RESTRICTED  
  
WT/BFA/164/Rev.1  
 
18 July 2017 
(17-3903) Page 1/6 
Committee on Budge t, Finance and Administration    
 
REPORT OF THE MEETIN G HELD ON 22 JUNE  2017  
Revision  
The Committee on Budget, Finance and Administration (CBFA) met on 22 June  2017 under the 
Chairmanship of Ambassador  Peter BRŇO  (Slovak Rep ublic). The Terms of Reference and 
composition of the Committee ar e set out in document WT/L/44/REV.1.  The Agenda is contained in 
document WTO/AIR/BFA/ 18. The agenda was formally adopted . 
1  REPORT OF THE INDEPE NDENT EXTERNAL AUDIT OR ON THE AUDIT OF T HE 
FINANCIAL STATEMENTS  OF THE WORLD TRADE O RGANIZATION (WTO) FO R THE YEAR  
ENDED 31 DECEMBER 20 16 – WT/BFA/W/421 
1.1.  The representatives of the German Supreme Audit Institution (the Auditor) expressed their 
gratitude for the collaboration of the Secretariat during the audit. The Auditor said that the 2016 
report was focused on the a udit of the WTO 2016 financial statements and performance audit s 
regarding the WTO's information confidentiality in general ; the organization of the Ministerial 
Conferences ; and termination indemnities.  
1.2.  The Auditor highlighted some of his key findings and associated recommendations. The 
Auditor concluded by informing the Committee that he had placed an unqualified audit opinion 
both on the financial statements of the WTO and the financial statements of the WTO Pension Plan 
for the year 2016.  
1.3.  Some Members th anked the Auditors for their comprehensive report and acknowledged  the 
cooperation between the External Auditors and the Secretariat. On e Member then e nquired about 
the interaction between the External Auditors and the Office of Internal Oversight.   On thi s matter, 
the External Auditor stated that the External Auditor and the Office of Internal Oversight 
cooperated well and had met often during the visits of the External Auditor to Geneva  and shared 
the results  of their findings , reports and implementation of the recommendations. The Head of the 
Office of Internal Oversight (OIO) reiterated this and added that the two parties shared their work 
plans and audit coverage in order to ensure that there is no overlap .  
1.4.  Another Member wished to know what is carried  out to detect cases of fraud  within the 
Secretariat. The Auditor answered that a control assessment was part of the financial and 
performance audit s to assess whether the rules and regulations within WTO were sufficient to 
prevent fraud. The Head of the O IO informed the meeting that the OIO  had prepared an anti -fraud 
policy and conducted fraud detection training . He also stated that he was conducting preventive 
and detecting measures within the Organization and concluded that he will be presenting his 
comp lete report at the next CBFA meeting.  
1.5.  The same Member stated that she looked forward to receiving additional information on 
progress made , regarding for instance Confidentiality of Information , at a later stage.  
1.6.  The Chairman thanked the External Auditors for their work and presentation. The Committee 
took note of the report and proposed the following recommendation to the General Council:  
1.7.  The Committee recommends that the General Council approve the transfers 
between budgetary sections as outlined in parag raphs 2.31 and 2.36 of document WT/BFA/164/Rev.1  
 
- 2 - 
 
  WT/BFA/W/419. The Committee further recommends that the General Council approve 
the WTO Audited Financial Statements for the year ended 31st December 2016.  
2  WORLD TRADE ORGANIZA TION - 2016 FINANCIAL PERFO RMANCE REPORT  – 
WT/B FA/W/4 19 
2.1.  Officials from the Secretariat presented the financial performance report for the year 2016. 
The 2016 budget amounted to MCHF  197.2 and the budgetary expenditure to MCHF 196.1, 
displaying a budgetary saving of MCHF  1. In this respect, it was under lined that that budgetary 
saving was only considered as an intermediary result, with the financial result being the final result 
of the exercise due to the International Public Sector Accounting Standards (IPSAS) 
implementation, underlining that other elem ents must be taken into consideration to reach a 
financial result.  
2.2.  The Official stated that the expenditure as at 31 December 2016 was on track with an overall 
expenditure rate of 99% or CHF 196 million. The Official touched on the financial impact of the  
negative interest was limited to CHF  130,000 subsequent to intensive negotiations with the WTO 's 
main banks. Without the special conditions negotiated by the WTO, the financial impact could have 
been around CHF 500,000.  
2.3.  The Official explained the distinct ion between the budgetary surplus (MCHF 1) and the 
negative financial result  (a deficit of  MCHF 28.2), underlining  that the latter include d some 
adjustments required in accord ance with  IPSAS e.g. depreciation, ASHI benefits actuarial 
valuation, loan reimbu rsement and provision for  contributions in arrears.  The Off icial explained 
that the drivers of the large variance in the 2015 and 2016 financial result  i.e. a deficit of MCHF6 
and MCHF28 were: a decrease of 0.5% in the discount rate  applied to the Pension and ASHI costs; 
a decrease of 1.25% of the discount rate applied to the expected return of Pension asset s; and a 
lower B udgetary Surplus in 2016 relative to 2015 . 
2.4.  The Official highlighted that the procedure for determining the discount rate used for 
calcul ating actuarial liabilities for the pension plan and After Service Health Insurance was revised 
in 2015 in order to reduce the high volatility noted in previous years. The new approach was based 
on the rate of the Swiss Chamber of Pension Plan Experts. Thi s employs a combination of a 
smoothed average over some years and the spot rate, whereas the previous methodology involved 
using only the spot rate.  
2.5.  The Auditor had expressed an "un qualified opinion" on the 2016 financial s tatements.  
2.6.  The Official stated th at the Auditor had made 44 recommendations  in the last three  years . Of 
these, 24 have been implemented and classified as closed. 7 recommendations from the audit s in 
2015 and 2016 were still under implementati on and, therefore clas sified as ongoing. During the 
2017 audit, 13 new recommendations were issued and classified as ongoing.  As a result, the 
External  
2.7.  Responding to a question pertaining to the ageing of receivables, an Official confirmed that 
this is based on the outstanding for all and that arrears  in contribution spanning more than 3 years 
were provisioned for .  
2.8.  One Member inquired whether the dependenc y allowance adjustments were reflected in these 
2016 financial statements. The Secretariat answered in the affirmative saying that the amount was 
reflected as a provision in the accounts.  
2.9.  Another Member referred to para 2.55 on page 29 which indicates that gender programs 
which addressed leadership training and coaching for female, staff, especially  in the area of career 
development were offered for t he first time in 2016. The Member welcomed this and wondered 
about experiences gained from the new program s. With reference to para 4.7 on page 33, the 
same Member emphasized the importance her delegation attaches to results based management 
in the context  of the WTO technical assistance plan and its implementation. On dispute settlement, 
with specific reference to paragraph 2.43 on page 25, the Member encouraged the Secretariat to 
in future exclude forecasts from financial performance reports and instead i nclude information 
about possible future trends in budget proposals.  WT/BFA/164/Rev.1  
 
- 3 - 
 
  2.10.   The Committee  took note of the report.  
3  UPDATE FROM THE WORK ING GROUP ON THE ASH I FUND  
3.1.  The Chairwoman of the Working Group on the ASHI Fund updated the Committee on its 
ongoing work. She stated that the Working  Group has intensified its work  and had met  on 29 May, 
9 June and 20 June. She stated that t he Working Group had made further progress in narrowing 
down and more clearly articulating the possible options for the governance and admini strative 
structures  were the Working Group to decide to set up a Fund. These options will be reconsidered  
following more clarity on the details of the funding, including a possible size of the Fund, as well as 
the funding sources. At the last meeting on 20  June, the Working Group launched  its deliberations 
on funding  the Fund . Then, t he Chairwoman informed the Committee o f a presentation given by 
the Secretariat to recapitulate the assumptions and projections with regard to the growing ASHI 
liability and th e corresponding impact on the WTO budget.  
3.2.  To conclude, the Chairwoman  informed the Committee that though the Working Group had 
intensified its work significantly, it was not yet in at a stage where it could  make a 
recommendation to the CBFA. She emphasize d that the Working Group remained prudent and 
would rather work through the issues thoroughly and carefully. The Chairwoman requested that 
the CBFA extend the deadline for submission of its recommendations to  the CBFA to October 
2017.   
3.3.  The Committee took note of the report  and approved the change in the deadline . 
4  REVIEW OF THE ADJUST MENT OF THE WTO DEPE NDENCY ALLOWANCES – 
WT/BFA/W/416/REV.2  
4.1.  The Chairman  of the Committee evoked the letter  on this subject that he sent to all 
delegations and made reference to  the consultations that that had taken place between the 
Secretariat and the Members on this subject . The Chair recapitulated the changes that were being 
proposed, that is: modification of  paragraph 8 , deletion of  paragraph 15; and the substitution of 
the words "takes note" with  "recog nizes" in paragraph  17(ii)  (a). As the recommendation proposed 
by the Secretariat seemed to be acceptable  to the Membership , the Chairman gavelled it.  
4.2.  Immediately after the gavel fell, a Member asked for the floor and  contest ed the 
recommendation, declaring that his delegation could not take a position without understand ing the 
financial implications that this decision would have over the long term. He stated that his 
delegation wanted to defer any recommendation until such ti me as the 2018 -19 budget 
deliberations took place .  
4.3.  Several members expressed appreciation of the fact that the revised paper reflected key 
proposals that Members of the Committee had made over the months and underlined that they 
were supportive of the rec ommendation proposed for the General Council . 
4.4.  A number of Members stated that the decisions for the dependency allowances  were specific 
to 2016 and 2017 and that during earlier deliberations of this subject, it was acknowledged that 
the methodology for det ermining dependency allowances is too complex and thus needs to be 
revised with a view to implementing a new methodology with effect from 1 January 2018.   As a 
result, the CBFA instructs the Secretariat to put forward proposals for a new methodology, at 
paragraph 17(i) of the paper. The discussions of the proposed new methodology and the 2018 -19 
budget proposal will take place concurrently.  
4.5.  The DDG in charge of Finance stated that the Secretariat took cognisance of the concerned 
Member's views and noted tha t the authorities in the Member's Capital have to consider  the issue. 
He reiterated that t he recommendation is for  2016 and 2017  and that what is to take place in 
2018 and 2019 is in the hands  of Members . The Secretariat  will put forward proposals for the 
Committee's consideration .  
4.6.  A Member  thank ed the Secretariat and in particular the Deputy Director  General for the 
extensive consultations that he ha d held on this topic. He stated that his delegation support s the 
version that was under discussion during t he meeting, with the changes presented by the WT/BFA/164/Rev.1  
 
- 4 - 
 
  Chairman. He said that the path had not been easy and that the recommendations that were being 
proposed are  balanced and stem the latent legal risks . 
4.7.  A Member expressed concern that a decision would not be take n during this meeting.  He 
emphasized that closing this chapter is  important since everything that the Members had been 
discussing and had suggested had been addressed by the Secretariat to come up with this solution 
to have a text that could be submitted to the  General Council . He noted that the CBFA would be 
working on a  new methodology. A Member opined that the experience that the Committee and the 
Secretariat had regarding this subject will prompt some reflection about best practices with respect 
to transparent communication between the Secretariat and the CBFA in respect of human 
resources matters.  
4.8.  All Members that took the floor, except for one Member, expressed their support for the 
recommendations proposed for the General Council as outlined in the  revised version of the 
background paper and with the modifications presented by the Chair t hrough his letter  and 
expressed the hope that a consensus  on the recommendations would be taken ahead of the next 
General Council meeting.  
4.9.  Members further reemphasi zed the instruction to the Secretariat to propose a new 
methodology with  a view to it being implemented in 2018 . 
4.10.   A Member reminded the Committee that there are sufficient funds to meet the 
commitments for 2016 and 2017, from the respective years' budgets. He stated that if a decision 
was unduly delayed, the problem  would  continue  and that the organization might face some future 
legal problem from the staff of the Secretariat. He then asked the Member that was not yet in a 
position to support the recommendat ions  to reconsider and accompany the rest of the Members in 
a consensus so that discussions could then progress to work on the future methodology for the 
years 2018 and onwards.  
4.11.   The Chair suggested to adjourn the meeting for 15 minutes so that consultati ons cold be 
taken with the Member to hash out the issues with the aspiration that the Member could join the 
rest of the membe rs in arriving at a consensus. The Member stated that 15 minutes would not be 
sufficient since his delegation still needed to consu lt with its capital . 
4.12.   The Chair concluded by stating that he would engage the Member through a written 
procedure and in the event that the Member opted to join the consensus at a later stage there 
would not be any need to have another CBFA meeting to discus s this topic and that he would 
submit the recommendations to the General Council.  
4.13.   Subsequent to the circulation of the CBFA Report to the General Council of the 26 July, the 
Member that had requested additional time communicated that his delegation would j oin the 
consensus. In view of this, the CBFA makes the following recommendation to the General Council:  
4.14.   The committee  on budget, finance and administration recommends that, in view of 
staff regulation 6.5 and annex 2 of the wto staff rules, the general cou ncil: 
a. recognizes that for the years 2011 to 2015 no provisional application of 
adjustments of the dependency allowances was made and no requests for 
adjustments of the dependency allowances for these years were presented by 
the Secretariat ; 
b. in this context  recalls that staff hired before 1 January 2012 have benefited 
from a salary freeze since 2012 ;  
c. approves adjustments to the dependency allowances as of 1 January 2016 and 
1 January 2017 respectively, as reflected in the table  below :  WT/BFA/164/Rev.1  
 
- 5 - 
 
  Allowance  Amount as at 
1 January 
2009 
(in CHF)  Amount as of 
1 January  2016 
(in CHF)  Amount as of 
1 January 2017  
(in CHF)  
(a) Spouse allowance (Staff Rule 106.14 (a))  7,788  10,212  10,188  
(b) Child allowance (Staff Rule 106.14 (b) 
and (c))  
(i) for dependent child  
(ii) for the first de pendent child if the 
staff member is without spouse   
5,160  
12,240   
7,368  
15,888  
 7,368  
15,900  
 
(c) Secondary dependant’s allowance (Staff 
Rule 106.14 (d))   
2,712  3,798   
3,805  
 
and: 
 
d. hereby decides to close its consideration of the adjustment of the depe ndency 
allowances for the years 2011 to 2017 . 
5  WORLD TRADE ORGANIZA TION PENSION PLAN RE PORT  – WT/BFA/W/420  
5.1.  An Official from the Secretariat updated the Committee on the process for the selection of 
members of the WTOPP Management Board selected from the Sec retariat staff  and that the new 3 
year terms of members of the management board would commence in September 2017.  
5.2.  The Official then reported on the WTO Pension Plan Management Board ( Management Board ) 
activities in 2016. There had been 5  formal meetings in 2016 and three since the beginning of 
2017. The Official stated that the Management Board voted to align the definition of spouse used 
by the Pension Plan with that used by the WTO , recogniz ing registered domestic partnerships.  
5.3.  The Management Board ident ified two areas that need to be monitored from now until the 
next triennial valuation report in 2020 . Firstly, the low interest rates and economic uncertainty 
could make it difficult to achieve target investment returns. Second ly, changes in staffing and 
recruitment policies could have an impact on the actuarial position of the Plan. He then 
emphasized that a structural decrease in the active staff participating in the Plan would eventually 
lead to an actuarial deficit that would have to be addressed.  The a ctuarial report would be 
submitted to the CBFA after the Summer break.  
5.4.  Subsequently, t he Official stated  that in spite of economic uncertainty and low returns for  
many asset classes, the Pl an had reported another year of returns that exceeded the target, in 
2016 (6.8% versus  the 3.3% target. He stated that the returns for the year to 31st May 2017  were 
4.8% . 
5.5.  In conclusion, the Official reported that the Auditors had provided an unqualified opinion on 
the Pension Plan 2016  financial statements.  He concluded by saying that the Annual WTOPP Report 
along with the Auditor Report will be presented to the General Council at its meeting in July.  
5.6.  The CBFA  Chairman informed the Committee that a communication was sent on 8th July 
inviting Members to express interest to  serve on the WTOPP Management Board before close of 
business on 19th June. He updated the Committee about  the consultations that he had conducted  
with Members , on the request of the Chairman of the General Council, in a bid  to identify 
candidates  in a tra nsparent manner . Three  candidates had expressed interest and since there are 
three  slots available to Members, the Chair stated that he would be submitting the  names  for 
consideration at the July meeting of the General Council.  
5.7.  The Chairman concluded by s aying that he had met a good pool of candidates and in that 
respect, reassured the Committee that there was a significant choice of qualified candidates. He WT/BFA/164/Rev.1  
 
- 6 - 
 
  invited Members who wished to consult with him further on this to arrange a meeting through the 
Secretary of the WTO Pension.  
5.8.  The Committee  took note of the report.  
 
__________