Scrutiny president Andy Sloan, a long-time critic of States’ accounting methods, said in his maiden speech in the Assembly that the full adoption of Ipsas standards in the 2024 Accounts had failed to provide deputies and the public with clarity about the state of public finances.
Deputy Sloan, previously the States' chief economist, told the Assembly that he wanted his new committee to focus more on financial scrutiny through a new public accounts sub-committee and indicated that the presentation of the States Accounts would be in its sights.
He cited one section in which the previous Policy & Resources Committee had stated that States core activities recorded a net surplus of £34m. last year.
‘One take is that according to these shiny new international standards-compliant accounts, it reads very much like we are running a healthy fiscal surplus,’ said Deputy Sloan.
‘How does that statement reconcile with an underlying structural deficit? It’s a rhetorical question. The answer is it doesn’t. It’s just nonsense. That is, the picture those numbers paint is nonsense.
‘That is a state of affairs that is not helpful to the members of this Chamber nor to the wider public.’
He said he was not challenging the veracity of the accounts but the lack of clarity in the presentation of the numbers.
He described trying to locate capital expenditure in the accounts as ‘like playing Where’s Wally?’ despite the cost of infrastructure projects being central to projections of ongoing deficits in public finances in the years ahead.
Another of Deputy Sloan’s concerns was the treatment of paper gains and losses on assets held by the States.
But his criticism was challenged by P&R member Charles Parkinson, under whose leadership the treasury started work to adopt Ipsas methods nearly 15 years ago, who said it was unhelpful for States members to disregard unrealised investment returns and did not help to promote confidence in the accounts.
‘The reality is that we have £1.8bn. of financial investments and all but £24m. are liquid financial investments which could be sold and the money could be in our pockets in three days if we wanted it,’ said Deputy Parkinson.
When the 2024 accounts were published a few days before the end of the last States term, the previous P&R said they showed an annual underlying structural deficit of £56m.
‘Yet no explanation of how this figure has been derived is provided,’ said Deputy Sloan.
‘No reference to a structural deficit is made in the accounts. I suspect, based on personal experience, that the £56m. figure is wrong, both methodologically in how it has been calculated, and numerically in the result.’
Guernsey is one of fewer than 20 jurisdictions which prepares its accounts in full compliance with Ipsas. That requires the inclusion of trading bodies owned by the States, such as Guernsey Electricity, Aurigny and the Guernsey Housing Association. However, P&R had urged members to exclude those bodies when focusing on the States’ core financial position.
‘It really begs the two questions of why on earth did we go through the time and the expense of reporting to these standards in the first place and whether the exercise has been value for money?’ said Deputy Sloan.
‘The States accounts need to present clearly our underlying fiscal position to be of real use to members and the public. That should be our lodestar.
‘I remain to be convinced that those presented today meet that objective.’
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