Review of the provisions of the Public Finances Law 2005

UNDER STRICTEST EMBARGO UNTIL 13 February 2010

Comptroller & Auditor General reviews Public Finances (Jersey) Law 2005

The Comptroller & Auditor General, Chris Swinson OBE, has conducted a review of the provisions of the Public Finances (Jersey) Law 2005 (the 2005 Law).

Background

A major revision of the legal framework for the finances of the States, the 2005 Law took into account the previous Public Finances (Administration) (Jersey) Law 1967 and the reforms associated with the introduction of ministerial government.

Now, over four years since its implementation, the Comptroller & Auditor General (C&AG) has reviewed the 2005 Law in the light of practical experience, to see whether its operation can be improved, either by amendment, or by adjustment of practice.

The review focuses on several key areas, but also takes into consideration Mr Swinson’s previous review of Financial Management in the States (published in 2009) in which he identified a number of challenges which the States must face in ensuring that financial management is of the highest quality. These factors have also formed part of the review of the 2005 Law; as well as findings from his previous reports, discussions with Chief Officers and the Treasury, as well as evidence from public hearings of the Public Accounts Committee.

Framework for financial management and accountability

The 2005 Law provides the framework within which the States’ financial affairs are managed and which establishes appropriate principles to underlie the conduct of management, as a basis for public confidence that the States’ financial affairs are well managed.

The C&AG notes in his report that many aspects of the 2005 Law’s reforms have worked well but that the framework of the Law, being based on the practice of central government in London, has encountered difficulties; some by the way in which the framework created by the 2005 Law has been understood and implemented in practice, and others from the provisions of the Law itself.
The Review compares the arrangements within central government with those in local government. It suggests ways in which local government experience on the mainland could be used within the existing law, to achieve an overall framework for effective financial management in the States.

Key subjects of the report
The report reviews a number of aspects of the role of the Treasurer and
goes on to examine aspects of the 2005 Law’s provisions concerning Financial Management itself, relating to Accounting Officers, financial management standards for the States and compliance with financial management standards. It explains how practical experience suggests where improvements can or need to be made.

In practice, many issues surrounding Expenditure control, including providing estimates for States’ expenditure, budgeting and expenditure forecasts in the States’ Business Plan are apparent; and which will require both behavioural change and amendments to the provisions of the Law.

Finally, the report examines the 2005 Law in respect of States’ Trading Operations, where the States may designate a distinct area of operation of the States to be a States trading operation.

The questions for consideration posed by the report offer ways in which issues arising out of the practical implementation of the 2005 Law can be addressed by the States.

ENDS