Accountable Officers in Specified Organisations
- Introduction and background
- This section applies to Specified Organisations – which are those organisations where the Principal Accountable Officer has appointed an Accountable Officer under the terms of the Public Finances Law.
- The Chief Executive Officer of the Council of Ministers is the Principal Accountable Officer and as such is responsible for the appointment of an Accountable Officer in a Specified Organisation and for determining their functions. This is to ensure that there is accountability for the best use of public resources even when service delivery is conducted at arm’s length to the Government of Jersey’s administration.
- The Principal Accountable Officer may appoint an Accountable Officer in the following Specified Organisations (as listed in Schedule 2 of the Public Finances Law):
- Andium Homes Limited and its subsidiary companies (if any)
- Jersey Post International Limited and its subsidiary companies (if any)
- JT Group Limited and its subsidiary companies (if any)
- Jersey Overseas Aid Commission
- Ports of Jersey Limited
- States of Jersey Development Company Limited and its subsidiary companies (if any)
This list may be added to by the Minister for Treasury and Resources through the issuance of an Order.
1.4 The Accountable Officer for a Specified Organisation must be a paid employee of that Organisation.
1.5 In addition to the guidelines set out in this section, Accountable Officers should have regard to all other sections where relevance is identified, as well as other formal policies which are relevant and brought to their attention. However, the bodies will have their own such policies and codes.
1.6 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- there is a gap in responsibility and accountability for all of the Specified Organisations direct and indirectly funded expenditure and income
- Accountable Officers are not fully aware of their legal responsibilities and accountabilities
- an Accountable Officer is unaware of the proper course of action to take if they are directed by the Council of Ministers and or Government of Jersey, Minister, Chair, Board Member of the Specified Organisation and or Principal Accountable Officer to take action which they feel conflicts with their responsibilities and accountabilities
- the Specified Organisation undertakes a course of action that is outside the risk appetite of the States or Government of Jersey leading to reputational damage for the Specified Arm’s Length Organisation and the States or Government of Jersey
- the Specified Organisation competes unfairly with Private Sector organisations in the market
the requirements of the States or Government of Jersey cause the Accountable Officer of the Specified Organisation to act in a manner contrary to the laws under which the Specified Organisation is established
- Principles
- Accountability lies far beyond what is included in the Law. Accountable Officers in Specified Organisations are personally responsible for managing their area of responsibility efficiently and effectively, and for reporting to the States Assembly accurately and transparently in accordance with their Memorandum of Understanding and Articles of Association. Initiatives and activities should be assessed “through the Accountable Officer lens” to assess whether they meet the four essential standards of:
- proprietary
- regularity
- value for money
- feasibility
- The function of Accountable Officers may be delegated to another person(s), however, personal accountability for that function cannot be delegated. All delegations must be documented and recorded appropriately.
- Accountable Officers in Specified Organisations must ensure compliance with the Memorandum of Understanding and any other associated documents signed with the relevant Minister.
- Accountable Officers must demonstrate the same oversight over subsidiaries and or branches, as the establishment of subsidiaries and or branches must not be seen as a means of avoiding direct public oversight.
- In addition, Accountable Officers should apply the overarching test of: “Could this course of action be satisfactorily defended in public?” The Nolan Principles (see the Glossary) are of particular importance to the proper performance of the role.
- Accountable Officers should work together for the common good of the Government of Jersey and Specified Organisations.
- Accountable Officers for Specified Organisations should maintain a balance between their responsibilities to the Government of Jersey and to the Specified Organisation. Where there is an actual or perceived conflict of obligations, those under the Companies (Jersey) Law 1991 will take precedence.
- Requirements
- Role of the Accountable Officer
Accountable Officers of Specified Organisations must be aware of their roles and responsibilities established under their letters of appointment.
3.2 Appointment of Accountable Officers
When appointing an Accountable Officer, the Principal Accountable Officer in the letter of appointment must specify any specific functions expected of individual officers. As such, these Accountable Officers are responsible to the Principal Accountable Officer, to the extent permitted by the laws under which the Specified Organisation is established. All Accountable Officer appointments must be in writing and are effective from the date on which the appointed person receives a copy of the notice of appointment. Copies of appointment letters must be sent to the Comptroller and Auditor General, the States Treasurer and any Minister with responsibility for the area.
3.3 Position of Accountable Officers
An Accountable Officer must be an employee of the Specified Organisation. In normal instances, the Accountable Officer will be the most senior full time official of the Organisation, however, the Principal Accountable Officer has the discretion to appoint another officer subject to relevant approvals.
3.4 Information
An Accountable Officer must ensure that all managers and staff have the relevant information, training and access to information to carry out their responsibilities. Managers must have a clear view of their priorities and it must be possible to assess their performance against these.
3.5 Multiple roles
It will be incumbent on the person appointed as Accountable Officer to combine the functions of that role with their functions and duties of the Specified Organisation through which they derive their authority, including those under other legislation such as the Companies (Jersey) Law 1991. If responsibilities conflict then the Companies Law requirements take priority.
3.6 Propriety and Regularity
An Accountable Officer will be expected to ensure that the Specified Organisation achieves high standards of propriety and regularity and that the Specified Organisation is given appropriate advice on these matters so as to ensure that resources are used economically, efficiently and effectively.
3.7 Financial support
In those instances where a Specified Organisation receives direct financial support from the Government of Jersey to carry out a specific task or function the Accountable Officer must ensure that the financial support is used for the purposes specified.
3.8 Oversight
The Memorandum of Understanding between a Specified Organisation and its Minister should provide for the Minister (and relevant Government officers) to exercise oversight of the Arm’s Length Organisation’s strategy, performance and significant transactions e.g. through monthly or quarterly reporting and exception reporting.
3.9 Delegation
When considering delegation, Accountable Officers must ensure clear lines of control as well as accountability and reporting arrangements. Arrangements for delegation should promote good financial management and governance and should be supported by the necessary staff with an appropriate balance of skills and experiences.
3.10 Objections
If Accountable Officers are directed by the Board of the Specified Organisation to follow a course of action which involves a transaction which is considered to infringe the requirements of propriety or regularity; or their wider responsibility to ensure economy, efficiency and effectiveness, the Accountable Officer should set out in writing to the Board the reason for the objection and then notify the Minister as shareholder so that the Minister is able to determine if they wish to intervene in such a situation. A copy of the letter must be sent to the Comptroller and Auditor General. The Principal Accountable Officer must then consider the appropriate action to take, having consulted the Minister for Treasury and Resources (as shareholder representative) and having taken into account any legislative requirements.
3.11 Reporting to Public Accounts Committee and Comptroller and Auditor General
When requested, the Accountable Officer is responsible for timely provision of adequate and accurate financial information and evidence to the Public Accounts Committee and Comptroller and Auditor General in the appropriate format and to the relevant timescales. Accountable Officers must be ready to respond to all questions or queries and obtain relevant support in terms of evidence from other appropriate staff. Accountable Officers should ensure provision of details of any errors or omissions to Public Accounts Committee is done as soon as reasonably practical. Under the Comptroller and Auditor General (Jersey) Law 2014, the Comptroller and Auditor General may report on any matter relating to:
- general corporate governance arrangements
- the effectiveness of internal controls and the internal auditing of those controls
- whether resources are used economically, efficiently, and effectively
- actions needed to bring about improvement where necessary
- Expected standards
Accountable Officers have the responsibility of ensuring that all staff are aware that they are responsible for public money and that high standards are expected of them.
3.13 Stewardship
Accountable Officers are responsible for effective stewardship of assets they control and safeguard and must ensure that they are effectively checked and discrepancies investigated and reported on.
3.14 Risk management
Accountable Officers must ensure that an appropriate approach to risk management is followed throughout the Specified Organisation and that systems are in place to identify and manage these risks.
3.15 Prudence
Accountable Officers must promote prudence and the economic, efficient and effective use of all resources at all times, and in particular by ensuring:
- the prevention and detection of fraud, error and wasteful practices as well as correcting them as appropriate
- the establishment and maintenance of sound systems of internal control that support the achievement of the set policies, aims and priorities. The systems of internal control are designed to respond to and manage the whole range of risks that an organisation faces
- that financial systems and procedures promote the efficient and economical conduct of business
- Financial management
An Accountable Officer must ensure that there is a proper standard of financial management in their Specified Organisation.
3.17 Availability for consultation
An Accountable Officer should ensure that they are generally available for consultation but in periods of absence i.e. annual leave they must ensure that there is another senior officer who can on act on their behalf. In exceptional circumstances, and where an Accountable Officer will be incapacitated for a period of four weeks or more, the Principal Accountable Officer must be notified.
3.18 Conflict of interest
Where an Accountable Officer identifies an actual or potential conflict of interest, such conflicts should be mitigated through steps such as declaration or register, requesting for a temporary substitute and resignation, depending on the type of conflict identified.
3.19 Consultation on appointment
Prior to appointing an Accountable Officer in a Specified Organisation, the Principal Accountable Officer must consult with the body concerned on the contents of the appointment letter.
Accountable Officers in Non Ministerial States Bodies
- Introduction and background
- This section applies to Accountable Officers with responsibility for the following Non Ministerial States Bodies defined in Schedule 1 to the Public Finances Law:
• Bailiff’s Chambers
• Office of the Lieutenant Governor
• Office of the Comptroller and Auditor General
• States Greffe
• Viscount’s Department
• Judicial Greffe
• Law Officers’ Department
• Official Analyst
• Jersey Probation Service
1.2 The role of Accountable Officer is established under the Public Finances Law
1.3 For the Bodies covered by this section, their Chief Officer is usually their Accountable Officer, although the Minister for Treasury and Resources can, in exceptional circumstances, appoint a person other than its Chief Officer or appoint an additional Accountable Officer, for example the Bailiff and Attorney General cannot report to someone within the States administration, whether Minister or Civil Servant.
1.4 In addition to the guidelines set out in this section, Accountable Officers should refer to all other sections, as well as other formal Policies which are relevant, and also to the States of Jersey Code of Conduct issued by the (then) Human Resources department.
1.5 In addition to the common risks identified in the Background and Introduction section of the Public Finances Manual a number of significant risks relating to this section include:
• the independence and effectiveness of the Non Ministerial States Bodies is compromised
• there is a gap in responsibility and accountability for all of the States or Government of Jersey’s direct and indirectly funded expenditure and income
• Accountable Officers are not fully aware of their legal responsibilities and accountabilities
- Principles
- Accountability lies far beyond what is included in the Law. The Accountable Officers are personally responsible for managing their area of responsibility efficiently and effectively, and for reporting to the States Assembly accurately and transparently. Initiatives and activities should be assessed through the “Accountable Officer lens” to assess whether they meet the four essential standards of:
• propriety
• regularity
• value for money
• feasibility
and should be able to describe how they contribute to strategic outcomes and departmental objectives over time and how they will measure progress made and or service performance in alignment with the Jersey Standard for Performance Management and Business Planning.
2.2 The functions of an Accountable Officer may be delegated to another person(s), however, personal accountability for those functions cannot be delegated. All delegations must be documented and recorded appropriately.
2.3 Accountable Officers must ensure that there are procedures in place to ensure proper control and assurance frameworks exist throughout the Government of Jersey. Internal and external audit findings assess and test internal controls and performance. These audit findings should be used in conjunction with other measures to continually improve internal controls and performance.
2.4 In addition, Accountable Officers should apply the overarching test of: “Could this course of action be satisfactorily defended in public?” The Nolan Principles (see the Glossary) are of particular importance to the proper performance of the role.
2.5 Accountable Officers should work together for the common good of the Government of Jersey.
- Requirements
- Role of Accountable Officers
Accountable Officers must be aware of their roles and responsibilities set out in their letters of appointment. In addition, they must always ensure that the standard of financial management is in compliance with the provisions of the Law and the Public Finances Manual. Where a deviation from policy may be required, the decision and rationale should be documented.
3.2 Appointment of Accountable Officers
In exceptional circumstances an Accountable Officer who is not the Chief Officer may be appointed in writing by the Minister for Treasury and Resources. An appointment is effective once the written notice of the appointment is received, a copy of which must be forwarded to the Comptroller and Auditor General and the States Treasurer. A copy should be sent to the Principal Accountable Officer for information purposes.
3.3 Position of Accountable Officers
It is expected that an Accountable Officer is a States’ employee under the terms of the Employment of States of Jersey Employees (Jersey) Law 2005 but must be an officer of the Non Ministerial States Bodies.
3.4 Delegation
When considering delegation, Accountable Officers must ensure clear lines of control as well as accountability and reporting arrangements. Arrangements for delegation should promote good financial management and governance and should be supported by the necessary staff with an appropriate balance of skills and experiences. Delegations must be recorded in the departmental Scheme of Delegation.
3.5 Provision of information
When requested, the Accountable Officer is responsible for timely provision of adequate and accurate financial information and evidence to the Public Accounts Committee, Comptroller and Auditor General and Scrutiny Panels in the appropriate format and to the relevant timescales. Accountable Officers must be ready to respond to all questions or queries and obtain relevant support in terms of evidence from other appropriate staff. Accountable Officers should ensure provision of details of any errors or omissions to Public Accounts Committee or Scrutiny Panels is done as soon as reasonably practical.
3.6 Staff awareness
Accountable Officers have the responsibility of ensuring that all staff are aware that they are responsible for public money and that high standards are expected of them.
3.7 Stewardship
Accountable Officers are responsible for effective stewardship of assets they control and safeguard and must ensure that they are effectively checked and discrepancies investigated and reported on.
3.8 Risk management
Accountable Officers must ensure that an appropriate approach to risk management is followed throughout the relevant Non Ministerial States Bodies, and that systems are in place to identify and manage these risks.
3.9 Prudence
Accountable Officers must promote prudence and the economic, efficient and effective use of all resources at all times, and in particular by ensuring:
• the prevention and detection of fraud, error and wasteful practices as well as correcting them as appropriate
• the establishment and maintenance of sound systems of internal control that support the achievement of the set policies, aims and priorities. The systems of internal control are designed to respond to and manage the whole range of risks that the Non Ministerial States Bodies face
• that financial systems and procedures promote the efficient and economical conduct of business
• that funds allocated to Non Ministerial States Bodies are used for the purposes intended and there must be a clear understanding of the respective responsibilities of the Accountable Officer.
3.10 Further duties of Accountable Officers
Accountable Officers must ensure that:
• all items of expenditure and receipts are dealt with in accordance with the relevant legislation and any other Government of Jersey approvals authorising them and any applicable delegated authority
• expenditure is a proper and acceptable charge on public funds and that all items of expenditure and receipts are dealt with in accordance with the Government of Jersey’s intentions for the public funds for which they are responsible
• adequate systems and checks exist to ensure that all income, as far as is practical, is collected and promptly banked into the appropriate States’ bank account(s); and expenditure is paid in a timely and accurate basis and in line with relevant approvals
• proper financial procedures are followed and that accounting records are maintained in a form suited to the requirements of management; and capable of being provided in a format required for the published annual financial statement
• authorised spending limits are not exceeded.
3.11 Annual accounts
At each financial year end an Accountable Officer must sign the relevant annual accounts and the Governance Statement for their area(s) of responsibility. In signing these documents, the Accountable Officer is acknowledging the basis on which they believe their responsibilities have been properly discharged;
• the Governance Statement must record and confirm that the necessary controls have been instituted and that, where weaknesses are acknowledged to exist, the necessary improvements in control have been arranged; and
• signing the Accounts effectively means that the Accountable Officer accepts personal accountability for the information contained in the accounts as well as the nature of all transactions and agrees that they are in the format prescribed by the States Treasurer
Accountable Officers must forward completed Governance Statements and Accounts to the States Treasurer. As part of the annual financial statement full details of an Accountable Officer’s remuneration will be published.
3.12 Multiple duties
An Accountable Officer must, where appropriate, combine the duties of an Accountable Officer with their duty to serve and support the Non Ministerial States Bodies they are responsible to.
3.13 Financial management
An Accountable Officer must ensure that there is a standard of financial management in their area of responsibility which meets or exceeds the requirements of the Government of Jersey Financial Reporting Manual and Public Finances Manual.
3.14 Notifying the States Treasurer
The States Treasurer must be notified of all notifications or letters of instruction issued by or to an Accountable Officer. These include notifications made by Accountable Officers where they have been asked to follow an inappropriate course of action, or letters of instruction received in such cases.
3.15 Availability for consultation
An Accountable Officer should ensure that they are generally available for consultation but in periods of absence i.e. annual leave they must ensure that there is another senior officer who can on act on their behalf. In exceptional circumstances, and where an Accountable Officer will be incapacitated for a period of four weeks or more, the Minister for Treasury and Resources must be notified.
3.16 Discrepancies
Accountable Officers should routinely scrutinise and identify any discrepancies on any significant policy proposals or plans to start or vary major projects and assess whether they measure up to the requirements of relevant legislation, Government of Jersey Policies and any other agreed standards. The Accountable Officer should draw any such problems to the attention of the responsible minister to see whether they can be resolved.
3.17 Conflict of interest
Where an Accountable Officer identifies an actual or potential conflict of interest, such conflicts should be mitigated through steps such as declaration or register, requesting for a temporary substitute and resignation, depending on the type of conflict identified.
3.18 Objections
If Accountable Officers are directed by any person in a position of authority to follow a course of action which involves a transaction which is considered to infringe the requirements of propriety or regularity; or their wider responsibility to ensure economy, efficiency and effectiveness, Accountable Officers should set out in writing to the person issuing the direction the reason for the objection, and notify the Principal Accountable Officer and the Comptroller and Auditor General. If a decision is made to go ahead with the course of action the Accountable Officers must request a written instruction to this effect with a copy sent to the Comptroller and Auditor Officer. If the course of action is followed, the Public Accounts Committee should be expected to recognise that the Accountable Officers bear no personal responsibility for the action. The acid test is whether the Accountable Officer could justify the proposed activity if asked to defend it.
Heads of Finance Business Partnering
- Introduction and background
- This section sets out requirements relating to Heads of Finance Business Partnering and the role they play in working with Accountable Officers to meet statutory public finance obligations.
- It is expected that all States Bodies have a professionally accountancy qualified Senior Finance Business Partner, reporting to the States Treasurer. This officer may or may not be part of the States Body’s (normally department’s) operational structure, but should be a part of that department’s governance structure i.e. be involved with major decisions of a financial nature. It is good practice for Arm’s Length Organisations to have similar arrangements in place. Some Arm’s Length Organisations may not be of the requisite size to support a full time Finance Director and, therefore, alternative but pragmatic arrangements may need to be put in to force.
- Users of this section should refer to other sections of the Public Finances Manual, as well as to all Policies that are relevant, and also to the States of Jersey Code of Conduct issued by the (then) Human Resources department.
- Principles
- Heads of Finance Business Partnering should:
- possess the relevant professional accountancy qualifications and necessary experience required for the role
- have direct access to the partner department’s Director General or most senior officer
- be a part of the partner department’s governance arrangements. This could mean being a member of the senior leadership team
- Heads of Finance Business Partnering should have a clear understanding and be up to date on a department’s financial performance and position.
- Supporting the Accountable Officer, Heads of Finance Business Partnering should ensure that there is sufficient expertise and effective systems to discharge this responsibility and ensure that those responsible for the Department’s activities are able to account for their financial performance.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- Heads of Finance Business Partnering are unaware of the impact of the role they play in working with Accountable Officers to meet public financial management obligations
- financial mismanagement or fraud due to a lack of sufficient oversight of the wider finance team
- Heads of Finance Business Partnering without sufficient experience and qualifications are employed and as such, reporting, budgeting and forecasting information provided is unreliable and inaccurate
- Requirements
The role of Head of Finance Business Partnering involves the following:
3.1 Governance
- being part of the financial leadership arrangement, both within the department and to its Arm’s Length Organisations when relevant, at both a strategic and operational level
- ensuring sound and appropriate financial governance and risk management, to include ensuring that the Director General (or equivalent) has prepared a Scheme of Delegation
- leading, motivating and developing finance staff reporting to them, establishing their full commercial contribution to the business
- planning and delivering the financial framework against the defined strategic and operational criteria
- challenging and supporting decision makers, especially on propriety, regularity, value for money and feasibility, by ensuring that policy and operational proposals with a significant financial implication are signed off by the finance function
- Internal controls
- coordinating the planning and budgeting processes, including contributions to the Government Plan
- applying discipline in financial management, including, where necessary, managing banking, debt and cash flow, with appropriate segregation of duties
- preparation of timely, accurate and meaningful management information
- ensuring that delegated financial authorities are respected
- leading or promoting change programmes both within the department and its Arm’s Length Organisations
- Reporting and scrutiny
- overseeing the preparation of annual accounts and input data for annual financial statements
- liaison with the auditors (internal, external, Comptroller and Auditor General), Public Accounts Committee and the relevant oversight committees as required
- reporting accurate and meaningful financial information about the department’s performance to Treasury and Exchequer and the general public as required
- Internal financial discipline:
The Head of Finance Business Partnering must maintain strong and effective policies to control and manage use of resources in the department’s activities. This includes improving the financial literacy of budget holders in the department through various methods including training etc. Similarly, he or she should ensure that a similar culture is promoted in the department’s Arm’s Length Organisations when relevant.
Consulting Treasury and Exchequer
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on how draft reports, propositions and proposed legislation should be discussed with Treasury and Exchequer where there are obvious or potential financial implications, either for expenditure or raising revenue whether that is a one off event or an annual position. This process will aid in ensuring States Members have access to a greater level of detail with which to consider and debate a proposition.
- Users of this section should refer to other sections of the Public Finances Manual or supporting documents that are relevant. Specifically, these include:
- Accountable Officers
- expenditure
- Principles
- Treasury and Exchequer should be consulted as early as possible in any financial proposal process.
- Consultation with Treasury should not be interpreted as amounting to approval. There are situations where explicit approval is required, e.g. from the States; in other cases, the focus of the consultation might be on obtaining information required or establishing the accuracy of available information to construct a robust proposition or proposal.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- proposals are based on inaccurate or partial information
- debates take place without all the relevant facts and figures, resulting in waste of the States’ valuable time
- legislation is passed without sufficient consideration of:
- the time, income and expenditure requirements
- the secondary impact on other States policies or services provided
- Requirements
- Consulting Treasury and Exchequer
Before any proposal for policy or legislation with financial implication is submitted for approval (e.g. to Corporate Strategy Board, Executive Management Team, OneGov Board, Council of Ministers, States Assembly), States Bodies must ensure that they consult Treasury and Exchequer at the earliest stage possible.
3.2 Explicit Approval
The following are examples of matters which require explicit approval by Treasury and Exchequer:
- expenditure proposals affecting the Government of Jersey’s approved expenditure totals
- contingent liabilities, including powers to issue indemnities or to provide guarantees
- increases in fees and charges above 2.5%, including any new charges
- additional public service staffing above approved limits
- pay and conditions (e.g. superannuation and early severance terms which may be subject to other legislation) of civil servants
- pay and conditions of board members of statutory organisations
- creation of new (or substantial alteration to existing) statutory bodies and related financial arrangements
Assets
- Introduction and background
- This section applies to all States Bodies (including States Funds and Trust Assets) as defined in the Public Finances Law, and relates to all non financial Assets, management of inventories and to the management and disposal of assets. This includes capitalised assets (i.e. those costing over £10,000) as well as “equipment” assets (i.e. those costing below £10,000 but where risks suggest control should be exercised).
- Accountable Officers are personally accountable for the proper financial management of resources as defined in their letters of appointment.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically these include:
- Delegations and changes to head of expenditure
- expenditure
- major Projects
- This section does not address the acquisition of assets, which is addressed within the Major Projects section or the Expenditure section, depending on the nature of the asset being acquired.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- an asset is not disposed at fair market value and thereby not achieving the best value for the States or Government of Jersey
- the disposal of an asset is not properly authorised
- the asset register is incomplete
- the inventory or asset deteriorates or becomes obsolete
- there is insufficient inventory causing shortages having consequential impacts
- the inventory or asset is incorrectly recorded
- the asset or inventory is used for purposes other than those that meet the States or Government of Jersey’s priorities
- Principles
- Accountable Officers should:
- utilise assets to deliver value for money and meet the Government of Jersey’s priorities
- ensure that a control and assurance framework is in place
- safeguard and maintain assets in respect of value, health and safety, insurance, and protection against theft or misuse
- review the need for assets on a continuous basis
- ensure that assets are appropriately disposed of at the end of their useful life and that any disposal of assets delivers value for money and is more economic than repairing or maintaining the asset
- Requirements
- Duties of Accountable Officers
Accountable Officers must:
- ensure that assets are appropriately recorded to ensure completeness and losses, thefts and damages are appropriately documented and appropriate action taken
- ensure that regular physical checks of assets and inventory are carried out, and where discrepancies between records and physical checks are reported, that appropriate action is taken
- consult with the appropriate States Body where land or property assets are deemed surplus to operational requirements
- keep and review a maintenance schedule in order to prioritise the appropriate maintenance of assets and inventory in a manner that protects or enhances their value to the Government of Jersey
- ensure that assets and inventory are only used for purposes that meet the priorities of the Government of Jersey and ensure that such assets are adequately insured
- when a disposal is agreed, ensure that it is completed as swiftly as the market will allow, with reasonable consideration for best value
- seek appropriate professional advice when disposing of assets of significant value, in particular land and property assets
- where not contemplated in the approved budget of the States Body, seek approval from the Minister for Treasury and Resources (or delegate) for the retention and use of the proceeds of asset disposals where these exceed £5,000
- ensure that if assets are transferred between States Bodies or to an Arm’s Length Organisations without being offered on the open market, they are transferred at market price and in appropriate circumstances except as otherwise agreed with Treasury and Exchequer (and follow appropriate approval processes)
- provide inventory and maintenance reports as and when required in the form specified by Treasury and Exchequer
- seek approval from the States Treasurer for new stock or inventory accounts, or inceases in levels of stocks over £50,000
Leases
- Introduction and background
- This section provides guidance on leased assets, hire purchase contracts, sale and leaseback transactions and any other similar arrangements (together “lease transactions”) that the Government of Jersey may enter into and it applies to all States Bodies as defined in the Public Finances Law. Some leases are economically equivalent to financing and should be treated as such. The section addresses how the Government of Jersey may enter into lease arrangements, the procedures to be followed before entering into a lease contract and accountability in relation to leases.
- Guidance on how lease contracts should be accounted for and disclosed within each States Body’s and the Government of Jersey’s annual financial statements is covered in the JFReM, which is based on the UK Treasury Financial Reporting Manual and is periodically updated for changes in EU adopted International Financial Reporting Standards as adapted for the Public Sector in Jersey. One change which is relevant to this section is with respect to International Financial Reporting Standards 16 which broadly removes the distinction between operating and finance leases for lessees by introducing a single lessee accounting model that requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. This is expected to be reflected in the Jersey Financial Reporting Manual 2021, however users of this section should consult Treasury and Exchequer for guidance on classifications, where required. States Bodies contemplating such arrangements should consult with Treasury and Exchequer.
- The Jersey Financial Reporting Manual defines a lease as “a contract between a lessor and a lessee for the hire of a specific asset”. The Government of Jersey currently acts in the capacity of a lessor or a lessee for a variety of specific assets.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant, including:
• assets
• financing
• expenditure
1.5 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
• leases may be entered into without appropriate approval
• leases may be entered into that result in the States or Government of Jersey’s aggregate borrowing or lending limits being exceeded
• the length of the lease term as well as other clauses within it might mean that it does not represent the best value for money for the States or Government of Jersey, such as lease arrangements may be entered into based upon attractive terms, but which may become increasingly onerous over the period of the contract
• lease agreements may be entered into which carry penalties and clauses which might have negative long term implications for the States or Government of Jersey
• leases may not be accounted for in accordance with the Jersey Financial Reporting Manual standards
• lease agreements may be inadequately documented
• there is an increase in credit risks due to ineffective customer due diligence
- Principles
- Adequate assessment should be carried out prior to entering any leases arrangement to ensure that such arrangements represent best value for money compared to other options. In assessing leases against other options, consideration should also be given to which option allows the Government of Jersey to better share or transfer risk; in particular in the case of technology, the risk of obsolescence.
- Leases should be properly approved, documented and accounted for in accordance with the Jersey Financial Reporting Manual.
- Leases should only be entered into within the Government of Jersey’s financing and lending limits. Legally, finance leases are not financing.
- There should be proper means of monitoring and controlling leases in accordance with the requirements of this section, the Jersey Financial Reporting Manual and States Bodies’ policies or procedures in relation to leases, if any.
- The terms of all lease agreements should be clearly assessed and documented to ensure that they do not lead to losses or poor value for money which could have been avoided by the Government of Jersey.
- Requirements
- Name on lease
All leases which relate to immovable property must legally be in the name of the Public of the Island or in the case of Specified Organisations, the company itself. Leases relating to property are governed by separate arrangements within Standing Orders.
3.2 Further guidance
In situations where the Government of Jersey acts as lessee or lessor for lease transactions (excluding operating leases), the requirements are the same as those covered by the borrowing and lending provisions of the Public Finances Law. Therefore, reference must be made to the following sections for further guidance:
• financing
• lending
3.3 Approval from States Treasurer
All lease transactions (excluding operating leases) as defined in the Jersey Financial Reporting Manual, regardless of limit, must be referred to the States Treasurer for approval. The Treasurer, in turn, must seek advice from the Law Officers’ Department.
3.4 Financial appraisal
States Bodies must carry out a full financial appraisal before authorisation is sought regarding any potential leasing arrangement. This should include consideration of penalty clauses and their potential impact on the overall commerciality of the transaction.
3.5 Leasing costs
All costs of leases must be met by the States Bodies on whose behalf the lease is obtained, and should include all associated and incidental costs including potential penalties. The cost of leases must be accurately reflected in the appropriate States Body’s financial statements.
3.6 Framework
The States Treasurer must establish an appropriate framework to ensure that limits on borrowing and lending are not exceeded as a result of lease arrangements without further States approval being obtained.
3.7 Reporting Minister
The Minister for Treasury and Resources must report to the States Assembly every six months on financing (which include lease transactions) and lending undertaken on behalf of the Government of Jersey and which has not previously been approved by the States Assembly and is within the limits delegated to the Minister in the Public Finances Law.
3.8 Documentation
For all leases, the Accountable Officer must be able to provide documentation which indicates that:
• the leasing agreements entered into are competitive
• the cost and terms relating to the leasing are comparative with the outright funding option
• the benefits (tangible and intangible) of using this leasing route outweigh the outright purchase route
Sufficient documentation must be provided to the States Treasurer for all lease proposals and contracts, in order to allow for proper assessment and consideration of the full cost before making a decision to approve or reject the proposal.
3.9 Provision of contracts to Treasury and Exchequer
Copies of all signed lease contracts to which the Public of the Island or Government of Jersey are party to, must be forwarded by the relevant Accountable Officer to Treasury and Exchequer.
3.10 Reporting – Accountable Officers
Accountable Officers must report lease arrangements for both capacities of lessor and lessee in a form specified by Treasury and Exchequer.
Cash
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and applies to Accountable Officers and officers directly involved in the cash handling process.
- In the context of this section, cash means notes and coins, cheques and card receipts, including cash refunds against card receipts. Recognised cash like items such as stamps are also included in this definition. However, cryptocurrencies, digital currencies and other online tokens are not covered within this definition and should not currently be accepted by a States Body (or Specified Organisation) as a form of payment for services.
- In view of the diversity of cash systems operating across the Government of Jersey (e.g. cash floats, school, student funds, patients’ funds) it is not practical to provide specific requirements on all aspects of cash handling. The requirements of this section should be supplemented with States Body specific procedures where necessary.
- Users of the Public Finances Manual should refer to other sections that are relevant. Specifically these include:
• assets
• banking
• expenditure
• fraud
• income
1.5 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
• the States or Government of Jersey is unable to achieve its Strategic Priorities due to poor cash management
• the personal safety of staff and unsecured cash might be compromised
• the States or Government of Jersey could become involved in incidents of money laundering
• cash received is incorrectly recorded
• cash is used unnecessarily, where electronic payments would be better suited
- Principles
- The use of cash to settle transactions is expensive compared to other methods, such as standing orders, bank transfers or direct debits, and poses a greater risk of losses due to fraud, theft or error. Cash handling should, therefore, be kept to a minimum as a method of payment accepted by the Government of Jersey. Debit or credit cards should be the preferred option for one off payments, with cheques and cash only to be used where there is no feasible alternative. In the event that cash is used as a method of payment, such payments should be restricted to a maximum sum to be specified by the States Treasurer. For recurring receipts, Accountable Officers should encourage customers to use bank transfers, direct debits and standing orders to reduce the need for cash handling and encourage timely remittance.
- Cash balances should only be held for petty cash and float purposes, and should be limited to the lowest practicable amount (as agreed with Treasury and Exchequer) to reduce risk of loss or theft. These limits should be periodically reviewed to ensure that they remain as low as feasibly possible. Treasury and Exchequer must be made aware of these balances and any changes to limits. Any proposed changes to these limits should be communicated in advance and agreed with Treasury and Exchequer.
- Accountable Officers should ensure that the number of keys issued, security codes and officers having access to cash are kept to a minimum to reduce the risk of theft. Furthermore, a register of authorised key holders should be kept and maintained at all times, and staff should be aware of the security requirements
- Accountable Officers should ensure that control and assurance frameworks are in place and that they are tailored to cash handling within their States Bodies.
- Requirements
- Scheme of Delegation
Accountable Officers must operate a documented Scheme of Delegation which segregates duties appropriately for their States Body in respect of cash handling. These duties include custody of the cash, transactions involving cash, reconciliations and reporting of cash flows and balances. The Scheme of Delegation must be submitted to the Treasurer for approval.
3.2 Securing Cash
Cash must be held securely in a locked cash box or safe and appropriately protected at all times. Safes are recommended to be of a Eurograde specification appropriate to the value of cash that is expected to be stored. Security arrangements should be communicated to members of staff as appropriate, and only authorised officers should have access to safes and cash boxes. Cash must not be reconciled or stored within the view of the general public. Cash must never be left loose or unattended to and must not be kept in storage cupboards or desk drawers.
3.3 Recording Cash
Accountable Officers must ensure that all cash is appropriately recorded and reconciled, with swift and appropriate actions to be taken where variances occur. Reporting should be undertaken on a timely basis and in the form prescribed by Treasury and Exchequer.
3.4 Refunds
Where required, refunds to credit and or debit cards must only be made to the original card used, and not in the form of cash or cash equivalents (such as vouchers).
3.5 Banking Cash
Banking of cash must be undertaken frequently to ensure that the limits for sums insured are not exceeded.
3.6 Proper Usage of Cash
Accountable Officers must ensure that cash is not used for personal or private purposes and no advances or loans should be given to any member of staff for such purposes, except in accordance with the requirements of the Lending section of the Public Finances Manual.
3.7 Anti Money Laundering
Accountable Officers must ensure that staff within their area of responsibility are aware of the States’ policy.
3.8 Personal Cash
The States’ insurance policy does not cover the loss of personal cash, for example staff collections or lottery syndicates.
Banking
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on the creation, operation and management of bank accounts belonging to the Government of Jersey.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically these include:
• cash
• expenditure
• funds
• fraud
• income
- Principles
- The number of bank accounts as well as balances in commercial banks should be kept to the most economic minimum to minimise the risk of idle funds, error, fraud or theft and allowing for ease of reconciliation.
- Overdrawn balances in bank accounts are not allowed, except by explicit permission from Treasury and Exchequer.
- States Bodies should take appropriate steps to prevent acts of fraud being committed on their bank accounts and transactions.
- Banking operations should be regularly reviewed to reassess the objectives, cost and benefits of maintaining the various bank accounts, diversification and exposure to different banks, rate of returns and credit risk.
- Banking reconciliations should be performed regularly and promptly, and independently reviewed and approved.
- There should be hierarchical controls on transactions, such as making or reviewing payments, and these duties should all be segregated.
- These principles also apply to bank accounts used for trust funds and bequest funds, unless these funds specify otherwise.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
• bank accounts are not serving the Strategic Priorities of the States or Government of Jersey for which they were created
• the States or Government of Jersey is not making the best possible use of balances held in bank accounts to enhance returns
• the States or Government of Jersey’s bank accounts are used to carry out money laundering activities
• the banking arrangements are not efficient or effective and creates inefficiencies in reconciliations, reporting and the use of funds
• bank accounts are operated on terms which are not competitive
• bank accounts are unnecessarily created with a lack of appropriate experience, resulting in avoidable oversights
• the use of banks is not appropriately diversified
- Requirements
- Treasury Approval
Opening and closing of bank accounts must only be undertaken by Treasury and Exchequer, and these should only be with banks registered with the Jersey Financial Services Commission or with banks holding a recognised credit rating and as defined by the States Treasurer.
In limited cases, States Bodies can request that Treasury and Exchequer open or alter a bank account. Such requests should demonstrate the value to the Government of Jersey and explain why the purpose cannot be achieved through the use of existing bank accounts.
The Minister for Treasury and Resources can arrange a bank overdraft or overdraft facility (the value of all overdrafts or overdraft facilities cannot exceed 25% of the estimated income of the States derived from taxes and duties during the previous financial year).
3.2 Frameworks
Each States Body should establish and maintain a suitable framework for monitoring and control of its cash balances and its transmission of funds. The framework should cover, but is not limited to the following:
- the bank accounts operated within the States Body, their purposes, terms (which should be as approved by Treasury and Exchequer) and justification for continuation
- how the different bank accounts are operated, including details such as the acceptable methods of payment
- how the risk of error and fraud are to be managed and prevented
- record keeping, reconciliation and review of bank accounts
- key personnel and authorisation
Specific charges for money transmission and other banking services for States Bodies should be subject to negotiation by the States Treasurer. This ensures that costs are transparent and assists in making comparisons between service providers in order to attain the best terms possible, in line with the overriding principle of best value.
3.3 Scheme of Delegation
Accountable Officers must operate a documented Scheme of Delegation, which segregates duties appropriately for their States Body in respect of bank accounts. These duties include the recording, reconciliation and reporting of bank balances. The Scheme of Delegation must be submitted to the States Treasurer for approval.
3.4 Transmitting Funds
States Bodies should adopt the most economical, secure and quickest means of transmitting funds or operating their bank accounts. Examples generally include the use of internal transfers, electronic methods and cards. However, on a case by case basis, consideration should be given to security and the need to obtain best value for the Government of Jersey. As much as possible, transmission of funds should not be done using cash, cheques, order books or other similar methods involving high security risk.
3.5 Bank Reconciliations and Reporting
Accountable Officers must ensure that reconciliation is carried out on all bank accounts, (at least monthly for those accounts which have more than 10 transactions per month otherwise on a quarterly basis), with appropriate actions to be taken where discrepancies are recorded. This should be reported on a timely basis and in the format and frequency prescribed by Treasury and Exchequer. As a general rule reconciling discrepancies should be cleared within one month.
3.6 Bank Account Reviews
Periodic reviews must also be conducted, at least annually, on all bank accounts maintained to determine the exposure of the States to individual banks, the rate of returns being obtained and their credit risk. In addition, to ensure that they are being used solely and efficiently for their authorised purposes. The outcome of these reviews should be reported to States Treasurer. Dormant or unauthorised accounts identified by these reviews must be closed immediately.
3.7 Overdrafts
Bank accounts are not permitted to be overdrawn without the express permission of Treasury and Exchequer. If any bank account, including those administered by Treasury and Exchequer, becomes overdrawn the negative balance must, as far as possible, be cleared by the end of the next working day by the transfer or deposit of funds. If it’s not possible to address a negative balance the States Treasurer must be notified.
Foreign currency
- Introduction and background
- This section applies to all States Bodies as defined under the Public Finances Law and provides guidance on the planning and undertaking of financial transactions in any foreign currency. The Government of Jersey has receipts and payments in foreign currency, which could be regular or occasional in nature. In addition some States Bodies may have overseas operations which give rise to longer term foreign currency exposures. This section sets out the principles for the management of these cash flows and exposures.
- The aim of this section is to provide guidance as to how to insulate the Government of Jersey, as far as practically possible, from the material adverse impact of foreign exchange movements on its receipts and payments. Additionally, it is also designed to aggregate the overall impact of various expenditure and income so that these can be offset against each other and the net cash flows appropriately managed.
- Foreign exchange movements can be favourable or unfavourable, and on small transactions will have a negligible impact on the Government of Jersey's finances. This section, therefore, focuses primarily on larger transactions. However, the classification of transactions into small and large will be different for each States Body.
- It is also important to note that the Government of Jersey will make gains and losses on foreign currency in the normal course of business which will be reported in the financial statements.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
• Arm’s Length Organisations
• expenditure
• income
• investments
• major Projects
1.6 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
• the States or Government of Jersey could be vulnerable to sudden weakness in Sterling relative to other currencies
• the States or Government of Jersey may be incurring higher than necessary transaction costs for foreign currency transactions
• the States or Government of Jersey may be over exposed to currency transactions if holdings are not at an optimum level
• States Bodies may be undertaking transactions in foreign currency to the disadvantage of, or detriment to, the States or Government of Jersey
• the States Treasury and Exchequer may have incorrect or insufficient documentation of foreign currency exposures
• the levels of foreign currency or positions taken are insufficient to meet foreign currency obligations, resulting in losses or additional costs to the States or Government of Jersey
• the States or Government of Jersey incurs costs in hedging foreign currency exposure that are excessive in comparison with the exposure itself
• overseas operations may accumulate significant foreign currency reserves exposing them to operational risk in the event of currency fluctuations
- Principles
- Foreign currency transactions should only be entered into where they represent best value for money to the States.
- Where possible, foreign currency receipts should be matched with payments to reduce exposure to foreign currency fluctuations.
- Where matching is not feasible, other means of managing foreign currency transaction risk (hedging) should be considered. Only the States Treasurer can be authorised to enter into hedging arrangements.
- Wherever possible foreign currency transactions should be dealt with through cash balances in Euros (€) and US Dollars ($) held by the States Treasurer.
- Foreign currency obligations and transactions as well as balances on foreign currency accounts should be monitored by the States Treasurer on a regular basis, at least monthly.
- Where States Bodies have overseas operations, Accountable Officers should give consideration to the most appropriate way to manage longer term foreign exchange exposure arising from the operations, seeking advice from Treasury and Exchequer.
- Requirements
- Duties of Accountable Officers
Accountable Officers are responsible for:
• submitting details of planned foreign currency receipts and payments in excess of £50,000 to Treasury and Exchequer as part of the Government planning cycle and as soon as any likely additional payments above this value become known
• informing Treasury and Exchequer, in writing, as soon as they become aware of any unplanned foreign currency receipts or payments greater than £50,000
• notwithstanding the amount stated above, States Bodies should apply these requirements to transactions which are individually, or on an aggregate basis, material to their operations
• regardless of the amount, ensuring that all foreign currency payments are clearly identified as such when requesting payment to be processed by Treasury and Exchequer
• ensuring that sufficient approvals are in place relating to the income or expenditure and its total sterling value, and that the expenditure is proper and represents good value for money
• providing a quarterly estimate of foreign currency requirements to Treasury and Exchequer
3.2 Hedging
The Minister for Treasury and Resources is responsible for deciding whether to hedge foreign currency transactions. The Minister for Treasury and Resources can delegate the decision to enter into hedging transactions to an Assistant Minister or an Accountable Officer. The States Treasurer is responsible for entering into hedging arrangements in accordance with this section and the decisions of the Minister for Treasury and Resources.
3.3 Reporting hedging
The States Treasurer must:
• prepare an Aggregated Foreign Currency Cash Flow for consideration by the Treasury Advisory Panel
• inform Accountable Officers of hedging arrangements
3.4 Treasury Advisory Panel responsibilities hedging
The Treasury Advisory Panel should:
• consider and decide on hedging arrangements based on the Aggregated Foreign Currency Cash Flow provided
• determine the most appropriate form(s) of hedging based on individual and aggregated planned cash flows
3.5 States Treasurer responsibilities
The States Treasurer must:
• if hedging appears to be an appropriate option, refer such receipts or payments to the Treasury Advisory Panel, who will advise upon appropriate hedging arrangements
• require the foreign currency receipts or payments to be translated into Pound Sterling (£) on the day of receipt or payment if they are not covered by a hedging arrangement
• require the receipt or payment to be paid into or from an account specified by Treasury and Exchequer
• inform the Accountable Officer of the appropriate action required
3.6 Minor Foreign Currency Receipts and Payments
Where relatively small foreign currency transactions occur (i.e. less than £50,000) the transaction will not routinely be hedged(unless the amount forms part of a series of smaller transactions which when totalled meet the £50,000 threshold), and the Accountable Officer need not inform the States Treasurer in advance of this type of foreign currency expenditure. Minor receipts and payments in Euros and US Dollars must be processed through foreign currency accounts. Minor transactions in other currencies must be translated at the time of the Transaction.
3.7 Cash Management
• All currency receipts, unless hedged, must be changed into Sterling upon receipt, unless the States Treasurer believes that such currencies are likely to be needed for payments in the near future. All currency payments, not hedged, must be translated from Sterling into the relevant currency prior to the payment being made
• Accountable Officers must report to Treasury and Exchequer their expected foreign currency transactions at the beginning of each quarter in order that the overall foreign currency requirements can be considered
• the States Treasurer must:
- monitor the balances on the foreign currency accounts and report them to the Treasury Advisory Panel at least quarterly
- maintain foreign currency accounts in (as a minimum) US Dollars and Euros
• the Treasury Advisory Panel should consider the level of foreign currency holdings and the timing of translation to Sterling
3.8 Costs
Costs, and gains associated with foreign exchange translation and hedging arrangements associated with a transaction must be borne by or attributed to the States Body (States Fund or Trust Fund) undertaking the transaction.
3.9 Accounting and Budgeting
Accounting for foreign currency transactions must be undertaken in accordance with the Jersey Financial Reporting Manual. The States Treasurer must inform Heads of Finance Business Partnering of the exchange rate to be used in budgeting foreign currency income and expenditure as part of the Government planning process. The exchange rate applied to un hedged foreign currency transactions for the purposes of calculating the relevant Sterling cost to the relevant budget must be determined by the States Treasurer by reference to current exchange rates and Government of Jersey accounting policies. Gains and losses made on foreign exchange must be reported in the Government of Jersey annual financial statements.
3.10 Overseas operations
Accountable Officers responsible for overseas operations should consider foreign exchange exposures as part of their overall strategy for those operations, consulting Treasury and Exchequer for advice if necessary. In particular consideration should be given to whether matching payments and receipts in the same currency provides sufficient mitigation for the exposure or whether additional hedging should be considered. Advices should be sought from Treasury and Exchequer.
Expenditure and procurement
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and applies to all expenditure made by Accountable Officers of States Bodies, or on their behalf. The principles should be applied to all public expenditure by any person authorised by an Accountable Officer to undertake that expenditure.
- This section excludes Benefit Payments. However, such payments should be appropriately documented. It also excludes the following, which will be subject to separate, specific guidelines:
• depreciation (see Annual Financial Statements)
• impairments, losses and write offs (see Losses and Write offs)
• finance charges (see Financing)
• special payments (see Special Payments)
• grants (see Grants)
• payments to staff (other than expenses) (see relevant Human Resources guidelines)
1.3 Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically these include:
• Major Projects
1.4 Additional guidance can be found in:
• Procurement Best Practice Procedures Toolkit
• Travel Policy
• Policy on the use of Consultants
1.5 In addition to the common risks identified in the Background and Introduction section of the Manual a number of significant risks relating to this section include:
• expenditure is not properly authorised
• purchases are made which either do not represent good value for money or fail to leverage the States or Government of Jersey’s buying power
• expenditure is considered irregular i.e. is not spent for the purposes intended
• the States or Government of Jersey does not demonstrate sufficient adherence to the principles set out in United Nations Convention against Corruption (Principle 9: Anti Corruption) or other International Agreement related to Procurement and expenditure that the States or Government of Jersey is party to
• the States or Government of Jersey’s reputation may be compromised as a result of poor procurement practice and weak governance arrangements
• the competition process and subsequent contract award is not open, fair or transparent or could be at risk of legal challenge
• contract terms and conditions do not provide adequate protection to the States or Government of Jersey
• goods or services are paid for more than once in error
• expenses claims are inadequately evidenced or are paid more than once in error
• States or Government of Jersey employees are not protected from unwarranted criticism from not following due process, best practice guidance or adherence to principles
• expenditure is incorrectly recorded
- Principles
- All expenditure should be incurred in accordance with the Scheme of Delegation.
- All expenditure should be furthering the Strategic Priorities for which the funding was allocated by the States Assembly.
- Accountable Officers should primarily seek to obtain value for money at all times.
- Accountable Officers should ensure that all procurement processes are open, fair, transparent and follow the requirements of all international obligations applicable to the Government of Jersey.
- All expenditure should be appropriately authorised, recorded and coded.
- All expenditure should be approved in advance of goods or services being received, utilising Supply Jersey or other approved Government of Jersey systems and payment should not be made in advance of receiving the goods or services.
- All expenditure should be subject to segregation of duties control i.e. no one officer should be able to raise an order, receipt the goods or services received and approve payment of the invoice.
- Requirements
- Scheme of Delegation
Accountable Officers must document and operate a Scheme of Delegation for their States Body which segregates duties as appropriate for authorisation relating to expenditure transactions. The Scheme of Delegation must also specify who is able to sign contracts. The Scheme of Delegation must be submitted to the Treasurer for approval.
3.2 Corporate Procurement Contracts
Corporate procurement contracts must be used unless an exception is documented within the Scheme of Delegation and approval (by exemption) has been obtained from the Group Director Commercial Services. In the case of a genuine emergency, these incidences must be documented and the Group Director Commercial Services advised as soon as possible afterwards.
3.3 Supply Jersey
Supply Jersey (and any successor system) must be used to manage purchasing of goods and services, except where alternative approaches have been approved by the Group Director Commercial Services through an exemption.
3.4 Expenditure Controls
Accountable Officers must ensure that there are appropriate controls in place over the expenditure process to ensure effectiveness and efficiency. These should include matching vendor invoices to the purchasing instrument (e.g. purchase order) and receipt before any payment is made. There must be segregation of duties between raising orders and approving payment of the relevant invoice.
3.5 Expenditure Authorisation
Certain expenditure may require specific authorisation in addition to that required by the Scheme of Delegation. This includes but is not limited to:
• any vehicle purchase that is being considered that hasn’t already been agreed with Jersey Fleet Management
• any I.T. purchase being considered that needs to connect to the Modernisation and Digital, Police or Education Curriculum Services networks or equipment
• any legal services required that have not been authorised with the Practice Director of the Law Officers’ Department
• major projects (as defined in the Major Projects section)
In general, it may be appropriate to seek specific authorisation where the expenditure impacts on the activities of another States Body.
3.6 Lease Agreements
Approval by the States Treasurer must be obtained before entering into any lease agreement.
3.7 Long term Contractual Agreements
In the case of contractual arrangements where the obligation to pay extends beyond the end of the current Government Plan period, other than Major Projects or Leases, the States Body concerned must obtain approval from Treasury and Exchequer before entering into any such arrangement. Care should be taken where the future source of funding is uncertain e.g. for new initiatives, or where the ability to pay depends upon the future generation of income. The Government Plan will include three years’ worth of indicative expenditure, providing a reasonable indication as to the levels of funding available over the time period.
3.8 Payments in Advance of Receipt
Payment must not be made in advance of receipt of goods and services, except where this is a normal condition for the goods or services being ordered (for example, subscriptions to magazines and periodicals, conference and course fees). If there is doubt about whether this is a normal condition, Commercial Services should be contacted. Exceptions may be made where advance payment represents good value for money e.g. early payment discounts. Such exceptions will require approval by the Group Director Commercial Services except where the States Body’s Scheme of Delegation requires otherwise.
3.9 Payments after Receipt
Where it is possible to pay after receipt, States Bodies should process purchases of goods and services in the appropriate financial period.
3.10 Online Purchases
When purchases are being made via the internet, Accountable Officers should ensure that Government of Jersey I.T. security policies are followed including the use of secure checkouts.
3.11 Goods and Services Tax
Goods and Services Tax and other sales taxes, such as Value Added Tax, should only be paid where legally required.
3.12 Pre Orders
It may be necessary or expedient for a States Body to order goods or services towards the end of a financial year for which no provision has been made in that year’s budget allocation. For example, by pre ordering a better price or discount can be achieved or continuance in service provision is ensured. This type of pre ordering is permissible under the Public Finances Law provided that the goods or services are neither received nor paid for until the following financial year and the expenditure is included in the indicative budget for the following year as agreed in the Government Plan.
3.13 Purchase Cards
Accountable Officers should ensure that Purchase Cards are used in accordance with the guidelines outlined in the Procurement Best Practice Procedures Toolkit or other agreed policy.
3.14 Achieving Value for Money
Expenditure must be undertaken in accordance with the Procurement Best Practice Procedures Toolkit (including putting contracts out to tender according to the criteria set out in the Toolkit) unless an exemption has been approved.
3.15 Travel
All travel should be booked and undertaken in accordance with the Travel Policy.
3.16 Consultants
All expenditure on consultants must comply with the Policy on the use of Consultants as well as this section of the Manual.
3.17 Capitalisation of assets
All purchases of assets for more than £10,000 must be accounted for as capital and the asset added to the asset register.
Arm’s Length Organisations
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and all States Funds created in accordance with the Public Finances Law. It provides guidance on their interactions with Arm’s Length Organisations (ALO’s). This section does not apply where the financial relationship between the Government of Jersey and an external organisation is on a contractual basis. This section does not apply to Grants to organisations (see Grants and Sponsorship section).
- The public service provides an increasing range of services both through the traditional ministerial department delivery model and indirectly through other organisations such as Arm’s Length Organisations. Arm’s Length Organisations are typically established by, and either substantially funded or economically dependent on, the Government of Jersey. Some Arm’s Length Organisations are given statutory powers to levy charges for services to cover part or all of their expenditure.
- The overriding consideration in any Arm’s Length Organisation arrangement is the achievement of the Government’s key Strategic Priorities in the most effective, efficient and economic manner, ensuring the imposition of robust controls over governance including probity and regularity in the use of public funds.
- For the purposes of this section, the definition of an ‘Arm’s Length Organisation’ is an organisation which fulfils a role or function the Government of Jersey would otherwise perform.
The definition does not extend to organisations which receive funding from the Government of Jersey of less than £75,000 per year.
The definition also excludes the following Specified Organisations listed in schedule 2 of the Public Finances Law:
- Andium Homes Limited and its subsidiaries (if any)
- Jersey Overseas Aid Commission
- Jersey Post International Limited and its subsidiaries (if any)
- JT Group Limited and its subsidiary companies (if any)
- Ports of Jersey Ltd.
- States of Jersey Development Company Limited and its subsidiary companies (if any)
Whilst these organisations are required to comply with the principles set out in this section, they are guided by specific arrangements. This includes the ability for the Principal Accountable Officer to appoint and determine the functions of the Accountable Officer for these organisations, and to ensure the propriety and regularity of their finances.
These Specified Organisations also have Memoranda of Understanding (and associated documents) in place setting out their relationship with the Government of Jersey. They should give consideration to whether, where relevant, their own policies and procedures should conform to the requirements of this Manual.
1.4 Accountable Officers of sponsor departments (i.e. the Government department which has the primary relationship with the Arm’s Length Organisation, and accounts for expenditure on that Arm’s Length Organisation within its head of expenditure) can elect to treat a grant receiving body as an Arm’s Length Organisation and apply the more strict requirements of this section (as compared to the Grants section) even if the body does not meet the full definition of an Arm’s Length Organisation as specified above.
1.5 Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
- expenditure
- funds
- grants
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- Arm’s Length Organisation service priorities are not fully aligned with corporate and States Bodies’ priorities
- Arm’s Length Organisations do not represent the most effective mode of service delivery, in terms of value for money against alternative service provision options
- the business case for an Arm’s Length Organisation is based on inadequate or inaccurate assumptions and not properly evaluated
- service and performance targets are not adequately defined
- construction of the Service Level and Funding Agreement is not comprehensive, does not deal with non performance, and does not include the required information requirements and governance issues
- there is inconsistent application of controls and performance management of Arm’s Length Organisations across the States or Government of Jersey, with inconsistent frequency in performance assessment and absence of commonality in information requirements and documentation
- oversight from States Bodies of the Arm’s Length Organisation is sub optimal and that inadequate challenges are being applied in the tracking of operational and financial performance management
- there is a lack of agility in States Bodies’ responses to sub standard Arm’s Length Organisation performance
- there is inadequate rigour within governance controls covering the management of the relationship between the States or Government of Jersey and Arm’s Length Organisations
- service delivery risks are not properly managed
- there is conflict of interest between those representatives of the States or Government of Jersey involved in decision making and Arm’s Length Organisation performance management
- there is inadequate corporate oversight of Arm’s Length Organisation strategy and performance management
- Arm’s Length Organisations do not have sufficient understanding of the States’ insurance programme and their own insurance requirements, resulting in their being under insured or incurring excessive and or unnecessary premiums
- Principles
- All Arm’s Length Organisation activity should contribute towards the strategic priorities of the Government of Jersey and optimise independence, flexibility, skills and funding capability associated with Arm’s Length Organisation based provision.
- Service delivery should be aligned to the priorities of the Government of Jersey and the sponsor department.
- The merits of establishing a relationship with an Arm’s Length Organisation should be well defined and based on robust assumptions.
- Sponsor departments should exercise a risk based approach to assurance, governance and the oversight of operational and financial performance.
- There should be a consistent approach to the utilisation of Arm’s Length Organisations across the Government of Jersey and a continuous challenge required on both Arm’s Length Organisation performance and the utilisation of Arm’s Length Organisations as representing the most optimal mode of service delivery against viable alternative options.
- Requirements
- Accountable Officers
There must be an Accountable Officer responsible for each Arm’s Length Organisation (normally the Accountable Officer for the department funding the Arm’s Length Organisation, the Principal Accountable Officer will have ultimate responsibility for appointing an Accountable Officer) who will ensure accountability for the use of resources and that the Government’s Strategic Priorities in relation to the Arm’s Length Organisation are achieved. The responsibilities and interaction with the Accountable Officer of the sponsoring States Body and other guidelines on Accountable Officers for Arm’s Length Organisations are covered in the Accountable Officers section.
3.2 Creation of an Arm’s Length Organisation
The Accountable Officer for the States Body must prepare a business case for consideration by the States Assembly for any new Arm’s Length Organisation. Any assumptions contained within the business case must be robust and provide evidence that creation of an Arm’s Length Organisation provides the most advantageous position over other existing methods of service provision in terms of value for money.
3.3 Checks and reporting
The Accountable Officer must have documented arrangements in place that include:
- a six monthly assessment of operational and financial performance. This should focus on the aims and priorities of the Arm’s Length Organisation and how these are being met, whether the standards set by the Government of Jersey have been met, other key performance measures and targets and (where applicable) disclosure of future Arm’s Length Organisation planning initiatives and how they are likely to impact upon the achievement of the Government of Jersey’s corporate and States Bodies’ priorities. The Accountable Officer’s review should also consider issues of efficiency, including the potential for efficiency savings, and make relevant recommendations. They should examine whether the Arm’s Length Organisation could provide better value for money, including where appropriate, the organisation’s contribution to economic growth. A pragmatic and risk based approach should be adopted in meeting this requirement, with consideration given to the size of the Arm’s Length Organisation and the nature of its activities.
- an annual assessment, that each relevant Arm’s Length Organisation under the States Body’s oversight remains the optimal route to service delivery given current and or expect performance against alternative modes. When assessing whether an Arm’s Length Organisation remains the optimal route to service delivery, an Accountable Officer should give specific consideration to the following:
- does the Arm’s Length Organisation perform a technical function, which needs external expertise to deliver?
- does the Arm’s Length Organisation perform a function which needs to be, and be seen to be, delivered with absolute political impartiality?
- does the Arm’s Length Organisation perform a function that needs to be delivered independently of ministers to establish facts and or figures with integrity?
The six monthly and annual assessments must be carried out in sufficient time to enable the relevant Minister approving the grant to be provided with the results of the assessments. These should be considered by that Minister when deciding whether the grant should be approved.
3.4 Documentation
The Accountable Officer must ensure that there is a written agreement governing the relationship with each Arm’s Length Organisation for which they are accountable, which contains robust controls and specific service measures to enable rigorous and effective performance management.
3.5 Further Considerations
In normal instances and depending on the size and risk associated with the Arm’s Length Organisation, the Accountable Officer should consider:
- ensuring that, wherever possible, officers involved in developing policy with an Arm’s Length Organisation are different from those tasked with monitoring the relationship with the Arm’s Length Organisation
- ensuring that suitable sanctions can be put in place for non or sub standard performance including the withdrawal of funding and that suitable alternative service provision options are available to be activated if required
- ensuring the effective management of risks associated with Arm’s Length Organisation service delivery and relationship management
- ensuring that States Member or Government officer membership of the Arm’s Length Organisation Board (if applicable) is defined in line with relevant Government of Jersey policies
- ensuring that no Accountable Officer shall be a member of any Arm’s Length Organisation Board (if applicable) or decision making forum within an Arm’s Length Organisation
- certifying that effective arrangements are in place for compliance with the requirements of this section on an annual basis.
In those instances where an Arm’s Length Organisation is established by an Act of the States the Accountable Officer has the same responsibilities as an Accountable Officer for a States body.
3.6 Corporate Oversight
Accountable Officers must provide any information requested by an officer or group exercising corporate oversight when requested, and in the form requested.
Major Projects
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and applies to all Major Projects, as designated in the Government Plan, planned and executed by those States Bodies.
- A major project is defined in the Public Finances Law as:
- a capital project the duration of which, from start to finish, is planned to be of more than one year and the total cost of which is planned to be of more than £5 million; or
- a project that has been designated as a major project under an approved government plan.
- A capital project is a project which results in the creation of an asset which will be held on the Government’s balance sheet.
- The purpose of this section is to provide States Bodies (and any other entity to which States funding has been allocated for Major Projects) with the requirements for the control of Major Projects. It is designed to provide users with guidance throughout the entire process of a Major Project, from the identification of a requirement to the post completion review of the completed Project.
- Major Projects may include the development of both tangible assets (e.g. I.T. hardware) and intangible assets (e.g. intellectual property).
- Any departure from the procedures set out in this section must first be agreed by the Senior Responsible Officer and then be approved by the States Treasurer.
- The flowcharts on the following pages summarise how a Major Project develops over its life cycle, including funding approvals and control and implementation processes in line with the requirements of this section.
- Major Projects must be accounted for in accordance with the Jersey Financial Reporting Manual. Additional guidance on Accounting for Capital is provided by the Capital Accounting Manual.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant including:
- financing
- budgeting
- expenditure
- funds
- losses and write offs
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- the cost of Major Projects is not controlled
- Major Projects are not delivered on time and to the required level of quality
- Major Projects are not appropriately selected, authorised and managed
- the States’ reputation may be compromised as a result of poor procurement practice and weak governance arrangements
- the States does not demonstrate sufficient adherence to the principles set out in United Nations Convention against Corruption Principle 9 (Anti Corruption or other International Agreements) related to Procurement and expenditure that the States or Government of Jersey is party to
- the competition process and subsequent contract award is not open, fair or transparent or could be at risk of legal challenge
- States or Government of Jersey employees are not protected from unwarranted criticism from not following due process, best practice guidance or adherence to principles
- contract terms and conditions do not provide adequate protection to the States or Government of Jersey
- expenditure is not properly authorised
- purchases are made which do not represent good value for money or leverage the States or Government of Jersey’s purchasing power
- Principles
- In order to ensure that Major Projects are delivered as efficiently and economically as possible, the Government Plan will contain details of all Major Projects expected to be commenced or continued during the life of the Government Plan. All such Projects will form the Major Projects Envelope. The Major Projects Envelope will contain indicative timings for each Major Project but these will be subject to change at the discretion of the Principal Accountable Officer and the States Treasurer either due to delays in commencement of the Major Project or changes in the Strategic Priorities of the Government of Jersey.
- Major Projects (i.e. those specified as such in the Government Plan) must be properly selected, authorised and controlled.
- Major Projects must be subject to proper governance processes (see section on Project Governance below).
- The execution of Major Projects should be conducted in a transparent manner with regular (at least every six months depending on the scale of the project) reports to the States Assembly on progress.
- Major Project plans should be realistic and responsive to unexpected events. Any variations to budgets for Major Projects should be appropriately and transparently authorised and recorded in line with the governance framework set out at the beginning of the Major Project.
- Accountable Officers should seek to obtain value for money at all times.
- All responsibilities and accountabilities for Major Projects should be appropriately and transparently authorised and recorded.
- All expenditure should be appropriately authorised, recorded and coded.
- Projects will usually result in continuing activities after the completion of the Project. These should be planned in conjunction with delivery of the Project and not subsequently. Typically, the States Body that will be responsible for the continued services or receive the asset once it is completed, will be the sponsoring Body for the Project and as a result involved from the outset. Should this not be the case, the Body responsible for the continued activities should still be involved at an early stage and throughout the Project. Consideration should also be given as to how such continuing activities are accommodated in the Government Plan.
- Clear responsibility should be established that balances responsibilities of the client department(s) and the supplying or delivering department.
- Requirements
Project Governance for Major Projects
3.1.1 Pre Implementation
A Project Governance structure must be put into place before Project implementation has begun in all cases. For some Projects it may have been appropriate to establish this structure earlier, for example before the feasibility study is undertaken. Project Governance will need to be tailored to the circumstances of the specific Major Project and, should the need arise, may need to be adapted as the project progresses.
Once appointed, the Project Manager must develop the Project Delivery Documentation.
The Sponsoring Body must be identified. This will normally be the department which will receive, hold and operate the asset created by the Major Project. Where a different department will be responsible for delivery the respective responsibilities must be clearly documented.
The Accountable Officer of the Sponsoring Body (or their delegate) must ensure that the documentation prepared before the commencement of the Project includes a sufficient consideration of the elements in the following table. The Table also shows which documents may consider each element.
Element | Initial Project Assessment | Outline Business Case | Feasibility Study | Project Delivery Documentation |
Need and Business Opportunity | x | x | | |
| developed | | |
User Requirement | | x | x | |
| | developed | |
Fit with Strategic Priorities and Property Strategy | x | x | | |
| | | |
Alternatives and Preferred option | x | x | x | |
high level | developed | preferred | |
Benefits and Costs | x | x | x | |
| developed | developed | |
Financial Analysis, VFM and Affordability | | | x | |
| | | |
Constraints, e.g. Budget, Timeline | | x | | |
| | | |
Market Analysis | x | x | | |
| developed | | |
Risk Assessment and Sensitivity Analysis | | x | x | x |
| | | detail |
Flexibility and Future Proofing | | x | x | x |
| | | |
Detailed Specification | | | x | |
| | | |
Implementation Plan with Milestones | | | x | x |
| | high level | developed |
3.1.2 Project Delivery Documentation
The Project Delivery Documentation must be developed to a sufficiently detailed level to enable the Sponsoring Minister to sign off the responsibility to the Senior Responsible Officer. The Documentation should be endorsed by the Project Board (including the Senior Responsible Officer), and then formally signed off by the Sponsoring Body via a Ministerial Decision (or other suitable approval in line with an approved Scheme of Delegation).
In developing the Project Delivery Documentation, the Sponsoring States Body should consult with key stakeholders and document the consideration of this consultation. Where elements of the proposed approach are challenged, responses to challenges must be formally documented.
Where the Supplying States Body differs from the Sponsoring States Body, the Supplying States Body must also endorse the Project Delivery Documentation. The Project Delivery Documentation must include:
- Governance Arrangements, including:
- details of the Governance Structures in place for the Project
- an assessment of the appropriateness of the experience and qualifications of the Project Board (individually and collectively)
- an assessment of the appropriateness of the experience and qualifications of the Project Manager, and any planned use of external Project Management advice to support them
- terms of reference for the Project Board
- relevant Schemes of Delegation relating to the Project (or reference to existing departmental delegations), including for procurement authorisations, approvals of variations to contracts and approvals for use of contingency amounts
- details of the sign off process for the Project, including any stage sign off
- details of the professional standards to be used to document work undertaken, including recording of proceedings and decisions of meetings
- updated Detailed Business Case (building on the Outline Business Case and Strategic Business Case)
- clear reporting structures – format and timing
- detailed project Plan, including:
- a list of critical tasks, scheduled in the correct sequence with sufficient contingency time
- a breakdown of each task into logical and manageable sub tasks with milestones or gateways and a realistic schedule allowing for potential delays
- consideration as to which tasks are best undertaken in house and which should be outsourced
- estimates for all resources required (not just the financial budget), in line with the breakdown of the task. This will include in house resources which may not be costed within the Project (e.g. the Senior Responsible Officer’s staff time)
- a plan for implementation and handover once the Project is completed, including any testing, training, etc.
- Evaluation model for option appraisal, including
- unambiguous, weighted criteria
- process for adjusting criteria
- process for using the model and reporting evaluations undertaken
- Risk Management Strategy, including:
- planned use of internal audit for assurance purposes, including proposed timings and scope of reviews
- a strategy to deal with issues that may arise
- see Risk Management Code of Practice for additional guidance on Risk Management
- Communications Strategy, including:
- what professional standards for communications will be followed
- arrangements for the involvement of service providers, service users, other stakeholders and the wider public as appropriate – with milestones
- a framework for reporting progress on the Project to the Project Board, Sponsoring Minister and other parties, considering financial performance, progress (including both timeliness and quality of output) and risks and issues
- consideration of how frequently to publish progress updates in a form available to the public and what information those updates should contain. The presumption should be that progress against Key Performance Indicators identified at the outset of the Project should be published unless there is a legal or contractual requirement that prevents this. These updates should be at least quarterly.
- Plan for the use of external advisors, including:
- the nature, extent and timing of engagement of external advisors, focusing on both current patterns of and potential changes in patterns of service delivery
- identification of data and information already available (and so will not need to be provided externally at further cost)
- arrangements for monitoring against the plan
- Arrangements for political oversight
- compact and focused groups must be established for political oversight
- political oversight groups must have terms of Reference for such groups that include responsibilities for reporting
- decisions taken by political oversight groups must be clearly recorded as such, in particular where they are not in accordance with other work of the Project Board or Team. Decisions to defer decisions must be recorded.
The Project Manager must ensure that all elements of Project Delivery Documentation are kept up to date throughout the implementation of the Project.
The Project Manager must maintain a Risk Register and Issues Register throughout the implementation of the Project in a form agreed with the Director of Risk and Audit or their delegate.
3.1.3 Project Governance Structures
The minimum Project governance structure set out in this section must be put into place before Project implementation has begun in all cases. For some Projects it may be appropriate to establish this structure earlier, for example before the Feasibility Study is undertaken.
3.1.4 Sponsoring States Body and Minister
The Sponsoring States Body will normally be the States Body that will be the primary end beneficiary of the Project outcome they will also be known as the User Body. For example the Children, Young People, Education and Skills Department would be the Sponsoring States Body for the building of a school despite the work being undertaken by Jersey Property Holdings. Where the Project cuts across several States Bodies, a lead or primary States Body will be identified that will take the role of the Sponsoring States Body.
The Accountable Officer for the Sponsoring States Body is responsible for:
- agreeing the composition of the Project Board and appointing the Senior Responsible Officer
- obtaining decisions at a political level which are beyond that group’s remit
The ultimate responsibility for the management of expenditure against budget for Major Projects lies with the States Body to which these funds have been voted, which will normally be the Sponsoring States Body. Where the Supplying States Body is different to the Sponsoring States Body, control of the budget may be transferred to the Supplying States Body. Any such decision should be formally documented as part of the Project Delivery Documentation. Regardless of where control of the budget lies, the Accountable Officer of the Sponsoring States Body will have ultimate responsibility for the delivery of the Project.
In some circumstances there may be more than one Sponsoring States Body. In this case, a primary Sponsoring States Body must be identified who will bear ultimate responsibility for delivering the project. Regardless of the number of Sponsoring Bodies, on completion of the Project a single organisation must be identified to be responsible for the delivery of anticipated benefits from the continuing services arising from the Project.
3.1.5 Supplying States Body
The Supplying States Body is the Body which is responsible for the delivery of the Project. For example, for a Project to build a new school the Supplying States Body would be Jersey Property Holdings.
The Supplying States Body is responsible for delivery against the Project Plan as agreed by the Sponsoring States Body. Where the Senior Responsible Officer has concerns regarding such delivery they should discuss with the Project Manager in the first instance. If the issues cannot be resolved the Senior Responsible Officer must inform the Accountable Officer of the supplying States Body. The supplying States Body is responsible for the management of expenditure against any budgets transferred to it relating to a Major Project.
3.1.6 Senior Responsible Officer
The Senior Responsible Officer is the individual nominated by the Sponsoring States Body who is ultimately accountable for the effective delivery of the Project. The Senior Responsible Officer will normally be the Accountable Officer of the Sponsoring States Body, however, the Accountable Officer may delegate this responsibility to another named officer.
The Senior Responsible Officer will also have overall responsibility for the proper governance of the Project. The role of Senior Responsible Officer is one of oversight and, as a result, the Senior Responsible Officer should not be involved in Project delivery, which is the role of the Project Manager.
If the Accountable Officer is not the Senior Responsible Officer then the Senior Responsible Officer will act on all matters on behalf of the Sponsoring States Body except for decisions at a political level which are beyond the remit of the Senior Responsible Officer, which the Accountable Officer will be responsible for obtaining and cannot be delegated. If required, the Accountable Officer will consult the Minister of the Sponsoring States Body. The Senior Responsible Officer must ensure that the Sponsoring Minister is appropriately briefed on the Project status.
The Senior Responsible Officer is responsible for the appointment of the Project Manager, chairing the Project Board and where necessary briefing the Project Board on matters of a political nature that affect the Major Project. The Senior Responsible Officer should also ensure Terms of Reference are prepared for the Project and ensuring that the Project is undertaken in accordance with them.
3.1.7 Project Board
The Project Board is responsible for the effective delivery of the Project. The remit of the Project Board is to:
- provide unified direction to the Project and, in particular, to the Project Manager
- challenge any reported variations to the expected Project plan on a timely basis in order that decisions can be taken at the appropriate level
- ensure effective decision making related to the Project
- provide visible and sustained support to the Project Manager
- ensure effective communication and reporting between the Project team, its relevant ministers and senior civil servants and other stakeholders
Whilst the Project Board is responsible for the effective delivery of the Project, the Senior Responsible Officer remains ultimately accountable for the Project and is therefore the key decision maker. If a consensus cannot be reached the decision of the Senior Responsible Officer is final. In situations where consensus cannot be reached, the Senior Responsible Officer should consult the Principal Accountable Officer before making the final decision.
Project Board composition will depend on the nature of the Project and Sponsoring States Body’s requirements. The Board must be chaired by the Senior Responsible Officer.
Other Board members must include:
- a representative from the Supplying States Body (where this differs from the Sponsoring States Body)
- departmental Head of Finance Business Partnering (from the States Body responsible for reporting on the Project budget, usually the Supplying States Body), or their representative
- other relevant stakeholder representatives as determined by the Senior Responsible Officer (for example a User Representative)
- subject matter experts (e.g. quantity surveyors, lawyers) as appropriate to the Major Project and not directly involved in the delivery of the Project
The Sponsoring States Body may co opt into the Project Board other States officers or independent advisers to provide particular expertise. The group’s composition may change depending on the stage of the Project, and any changes in composition must be minuted. The Public Accountable Officer should be notified of the initial composition of the Project Board and of any subsequent changes.
3.1.8 Project Board – Sub groups
Sub groups may be formed under the Project Board to consider specific elements of a Project, e.g. design or communication strategies.
The Project Board must put into place mechanisms for these sub groups to report back to the Project Board.
3.1.9 Project Manager
Every Major Project requires the appointment of an individual, named, Project Manager, who has delegated responsibility for preparing the detailed Project Delivery Documentation and managing the implementation of the Project.
The key role of the Project Manager is to support the Senior Responsible Officer in delivering the Project on time and within budget and also to ensure that the flow of information between the Project Team and Project Board is timely and accurate.
The Project Manager’s responsibilities include:
- delivering the Project in line with the Project Plan, on time and within budget
- preparation of suitable Project documentation
- development of the Project Delivery Documentation
- management of the Project in accordance with the plan
- ensuring copies of all relevant Project documentation are maintained with adequate version control
- control of changes following approval
- assistance in determining and managing risks and ensuring the risk register is updated on a timely basis
- management of the Project budget, including the contingency provision
- co ordination of the Project team
- determination of the procurement strategy in accordance with the Procurement Best Practice Procedures Toolkit
- establishment of transparent, formal reporting arrangements in compliance with this section
- completion of the Post Project Review
The Project Manager should be suitably experienced in Project Management (and will generally hold relevant qualifications).
If there is insufficient in house expertise or resources available to manage the Project, the Senior Responsible Officer must recommend to the Sponsoring States Body that consideration is given to the need to employ additional expertise in the form of an external Project Manager.
3.1.10 Project Team
The Project Team is normally managed by the Project Manager. The composition of the Project Team will vary depending on the size, nature and complexity of the Project, and the mix of skills required.
Should the Project Board decide that external expertise is required to support the Project team then the selection and appointment should follow the requirements of the Expenditure section.
If the external expertise involves the appointment of a consultant the requirements of the Expenditure section must also be followed.
3.1.11 Internal Audit
Every Major Project will be subject to an internal audit during the life of the Project. Therefore, all information and documentation requested by the internal auditor must be provided in a timely manner. As such documentation on the Project must be maintained for inspection.
Further information on the role of the internal auditor can be found in the section on Internal Audit.
3.1.12 Contingency Amounts
The budget relating to any contingency amounts must be held separately from the remaining Project budget.
The use of any contingency amounts must be approved in line with the Scheme of Delegation set out in the Project Delivery Documentation, or by the Project Board.
Contingency amounts must only be used to ensure the delivery of the original Project Scope.
Any use of contingency amounts to fund enhancements to the quality or scope of a Project must be approved by the States Treasurer (or their delegate).
Expenditure must not be incurred against the contingency object account, and must instead be recorded against an appropriate expenditure code. Budget should be transferred to the relevant object account for management reporting purposes.
3.2 Feasibility Assessment
3.2.1 Project Initiation
A Project will be initiated when a need is identified by a States Body. This need could arise from an identified problem with an existing service or facility, a new requirement or an area where improvements are possible or required.
A Project must be considered in the context of the Strategic Priorities of the Government of Jersey and any relevant medium and long term plans and strategies (e.g. the Long Term Capital Plan, Economic Framework Strategy). Consideration should be given as to whether the necessary resources will be available in upcoming years and the competing future demands on the Government of Jersey’s funds. Consideration must also be given as to whether the need(s) can be met through changes to business as usual processes.
If the need(s) cannot be met as part of current or expanded business as usual processes, a Project to deliver a solution should be considered and a Strategic Business Case must be drafted.
The Strategic Business Case must give a clear and focussed brief before more detailed work is undertaken, and must include:
- a definition of the requirement (i.e. the details of the need or business requirement)
- the benefits of addressing the requirement, and the consequences of not addressing the requirement, including linkages to Strategic Priorities and strategic risks
- consideration of relevant factors, including political, economic, social, technological, environment, legal and ethical considerations
- an outline of feasible options (including doing nothing) with initial estimates of costs
- consideration of the approach to funding the Project, including whether borrowing (see Financing section) would be beneficial and whether cooperation with other jurisdictions e.g. Guernsey may be appropriate to reduce the risks or increase the benefits of delivering the Major Project.
The Strategic Business Case must be considered by the Accountable Officer or their delegate(s), and a decision made as to whether the Project should be progressed. A record of the review and the reasons for the decision must be made (for example as a note to the initiation report or in formal minutes), and a copy of this documentation retained.
If the Project will include expenditure on Information Technology, Systems and Services the additional specific requirements for Information Technology. Expenditure within the section Expenditure must be followed.
If the decision is taken to progress with a Project, subsequent funding should be sought following the procedures in this section.
As the Strategic Business Case is part of the Business Planning activities of the Sponsoring States Body it will normally be funded from that Body’s revenue cash limit determined in the Government Plan. Any alternative funding source must be agreed with Treasury and Exchequer in advance.
3.2.2 Project Funding Approvals – Step 1: Outline Business Case and Inclusion in Long Term Revenue Plan, Long Term Capital Plan and Government Plan
An Outline Business Case must be drafted and submitted to Treasury and Exchequer before the Project is considered for inclusion in the Long Term Revenue Plan or Long Term Capital Plan. An updated Outline Business Case may be submitted as part of updates to the relevant plan.
The Outline Business Case must be drafted by the Sponsoring States Body, and approved by the Accountable Officer (or their delegate) and the Head of Finance Business Partnering.
Where a different States Body or States Bodies (the “Supplying States Body”) will deliver the Project the Sponsoring States Body must consult with them and seek their endorsement before submission of the Outline Business Case.
Projects in the Long Term Revenue Plan or Long Term Care Plan will then be considered for inclusion for funding approval in the Government Plan. As part of the Government Plan, the States Assembly approves funding for Major Projects beginning or continuing within the next four years (Major Projects Envelope).
Funding for specific Major projects within the Major Projects Envelope will be released by Treasury and Exchequer when it is required to be drawn down, as agreed in the Major Projects Envelope unless changes to the timing of the Project have been agreed between the Principal Accountable Officer and the States Treasurer. Such amendments may arise either due to delays in beginning a Project or because it is more efficient and economical to deliver Projects or stages of Projects within the Major Projects Envelope in a different order. All decisions taken to vary the Major Projects Envelope must be documented and reported to the States Assembly on a quarterly basis.
The Outline Business Case will develop the content of the Strategic Business Case, and must include:
- a definition of the requirement (i.e. the details of the need)
- a translation of the requirement into a user requirement
- details of the benefits of addressing the requirement, and the consequences of not addressing the requirement , including linkages to Strategic Priorities of the Government of Jersey
- an outline of the relevant Political, Economic, Social, Technological, Environmental, Legal and Ethical considerations
- feasible options with estimates of costs, and relative merits
- details of the method and criteria that will be used for option assessment at the feasibility stage, including weightings
- an estimate of Project costs (including any contingency elements) that is sufficiently accurate for inclusion in the approval process (the Long Term Revenue Plan, Long Term Care Plan and Government Plan), normally based on the option expected to be selected. If significant variation exists between options this should be discussed with Treasury and Exchequer
- an estimated Project timeline including any time constraints and a critical path analysis
- an estimate of the manpower implications, both for the life of the Project and ongoing post implementation
- a comprehensive assessment of the need for internal or external professional advice (in addition to any review by Internal Audit)
- an assessment of whether the Project involves capital or revenue expenditure under Accounting Standards (or both, in which case, an assessment of which element will be greater)
- a consideration of the scale of potential ongoing expenditure implications of the Project
- identification of key stakeholders and a proposed communication strategy
- a consideration of high level risks related to the Project
- a proposal of how the Project will be managed, including the proposed Senior Responsible Officer, Project Manager (if known), structure of the Project Board and other key personnel. The Project Board should normally include at least five members with appropriate professional expertise and be independent of those involved with the delivery of the project
The Outline Business Case is part of the Business Planning activities of the Sponsoring States Body and will normally be funded from that States Body’s revenue cash limit.
The maximum contingency sum incorporated within the estimate of Project costs should not in general exceed 10% of the total estimated cost of the Project. It is recognised that a greater sum may be required for complex Projects, e.g. some civil engineering Projects. The contingency sum should in all cases be kept to a minimum within the original specification by identifying and quantifying all known aspects of the works required, and the basis for calculation for each separate material expense documented.
Any contingency amounts exceeding 10% of the total estimated cost of the Project at the Outline Business Case stage must be formally justified and reported to the States Treasurer.
Amongst other matters, consideration should be given to whether contracts with third parties should include appropriate penalty clauses in the event of delays or cost overruns in order to limit the requirement for significant contingencies.
3.2.3 Major Project Funding Approvals – Step 2: Feasibility Study and inclusion in Major Projects Envelope
All Major Projects (except those funded through rolling votes) require a Feasibility Study to be carried out before the Project commences.
The Feasibility Study should enable the Sponsoring States Body to evaluate all feasible options and determine the preferred option for design and development. It will also show the costs and benefits of undertaking the proposed Project.
The decisions to proceed with detailed design and to place the contract are the two major financial commitments. The content of the Feasibility Study should reflect the importance of these commitments and therefore be sufficient to provide a comprehensive statement of the Project and how it will be implemented.
The Feasibility Study should be drafted by the Sponsoring States Body or Supplying States Body, and approved by the Sponsoring Minister and the Accountable Officers (or their delegate) and Heads of Finance Business Partnering of both States Bodies (if different).
3.2.4 Contents of a Feasibility Study
The Feasibility Study must include as a minimum the following elements, or a formal explanation of why non-inclusion is justified:
- specification requirements
- design strategies and whole life costs
- an appraisal of alternative options to meet the need(s) or deliver the service, including financial appraisal
- appropriately scaled sensitivity analysis and an explanation and justification of any variations in cost from the Outline Business Case estimate originally included in the Long Term Capital Plan and Major Projects Envelope
- an estimate of Project costs (including any contingency element and expected costs of specialist internal audit services) that is sufficiently accurate for inclusion in the Major Projects Envelope
- an outline Project programme, including key Project milestones and consideration of time constraints
- a full risk assessment, including any legal limitations
- environmental delivery and controls
- benchmarking against appropriate comparators
- estimates of ongoing capital, revenue and manpower implications and how these will be met in order to operate and maintain the new asset
- any other specific issues (e.g. temporary accommodation requirements)
- the appropriate type of contract to be employed as approved by the Law Officer’s Department (see below)
- an estimate of the sum and timing of predicted cash flows in foreign currency (if it is envisaged that sourcing of any part of the works required will involve payments in a foreign currency). The requirements of the Foreign Currency section will also be relevant to these amounts
- consideration of the long term fiscal impacts and benefits of the Project
- consideration of the potential population impact, i.e. will the Project influence population growth and hence result in ancillary costs and benefits?
- consideration of behavioural changes in the States or the population of the island and whether they will impact either the delivery of the project or the costs and benefits once the Project is complete
Option appraisal typically involves the identification of criteria, weighting these criteria in terms of importance and scoring of alternatives against these criteria. This provides a systematic approach to comparing the relative merits of options against priorities.
There are different approaches to financial appraisal including:
- cost benefit analysis
- cost effectiveness (input economy costs to achieve similar outputs)
- financial analysis (cash flows)
Each may be appropriate in different situations of States involvement in capital or revenue expenditure. The appraisal will need to be sufficiently developed to demonstrate the approach being used and why it is appropriate.
Advice on the appropriate type of contract to be employed can be obtained as follows:
- Building Projects from the Director of Estates, Jersey Property Holdings
- Civil Engineering Projects the Director of Engineering and Infrastructure, Growth Housing and Environment
- Projects with an Information Technology element the Head of information Services
- any other Projects the Director of Corporate Procurement
The contingency sum must be recalculated at the Feasibility Study stage and incorporated within the initial outline costing. The amount should be justified, for example through a quantitative risk assessment, and if the contingency exceeds 10% of estimated costs this must be reported to the States Treasurer and the PAO.
As part of the estimate of costs, the Sponsoring States Body must provide information on potential significant fluctuations in costs, other than inflation, to Treasury and Exchequer as part of the feasibility study in order to provide an accurate Project budget.
An example of such fluctuation in costs is the price of specific materials (for example if the Project uses a lot of steel, the cost of which does not necessarily follow general price inflation).
3.2.5 Funding of Feasibility Studies
If a Major Project is being considered, feasibility funding can be proposed in a Government Plan once a Strategic and/or Outline Business Case has been completed. States trading operations are expected to fund their own Major Project costs, so it would not normally be appropriate for them to apply to obtain funds to conduct a feasibility study.
If feasibility funding is required, the Sponsoring States Body should submit an application to Treasury and Exchequer.
This application will be considered by Treasury and Exchequer who will recommend whether funding should be proposed for inclusion in a Government Plan.
3.3 Implementation and Monitoring
3.3.1 Project Implementation
Once funding has been secured Project implementation can begin, subject to the agreement of the Principal Accountable Officer and States Treasurer.
There are a number of widely recognised Project management techniques which can be tailored to meet the requirements of the specific Project. This section sets out the minimum requirements for Project planning, monitoring and control, and it should in general be possible to incorporate these requirements into the chosen methodology.
3.3.2 Project Board Meetings
The Project Board must meet at least quarterly (or more frequently if the agreed Terms of Reference for the project require it), to review cost and other relevant reports, significant variations to the Project and make decisions required for the Project.
The Senior Responsible Officer must be present at all Project Board meetings. Whilst not a member of the Project Board, the Project Manager should also attend Project Board meetings. Other Project Team members may also attend as required.
Project board meetings must be minuted (including details of any decisions made).
Key decisions relating to the Project must be documented in the relevant minutes including:
- actions taken in relation to Risks and Issues, including adapting the Governance arrangements for the project if required
- agreed changes as a result of a significant variation to the Project
- approval of changes to Project Delivery Documentation
- use of contingency amounts outside of delegated limits
In the event that the Project is halted (e.g. delays in planning permission or agreement of legal servitudes) the Senior Responsible Officer should formally notify all Project Board members accordingly and may agree to reduce the frequency of meetings, if appropriate. Any member of the Project Board may request the Senior Responsible Officer to call an extraordinary meeting if they believe it is reasonable to do so.
The Principal Accountable Officer and the States Treasurer should receive copies of the minutes of all Project Board meetings.
3.3.3 Reporting to the Project Board
The Project Manager must ensure that relevant reporting information is submitted to the Project Board seven days in advance of scheduled meetings and copied to the Capital Accountant, Financial Performance Reporting.
This reporting will include as a minimum:
- financial reporting
- reporting of progress against the Project Plan
- an up to date assessment of risks and issues relating to the Project (including copies of the current Risk and Issues registers)
- any variations to contracts relating to the Project
- use of contingency amounts (within delegated limits)
As part of its review the Project Board should decide if any mitigating actions should be taken to address relevant risks and issues, and the appropriate course of action to take where risks or issues materialise. The Project Board should also consider whether it is appropriate to notify, or seek approval of, the Accountable Officer or Minister of the Sponsoring States Body. If an issue with significant financial implications is identified this should also be highlighted to the States Treasurer and Principal Accountable Officer.
In addition to the reporting to the Project Board, the Project Manager, other Project Team members and the finance business partering team must collectively review cost reports on at least a monthly basis.
3.3.4 Significant Variations
Where there is expected to be a significant variation to the Project, a report must be presented by the Project Manager to the Project Board with recommendations for actions to take. The Project Board must approve any such changes, with such approvals being documented and Project documentation updated accordingly
The Senior Responsible Officer must report any significant variation to the Project to the Sponsoring States Body and Treasury and Exchequer, who will then consider if any further action needs to be taken.
Significant variations to a Project include, but are not limited to:
- the cost of the Project is expected to exceed the original sum approved
- it is estimated that the Project will overrun its original timescale for completion by more than 10%
- external factors such as major economic shocks or changes to the Strategic Priorities of the Government of Jersey
- there is a significant change in the scope, expected quality of outputs or expected benefits of the Project
- the decision is taken to abandon a Project
- Other Meetings
Other significant Project meetings (e.g. meetings with the Sponsoring Minister, or between Senior Responsible Officer and Project Manager) must be minuted.
The Project Team should meet at least monthly to discuss all aspects of the Project; including cost vs. budget reports, progress reports, and variations to the scope of work. These meetings should include the Project Manager and decisions on the day to day running of the Project should be made at this meeting.
Projects of critical importance or of unusual scale or nature to the Sponsoring States Body may require Key Stage Reviews during key procurement stages. These will be in addition to regular meetings of the Project Board.
3.3.6 Procurement
The procurement of any goods or services including the procurement of the main contract should follow the guidance set out in the Expenditure section.
The appointment of a consultant(s) should follow the guidance set out in the Expenditure section.
For all Projects, all instructions to external experts (including professional advisors) after appointment must be in writing, by letter or by email.
Should any part of the works required involve payment in foreign currency exceeding £5,000 reference should be made to the Foreign Currency section.
The form of the contract used must be consistent with that identified in the Feasibility Study. The reasons for any variation in approach, including financial implications, must be clearly documented.
Any variations to contracts for non building and civil engineering Projects should follow the procedures set out in the Expenditure section.
3.3.7 Performance Bond
The Procurement Best Practice Procedures Toolkit makes reference to the due diligence process for suppliers. For all Major Projects involving the purchase of property or construction and where the contract value exceeds £5 million, the implementation of a performance bond is mandatory. For other Projects the Accountable Officer should consider the appropriateness of a bond and record their decision with justification.
Under a performance bond, the Bond Issuer will act as guarantors for ten per cent of the contract value should the main contractor fail to perform in completing the works, for a fee incurred by the States as part of the contract cost.
The States Treasurer can approve the use of a Bank Guarantee in place of a performance bond, if the wording contained within the document is wholly consistent with that for a bond.
3.4 Closure and review
3.4.1 Project Evaluation
On successful completion of a Major Project, the Project Manager must produce a two stage Project evaluation report.
The first stage report must be completed within three months of practical completion and give an initial assessment of the Project performance, including:
- scheme performance
- user satisfaction
- contractor performance
- consultants performance
A second stage report must be prepared to assess the value for money performance of the Project. This will normally coincide with the final payment for the Project, but may require a longer period (up to 3 years) to evaluate the Project in full operation, particularly where seasonal variations have an impact. If the evaluation of the Project is expected to take more the 12 months then an initial second stage report should be completed within 12 months of practical completion and updated every 6 months until such time as a final assessment can be made of the performance of the Project.
Both stage reports must be approved by the Senior Responsible Officer, presented to the Sponsoring States Body and copied to the States Treasurer and Principal Accountable Officer or their delegates if agreed in the terms of reference of the Project.
3.4.2 Surplus Funding
On completion of the Project, and after any period of retention, any funding remaining within the Major Projects Envelope may be used for other Projects within the Major Projects Envelope unless otherwise transferred by the Minister for Treasury and Resources. This includes any contingency sums not utilised.
Should the Sponsoring States Body propose an alternative use of surplus funding approval must be sought from the Office of the Chief Executive and Treasury and Exchequer.
3.4.3 Asset Creation
Upon completion of the Project all assets individually valued above £10,000 must be identified and added to the asset register. The process for capitalising assets can be found within the Capital Accounting Manual, and further guidance is available from Treasury and Exchequer.
3.4.4 Abandonment
Where the decision is taken to abandon a Major Project, the Project Manager must carry out a review of the Project within 3 months of the date of abandonment and comment on:
- the justification for abandonment
- costs incurred to date
- extent to which the Project was completed, and whether partial benefits have been realised
- contractor performance
- consultants performance
This report must be approved by the Project Board and presented to the Sponsoring States Body, copied to the States Treasurer and Principal Accountable Officer. Details of abandoned Major Projects should also be including in the six monthly update presented by the Minister for Treasury and Resources to the States Assembly.
Costs of Projects abandoned are likely to qualify as fruitless payments which must be recorded in line with the Supplementary Guidance to the Jersey Financial Reporting Manual and reported as a loss in the States Accounts (see Losses and write offs section).
Any surplus funding must be treated in the same manner as for a completed Major Project.
3.5 Additional Requirements for Building and Civil Engineering Projects
3.5.1 Feasibility Studies
In addition to the other requirements of this section, as a minimum, the following must be included in the Feasibility Study for building and civil engineering Projects:
- physical boundaries and site limitations with appropriate input from the Planning authorities
- full site investigation in accordance with the existing Code of Practice
- condition survey and associated investigations
- servicing options
- quality assurance plan to identify what decisions are required and when
- consideration of whether a value engineering workshop is appropriate
- Project Implementation
Minimum additional requirements Approvals for Land and Building Transactions
Standing Order 168 Land Transactions empowers the Minister for Infrastructure to enter into an agreement to dispose, acquire or lease land (and buildings) on behalf of the public of Jersey without prior agreement of the States, subject to compliance with sections (2) (a) and (b) of that Standing Order. That Minister has delegated powers and responsibilities arising under Standing Order 168.
Where a Major Project requires the purchase of land and or buildings from a third party this must first be approved by the Sponsoring Minister, following the requirements of the relevant sections of this Public Finances Manual.
On approval by the Sponsoring Minister, Jersey Property Holdings must be consulted, in order that JPH may make a positive recommendation to the Minister for Infrastructure in accordance with Standing Order 168. All land and building transactions (including disposals) must be undertaken in conjunction with Jersey Property Holdings.
Appropriate approval in line with the Scheme of Delegation, including Delegated Decisions or Ministerial Decisions as necessary, must then be obtained.
3.5.3 Minimum additional requirements Project Management
In the case of Building and Civil Engineering Projects, a note of all requests for an extension of time received from the contractor with an indication as to the reason, together with a list of extensions approved must be formally recorded, and Treasury and Exchequer notified.
For building and civil engineering Projects:
- adequate records of site activities must be maintained
- all instructions to contractors on site must be in writing or confirmed in writing within seven days
- timesheets must be submitted by contractors and cross referenced to the relevant instructions
- records of labour and plant used on site must be kept and submitted weekly by the contractor (to allow accurate assessment of variations)
- Minimum additional requirements Variations to Contracts
Any variations to contracts for building or civil engineering Projects should follow the procedures set out below:
- no variation shall be instructed or issued unless it has received prior authorisation or constitutes an emergency situation. All variations must be in the form of written instructions to the contractor from an authorised individual (e.g. architect or engineer)
- the cost implications of every variation shall be assessed prior to the issue of the instruction, except where immediate action is necessary to prevent danger or damage or would cause significant and irretrievable disruption to the Project’s critical path. In such cases, the cost implications shall be assessed as soon as possible after the instruction is issued
- where a variation for the completion of works in compliance with the contract documentation is approved, then it is an essential variation. The cost of essential variations shall be set against any available contingencies or accrued savings made in the contract, sub contract or elsewhere in the Project budget
- copies of all variations orders or engineers instructions shall be sequentially numbered for each contract
- Minimum additional requirements Project Governance: Project Team
A Quantity Surveyor would normally be included on the Project team.
The designated Lead Professional (e.g. architect or engineer) may take a more significant role in managing the team.
The Lead Professional must be required under the terms and conditions of the contract to approve variations within the extent of the approval limits delegated to them, issue certificates of payment for works carried out and grant extensions of time (where applicable), within the designations of their authority.
3.5.6 Minimum additional requirements appointment of external experts
The terms of appointment of any external expert must be according to relevant professional guidelines, and take the form of a written contract. The contract must include:
- the relevant Professional Bodies’ conditions of engagement, with amendments to suit local requirements
- the purpose of the engagement
- the outcomes required and the potential for further supplementary work
- in the case of a negotiated fee appointment the negotiated fee relevant to the engagement including the method of calculation and basis for payment
- payment arrangements including the extent and range of disbursements and expenses to be met
- the scope of the commission and timescale for the work to be completed in
- requirements for supervision and liaison with Sponsoring and other consultants
- sanction and monitoring of variations, reporting on progress and cost limits as set out in this document
- requirements as to professional indemnity insurance
- prohibition of assignment to third parties
- for building and civil engineering Projects, requirement for the submission to the Sponsoring States Body of adequate record drawings
- specifications and manuals for maintenance of the completed Project (if appropriate)
- the criteria against which the performance of the consultant will be assessed on completion of the engagement
If the expert to be appointed will be required to value the asset constructed, the Senior Responsible Officer must consider whether additional assurance over valuations is appropriate, such as retaining off island valuers to review the approaches adopted by local valuers. A formal record of any decisions regarding this additional assurance must be made and retained.
Grants and sponsorships
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and all States Funds created in accordance with the Public Finances Law.
- This section is applicable to discretionary financial benefits paid to third parties, whether in the form of Grants or Sponsorships (together referred to in this section as Grants), or subsidies. Discretionary financial benefits typically have the following characteristics:
- a transfer to a recipient which may be in return for compliance with certain terms and conditions
- a transfer which may not directly give approximately equal value in return to the States (that is, there is a non exchange transaction or subsidy so there may not be an exact pound for pound value)
- a recipient may have been selected on merit against a set of scheme specific criteria
- It includes concessions against income (such as property rentals), concessions against property value and all transfers of value, monetary or otherwise. All new grant or sponsorship schemes must be submitted to the Group Director – Commercial Services for approval of the scheme itself, as well as the proposed diligence and measurement framework to be put in place. This section includes a number of requirements in relation to new schemes.
- For the avoidance of doubt, the definition excludes Contracts for Services and Social or Community benefits. Additionally, gifts, staff benefits, and hospitality are not forms of discretionary financial benefits, and are, therefore, also excluded.
- Although donations may be considered a discretionary financial benefit, they are not included in the scope of this section (see Special Payments). Most States Bodies will rarely give or receive a donation, as they impose no obligations on the recipient and offer little or no rights or benefits to the provider. The ability to give or receive a donation would normally require a strong rationale and a high level of approval within a department and should be documented in the relevant department’s Scheme of Delegation.
- Users of this section should also refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
- expenditure
- Arm’s length organisations
- special payments
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- the service for which the grant is given is not provided to the required standard
- the grant does not achieve the desired outcome
- the grant is incorrectly processed or recorded
- the grant is not properly monitored and or authorised
- the grant award costs more than if the States were to incur the direct expense
- the grant proposal is inefficient or unduly expensive
- the individual or organisation is awarded more than one payment
- by provision of a grant the States or Government of Jersey enters into a de facto longer term commitment
- Principles
- All grants should contribute towards the strategic aims, priorities and desired outcomes of the Government of Jersey.
- Grants should not be issued to the recipients before the funds are required.
- In designing grant schemes, consideration should be given to elements of good practice, such as consideration of alternative funding mechanisms, risk management, consultation, evaluation and monitoring.
- All grants should be processed in accordance with the departmental assurance framework and Scheme of Delegation.
- Accountable Officers should ensure that financial resources are used in the most efficient and effective manner.
- Accountable Officers should periodically review grants awarded for their effectiveness and timeliness in achieving agreed outcomes. The frequency of review should be determined at the outset and by reference to the quantum of the grant and perceived level of risk of achieving the desired strategic aims and outcomes.
- All matters relating to the provision and administration of grants should have due regard for the principle of transparency.
- Requirements
- General requirements for all grants
The accountable officer must:
3.1.1 ensure grants have been used for their intended purpose
3.1.2 ensure that funding agreements are in place for all grants. The format and complexity of the funding agreement should be proportionate to the value of the grant and the risk involved.
3.1.3 ensure that value for money outcomes are maximised and appropriate value for money measures for grants are included in funding agreements and subsequently used;
3.1.4 ensure that systematic quality checks are carried out for all larger grants (i.e. where the grant is related to activity carried out by, and evidenced by information received from, the grant receiving body, independent checks should be carried out on that information);
3.1.5 ensure that conflicts of interest, present or perceivable, are managed:
3.1.6 establish effective and efficient administrative controls;
3.1.7 ensure due diligence is undertaken regarding grant recipients proportionate to value of grant and risk;
3.1.8 ensure that clear and unambiguous clawback arrangements are included in grant agreements where appropriate; and
3.1.9 ensure that the Annual Accounts of those organisations which receive grant funding in excess of £75,000 from the Government of Jersey are published as a report to the States Assembly.
3.2 New grant schemes
The Accountable Officer must ensure that all new grant and subsidy schemes are documented and submitted to the Group Director – Commercial Services for approval prior to introduction. Proposals must detail the proposed diligence and assurance framework to be put in place and should meet the following requirements:
- Contribute towards the strategic aims, priorities and desired outcomes of the Government of Jersey
- Consider alternative options for funding the service need other than a grant scheme;
- Identify, assess and mitigate risks;
- Consider experiences learned from other grant schemes – Government of Jersey or otherwise;
- Be stress tested (i.e. against all potential scenarios including volume of take up);
- Be designed to minimise the potential for fraud;
- Include evaluation and review processes;
- Identify the target population for grants;
- Balance the uptake of grants against the cost of administration;
- Involve market sector expertise in their design where available;
- Consider any potential overlap with existing grant schemes operated by the States or any other body;
- Forecast and monitor scheme uptake;
- Consider the mechanism by which grant recipients should account for their performance;
- Consider the mechanism by which grant recipients should provide management information ;
- Consider mechanisms to ensure grants are only used for the purposes intended;
- Consider how to achieve a robust assessment of the capacity and capability of delivery partners; and
- Consider the design of appropriate sanctions and rewards.
3.3 Existing grant schemes
The Accountable Officer must review existing grant schemes against the requirements for new schemes at least annually. Any requirements not met must be documented, and the Accountable Officer should consider whether to amend the scheme.
3.4 Discretionary Grants (i.e. grants which are not under a scheme)
The Accountable Officer must apply the following principles for discretionary grants and document that they have been considered:
3.4.1 grants should only be used when they secure a Government policy outcome;
3.4.2 discretionary grants should not be used without first considering alternative policy mechanisms or existing grant schemes;
3.4.3 grants do not lead to Government overreach into other areas of responsibility, nor create an ongoing need for funding;
3.4.4 where small grants are used, they should be administered by the organisation that is able to do so most efficiently;
3.4.5 accountability requirements imposed on grant recipients should be proportionate to risk.
3.5 Sponsorship
The Accountable Officer must (where a department engages in sponsorship) apply the following principles of sponsorship management, document that they have been considered and develop departmental sponsorship procedures:
- ensuring probity;
- achieving efficiency and effectiveness;
- maintaining accountability; and
- implementing effective risk management.
Changes to head of expenditure
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and relates to amendments to the heads of expenditure approved by the States Assembly. It provides guidance on when and how heads of expenditure may be altered. It does not apply to the transfer of funds within a head of expenditure.
- The States Assembly approves heads of expenditure as part of the Government Plan. These include heads of expenditure for the Major Projects Envelope (see Major Projects section) and the Reserve. There are a limited number of ways in which the Law permits these heads of expenditure to be varied. These include:
- the Minister for Treasury and Resources may approve the transfer of an amount allocated from one head of expenditure to another, having consulted any Ministers affected. In the case of Non Ministerial States Bodies, the Minister for Treasury and Resources must have the approval of the relevant body before doing so (for transfers which affect the Comptroller and Auditor General this should be the chair of the Public Accounts Committee, for the States Greffe the States Privileges and Procedures Committee and in any other case the relevant accountable officer).
- before a transfer under the above bullet point can be actioned the Minister must give the States at least 4 weeks’ notice of any intended transfer. If a proposition is lodged objecting to the transfer the Minister must wait the outcome of the debate on the proposition before actioning the transfer.
- transfer of underspends of revenue budgets to the Reserve head of expenditure
- use of additional revenue income, subject to approval from the Minister for Treasury and Resources
- use of income from the sale of assets (see assets section)
- transfers from the Reserve head of expenditure (see section on Reserve head of expenditure)
- Users of this section should refer to other sections of the Public Finances Manual that are relevant, including:
- expenditure
- reserves
- major Projects
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- transfers may not be appropriately authorised or processed
- States Bodies may be able to exceed their authorised revenue Head of Expenditure using departmental income where better value could be obtained by using it for another purpose
- States Bodies may be able to exceed their authorised revenue Head of Expenditure by disposing of assets and spending the proceeds
- approved revenue expenditure which is not required by States Bodies may not be returned to the Consolidated Fund
- Principles
- Heads of expenditure will be allocated to a department, strategic priority, Major Project, capital project or other area of expenditure.
- Changes to head of expenditure should be rare and only occur where more economic, efficient and effective outcomes or better value can be achieved for the Government of Jersey as a whole.
- Budget transfers should be necessary and properly authorised.
- Income received by departments in excess of the amount budgeted can only be spent with appropriate authorisation.
- Proceeds from the disposal of assets should only be spent with appropriate authorisation.
- Requirements
- Heads of expenditure
The States of Jersey will approve in the Government Plan:
- specific heads of expenditure (revenue and annual capital spend)
- an allocation for a Reserve head of expenditure
- an annual spend allocation for each Major Project
Each of these allocations is defined as a “head of expenditure”. The head of expenditure may be supplemented by transfers from other heads of expenditure, additional departmental income received and receipts from the disposal of assets. All of these are subject to the appropriate approval.
3.2. Departmental approval
Bodies wanting to transfer funds between heads of expenditure must consult their Minister and have the approval of their Accountable Officer, or another officer where a delegation exists before approaching the Minister for Treasury and Resources. Accountable Officers may make transfers within their Bodies’ head of expenditure, or within elements of a major project head of expenditure, without the approval of the Minister for Treasury and Resources or the States Treasurer, but transfers over £250,000 must be notified to the States Treasurer together with the reason for the transfer.
3.3. Treasury approval
Approval of non contentious transfers between heads of expenditure solely to comply with accounting standards is delegated to the States Treasurer. The States Treasurer has the discretion to escalate approval of transfers to the Minister for Treasury and Resources if deemed appropriate. In all other instances, the approval of the Minister for Treasury and Resources must be obtained. The decision as to whether a transfer is non contentious will be made by the States Treasurer or the Minister for Treasury and Resources as applicable. All transfers must be presented to the States Assembly for at least 4 weeks by Treasury and Exchequer. After that time the decision can be implemented providing no States Member has lodged a proposition to the contrary.
Treasury staff must process all decisions as expediently as possible following the receipt of all relevant approvals documentation.
3.4. Documentation
Bodies must submit to Treasury and Exchequer documentation in the manner prescribed by that department.
3.5. Use of additional revenue income
An Accountable Officer may approve the use of additional income up to 10% of the estimated departmental income included in the Government Plan (up to a maximum of £100,000). The Accountable Officer of the relevant States Body must seek approval to spend additional funds in excess of these levels. Approval of the use of additional funds of a non contentious nature above this level must be obtained from the States Treasurer. The States Treasurer has the discretion to escalate approval of transfers less than that amount to the Minister for Treasury and Resources if deemed appropriate. In all other instances, the approval of the Minister for Treasury and Resources must be obtained. Additional income must not be used to fund unforeseen recurring expenditure for which no future funding is secured.
3.6. Under and overspends of revenue budgets
Under and overspends within a head of expenditure must be netted off against one another to result in one net amount. Any under achievement of income must be taken into account in the calculation of the under or overspend of the head of expenditure.
If there is an underspend at the end of the financial year, this will be transferred to the Reserve. Over or underspends should be reported monthly with explanations for variances to the States Treasurer.
3.7. Use of the proceeds of asset disposals
Where net proceeds (i.e. proceeds less the costs of selling the assets) are up to £5,000, the Accountable Officer may approve the use of the net proceeds. Use of proceeds from the disposal of an asset of over £5,000 (net of disposal costs) where the request to use funds is not contentious it can be authorised by the States Treasurer (see Assets section).
Where the net proceeds exceed £100,000, the Accountable Officer (or delegate) must gain the approval of the Minister for Treasury and Resources to use the net proceeds. The reasoning must be fully documented so the Minister can reach a decision.
3.8. Non Ministerial States Bodies
The Law defines a number of Non Ministerial States Bodies which as their title suggests do not directly report to a Minister. For these Bodies it is recognised that references to the term Minister in this section should be read as Accountable Officer. Any transfers within heads of expenditure of Non Ministerial States Bodies over £250,000 should be notified to the States Treasurer although approval is not required.
3.9. Reporting
The Minister for Treasury and Resources must report to the Government of Jersey in a semi annual update, as well as in the Government of Jersey’s Annual Report and Accounts:
- all transfers between heads of expenditure against approved expenditure
- underspends transferred to the Reserve
- Scrutiny by the Comptroller and Auditor General
Actual expenditure may be scrutinised by the Comptroller and Auditor General, Internal Audit or the Public Accounts Committee.
The Comptroller and Auditor General’s duties include assessing whether “money withdrawn from the Consolidated Fund or the Strategic Reserve was used for the purpose for which it was authorised to be withdrawn”. In connection with this duty, “purpose for which it was authorised to be withdrawn” is defined as being in accordance with the key objectives and priorities set out in the Government Plan. Accountable Officers should consider this requirement when proposing a transfer between heads of expenditure or incurring expenditure more generally (see Expenditure section) and be prepared to explain the approach they have taken.
Special Payments
- Introduction and background
- This section provides guidance on how States Bodies should manage payments relating to current transactions outside of the usual planned range of the Body’s activity and applies to all States Bodies in accordance with the Public Finances Law. Examples of such payments include, but are not limited to, extra-contractual payments, extra-statutory and extra-regulatory payments, compensation payments, special severance payments and ex-gratia payments.
- States Bodies should authorise special payments only after careful appraisal of the facts and when fully satisfied that the best course of action has been identified.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
- Government Plan and budgeting expenditure
- fees and charges
- income
- grants
- losses and write offs
1.4 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- authentic circumstances requiring compensation payments are denied
- reputational damage in cases where novel, contentious and potentially repercussive special payments such as severance payments have been poorly handled
- budget overruns leading to financial burden on the Treasury
- fraud risk is increased as special payments could be made through collusion with the recipients
- Principles
- States Bodies should have a system for the timely identification, authentication and processing of any special payments that are compensatory in nature and ensure that such payments are fulfilled in the required timeframe in accordance with the relevant policies.
- Special payments should be authorised only after careful consideration of the facts, and when it is identified as the best course of action, bearing in mind principles such as value for money.
- Accountable Officers identifying a need for a special payment from the Head of Expenditure they have responsibility for must be able to justify the proposed payment if challenged.
- Proposals for special payments should explain the nature, circumstance of the case, amount involved, management procedures followed, assessment of the value for money of the case, any non-financial aspects, the impact of the case, and, where appropriate, legal advice received.
- States Bodies should be proactive in drawing and documenting lessons from special payment cases as they arise in order to establish the soundness of the control system and share the outcomes with Treasury and Exchequer. Necessary steps should also be taken to remedy all failings identified.
- Sensitive special payment situations should be handled with integrity and focus on avoiding reputational damage to both the States Body and the wider public service.
- Any proposals to keep special payments confidential must be sufficiently justified to avoid being interpreted adversely by the public or other States Bodies.
- Requirements
- Approval
States Bodies must always consult Treasury and Exchequer on special payments unless there are specific agreed delegation arrangements in place. In addition Accountable Officers must take advice, where appropriate, from the Law Officers’ Department when considering the potential for a special payment, to ensure that their proposed course of action is lawful and does not expose the Government to unnecessary claims or losses or create precedents for future claims.
The ultimate responsibility for agreeing to a special payment rests with the Accountable Officer for the head of expenditure from which the special payment will be made.
3.2 Consultation
Accountable Officers are responsible for consulting the Treasury and Exchequer on any special payments that fall within the following categories:
- involves important questions of principle
- raises doubts about the effectiveness of existing systems
- contains lessons which might be of wider interest
- might create a precedent for other Bodies
- arises because of obscure or ambiguous instructions issued by another States Body or individual with authority to do so
- Examples of special payments
Accountable Officers must fully understand the different types of special payments and how they should be managed. The following examples represent a non-exhaustive list of some of the different types of special payments:
- extra-contractual payments
- extra-statutory and extra-regulatory payments
- compensation
- special severance payments
- ex gratia payments
- Extra-contractual payments
Extra-contractual payments are payments which, though not legally due under contract, there is nevertheless sufficient reason to make the payment. Examples include where there are ex gratia payments as part of complaints procedures, or where there is a particularly compelling moral duty on the States. Another example would be settling an unfounded contractual claim on a commercial basis due to the costs of defending the claim, even where a claim is manifestly unfounded and no money is legally due, it may be best to settle. It is important to avoid creating a risk encouraging unmeritorious claims, so such claims should not be routinely accepted.
3.5 Extra-statutory and extra-regulatory payments
Extra-statutory and extra-regulatory payments are broadly within the limits of the statute or regulation, respectively, but go beyond a strict interpretation of its terms.
3.6 Compensation
Compensation payments are made to provide redress for personal injuries, accidents, damage to property etc. suffered by civil servants or others. They include other payments to those in the public service outside statutory schemes or contracts. For the avoidance of doubt, payments made through the Criminal Injuries Compensation Board scheme will be subject to the rules of that scheme and should be considered outside the scope of the Special Payments section of this Manual. The same principle also applies to the Redress Scheme as payments made from this Scheme are subject to the rules of that Scheme and should also be considered outside the scope of the Special Payments section of this Manual.
3.7 Special severance payments
Special severance payments are paid to employees, contractors and others outside of normal statutory or contractual requirements when leaving employment in public service whether they resign, are dismissed or reach an agreed termination of contract. Special severance payments when staff leave public service employment should be exceptional.
Special severance payments always require additional endorsement from Treasury and Exchequer and People Services because they are typically novel, contentious, potentially repercussive, and may set a precedent. Overall responsibility for any payment, however, remains with the Accountable Officer. As such, Bodies should always consult the Treasury and Exchequer in advance when considering a special severance payment. A sceptical approach needs to be adopted for proposals for special severance settlements, in particular:
- precedents from other parts of the public sector may not be a reliable guide in any given case
- advice that a particular severance payment appears to offer good value for the States Body or employer may not be conclusive since such advice may not take account of the wider public interest
- even if the cost of defeating an apparently frivolous appeal will exceed the likely cost of that particular settlement to the Body or employer, it may still be desirable to take the case to formal proceeding
- winning such cases demonstrates that the government does not reward failure and should enhance the Body or employer’s reputation for prudent use of public funds and deter other similar claims
- whether the case could have wider impact, e.g. for a group of potential tribunal cases
- Ex gratia payments
Ex gratia payments go beyond statutory cover, legal liability, or administrative rules, and include:
- payments made to meet hardship caused by official failure or delay where there is no legal obligation to pay
- out of court settlements to avoid legal action i.e. settling claims which have no merit, and where the settlement has no commercial basis, but for reputational reasons
- payments to contractors outside a binding contract
- retention payments designed to encourage staff to delay their departures, particularly where transformations are being negotiated. Such payments always require additional explicit endorsement from Treasury and Exchequer, whether proposed in individual cases or in groups before any commitment, whether oral or in writing, is made. Responsibility for the decision to make any payment remains with the Accountable Officer.
- As the Government of Jersey does not provide for special payments during the planning process for the Government Plan, special payments should be reported and brought to the attention of the States Assembly through appropriate disclosures in financial reports and accounts. As a minimum, such payments should be reported quarterly to Treasury and Exchequer (note that confidentiality may require such payments to be reported in the Annual Report and Accounts in an aggregated and anonymised manner).
- There may be instances where special payments are of a small amount and Accountable Officers are expected to adopt a pragmatic approach. For individual payments less than £1,000, States Bodies should establish their own policy with regard to those payments, include these in their Scheme of Delegation and inform Treasury and Exchequer. Accountable Officers should, however, note that these payments will still be subject to Scrutiny e.g. Internal Audit, States Questions and FoI questions. They must always be capable of justification if questioned. This ability must not be used to circumvent other processes, for example small business purchases that would otherwise be made through Supply Jersey or by purchase card.
Annual financial statements
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law, and provides guidance on financial reporting arrangements both at the States Bodies and Government of Jersey levels.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically, this includes:
- income
- assets
- expenditure
- investments
- funds
- financing
- budgeting
Users should refer to the Jersey Financial Reporting Manual, which provides guidance on the preparation of financial statements.
1.3 The Jersey Financial Reporting Manual sets out the accounting standards to be adopted in the preparation of the Government of Jersey Financial Statements. It is based on the UK Treasury Financial Reporting Manual, adapted for Government of Jersey-specific situations. The accounting policies contained in the Jersey Financial Reporting Manual apply European Union adopted International Financial Reporting Standards as adapted or interpreted for the Public Sector in Jersey. The Jersey Financial Reporting Manual is published by the Minister for Treasury and Resources and presented to the States each year. The relevant annual update of this can be found in the Report section of the States Assembly website
1.4 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- the States Assembly and the public are unable to assess the performance of the States or Government of Jersey against its stated priorities due to lack of transparency and consistent framework for reporting financial outcomes
- the States Assembly is not provided with up-to-date financial information and is, therefore, unable to make appropriate decisions
- reports produced by different States Bodies are inconsistent due to a lack of commonality regarding the accounting standards used or the template utilised
- those responsible for producing reports are unaware of the expectations in terms of frequency of reporting and the nature of reports required
- the manner and format of how matters are reported is not transparent, nor easily understood, by all stakeholders including the Accountable Officers and the States Assembly
- Principles
- All reporting, budgeting, forecasts, performance measuring documents and financial statements should use the same generally accepted accounting principles.
- Reporting should be clear, concise and consistent throughout the Government of Jersey. Consideration should be given to alternative methods of presentation, e.g. infographics, where they will make the report more easily understood and accessible to non-financially trained users.
- Reports should be comprehensive and present a States-wide view of finances, e.g. including the aggregated debt position.
- Requirements
- Recording and reporting
States Bodies must record and report transactions in line with the provisions of the Jersey Financial Reporting Manual and any accompanying guidance. Accountable Officers are responsible for ensuring that the relevant staff are aware of the requirements of the Jersey Financial Reporting Manual and that these requirements are complied with.
3.2 Semi-annual updates
States Bodies must provide financial information in the form required by the Minister for Treasury and Resources focusing on the progress against objectives.
3.3 Specified Organisations
In the case of Specified Organisations, financial reporting arrangements must be clearly set out in the relevant Memorandum of Understanding and should be such that public funds received can be clearly accounted for.
3.4 Performance monitoring
Treasury and Exchequer will provide standardised reporting templates and guidance on the most appropriate ways to present the different types of financial information for different audiences.
Government Plan and budgeting
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law, with the exception of Specified Organisations (but includes Jersey Overseas Aid) as defined in schedule 2 of the Public Finances Law. It applies to the creation and management of budgets, and provides guidance on the responsibilities arising in relation to the process of preparing the financial elements of the Government Plan as defined in the Public Finances Law. Note that this includes the preparation of income and expenditure plans by individual States Bodies that contribute to the consolidated draft Government Plan.
- This Section adopts the definition of ‘budget’ from the Organisation for Economic Co-operation and Development’s Recommendation on Budgetary Governance. Specifically, a budget is a “contract between citizens and state, showing how resources are raised and allocated for the economic, efficient, and effective delivery of public services”.
- The areas covered by this section include:
- responsibilities of Accountable Officers in relation to budgets
- preparation of an annual income and expenditure plan for individual States Bodies
- proposals for Major Projects
- management of a States Body’s budgets subsequent to the commencement of the approved Government Plan
- ongoing reporting of performance against budget
For the avoidance of doubt, this section is not intended to address the role of the Treasury and Exchequer in collating budgetary submissions received from Accountable Officers, and balancing them to form the financial elements of the Government Plan. Nor does it address the creation of taxation or impôt proposals, or other income-related matters for which individual States Bodies are not directly responsible.
1.4 Users of the Public Finances Manual should refer to other sections that are relevant. Specifically this includes:
- assets
- accountable officers
- cash
- expenditure
- fees and charges
- reserves
- grants
- income
- major projects
- projects
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- a States Body budgets to spend too much, leading to the potential for best value being unachieved
- a States Body budgets to spend too little, and so has insufficient funds to deliver its priorities
- an individual States Body’s income and expenditure proposal does not further the collective Strategic Priorities of the States or Government of Jersey
- a historic/cost plus approach to budgeting renders income and expenditure proposals unsuitable for the present year’s requirements
- an Accountable Officer could exceed the approved expenditure limits
- Principles
- Accountable Officers are responsible for the preparation of detailed annual and high-level forecast income and expenditure proposals for their States Bodies (and for those Funds defined in the Public Finances Law, including the Social Security Funds, Stabilisation Fund and Strategic Reserve Fund), together covering a 4 year period. This proposal should show a clear link between Strategic Priorities, policy initiatives, finances, and outcomes.
- Accountable Officers should promote the integrity and quality of budgetary forecasts, financial plans and budgetary implementation through rigorous quality assurance including independent audit.
- To the extent that it is feasible, Accountable Officers should adopt a zero-based budgeting mind-set. While using prior year figures for guidance is permitted, rollover budgeting should not usually be employed.
- When considering the preparation of an income and expenditure proposal, alternative approaches to delivering services and Strategic Priorities should be considered. Accountable Officers should also be mindful of the risks they are responsible for managing in relation to Strategic Priorities and ensure they are adequately addressed.
- Accountable Officers should consult widely amongst their peers when preparing income and expenditure proposals to share ideas, initiatives and other thoughts in preparing their budgets.
- The proposal should be clear and concise, considering relevant statistics and financial information available to the States Body, and aligned to the Government’s Strategic Priorities. It should contain clear outcomes and measures of performance.
- The proposal should also have due regard for macro-economic and local economic trends, and draw on available information prepared by the Government of Jersey, such as intergenerational reports and long-term capital plans. This will help identify, assess and prudently manage longer term sustainability and other fiscal risks.
- Where appropriate, Accountable Officers should also consider thought leadership prepared by supra-national bodies and the impact such trends may have on their Strategic Priorities and department more generally (such as relevant reports published by the World Health Organisation or the Organisation of Economic Co-operation Development).
- The Accountable Officer of the lead States Body responsible for a strategic priority of the Government of Jersey should ensure other States Bodies involved in the delivery of the objective are consulted when preparing the proposal to ensure expenditure is allocated in the most economic, efficient and effective manner.
- Subsequent to the commencement of the Government Plan and associated head of expenditure, Accountable Officers should monitor expenditure and provide regular updates both to Treasury and Exchequer and to their States Body in the format prescribed by Treasury and Exchequer.
- As part of longer-term planning for the Government of Jersey, Accountable Officers may be required to contribute to the preparation of intergenerational reports and other strategic planning. Accountable Officers should ensure that the body is able to provide the information required to the preparer of the report accurately and in a timely manner.
- Requirements
- Income and Expenditure Proposal
With the exception of Non-Ministerial States Bodies, income and expenditure proposals for States Bodies (and those Funds referred to in 2.1 above) must be submitted to the States Treasurer prior to the preparation of the draft Government Plan. Accountable Officers of Non-Ministerial States Bodies should present their proposals in accordance with the Public Finances Law.
3.2 Form of Income and Expenditure Proposal
The income and expenditure proposal prepared by the Accountable Officer should contain the following sections:
- major projects for inclusion in major project envelope
- other projects excluding major projects
- revenue head of expenditure
- income
- Accounting standards
The form of the proposal must follow a format specified by the States Treasurer and be prepared in accordance with the accounting standards set out in the Jersey Financial Reporting Manual. The proposal should contain detailed income and expenditure for one year, and indicative income and expenditure for a further three years. It should contain clear outcomes, with performance measures. The Jersey Financial Reporting Manual will be published by the Minister for Treasury and Resources.
3.4 Consideration of alternative approaches
When preparing an income and expenditure proposal, Accountable Officers should assess if the existing model of delivery is appropriate. They should also consider a range of alternative approaches to delivering the Strategic Priorities for which they are responsible, for example the use of digital service delivery. This could include consultation with other Accountable Officers about new ideas and developments and the opportunity to deliver services and projects together.
3.5 Reserve
The proposal should not include provision for expenditure from the Reserve. Expenditure from the Reserve should only be considered in exceptional circumstances, or if it would result in a better economic outcome for the Government of Jersey. See the Reserve section for further details.
3.6 Sensitivity and Other Analysis
For material items with variables or imponderables, consideration should be given to using sensitivity analysis to assist Treasury and Exchequer in balancing the submissions from various States Bodies to the Government Plan e.g. payroll costs should be sensitised to illustrate the impact of staff turnover and vacancies. Where relevant, it may be appropriate to also present option analysis indicating the different costs and income associated with alternative methods of service or project delivery.
3.7 Major Project Envelope
If an Accountable Officer wishes to include one or more Major Projects in the income and expenditure proposal, each project must first be approved by Treasury and Exchequer. See the Major Projects section for further details.
3.8 Other Projects
For more information, please refer to the Projects section.
3.9 Proposals for Major Projects for States Trading Operations
The proposals in the Government Plan determine the approval of individual Major Projects for States Trading Operations for the financial year. These are funded from Trading Funds and not directly from the Consolidated Fund as for other States Funded Bodies.
The approval of individual Major Projects should be sufficient to deliver that project or be sufficient to complete an existing Major Project for which no other approval (e.g. a Capital Rolling Vote) sufficient to complete the project exists.
The approval of individual Major Projects should be based on the expected gross expenditure and an estimate of any capital receipts that relate to that specific project.
3.10 Ongoing Reporting
It is the responsibility of the Accountable Officer to provide updates to the States Treasurer, comparing budgeted against actual income and expenditure of the States Body in the form prescribed by the States Treasurer. High-level updates should be provided on a monthly basis, with more detailed reports every quarter. Monthly reporting should also include estimated cash flow requirements. Quarterly reporting should include performance against agreed Key Performance Indicator’s, and explanations for any significant variances. The States Treasurer must then report the corporate financial position quarterly to the Council of Ministers.
Accountable Officers should also provide Treasury and Exchequer with accurate and timely inputs for the six-monthly updates to the States Assembly as defined in the Public Finances Law.
Accountable Officers should also perform any ongoing monitoring necessary to identify, assess and manage prudently longer-term sustainability and other fiscal risks.
3.11 Internal Communication
Accountable Officers should ensure that regular (at least quarterly) updates on performance against budget are provided to staff for whom they are responsible. The format of these updates should be determined by the Accountable Officer, but they should ensure that the updates are clear and transparent, and appropriate to their audience.
3.12 Further responsibilities
- Accountable Officers should ensure they are able to contribute to longer-term strategic planning when requested by the Principal Accountable Officer, for example by providing long-term estimates at the request of the Economics Unit
- Accountable Officers must document and operate a Scheme of Delegation for their States Body which segregates duties as appropriate and allocates responsibilities for budgets
- Accountable Officers must maintain and review forecasts on a regular basis
- Accountable Officers must document the control and assurance framework for their States Body to support the reliable processing of financial information
- Accountable Officers must ensure appropriate controls are in place to ensure that expenditure does not exceed approved budgets. Accountable Officers should ensure expenditure is incurred in a timely manner so that best value is delivered for the States Body and the Government of Jersey as a whole.
Fiscal Policy Panel
- Introduction and background
- This section provides an overview of the operation and remit of the Fiscal Policy Panel. The Panel are not bound by the requirements of the Public Finances Manual and as such this section is included for information only.
- The Fiscal Policy Panel provides independent economic advice on matters relating to income raising and spending policy (including on the medium and longer term sustainability of States finances), the Strategic Reserve Fund and the Stabilisation Fund, to the Minister for Treasury and Resources and the Council of Ministers.
- The legislative requirements in relation to the establishing and remit of the Fiscal Policy Panel are set out in the Public Finances Law. It also sets out provisions for independence and the requirement for an annual report on the state of the economy and the Government of Jersey’s finances to inform the preparation of the Government Plan. The Council of Ministers or Minister for Treasury and Resources can request other ad hoc reports.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- the operation of the Fiscal Policy Panel does not support the achievement of the States or Government of Jersey’s Strategic Priorities
- the Fiscal Policy Panel is not established or operated in line with international best practices of Independent Fiscal Institutions
- the Fiscal Policy Panel is not sufficiently independent or perceived as such
- the Fiscal Policy Panel is not provided with sufficient resources or information to enable it to achieve its objectives
- Principles
- The Organisation for Economic Co-operation and Development sets out key principles to be considered in the establishment and operation of Independent Financial Institutions such as the Fiscal Policy Panel. These principles are based on international leading practices but should be considered in the context of Jersey’s size, political and economic characteristics. The principles include the following:
- local ownership – the Fiscal Policy Panel requires national ownership, commitment and consensus across the political spectrum to be effective and enduring
- independence and non-partisanship – this will ensure that the Panel does not presents its analysis from a political perspective, rather objectively and professionally
- mandate – the authority of the Panel should remain clearly defined in the primary legislation i.e. Public Finances Law
- resources – the resources that are allocated to the Panel should be commensurate with their mandate
- relationship with legislature - regardless of whether the Panel reports directly to the Executive, mechanisms should be put in place to encourage appropriate accountability to the States Assembly
- access to information – the Panel should be granted full access to all relevant information, as required by them, in a timely manner, including methodology and assumptions underlying budget and fiscal proposals, and sensitivity analysis where appropriate
- communications – the Panel should develop effective communication channels, especially with the media, the public and other stakeholders, with due consideration to available communication channels and resources within the Government of Jersey
- transparency – the Panel has a special duty to act as transparently as possible to maintain credibility with the public
- external evaluation – a mechanism should be developed for external evaluation for the work of the Panel. This could be conducted by either local or international experts
More details on these principles can be found in the Organisation of Economic Co-operation and Development document: Recommendations on Principles for Independent Fiscal Institutions.
Funds
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on Funds specifically named in the Law as well as other States Funds which are created in line with the Law.
For the avoidance of doubt, the Funds specifically listed in the Public Finances Law include the Consolidated Fund, the Strategic Reserve Fund and the Stabilisation Fund. The Public Finances Law also allows for the establishment of States Funds for specific purposes by the States Assembly on a proposition lodged by or with the consent of the Minister for Treasury and Resources. When dealing with the Consolidated Fund, Strategic Fund and Stabilisation Fund reference should be made to specific provisions contained in the Public Finances Law as some requirements of this section (e.g. termination) might not be applicable to these funds.
1.2 Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
- fraud
- income
- investments
- Users of this manual should take specific note of the transitional provisions included in the Public Finances Law in relation to the Funds created prior to the passing of the law. These provisions allow for the Funds to continue in existence until such time as they are wound up, subject to time considerations, their original purpose and whether they are still required.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- existing Funds no longer serve the purpose for which they were created or the initial objectives could be better achieved through alternative arrangements
- Funds are mismanaged due to lack of sufficient oversight, administration or internal control
- Funds are not properly accounted for or that money is lost to fraud or theft
- money becomes effectively locked up to a Fund due to ring-fencing and cannot be used for alternative uses, even after the purpose of that Fund has been served
- Principles
- There should be a clear and documented framework for the establishment, operation, monitoring and termination of Funds, where applicable, depending on the relevant legislative provisions.
- All Funds must contribute to the Strategic Priorities of the Government of Jersey. They should be periodically reviewed to ensure that they remain fit for the purpose for which they were originally established. The purpose of a Fund can only be amended via a request submitted to the States Assembly by or with the consent of the Minister for Treasury and Resources.
- When establishing a Fund, provision should be made for the winding up of the Fund once its purpose has been served.
- Requirements
- Accountable Officers
There must be an Accountable Officer appointed for each Fund who will ensure accountability and that the Strategic Priorities of the Government of Jersey in relation to the Fund are achieved. The appointment, responsibilities and other guidelines on Accountable Officers are covered in the Accountable Officers section.
3.2 Establishment of a Fund
The Public Finances Law allows for the establishment of States Funds on the basis of a proposition lodged by or with the consent of the Minister for Treasury and Resources. The Minister must prepare or arrange for a business case for consideration by the States Assembly for any new Fund. Any assumptions contained within the business case must lay out the strategic objectives of the Fund, governance and operational arrangements, source of the initial Funds, expected life span, termination and evidence that creation of a Fund provides the most benefits for the Government of Jersey in terms of value for money.
3.3 Ongoing monitoring and reporting
The Accountable Officer must provide a periodic, but as a minimum six-monthly, report to Treasury and Exchequer covering:
- operational and financial performance against the aims and objectives of the Fund
- how these are being met
- whether the standards set by the Government of Jersey have been met
- other key performance measures and targets as set out during the establishment of the Fund
- disclosure of future plans to establish Funds and how they are likely to impact upon the achievement of States corporate and States Bodies’ priorities (where applicable)
- all of the above in the manner prescribed by the States Treasurer
A pragmatic and risk-based approach should be adopted in meeting this requirement with consideration given to the size of the business and the nature of each Fund.
3.4 Fund Operation
The operation and administration of each Fund must be conducted in line with any relevant document (e.g. Terms of Reference) establishing the Fund and guidance on the involvement and responsibilities of Accountable Officers. All expenditure from a Fund should be agreed as part of the Government Plan process.
3.5 Investment of Funds
This must be carried out in line with the Public Finances Law. These include the requirement for the Minister of Treasury and Resources to present an investment strategy to the States Assembly after consultation with qualified investment professionals, the Treasury Advisory Panel and for the States Treasurer to ensure that Funds’ assets are invested in line with the investment strategy. For further guidance, please refer to the Investments section of the Public Finances Manual.
3.6 Joint Venture Funds:
The requirements set out in this section apply equally to these joint venture funds or any arrangement involving the pooling of funds with the private sector, Accountable Officers must ensure that adequate due diligence is conducted on the private sector partners, appropriate service level agreements are signed and controls are in place to ensure ongoing monitoring depending on the size, purpose and risk associated with the Fund.
Reserve head of expenditure
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and relates to expenditure from a Reserve head of expenditure. The Minister for Treasury and Resources holds responsibility for the control of a Reserve head of expenditure, but all Accountable Officers need to ensure that any requests for funding are appropriate.
- The Public Finances Law sets out a number of responsibilities for the Minister for Treasury and Resources in relation to a Reserve, including:
- to report to the States Assembly every 6 months with details of any approvals given to spend the Reserve
- to propose a head of expenditure for the Reserve in the Government Plan
- to direct how an approved appropriation from a Reserve head of expenditure may be spent in the first financial year covered by the Government Plan
- to authorise that an unspent amount appropriated from the Consolidated Fund under an approved Government Plan for one financial year is deemed to be appropriated as part of a Reserve head of expenditure for the following financial year
- Allocations from a Reserve head of expenditure cannot be made without the approval of the Minister for Treasury and Resources. If necessary, the Minister for Treasury and Resources may delegate the approval for expenditure from a Reserve head of expenditure to the States Treasurer, with any decision under this delegated authority being notified to the States Assembly in the next six monthly report.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically this includes:
- budgeting
- changes to head of expenditure
- expenditure
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- expenditure from the Reserve may not be properly authorised
- expenditure from the Reserve may not be in accordance with the published policy of the Minister for Treasury and Resources or offer best value to the States or Government of Jersey
- expenditure from the Reserve may exceed the amount set aside by the States Assembly for this purpose
- the States or Government of Jersey could achieve better value for money if the amounts held in the Reserve were put to alternative uses
- expenditure from the Reserve is not properly accounted for
- Principles
- A Reserve head of expenditure should be operated in line with the requirements set out in the published Ministerial Policy Statement on the Reserve.
A Reserve head of expenditure should be used only for unforeseen and urgent expenditure or as otherwise considered in the Government Plan or specified in the Minister’s policy statement.
2.2 A Reserve head of expenditure may also be used to accelerate expenditure planned in another head of expenditure for the next financial year, depending on the terms of the Reserve, if to do so would be more economic, effective and efficient than delaying the expenditure. Such expenditure should result in a corresponding transfer to the Reserve head of expenditure from the following year’s budget.
2.3 Expenditure from a Reserve head of expenditure should be appropriately considered, authorised and reported.
2.4 If a States Body aims to make a withdrawal from a Reserve head of expenditure, a plan should, where appropriate, be made to repay the figure out of the next year’s head of expenditure when agreed. However a decision can be taken by the Minister for Treasury and Resources not to require repayment.
2.5 Expenditure from a Reserve head of expenditure should not be used for regular recurring expenditure and its availability should not be relied upon when making budgeting decisions.
- Requirements
- Compliance
Accountable Officers and other responsible parties must ensure compliance with the Ministerial Policy for a Reserve head of expenditure. The existing Ministerial Policy on Contingency covers the following broad sections:
- the different ways allocation can be made to the Reserve
- types of expenditure that can come out of the Reserve
- the treatment of any unspent balance in the Reserve at the end of the year
- the allocation process including the role of Accountable Officers, the Investment Appraisal Board, Principal Accountable Officer, and the States Treasurer
- drawdown on approved funding
- monitoring the Reserve
- Expenditure and unspent funds
Expenditure from a Reserve head of expenditure may only be used for the purpose for which it was approved. Unspent funds must be returned to the Reserve head of expenditure. Accountable Officers should provide monthly updates on the use of such funds to the States Treasurer.
3.3 Reporting
The Minister for Treasury and Resources must report to the States at six monthly intervals regarding any transfers from a Reserve identifying the head of expenditure to which it was applied.
3.4 Re-allocation at year end
At the end of each financial year, the Minister for Treasury and Resources may re-allocate any unspent funds from any head of expenditure to the following year’s reserve head of expenditure.
3.5 Carry forward
At the end of each financial year, the Minister for Treasury and Resources may agree that unspent funds may be deemed to be appropriated to the following years reserve head of expenditure, taking into consideration all relevant factors.
3.6 Delegation
The Minister for Treasury and Resources may delegate authority to approve expenditure from a Reserve head of expenditure to the States Treasurer. This delegation should only occur if there is genuine urgency in the public interest and postponing expenditure would:
- cause other damage or public detriment
- cause additional wasteful expenditure
- lose efficiency savings
Any expenditure authorised under this delegated authority must be notified to the States Assembly in the appropriate six monthly report.
Financing (Borrowing)
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on borrowing by the Government of Jersey.
- Borrowing is defined as the acquisition of funds or assets from a Body other than a States Body with an obligation to repay those funds. This definition also includes the permanent (or potentially permanent) acquisition of an asset with an obligation to pay for that asset over a period longer than 90 days.
- Borrowing or debt financing represents a key balance sheet item of the Government of Jersey. As such, a clear understanding of how this balance changes and is serviced and repaid is required to ensure that stakeholders fully comprehend the potential long-term impacts on the Government and future generations. Further reference should also be made to the covenants provided and to the cost of servicing. A mismanagement of borrowing by the Government of Jersey could generate substantial risk to the Island’s financial stability for years to come.
- The following types of borrowing fall within the remit of this Public Finances Manual:
• Hire Purchase Agreements
• leases and similar contracts whereby the economic benefit of an asset is acquired for a limited duration
• the assignment of debt from a third party
• sale and leaseback transactions
• guarantees or indemnities in the Government of Jersey’s name (in which case the liability will be taken to be the amount borrowed for the purpose of calculating borrowing limits) – these do not include “letters of comfort” issued by the Minister for Treasury and Resources
• bank overdrafts and overdraft facilities
• loans from external institutions e.g. banks
• the issuance of bonds
1.5 Accountable Officers in States Bodies with a responsibility for the oversight of Arm’s Length Organisations should consider the potential for external providers of capital to Arm’s Length Organisations to consider that the Government of Jersey could implicitly guarantee that capital e.g. if an Arm’s Length Organisation enters into a loan agreement with a bank, irrespective of the terms of the agreement there may be an underlying expectation that the Government of Jersey will ensure that the loan is repaid in the event of a default. As such, any borrowing made by these organisations should be carefully monitored, reviewed periodically and notified to Treasury and Exchequer (Investment Management). The Accountable Officer should ensure sufficient information is received to understand, and if required, manage any risk of default. For the avoidance of doubt, while there may be a perception that such implicit guarantees extend to the finances of the Parishes, they are entirely independent of the Government of Jersey and as such, the information requirements as described above cannot be applied to them.
1.6 Users of the Public Finances Manual should refer to other sections, as well that are relevant. Specifically this includes:
• assets
• banking
• expenditure
• fraud
• income
• leases
1.7 In addition to the common risks identified in the Background and Introduction section of the Manual a number of significant risks relating to this section include:
• borrowing is not appropriately authorised
• annual and or total borrowing limits of the Minister for Treasury and Resources are exceeded
• total borrowing exceeds the maximum permissible amount
• the total borrowing limit is incorrectly calculated
• the same assets are used to secure more than one loan
• the Government is unable to service its debt
• borrowing is carried out directly by States Bodies; only the States Treasurer (or the States or Government of Jersey on the Minister’s recommendation) can borrow
• the States or Government of Jersey has inadequate methods of monitoring its borrowing arrangements and debt levels
• the States Assembly does not have a complete view of borrowings undertaken by the States or Government of Jersey
- Principles
- Borrowing should not be carried out without appropriate authorisation.
- Accountable Officers should ensure that there is no activity carried out within their States Bodies that meets the definition of borrowing.
- Total borrowing by the Government of Jersey should be monitored against approved limits set in the Public Finances Law or by the States Assembly periodically, at least on a six-monthly basis. Annually, a total of the aggregated borrowings made by the Government of Jersey and all organisations which are within the scope of the Financial Statements of the Government of Jersey as prescribed by the Jersey Financial Reporting Manual must be reported.
- Requirements
- Borrowing Proposals
States Bodies making borrowing proposals for consideration by the States Treasurer for inclusion in the Government Plan must provide a business case for such borrowing to be undertaken, including the full cost implications of the borrowing, comparisons with other methods of funding, and the funding sources for repayments and servicing of the borrowing. In addition, possible restrictive covenants should be considered as restrictions in respect of cash limits, interest cover, etc. may impact on other planned expenditure, reducing the ability of the Government of Jersey to respond to new challenges.
3.2 Cost of Borrowing
All costs of borrowing must be met by the States Body on whose behalf the finance is obtained. The cost of borrowing must be adequately reflected in the States Body’s financial reports.
3.3 States Treasurer Requirements
When requested, Accountable Officers must submit promptly to the States Treasurer, information relating to borrowing, in a form which is compliant with the Jersey Financial Reporting Manual or the relevant Government of Jersey accounting policies.
3.4 Name of Borrower
All borrowing must be in the name of the Government of Jersey or the relevant Specified Organisation or Arm’s Length Organisation.
3.5 States Assembly Approval
All requests for borrowing other than those approved by the States Assembly in the Government Plan, regardless of limit, must be referred to the States Treasurer for approval before submission to the Minister for Treasury and Resources.
3.6 Notifying the States Treasurer
States Bodies must not enter into any new lease arrangements, or any other type of borrowing, without first notifying the States Treasurer and obtaining approval to do so. For further guidance, please refer to the Leases Section of this Manual.
3.7 Financing (Borrowing) Limitations
It is the responsibility of the States Treasurer to ensure that limits on borrowing in the Public Finances Law or Government Plan are not exceeded without the prior approval of the States Assembly. Under the Law the Minister can finance up to £3 million in a financial year. The total outstanding amount of financing of this type at any given time must not exceed £20 million. This is in addition to any financing approved by the States in the Government Plan.
3.8 Exceeding Limitations
Borrowing in excess of the Ministerial limitations set in the Public Finances Law has to be approved as part of the Government Planning process.
3.9 Reporting Additional Borrowing
Information on additional borrowing as well as the aggregate debt position of the Government of Jersey must be reported to the States Assembly on a six-monthly basis by the Minister for Treasury and Resources.
3.10 Requirements for Specified Organisations
The circumstances under which Specified Organisations may borrow, as well as the applicable terms, should be set out in the relevant Memorandum of Understanding and associated documents. Specified Organisations should first consider borrowing directly from the Government of Jersey before obtaining any external financing.
3.11 Contingent liabilities requirements
- any prospective contingent liability in the form of a guarantee or indemnity must be approved by the States Treasurer who will advise on any budgetary implications if the contingent liability gives rise to a financial guarantee contract
- a careful appraisal of the risks, including the legal aspects, should be carried out before accepting any contingent liabilities. In all cases, steps should be taken to restrict the total contingent liability to a minimum e.g. by carefully specifying the duration, the extent and the conditions attached to guarantees
- a contingent liability may arise due to a complaint, a legal claim or other matter. When such a matter arises, the Accountable Officer should notify the States Treasurer and the Director of Risk and Audit, and provide periodic updates at a time specified by each
- Notifying the States Treasurer of Contingent Liabilities
The States Treasurer must be notified of all of the Government of Jersey’s contingent liabilities to enable a record of contingent liabilities to be maintained and to assist with the compilation of notes to the accounts.
3.13 Crystallised Liabilities
If a liability crystallises then the relevant States Body should consider, in consultation with the States Treasurer, whether an immediate report should be made to the States Assembly or if this is better addressed during the six-monthly updates. The report should explain the circumstances in which the liability has crystallised and the amount involved.
3.14 Government of Jersey Duties in Relation to Arm’s Length Organisations (as defined in the Public Finances Manual) Contingent Liabilities
The contingent liabilities are not normally under the direct control of the Government of Jersey. However, any contingent liabilities which they are unable to meet from within their own resources could then fall to the Government of Jersey to repay. As such, each sponsoring States Body should therefore have adequate arrangements in place to ensure that the acceptance of contingent liabilities by Arm’s Length Organisations concerned is consistent with the written agreement between the Arm’s Length Organisation and the Government of Jersey, and that, in the event of the contingent liabilities crystallising, the States Body would have the ability to meet the costs from within their own resources. These arrangements should be reviewed and the findings reported at least annually to ensure appropriate provisions can be made.
Lending
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and, where appropriate, loans from States Funds, and provides guidance on all lending by the Government of Jersey in accordance with the Public Finances Law.
- For the purposes of this section, lending is defined as the transfer of money to a third party under an agreement that requires repayment of a specified amount at a specified time or times.
- This section addresses the responsibilities of the Accountable Officer of a States Body in ensuring compliance with the requirements of the Government of Jersey on lending and in ensuring that loans are repaid in accordance with the agreed terms.
- The section does not apply to loan schemes which have been established by separate legislation (e.g. Agricultural Loans). The value of these loans will, however, be taken into account when calculating overall lending limits, as defined in the Public Finances Law and by the States Assembly.
- Non-lending transactions
For the purposes of this section the following transactions are not deemed to be lending:
- payment for care while awaiting curatorship
- loans of equipment
- payment for anyone supporting someone which will later be reimbursed
- payment of rental deposits for Licensed employees
- payroll advances
- advances of foreign currency for travel
- spending charged to Gift Funds and settled at the year end
Lending from Gift Funds will also not be classified as lending for the purpose of this Section since the money is not part of States funds.
1.6 Users of this section should refer to other sections of the Public Finances Manual that are relevant including:
• financing
• expenditure
• fraud
1.7 In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- unauthorised lending is carried out in breach of the Public Finances (Jersey) Law 2019, or other Laws or relevant States or Government of Jersey policies
- lending limits on the value of the individual loans authorised by the Minister for Treasury and Resources or States Treasury and Exchequer are exceeded
- ineffective due diligence procedures result in lending which the borrower is unable to repay
- fraud is committed through deliberate and calculated loan write-offs
- lending is inadvertently subsidised, with the final charges resting on the States or Government of Jersey
- total lending exceeds the maximum permissible amount
- the total lending limit is incorrectly calculated
- Principles
- All lending should be in the name of the Government of Jersey or, in the case of Arm’s-Length Organisations, (ALOs) the body itself.
- With the exception of Arm’s Length Organisations, Accountable Officers cannot independently authorise the issuance of a loan. A States Body may request that Treasury and Exchequer makes a loan, which is made directly from Treasury and Exchequer. All lending regardless of limit must be approved by Treasury and Exchequer.
- In the case of Arm’s Length Organisations, the sponsoring States Body should monitor any lending carried out by the Arm’s Length Organisation.
- All lending should be appropriately authorised and undertaken in accordance with any relevant Government of Jersey policies.
- Due diligence procedures should be undertaken with regard to any proposed loan to third parties, culminating in a formal assessment of the borrower's financial standing and an assessment as to whether or not the borrower is likely to be in a position to satisfy the terms of the loan.
- States Bodies and Specified Organisations should have clear policies and procedures for credit control and must ensure that loan agreements are clear with necessary covenants in place to ensure recovery of the loan. Proper credit record checks for all potential third party borrowers should be done. This should include setting credit limits.
- States Bodies should be able to justify loans that are on commercial terms and do not give the recipient an unfair competitive advantage in the market to organisations that compete with the Private Sector (e.g. Arm’s Length Organisations).
- States Bodies should ensure early discussion with Treasury and Exchequer when there is concern about the security of any of loans to third parties.
- States Bodies should consult Treasury and Exchequer regarding any proposals involving loan repayments and write offs.
- Accountable Officers should ensure there is no activity carried out by their States Body that meets the definition of lending above unless conducted in accordance with the requirements of this section. E.g. offering extended credit terms to a specific person or organisation.
- Total and annual lending by the Government of Jersey should be monitored against the limits set out in the Law and Government Plan on a quarterly basis.
- All lending carried out under powers in the Law should be reported to the States Assembly as part of the Semi-Annual Updates.
- Requirements
- Decision making
Before a decision is made to consider lending in any form, Accountable Officers must consider the full financial implications (including tax implications) and compare these with other alternative courses of action. These implications should be considered over the whole life of the proposed loan.
3.2 Requesting funding
A States Body making a request for funds to make a loan must make a written request to Treasury and Exchequer. This request must include:
- details of how making the loan will contribute to the States Body’s Strategic Priorities
- the proposed recipient of the loan
- the amount of the loan
- the purpose for which the loan will be used
- the reasons (both financial and non-financial) for making a loan as opposed to any other course of action, including specific measurable objectives for the success of a loan
- confirmation that the States Body is able to meet the cost of any interest subsidy plus the cost of repayments if the borrower defaults (if interest charged to the borrower is lower than that payable by the States Body) from within its approved expenditure
- the period over which the loan will be repaid and the method of repayment
- the proposed rate of interest to be charged
- any other terms and conditions of the proposed loan
- an assessment of the risk of non-repayment and confirmation that this falls within the risk appetite of the States Body
- details of any security or guarantee to be taken in relation to the proposed loan
- Risk management
In particular, the States Body requesting funds to make a loan must consider the risk to the States of non-repayment of the loan and should take appropriate security from the borrower on the amount lent if it is deemed appropriate. These considerations should be documented. In the event that security is taken a process for regular valuation (at least annual) of such security should be put in place alongside details of action to be taken in the event that the value of security is lower than the outstanding loan amount. In the event of default the outstanding balance, following the liquidation of any security will be debited against the approved expenditure of the States Body requesting funds to make a loan.
3.4 Security
All States Bodies should, where it would be practical and economic to do so, seek to establish a security (e.g. a fixed or floating charge) covering a loan to the Private Sector.
3.5 Lending Limitations
It is the responsibility of the States Treasurer to ensure that limits on lending in the Public Finances Law or Government Plan are not exceeded without the prior approval of the States Assembly. Under the Law the Minister can lend up to £3 million in a financial year. The total outstanding amount of lending of this type at any given time must not exceed £20 million.
3.6 Surplus funds
Where the borrower has genuinely accrued surplus funds and proposes an early repayment, it must be agreed with Treasury and Exchequer beforehand. Such an agreement should also specify the applicable interest and principal amount payable and any early repayment penalties.
3.7 Change of status
All loan agreements should include a clause such that should the borrower’s status change from Public to Private Sector, the loan must be repaid unless agreed otherwise with the States Treasurer. The timing and amount to be repaid must be agreed with Treasury and Exchequer.
3.8 Finance costs
All costs of financing the loan must be met by the States Body making the loan. The States Body requesting funds to make a loan will be charged interest on the sum lent at a rate as negotiated between the States Body and Treasury and Exchequer. If the rate received by the States Body exceeds the agreed rate the additional interest should be credited to the Reserve.
3.9 Accounting
The loan and any interest payable and receivable must be accurately reflected in the appropriate States Body’s accounts.
3.10 Reporting
When requested, Accountable Officers must submit promptly to Treasury and Exchequer information which is compliant with the Jersey Financial Reporting Manual and complies with the relevant Government of Jersey accounting policies for all loans for the completion of the annual accounts. When requesting the information, Treasury and Exchequer will specify the format and content to ensure compliance.
3.11 Outstanding loans
Treasury and Exchequer will compile information from Accountable Officers on all outstanding loans on a six monthly basis for onwards reporting to the States Assembly by the Minister for Treasury and Resources.
3.12 Controls
Stricter controls should be applied when lending to organisations that compete with the Private Sector or those that are operating in commercial markets such as Arm’s Length Organisations for the following reasons:
- to avoid distorting competition in the markets in which these organisations operate
- to deliver value for money for Treasury and Exchequer as a whole by maximising the efficiency and minimising subsequent cost of funds
- Guarantees
Where guarantees are required during the lending process, the States Body should follow the guidance provided on guarantees in the Financing section.
3.14 Underperforming loans
Accountable Officers must notify Treasury and Exchequer whenever there is an indication that a loan may be underperforming, and agree the appropriate remedial action. Underperforming loans must be reported to Treasury and Exchequer on a monthly basis in the manner prescribed.
Investments
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and applies to all Investments made by Treasury and Exchequer or States Bodies, subject to relevant schemes of delegation.
- This section applies to all investments administered by the Government of Jersey. The following is a non-exhaustive list of funds which currently hold investments:
- Strategic Reserve Fund
- Social Security (Reserve) Fund
- Long-term Care Fund
- Consolidated Fund
- Currency Notes and Coinage Fund
- Stabilisation Fund
- Health Insurance Fund
- Jersey Reclaim Fund
- Various Trust and Bequest funds
The investment strategies and governance arrangements of the Pension Funds are subject to specific legislation. Accordingly, their investment strategies are outlined in separate published documents issued by their governing bodies.
1.3 This section also provides guidance on the expected requirements for staff administering investments, specifically:
- what constitutes an investment
- who is empowered to carry out investment management
- limits around investment management activity
- governance structure for investment management
- the process for carrying out investment management (to include, selection/retirement of Investment Managers and advisers, reports to the States Assembly and Government of Jersey)
- Users of this section should refer to other relevant sections of the Public Finances Manual. Specifically this includes:
- funds
- income
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- funds invested are mismanaged
- the return on the funds invested are insufficient to meet the States or Government of Jersey’s Strategic Priorities
- funds are not invested in accordance with the States or Government of Jersey’s risk appetite or investment strategy
- public funds are invested without the appropriate authorisation
- funds are placed in investments that are not in line with the ethical values of the States or Government of Jersey
- investments are not accurately recorded or reported
- Principles
- Investments should be made in accordance with the Government of Jersey’s risk appetite and investment strategy. In appointing Investment Managers to make investments on behalf of the Government of Jersey, necessary steps must be taken to strike a balance between risk and return.
- The Minister for Treasury and Resources is responsible for the investment of money held by the Government or a States body. The Treasurer is responsible for ensuring that investment is carried out in line with the Minister’s Investment Strategy.
- Requirements
- Authority to invest
The States Treasurer and Minister for Treasury and Resources are responsible for carrying out investment management in line with the Minister’s investment strategies presented to the States Assembly. Only Treasury and Exchequer staff can implement the investment decisions under the approval of the States Treasurer or Minister for Treasury and Resources. No other States Bodies are authorised to carry out investment management.
3.2 Investment Strategy
The Minister for Treasury and Resources must develop investment strategies for the funds with investable assets in excess of £1m for which they are responsible and present any review of those strategies to the Government of Jersey as soon as practical.
The investment strategies must be monitored by officers of Treasury and Exchequer - Treasury and Investment Management on a regular basis. A programme should be maintained to ensure an appropriate periodic review of strategies is undertaken to confirm they remain appropriate. This should consider the minimum frequency with which reviews are undertaken and, where factors such as macro-economic shocks or other indicators of increased risk occur, consideration should be given to more frequent reviews.
Where new funds are created either in legislation or via a States proposition consideration must be given as to whether these funds will hold monies over a long period of time, i.e. in excess of 2 years. In this situation, funds must have investment strategies developed to effectively manage the monies, maximizing returns within the agreed risk appetite and cash flow requirements.
3.3 Further considerations for investment strategies
When investment strategies are created for new funds, the following should be considered:
- the strategic objective that the fund is seeking to achieve
- the lifespan of the fund
- the timing of cash flows and when money is likely to be required to be distributed
- the risk appetite for the fund versus desired returns
- if the fund is suitable for carrying out its investment in the Common Investment Fund
- in the case of Trust funds, whether there are there any other parties which should be consulted in terms of their aspirations of fund returns (e.g. Trustees (such as Jurats acting as administrators), Trust Protector or separate Committees looking after the administration of the funds)
- the appropriate fund benchmark(s) and performance targets that should be utilised during the life of the fund to measure performance
- whether the fund should be prevented from investing in certain areas (e.g. Jersey) or asset classes in case of there being an economic downturn or for other specific reasons such as failing to comply with the Minister’s Responsible Investment Policy
- what asset class diversification is required
- whether there are any taxation implications which should be considered
- Investment advice
The creation of investment strategies must be led by Treasury and Investment Management in consultation with other relevant States Bodies, the Government of Jersey’s Investment Advisor and the Treasury Advisory Panel (which provides independent advice to the Minister and Treasurer). The Government of Jersey’s Investment Advisor may be appointed by the Minister for Treasury and Resources to provide advice on the selection, monitoring and termination of Investment Managers, as well as the investment strategies of the funds. However, the Minister for Treasury and Resources and the States Treasurer remain responsible for the safeguarding and performance of the investments.
The appointment of the Government of Jersey Investment Adviser should be undertaken in accordance with standard Government of Jersey procurement practices and care should be taken to ensure appropriate due diligence is conducted and that there are provisions for the termination of the contract in the event of underperformance. In particular, consideration should be given to how an Investment Manager’s contract can be terminated in the event that they are removed from the Government’s Investment Advisors “buy-list”.
3.5 Appointment of Investment Managers
All Investment Manager appointments should be carried out in line with the Government of Jersey’s procurement process with the following exceptions;
- It is not required to an open tender to appoint new investment managers. Given the reliance placed on Investment Advisors’ operational due diligence assessment of potential managers, it is impractical to run an open tender for mandates given the high costs required to gain equivalent comfort over the internal controls of a manager unknown to the advisor. Secondly the complexity of portfolios requires the advisor to assess potential managers’ characteristics, including historic holdings, concentrations and correlation compared to existing managers in the portfolio. Obtaining, cleansing and validating data before the quantataive assessement across an open tender would be unnecessarily expensive.
- It is not required to use a standard Government of Jersey Contract. Managers have complex and bespoke contracts specific to the service they provide. These contain a number of regulatory constraints and the standard Government of Jersey contract is not an appropriate proxy.
- It is not required to include a set contract end date. Given the long term investment horizon of managers and the high cost of replacing managers a fixed term contract is not an appropriate mechanism for ensuring value for money. Managers are instead subject to ongoing review to ensure they remain ‘best of breed’ and value for money.
The appointment of Managers is expected to be subject to recommendation by members of the Treasury Advisory Panel and the process managed by officers of Treasury and Investment Management. It is expected the States Investment Advisor will recommend potential managers for review by the Panel.
For larger mandates, consideration should be given to appointing more than one Investment Manager.
Further due diligence must be carried out by officers of Treasury and Investment Management prior to the appointment of an Investment Manager, which comprises as follows:-
- legal due diligence – The Law Officers’ Department or external lawyers and the Government of Jersey’s Investment Advisor should provide views on legal and technical details for the contract. For the Pension funds, external lawyers may be used instead of the Law Officers’ Department
- seek Investment Advisors relevant external benchmarking data for the short listed managers to supplement information gathered in the tender process in order to ascertain if there are any likely perceived risks – financial, organisational, systems, etc. Priority should be given to Investment Managers who are Buy-Listed by the Government’s Investment Advisor; consideration, however, should be given to the relationship with such Managers, should there be a downward rating. This should be addressed in the terms of reference
Prior to entering into a new contract, a Ministerial Decision or States Treasurer’s Decision must be prepared and authorised, appointing the new Investment Manager.
3.6 Pooling
All or any part of the money that the Minister is responsible for investing may be pooled and invested in the name “Treasurer of the States on behalf of the States of Jersey – Common Investment Fund”. However, money of a States Fund must not be invested in a manner that is inconsistent with any applicable enactment or instrument that established the Fund and money held in trust must not be invested in a manner that is inconsistent with the trust.
3.7 Investment monitoring
The Committee or Panel must monitor investment performance regularly. As a minimum, investments should be monitored on a quarterly basis by the Committees or Panel. Monitoring may include considering and verifying the following:
- the investments are being managed in accordance with the appropriate regulations and terms of reference
- how the investments have performed over the last quarter compared with appropriate pre-determined benchmarks and performance targets
- how the investments have performed over the last year compared with appropriate pre-determined benchmarks and performance targets
- how the investments have performed over the last three years compared with appropriate pre-determined benchmarks and performance targets (this is only appropriate where long-term performance is relevant)
- the economic, market and political factors that should be taken in to account when considering performance (this view is usually provided by the investment advisor)
- how the individual investment managers have performed against the benchmarks set
- whether there have been any ownership, management or organisational changes or reputational issues for Investment Managers which could put the stability of investments at risk
- whether there have been any significant changes in relation to the longevity of the fund and or a change in its direction which may require a change in the long term investment strategy for the fund – and whether the benchmarks or the strategic ranges should be changed as a result
- whether the safe custody arrangements remain robust and continue to safeguard the assets of the funds at risk
- Performance meetings
On a regular basis all investment managers must be asked to attend performance meetings to discuss the performance of the assets they manage and share their vision for the future of these funds’ investment returns. This will typically be on a three year rolling cycle unless the investment manager is downgraded by the Government’s Investment Advisor or are deemed to warrant additional attention either by the Treasury Advisory Panel or officers of Treasury and Investment Management, in which case they should be invited to attend a meeting as soon as is practical to determine how to proceed.
3.9 Further duties
The Committee or Panel are responsible for considering performance of the investment managers and must make a timely recommendation for the termination of a manager to the States Treasurer or Minister for Treasury and Resources when that manager continually underperforms. In addition to the monitoring of performance by the Committee or Panel, Treasury and Investment Management must
- put in place an appropriate risk matrix with associated mitigations and controls to ensure that all of the funds’ investments are being managed in accordance with mandates.
- ensure that investment managers reconcile asset balances with custodians , within the agreed tolerance range for the asset class (which is set by the States Treasurer)
- prepare regular performance reports in the prescribed form for all Government of Jersey funds and circulate them to the relevant Committee or Panel and officers of the Government of Jersey, including the States Treasurer
- review the underlying assets of the funds and ensure they continue to be invested in accordance with the Minister’s published investment strategies
- challenge investment managers where appropriate in relation to performance
- prepare a performance report for all Government of Jersey funds and present it to the Government of Jersey in a timely manner for inclusion in the six-monthly update delivered by the Minister for Treasury and Resources to the States Assembly
- notify custodians of any changes to the benchmarks and their weightings, in a timely manner before they prepare the monthly performance reports. Changes to benchmarks and weightings should be prepared in consultation with the Government’s Investment Advisor
Fees and charges
- Introduction and background
- This section provides guidance on establishing acceptable fees and charges for services offered across all States Bodies. The fees and charges covered by this section are not those relating to Income Tax, Goods and Services Tax, Stamp Duty, Social Security contributions and any other similar income.
- This section addresses how States Bodies can effectively introduce new charges for services that have not been previously made and make adjustments to existing charges in line with the Government of Jersey’s requirements. The scope of fees and charges in this section includes but is not limited to fees, fines and penalties.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically these include:
- expenditure
- income
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- charges could be made which are “ultra vires” or illegal
- inaccurate calculation of fees and charges leading to profits and hence Islanders paying more than the cost of services (which is, in some circumstances, ultra vires)
- States Bodies might have an implicit bias towards increasing fees and charges but not addressing expenditure
- services to specific groups of users could be deliberately or inadvertently subsidised which may be contrary to agreed public policy
- loss of value to the States or Government of Jersey due to inappropriate levels of subsidy on fees and charges for organisations such as those in the third sector
- increased fees and charges could be detrimental to the States’ Strategic Priorities where the fees and charges influence activities or behaviours contrary to intended Strategic Priorities
- fees and charges are subsidised on discretionary services provided in competition with the private sector
- Principles
- Levels of fees and charges and estimated income should be included in proposals for the Government Plan (see Government Plan and budgeting section).
- Accountable Officers should ensure any proposed fee or charge is not in fact a tax (i.e. raises more in income than the cost of delivering the associated service) and should seek advice from the Law Officers’ Department where uncertainty exists. If there is a statutory power to raise fees this normally permits fees to be charged to safely pay for the service. If the aim is to make a profit then there must be statutory powers which allow this to happen.
2.3 Accountable Officers should always check the mechanism for charging fees. If a service is in the course of exercising a government power, then no charge can be made. However, if the service is one of a commercial nature, e.g. a customer relationship in the ordinary sense of the word, then charges can be made and commercially. For example, if the States has land, then it can lease it out; if the Government of Jersey conducts children’s parties in Fort Regent it can charge what the market will bear. Accountable Officers should consider whether a move to charging full-cost recovery is appropriate for “user pays” services
2.4 Decisions on charging policy should be made with the same care, and to similar standards, as those on taxation and the levels of fees and charges. The income arising should form part of proposals submitted for the draft Government Plan.
2.5 Cost should be calculated on an accruals basis, including overheads, depreciation (e.g. for start-up or improvement costs) and the cost of capital.
2.6 When considering increases or decreases to fees and charges, a Body should have proper justification as to the necessity of doing so. Accountable Officers should ensure early engagement with Treasury and Exchequer and gain relevant legal advice where appropriate.
2.7 States Bodies should calculate the long term impact of fees and charges before considering discussing with Treasury and Exchequer.
2.8 Proper assessments of the level of competition, market rates and potential risks associated with the provision of discretionary services provided in competition with the private sector should be undertaken and effort should be made to mitigate such risks and derive an appropriate level of income from the services.
2.9 Charges should not normally be made for services which are delivered to the population as a whole. They should only be considered where they benefit a specific group of users (“user pays”). This is because services offered to the whole public may constitute general income set by legislation such as income tax which is not covered in this section.
2.10 Accountable Officers should not make a profit on services. The income from charges cannot exceed the full cost of delivering the service. Where costs of providing a service have been reduced or increased, Bodies must reassess whether the level of any charges made is appropriate.
2.11 Where States Bodies intend to increase an existing charge or introduce a new one, the recipients should be made aware of the charges and consulted if practical to do so.
2.12 Accountable Officers should not achieve net savings by virtue of passing charges on to another States Body through targeted increased charges.
2.13 Accountable Officers should not be disadvantaged by having to meet increased external costs without being able to recover them through increasing charges.
2.14 Where considering an increase in charges to external customers, it should not be dismissed simply because the increases would also fall on internal customers. Where this occurs, the receiving States Bodies should transfer sufficient budget to the paying States Body to meet the increase in charges.
2.15 Leases, rental and similar charges should all be made at the market rate.
- Requirements
- Accountable Officer Approvals
The Accountable Officer must ensure that the following approvals are sought prior to proceeding:
- approval of the relevant Minister and the Minister for Treasury and Resources for all annual increases in excess of 2.5% (except where leases and rentals are made at market rate)
- approval of the States Assembly for new “user pays” charges in accordance with P.63/2003, which resulted in a States decision in June 2004
- Accountable Officer Responsibilities
Accountable Officers are responsible for:
- providing recommendations on the appropriate fee or charge through a regular review of costs of providing services
- ensuring that the standard approach to setting charges for public services (including services supplied by one States Body to another) is full cost recovery. Exceptions to this standard approach include but are not limited to the following services:
- subsidised services: Where the Government of Jersey decides to spend public resources on lowering costs for some or all consumers of public services
- information services: Where charges are generally low or waived as a matter of policy
- discretionary services provided in competition with the private sector: where a commercial rate is normally charged. In determining such rates, consideration should be given to the level of competition, the market prices of competitors and the potential risks to the Government of Jersey
- levies: Licences to operate using public assets, often set to recover associated costs such as supervision by a regulator
- Accountable Officer Duties
The Accountable Officer must ensure that:
- there is an agreed plan to achieve full cost recovery within a reasonable period where a decision has been taken to charge less than full cost. An example is where failing to provide such a subsidy would cause a reduction in overall value to the Government of Jersey e.g. where a third sector organisation would be adversely impacted leading to a reduction in service, which the Government of Jersey would then need to underwrite. If the subsidy is intended to last, this decision should be documented and periodically reconsidered
- a policy is in place for guidance on whether to charge at a uniform rate for all varieties of a service or having different fees set for objectively different categories of service costing different amounts to provide
- at regular intervals of at least once a year, a review of the necessity and appropriateness of offering a service and its associated fees and charges is conducted including review of the financial objectives and outcome, scope of service, alternative business models, ways of improving efficiency and effectiveness, forecasting on potential changes and the necessity of using public resources to supply a service. Any tangible or intangible assets used in running the service should be assessed during the review and decisions should be made on any underused assets as whether to have them redeployed, used for wider markets activity, or sold
- the full cost of each category of service is measured realistically and objectively. The cost should be estimated, extrapolating past trends and forecasting future consumption patterns.
- the standard calculation for fees and charges takes full account of the associated costs incurred in providing the service and non-cash items e.g. depreciation, return on capital and the notional cost of insurance, where applicable, are considered. If a publicly provided commercial service does not deliver its target rate of return, outstanding deficits should be recovered, e.g. by adjusting charges. Exceptions to the standard approach to costing may include but are not limited to:
- externalities imposed on society (e.g. costs from pollution and crime)
- costs of policy work (other than policy on the executive delivery of the service), enforcement costs
- replacement costs of items notionally insured
- start-up costs (those which are capitalised in the accounts) and one-off capital items
Income
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on the efficient and effective collection, recording and, where applicable, recovery of income realised from, inter alia, fees, fines and penalties and from the States Trading Operations. Income from Income Tax, Goods and Services Tax, Stamp Duty, Social Security contributions and any other similar income is not covered by this section.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically, these include:
- banking
- government plan and budgeting
- cash
- expenditure
- fees and charges
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- income is not collected or banked
- customers are incorrectly charged leading to reputational damage to the States or loss of income
- income generating activities are set at the wrong price levels leading to losses to the States, unfair competition with the private sector or excessive profits
- income is misallocated, understated or overstated due to ineffective recognition, monitoring and management processes
- Principles
- An adequate framework should be established for the effective collection, recording and recovery of income of States Bodies.
- Where the administration of a specific type of income is addressed in the Public Finances Law, such income should be administered in line with the requirements of the Law.
- All income due to the Government and States should be promptly collected and banked.
- When considering legal action to recover income due, the costs of that action should be considered against the income which is likely to be collected.
- Requirements
- Duties of Accountable Officers
Accountable Officers are responsible for:
- establishing, maintaining and monitoring the income process within each States Body including identifying and promoting the most efficient and economic methods of income collection e.g. encouraging the use of bank transfers over cheque payments
- establishing, implementing and maintaining adequate internal controls over cash receipts, including segregation of duties, accounting controls, and the use of appropriate safekeeping devices
- issuing manuals, guidelines and other instructions within their area of operation for the identification and collection of income
- ensuring the effective running of all systems put in place to ensure proper forecasting, recording and collection of income which include; budgeting, credit controls, debt recovery, accounting for internal and external transactions, and receipt and safekeeping of income
- ensuring that income is charged in line with the requirements of the Fees and Charges section of the Public Finances Manual, as well as the Government Plan and other applicable legislation
- Income process
In establishing the income process, the Accountable Officer must ensure:
- that roles and responsibilities relating to income are clearly set out in the Scheme of Delegation. This must include the ability to authorise write-offs of income due
- the identification of the sources and amounts of income authorised by the Government of Jersey which would enable the States Body to claim all the money to which it is entitled
- that the States Body has a proper system in place for claiming income when it arises and providing official receipts
- that the States Body has a system in place for receiving and depositing revenue in accordance with the States Body’s banking policy
- that income is accounted for completely and accurately in a timely manner, and that public money is properly safeguarded
- that the States Body puts in place policies to consider the recoverability of overdue accounts receivable and undertake aged analysis of the account at regular intervals. Consideration should also be given to the requirements of the Losses and write offs section of the Public Finances Manual where receivables are considered to be irrecoverable
- Internal controls
In relation to internal controls, the Accountable Officer must ensure that:
- a regular review of the performance of internal controls is carried out to ensure that the correct amount of income is being recognised and recorded
- where practical, the cash receipting function is segregated from the accounting function and is separate from all similar functions. Where it is not possible to have total segregation of cash receipting, additional checks and balances must take place to ensure cash is properly and fully accounted for.
- Processes which require approval
The Accountable Officer must seek approval from the States Treasurer before proceeding with the following:
- debt write-off which exceeds the limits contained in the approved Scheme of Delegation and debt management procedures. Consideration should also be given to the requirements of the Losses and write offs section of the Public Finances Manual
- use of additional income must be authorised by the Minister of Treasury and Resources (or delegate) in line with the Public Finances Law
- Monitoring and management
In relation to the monitoring and management of income, Accountable Officers must ensure:
- that the States Body has a system for reconciling collections to the receipts records and investigating any notable differences. Similarly, a policy must be agreed regarding differences in daily cash collected and the total daily receipts. Proper physical security of cash and receipt books must be observed at all times
- that a monthly reconciliation of income recorded against the amount budgeted is carried out
- that variances identified during reconciliations of income to budget are investigated and measures put in place to ensure efficiency
- that all excess receipts over and above the authorised limits as defined in the relevant Schemes of Delegation are surrendered to the Reserve, unless the Minister for Treasury and Resources agrees that additional income can be used.
Trading operations
- Introduction and background
- This section applies to all States Trading Operations as defined in the Public Finances Law and provides information and guidelines relating to the financial administration of States Trading Operations (STO’s). It includes details relating to:
- designation as a States Trading Operation
- establishment of a Fund relating to an States Trading Operation and the use of such funds
- use of a Trading Fund
- financial returns and estimates
- borrowing by Trading Operations
- A States Trading Operation is a Body which has been designated as such by the States Assembly by approving a Government Plan. Designation as an States Trading Operation means that the Body will not operate a head of expenditure in the same way as a States Body, and will not have a revenue budget allocated to it by the States Assembly in the Government Plan. The States Assembly agrees the estimated income and expenditure of each States Trading Operation for each year and its forward capital programme (including Major Projects). The States Trading Operation effectively becomes self-funding. With the agreement of the Minister for Treasury and Resources, it may retain any surplus of income over expenditure and must fund its own capital expenditure (unless the States Assembly agrees to do so) and is not subject to requirements under the Public Finances Law to seek approval to have unspent funds at the end of the year reallocated to them from the Reserve in the following year. The States Trading Operation may be required to make a contribution in any year to the general revenues of the Government of Jersey.
- The Accountable Officer of the Trading Operation, or, if an Accountable Officer has not been appointed for the Trading Operation, the Accountable Officer of the department which the Trading Operation reports to, is responsible for ensuring that this section is complied with.
- Users of this section should refer to other sections of the Public Finances Manual that are relevant. Specifically, these include:
- financing
- expenditure
- funds
- major projects
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- the States Trading Operation may not generate sufficient income to meet its costs or capital expenditure requirements
- the operations of the States Trading Operation may have an unanticipated effect on competing private enterprises
- the planned income, expenditure and capital programmes of States Trading Operations may not be appropriately nor comprehensively prepared and authorised
- expenditure may be made from trading funds which has not been authorised
- borrowing made by States Trading Operations may not be properly authorised
- activities of States Trading Operations may not be accurately reflected in the States’ Financial Report and Accounts
- Principles
- STOs should make a financial return to general revenues unless agreed otherwise by the Minister for Treasury and Resources.
- The financial performance of States Trading Operations should be accurately reflected in the States’ Annual Financial Statement
- States Trading Operations should not compete nor be perceived to compete unfairly with private enterprises engaged in the same trade.
- Requirements
- Designation as a States Trading Operation
In order to establish an area as a States Trading Operation, the Council of Ministers must include proposals in a Government Plan for debate by the States Assembly. The proposals must detail:
• the area of States operation which constitutes the States Trading Operation
• the exact nature of trading to be undertaken
The Minister responsible for the area requesting States Trading Operation designation must make a full case to the Council of Ministers as to why States Trading Operation status should be granted. Any request for such designation should include:
• an explanation as to why the operation should be classified as a States Trading Operation
• details of the benefits (financial and non-financial) to be gained from granting such an STO status
• a business plan for the States Trading Operation setting out expected income, expenditure and including funding for major projects requirements
3.2 Balances on a Trading Fund
In circumstances where the income generated by a Trading Operation does not cover its negotiated financial return and its annual revenue expenditure, it must meet the deficit from its trading fund.
The States Treasurer may determine the interest rate to be paid on any positive balance of funds in a trading fund or charged on any negative balance. The States Treasurer must determine the times at which any interest receivable and payable will be credited or debited.
3.3 Financial planning
Financial returns and estimates of the income, expenditure, surplus and financial return of a States Trading Operation as well as the amount to be transferred to the Fund and the States Trading Operation’s major projects expenditure plans must be subject to discussion and determination between the Minister responsible for the trading operation and the Minister for Treasury and Resources and will be based upon business plans presented by the Minister responsible for the Trading Operation and will be approved in the Government Plan.
Any income earned by a States Trading Operation in a financial year in excess of its expenditure for a particular year must be paid into the States Trading Operation’s Fund.
3.4 Financing (Borrowing) by States Trading Operations
The States Trading Operation must approach Treasury and Exchequer with any requests for any financing (borrowing). Requests should be made in line with the section on Financing.
3.5 Financial Administration
Unless the Minister for Treasury and Resources requests otherwise, each States Trading Operation must prepare an Annual Financial Statement in respect of its accounts and operations. These must be delivered to the Minister for Treasury and Resources within the timeframe required for the completion of the Accounts (or any other period specified in the Treasury Instructions - Year-end Procedures). The statement must be prepared in accordance with the Jersey Financial Reporting Manual.
3.6 Accounting
Each States Trading Operation must maintain and regularly report, in the form prescribed by Treasury and Exchequer, a profit and loss account, a balance sheet including the balance of its Fund and a cash flow forecast.
Risk Management
- Introduction and background
This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on how to achieve effective risk management.
1.1 Risk Management is defined as, all the processes involved in identifying, assessing and judging risks, assigning ownership, taking actions to mitigate or anticipate them, and monitoring and reviewing progress, this process is set out in detail in the Risk Management Strategy 2019.
1.2 The Principal Accountable Officer is responsible for ensuring that an appropriate approach to risk management is followed throughout the Government of Jersey and various departments respectively and that systems are in place to identify and manage these risks.
1.3 Accountable Officers are personally accountable for the proper oversight of risk management within their area of control, the scope of which is defined in their letters of appointment.
1.4 The term risk appears frequently throughout the Public Finances Manual. For the purposes of the Risk Management Section risk is defined as "Something that could happen that might have an effect on the objectives of the Government of Jersey" in this context a risk is therefore an uncertain future event that can be either a negative threat or a positive opportunity.
1.5 The underlying premise of risk management is that every entity exists to provide value for its stakeholders, effective risk management helps us to identify and manage the risks thereby improving the likelihood of achieving our objectives. This is the first and overriding purpose of risk management.
1.6 Internal Control is defined as, any action, originating within the organisation, taken to manage risk. Control responses may be taken to manage either the frequency or likelihood of the risk being realised or the impact if the risk is realised.
1.7 The system of internal control is designed to provide reasonable assurance regarding the effectiveness and efficiency of risk assessment, acceptance, and management. There are five key components of effective controls.
- maintenance of reliable systems.
- timely preparation of reliable information.
- safeguarding of assets.
- optimum use of resources, and
- preventing and detecting fraud and error.
- Control activities are those actions that help ensure that responses to assessed risks, such as establishing standards of conduct in the control environment, and ensuring these are carried out properly and in a timely manner. Control activities serve as mechanisms for managing the achievement of our objectives and are very much a part of the processes by which we strive to achieve those objectives.
- All employees have some responsibility for internal control as part of their accountability for the achievement of objectives. Collectively they must have necessary, knowledge, skills, information, and authority, to establish, operate and monitor the system of internal control.
- Reputational Risk is failure to meet stakeholders’ reasonable expectations of the organisation’s performance and behaviour. Reputational risk poses a threat or danger to the good name or standing of the organisation, as such all employees have a responsibility to help reduce the potential for reputational risk by actively promoting and following 'Nolan's Principles' described in the appendices of the Public Finance Manual.
2. Principles
The Principal Accountable Officer and Accountable Officers should:
2.1 Establish an appropriate 'Tone at the top' in respect of a shared set of attitudes where employees maintain high ethical values and act with integrity, thereby complying with laws and regulations and behaving in a principled manner
2.2 promote the consistent, comprehensive collaborative and proportionate approach to risk management through the Enterprise Risk Management (ERM) framework
2.3 ensure that States Bodies objectives are not adversely affected by significant unforeseen risks
2.4 ensure arrangements are in place to deal with the unexpected that might put service delivery at risk
2.5 promote an innovative, less risk averse culture that encourages the pursuit of opportunities as well as the management of threats
2.6 provide a sound basis for integrating risk management into decision making; and
2.7 embed risk management as a component of excellent corporate governance and management practices
- Requirements
Accountable Officers must ensure that mechanisms are put in place and applied to:
3.1 document and regularly review the Government’s and related bodies risk management strategies
3.2 identify and evaluate risks
3.3 identify any third party suppliers of goods and/or services that are in scope of risk management activities and establish appropriate monitoring and control requirements where necessary
3.4 assess acceptable risk
3.5 identify and implement suitable responses to risk
3.6 record and monitor risks using a suitable Risk Management Information System (RMIS) or risk register
3.7 document and assess the effectiveness of mitigating actions and controls
3.8 provide assurances that risks and their associated controls are regularly reviewed and action points carried out in a timely manner
3.9 escalate significant risks identified to the appropriate level of management
3.10 record and review near misses as part of the risk management process
3.11 provide training and awareness on risk management
3.12 ensure the effectiveness of risk policies and mandatory risk management requirements as applicable.
Internal Audit
- Introduction and background
- The Internal Audit function provides an independent, objective assurance and advisory service necessary for continual improvement of the organisation’s business performance. It provides reasonable assurance that States Bodies’ financial and operational controls designed to manage the organisations’ risks and achieve the organisations’ objectives are operating in an efficient, effective and ethical manner.
- On an ongoing basis, Internal Audit provides Accountable Officers with reasonable assurance that their organisation’s risk management, control, and governance are adequate, effective and compliant with applicable legislation and other policy and procedures such as this Manual. It also functions as an important source of information and advice regarding areas of improvement and development. It helps the organisation accomplish its objectives through a systematic, disciplined approach to the evaluation and improvement of these processes.
- The States Treasurer is required under the Public Finances Law to establish a system of internal auditing in support of his requirement to ensure the proper stewardship and administration of the public finances of Jersey. The States Treasurer is also responsible for advising the Comptroller and Auditor General, as well as the Principal Accountable Officer (if appropriate), of the results of internal audits carried out under that system.
- The Treasurer must with the agreement of the Minister designate a person who is employed in the Treasury and Exchequer as Head of Internal Audit.
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
• the States or Government of Jersey is unable to meet its Strategic Priorities and outcomes due to inadequate risk management frameworks
• the States or Government of Jersey suffers financial loss
• the States or Government of Jersey suffers reputational damage
• the States or Government of Jersey suffers missed opportunities as a result of failure to identify, report and mitigate risks
- Principles
- An Internal Audit Charter will be maintained which will be approved by the Risk and Audit Committee, and will specify the purpose of the Internal Audit function, reporting lines, scope of activities, and responsibilities. An effective Internal Audit function will be based on the following core principles:
- demonstrates integrity
- demonstrates competence and due professional care
- is objective and free from undue influence
- aligns with the strategies, objectives, and risks of the organisation
- is adequately resourced
- demonstrates quality and continuous improvement
- communicates effectively
- provides risk-based assurance
- is insightful, proactive, and future-focused
- promotes organisational improvement
- Requirements
- Internal Audit’s Conduct
The conduct of work by Internal Audit should be governed by the Public Sector Internal Audit Standards, which provide a benchmark against which the quality of Internal Audit in the UK public sector is assessed. The structure, authority and responsibilities of the Internal Audit function will be specified in the Internal Audit Charter.
3.2 The States Treasurer’s Duty to Provide Resources
The States Treasurer must provide sufficient resources to meet his obligations under the Public Finances Law and to enable the person designated as Head of Internal Audit to perform their duties to leading international standards.
3.3 The Head of Internal Audit responsibility for Internal Audit Plans
The Head of Internal Audit is responsible for preparing an internal audit plan in accordance with Public Sector Internal Audit Standards and with the Internal Audit Charter. The plan should be prepared on a rolling three year basis and be agreed with the Risk and Audit Committee and the States Treasurer. The plan should be revised at least annually and more frequently when there are indications that the risks faced by the Government of Jersey in delivering their priorities have changed materially. The Head of Internal Audit can also carry out unplanned activity at any time to address identified risks.
3.4 Internal Audit’s Internal Control System
Part of the duties of Internal Audit is to evaluate compliance with an organisation's internal control system, including relevant Regulations, guidance and procedures. However, leading international practice in the public sector is for Internal Audit to operate under an expanded remit, also covering such issues as reports against Key Performance Indicators, comparison of results against planned outcomes, and value for money when reporting.
3.5 Internal Audit’s Duties and Limitations
The Internal Audit function exists in order to assist the Government of Jersey to achieve its Strategic Priorities. Internal Audit team members should, therefore, be a source of advice for Accountable Officers on issues such as governance and control. However, it is important that members of Internal Audit do not take responsibility for management decisions, executive functions, or the development of systems, as this would compromise their independence and present a conflict of interest. The Chief Internal Audit will refuse requests from management to undertake work that it is not appropriate for Internal Audit to undertake.
3.6 The Head of Internal Audit’s Report
The Head of Internal Audit must prepare a report on any Internal Audit carried out on a States Body. A copy of this report must be sent to the Comptroller and Auditor General as well as the Accountable Officer of the organisation audited. The Accountable Officer also has overall responsibility for ensuring the States Body has appropriate internal controls, to ensure that effective action is taken based on the recommendations of an Internal Audit report, for recognising risks associated with inaction, and for compliance with applicable policies, procedures and regulations.
Accountable Officers and management must respond to draft Internal Audit reports in a timely manner (preferably within two weeks of receipt unless agreed otherwise with the Head of Internal Audit) and provide specific timescales for implementing agreed recommendations.
Internal Audit reports are confidential, and Accountable Officers and others on the circulation list for Internal Audit reports must not forward or circulate these reports to anyone else without first obtaining the permission of the Head of Internal Audit.
A report is also provided on a quarterly basis to the Risk and Audit Committee, the States Treasurer and the Chief Executive setting out the progress made to date on the Internal Audit Plan and key control issues noted.
The Head of Internal Audit will also prepare an annual report and opinion on the Government of Jersey’s governance framework and internal control environment, based on audit work carried out in the year in question. This report will be presented to the Risk and Audit Committee to inform their review of the Governance Statement in the Government of Jersey’s published annual report and accounts.
3.7 Considerations before auditing a States Body
When seeking to provide reasonable assurance that the States Body being audited will achieve its strategic objectives, Internal Audit should focus on the following key areas:
- risk management – How does the States Body approach risk management? Do they appropriately consider risks to the delivery of the States Body’s priorities in a regular and timely manner? Do they maintain a risk register and is it updated regularly? Do they regularly review and update the internal control environment as issues are identified? Is the States Body’s risk framework aligned with that of the Government of Jersey as a whole?
- internal controls – How effective and efficient are internal controls in terms of the prevention and detection of error and misstatements?
- operational effectiveness – Is the States Body successful at achieving its priorities when measured against agreed Key Performance Indicators? How could it achieve those priorities more efficiently? How will the States Body’s priorities change in the future?
- use of resources – Are the resources of the States Body used efficiently, effectively, and economically? Are personnel proficient within their roles and comfortable with their responsibilities?
- compliance – Does the States Body comply with all applicable policies, procedures, laws and regulations? What gaps exist and how may they be remedied?
- safeguards against losses – What safeguards does the States Body have in place against losses, including those arising from fraud, irregularity or corruption? How effective are these safeguards?
- data – What level of reliability can be attributed to the data used/processed by the States Body? To what degree of quality is the data collected? How could data collection procedures be improved?
- Co-Sourcing
Co-sourcing i.e. the use of external resources in specialist areas, or just to provide more flexible resources as needs arise may be employed by the Head of Internal Audit to deliver the internal audit plan. This should be done where it represents best value for the Government of Jersey. Arm’s Length Organisations should consider whether it is appropriate to establish their own internal audit functions based on the scale and complexity of their operations. The Head of Internal Audit will not be responsible for delivering internal audit services to these bodies, except where agreed with the Risk and Audit Committee, States Treasurer and the Accountable Officer responsible for the organisation.
3.9 Access to persons and information
The Head of Internal Audit and staff have unfettered right of access to all persons and information within States bodies. Any requests must be complied with.
3.10 Independent reporting arrangements
The person designated as Head of Internal Audit has an unfettered right to report on specific matters direct to any of the following:
- the Minister for Treasury and Resources
- the Treasurer of the States
- the Principal Accountable Officer
- the Chair of the Risk and Audit Committee
- the Comptroller and Auditor General
- Internal and External Auditor’s Relationship
The Internal and External Auditors should maintain a close working-relationship. The effectiveness of an audit, along with an efficient use of audit resources, will be enhanced by co-operation between these teams. However, it should be noted that the use in Internal Audit work of entities or individuals involved in the provision of External Audit services should be allowed only in exceptional circumstances. Internal and External Audit functions should be kept separate to avoid conflicts of interest, and any possible threat to objectivity or independence.
Projects
- Introduction and background
- This section applies to all States Bodies as defined in the Public Finances Law and provides guidance on Projects planned and executed by those Bodies.
- Projects attract specific risks which differ from those of day-to-day revenue expenditure. A Project is defined as a piece of work that:
- has an identifiable start and end date
- is outside of a States Body’s recurring activities
- is being undertaken to achieve a specific goal
- has defined deliverables or outcomes
- can run for more than one year
Or where the Accountable Officer of the States Body defines it as a Project based on consideration of the above criteria.
1.3 Departmental Schemes of Delegation will specify financial limits above which non-recurring expenditure must be treated as a Project for the purpose of this section. If a Project meets certain criteria, as set out in the Public Finances Law, Government Plan or Major Projects section, it will be classified as a Major Project. Where further guidance on Projects is required, the Major Projects section may a useful steer on possible measures to be undertaken or considered in the event of uncertainty.
1.4 Users of this section should refer to other sections of the Public Finances Manual that are relevant, including:
- government plan and budgeting
- expenditure
- major projects
- In addition to the common risks identified in the Background and Introduction section of the manual a number of significant risks relating to this section include:
- projects do not constitute good value for money
- projects are not delivered on time or to the required quality
- projects do not deliver the objectives set for them
- the desired outcomes of projects are not clearly defined
- responsibility for project management is not clearly allocated
- projects are not accounted for nor presented in a transparent manner that allows stakeholders to understand the activity and outcome
- Principles
- At the outset of the Project, the Project Plan should include specific measurable criteria for the success of the project and a timetable for completion of the Project
- The Project Plan should include a clearly articulated description of how the project will further the strategic priorities of the Government of Jersey.
- Accountable Officers should seek to obtain value for money at all times.
- Accountable Officers should ensure that the Project is managed in accordance with authorities set out in the relevant Scheme of Delegation.
- Accountable Officers should ensure project risks are identified and managed appropriately.
- Accountable Officers should ensure that a suitable handover process takes place at the end of a contract.
- Upon completion a review of the Project should take place, assessing the Project against the initial criteria, including desired outcomes, and identifying lessons to be learned for future projects.
- Requirements
- Commencement of a Project
A Project will be initiated when a need is identified by a States Body and any necessary approvals have been obtained. This need could arise from an identified problem with an existing service or facility, a new requirement or an area where improvements are possible or required.
3.2 Strategy
A Project should be considered in the context of the Strategic Priorities of the Government of Jersey and the medium and long term strategies of the Government of Jersey.
3.3 Project register
Accountable Officers must maintain a project register listing all ongoing Projects at any one time. This should be provided to the Corporate Programme Management Office for information and confirmation.
3.4 Project Sponsor and responsibilities
Every project must have a Project Sponsor assigned, with responsibility to oversee the project. Responsibilities relating to projects must be set out in the relevant Scheme of Delegation.
3.5 Documentation
Accountable Officers must ensure that the purpose, outcome, timescale, budget and risk of every project is documented. This should include specific, measurable success criteria and, where relevant, a plan for the outcomes of the Project to be integrated in to business as usual.
3.6 Insurance
Accountable Officers should ensure that any proposed contractor carries sufficient professional indemnity insurance and public liability cover. Contractors should be appointed in accordance with the Government of Jersey’s Procurement Best Practice Procedures.
3.7 Delegation
Accountable Officers must maintain a Scheme of Delegation which includes requirements in relation to projects.
3.8 Recording and reporting
Accountable Officers must keep appropriate project records in line with the Scheme of Delegation and report to the Chief Operating Office or Treasury and Exchequer separately on projects in line with the specified requirements.
3.9 Status updates
The Project Sponsor must provide the Accountable Officer with regular status updates. The regularity of updates should be relative to the length of the project
3.10 Completion
On completion of the Project, it should be assessed against the defined success criteria set out during planning; and lessons learned should be communicated both within the States Body and to the Government of Jersey as a whole if they are relevant to other States Bodies.
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