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WT/BFA/179  
 
29 May 2019 
(19-3719) Page: 1/6 
Committee on Budget, Finance and Administration    
 
 
REPORT OF THE MEETIN G HELD ON 30 APRIL  2019  
The Committee on Budget, Finance and Administration (CBFA) met on 30 April  2019.  
 
His Excellency Ambassador Dagfinn Sørli (Permanent Representative of Norway to the WTO and 
EFTA), welcomed Members to the meeting. He then introduced the agenda for the day, bearing the 
reference  WTO/AIR/BFA/3 1 and the annotated agenda bearing the reference JOB/BFA/34. He asked 
if any  Members had items to propose under "Other Business".   
The following items were included under "Other Business": Update from the Chairwoman of the 
Working Group for the Management of the Working Capital Fund ; Update from the Chairwoman of 
the Working Group for the Selection of an External Auditor; and  Letter received by the Chairman of 
the CBFA, from the Staff Council of the WTO.  
 
1  REVIEW OF SELECTED F INANCIAL REGULATIONS  OF THE WORLD TRADE 
ORGANIZATION – WT/BF A/W/478  
1.1 In introducing this agenda item, the Chairman recalled the  extensive deliberat ions that the 
Committee had  on this topic during its meeting of 20th March 2019. He noted that the Secretariat 
had circulated a document with proposed text for amending selected  Financial Regulations and 
incorporat ed comments that had been made by Members duri ng the meeting  on 30th March 2019 .  
 
1.2 An Official of the WTO Secretariat presented  slides with the proposed reformulated text  for 
Financial Regulations 4, 17, 19, 23 , 27, 28, 29, 37 and 38.  The official added that a version , tracking 
changes to the text  of the selected Financial Regulations currently in force, had be en circulated to 
Members by email ahead of the meeting.  
 
1.3 The Official of the Secretariat said the only change  to Financial Regulation 4 is that the revision 
of the Financial Regulations shall be at least every five years, the intent being to avoid the revision 
falling within the same year as the budget discussions.   
 
1.4 A Member expressed support for th is propos ed change and made an observ ation that  if the goal 
of decoupling the review of the F inancial Regulation from the budget discussion  was to be achieved, 
then the review period wo uld have to revert to an even year in 2024 , either by returning to the four-
year cycle or by further extending the review cycle to 6 years.  
 
1.5 The Official of the WTO Secretariat responded by saying that the Secretariat team had considered 
this aspect and plans to review the Financial Regulations in year 4 where there is a possibil ity of the 
budget preparation and the review of the Financial Regulations coinciding.   
 
1.6 A sentence , recognizing the new approach of informing CBFA members whenever there is a new 
trust fund, was added to the  first paragraph of  Financial Regulation 19 .  
 
1.7 Referring to the discussions that had been occasioned by Financial Regulation 19 in 2018, a 
Member sought clarification of the line "the CBFA will be notified of all…that lead to the establishment 
of a new trust  fund". He asked if the  guidelines which ha d been circulated regarding th e notification 
approach for voluntary contributions would be  expressly stated  in Financial Regulation 19.   
 
1.8 An Official of the Secretariat  said the guidelines were intended to provide information t o the 
Committee when a new trust fund is established . The  exact nature of such notification would be 
determined by the Director -General. He said the  idea would be that the Committee and the WT/BFA/179  
 
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  Secretariat work with the guidelines, without having to open the Financ ial Regulation every time an 
amendment to the guidelines was deemed necessary.    
 
1.9 The Member that had posed the question regarding the guidelines suggested that Financial 
Regulation 19 be reformulate d to integrate  the guidelines or the notification tem plate of voluntary 
contributions.  He added that this would give standing to the guidelines, as the Financial Regulations 
have a higher level than guidelines, from a regulatory point of view.  
 
1.10 An Official of the Secretariat said that the reformulation of Financial  Regulation 23  (a) is geared 
towards defining "budgetary result " and distinguish ing it from the "financial result ", which comes at 
a later stage. For Financial Regulation 23 (c), th e aim is to clarify what the WTO's equity  is. She 
stated that a delegation had suggested that this be defined. However, the Secretariat deems it 
appropriate to not define to o many terms within the body of the F inancial Regulations because the 
notion is that when people  work with regulations they can cross -reference with other sources to get 
definitions of terms . Another enhancement  to Financial Regulation 23 is the e numerat ion of 
paragraph s, to improve clarity.   
 
1.11 A Member  thank ed the Secretariat for having made th e new version of the Financial R egulations 
available . He said that he had prepared a statement but d idn't know if it would actually reflect what 
was presented on  the screen. He then said his delegation would  reserve its opinion until it has had  
time to carefully go through the changes that were on the screen. He opined that  the objective of 
this exercise is to comply with IPSAS. He noted that IPSAS  requires ASHI to be recognized in the 
financial statement s and that  IPSAS doesn't recognize the need to have a fund to be able to ensure 
all of these liabilities are funded . He said there is a need to have enough accurate financial 
information to make it possible for Members to anticipate any lag or shortfall in covering pension 
compliance with the ASHI requirement s.  
 
1.12 A Member said that Financial Regulation 23 seems  to require some additional drafting. He 
suggested that  the new third paragraph should state who will decide on the D irector -General's  
recommendation as to the redistribution of the annual budgetary  result. He proposed that the fourth  
paragraph should read as follows , "The unspent appropriations of a financial period, reduced by the 
arrears of assessed contributions for that period, determine the WTO year -end Financial Result."  He 
said that his delegation doesn't find it very helpful to confuse  the financial result , which computes 
real expenditure  and income , with liabilities , which  are future fictitious expenditure. He said that his 
delegation's proposed wording is based on the definition of cash balances used in the United Nations 
network of organizations.  In addition, the Member said that his delegation requests the deletion of 
the word "only" and of the words " if the WTO equity has a positive balance ," from the reformulated 
text for both Financial Regulation 28 and Financial Regulation 29.  
 
1.13 Refer ring to a comment made by an Official of the WTO Secretariat, a Member asked  whether  
the global WTO  Financial Regulations would be in line with IPSAS, i f the Committee goes along with 
the proposed amendments . 
 
1.14 A Member asked the Committee to bear the big picture  in mind regarding the long -term 
liabilities , as these cannot be deemed  fictitious becau se they will be very real at a point in time.  
 
1.15 In responding, an Official of the WTO Secretariat requested Members  who had intervened to 
provide  their comments in writing to enable  the Secretariat to consider the m in detail. The Official 
of the Secre tariat stated that during the process of  review ing the Financial Regulation s, the 
Secretariat strove to  make  modifications to any elements that related to IPSAS. She stated that 
such changes were mainly in Financial R egulation 23 . Another Official of the S ecretariat 
supplemented the response by stating that in order to move closer to compliance with IPSAS, service 
costs pertaining to long term liabilities would have to be included in the budget.   
 
1.16 A Member raised concern at the amount  related to long term liabilities and its relationship to 
the annual estimates . He noted that IPSAS recognize s the possibility that long -term liabilities may 
not be dealt with in the budget but instead that a  charge can be added , whilst  looking for sustain able 
ways to  cover  the liabilities.  He stated that there is still a long way  to go before getting full clarity 
on this issue.  
 
1.17 An Official of the Secretariat stated that Financial  Regulation 27 took into account comments 
that were made at the time a recommendation was made to the General Council regarding the WT/BFA/179  
 
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  utilization of the accumulated  budgetary surplus.  She emphasized that the reformulation of Financial 
Regulation 27 makes  a distinction between the portion of the Working Capital Fund that came ab out 
because of th e accumulated budgetary surplus relative to that which was contributed directly by 
Members . The rationale being that it would be very difficult to replac e any large sums that may have 
been drawn down against the Working Capital Fund, were they largely from the accumulated 
budgetary surplus, in the next budget cycle.  
 
1.18 An Official of the Secretariat indicated that the word "only" would be deleted from Financial 
Regulations 28 and 29. She said it is  importan t to includ e the phrase "…if the WTO's equity has a 
positive balance"  in Financial Regulations 28 and 29 as, in an environment where the WTO actually 
has negative equity, the idea that there is a possibility to return money to Members becomes very 
difficult and is imprudent , as this would increase the amount of the negative equity . She pointed to  
the situation  prior to the implementation of IPSAS, as the long -term aspects were not recognized in 
the financial statements. Given this,  the budgetary surplus was invariably equal to the financial 
result. She submitted that in the current iteration of Financial Regulation  29 there was an 
understanding that Members may get the contribution that they made to the Working Capital Fund 
returned to them. She stated that this held tr ue prior to the implementation of IPSAS, since  the 
WTO didn't have negative equit y give that  amounts pertaining to long -term liabilities, specifically 
those relating to After Service Health Insurance and the Pension Plan , were not reflect ed in the 
financia l statement s but only covered  in the notes. S he stated that another aspect is that were 
Members to ask for a return of their Working Capital Fund portion, the gap between pension or ASHI 
assessed liabilities attributable to the concerned Member s would have to be assessed and also 
apportioned.  
 
1.19 A Member enquired whether negative equity is defined under IPSAS . He said that it sounds like 
assets and liabilities in the private sector. He said that t he Secretariat had explained the idea was 
to take into account future liabilities, citing ASHI and pension , and said if liabilities  are being included 
then assets  should also be taken into account .  
 
1.20 An Official of the WTO Secretariat referred to a slide containing the Statement of Financial 
Position for the year ended 31st December 2017 and explained th at equity is is a concept that exists  
in all accounting standards, not just IPSAS . He stated that equity is the difference between the 
assets and the liabilit ies. He noted that if assets  exceed liabilities the result is positive equity . He 
explained that in the case of the WTO, the  total asset s were CHF 877 million  and the total liabilit ies 
were CHF 1,321 million , leading to  negative equity CHF 414 million.  
 
1.21 Another  Official of the WTO Secretariat adde d that w hen talking about long term liabilities, it is 
important to recall that under IPSAS liabilities are calculated in a very specific way. In this regard, 
the calculation is not that of th e theoretical liability that was accumulated over some time and 
projecting this into  the future. He elaborated that t he annual liabilities calculated as at 31 December 
represent what the situation would be if the WTO ceased to be in operation  and it had to honour all 
the obligations up to that point  and that this  amou nt of money would be needed to wrap up the 
commitments that have already been made by the WTO. He differentiated this from the actuar ial 
variations that are done on a different ba sis. 
 
1.22 Turning to Financial Regulation 37, an Official of the WTO Secreta riat stated that the 
reformulated text recognizes the fact that it is not possible to submit the financial progress report 
of the  second quarter within 6 weeks after the end of the second quarter, as it takes time to prepare 
the report and as there are no official meetings of WTO Members during the month of August. 
Another aspect is that the preparation of Output Reports is cumbersome,  yet the utility of the Output 
Reports is low. The refore, the  proposed change reduce s the frequency of reporting back to the  
Members to twice a year and inclusion of expenditure by Output Chapter only at the end of the year.   
 
1.23 Financial Regulation 38  recogni zes the existence of the Office of Internal Oversight and its 
crucial importance to the WTO. The purview  now includes internal control for other areas of the of 
the WTO,  beyond financial controls, especially those pertaining to Information Technology and 
Human Resources.  
 
1.24 A Member asked about the extent to which Financial Regulation 38 will  provide an opportunity 
to check any misconduct or integrity problem with the WTO's  subcontractors . 
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  1.25 An Official of the WTO Secretariat responded by saying that the Office of Internal Oversight 
does not investigate misconduct conducted by subcontractors. He stated that investigat ion is limited 
to cases of fraud that would impac t the WTO  and that the WTO does not  have any mandate to 
investigate or sanction any person that is not a staff  member  of the WTO.  
 
1.26 The Member clarified his question by asking where the basis to investigate cases of fraud and 
misconduct could be found  within the Financial Regulations . He enquired whether Financial 
Regulation 38 is sufficient to put in certain criteria in contrac ts. He noted that serious issues had 
been encountered worldwide in terms of sexual harassment, etc.  
 
1.27 DDG Karl Brauner stated that the WTO does not have many  subcontractors and  that in the 
situation where there are  subcontractors , the WTO is at liberty to design the contract in such a way 
that areas of concern  can be addressed . He said that this is done in the general context of the values 
that the WTO  and its Members represent.  
 
1.28 Article  42 is extended to require that the exceptions foreseen be included in the Financial 
Performance Report for the concerned year .  
 
1.29 The Chairman summed up the di scussion by saying that s ome comments , reservations  and 
specific text proposals  had been made by Members . His conclusion was that , in view of the fact that  
Members were not yet ready to endorse the amendments , the Secretariat should draft a new text 
on the  basis of the discussion s that had taken place during the meeting.  
 
1.30 A Member said that her delega tion's understanding is that once the selected Financial 
Regulations have been endorsed, a new version will be put in place . In this regard she suggest ed 
that the previous name of the Financial Regulation s be retained. The Member enquired why Financial 
Regulation 21 had been excluded from the text and enquired whether the intention was for it to 
remain unchanged. She asked how the perceived complexity of ex post facto approval would be 
addressed.  
 
1.31 In response to the question pertaining to Financial Regulation 21, the Official of the WTO 
Secretariat recall ed that an observation had been made by a Member, during the CBFA meeting that 
took place on 20th March, that Financial Regulation 21 had to be read in conjunction with Financial 
Regulation 20 and that  there is really no difficulty with ex post approval because Financial 
Regulation  20 already gives the Director General the powers to make decision s in terms of 
reallocating money between budget chapters and then subsequently, he has to inform the General 
Council of such transfer , in acco rdance with Financial Regulation 21 . She said that since there was 
strong rationale, the WTO Secretariat had removed Financial Regulation 21 from the list of Financial 
Regulations to be reformulated.  The Official of the WTO Secretariat confirmed that the t itle of the 
Financial Regulations would remain unchanged and that only the reference would be modified to 
reflect the updated version.  
 
1.32 A Member called on the Committee to bear the S ecretariat's call for prudence in mind during 
the course of  review ing the updated version of the text at its next meeting . 
 
1.33 DDG Karl Brauner proposed that , for the meeting in June, only those Financial Regulations that 
had not yet been accepted should be presented to the Committee. Furthermore, he suggested that 
the comments that had been made  regarding Financial Regulation  19 could be addressed through a 
footnote referenc ing the  guidelines  for the notification of new voluntary contributions . 
 
1.34 A Member stated that his delegation had a rationale for requesting that the process relating to 
new Trust Funds be  more transparent and for reporting be in a time -bound manner , which now is 
expressly done with in 14 days . He noted that the notification template contains  important  elements , 
such as the proposed objective. He expressed openness to assessing any text that the Secretariat 
would suggest regarding the ref erence.  
 
1.35 The revised text of the Financial Regulations that are to be further amended will be considered 
for endorsement during the next meeting of the CBFA.   
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  2  Q1 2019 BUDGET AND F INANCE REPORT – WT/B FA/W/479  
2.1 An Official of the WTO Secretariat  present ed the Budget and Finance Report for the first quarter 
of 2019. She informed the Committee that contributions received as at the end of March 2019 are 
slightly lower than the contributions that had been received at the same point in  2018. She indicated  
that 54 Members had paid their  assessed contributions , amounting to  CHF 105.5 million . 22% of the 
Observers had so far paid con tributions of CHF 105,237 towards their 2019 assessed contributions.  
 
2.2 The Official of the WTO Secretariat stated that 23 Members were under Administrative Measure s: 
12 Members under category I ; 2 Members under category II ; and 9 Members under category  III. 
3 Observers were under  Administrative Measures . 
 
2.3 The Official of the WTO Secretariat highlighted that the budgetary expenditure rate for the first 
quarter of 2019  was 31% (or CHF 61 million ).  
 
2.4 The Committee took note of the report . 
 
3  Q1 2019 EXTRA -BUDGETARY FUND S REPORT – WT/BFA/W/ 481 
3.1 An Official of the WTO Secretariat said the overarching message for the first quarter report for 
extra-budgetary funds is that, for the current year , the trust funds are in a reasonable position to 
meet their  stated objectives and fund the activities that have been planned for. Though the  balance 
in the Global Trust Fund for the last few years  has been reassuring , the annual expenditure rate 
since 2018 has been  exceeding annual receipts.  
 
3.2 The Official of the WTO Secretariat mentioned  that the ITTC is in the process of developing a 
new T echnical Assistance P lan and he invited Members  interested in k nowing more about this to  
reach out to the ITTC. He informed  Members that , as in previous periods , the ITTC would engage 
with groups  of Members . He informed Members that the WTO Secretariat would likely provide a 
budget estimate for the Trust Fund for LDCs' Participation in Ministerial Conferences, at the next 
meeting of the Committee.  
 
3.3 The Official of the WTO Secretariat drew the Committee's attention to the fact that  a new  Trust 
Fund, the LDC Graduation Trust Fund, is included in the repor t. He also stated that Members had 
very recently been notified of the e stablishment of another Trust Fund.  
 
3.4 Making reference to T able 3 and Table 8 , a Member asked if overhead s were applied at  13% for 
all Trust Funds . She suggested that if that were not the case, a footnote should indicate the Trust 
Funds for which a dif ferent rate is applied  and an explanatory note .  
 
3.5 An Official of the WTO Secretariat responded by saying that, i n general, 13% was applied to all 
Trust Funds, save for a few specific circumstances . He said that this would be reflected in future 
reports.  
 
3.6 A Member suggested that, considering the yellow and red reflected for the STDF on page 11 , 
the Secretariat could provide  perspective  as for 2018 the situation seemed to be quite healthy with 
13 countries contributing to the fund and for 2019 , eight countries  have flagged their commitments. 
He raised a related question about expenditure , noting that  whereas yellow and red traffic lights 
were shown at the same time , the expenditure for 2019 is expected to be the highest in the period 
of 2011 -2019.  
 
3.7 An Official of the WTO Secretariat said that the c olour code is not strictly defined and  that it can 
vary a little bit in terms of how it  is applied. In the STDF  case, the  trust fund is quite succe ssful and 
well supported and the support seems to be growing. It's also an active trust fund with its  board , at 
times , approv ing projects before the funds are in the bank  account . He clarified that the yellow 
shows  the difference in  spending plans and curr ent cashflow.  
 
3.8 The Committee took note of the report . 
 
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  4  IT PROGRESS REPORT O N SECURITY – ORAL UP DATE  
4.1 An Official of the WTO Secretariat gave a  status report  on information security . He highlighted 
the proliferation of cyber threats, requiring increasingly sophisticated defences . He stated that the 
priori ty is to  protect the Organization's  most sensitive information assets . This had been identified 
as a high -risk area during an externa l audit of  IT security. He informed the Committee that several 
audit recommendations had been closed and that the outstanding ones are on track for closure by 
year end.  
 
4.2 The Committee took note of the report . 
 
5  OTHER BUSINESS  
5.1 The Chairwoman of the Working Group for the Management of the Working Capital Fund  
expressed her appreciation of being vested with the stewardship of this Working Group. She  invite d 
Members to send questions or comments regarding the Working Capital Fund  to the Secretariat, by 
email, and indicated that these would be address ed through modifications in documentation that 
would be discussed during the next meeting  of the Working Group. She reminded the Committee 
that the Working Group is open to all interes ted Members and that the next meeting w ill take place 
during the second half of May. She expressed her anticipation that  the outcome of the Working 
Group would be  successful . 
 
5.2 The Chairwoman of the Working Group for the Selection of an External Auditor  informed the 
Committee that the Working Group had  had its first meeting on the 4th of April. She said that she is 
looking forward to the contributions, guidance and support of members of the Working Group and 
the CBFA. She further informed the Committee t hat the next meeting of the Working Group would 
take place on the  2nd of May, to discuss the draft I nvitation to Bid and the timeline for various stages 
in the selection process.  
 
5.3 The Chair man of the CBFA inform ed the Committee that he had received a l etter from the Staff 
Council of the WTO , in which the Staff Council made a  request to be present at meetings of the 
Committee , on an ad -hoc basis , whenever  issues of systemic interest to staff are to be discussed. 
The Chairman mentioned that the Secretariat ha d informed him that a similar request had been 
considered b y the Committee in September 2017 and a document bearing the reference 
WT/BFA/W/429 had been  circulated beforehand. At that time, no consensus was reached by the 
Committee as to whether or not to invite the Staff Council to attend meetings of the Committee . 
The Chairman propose d to meet with the Staff Council, in his capacity as Chair man of the CBFA, and 
provide an update to the CBFA at its next meeting. He closed by saying that, i n the interim period, 
the Secretariat w ould circulate the letter to all Members of the CBFA.  
 
5.4 Before closing the meeting, t he Chair man announced that the next CBFA m eeting will be on 
17th June 2019.  
 
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