Report: States finances “lack transparency”

Thursday 02 April 2015

Financial management in the States lacks transparency and is holding back efforts to reform the public sector, according to a damning independent report out this morning.

The day after Bailiwick Express revealed that ministers are looking at updated secret figures that put the black hole in public finances at up to £130 million, a report has highlighted failings in the way that the States’ manage and spend taxpayers’ money.

The report by the States’ independent spending watchdog has made 36 recommendations for how the Treasury department needs to improve its game – among them are recommendations that the States finally starts budgeting for depreciation, that all finance professionals should report to the Treasury instead of individual departments to allow overall strategic planning, and that far more is done to measure how departments perform against the resources they receive.

It also found that the the Strategic Plan of aims agreed by the States had only a vague link to the financial plan agreed in terms of taxes and budgets – and that the financial planning process did not challenge the way that money was being spent.

Comptroller and Auditor General Karen McConnell – who used to work for the UK Audit Commission – found that some improvements were being made, but that more fundamental action was needed.

She wrote: “I welcome the proposed changes in how the executive reports on financial performance to the legislature.

“However, maximum value will only be secured when the current system of allocation of resources is changed: the current system lacks transparency, is partial and provides perverse incentives.

“Internally, the arrangements for financial management do not facilitate the reform agenda. Performance management is not embedded in the States and to embed it requires a major cultural shift.

“There is too much focus on departmental responsibility at the expense of collective strategic leadership.”