‘States’ accounts unclear, misleading and complex’
WRONG decisions on States spending are likely to result from its accounts being ‘unclear, misleading and complex’, according to the latest report from the Guernsey Policy and Economics Group.
The group’s third paper highlighted the ‘bizarre and complicated’ accounting of the States, which it said was hard to follow and led to issues not being ‘properly visible or appropriately considered’.
Authors Lord Digby Jones and Jon Moulton said it was time for the States to update its methods and bring them ‘into the norms of accounting generally followed globally’. Funding to do this was approved some eight years ago, they said, but it has not happened: ‘Quite why remains to be discovered.’
A case where money was moved from one States account to another States account and ended up being labelled as a £3m. surplus was referred to.
‘You may very well wish that you could generate a surplus for yourself by moving money from your right pocket to the left one,’ said the report. ‘Sadly, the real world does not do this, but the States would have you believe that they can do so.
‘This kind of absurd accounting really should not be happening.’ It also noted the failure of the accounts’ auditors to make the usual statement that they were ‘true and fair’.
‘The auditors do not provide the usual level of assurance that you should expect to see, which in itself gives a strong indication of their confidence in [the] accounting process used by the States.’
The report looks in particular at the ports accounts, citing how they were handled as an example of ‘off-balance sheet accounting’.
‘Any operating losses of the airport or the harbours (and quite a few other things) would not get deducted in arriving at the States “surplus” that was enthusiastically published in the last States,’ it said.
‘GPEG firmly believes that on any normal accounting basis the 2019 “surplus” would have been a substantial deficit.’
The previous States often portrayed things in an excessively cheerful light, it said, while simultaneously ‘pushing problems into the (often near) future’.
‘Whether it be dealing with the massive deferred essential capital expenditure at the port and elsewhere or the pension deficit, light often did not much shine on inconveniently difficult issues.’
On the plus side, it said that the estimate of 2020 tax revenues turned out to be ‘happily pessimistic’ by £25m.
‘It is not hard to move to normal accounting,’ concluded the report’s authors. ‘Our single recommendation is to do so.’
A Policy & Resources spokesperson said: ‘The project to transition the States of Guernsey’s accounts to be IPSAS [International Public Sector Accounting Standards] compliant is under way. This is a significant piece of work and one that has had to be prioritised against government’s other priorities, but it is being actively progressed.’
