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Office of the Comptroller and Auditor General: Increase in costs delivering Annual Audit for the year end 31 December 2021: Allocation of Reserve Funding

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A decision made on 8 January 2021

Decision reference: MD-TR-2021-0002

Decision Summary Title:

Allocation of Reserve Funding to the Office of the Comptroller and Auditor General for the increase in costs delivering Annual Audit for the year end 31 December 2021.

Date of Decision Summary:

9 December 2020

Decision Summary Author:

Head of Finance Business Partnering

 

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title:

Allocation of Reserve Funding to the Office of the Comptroller and Auditor General for the increase in costs delivering Annual Audit for the year end 31 December 2021.

Date of Written Report:

9 December 2020

Written Report Author:

Head of Finance Business Partnering

 

Written Report:

Public or Exempt?

Public

Subject:

The allocation of up to £73,000 in 2021 from the General Reserve to the Office of the Comptroller and Auditor General for the increase in costs delivering Annual Audit for the year end 31 December 2021 following appointment of new external auditors of the States.

Decision(s):

The Minister approved a non-recurring allocation from the General Reserve in 2021 of up to £73,000 to the Office of the Comptroller and Auditor General for the increase in cost delivering Annual Audit for the year end 31 December 2021.

Reason(s) for Decision:

Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.

 

The current Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources (published as R.80/2020) states: “Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.” The Treasurer has recommended this allocation.

 

The Minister for Treasury and Resources has already written to the Comptroller and Auditor General to confirm that she will make available additional funding to her office to meet additional external audit-related costs.

Resource Implications:

The head of expenditure of the Office of the Comptroller and Auditor General of expenditure to increase by up to £73,000 in 2021 and the General Reserve to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2021-2024.

 

It is noted that the proposed funding from Reserves is for 2021 only, and any increase in funding for subsequent years will be included in respective government plans.

Action required:

The Head of Financial Governance to advise the Specialist – Business Cases and the Head of Finance Business Partnering of NMD that this decision is approved.

 

Signature:

 

 

 

Position:

Deputy S J Pinel

Minister for Treasury and Resources

Date Signed:

 

 

Date of Decision:

Office of the Comptroller and Auditor General: Increase in costs delivering Annual Audit for the year end 31 December 2021: Allocation of Reserve Funding

Treasury and Exchequer

Ministerial Decision Report

 

 

ALLOCATION of Reserve Funding to office of the Comptroller and auditor general for the cost increase in delivering Annual Audit for the year ending 31 December 2021.

 

  1. Purpose of Report

 

To enable the Minister to approve the allocation of up to £73,000 in 2021 from the General Reserve to the Office of the Comptroller Auditor General for the increased costs of delivering Annual Audit for the year ending 31 December 2021.

 

  1. Background

 

 

The Acting Chairman of the Public Accounts Committee submitted, on 7th October 2020, a revised estimate of costs in 2021 for the Office of the Comptroller and Auditor General (CAG). At that date it was too late to accommodate the revised estimate and make the consequential changes within the Government Plan. The Minister for Treasury and Recourses has given assurance to the Acting Chairman that she will make the additional funding required available in 2021 from the General Reserve.

 

In August 2020 CAG became aware of a procurement process that gave rise to a potential threat to the independence of the current auditor of the financial statements of the States of Jersey, Deloitte LLP. Following discussions with the senior officers in the Government of Jersey, CAG decided to run a procurement process on an accelerated timetable for the appointment of an external auditor of the States of Jersey for the years ending 31 December 2020 to 31 December 2024.

As a result of that process CAG appointed Mazars LLP as external auditor of the States of Jersey. However, there are additional costs associated with this appointment arising from:

 

  • higher audit fees than those payable to Deloitte LLP;
  • the proposed extension of the accounting boundary of the States of Jersey to include the strategic investments from the year ending 31 December 2021; and
  • an increase in the costs to the CAG’s Office of oversight of the appointed auditor.

 

 

2021

Estimate agreed by the Chairman of the Public Accounts Committee

£870,000

Estimated additional cost of the external audit of the States of Jersey based o tender by Mazars

£64,000

Less: recharge to the Social Security Funds

-£6,000

Plus: additional cost of oversight of auditor

£15,000

Estimated additional costs failing on the Office

£73,000

 

  1. Recommendation

 

The Minister is recommended to approve the allocation of up to £73,000 from the General Reserve to the CAG head of expenditure in 2021 for the increase in costs of delivering Annual Audit for the year ending 31 December 2021.

 

 

 

 

  1. Reasons for Decision

 

Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a Government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.

 

The current Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources (published as R.80/2020) states: “Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.” The Treasurer has recommended this allocation.

 

The Minister for Treasury and Resources has already written to the Comptroller and Auditor General to confirm that she will make available additional funding to her office to meet additional external audit-related costs.

 

5. Resource Implications

 

The head of expenditure of the Office of the Comptroller and Auditor General of expenditure to increase by up to £73,000 in 2021 and the General Reserve to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2021-2024.

 

It is noted that the proposed funding from Reserves is for 2021 only, and any increase in funding for subsequent years will be included in respective government plans.

 

Report author: Head of Finance Business Partnering

 

Document date : 9 December 2020

Quality Assurance / Review: Head of Financial Governance

File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2021-0002 - 2021 Reserve funding to C&AG for increased audit costs

MD sponsor: Group Director, Strategic Finance

 

1

 

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