RESTRICTED  
 
WT/BFA/W/368  
16 June 2015  
(15-3135)  Page: 1/36  
Committee on Budget, Finance and Administration   
 
  REPORT OF THE INDEPENDENT EXTERNAL AU DITOR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION (WTO) 
FOR THE YEAR ENDED 31 DECEMBER 2014 
1  EXECUTIVE SUMMARY .................................................................................................. 3  
2  SCOPE AND APPROACH  OF THE AUDIT ......................................................................... 5  
2.1  Scope of  the Audit ...................................................................................................... 5 
2.2  Audit Objectiv e and Approach....................................................................................... 5  
2.3  Audit Conclusion ......................................................................................................... 6  
3  FINANCIAL AUDIT ........................................................................................................ 7  
3.1  General ..................................................................................................................... 7  
3.2  Contri butions ............................................................................................................ . 7 
3.3  Financial Positi on/Perform ance ..................................................................................... 9  
3.3.1  Statement of Fi nancial Position .................................................................................. 9  
Assets and Li abilities ........................................................................................................ . 9 
Cash and Cash Equivalents ................................................................................................ 10 
Receivables from Memb ers and Ob servers ........................................................................... 10 
Inventor ies ................................................................................................................... .. 10 
Other receivables ............................................................................................................. 11 
Advances and prepayments ............................................................................................... 11 
Building .......................................................................................................................... 11 
Equipment ..................................................................................................................... . 12 
Pension Plan Assets .......................................................................................................... 12 
Assessed contributions re ceived in advance ......................................................................... 13 
Short-term empl oyee benefits ........................................................................................... 13 
Loan .......................................................................................................................... .... 13 
Pension Be nefits ..............................................................................................................  14 
ASHI .............................................................................................................................. 14 
Net assets (total) ............................................................................................................. 14 
3.3.2  Statement of Fi nancial Performance .......................................................................... 15 
Revenue and Expenses ..................................................................................................... 15 
Net result/surplus (deficit) for the Period ............................................................................. 17 
4  PERFORMANCE AUDIT ................................................................................................ 18  
4.1  Procurement activities of WTO ..................................................................................... 18 
Focus and procedur e of the audit ....................................................................................... 18 WT/BFA/W/368 
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  Rules and Guidance .......................................................................................................... 18 
Procurement Planning ....................................................................................................... 18 
Requisition of cons ulting services ....................................................................................... 19 
Amendments to  Contra cts ................................................................................................. 20 
Contract Ma nagement ...................................................................................................... 21 
Conclusion .................................................................................................................... .. 22 
4.2  IT-Gov ernance .......................................................................................................... 23 
Focus and procedur e of the audit ....................................................................................... 23 
IT in the Se cretariat .........................................................................................................  23 
Adoption of IT standards ................................................................................................... 24 
Business strategy, IT strategy  and IT policy  framework ......................................................... 26 
IT Security ...................................................................................................................... 28 
5  CASES OF FRAUD OR  SUSPECTED FRAUD ................................................................... 29  
6  FOLLOW-UP ................................................................................................................ 29  
6.1  WTO Financia l Regulations .......................................................................................... 29 
6.2  US-Tax reimburs ement for WT O staff ........................................................................... 29 
6.3  IPSAS-compliant WTO financial statements ................................................................... 30 
7  ACKNOWLE DGEMENT ................................................................................................. 30  
LIST OF ABBREVIATION S AND ACRO NYMS .................................................................... 31  
ANNEX ......................................................................................................................... .. 32 
 WT/BFA/W/368 
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  1  EXECUTIVE SUMMARY 
My team and I have audited the financial statements of the WTO. 1.  My team and I have audited the financial statements of the World Trade Organization 
(hereinafter "WTO") for the financial period from 1 January to 31 December 2014. These 
comprise: 
 the statement of financial position; 
 the statement of financial performance; 
 the statement of cash flow; 
 the statement of changes in net assets; 
 notes and annexes to the financial statements. 
Responsibility of Management 
2.  The Director-General is responsible for preparing the financial statements in accordance with 
the Financial Regulations of the WTO. 
Responsibility of the External Auditor 
3.  My responsibility, under Chapter XIII of the Financial Regulations, is to express an opinion on 
these financial statements based on my audit. 
Scope of the audit 
4.  The audit included the examination, on a test basis, of evidence supporting the amounts and 
disclosures in the financial statements. It also included an assessment of the accounting principles used, and significant estimates made by the Direct or-General, as well as an evaluation of the 
overall presentation of the financial statements. 
I have conducted my audit in conformity wi th the International Standards on Auditing 
5.  I conducted my audit in conformity with the International Standards on Auditing (ISA) as 
adopted and amended by the International Organiza tion of Supreme Audit Institutions (INTOSAI) 
and issued as International Standards for Supreme Audit Institutions (ISSAIs). These standards 
oblige me to comply with ethical requirements and to plan and carry out the audit to obtain 
reasonable assurance that the financial statements are free from material misstatement. 
My audit provides a reasonable basis for the audit opinion 
6.  The ISA, as well as the ISSAI, require the audito r to carry out an audit of an organization's 
accounts and financial transactions which includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting 
principles and significant estimates made by the Director-General, as well as evaluating the overall 
presentation of the financial statements. I believ e that my audit provides a reasonable basis for 
the audit opinion. 
The financial statements present fairly the financial position 
7.  As a result of my audit, I am of the opinion that the financial statements present fairly, in 
material respects, the financial position as at 31 December 2014, that they have been prepared 
mostly (except for the remarks concerning ITC,  see paragraphs 77-81) in accordance with 
International Public Sector Accounting Standard s (IPSAS) and WTO's stated accounting policies, 
and that the transactions have been in accordance with the Financial Regulations. Furthermore I have assumed that the IT system the Secretariat is responsible for and which it uses for 
accounting and for the preparation of the financial statements works properly and according to 
ISSAI-standards (even though, in the course of th is audit, I had no chance to ensure that), 
especially concerning IT security (see also my recommendations in paragraph 126 in this report). WT/BFA/W/368 
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  I have placed an audit opinion with a reservation on the financial statements 
8.  The audit revealed no weaknesses or errors which I considered material to the accuracy, 
completeness and validity of the financial statements as a whole. Nevertheless, I have placed an audit opinion with a reservation on WTO's financial statements for 2014 due to non-consolidation 
of the ITC (see 3.3.2). Therefore, from my po int of view, the financial statements are not 
completely IPSAS-compliant. 
Areas covered by this report 
9.  My report includes observations and recommendations intended to contribute to the 
improvement of financial management. For 2014, my audit work has mainly covered the areas described in the following paragraphs. 
Overall financial situation (Part 3) 
10.  In accordance with Chapter XIII of the Financial Regulations, I present an analysis of WTO's 
financial statements. In Part 3 of my report I comment on the overall financial situation. 
Performance audit (Part 4) 
11.  Regulation 44 of the Financial Regulations stipulates that my annual audit shall also include 
performance audits as defined by the INTOSAI Auditing Standards. 
WTO has presented financial statements mostly in accordance with IPSAS 
12.  The financial statements for the year ending 31 December 2014 are the third official financial 
statements to be prepared and presented mostly in accordance with IPSAS. 
Cases of fraud or suspected fraud (Part 5) 13.  The Secretariat reported that it did not have any information on cases of fraud or suspected 
fraud. During our audit, my team did not de tect any cases of fraud or suspected fraud. 
Follow Up (Part 6) 14.  In the last report of the External Auditor (2013) my predecessor commented on a number of 
aspects. My team reviewed the pending implementation of these recommendations. 
Acknowledgement (Part 7) 15.  I wish to convey my appreciation for the cooperation and assistance extended by the 
Director-General, the management and staff of the Secretariat. I am very grateful for their 
assistance during the entire external audit process. WT/BFA/W/368 
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  2  SCOPE AND APPROACH OF THE AUDIT 
2.1  Scope of the Audit 
Principles governing my audit 16.  My staff and I have audited the financial statem ents of the WTO for the financial period from 
1 January to 31 December 2014. These statements comprise the statement of financial position, 
the statement of financial performance, the statem ent of cash flow, the statement of the changes 
in net assets and notes and annexes to the financial statements. We also examined the related 
financial accounts and transactions. 
Responsibility of Management 17.  The Director-General is responsible for the prepar ation and fair presentation of these financial 
statements in accordance with WTO's Financial Regulations, and with such internal controls as 
management determines are necessary to permit th e preparation of financial statements that are 
free from material misstatement, whether due to fraud or error. 
Responsibility of the External Auditor 
18.  I am responsible for expressing an opinion on  the financial statements based on evidence 
obtained during my audit. I planned and performed the audit in such a way as to obtain reasonable assurance that the financial statements are free from material misstatement. 
Audit of the financial statements 
19.  The financial statements of the WTO, together with my audit report and the audit opinion, 
have been discussed with the Director-General. He has taken note of the contents of my report. 
Performance audits 
20.  In addition to my audit of WTO's financial statements, accounts and financial transactions, 
I carried out the reviews (under Regulation 44 of the Financial Regulations) that I deemed necessary with respect to the efficiency of the Procurement and the IT Division, its accounting 
system, its internal controls, and the financial cons equences of existing administrative practices. 
2.2  Audit Objective and Approach 
Objective of financial audit: Forming the audit opinion 
21.  The purpose of the audit was to enable me to  form an opinion on whether the expenditure 
recorded for the year had been incurred for the purposes approved by the Council; whether revenues and expenses were properly categori zed and recorded in accordance with WTO's 
Financial Regulations; and whether the financial statements presented fairly the financial position 
as at 31 December 2014. 
Substantive testing convinced me of  the correctness of WTO's records 
22.  My audit opinion is based on substantive testing of the transactions recorded in all areas of 
the financial statements. The examination was carried out to ensure that the financial statements 
accurately reflect the accounting records and present fairly the financial situation of the WTO. WT/BFA/W/368 
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  2.3  Audit Conclusion 
I found no material weaknesses. Neverthele ss, I have placed a qualified opinion on 
WTO's financial statements 
23.  Notwithstanding the observations in this report, my examination revealed no weaknesses or 
errors which I considered material to the accuracy, completeness and validity of the financial 
statements as a whole. In accordance with normal practice, my team reported additional findings to the management of the Secretariat in the cour se of the audit. I certify with the mentioned 
reservation (see paragraph 77) that the financial statements and schedules present fairly the 
financial situation of WTO, and I have placed a qualified opinion on WTO´s financial statements for 2014. WT/BFA/W/368 
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  3  FINANCIAL AUDIT 
3.1  General 
My team examined the accounting records. 24.  My audit included a general review, and such tests of the accounting records and other 
supporting evidence as I considered necessary in  the circumstances. These audit procedures are 
primarily designed to allow an opinion on WTO's financial statements to be formed. 
Random sample check 
25.  We analysed data records and transactions. From a total of 69,507 transactions we eliminated 
automatically generated entries in the accounts by means of the audit software "IDEA". We clustered all transactions and took a random sample of a significant number of the remaining 21,609 transactions from all clusters. We checked if invoices and the related documents had been 
filed in accordance with the regulations and cross-checked the basis for payment and the 
necessary approvals. None of the transactions  examined gave cause for serious criticism. 
The Secretariat was able to clarify all open questions. 
I report on WTO's financial development. 
26.  In the following paragraphs, I report on tr ends and tendencies and provide background 
information. For that purpose, my staff carried out an analysis of several of the Organization's key 
figures and their trend. 
3.2  Contributions 
2014 budget was approved in November 2013. 27.  All regular WTO activities are financed from the regular budget (beside voluntary 
contributions) covering expenses and income for a biennium, this time 2014-2015. The 2014 
budget was approved by the Council in its meeting on 26th of November 2013. The budget is 
financed from assessed contributions and miscellaneous income. 
Calculation of contributions 
28.  The contributions are calculated on the basis of each Member State's international trade 
(imports plus exports) in relation to the international trade of all WTO Member States, based on 
statistics over a five year period  
Reviewing of contributions 29.  I reviewed contributions for 2014. 
2014 Assessed 
Contributions* % Outstanding 
Contributions % 
Member States 195.6  11.6  
Observers 0.7  0.2  
Total 196.3 94 11.8 6 
Source: WTO Financial Statements 2014; in mil lion CHF; *(Differences due to rounding). 
In 2014, assessed Member States' contri butions amount to CHF 195.6 million. 
30.  Assessed contributions by Member States amounting to CHF 195.6 million, contributions by 
Observers totalled CHF 0.7 million. At the en d of 2014 WTO has 160 Member States; one new 
Member State, Yemen, formally acceded in 2014. There are 24 Observers of WTO. WT/BFA/W/368 
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  31.  Assessed contributions paid in advance by Members and Observers amount to 
CHF 13.9 million, CHF 13.8 million contributions, the re st of it are interests earned by this advance 
payment. 
Outstanding contributions totalled CHF 19.3 million. 
32.  The outstanding contributions totalled CHF 19.3 million - coming from a peak in 2003 with a 
total of CHF 31.5 million outstanding contribution s. 56 out of 160 Members and 9 Observers out of 
24 had payment arrears, 8 Members accepted a payment plan to suspend Administrative 
Measures, and 2 Members have been put back under Administrative Measures due to 
non-compliance with the agreed payment plan. Details of Administrative Measures and their different levels are defined in Annex B of WTO's Financial Regulations. 
Administrative Measures for Me mbers/Observers in arrears. 
33.  Concerning to Regulation 14 in the WTO Fina ncial Regulations Members and Observers with 
arrears shall be subject to Administrative Meas ures. Furthermore, there might be (inactive) 
Members without a payment plan but with long-term outstanding contributions (e.g. states no 
longer in existence). This is not a standard prac tice within WTO. Due to IPSAS, contributions that 
are uncollectible should be written off completely. 
I recommend developing a procedure for de aling with uncollectible contributions. 
34.  I recommend that the WTO develop a practice or procedure and coming to a decision about 
how to deal with uncollectible contributions (e.g. in the case of states no longer in existence such as Yugoslavia). The Secretariat will assess the feasibility of the write off of uncollectable contributions and take proper action where possible. WT/BFA/W/368 
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  3.3  Financial Position/Performance 
Table 1 - Statement of Financial Po sition as at 31 December 2014* 
(In million CHF) 
 2014 2013 2012 (restated) 
Current Assets    
Cash and cash equivalents 107.7 83.5 88.3 
Receivables from Members 9.9 12.7 12.6 
Receivables from Observers 0.5 0.6 0.2 
Inventories 0.4 0.4 0.4 
Other receivables 3.6 5.6 4.6 
Advances and prepayments 5.2 5.0 4.4 
Non-Current Assets    
Building 118.4 119.1 49.7 
Work in Progress - Building - - 68.1 
Work in Progress - Equipment - 2.0 12.3 
Equipment 16.9 16.9 3.2 
Intangible assets 0.6 0.3 0.5 
Pension Plan Assets 487.6 441.3 397.5 
TOTAL ASSETS  750.8 687.4 641.7 
Current Liabilities    
Payables 4.3 3.7 9.6 
Accruals 1.0 1.2 2.4 
Assessed contributions received in advance  13.9 8.0 12.9 
Voluntary contributions refundable  32.6 33.6 31.3 
Short-term employee benefits 11.7 12.7 12.3 
Grant - - 12.6 
Non-Current Liabilities    
Loan 57.6 58.8 60.0 
Pension benefits 1,209.6 852.7 945.8 
ASHI 342.9 247.1 270.5 
Other Long-term employee benefits 10.6 9.0 8.9 
Provision for right of use 48.5 49.1 49.7 
Funds 4.3 6.0 12.2 
TOTAL LIABILITIES  1,736.9 1,281.9 1,428.1 
NET ASSETS (986.1) (594.5) (786.4) 
WCF 10.7 10.6 10.5 
Actuarial gain (loss) (226.1) 155.5 (41.4) 
Accumulated surplus (770.7) (760.5) (755.5) 
TOTAL NET ASSETS  (986.1) (594.5) (786.4) 
Source: WTO Financial Statements 2014 and 2013; *(Differences due to rounding). 
3.3.1  Statement of Financial Position 
Assets and Liabilities My team examined the statemen t of assets and liabilities. 
35.  Full reporting of assets and liabilities in a balance sheet enables the reader to understand the 
financial position of an organization. Such a statement of financial position is also required under 
IPSAS. My team examined this statement and the presentation of the major underlying accounts. WT/BFA/W/368 
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  Assets 
Current Assets 
Cash and Cash Equivalents Overall cash situation with a total of CHF 107.7 million is sufficient. 
36.  WTO's overall cash situation is sufficient. Compared to the balance in the previous year, total 
cash and cash equivalents increased by CHF 24.2 million from CHF 83.5 million in 2013 to 
CHF 107.7 million as at 31 December 2014 (CHF 88.3  million in 2012). Cash and cash equivalents 
include cash in hand and cash accounts at bank. 
Cash deposits in CHF increased in 2014. 37.  The increase in 2014 is almost complete due to a cash deposit amounting to CHF 103.5 million 
(in 2013 CHF 81.4 million). 
38.  Other currencies (USD, EUR and GBP) are of mi nor importance for WTO. In 2014, the total 
amount of assets in other currencies was equivalent to approximately CHF 4 million. 
No formal decision concerning  accounting exchange rates. 
39.  WTO uses the United Nations Operational Exchange Rate for accounting transactions in foreign 
currencies. There is no official decision or document supporting this practice. 
Following my recommendation, a decision do cument was presented during our audit. 
40.  I recommended that the Secretariat ask for an authorization and an official decision to use UN 
Operational Exchange Rate as official accounting rate for WTO transactions. The Secretariat accepted the recommendation and, during our audit, presented a memorandum on this topic signed by the DDG. 
Receivables from Members and Observers 
Provision for arrears amount to CHF 9.4 million 41.  Receivables from Members and from Observers (r eceivables from non-exchange transactions) 
include a provision for outstanding contributions. The provision for arrears from Members and 
Observers amount to CHF 9.4 million (CHF 9 m illion from Members; CHF 0.4 million from 
Observers). 
Payment plans are covering arrears of CHF 7 million. 
42.  There are payment plans with 10 Members (8 ar e following the agreed payment plan) with 
total arrears of CHF 7 million. 
Inventories 
Inventories consist mainly of WTO publications and co-publications. 
43.  Inventories within current assets for WTO are mainly publications and co-publications totalling 
CHF 0.4 million. Not all inventories are held internally; a part of the WTO publications and 
co-publications are stored at a third party storage facility. 
44.  Minor inventory adjustments (about CHF 4,000 in 2014) are made as a result of a difference 
between value in the financial accounts and value of the physical inventory. WT/BFA/W/368 
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  Other receivables 
Recoverable United States taxes amount to CHF 3 million. 45.  Other receivables include recoverable taxes, e.g. from the United States (US) and 
Switzerland. In 2014, other receivables to talled amount to CHF 3.6 million (2013: 
CHF 5.6 million); CHF 3 million of the 2014 total were recoverable US taxes. 
WTO pays for staff estimated US tax in advance. 46.  Staff members of WTO, like those of other international organizations, are exempt from 
income tax. Nevertheless, the US requires its citizens and residents to pay tax worldwide. 
The WTO pays estimated tax payments in advance and asks for a reimbursement from the US Government based on an agreement between WTO and US of 22  December 2000. 
47.  The WTO Secretariat's method of calculating reimbursements is different from the method 
used by the US Government, although the WTO me thod is validated by the International Labour 
Organization (ILO). 
Different reimbursement methods re sult in a write-off for WTO. 
48.  The difference in 2014 not reimbursed by the US results in a write off for the WTO shared by 
all Member States amounting to CHF 98,194 (2013: CHF 115,370). 
I recommend that the WTO Secretariat agree with the US Gov. on a similar 
reimbursement method. 
49.  I recommend, just like my predecessor the years before, that efforts be continued to 
accelerate the refunding procedure and to negotiate and agree with the US Government on a similar reimbursement method based on the ILO approach. 
 
The Secretariat will continue to pursue efforts to accelerate the refunding procedure from the US Government. 
Advances and prepayments 
Advances and prepayments amount to a total of CHF 5.2 million. 50.  In 2014, advances and prepayments with a total of CHF  5.2 million include staff advances 
made for salary, travel and education grants repres enting CHF 3.3 million and advances relating to 
Trust Funds activities with an amount of CHF 1.1 million.  
Non-Current Assets Building 
Net carrying amount as at 31 De cember 2014 CHF 118.4 million. 
51.  With regard to non-current assets, a balance sheet item of high value is "building" with a net 
carrying amount of CHF 118.4 million (2013: CHF 119. 1 million). The accumulated depreciation of 
buildings as at 31 December 2014 amounts to CHF 16 million (depreciation for 2014 only: 
CHF 3 million). 
52.  Work in progress (WIP Building/Equipment) in the financial statements of 2014 is zero (in the 
financial statements for 2012 still indicated CHF 68.1 million WIP – Building and CHF 12.3 million 
WIP – Equipment). After finalizing the New Administrative Building in the end of 2014 all work in progress is completed. WT/BFA/W/368 
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  Equipment 
The value of equipment totals CHF 16.9 million. 53.  The value of equipment totals CHF 16.9 million . The most significant items are furniture 
(CHF 7.5 million), audiovisual equipment (CHF 6. 5 million), security equipment (CHF 1.9 million) 
and IT equipment (CHF 0.5 million). 
No regular physical inventory for assets (exception: publications). 54.  For equipment assigned to non-current assets there is no procedure for a regular physical 
inventory. Only for inventories (see above) categorized as current assets, there is a regular 
physical inventory. 
I noted that WTO is going to implement sp ecial software for improving the process of 
registering all assets in 2015. 
55.  In 2015, WTO is going to implement special software  to register all assets and to facilitate the 
depreciation process for assets to fulfil all requ irements of IPSAS (all assets should be clearly 
documented in the Financial Statements) and to improve the documentation process. 
 
I will monitor further activities and experiences concerning this topic. 
Pension Plan Assets 
Fair value of Plan assets: CHF 487.6 million. 
56.  The fair value of Plan assets at the beginning of 2014 (31 December 2013) was 
CHF 441.3 million. With all expenses, contributions and benefits paid, the fair value as at 31 December 2014 was CHF 487.6 million. 
Actuarial gain 2014: CHF 16 million. 
57.  Actuarial gain on Plan assets net of actual investment expenses as at 31 December 2014 
amounts to CHF 16 million (2013: CHF 15.3 million). WT/BFA/W/368 
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Liabilities 
Current Liabilities 
Assessed contributions received in advance 
Contributions paid in advance: CHF 13.9 million. 
58.  The total amount of contributions paid in advance by Members and Observers is 
CHF 13.9 million (2013: CHF 8.0 m illion). This includes interest of CHF 132,000 earned through 
the Early Payment Scheme implemented by the Council to encourage early payment.  
Short-term employee benefits Short-term employ ee benefits total CHF 11.7 million. 
59.  Short-term employee benefits comprise dependency allowance, untaken annual leave, 
education grant and home leave. The total as at 31 December 2014 amounts to CHF 11.7 million. 
Short term Employee 
Benefits 31/12/2014 
(In million CHF) 
Dependency allowance 0.05  
Untaken annual leave 9.17 
Education grant 1.39 
Home leave 0.90 
Separation grant 0.23 
Total 11.74 
 
Several adjustments in Note 14 and some tables concerning employee benefits. 
60.  I requested several adjustments regarding the figu res, phrases and presentation in the tables 
of Note 14. In particular, this pertained to updated calculation bases and the clarity of descriptions 
of provisions. 
61.  The Secretariat accepted the recommendation and will follow my suggestions. 
Non-Current Liabilities 
Loan WTO received an interest-free loan of CHF 60 million. 
62.  The WTO received a CHF 60 million loan from the Swiss Authorities to finance renovation work 
on its headquarters (CHF 20 million for the south and north courtyards and another CHF 40 million for the new administrative building). 
The duration is 50 years; annual repayment is CHF 1.2 million. 
63.  The loan is interest-free; its term is 50 years. WTO started reimbursement in 2013 with 
CHF 1.2 million (1/50 of 60 million); in 2014 WTO repa id another CHF 1.2 million. The total of the 
residual debt as at 31 December 2014 is CHF 57.6 million. WT/BFA/W/368 
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  Pension Benefits 
Pension benefits total CHF 1,209.6 million. 64.  The WTO Pension Plan is a defined benefit plan. The value of its commitments according to 
IPSAS amounts to CHF 1,209.6 million as at 31 December 2014 (2013: CHF 852.7 million). The 
most important change in 2014 was th e actuarial loss of CHF 313.3 million. 
Discount rate as an essential assump tion decreased from 2.6% to 1.1%. 
65.  Actuarial assumptions changed significantly compared to the valuation as at 31 December of 
the previous year. In particular, the key date-related discount rate decreased from 2.6% to 1.1% 
(for ASHI (see below) and Pension). Furthermore, the expected long-term rate of return on Plan assets decreased from 4.5% to 4.0%. 
ASHI 
ASHI total CHF 342.9 million. 
66.  The After Service Health Insurance (ASHI) benefits are calculated, just like the pension 
liability, by consulting actuaries. The related li ability at the end of 2014 totalled CHF 342.9 million 
(2013: CHF 247.1 million). 
Actuarial loss in 2014: CHF 84.3 million. 67.  Just like in the position for pension benefits the increase mainly results from the above 
mentioned change in the discount rate from 2.6% to 1.1%, which led to an actuarial loss of 
CHF 84.3 million at the end of 2014. 
Net assets (total) Net assets/equity of the period is CHF (986.1) million 
68.  Considering all assets as at 31 December 2014 (CHF 750.8 million) and all liabilities 
(CHF 1,736.9 million) there is a negative tota l net assets/equity of CHF (986.1 million) 
(2013: CHF (594.5 million)). This is mainly due to the inclusion of the Pension and ASHI liabilities 
in the financial statements and their valuation according to IPSAS. In particular the Pension 
liability will be offset by future contri butions and return on investment income.  WT/BFA/W/368 
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  3.3.2  Statement of Financial Performance 
Revenue and Expenses The table below shows comparative figures of 2012, 2013 and 2014. 69.  The IPSAS equivalents of income and expenditure are revenue and expenses (as shown in the 
Statement of Financial Performance). The tabl e presents the figures for 2012, 2013 and 2014. 
Table 2 - Statement of Financial Pe rformance as at 31 December 2014* 
 2014 2013 2012 
(restated)  
Revenue     
Contributions / Members 195.6 195.6 195.8 
Contributions / Observers 0.7 0.7 0.8 
Voluntary contributions to 
trust funds 21.2 21.0 21.9 
Revenue from publications 0.3 0.3 0.4 
Other revenue 0.9 0.3 1.0 
Extraordinary revenue 2.5 6.5 7.1 
Income portion/grant 
received - 13.0 - 
Pension Plan revenues 20.5 18.4 21.6 
Total Revenue 241.7 255.8 248.6  
    
Expenses    
Staff expenditure (174.7) (184.6) (189.9) 
Temporary Assistance (20.6) (23.7) (23.3) 
Supplies /other Service 
Costs (14.7) (16.8) (17.1) 
Travel & Hospitality (12.3) (12.7) (11.8) 
Implementing Partners (5.6) (4.7) (7.1) 
Contribution to ITC (18.5) (18.1) (18.9) 
Ministerial Conference Operating Fund (variation) (0.6) 0.6 (0.6) 
Appellate Body Operation Fund (variation) (0.1) (0.9) 0.05 
Depreciation (5.5) (4.7) (1.7) 
Provision for contribution in arrears (0.03) 4.2 1.3 
Depreciation of provision for ri
ght of use 0.6 0.6 0.6 
Financing costs (0.04) (0.03) (0.03) 
Loss on foreign exchange 
transactions 0.3 (0.1) 0.06 
Total Expenses  (251.9) (260.8) (268.5) 
    
Surplus (deficit) for the 
Period (10.2) (5.1) (19.9) 
 
Source: WTO Financial Statements 2014 and 2013; *(Differences due to rounding). WT/BFA/W/368 
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  Revenue 
Total revenue amounts to CHF 241.7 million. 
70.  Revenue at year-end totalled CHF 241.7 million (2013: CHF 255.8 million). 
71.  The most significant revenue item are contributions from Members and Observers amounting 
to CHF 196.3 million (CHF 195.6 + 0.7 million). 
Expenses 
Total expenses amount to CHF 251.9 million. 
72.  Total expenses as at 31 December 2014 totalled CHF 251.9 million (2013: CHF 260.8 million). 
Staff expenditures of CHF 174.7 millio n represent more than two thirds. 
73.  More than two thirds of the expenses (69.4%) are chiefly due to staff expenditures with a 
total of CHF 174.7 million (2013: CHF 184.6 million). 
Following my recommendation, the Secretar iat implemented a detailed table on staff 
expenditures. 
74.  For improving transparency I recommended that more explanations and more details on 
expenses be given in Note 19, especially on staff expenditures, e.g. a table with details to the 
different types of staff expenditures. The Secretariat accepted the recommendation and 
implemented Table 62 in the report with details concerning staff expenditures. 
Expenditure for temporary assistan ce amounts to CHF 20.6 million. 
75.  Another important item within expenses is temporary assistance with an amount of 
CHF 20.6 million. 
The Secretariat accepted my further proposal  concerning the introduction of a table 
showing expenditures details. 
76.  As I did for staff expenditures, I also recommended giving more details concerning expenses 
for temporary assistance in Note 19. The Secr etariat accepted the proposal and introduced 
Table 63 accordingly. 
WTO's contribution to the ITC: CHF 18.5 million. 77.  The WTO's contribution to the International Trade Centre (ITC) is another significant expense 
and as at 31 December 2014 amounts to CHF 18.5 million. 
ITC is a jointly operated and controlled entity. 78.  The ITC is a joint technical cooperation agency of the UN and WTO. Originally established in 
1964 by the General Agreement on Tariffs and Trade (GATT), ITC has operated since 1968 under 
the joint aegis of GATT and the UN. It is operated jointly (as outlined in the financial statements of 
WTO) and therefore - based on IPSAS 8 - a jointly controlled entity. 
WTO has to consolidate the ITC according to IPSAS 8. 
79.  WTO is documenting the above mentioned payment to ITC among expenses within the 
statement of financial performance and is not consolidating ITC. According to IPSAS 8 ITC is legally a jointly controlled entity; important is just the ability, not the de facto control; therefore 
WTO has to consolidate ITC. WT/BFA/W/368 
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  I have to give my Audit opinion with a reservation. 
80.  Concerning this issue the WTO financial statements are not completely IPSAS-compliant. 
Therefore I have to give an audit opinion with a reservation. 
I recommend negotiating with ITC and clarifying the legal situation. 
81.  Even if WTO might actually have only limited or no control, the legal situation still defines ITC 
as a jointly controlled entity, there is no proof or document stating any other fact. I recommend that WTO negotiate with ITC/UN and clarify the legal situation, especially concerning control. If 
there might be a new contract documenting that ITC is just a grant recipient without any control 
from WTO, this reservation could be removed and WTO's financial statements would be completely in line with IPSAS.  
The Secretariat will study the legal framework with ITC in order to clarify the legal nature of the 
partnership. 
Net result/surplus (deficit) for the Period 
Net result (deficit) for the period  amounts to CHF (10.2) million. 
82.  The net result (deficit) for the period 2014 is CH F (10.2) million compared to CHF (5.1) million 
in 2013 and after CHF (19.9) million in 2012.  WT/BFA/W/368 
- 18 - 
   
4  PERFORMANCE AUDIT 
4.1  Procurement activities of WTO 
Focus and procedure of the audit 
Audit focus: rules, regulations, organi zational prerequisites for procurement 
83.  The audit focused on the WTO's rules and regula tions for procurement and the organizational 
prerequisites to implement them. Procurement is understood as the whole process of acquisition of 
goods and services from third parties. It covers goods and services. The procurement process 
includes the whole life cycle from initial concept and definition of needs through to the end of the 
useful life of an asset or the completion/termination of a service contract. 
84.  We analysed the rules and regulations, conducted interviews with WTO staff in several 
divisions and analysed files and records held by  the WTO Secretariat. The fieldwork was carried 
out in February and April 2015. 
Rules and Guidance 
Basis: Financial Regulations, Financial Ru les, Procurement Manua l and Complimentary 
Guidance. 
85.  The procurement activities of the WTO Secretaria t are based on the Financial Regulations, the 
Financial Rules (No. V, VII, X, XI, XII), the Procurement Policy (Administrative Memorandum 
No. 965/Rev. 1), the Procurement Manual (PM) and additional regulations on specific issues. The 
PM was adopted in 2009. After the revision of the Financial Regulations in February 2015, the WTO also plans a revision of the Financial Rules. In consequence it considers a revision of the 
Procurement Manual and complementary guidance.  
Procurement Planning Procurement Manual: Requisitioning units have to identify procurement needs and 
define requirements. 
86.  Procurement expenditure amounts to abou t 10% of WTO's expenditure. The WTO 
Procurement Manual states that optimal performance in procurement can only be achieved if 
planning is improved. Thus, procurement planning is to involve the preparation of projections of 
procurement needs for budgeting purposes at the divisional level. The requisitioning units are 
responsible for identifying their procurement needs (PM, Part 6). Each division defines the requirements and prepares its Procurement Plan, in consultation with the Procurement Section. 
The PM (Tool 1) provides a template for the Procurement Plan. The requisitioning unit is requested 
to list the items, their type (goods/services), the quantity, a price estimate and the requested 
delivery date or contract start/end dates; the Procurement Section is asked to add specifics on the 
procurement method. 
Procurement Manual: Procurement Pl ans as part of budget request. 
87.  The Procurement Plan should form an integral part of the Biannual Divisional Budget Request. 
The Procurement Plan should comprise all the proj ected requisitions of goods and services for the 
coming two years. At the end of the first year, the Procurement Plan of the Division should be 
compared to the actual acquisitions made. Accord ingly, the Procurement Plan for the coming year 
should be reviewed and updated (PM, Part 5). WT/BFA/W/368 
- 19 - 
  In practice: variety of approaches to needs assessment and procurement planning. 
88.  In practice, there is a variety of divisional a pproaches to the identification of needs and the 
definition of requirements. Whereas some divisi ons report to a specific steering committee that 
supports these steps and makes decisions (e.g. ITSD), in other divisions (e.g. LDMID) the 
decisions on needs and requirements are taken by  the director alone. The procurement plans for 
2013 and 2014 differed significantly. The spectrum ranged from comprehensive lists with all required information (ITSD) to very general over views or no procurement plan at all: The HR 
Division did not prepare a Procurement Plan for 2014. Its 2013 Procurement Plan stated that 
training, training materials, video conferencing, venues would be required "all year long" "on as 
needed basis" without any indication of quantities or estimated price. 
Procurement Plans were prepared after th e divisional budgets had been approved. 
89.  The divisional Procurement Plans were prepared annually after the divisional budgets had 
already been approved. According to our interlocutors the procurement plans serve as a "forecast" for the Procurement Section and they are not under stood as a planning tool. In 2015, the Division 
Directors were for the first time asked to present their Procurement Plans to the Contracts 
Committee (CC) to enforce planning  and strengthen the commitment. 
Practice is not in line with rules. This implies risk of poor needs-assessment and 
potential waste of time, effort and resources. 
90.  The current practice at the WTO Secretariat is not in line with its rules. Poor identification of 
needs may lead to assets being procured that do not fully meet the needs of WTO, potentially causing waste of time, effort and cost or inefficiencies and sub-optimal assets being procured. 
Defining the requirements of procurement and prio rity setting are thus cornerstones of reliable 
budget planning and of a successful procurement proc ess. In addition, it contributes to minimizing 
the need for later changes. It helps to identify common and recurring acquisitions across divisions 
and is a reference for keeping track of acquisitions with a view to achieving the objectives within 
budget. 
Recommendations: 
- Define needs before allocating divisional budgets. 
- Specify rules and procedures. - Define clear responsibilities. 
- Establish high level managerial approval of procurement plans. 
 
91.  The WTO Secretariat has to ensure that the divisions define their needs on a reliable basis 
before divisional budgets are allocated. I recommend that the WTO specify the procedures for 
needs assessment and the requirements of procur ement planning. To enforce the compliance with 
the regulations and to ensure coherence between all divisional practices I recommend that WTO 
define clear responsibilities and establish high le vel managerial approval of the Procurement Plans. 
The Secretariat, as of January 2015, has requested that all Procurement Plans (PP) be briefly 
presented by the Directors to the Contracts Committee (CC) Members during the CC session. A notion of risk and impact in the PP has been in cluded to help the Procurement Section to better 
understand the dimensions of the various procurem ent projects to be implement. The Secretariat 
will continue to pursue efforts in having the PP presented earlier in the year to enhance acquisition 
planning in a more timely and efficient manner. 
Requisition of consulting services 
External collaboration contracts with in dividuals handled by HR, contracts with 
consulting firms by Procurement Section. 
92.  According to Section II Paragraph 5 of the Procurement Policy of the WTO external 
collaboration contracts with individuals are outsid e the scope of the procurement policy. Requests 
for individual consultants are handled by the Human Resources Division, contracts with consulting firms by the Procurement Section. WT/BFA/W/368 
- 20 - 
   
No internal control mechanism, no  automated comparison of data. 
93.  There is no internal control mechanism in plac e to prevent the simultaneous existence of two 
contracts with the same consultant – one via the Procurement Section with a consulting firm and 
one individual contract via HRD. There is no automated comparison of data. In the past, a case of 
two contracts with the same consultant was discovered only by chance. 
Recommendation: Strengthen intern al coordination and control. 
94.  To minimise risks of waste, impropriety and fraud in connection with the requisitioning of 
consulting services, I recommend that the WTO Secretariat strengthen its internal coordination and control. The Secretariat should explore ways to support the control mechanisms by an automated comparison of data. 
 
The Secretariat will assess the feasibility of the suggested indications. 
Amendments to Contracts 
Procurement Section is exclusively in charge  of placing orders, signing or changing 
contracts. Changes must be documented an d can only be authorized if funds are 
available. 
95.  Placing orders or issuing a (formal) tender (i.e. for an estimated amount above CHF 20,000) is 
the exclusive responsibility of the Procurement Se ction (PM, Part 6). For each acquisition, the 
requisitioning units have to submit a request in the form of a requisition via the ERP system. The requisition shall contain all information necessary to enable the Procurement Section to issue a 
tender or place a purchase order. The requisition has to be checked by the Budget and Finance 
Section to ensure fund availability. In this case , the funds are encumbered. Once the requisition is 
approved by the Budget and Finance Section it is  electronically forwarded to the Procurement 
Section. 
96.  The PM (Part 16) stipulates that all modifica tions/amendments to the contract e.g. the 
increase of work must be documented. Changes cannot be authorized unless funds are available. 
According to the PM, only authorized procurement staff can officially change a contract. 
Example: Compliance with rules is not ensured. Changes to contracts without prior 
budgetary approval and without invo lvement of Procurement Section. 
97.  There is no procedure in place to ensure that  these rules are observed. Example: Purchase 
Order No. 119230 (13 October 2014): The amount approved was CHF 17,800 for the development 
of an "app" for the World Trade Report 2014. The Purchase Order was based on an offer of the 
company. The requisitioning unit had asked four companies for their offers, two had replied; the 
company chosen had offered the lower price. The invoice (31 December 2014) was CHF 21,040. 
If the amount of an invoice is higher than the amount approved in the purchase order, the Budget 
and Finance Section is automatically notified by the ERP system. In this case, the Finance and 
Budget Section contacted the requisitioning unit to clarify the difference of CHF 3,240 
(plus 18.2%). The unit explained that additional costs were due to additional work of 8.5 working days that had to be done by the contractor. On this basis, the Budget and Finance 
Section initiated the payment of the amount requested. The Procurement Section was not 
involved. 
Recommendation: Enforce compliance with rule s to guarantee sound management of the 
WTO budget. 
98.  I recommend to the Secretariat implementing procedures to ensure that requesting units 
always have to involve the Procurement Section in advance before they accept modifications to the Purchase Order, even more so if these modifica tions result in price adjustments. To guarantee 
sound management of the WTO budget, such modifications have to be subject to prior 
identification and availability of sufficient f unds. I also recommend establishing an automated WT/BFA/W/368 
- 21 - 
  notification to the Procurement Section if the amount of the purchase order deviates from the 
amount requested in the invoice.  The Secretariat accepts the recommendation and will follow the suggested indications. 
Contract Management 
The PM requires the requesting units to k eep a comprehensive Contract Administration 
File for each contract. 
99.  Responsibility for contract management is primarily assigned to the requesting units. The 
secondary responsibility rests with the Procuremen t Section (Procurement Policy Annex A). The PM 
(Part 16) requires the requesting units to appoint a Contract Administrator and for each procurement to create and maintain a Contract Administration File as "the central repository of all 
actions related to contract performance throughout the life of the contract" for each procurement. 
The PM lists all documents the file should contain – e.g. telephone logs, internal and external correspondence, meeting minutes, lessons learned reports and contractor performance reports. 
When the contract expires, the Contract Administra tion File has to be completed. In procurement 
of a value equal or exceeding CHF 20,000, the file has to be sent to and archived by the Procurement Section (PM, Part 17). 
Little awareness of the requirements. There is no systematic and structured approach to 
keeping Procurement Ad ministration Files. 
100.  The Procurement Section keeps the contracts and all information concerning the tenders on 
file. The Contract Administrators of the requesting units the audit team talked to were not aware 
of the requirement to keep a Contract Administration File containing all the information listed in 
the PM. There was no systematic and structured approach to maintain the Files. In most cases, only the contract itself was filed on paper; other information was stored in shared and/or individual 
electronic folders and/or personal email-accounts. Performance Reports on the contracts were 
completed only "on request" by the Procurement Section. The Procurement Section had no knowledge of whether and how the units proceeded. It did not receive the completed Contract 
Administration Files. Neither did it actively request them. Only in cases of contract amendments it 
asked the requesting units to submit a performance report. 
Due to the lack of documentation the WTO Secretariat is not able to evaluate the quality 
and integrity of the contract management. 
101.  Compliance of the contractors with the contract has to be assessed on an ongoing basis to 
minimize risks and to prevent shortcomings. Thus, it is vital to ensure comprehensive, reliable and transparent contract management over the whole life cycle of contracts. This has not been ensured 
by the WTO Secretariat. Its practice is not compliant with the rules. Due to the lack of 
documentation the WTO Secretariat is not able to evaluate the quality and integrity of the contract management. 
Recommendations: 
- Ensure appropriate documentation.  
- Strengthen consistency of approach.  
- Evaluate organizational links.  
- Promote sound contract management. 
102.  I recommend developing a procedure to ensure appropriate documentation and safeguard 
availability, reliability and integrity of information and records on all procurements. I also 
recommend evaluating the organizational links between the procurement section and the 
requesting divisions. In addition, it might prove appropriate to highlight the importance of sound 
contract management and transparent documentat ion to the staff members of the Secretariat. 
 
The Secretariat takes note of the recommendation and will follow the suggested indications. WT/BFA/W/368 
- 22 - 
  Conclusion 
I recommend accelerating the developmen t and implementation of clear rules, 
procedures and structures for its pr ocurement and contracting activities. 
103.  It is of great importance that the Secretariat continues with developing and implementing 
clear rules, procedures and structures for its procurement and contracting activities. Without 
adequate governance, the WTO Secretariat might risk  that its practice is noncompliant with the 
relevant policies. There might also be the risk that needs are not clearly defined, could be met by 
alternative goods or services, or do not adequately support the WTO to meet its strategic 
objectives. It is important that appropriate controls are in place to ensure that procurement complies with the internal rules. Non-compliance has the effect that optimum and transparent procurement is not achieved and value for money cannot be ensured.  WT/BFA/W/368 
- 23 - 
   
4.2  IT-Governance 
Focus and procedure of the audit Audit Scope and Audit Methodology 
104.  My staff and I audited the Information Technology (IT) of the WTO's Secretariat as part of 
my performance audit. The main scope of the IT  audit was the Secretariat's IT governance. My 
staff analysed the existing policies, guidelines and additional documentation concerning IT and also 
current efforts for optimizing IT. We also took note  of current results of investigations made by or 
on behalf of the Office of Internal Audit. 
Set of criteria 105.  In order to find "best practices" taking into account the WTO's role as an independent 
international institution and the importance of IT for its business, I applied relevant 
internationally-accepted management standards such as: 
- "ISO/IEC 38500", an international standard for corporate governance of information 
technology; 
- "Control Objectives for Information and Related Technology (COBIT)", a framework that 
combines international standards dealing with quality, security and fiduciary aspects of 
IT, created by the Information Systems Audit and Control Association (ISACA); 
- "International Information Technology Guidelines", created by the International 
Federation of Accountants (IFAC); 
- "IT Infrastructure Library (ITIL)", an international de facto standard in the area of 
IT service management; 
- "A Guide to the Project Management Body of Knowledge (PMBoK® Guide)", created by 
the Project Management Institute (PMI); 
- "ISO 21500:2012", an international standard for project management 
- "ISO/IEC 27000 series", international standa rds for information security management. 
In essence, the criteria specified above inco rporate the commonly accepted and documented 
approach to manage IT in a proper way ("best practices"). 
Audit Objectives 106.  The main objectives of the audit were to eval uate appropriateness of the WTO's Secretariat's 
IT governance approach and the use of internat ionally accepted procedures, standards and best 
practices for IT. 
IT in the Secretariat Importance of IT for the WTO 
107.  The essential objective of the Secretariat is to support the activities of the WTO. These 
activities and the performance of tasks within the Secretariat depend on an efficient and secure IT 
environment to run applications. 
Risks to the WTO 
108.  Malfunctioning IT does not only bear the risk of  delays and increasing workload but can also 
lead to material and non-material damages such as the loss of reputation of the affected WT/BFA/W/368 
- 24 - 
  organization. For example data manipulation in or unavailability of the used IT based applications 
may cause such damages. Particularly in times of increasing risks of external and internal attacks to the IT of governmental and non-governmental organizations management should be aware of its responsibility for ensuring an efficient and secure IT environment. 
Need for IT governance 
109.  An IT governance framework is needed to identify and establish processes to increase and 
oversee the use of IT in fulfilling the tasks of th e organization and to manage risks in connection 
with the use of IT. The ISACA defined IT governan ce as "… leadership, organizational structures 
and processes to ensure that the organization's  IT sustains and extends the organization's 
strategies and objectives." To run an IT environment properly and effectively, it is essential to adopt suitable standards, to build appropriate st ructures, to develop and implement an overall IT 
strategy as well as clear specific policies and to provide appropriate human and material resources. 
Management should ensure that the IT issues are adequately assessed and aligned with the organization's strategy and plans which fulfil the organization's mission and general goals. 
 
Management efforts on IT governance 
110.  In recent years the Secretariat implemented a number of enhancements of its IT structures. 
In this regard I want to point out the establishment of the Information Technology Solutions 
Division (ITSD), the release of the ITSD 2015 St rategy and the appointment of the IT Steering 
Committee (ITSC). I recognize these efforts as important steps towards an optimised IT governance structure. 
Adoption of IT standards 
Internationally accepted Standards ensu re efficiency and security of IT 
111.  The use of determined standards and approved methodologies ensures that IT is planned, 
implemented and operated in a well-defined way, which is also a precondition for its efficiency and 
security. Although there is a plurality of IT stan dards for various functions, some of these have 
been broadly accepted and applied directly or in  a customized way by the international community 
of professional Information Officers. We therefore specified suitable standards and methodologies 
in the areas of IT governance, IT service management, IT project management and IT security management. 
Standards applied in the Secretariat;Efforts of the Secretariat to increase maturity. 
112.  The Secretariat stated that it applied ITIL as a framework for its IT service management. My 
team noted that the Secretariat did not apply those standards in IT governance, IT project management and IT security management. The Secr etariat expressed that WTO was "… not aiming 
at compliance with any standards such as ISO/IEC 38500 or COBIT." The Secretariat was 
"… progressively building WTO's maturity to build the elements that will increase this maturity". As "elements of increasing maturity" the Secretariat listed, amongst others: 
- construction of the ITSC as decision making committee; 
- description of the process of IT Project portfolio management, the criteria to decide on 
projects and a spreadsheet to track the overall portfolio as elements to manage IT projects; 
- references in job profiles of the business relationships and solutions managers to make 
e.g. long-term plans, yearly plans and se rvice levels agreements available to the 
supported division as an element of business and IT alignment; 
- a map of the WTO IT Services and the description of a project to define the 
WTO Enterprise Strategy for Trade and Market-access related information systems as an element of enterprise architecture. WT/BFA/W/368 
- 25 - 
  I recognize some of the named elements to increase the Secretariat's maturity; these 
elements covered only parts of IT governance  and were not always consistent with best 
practices. 
113.  I understand that the Secretariat is looking for an approach concerning IT governance that 
takes into account the individual characteristics of the WTO, like its size and its tasks, under 
account. In this regard I recognize the efforts which were made in the area of IT project management and the reflections in terms of a strategy for trade and market-access related 
information systems. The appointment of the ITSC was an important step to upgrade IT 
governance in the Secretariat. Regarding business and IT alignment the job profile references were not in a status for building maturity in the intended way. Also, those elements only took up some parts of the overarching and integrated approach of IT governance. In addition, the 
"progressive" approaches mentioned were not always  consistent with IT governance standards and 
best practices. It is questionable if current effo rts taken by the Secretariat serve to an appropriate 
maturity for WTO's IT governance. 
I recommend applying international best pr actices concerning IT governance. Hereby 
the Secretariat should customize the st andards according to its requirements. 
114.  I recommend to the Secretariat applying international standards and best practices for the IT 
environment together with the establishment of it s IT policy framework (see above). In doing so, 
the Secretariat should give due regard to its individual characteristics like its size and its tasks and customize the suitable standards according to its requirements. Only in cases the Secretariat's special requirements justify an exception or extension, it may define and document these special 
guidelines for itself. Depending on their importance and character, different standards can be 
defined for compulsory or voluntary use. However, some substantial elements should be implemented as a minimum standard to ensure an  appropriate level of IT governance maturity. 
These standards should cover the areas mentioned above (IT governance, IT service management, 
IT project management and information security management) and may also be extended to cover 
efficiency issues and the compatibility requiremen ts of applications and databases. Adherence to 
these standards should be monitored in an appropriate manner. 
WTO agreed that Standards need to be applied. To support ITSD Management the company 
"Info-Tech" was hired (in Jan 2015…) as IT Advisor. ITSD already started running a survey within the IT-Management team. This survey collects both the maturity level and the criticality of the 
process for WTO Secretariat. WT/BFA/W/368 
- 26 - 
  Business strategy, IT strate gy and IT policy framework 
General Requirements 115.  To run an IT environment properly, it is essential to develop clear policies, a long-term IT 
strategy and short-term plans on IT. The IT strategy and the short-term plans should also be 
developed to help ensure that the use of IT is aligned with the mission and business strategy of 
the organization. The overall IT plan, which sh ould be documented, e.g. in an "IT Policy 
Framework", should contain among other things: 
- organizational structures, applied norms, existing procedures and systems, also the 
required personnel, 
- description of the assignments that have to be supported or executed by 
IT (Requirements analysis), 
- interfaces between this range of tasks and other assignments, 
- goals of IT utilization, - running and planning IT projects, including timelines, 
- implementation strategies, 
- plans for service management and training, - planning and procedures for IT security, 
- statements concerning efficiency. 
Senior management should ensure that the IT i ssues and opportunities described in these plans 
are adequately assessed and reflected in the organization's business strategy and short-term plans which fulfil the organization's  mission and general goals. 
Status in the Secretariat; attempts to improve IT policy 
116.  The analysis of the IT-related policies and directives available in the Secretariat and the 
study of documentations of activities concerning IT showed that in recent years there had been 
some attempts to improve the Secretariat's IT policy, particularly initiated by ITSD and the ITSC. 
Examples of an increasing awareness of a futu re strategic approach of these two responsible 
entities I want to point out are some of their considerations and activities: The ITSC found that the 
WTO needed an "overall IT strategy related to trade and market access information systems". The 
committee noted also that divisional-demand driven  projects had the risk to perpetrate the so 
called "silo" approach "that plagued the previous IT  (lack) of strategy". ITSD planned to compose a 
group of stakeholders to aim at a common information system. The ITSC discussed how an 
organization architecture effort would help, in particular the need of a corporate program of 
improvements and the development of a "Master pl an" of how the architecture needs to evolve 
and make sure projects fit into it. As a strategic document ITSD released the "ITSD 2015 strategy" 
covering planning and work priorities of the division for the years 2012 to 2015. 
Current applicable policies and guidelines of the Secretariat were: 
- "IT Policies", containing the chapters: 
 Acceptable Use Policy (also available as OFFICE(06)/15); 
 Security Policy; 
 Pass Phrase Policy; 
 Policy On Conference Room Laptops; 
 WTO Mobile Service Guidelines; 
 WTO Mobile Service Provision Policy. WT/BFA/W/368 
- 27 - 
  - Information Technology Security Policy (OFFICE (00)/52); and 
- Policy on the Security Classification of Electronic Documents and Data (OFFICE (08)/15). 
The Secretariat did not possess an adequate, transparent IT policy, documented in a 
well-structured IT policy framework. 
117.  I noted weaknesses such as lacking specifications e.g. concerning: 
- the description of the existing structures, procedures and systems; 
- the listing of applied norms (see above); 
- long-range IT strategy; 
- requirement analyses for IT Systems and IT Projects; - economic feasibility studies; - coordinated implementation strategies; and 
- IT security. 
The Secretariat did not possess an adequate, transparent IT policy, documented in a 
well-structured IT policy framework. The existing strategy document is not in line with 
IT governance best practices or relevant standards. Together with the lack of documented 
business requirements, IT in the Secretariat was managed neither with an adequate long-term strategy nor an overarching approach. There was also no documented business oriented 
short-term planning - ITSD provided its services and solutions based on the demands of 
requesting units, coordinated as far as possible by the ITSC. In this regard I welcome the approaches and activities of ITSD and the ITSC to  enhance the Secretariat's IT policy, particularly 
regarding the IT project management, as a step in the right direction. But I see still room for 
improvement. The current applicable policies on IT were covering only some parts of IT operational 
issues and were partly outdated. 
The Secretariat did not possess a document specifying WTO's mission and business strategy as a 
basis for aligning of IT with general goals. In connection with the deficient IT strategy and policies 
the task of ITSD, to deliver "IT solutions in partnership with the other WTO Secretariat divisions to fulfil the mandate of the Organization",  appears difficult, or even impossible.  
I recommend setting up an appropriate IT policy framework that should be aligned with 
a defined business strategy. 
118.  I encourage the Secretariat to define and document a general business strategy with an 
adequate level of detail not only but also as a requirement description in regard to a needs-based 
IT environment. I recommend that the Secretariat setting up an appropriate IT policy framework 
that should be aligned with the business strategy. 
The framework should fulfil the requirements mentioned before as a minimum containing 
documentation of requirement analyses, assessme nt of existing systems, current procedures, 
planning, strategies and also future targets. The existing documents could be used as input when they have been updated. The initiatives and activi ties already in place to improve elements of the 
Secretariat's IT policy could be integrated in the preferably overarching approach. Management 
should ensure that the components of this fr amework are periodically updated and communicated 
to all relevant parties across the Secretariat. It should also monitor their implementation and evaluate the results. 
WTO agreed with the need to describe the existing structure, procedures and systems, the need to 
review and document business requirements and evaluate various feasible solutions and the need to have a long term IT Strategy. 
These items are being worked upon with a defined approach, driving two specific efforts: 
(1) Development of enterprise architecture; (2) Development of the 2019 IT Strategy.  WT/BFA/W/368 
- 28 - 
  IT Security 
Internationally Accepted Standards 119.  Internationally accepted standards on IT security management are the ISO/IEC 27000 
series. These standards can help organizations to secure their information assets. ISO/IEC 27001 
as part of this series provides requirements for an Information Security Management System 
(ISMS). An ISMS is a systematic approach designed to ensure that information of an organization remains secure. The risk-management based procedure of an ISMS covers thereby IT structures, 
processes, IT systems and other relevant elements. 
Set of rules used by WTO is not cons istent with relevant IT standards. 
120.  According to the Secretariat no security stan dards had been adopted. The WTO's Information 
Technology Security is formally based on the "Inf ormation Technology Security Policy (ITSP)" the 
Director-General issued in the year 2000. The Intention of the ITSP is to concern "… the protection 
of the Local Area Network (LAN), hardware, software and data, as well as the policies, procedures and associated information technology tools necessary to protect the information used in support 
of WTO operations". Other rules, guidelines or policies which partly cover information security 
issues are listed above. This set of rules was not consistent with relevant standards and covered parts of IT security matters only. 
Standards applied in the Secretariat; Lack of up to date proper specifications; Increase 
of awareness concerning IT security. 
121.  Despite lacking up-to-date specifications, my team noted increasing awareness of IT and 
information security management in the Secretaria t. At its meeting of September 2014, the ITSC 
was briefed by responsible staff on key elements of  an "information security strategy". In this 
presentation, the ISO/IEC 27000 series was introduced as suitable best practices for IT security management in the WTO. Another very important step towards improving IT security I want to 
point out is the IT security assessment concluded last year: 
A Consultant conducted an IT Security Assessment. 122.  Mandated by the Office of the Director-General (DGO) and on behalf of the Office of Internal 
Audit (OIA) a consultant conducted an IT security assessment in 2014. The objective was to 
evaluate the security level of the WTO's IT envi ronment. The consultant performed tests including 
an IT Security Maturity Assessment based on the ISO/IEC 27001 standard. 
Main findings: WTO activities in place do  not comply with the requirements of 
ISO/IEC 27001. 
123.  The assessment identified gaps between the ISO/IEC 27001 standard requirements and the 
activities implemented at the WTO: the absenc e of a comprehensive and formal ISMS and the 
absence of an information security performance evaluation, governance model and documented 
information. In detail the review of IT security controls pointed out weaknesses of security configuration of the ERP system with high priority . The review of IT security governance pointed 
out major weaknesses in respect to the scope of IT  security, the definition of the overarching IT 
security policy, the IT security function's staffing requirements and the risk management process. The assessment identified a number of opportunit ies for improvements focused on achievable 
objectives to significantly reduce WTO's IT environmental risk exposure. 
OIA forwarded the results to the DG. 
124.  The OIA forwarded the results of the assessment to the Director-General in November 2014. 
 
The Secretariat is working on the implementation of the recommendations. 
125.  The Secretariat informed my team that it had already implemented the recent 
recommendations on IT security controls. The Secretariat stated that it had started with the WT/BFA/W/368 
- 29 - 
  implementing of the recommendations on IT secu rity governance. Additionally, the Secretariat 
stated that it did not intend to gain an ISO/IEC 27001 certification, but aimed at adopting best practices as defined in that standard. 
I recommend implementing the recommendations of the IT security assessment; I will 
continue to monitor IT Security. 
126.  I acknowledge the Secretariat's efforts to improv e WTO's IT security in order to reduce the 
IT environmental risk exposure. I strongly recommend to the Secretariat following the 
recommendations of the IT security assessment as soon as possible. Without interfering with the 
ongoing audit of the OIA on this matter, I will continue to monitor the improvement of WTO's IT 
security. 
5  CASES OF FRAUD OR SUSPECTED FRAUD 
No cases of fraud or su spected fraud detected. 
127.  The Secretariat reported that it did not have any information on cases of fraud or suspected 
fraud. During our audit, my team did not de tect any cases of fraud or suspected fraud. 
6  FOLLOW-UP 
I follow-up on the last report of the External Auditor.  
128.  In the last report of the External Auditor on the audit of the Financial Statements 2013, my 
predecessor commented on a number of aspects. My team reviewed the implementation of the 
recommendations made. 
6.1  WTO Financial Regulations 
WTO Financial Regulations should be updated. 
129.  Recommendation: The WTO Financial Regulations should be updated in line with the IPSAS 
and the senior-level staff of the finance division should be reinforced. This recommendation was still open on 31 December 2014. 
New Financial Regulations in place since 27 February 2015. 
130.  Financial Regulations were revised and made IPSAS compliant. Financial Regulations were 
released on the 27 February 2015 while the audit activities for the financial statements 2014 were 
under way. 
Conclusion 131.  I appreciate the implementation. 
6.2  US-Tax reimbursement for WTO staff 
Accelerate US-Tax reimbursement for WTO staff. 
132.  Recommendation: Pursue efforts to accelerate re fund by the United States of the taxes of 
WTO staff; and to obtain this refund according to  the method advocated by the ILO Administrative 
Tribunal. 
Recommendation from my po int of view still open. 
133.  This recommendation is still an open issue. In spite of activities undertaken by the WTO 
Secretariat, the process of reimbursement is still far from satisfactory. WT/BFA/W/368 
- 30 - 
  Conclusion 
134.  I appreciate the actions taken. Due to the fact  that implementation has not been finished, I 
defined a recommendation in the report on the financial statements 2014 and I will monitor further activities and developments. 
6.3  IPSAS-compliant WTO financial statements 
FS 2014 are not IPSAS-compliant due to not-consolidating ITC. 135.  Recommendation: Adjust the financial statements of the ITC in order to bring them into line 
with the WTO's accounting standards, use the equity method in reporting the ITC and present all 
the information required under the standards. 
The Secretariat analysed the situation. 136.  This recommendation is still an open issue. WT O Secretariat analysed the situation and came 
to the result, that accounting treatment by WTO is correct and IPSAS-compliant. 
I disagree. 137.  From my point of view, the financial statem ents 2014 of WTO still are not IPSAS-compliant 
as regards the ITC issue. Therefore I placed a reservation in my Audit Opinion 2014 and defined 
some recommendations. 
Conclusion 
138.  Recommendation still open. 
7  ACKNOWLEDGEMENT 
I am grateful for the support received during the audit. 139.  I wish to record my appreciation for the cooperation and assistance extended by the 
Director-General, the management and staff of the WTO. I am very grateful for their assistance 
during the entire external audit process  WT/BFA/W/368 
- 31 - 
  LIST OF ABBREVIATIONS AND ACRONYMS 
ASHI    After Service Health Insurance (benefits) 
CHF    Swiss Francs COBIT   Control Objectives for Information and Related Technology 
DDG    Deputy Director-General 
DGO    Office of the Director-General EUR    Euro 
GATT    General Agreement on Tariffs and Trade 
GBP    Great Britain Pound HRD    Human Resources Division IAS    International Accounting Standards 
IFAC    International Federation of Accountants 
ILO    International Labour Organization INTOSAI   International Organization of Supreme Audit Institutions 
IPSAS    International Public Sector Accounting Standards 
ISA    International Standards on Auditing ISACA   Information Systems Audit and Control Association 
ISMS    Information Security Management System 
ISSAI    International Standards for Supreme Audit Institutions IT    Information Technology ITC    International Trade Centre 
ITIL    IT Infrastructure Library 
ITSC    IT Steering Committee ITSD    Information Technology Solutions Division 
ITSP    Information Technology Security Policy 
LAN    Local Area Network NBV    Net Book Value 
OIA    Office of Internal Audit 
PM    Procurement Manual PMBoK® Guide   Project Management Body of Knowledge-Guide PMI    Project Management Institute 
UN    United Nations 
US    United States USD    United States Dollar 
VAT    Value Added Tax 
WCF     Working Capital Fund WiP    Work in Progress 
WTO    World Trade Organization 
   
  WT/BFA/W/368  
- 32 - ANNEX 
 
List of Recommendations 
Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Uncollectible Contributions  3.2/2014 Concerning to Regulation 14 in the WTO Financial Regulations 
Members and Observers with arrears shall be subject to 
Administrative Measures. Furthermore, there might be (inactive) Members without a payment plan but with long-term outstanding 
contributions (e.g. states no longer in existence). Due to IPSAS, 
contributions uncollectible shall be completely written off. This is not a standard practice within WTO.  
I recommend developing a practice or procedure and coming to a 
decision about how to deal with uncollectible contributions (e.g. in the case of states no longer in existence such as Yugoslavia). The Secretariat will assess the 
feasibility of the write off of 
uncollectable contributions and take proper action where possible. 
 Ongoing 
Accounting 
transactions 
foreign currencies 3.3.1/2014 WTO uses the United Nations Operational Exchange Rate for 
accounting transactions in foreign currencies. There is no official 
decision or document supporting this practice. 
 
I recommended that the Secretariat ask for an authorization and an 
official decision to use UN Operat ional Exchange Rate as official 
accounting rate for WTO transactions.  The Secretariat accepted the 
recommendation and presented 
during our audit a memorandum 
concerning this topic signed by the 
DDG. Done 
Recoverable 
US Taxes 3.3.1/2014 Other receivables include recoverable taxes, e.g. from the 
United States (US) and Switzerlan d. Staff members of WTO, like 
those of other international organizations are exempt from income 
tax. Nevertheless, the US requires its citizens and residents to pay tax worldwide. The WTO pays estimated tax payments in advance 
and asks for a reimbursement from the US Government based on an 
agreement between WTO and US of 22 December 2000.  
I recommend, just like my pred ecessor the years before, that 
efforts be continued to accelerate the refunding procedure and to negotiate and agree with the US Government on a similar reimbursement method based on the ILO approach. The Secretariat will continue to 
pursue efforts to accelerate the 
refunding procedure from the 
US Government. Ongoing   
  WT/BFA/W/368  
- 33 - Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Short-term 
employee 
benefits 3.3.1/2014 I requested respectively suggested several adjustments regarding 
the figures, phrases and presentation in the tables of Note 14. In 
particular, this pertained to updated calculation bases and the 
clarity of descriptions of provisions concerning short-term employee 
benefits.  The Secretariat accepted the 
recommendation and will follow my 
suggestions. Done 
Staff 
expenditures 3.3.2/2014 For improving transparency I recommended that more explanations 
and more details on expenses be given in Note 19, especially on staff expenditures, e.g. a table with details to the different types of 
staff expenditures. The Secretariat accepted the 
recommendation and implemented Table 62 in the report with details 
concerning staff expenditures 
including trust funds. Done 
Temporary 
assistance 3.3.2/2014 As I did for staff expenditures, I recommend giving more details 
concerning this item in Note 19. The Secretariat accepted the 
recommendation and implemented 
Table 63 in the report with details 
concerning temporary assistance 
including trust funds. Done 
ITC consolidation 3.3.2/2014 The ITC is a joint technical cooperation agency of the UN and WTO. 
Originally established in 1964 by the General Agreement on Tariffs 
and Trade (GATT), ITC has operated since 1968 under the joint 
aegis of GATT and the UN. It is operated jointly (as outlined in the financial statements of WTO) and therefore - based on IPSAS 8 - a jointly controlled entity. 
WTO is documenting the above mentioned payment to ITC among 
expenses within the statement of financial performance and is not consolidating ITC. According to IPSAS 8 ITC is legally a jointly 
controlled entity; important is just the ability, not the de facto 
control; therefore WTO has to consolidate ITC. 
Even if WTO might actually have only limited or no control, the legal 
situation still defines ITC as a jointly controlled entity, there is no 
proof or document stating any other fact. I recommend that WTO negotiate with ITC or with the UN and clarify the legal situation, especially concerning control. If there were a new contract 
documenting that ITC is just a grant recipient without any control 
from WTO, this reservation could be removed and WTO's financial statements would be completely in line with IPSAS. The Secretariat will study the legal 
framework with ITC in order to 
clarify the legal nature of the 
partnership. Ongoing   
  WT/BFA/W/368  
- 34 - Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Procurement 
Planning 4.1/2014 The WTO Secretariat has to ensure that the divisions define their 
needs on a reliable basis before divisional budgets are allocated. I 
recommend that WTO specify the procedures for needs assessment 
and the requirements of procurement planning. To enforce the 
compliance with the regulations and to ensure coherence between 
all divisional practices I recommend that WTO define clear 
responsibilities and establish high level managerial approval of the 
Procurement Plans. The Secretariat, as of 
January 2015, has requested that 
all Procurement Plans (PP) be 
briefly presented by the Directors 
to the Contracts Committee (CC) 
Members during the CC session. 
A notion of risk and impact in the 
PP has been included to help the 
Procurement Section to better 
understand the dimensions of the 
various procurement projects to be 
implement. The Secretariat will 
continue to pursue efforts in having 
the PP presented earlier in the year 
to enhance acquisition planning in 
a more timely and efficient 
manner. Ongoing 
Requisition of 
consulting 
services  4.1/2014 To minimise risks of waste, impropriety and fraud in connection with 
the requisitioning of consulting services, I recommend that the 
WTO Secretariat strengthen its internal coordination and control. The Secretariat should explore ways to support the control-mechanisms by an automated comparison of data. The Secretariat will assess the 
feasibility of the suggested 
indications. Ongoing 
Amendments to 
Contracts  4.1/2014 I recommend to the Secretariat implementing procedures to ensure 
that requesting units always have to involve the Procurement 
Section in advance before they accept modifications to the Purchase 
Order, even more so if these modifications result in price 
adjustments. To guarantee sound management of the WTO budget, 
such modifications have to be subject to prior identification and 
availability of sufficient funds in advance. I also recommend 
establishing an automated notification to the Procurement Section if 
the amount of the purchase order deviates from the amount 
requested in the invoice. The Secretariat accepts the 
recommendation and will follow the 
suggested indications. Ongoing   
  WT/BFA/W/368  
- 35 - Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Contract 
Management 4.1/2014 I recommend developing a procedure to ensure appropriate 
documentation and safeguard availability, reliability and integrity of 
information and records on all procurements. I also recommend evaluating the organizational links between the procurement section 
and the requesting divisions. In a ddition, it might prove appropriate 
to highlight the importance of sound contract management and transparent documentation to the staff members of the Secretariat. The Secretariat takes note of the 
recommendation and will follow the 
suggested indications. Ongoing 
Adoption of IT 
standards 4.2/2014 I recommend to the Secretariat applying international standards 
and best practices for the IT environment in combination with the 
establishment of its IT policy framework (see above). In doing so, 
the Secretariat should consider its individual characteristics such as 
its size and its tasks and customize the suitable standards according 
to its requirements. Only in cases the Secretariat's special 
requirements justify an exception or extension, it may define and 
document these special guidelines for itself. Depending on their 
importance and character, different standards can be defined to be 
used obligatorily or voluntarily. However some substantial elements 
should be implemented as a minimum to get an appropriate level of 
IT governance maturity. These standards should cover the areas 
mentioned above (IT governance, IT service management, IT 
project management and information security management) and 
may also be extended to cover efficiency issues and compatibility 
requirements of applications and databases. Adherence to these 
standards should be monitored in an appropriate manner. WTO agreed that Standards need 
to be applied. To support ITSD 
Management the company 
"Info-Tech" was hired 
(in Jan 2015…) as IT Advisor. ITSD 
already started running a survey 
within the IT-Management team. 
This survey collects both the 
maturity level and the criticality of 
the process for WTO Secretariat. Ongoing   
  WT/BFA/W/368  
- 36 - Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Business 
strategy, IT 
Strategy 4.2/2014 I encourage the Secretariat to define and document a general 
business strategy with an adequate level of detail not only but also 
as a requirement description in regard to a needs-based IT environment. I recommend to the Secretariat setting up an 
appropriate IT policy framework that should be aligned with the 
business strategy.  
The framework should fulfil the requirements mentioned before as a 
minimum standard containing documentation of requirement analyses, assessment of existing systems, current procedures, planning, strategies and also future targets. The existing documents 
could be used as input when they have been updated. The 
initiatives and activities already in place to improve elements of the Secretariat's IT policy could be integrated in the preferably 
overarching approach. Management should ensure that the 
components of this framework are periodically updated and communicated to all relevant parties across the Secretariat. It 
should also monitor their implementation and evaluate the results. WTO agreed with the need to 
describe the existing structure, 
procedures and systems, the need to review and document business 
requirements and evaluate various 
feasible solutions and the need to have a long term IT Strategy. 
 
These items are being worked upon with a defined approach, driving two specific efforts: 
(1) Development of enterprise 
architecture; (2) Development of the 2019 IT Strategy. Ongoing 
IT Security 4.2/2014 I acknowledge the Secretariats efforts to improve WTO's IT Security 
in order to reduce IT environmental risk exposure. I strongly 
recommend to the Secretariat following the recommendations of the 
IT Security assessment as soon as possible. Without interfering with 
the ongoing audit of the OIA on this matter I will continue to 
monitor the improvement of WTO's IT Security.   
 
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