States of Jersey Financial Reporting Manual

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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 6 December 2013:

Decision Reference: MD-TR-2013-0104
Decision Summary Title:	States of Jersey Accounting Standards		Date of Decision Summary:	3 December 2013
Decision Summary Author:	Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Accounting standards to be adopted for the States of Jersey’s Annual Financial Statement 2013		Date of Written Report:	3 December 2013
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). approve the list of Accounting Officers excepted from the definition of Directors as set out in section 4.3.3 of the JFReM (Appendix 2 in the attached report). adopt a new version of 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 2013 (Appendix 3 in the attached report). present the JFReM to the States.
Reason(s) for Decision: Following the Accounting Standards policy set in MD-2012-0020, the JFReM has been updated in line with the the equivalent UK FReM for the year ended March 2012, to implement GAAP-based accounting in the States of Jersey, and to ensure that the accounting standards that are applied are maintained appropriately.
Resource Implications: None.
Action required: The Greffier of the States to be requested to arrange for the JFReM to be presented to the States for their information at the earliest opportunity.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

States of Jersey Financial Reporting Manual

Treasury and Resources Minister

Report

Accounting standards to be adopted for the States of Jersey’s Annual Financial Statement 2013

Purpose of Report

The purpose of this report is:

1) To set out the 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 basis on which the States of Jersey’s 2013 Annual Financial Report and Accounts will be prepared.

Background

The Public Finances (Jersey) Law 2005 (as amended by P.73/2013) states that the annual financial statements of the States must be prepared in accordance with accounting standards issued by the Treasurer with the approval of the Minister.

In Ministerial Decision MD-TR-2012-0020, the Minister recognised that accounting standards are not fixed, that they evolve over time. The Minister’s policy is to update the accounting standards adopted by the States on an annual basis, following those standards adopted by the UK Government in their annually updated Financial Reporting Manual. The JFReM for 2012 was therefore been drafted based on the UK FReM for the year ending March 2011. This policy has been continued, with the 2013 version being based on the UK FReM for the year ending March 2012, adapted as appropriate for the public sector in Jersey.

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.

Under section 4.3.3 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.

The JFReM 2013 is included in Appendix 3.

Recommendation

That the Minister approves the policy for implementing and updating the Accounting Standards to be used in the preparation of the States of Jersey annual financial statements.

That the Minister approves Jersey Financial Reporting Manual (JFReM), which sets out the accounting standards to be adopted in the preparation of the States of Jersey Financial Statement for 2013.

That the Minister approves the list of exempt Accounting Officers.

Reason for Decision

Following the Accounting Standards policy set in MD-2012-0020, the JFReM has been updated in line with the the equivalent UK FReM for the year ended March 2012, to implement GAAP-based accounting in the States of Jersey, and to ensure that the accounting standards that are applied are maintained appropriately

Due to changes in the Public Finances (Jersey) Law 2005 a Ministerial Order is no longer required to set Accounting Standards, and so the previous Order is to be withdrawn.

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 accounting standards issued by the Treasurer with the approval of 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.

Maintaining Accounting Standards

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

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 intends to adopt the standards implemented by the UK central government with a one year delay. Therefore it is the Minister’s policy that the Jersey FReM for 2013 will adopt IFRS in line with the UK FReM for the year ending March 2012.

Future years will adopt the same one year delay, and so, for example, the Jersey FReM for 2014 will adopt IFRS in line with the UK FReM for the year ending March 2013.

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 differences between the JFReM 2012 and JFReM 2013

The most significant change in the JFReM 2013 is the change to the Accounting Boundary to include the Social Security Fund, Social Security (Reserve) Fund and Health Insurance Fund, which were previously specifically excluded by the JFReM.

Other changes include the replacement of the Statement on Internal Control with a Governance Statement, and changes to the Accounting for Donations of Fixed Assets and Capital Grants received.

A full amendment record has been prepared and is included as Appendix 4.

Appendix 2 – Accounting Officers of minor departments

Under section 4.3.3 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 have less influence over the overall control of the States of Jersey. For this reason the Accounting Officers for the following departments are excluded from the definition in 4.3.3:

Office of the Lieutenant Governor
Data Protection Registrar
Official Analyst
Office of the Dean of Jersey
International Affairs (within the Chief Minister’s Department)
Financial Services Industry (with the Economic Development Department)

Appendix 3 – JFReM 2013 (attached)

Appendix 4 – Amendment Record (attached)