GAAP is a set of best practice rules and procedures for reporting financial information.

In preparation for the new accounting regime, the Treasury and Resources Minister is seeking the views of interested parties.

This move brings Jersey into line with public sector accounting methods already operating in countries like the UK, New Zealand and Canada.

Jersey will be one of the first small jurisdictions to adopt these standards.

The IMF and World Bank now expect governments to use GAAP accounting or to plan to do so.

Currently, the States vote a cash allocation for a specific purpose, then the year end accounts report the cash spent against the amount voted.

Under the proposed new arrangement, the States will report on the resources consumed and generated, rather than just on the cash spent. This should provide more relevant information for users of the States accounts.

A key element of the changes is the introduction of depreciation into departmental accounts.

This should lead to increased accountability for effective asset management and greater transparency over the real cost of services.

In other words, the reduction in value of an asset (like a building) due to its use and age will be more accurately reflected in the financial figures.

The consultation paper outlines the reasons for the proposed move to GAAP accounting, how it would be implemented by the States, the key differences between the current and proposed accounting regimes, and the impact of GAAP on the States’ Financial Statements.

The intention is to prepare financial statements on a GAAP compliant basis for the financial year ended 31st December, 2009.

Deputy Ian Gorst, Assistant Minister for Treasury and Resources, commented that:

"This is an important but technical piece of work, which will bring greater understanding and transparency to the States accounts. It will enable both members of the public and States Members to evaluate the efficiency and effectiveness of key public services and it will show the relationship between financial cost and performance."

"Financial information will be more comparable to the UK, allowing for improved benchmarking of department services against both the public and private sector. The consultation process will allow interested parties to comment on the proposed standards before they are adopted by the Minister."