) compared to the minimum content I would expect to be reported (see Exhibit 8); and

• 67% of accountability reports are good or fair (63% in the prior year) when compared to best practice (see Exhibit 9).

Exhibit 8: 2023 accountability reports compared to minimum standards

Very poor 8%

Poor 10%

Fair Good 15% 67%

Source: Jersey Audit Office analysis of 2023 annual reports

Exhibit 9: 2023 accountability reports compared to best practice

Very poor 15%

Good 27%

Poor 18%

Fair 40%

Source: Jersey Audit Office analysis of 2023 annual reports

38. I reported last year that the rate of improvement for accountability reports is slower than for other elements of the annual report. While there are small changes in the entities reviewed each year, 18% of 2023 accountability reports are poor or very poor compared to minimum standards (19% in the prior year) and 33% are poor compared to best practice (37% in the prior year).

39. While this demonstrates ongoing improvement, the key areas where accountability reports continue to 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 or stating there are none. I note that as last year, the process for managing conflicts can be 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.

40. I have undertaken further analysis this year to consider whether there is any evidence to suggest that the size of the entity, or type of entity, impacts the assessments in these areas, and specifically in relation to remuneration and staff reporting.
41. For the purposes of this analysis, I grouped entities by size as described earlier in this report. In addition, I grouped entities into two broad categories:

• Service delivery: entities that are delivering a service to Islanders; and

• Independent bodies and office holders: entities that are providing a regulatory or oversight function (excluding legal functions).

42. The average scores by size and type of delivery entity show that the large and medium sized independent bodies and office holders score most highly for remuneration and staff reporting (see Exhibit 10).

Exhibit 10: 2023 average scores for remuneration and staff reporting

100% 80% 60% 40% 20% 0%

Remuneration Staff reporting Very Large - delivery Large - delivery

Medium - delivery Small - delivery

Large and medium - independent Small - independent

Source: Jersey Audit Office analysis of 2023 annual reports

43. The reporting of information on staff and remuneration continues to be a significant area for improvement, and not just for the smaller bodies as demonstrated above. I repeat the comment made in my previous reports that staff and remuneration reporting is fundamental to ensuring transparency and accountability of public entities.
44. I acknowledge that there are valid concerns around data privacy, particularly for smaller bodies with few staff. However, while some entities disclose this as a reason for not sharing data, others are silent on their reasons for not including information on staff composition, staff policies or other employee matters, such as whether or not the entity employs staff.
45. Until the States of Jersey set out their minimum requirements for staff and remuneration reporting, improvements in accountability reports may remain limited. I understand that the Government is planning to update the Public Finances Manual to place additional responsibilities on Accountable Officers in respect of the annual reporting of Arm's Length Bodies.
46. The States of Jersey have also approved P.31/2023 that requires:

• the States Employment Board to publish annually:

• a breakdown of gender pay relative to salary bands for each Government department, commencing January 2024

• a breakdown of gender pay for full-time and part-time Government employees, commencing January 2024; and
• a report of the income ratio of the highest and lowest income earners within each Government department, commencing January 2024; and

• the Council of Ministers to encourage all Arm's Length Organisations and Specified Organisations (as defined in the Public Finances (Jersey) Law 2019) to publish their gender pay and income ratio information in a transparent manner as soon as practicable.

47. I consider these disclosures to represent best practice.

Overall Good Practice Principles

48. 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

49. These principles should be evident across the sections of the annual report.
50. The proportion of annual reports demonstrating fair or good compliance with best practice principles is in line with last year at 80%, with an increase in the proportion of entities scoring as good (see Exhibit 12).

Exhibit 12: 2019 to 2023 annual reports compared to best practice principles

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

10% 0%

2019 2020 2021 2022 2023

Good Fair Poor Very poor

Source: Jersey Audit Office analysis of 2023 annual reports

Supporting Accountability

51. I have previously reported that 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. I have noted in my review this year that a number of bodies have sought to provide a more balanced view, which is encouraging.
52. However, particularly for some smaller entities, the annual report does not clearly set out the purpose or strategy of the organisation. Without these key elements, it is more difficult to demonstrate compliance with best practice reporting requirements. For example, not all annual reports include the minimum content I have identified in relation to the accountability report.

Transparency

53. As I have previously reported, 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. This does not mean that reports need to get ever longer, but transparent annual reports

focus on clearly communicating these messages. I therefore repeat my commentary from last year about what organisations can do:

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

• quantify performance measures and risks

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

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

Accessibility

54. The best annual reports have clearly been designed with stakeholders in mind by, for example, providing short summaries to highlight important messages.
55. I was unable to locate any meaningful financial information published as part of the 2023 annual report for ten entities reviewed. It is important to provide a commentary on finances, in addition to audited accounts or other financial statements to explain how well the entity is managing its financial position.

Understandable

56. 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 remains scope for more entities to adopt this approach.

Setting requirements for annual reporting

57. In 2022 I consolidated the recommendations from all 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  Not

minimum requirements for  target implementation date of 31  implemented annual reports and accounts  March 2024.  Limited progress for States established and  The States are currently in the  has been made. 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 entities.

on the nature and size of  Further work will then be required

entities  to implement this

• specifying minimum  recommendation. This work is not

requirements for  currently being prioritised by the

reporting on performance,  Government.

accountability and

finances

• requiring specific disclosures of remuneration of directors and staff

• for entities required to publish financial statements:

• specifying the accounting framework; and
• specifying the degree of independent assurance that should be provided over the 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  Implementation for Statistics Jersey to  target date of December 2024. in progress produce an annual report. Legislation is required to effect  Progress is being

this change and is planned as part  made.

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 2023 sustainability report was Partially

and timetable for the  included in the 2023 States of  implemented production of a States of  Jersey Group Annual Report and  While the States Jersey annual sustainability  Accounts.  of Jersey have report. In doing so, consider: It takes into account the Jersey  developed their

• the Jersey Performance  Performance Framework and the  sustainability Framework and the Task UN Sustainable Development  reporting they Force on Climate-Related  Goals.  have not

Financial Disclosures  The report acknowledged there is  implemented the (TCFD) recommended  further work to do around setting  recommendation disclosures  metrics and targets, and in  in full.

• whether the sustainability  obtaining appropriate

report should form part of  comparative data.

the States of Jersey Group

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  Not requirements for sustainability  target date of December 2023. implemented reporting by States

established and States  Limited progress is reported by  Limithas beede pn romagresde.s controlled entities. In doing  ofpuficerbliclsy statealthoud gh t intentherione is toa

so, consider how to apply the  implement this recommendation.

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,  2024 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

58. I have included in Appendix Three of this report details of those recommendations that remain to be implemented.

Reporting for the States of Jersey Group

59. The 2023 States of Jersey Group annual report has continued to improve, and I assessed it as good in each of the areas I reviewed:

• overall content

• performance reporting

• accountability reporting; and

• best practice principles.

60. I noted last year that the performance report was particularly strong. The addition of an In Brief' section is a continued improvement. It has been structured around the three elements of the Jersey Performance Framework plus corporate performance and includes both positive and negative success measures. This structure followed through into the detailed performance report, making appropriate links to the Common Strategic Policy.
61. I was also pleased to note that sustainability reporting has continued to improve, alongside the use of the Jersey Performance Framework within the performance report. I note the sustainability report acknowledged there is further work to do around setting metrics and targets and identifying comparative data.
62. I recommended two areas for improvement in my last report. The current status of the implementation of these recommendations is summarised in Exhibit 14:

Exhibit 14: Current status of 2023 recommendations to the States of Jersey

Recommendation Current status  Evaluation

R1 Set out a project plan and  Recommendation accepted with a  Implementation timetable for the preparation  target date of June 2024.  in progress

and publication of full  Officers are currently discussing  Progress is being consolidated States of Jersey  options for the preparation and made.

Group accounts.   publication of consolidated

accounts with relevant parties.

R2 Set out minimum  Recommendation accepted with a  Implementation requirements for more  target date to implement for the  in progress granular financial reporting in  2024 accounts.  Progress is being Government department  Officers have identified the  made.

annual reports.  minimum requirement and are

currently deciding on the most

appropriate mechanism to

implement this.

Source: Jersey Audit Office analysis

63. I have included in Appendix Three of this report details of those recommendations that remain to be implemented.

Developments in sustainability reporting

64. 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.

65. Sustainability reporting includes, but is wider than, reporting on climate change (see Exhibit 15).

Exhibit 15: 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 2023

66. In my last report, I highlighted a range of international frameworks that are in place and being developed. I also referenced the Jersey Performance Framework which comprises a set of measurements by which the Island's progress towards sustainable wellbeing goals can be judged. Further details on these are included in Appendix Three for reference.
67. There has been a small increase in the number of annual reports that refer to climate or sustainability issues: 25 out of the 40 annual reports reviewed for 2023, compared to 23 out of 38 annual reports for 2022. I also noted a small increase in the number of bodies referring to the Task Force on Climate-related Financial Disclosures (TCFD) and the UN Sustainable Development Goals (UN SDGs) in the annual reports reviewed for 2023 (see Exhibit 16).

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

30 25 20 15 10 5 0

Climate Jersey Performance TCFD UN SDGs change/sustainability Framework

2023 2022 2021

Source: Jersey Audit Office analysis of 2021 to 2023 annual reports

68. I updated the criteria I use to assess the quality of ESG disclosures in my review of the 2023 annual reports (see Exhibit 17).

Exhibit 17: Assessment criteria for environment, social and governance issues

Assessment criteria

• Sustainability reporting considers environmental, social and governance issues

• Sustainability related information includes:

• governance arrangements around climate risks and opportunities

• strategy in respect of climate risks and opportunities

• how the entity identifies, assesses, and manages climate-related risks; and

• metrics and targets used to assess and manage relevant climate-related risks and opportunities;

• Annual report summarises the entity's

• performance against sustainability metrics and targets; and

• contribution towards a recognisable sustainability framework (such as the Jersey Performance Framework or UN Sustainable Development Goals; and

• Other external drivers that influence and impact on current objectives considered.

Source: Jersey Audit Office criteria

69. I have reviewed the results from my assessment of the 2023 annual reports to consider whether there are any notable trends in how well entities score against the above criteria. In general, the smaller entities provide less, or no, information on ESG issues compared to medium sized and larger entities (see Exhibit 18).

Exhibit 18: Average scores for ESG reporting in 2023 annual reports

100% 80% 60% 40% 20% 0%

ESG

Very Large - delivery Large - delivery Medium - delivery Small - delivery Large and medium - independent Small - independent

Source: Jersey Audit Office analysis

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 2023 annual reports, I reviewed annual reports available at 31 July 2024. The criteria used are set out in Appendix Two.

2023  Annual Reports reviewed

Entity  Documents

reviewed  2019  2020  2021  2022  2023 Andium Homes  Annual Report          

Bureau des Iles

Not available Anglo -

in any year Normandes

Care  Annual Report         Commission

Channel Islands  Not available

Brussels Office  in any year

Charity  Annual Report           Commissioner

Charity Tribunal  Annual Report       Children's  Performance  For 2018        

Commissioner  Report   to 2019

Criminal

Injuries  Annual Report  For 2016   Compensation  to 2018

Board

Jersey Office

of the

Data Protection  Information           Authority

Commissioner

Annual Report

Annual report

Digital Jersey  and financial          

statements

Annual Report

Director of Civil  to 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  Annual Report           Conciliation

Service

Jersey

Appointments  Annual Report           Commission

Jersey Bank  Annual Report  For year  For year  For year  For year  For year Depositors  and Audited  to 31  to 31  to 31  to 31  to 31 Compensation  Financial  Jan  Jan  Jan  Jan  Jan Scheme  Statements  2019  2021  2022  2023  2024

Jersey Business   Annual Report          

and Accounts

Jersey

Competition  Annual Report           Regulatory  and Accounts

Authority

Jersey

Teachers'  Annual Report           Superannuation

Fund

Annual Report

and

JT  consolidated          

financial

statements

Annual Report  For year

Jersey Water  and Financial  to 30 Sept      

Statements  2019

Mental Health  Not available Tribunal  in any year

Multi-Agency

Public  Annual Report    

Protection

Arrangements

Office of the

Comptroller  Annual Report         and Auditor  and Accounts

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  Annual Report      

Assembly

States

Employment  Annual Report           Board

Group Annual

States of Jersey  Report and          

Accounts

Annual Report

States of Jersey  and

Development  Consolidated           Company  Financial

Statements

States of Jersey  Annual Report   For 2018     Police

Not required Statistics Jersey  to produce an

Annual Report

Tenancy

Not available Deposit

in any year Scheme

Annual Report

Visit Jersey  and financial          

statements

Appendix Two

Scoring methodology for 2023 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 2023 annual reports is set out in the following tables.

Overall Content

Criteria  Mark  Guidance notes

available

Overall content

1. The annual report and  Good practice annual reports typically set out three accounts include: distinct sections. However, provided all three areas

• a performance  are covered and are easily identifiable, alternative structures may be appropriate.

report

• an accountability  Where entities are not required to publish audited 2 to 3  financial statements, other relevant financial

report; and

information should be provided (for example an

• the financial  income and expenditure statement).

statements.

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

Total for overall

2 to 3 content

Performance Report – minimum

Criteria  Mark  Guidance notes

available

Performance Report - minimum

2. Performance reporting is fair,

1

balanced and understandable.

3. The performance report tells the full  This should include both positive and story of the entity.  negative aspects of how the entity has performed across the year, so that

1  readers can have confidence in any

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

4. The annual report demonstrates that  This is typically achieved by the most the Accountable Officer, Chief  senior executive officer signing and Executive, or equivalent has taken  1  dating:

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

• the annual report as a whole.

6. The performance report contains: A going concern statement is only

• a statement of purpose required where there are reasons for going concern to be called into

• a statement from the lead  doubt. This means that for most Minister, Chief Executive or  entities this section should be marked equivalent setting out their  out of seven.

perspective on how the entity

Exceptionally, where an entity has no has performed

income or expenditure, a financial

• the key issues and risks that  review may also not be required. In could affect the entity in  such cases this section should be delivering its objectives marked out of six.

• a performance analysis showing  6 to 8 performance 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

Criteria  Mark  Guidance notes

available

Performance Report - minimum

• 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

Performance Report - best practice

6. Strategy:

• clarity around purpose, strategic objectives and key programmes/projects

• balanced view of progress against

4 objectives

• details of plans to implement priorities; and

• strategy clearly linked to performance measures and risks.

7. Risks:  

• clear articulation of the entity's risk  management process

• risks reflect the external environment and  implications for the entity

• clear links between risks, strategic  objectives and the annual report narrative  5  

• quantified risks and realistic planned and  implemented mitigations; and

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

8. Operations:  Discussion of the delivery

• discussion of the entity's delivery model model should describe how the entity delivers its

• narrative around how business operations  activities (for example in- support wider Government (or other)  house teams,

objectives  contractors). It may also

• for significant contracted-out services,  include discussion of: discussion of how these contracts are  2 to 4  the reason for using awarded and how the entity manages the  the entity's delivery

ongoing contract; and model

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

• different delivery models.

Criteria  Mark  Guidance notes

available

Performance Report - best practice

• metrics and targets used to assess and  Disclosures and The IFRS manage relevant climate-related risks  foundation.

and opportunities; The International

• annual report summarises the entity's Federation of

• performance against sustainability  Accountants has

metrics and targets; and published a sustainability

checklist for small and

• contribution towards a recognisable  medium enterprises. sustainability framework (such as the  States controlled and Jersey Performance Framework or UN  States established entities Sustainable Development Goals; and  may find this helpful.

• other external drivers that influence and  External drivers might impact on current objectives considered. include the cost of living crisis, international conflict and the continuing impact of issues such as the UK's EU exit and the COVID-19 pandemic.

Total for Performance Report - best practice  18 to 22

Accountability Report - minimum

Accountability Report – best practice

Criteria  Mark  Guidance notes

available

Accountability Report - best practice

14. Information provided on corporate  This information is governance includes a directors' report that  typically provided as a sets out:  directors' report (or

• the names of the Chair and Chief  equivalent). Alternative structures may be

Executive (or equivalent)

appropriate.

• the composition of the management

The management board board (or equivalent).

(or equivalent) may

• details of entity directorships and other  include advisory and/or significant interests held by members of  non-executive members. the management board (or equivalent)  It comprises those who which may conflict with their  have had authority or management responsibilities; and responsibility for

• information on personal data related  directing or controlling incidents where these have been  4  the major activities of the

formally reported to the Jersey Office of  entity during the year. the Information Commissioner or  This means those who confirmation that no incidents have  influence the decisions of been reported.  the entity as a whole,

rather than the decisions of individual directorates.

Entities may prefer to provide a link to an online register of interests instead of detailed disclosures in the annual report.

15. Information provided on corporate  For entities that are not governance includes a statement of  required to publish responsibilities of the Accountable Officer  audited financial

(or equivalent) comprising: statements, the second and third bullet points

• anAccou expnlatanbatle Offion ofic reser ponsibilities of the  are not required, and this 1 to 3  section should be scored

• a statement to confirm that, as far as they  out one.

are aware, there is no relevant audit

information of which the entity's auditors

are unaware, and that the Accountable

Officer has taken all the steps that they

ought to have taken to make themselves

aware of any relevant audit information

Criteria  Mark  Guidance notes

available

Accountability Report - best practice

packages, applies to a small number of individuals.

Where entities have such concerns, they:

• should consult their data protection lead; and

• may instead prefer to provide information on relevant policies and procedures and a commentary on their effectiveness and reasonableness.

Further information on personal information is provided by the Jersey Office of the Information Commissioner (JOIC)

personal data checklist.

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

• that it does not employ any staff; and employ any staff.

• how the entity carries out its activities  0 to 2 (for example all activities delivered by

board members, staff provided by the

Government of Jersey, appointment of contractors/affiliates, use of volunteers).

Total for Accountability Report - best

13 to 21 practice

Best Practice Principles

Appendix Three

Sustainability Frameworks and Jersey Performance Framework

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.

The Government of Jersey has developed its own Performance Framework. 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: Jersey Performance Framework (Island Outcomes and Sustainable Wellbeing)

Source: Government of Jersey

Appendix Four

Summary of Remaining Open Recommendations

2022 Report

R1  Finalise and set out minimum requirements for annual reports and accounts for

States established and States controlled entities. In doing so, consider:

• setting out different requirements depending on the nature and size of entities

• specifying minimum requirements for reporting on performance, accountability and finances

• requiring specific disclosures of remuneration of directors and staff

• for entities required to publish financial statements:

• specifying the accounting framework; and
• specifying the degree of independent assurance that should be provided over the financial statements; and

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

R2 Introduce a requirement for Statistics Jersey to produce an annual report.

R3  Set out a public ambition and timetable for the production of a States of Jersey

annual sustainability report. In doing so, consider:

• the Jersey Performance Framework and the Task Force on Climate-Related Financial Disclosures (TCFD) recommended disclosures

• whether the sustainability report should form part of the States of Jersey Group 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 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.

R5 For all entities: Continue to improve annual reporting. In doing so, consider:

• any minimum requirements set out by the States of Jersey

• how to improve reporting on performance, accountability (including 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.

2023 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.

LYNN PAMMENT CBE Comptroller and Auditor General

Jersey Audit Office, De Carteret House, 7 Castle Street, St Helier, Jersey JE2 3BT T: +44 1534 716800 E: enquiries@jerseyauditoffice.je W: www.jerseyauditoffice.je