RESTRICTED  
 
WT/L/953  
3 July 2015  
(15-3422)  Page: 1/10  
 
  REPORT OF THE INDEPENDENT EXTERNAL AU DITOR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION PENSION PLAN (WTOPP) 
FOR THE YEAR ENDED 31 DECEMBER 2014 
1  EXECUTIVE SUMMARY .................................................................................................. 2  
2  SCOPE AND APPROACH  OF THE AUDIT ......................................................................... 3  
2.1  Scope of  the Audit ...................................................................................................... 3 
2.2  Audit Objectiv e and Approach....................................................................................... 3  
2.3  Audit Conclusion ......................................................................................................... 3  
3  COMMENTS / AUDIT FINDINGS .................................................................................... 4  
3.1  General Overview of the Plan's financial situation ............................................................ 4  
3.2  Value of Pens ion Commit ments .................................................................................... 5  
3.3  Reserve / provision for operatin g cost s .......................................................................... 6  
3.4  Reimbursement of  withholding tax ................................................................................ 7  
3.5  Investme nt Policy ....................................................................................................... 8 
3.6  Internal Au dit's comm ent ............................................................................................ 9  
4  ACKNOWLEDGEMENT ................................................................................................... 9  
ANNEX ......................................................................................................................... .. 10 
 WT/L/953 
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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") Pension Plan for the financial period from 1 January to 31 December 2014. 
Responsibility of Management 
2.  The Management Board of the WTO Pension Plan is responsible for preparing the financial 
statements in accordance with the Financial Regulations of the Plan. 
Responsibility of the External Auditor 
3.  My responsibility is to express an opinion on these financial statements based on my audit. 
Scope of the audit 
4.  The audit included the examination 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 Management Board. 
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. 
The financial statements present fairly the financial position 
6.  As a result of my audit, I am of the opinion that the financial statements present fairly, in all 
material respects, the financial position as at 31 December 2014. 
I placed an unqualified opinion on the Financial Statements 7.  The audit revealed no weaknesses or errors which I considered material to the accuracy, 
completeness and validity of the financial statements as a whole. I have placed an unqualified 
audit opinion on the Financial Statements of WT O's Pension Plan for the year ended 31 December 
2014. 
Areas covered by this report 
8.  My report includes observations and recomme ndations intended to contribute to the 
improvement of financial management. For 2014, my audit work has mainly covered the areas 
described in the following paragraphs. 
Acknowledgement  9.  I
 wish to convey my appreciation for the cooperation and assistance extended by the 
Management Board, management and staff of th e Secretariat. I am very grateful for their 
assistance during the entire external audit process. WT/L/953 
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  2  SCOPE AND APPROACH OF THE AUDIT 
2.1  Scope of the Audit 
Principles governing my audit 10.  My staff and I have audited the financial st atements of the WTO's Pension Plan for the 
financial period from 1 January to 31 December 2014. We also examined the related financial 
accounts and transactions. 
Responsibility of Management 
11.  The Management Board of the WTO's Pension Plan is responsible for the preparation and fair 
presentation of these financial statements in accordance with the Financial Regulations of the Plan, and with such internal controls as management determines are necessary to enable the 
preparation of financial statements that are free from material misstatement, whether due to fraud 
or error. 
Responsibility of the External Auditor 12.  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 
13.  The financial statements of the WTO's Pension Plan, together with my audit report and the 
audit opinion, have been discussed with the Management Board.  It has taken note of the contents of my report. 
2.2  Audit Objective and Approach 
Objective of financial audit: Forming the audit opinion 14.  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; whether expenses were 
properly categorized and recorded in accordance with Financial Regulations; and whether the 
financial statements presented fairly the financial position as at 31 December 2014. 
Testing convinced me of the correct ness of the financial statements 
15.  My audit opinion is based on the 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's 
Pension Plan. 
2.3  Audit Conclusion 
I found no material weaknesses. I have plac ed an unqualified opinion on the Financial 
Statements 
16.  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 course of the audit. I have placed an unqualified audit 
opinion on the Financial Statements of WTO's Pension Plan for the year ended 31 December 2014. WT/L/953 
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  3  COMMENTS / AUDIT FINDINGS 
3.1  General Overview of the Plan's financial situation 
The excess of income over expenditure as at 31 December 2014 is CHF 46.8 million 
17.  The Income and Expenditure Statement shows a su rplus (excess of income over expenditure) 
of CHF 46.8 million as at 31 December 2014 (2013: CHF 43.8 million), an increase of 
approximately CHF 3 million. This change is basically a result of the increase in profit on securities 
(+ CHF 2.7 million) and the decrease in lump sum payments1 (- CHF 2.6 million). These effects 
were only partly compensated by an increase in  periodic benefits (+ CHF 2.0 million) and a 
decrease in contributions (- CHF 0.8 million). The benefits paid out in 2014 (CHF 17.9 million) were fully covered by investment income and contributions (CHF 66.5 million, altogether). 
Admin expenses increased to CHF 764,541  
18.  Investment and other administrative expenses increased from CHF 661,068 to CHF 764,541. 
Securities increased by CHF 40.9 million 19.  The balance sheet total increased from CHF 440.3 million (as at 31 December 2013) to CHF 
486.7 million (as at 31 December 2014) which is main ly due to the increase in securities by CHF 
40.9 million. 
As at 31 December 2014 the Pl an served 261 beneficiaries 
20.  As at 31 December 2014, the Plan served 261 beneficiaries and accounted for 721 active 
participants. 
21.  These 261 beneficiaries comprise 120 retirees, 79 persons who took early retirement, 9 
beneficiaries of survivor's pensions, 20 orphans an d 18 disabled persons.  In addition, there are 15 
retirees whose deferred pensions will begin to be paid after 2014. 
I report on audit findings and recommendations 22.  In the following paragraphs, I report on au dit findings and recommendations and provide 
background information. 
Actuarial rate of return for 2014, net of inflation: 8.49 per cent 
23.  The actuarial rate of return on investment, net of inflation, (8.49 per cent) was again positive 
and, while higher than in 2013 (8.23 per cent), largely exceeds the Plan's target (3.5 per cent, net 
of inflation). 
                                               
1 This increase cannot be forese en: upon retirement, staff member s may decide to take up to a 
maximum of 33 per cent of their pension in a lump sum.  A varying number of them use this possibility each 
year. WT/L/953 
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  Table 1 – Calculation of the actuarial rate of return, net of inflation (in CHF) 
Actuarial rate of return 2012 2013 2014  
a. Value of assets as of 1 January  348,800,016 396,539,355 440,342,527 
b. Value of assets as of 31 December  396,539,355 440,342,527 486,697,204 
i. Adjusted2 Investment income  34,489,624 33,480,802 36,486,230 
Average assets = (a+b-i)/2  355,424,874 401,700,540 445,276,751 
Actuarial rate of return in nominal terms =  
i/average assets  9.70% 8.33% 8.19% 
Consumer price index for Switzerland3 -0.40% 0.10% -0.30% 
Actuarial rate of return, net of 
inflation 10.10% 8.23% 8.49% 
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
Table 2 – Trend in actuarial rates of return in nominal terms (%) 
2008 2009 2010 2011 2012 2013 2014 
-36.53% +21.29% +3.52% -1.10% +9.70% +8.33% +8.19% 
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
3.2  Value of Pension Commitments 
Balance sheet of WTOPP does not mention the value of pension commitments 
24.  The balance sheet does not mention the actuarial value of pension commitments. This would 
be an essential element for the addressees of the WTOPP financial statements (General Council; Participants) to assess the financial situation of the Pension Plan. The IPSAS-value of this liability 
(which is based on assumptions like a past key date discount rate
4) amounts to CHF 1,209.6 
million as at 31 December 2014. Thus, if this amount is not stated in the balance sheet, then it should be disclosed at least immediately below the balance sheet ñ there should be an indication 
                                               
2 Investment income according to the Income and Expenditure Statement minus management fees and 
bank charges. 
3 Rate of variation in the Consumer Price Index (CPI) for December compar ed to December of the 
previous year, as reported by the Swiss Federal Office of Statistics. 
4 1.1 per cent as at 31 December 2014 (compared to 2.6 per cent as at 31 December 2013 where the 
pension liability according to IPSAS amounted to CHF 858.7 million). WT/L/953 
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  of the value of long term pension liabilities. This figure should be explained in the notes 
(underlying assumptions, counterbalancing by future  contributions and revenue on securities etc.). 
Pension commitments amounting to CHF 1,209.6 million 25.  The financial statements of the WTO, however, show these pension commitments amounting 
to CHF 1,209.6 million as at 31 December 2014, based on an actuarial valuation according to 
IPSAS 25. 
I recommended including information abou t pension commitments in the financial 
statements  
26.  I recommended that the financial statements of the WTOPP should include the value of 
pension commitments (liability) as this is an essential element in assessing the situation of a 
pension plan. Thereupon, the WTOPP Secretariat disclosed the IPSAS-based value of liabilities.  
The WTOPP Secretariat accepted the recommendation and has amended the notes and added a 
footnote. 
3.3  Reserve / provision for operating costs 
WTOPP regulations: all expenses / elements sha ll be identified separately in the report  
27.  Separate financial statements are presented for the WTOPP in order to give the addressees 
easier information about the Plan's financial situation. Art. 5 (f) of the Regulations of the WTOPP 
states that all expenses incurred for administerin g the plan, (…) and those incurred by the WTO in 
providing facilities for and in support of the Ma nagement Board shall be borne by the Plan. Each 
element shall be separately identified in the annual report. Thus, these operating costs have to be 
fully accounted for in the financial statements of the Plan. 
In the current WTOPP balance sheet the prov ision for operating costs not yet invoiced 
by WTO is CHF 250.000 
28.  The liability side of the balance sheet shows an unchanged reserve/provision (CHF 250,000) 
for operating costs which are incurred by the WTO with regard to the Pension Plan and potentially 
invoiced to the Plan. 
Current provision is based on an interpretati on and practical handling of the Regulations 
29.  The current balance sheet value of the reserve/provision (CHF 250,000) is based on the 
interpretation and handling of the Plan's Regulati ons to the effect that the WTO decides from year 
to year whether to charge its Plan-related costs for the previous year (staff of the Secretariat, 
facilities etc.) to the Plan.  
Furthermore, the nature of chargeable operating costs is not clearly defined  
30.  Furthermore, while most operating costs in terms of Art. 5(f) is specified in detail, the costs 
borne by the WTO are not specified in the same way.  
I recommend clarifying the situation and, if necessary, specifying a procedure for 
settlement or waiver  
31.  I recommend that some further detail on the WTO costs be provided and a more up-to-date 
estimate is made. Further, I recommend that the regulations be reviewed with the intention of 
clarifying the situation and, if necessary, sp ecifying a procedure for settlement or waiver. WT/L/953 
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  3.4  Reimbursement of withholding tax 
Pension Plan requests reimbursement of dividends 32.  Dividends earned from the WTOPP's securities are subject to fiscal levies at source and the 
Plan requests their reimbursement from the tax authorities in the countries concerned because the 
WTO is exempt from tax pursuant to the 1994 Marrakesh Agreement and the 1947 Convention on 
the Privileges and Immunities of the United Nations and Specialized Agencies. 
33.  In practice, the WTOPP authorizes the banks th at are the custodians of its investments to 
obtain reimbursement of withholding taxes, but Northern Trust (as one of the custodians) has 
difficulty in obtaining reimbursement of its long-outstanding claims. However, in 2014 this 
custodian was able to gain a considerable reimbursement of about CHF 319.000 for tax withheld in 
previous years. After that, the WTOPP shows a "reserve" for potentially non-recoverable 
withholding taxes of CHF 379.000 as of 31 December 2014 (compared to CHF 698.000 as of 31 December 2013). This reserve is actually a receiv able from the view of the WTOPP, but the Plan 
decided not to merge it into the Capital position as a reimbursement of these taxes is still 
considered as potentially irrecoverable. 
34.  However, the risk of a statutory limitation period  should not put an end to attempts to recover 
debts: taxes should not be considered as time-barred, in implementation of general legal 
principles, if their reimbursement was requested wi thin the legally set time frame and if the fiscal 
service concerned is solely responsible for the failure to reimburse. 
I recommend further efforts of the Secretariat to recover debts  
35.  To improve the transparency and the completene ss of the financial statements, I keep up the 
recommendation of the previous auditors that the Secretariat make further efforts to recover the debts due corresponding to withholding tax not reim bursed by the tax authorities of the countries 
concerned.  
The WTOPP Secretariat will continue its efforts to recover withholding taxes by working with the 
WTO Missions of the countries concerned.  WT/L/953 
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  3.5  Investment Policy 
WTOPP Management Board is responsible for investments and the definition of 
investment guidelines 
36.  Due to the Rules and Regulations of the Pensio n Plan, the Management Board is responsible 
for the secure investment of all Plan assets, the formulation of investment policies after taking 
appropriate professional advice, and the appointment of investment managers to implement that policy. In 2013, the Management Board approved a consolidated set of investment guidelines to 
more precisely articulate the Plan's approach to investment. 
WTOPP is a long-term investor 37.  The WTOPP is a long-term investor because its commitments are long term and behaviour and 
decisions made with a long-term view are more likely to succeed. 
Management Board defined an investme nt policy with an asset allocation 
38.  Asset Allocation is the main source of portfolio returns. Therefore, WTOPP's Management 
Board defined and implemented an investment policy for the Plan. 
Asset allocation includes equities, bonds and real estate 
39.  The Plan's investment policy, defined in 2004 and implemented from 2005 onwards, sought to 
achieve a high net rate of return of 3.5 per cent by emphasizing equities, pegged at 70 per cent of 
the portfolio (with 10 per cent invested in emerging markets), in preference to bonds (20 per cent) 
and real estate (10 per cent).  
Allocation target: Equities 40 per cent, bonds 40 per cent and real estate other 20 per 
cent  
40.  In 2008, the Plan's Management Board adjusted th is policy by decreasing the share of equities 
in order to limit losses on those investments. On 14 October 2009, the Management Board confirmed this approach by adopting the following new portfolio breakdown, while at the same 
time maintaining the target of 3.5 per cent net rate of return, not including inflation: 
a. Equities: 40 per cent (of which 32 per cent in developed market and 8 per cent in 
emerging market securities);  
b. Bonds: 40 per cent;  
c. Real estate: 20 per cent. 
Allocation as of 31 December 2014: equities  42.1 per cent, bonds 36.9 per cent and real 
estate 15.7 per cent 
41.  The asset allocation as of 31 December 2014 of the Plan's portfolio is close to the targets: 
42.1 per cent in equities (of which 33.3 per cent in developed market and 8.8 per cent in emerging market), 36.9 per cent in bonds (of which 31.2 per cent in Swiss bonds and 5.7 per cent in other 
European bonds); 15.7 per cent in real estate, and 5.3 per cent of liquidity. WT/L/953 
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  Table 3 – Trend in the breakdown of assets from 2013 to 2014 and investment 
performance (in nominal terms) of the cl asses of assets in 2014 (In CHF millions) 
Assets  Value of assets  
end of 2013  
(CHF millions)  Value of assets  
end of 2014  
(CHF millions)  Asset allocation 
(strategy)  2014 
performance  
(in nominal terms 
over 1 year)  
Shares  182.6 (41.6%)  204.9 (42.1%)  40%  14.4%  
Developed markets 149.4 (34.0%) 162.1 (33.3%) 32%  13.9%  
Emerging markets 33.2 (7.6%) 42.8 (8.8%) 8% 15.6%  
Total bonds  166.3 (37.9 %)  179.3 (39.2%)  40%  3.8%  
Bonds in  117.6 (26.8%)  151.5 (31.2%)  34%   
Short-term 
S48.9 (11.1%) 49.0 (10.1%) 12%   
High return bonds 
f12.8 (2.9%) -   
Emerging country 
bd39.0 (8.9%) 67.1 (13.8%) 14%  6.9%  
Loan funds  16.9 (3.9%) 35.4 (7.3%) 8% 1.1%  
Bonds in euros  48.7 (11.1%)  27.8 (5.7%)  6% 8.0%  
Government bonds 26.7 (6.1%) 27.8 (5.7%) 6% 8.0%  
High return bonds 22.0 (5.0%) -   
Real estate  74.6 (17.0%)  76.4 (15.7%)  20%  4.2%  
Cash  15.9 (3.6%)  25.7 (5.3%)  0%  
Total  439.5 (100%)  486.2 (100%)  8.1%   
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
3.6  Internal Audit's comment 
No Internal Audit's comments in 2014 
42.  The WTO's internal audit service has not yet conducted an audit of the WTOPP.  
4  ACKNOWLEDGEMENT  
I am grateful for the support received during the audit  
43.  I wish to record my appreciation for the cooperation and assistance extended by the 
Secretariat of the Pension Plan, the management and staff of the WTO. I am very grateful for their assistance during the entire external audit process.   
  WT/L/953 
- 10 - ANNEX 
 
List of Recommendations 
Aspect Reference: 
Chapter, Year Recommendation WTO's 
Comment/Implementation Status 
Value of pension commitments  3.2/2014 I recommend that the financial statements of the WTOPP should 
include the value of pension commitments (liabilities) as this is an 
essential element in assessing the situation of a pension plan. The WTOPP Secretariat accepted 
the recommendation and has 
amended the notes and added a footnote. Done 
Reserve / 
provision for 
operating costs 3.3/2014 I recommend that some further detail on the WTO costs be provided 
and a more up-to-date estimate is made. Further I recommend that 
the regulations be reviewed with the intention of clarifying the 
situation and, if necessary, specifying a procedure for settlement or 
waiver. The WTOPP Secretariat stated that 
they will address these 
recommendations at Management 
Board level and the decision will be 
implemented for next year's 
financial statements. Ongoing 
Reimbursement 
of withholding tax 3.4/2014 I keep up the recommendation of the previous auditors that the 
Secretariat should make further efforts to recover the debts due corresponding to withholding tax not reimbursed by the tax 
authorities of the countries concerned.  The WTOPP Secretariat will 
continue its efforts to recover withholding taxes by working with 
the WTO Missions of the countries 
concerned. Ongoing 
 
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