FINANCIAL REPORT AND ACCOUNTS 2011 - States Assembly

NOTES TO THE ACCOUNTSNOTE 1: STATEMENT OF ACCOUNTING POLICIES9 Notes to the Accounts9.1 Note 1: Statement of Accounting PoliciesAIntroductionA.1 These accounts have been prepared in accordance with the States of Jersey FinancialReporting Manual (JFReM) issued by the Treasurer of the States in order to meet therequirements of the Public Finances (Jersey) Law 2005. The accounting policies containedin the JFReM follow UK Generally Accepted Accounting Principles for companies(UK GAAP) to the extent that it is meaningful and appropriate to the Public Sector in Jersey.The JFReM applicable to the 2011 financial year (excluding comparators) is based on theUK Financial Reporting Manual for the UK financial year ending March 2009.A.2 Where the JFReM permits a choice of accounting policy, the accounting policy which hasbeen judged to be most appropriate to the particular circumstances of the States of Jerseyfor the purpose of giving a true and fair view has been selected. The accounting policieshave been applied consistently in dealing with items considered material in relation to theaccounts.BAccounting ConventionB.1 These accounts have been prepared under the historical cost convention modified toaccount for the revaluation of fixed assets and investments. A summary of the moreimportant accounting policies is set out below.CBasis of ConsolidationC.1 These accounts comprise the consolidation of all entities within the States of Jerseyconsolidation boundary (the ‘group boundary’) as set out in the JFReM. The group boundaryis defined with reference to applicable accounting standards except that the inclusion orexclusion of an entity is based on direct control rather than strategic control. Direct controlis normally evidenced by the States, the Council of Ministers or a Minister exercising inyearcontrol over operating practices, income, expenditure, assets or liabilities of the entity.Therefore the principles of FRS2, FRS9 and FRS5 for the determination of whether entitiesare subsidiary undertakings, associated undertakings or joint ventures are restricted to thefirst principle of direct control. Where this principle is not met and an entity within the groupboundary has an investment in an entity outside the group boundary, this holding is treatedas an investment in the group accounts.71