Public Finances (Accounting Standards) (Jersey) Order 2011

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 27 February 2012:

Decision Reference: MD-TR-2012-0020
Decision Summary Title:	2011 States of Jersey Accounting Standards		Date of Decision Summary:	10 February 2012
Decision Summary Author:	Director of Financial Planning and Performance		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Jersey Financial Reporting Manual		Date of Written Report:	10 February 2012
Written Report Author:	Manager - Financial Accounting and Control		Written Report : Public or Exempt?	Public
Subject: States of Jersey Accounting Standards.
Decision(s): The Minister decided to adopt the Accounting Standards Policy (appendix 1 in the attached report). The Minister decided to sign the Public Finances (Accounting Standards) (Jersey) Order 2011 adopting the Jersey Financial Reporting Manual (JFReM), which sets the GAAP-based accounting standards to be adopted in the preparation of the States of Jersey Financial Statements. The Minister decided to approve the list of Accounting Officers excepted from the definition of Directors as set out in section 6.3.4 of the JFReM (appendix 2 in the attached report).
Reason(s) for Decision: A Strategic Objective in the States Strategic Plan 2009 to 2014 is to ‘Deliver clear and informative accounts in line with recommended commercial practice (GAAP) to ensure that financial and business planning decisions can be based on full costs and achieve best value’. Following the Accounting Standards policy set in MD-2010-0147, the JFReM has been updated in line with the the equivalent UK FReM for the year ended March 2009. To set by Order the revised Accounting policies and standards to be followed by the States in the production of the States of Jersey Accounts, and to satisfy the requirements of The Public Finances (Jersey) Law 2005.
Resource Implications: None.
Action required: Business Manager to forward the signed and sealed Order to the States Greffe for subsequent presentation to the States Assembly.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Accounting Standards for States of Jersey

Treasury and Resources Minister

Report

Jersey Financial Reporting Manual

Purpose of Report

The purpose of this report is:

1) To set out the proposed policy for implementing and updating the Accounting Standards to be used in the preparation of the States of Jersey annual financial statements.

2) To provide additional information on the Ministerial Order, required under Article 32 of the Public Finances (Jersey) Law 2005 specifying the basis on which the States of Jersey’s 2011 Annual Financial Report and Accounts will be prepared. This Order will replace the Public Finances (Accounting Standards) (No. 2) (Jersey) Order 2010 which was followed for the production of the 2010 Annual Financial Report and Accounts.

Background

The 2010 States of Jersey financial statements was the first to be prepared under GAAP, as interpreted for the public sector in Jersey by the Jersey Financial Reporting Manual (JFReM). For 2010 this manual was based on the equivalent UK Financial Reporting Manual (FReM) for the year ended March 2008. Following the Accounting Standards policy set in MD-2010-0147, the JFReM has been updated in line with the the equivalent UK FReM for the year ended March 2009.

An updated policy for implementing and updating the GAAP-based Accounting Standards to be used in the preparation of the States of Jersey financial statements is set out in Appendix 1.

In order to implement this policy, it is proposed that the Jersey Financial Reporting Manual (JFReM) is approved by the Minister, which sets out the accounting standards to be adopted in the preparation of the States of Jersey Financial Statements.

Under section 6.3.4 of the JFReM the Minister can exempt Accounting Officers of minor departments from the definition of senior managers. The rationale for the proposed exemptions and the list of approved exempt Accounting Officers is included in Appendix 2.

Recommendation

That the Minister approved the Accounting Standards Policy (appendix 1 in the attached report).

That the Minister signs the Public Finances (Accounting Standards) (Jersey) Order 2011 adopting the Jersey Financial Reporting Manual (JFReM), which sets the GAAP-based accounting standards to be adopted in the preparation of the States of Jersey Financial Statements.

That the Minister approves the list of Accounting Officers excepted from the definition of Directors as set out in section 6.3.4 of the JFReM (appendix 2 in the attached report).

Reason for Decision

A Strategic Objective in the States Strategic Plan 2009 to 2014 is to ‘Deliver clear and informative accounts in line with recommended commercial practice (GAAP) to ensure that financial and business planning decisions can be based on full costs and achieve best value’. Following the Accounting Standards policy set in MD-2010-0147, the JFReM has been updated in line with the the equivalent UK FReM for the year ended March 2009.

To set by Order the revised Accounting policies and standards to be followed by the States in the production of the States of Jersey Accounts, and to satisfy the requirements of The Public Finances (Jersey) Law 2005.

Resource Implications

None.

Report author : Manager - Financial Accounting and Control	Document date : 10/02/2012
Quality Assurance / Review : Director of Financial Planning and Performance	File name and path: l:\treasury\sections\corporate finance\ministerial decisions\dss, wrs and sds\2012-01xx - soj accounting standards\report accompanying accounts order md.doc
MD sponsor : Treasurer of the States

Appendix 1 – Treasury and Resources Accounting Policy

Introduction

The Public Finances (Jersey) Law 2005 states that the annual financial statements of the States must be prepared in accordance with generally accepted accounting practice and accounting standards prescribed by an Order made by the Minister. This policy sets out the proposed model for implementing the accounting standards to be used in the preparation of the States annual financial statements, and the process for updating these accounting standards.

Accounting Standards

The Minister’s policy is to require the States of Jersey accounting records to be maintained and accounts prepared in accordance with UK GAAP, modified for the Jersey public sector.

Having considered the various options available to implement GAAP, the Minister has concluded that the preferred option is to follow the approach of the UK central government. The Minister has therefore determined that the set of generally accepted accounting practice (GAAP) standards that will be adopted for the States of Jersey is UK GAAP modified for the Jersey public sector. A Jersey Financial Reporting Manual (JFReM) has been prepared which details the application of these Generally Accepted Accounting Principles to the States of Jersey.

The Minister’s will implement UK GAAP by making a Ministerial order under the Public Finances (Jersey) law 2005 requiring the preparation of the States accounts in line the JFReM. The following paragraphs outline how this policy is being implemented.

The JFReM is based on the UK version of the same document. The UK version is prepared by HM Treasury and is subject to scrutiny by an independent board, the Financial Reporting and Advisory Board. Attached to this policy is a summary of any adaptations made to revisions made in the relevant UK FReM. The revised JFReM has been subject to scrutiny by the Comptroller and Auditor General.

The revised JFReM, applicable to the 2011 financial year is based on the UK Financial Reporting Manual for the UK financial year ending March 2009

Maintaining Accounting Standards

The Minister recognises that accounting standards are not fixed, that they evolve over time and also that the implementation of new standards in the public sector context can be a complex and resource hungry exercise.

The Minister’s policy, therefore, is to update the accounting standards adopted by the States on an annual basis. The Minister intends to follow those standards adopted by the UK Government in their annually updated Financial Reporting Manual. The implementation of new accounting standards can be complex and resource intensive; there are obvious benefits to a small jurisdiction such as Jersey to learning from others and not being at the cutting edge of such implementations. The Minister has, for 2010 and 2011, adopted the standards implemented by the UK central government with a two year delay. The Minister notes that in 2010 the UK moved to reporting under International Financial Reporting Standards (IFRS), and has decided to adopt IFRS on the same two year delay principle. However, the Minister intends to use this change as an opportunity to reduce the delay in adoption of standards to a single year. Therefore it is the Minister’s policy that the Jersey FReM for 2012 will adopt IFRS in line with the UK FReM for the year ending March 2011.

As with the preparation of the initial JFReM, new standards introduced in the UK FReM may require some modification for the States of Jersey. The Minister intends to continue to consult the Comptroller and Auditor General on all significant amendments to the JFReM before implementing them.

Summary of significant amendments made in the JFReM 2011

Adoption of revised financial instrument standards (Chapter 7 of the JFReM):
FRS 25 (Financial Instruments: Presentation)
FRS 26 (Financial Instruments: Recognition and Measurement)
FRS 29 (Financial Instruments: Disclosure)

Adoption of other standards triggered by FRS 26:
FRS 23 (The Effect of Changes in Foreign Exchange Rates)
FRS 24 (Financial Reporting in Hyperinflationary Economies)

Removal of superseded standards:
FRS 4 (Capital Instruments)
FRS 13 (Derivatives and Other Financial Instruments: Disclosures)
UITF 9 (Accounting for operations in hyper-inflationary economies)

Appendix 2 – Accounting Officers of minor departments

Under section 6.3.4 of the JFReM the Minister may exempt Accounting Officers of minor departments from inclusion in the definition of senior managers for the States. There are specific disclosure requirements (principally remuneration disclosures and related party disclosures) which are applicable to those persons deemed to be senior managers. Senior managers are those who have responsibility for the organisation as a whole, which in a private company is the Directors of the company. For the States of Jersey it is deemed that Accounting Officers most closely equate to the Directors of a private company, but it is recognised that some Accounting Officers of minor departments would not be deemed to have any corporate responsibility. For this reason the Accounting Officers for the following departments are excluded from the definition in 6.3.4:

Office of the Lieutenant Governor
Data Protection Registrar
Official Analyst
Overseas Aid Commission
Office of the Dean of Jersey
International Affairs (within the Chief Minister’s Department)