RESTRICTED  
 
WT/BFA/W/303  
25 June 2013  
(13-3307)  Page: 1/41  
  
 
  LETTER OF FINAL OBSERVATIONS ON THE FINANCIAL STATEMENTS 
OF THE WORLD TRADE ORGANIZATION (WTO) 
FOR THE YEAR ENDED 31 DECEMBER 2012 
AND PERFORMANCE AUDIT 
TABLE OF CONTENTS 
 
PART I: CERTIFIED AC COUNTS FOR 2012 ........................................................................ 3  
1   OBJECTIVES AND SC OPE OF THE AUDIT ...................................................................... 3  
2   LIST OF MAIN FINDIN GS AND RECOMMENDATIONS ................................................... 3  
2.1   Main Findings ............................................................................................................ 3  
2.2   Recomme ndations  ..................................................................................................... 4  
3   OBSERVATIONS AN D RECOMMENDATIONS ................................................................. 5  
3.1   Follow-up of earl ier recommend ations .......................................................................... 5  
3.1.1   Recommendations of the external auditor ................................................................... 5  
3.1.2   Recommendations of  the internal  audit ...................................................................... 7  
3.2   Overview of the financial situation ................................................................................ 7  
3.3   Preparation for the WT O's transition to IPSAS ................................................................ 8  
3.4   Presentation of assets and liabilities  in the statement of financial position .......................... 9  
3.5   Note 14 "e mployee benefits" ...................................................................................... 10 
3.5.1   The WTO's commitments relating to pe nsions and after-servic e health insurance ............ 10 
3.5.2   Other provisions  for employee benefits ..................................................................... 11 
3.6   Note 20 "segment reporting" ...................................................................................... 12 
3.7   Note 23 "contingent assets and contingent liabilities" ..................................................... 13 
3.8   In come .................................................................................................................. . 14 
3.8.1   Statutory contribu tions by Memb er States ................................................................. 14 
3.8.2   Plans for absorption of the debt of certain Member States ............................................ 15 
3.8.3   Provisions for a rrears of cont ributions ....................................................................... 16 
3.8.4   Contributions of Observer States .............................................................................. 16 
3.8.5   Refund of tax by th e United States of America ........................................................... 17 
3.9   Advances ................................................................................................................  17 
3.10   A ssets ................................................................................................................. .. 18 
3.10.1   Intang ible assets.................................................................................................. 18 
3.10.2   Headquarters buildings ......................................................................................... 18 
3.10.3   Equipment .......................................................................................................... 20 
3.11   Completion of the WTO he adquarters exte nsion project ................................................ 21 WT/BFA/W/303 
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  3.11.1   Compliance with the timetable and budget ............................................................... 21 
3.11.2   Method of recordin g expenditure fo r the work .......................................................... 22 
3.12   Internationa l trade ce ntre ........................................................................................ 23 
PART II: PERFOR MANCE AUDIT ..................................................................................... 24  
1   OBJECTIVES AND SC OPE OF THE AUDIT .................................................................... 24  
2   SUMMARY OF FINDINGS  AND RECOMMEND ATIONS .................................................. 25  
2.1   Main findings ...........................................................................................................  25 
2.2   Recomme ndatio ns .................................................................................................... 25 
3   OBSERVATIONS AN D RECOMMENDAT IONS ............................................................... 25  
3.1   Organizational location of  the office of internal audit ...................................................... 26 
3.1.1   The WTO Inte rnal Audit Charte r ............................................................................... 26 
3.1.2   Relationship of th e OIA with the WTO bodies ............................................................. 27 
3.1.3   Scope of work of the OIA ........................................................................................ 29 
3.2   Methods of the office of internal audit .......................................................................... 31 
3.2.1   Audi t planni ng ....................................................................................................... 31 
3.2.2   3Aud it topics .........................................................................................................  31 
3.2.3   Conduct of audits ................................................................................................... 33 
3.2.4   Use of co mputerized tools ....................................................................................... 34 
3.2.5   Follow-up of  recommend ations ................................................................................ 34 
3.2.6   Quality control and staff development ....................................................................... 35 
4   ACKNOWLE DGEMENTS .............................................................................................. 37  
5   CONC LUSION............................................................................................................. 37  
ANNEX I - FOLLOW UP TO RECOMMENDATIONS ............................................................. 38  WT/BFA/W/303 
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PART I: CERTIFIED ACCOUNTS FOR 2012 
1  OBJECTIVES AND SCOPE OF THE AUDIT 1.  In accordance with our letter of notification  of 3 December 2012, a team of five external 
auditors conducted an audit of the World Trade Organization (WTO) in Geneva from 25 March 
to 12 April 2013. The purpose of the audit was to examine the Organization's financial statements 
for the year ended 31 December 2012. 
2.  The audit was conducted in compliance with the International Standards on Auditing (ISA), 
and the WTO's Financial Regulations and Financial Rules. 
3.  The purpose of the audit was to determine with reasonable assurance whether the financial 
statements taken as a whole do not contain significant anomalies, whether as a result of fraud 
or error, so that the auditor may express an opinion indicating whether the statements have been 
prepared in all significant respects in accordance with the applicable financial information referential, namely the International Pu blic Sector Accounting Standards (IPSAS). 
4.  Each comment and recommendation was discussed with the officials concerned. The closing 
meeting of the audit was held with Mr Tristan Bauswein, Director of Administration and General 
Services, on 11 April 2013. The Secretariat confirmed the validity of the facts described. The present letter takes full account of its comments and replies. 
5.  Our opinion on the financial statements is given with two reservations. The essential reasons 
for our opinion are set out in the report. 
6.  The second part of the report resumes and updates the findings of the performance audit of the 
WTO's Office of Internal Audi t, conducted by five auditors  from 1 to 12 October 2012. 
2  LIST OF MAIN FINDINGS AND RECOMMENDATIONS 2.1  Main Findings 
1. For the first time the WTO has presented financial statements that are in principle consistent 
with the IPSAS Standards, and has therefore pr eviously changed all its accounting procedures. 
Despite the major effort thus made, the WTO must pursue its efforts to be entirely in conformity 
with the IPSAS on two essential points: applic ation of the standards to long-term employee 
benefits (pensions and after-service health insura nce), and the International Trade Centre (ITC), 
a "joint venture" of both the WTO and the UN. 
 
2. Several accounting errors were noted an d immediately corrected during the audit, 
illustrating both the difficulties encountered by the Secretariat staff in mastering the new 
accounting procedures as well as some lack of supervisory capacity in the Finance Division owing 
to the recent departure of several managers. 
 3. The methods of recording the Organization's  assets should be improved, in particular 
as regards intangible assets (software created by the Organization) and the stock 
of laptop computers.  
4. The headquarters renovation-extension projec t is being completed in accordance with the 
initial timetable set for the main elements (intra -muros and extra-muros work), with the exception 
of a few intermediary delays, and probably within  the planned budget (payment of expenses has 
not yet been completed). 
 WT/BFA/W/303 
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  2.2  Recommendations 
Recommendation No. 1. The WTO Financial Regula tions should be updated in line with IPSAS 
and the senior-level staff of the finance division should be reinforced.  
Recommendation No. 2. The WTO statement of financial position should present on the assets side 
the amount of the Organization's financial assets related to staff pensions and on the liabilities side the gross amount of the corresponding obligations,  in accordance with IPSAS 1 and 25, instead of 
summarizing these data. 
 Recommendation No. 3. Note 14 on employee benefits should present all the information required under IPSAS 25, paragraph 141, relating to the WT O's commitments for pensions and after-service 
health insurance and the financial assets accumulated to cover the pension commitments. 
 Recommendation No. 4. For the actuarial calculations relating to the Pension Plan and after-service 
health insurance, the auditor recommends using mortality tables designed specifically 
for international civil servants.  
Recommendation No. 5. The provision for short-term and long-term employee benefits should be 
corrected, as should the comment in Note 14.  Recommendation No. 6. The Secretariat should study the possibility of presenting segment 
information (i) by major segment of WTO activity and (ii) for all the financial statements (and not 
only the statement of financial performance), in accordance with IPSAS 18.  
Recommendation No. 7. The Secretariat should mention in Note 23 to the financial statements 
(i) under contingent liabilities, the existence of litigations between the WTO and staff members before the ILO Administrative Tribunal, and (ii) under contingent assets, the bank guaranties 
provided by the enterprises contracted to carry out the headquarters extension work. 
 Recommendation No. 8. The auditor recommends the adoption of a more realistic method 
of provisioning for arrears of contributions, according to the risk incurred. 
 
Recommendation No. 9. The Secretariat should strictly comply with the provisions of Regulation 15 of the Financial Regulations, under which Observers may only accede to the WTO if their financial 
obligations have been fully discharged. 
 Recommendation No. 10. The Secretariat should pursue its efforts (i) to accelerate refund by the 
United States of the taxes of WTO staff who resided there; and (ii) to obtain this refund according 
to the method advocated by the Administrative Tribunal of the International Labour Organization (renewal of a previous recommendation).  
Recommendation No. 11. The amount of the advances to trust funds mentioned in Note 8 to the 
financial statements should be corrected.  
Recommendation No. 12. The Secretariat should (i) take account of the cost of WTO staff working 
hours spent developing new software in the amount of intangible assets indicated in the statement of financial position: and (ii) amortize this software at a comparable rate to that for software 
purchased on the market. 
 Recommendation No. 13. The Secretariat should (i) indicate a counterpart liability for the asset of CHF 60 million indicated in the statement of financ ial position in relation to the old headquarters 
building; and (ii) depreciate this asset over 99 years, in line with the length of the surface right 
granted by the infrastructure contract of 31 May 1995, as from 1 January 1996.  
Recommendation No. 14. To improve the information given on the Organization's assets, 
(i) additional information should be given in point 16 of Note 1 on accounting policies; and (ii) the physical inventories of the Organization's equipment should indicate more clearly the nature 
of each asset recorded. 
 Recommendation No. 15. The WTO should improve th e recording of its assets in the statement 
of financial position (i) by recognizing in lots the "tempting" goods that are managed in a particular WT/BFA/W/303 
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  way by the informatics division, even where th eir individual value is less than CHF 2,500; 
(ii) recognizing for a symbolic value assets th at have already been depreciated but are still 
in service and have a high gross value, such as motor-vehicles and machines; and (iii) depreciating works of art and decorations in the same way as fixtures and fittings. 
 
Recommendation No. 16. The Secretariat should (i) make provision for the amount of the undisputed invoices of one of the construction ente rprises, withheld in the context of a dispute; 
and (ii) record in the 2012 accounts the invoices received in 2012 corresponding to work 
performed in 2012 as "payables" (debts to suppliers) and the invoices not yet received in 2012 but corresponding to work performed in 2012 as "payables" (invoices not received); (iii) mention the dispute on a general breakdown with one of the construction companies among contingent 
liabilities; and (iv) rectify in the accounts the amount of the loan and the subsidy from FIPOI. 
 Recommendation No. 17. The Organization should adjust the financial statements of the ITC 
in order to bring them into line with its own accounting standards, use the equity method in 
reporting the ITC and present all the information required under the standards.  
3  OBSERVATIONS AND RECOMMENDATIONS 
3.1  Follow-up of earlier recommendations 3.1.1  Recommendations of the external auditor 7.  We have examined the situation regarding implementation of our previous recommendations
1 
(Report of 27 July 2012 on the financial statements for the financial year ended 
31 December 2011 and performance audit) and noted that of the 22 recommendations, 15 had been implemented (68.18%), seven were in the process of being implemented (31.82%) 
and none had not been implemented, as indicated in Table 1 below. The high proportion 
of recommendations in the process of being implemented (4/6) in the case of the performance audit of the dispute settlement system is attributable to the complexity of the procedures 
concerned and the Secretariat's obligation to respect the wishes of the parties to disputes. 
Table 1 Summary of the implementation of recommendations 
Subject Implementation Ongoing Not 
implemented Total Relevant 
paragraph 
of the 
Report 
Certified accounts for 2011 
1. Planning for the accounts services 
transition to IPSAS X    7-11 
2. Note 12 should include the total 
amount of the provision for employee 
benefits in accordance with IPSAS X    14-16 
3. A note to the financial statements 
should provide information by sector 
for the statement of financial 
performance X    19-20 
4. Reminders should be sent to 
Members which fail to comply with 
their arrears absorption plans X    32-33 
5. Accelerate refund of taxes by the 
United States and obtain this refund 
according to the method advocated 
by the ILO Administrative Tribunal  X   37-39 
6. Reclassify the excess sum paid to 
the ITC (CHF 1.4 million) among the 
charges paid in advance X    41-42 
7. Ensure strict compliance with the 
deadlines for regularizing WTO 
advances on voluntary contributions  X   44-47 
                                               
1 Our last report on the financial statements  for 2013 will provide a full update on all the 
recommendations issued during the mandate of the Court of Audit. WT/BFA/W/303 
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  Subject Implementation Ongoing Not 
implemented Total Relevant 
paragraph 
of the 
Report 
8. Increase the percentage of the 
levy on trust funds used to finance 
the Secretariat  X   49-52 
9. Monitor the remuneration 
of its bank accounts more closely X    54-57 
10. The internal mechanism for 
controlling paymen t of expenditure 
should be st rengthened X    58-62 
11. Keep all supporting documents 
for allowances paid X    70-77 
12. (i) Keep an updated list of those 
holding credit cards; (ii) issue 
guidelines on the use of taxis and mobile telephones; (iii) envisage cancelling the contract with the taxi company; and (iv) show mobile 
telephone costs in the accounts X    82-98 
13. Finalize preparations for 
IPSAS 12 - compliant management 
of the inventory of publications 
and souvenirs X    100-107 
14. The complex method for 
recording investment made 
in connection with the WTO headquarters renovation-extension project should be explained in a note 
to the financial statements X    108-118 
15. The grant of CHF 10 million 
and the loan of CHF 60 million 
should be treated differently 
in the financial statements X    120-123 
16. To improve the presentation 
of the headquarters 
renovation-extension project, (i) indicate the total amount of the Federal Funds available to the WTO; (ii) explain the nature of FIPOI's payment of some of the costs of the intra-muros project, and (iii) specify the financing of the project from the regular budget and from 
the MTOF respectively X    124-127 
Dispute settlement performance audit 
1. (i) Seek a new method for 
presenting panellists to parties 
for selection; and (ii) present panellists already familiar with the cases in disputes dealing with the implementation 
of previous recommendations  X   175-179 
2. Not wait systematically 
for agreement from parties before 
appointing experts  X   180-181 
3. (i) Organize a single substantive 
meeting with the parties in simple 
cases; (ii) propose to the parties that only the panel and AB reports should be translated, and not their annexes, before they are transmitted to the 
Dispute Settlement Body  X   182-189 WT/BFA/W/303 
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  Subject Implementation Ongoing Not 
implemented Total Relevant 
paragraph 
of the 
Report 
4. Reinforce the Secretariat 
of the Appellate Body X    190-198 
5. (i) The remuneration of panellists 
and experts should be determined 
officially, and (ii) panellists' fees 
should be recalculated and the criteria for their travel costs should 
be defined  X   199-204 
6. Calculate the total cost for 
consideration of each case by a panel 
or the Appellate Body X    215-223 
Total 15 7 0 22  
Source: Report of the external auditor on the accounts for 2011. 
3.1.2  Recommendations of the internal audit 
8.  The rate of implementation of the internal  auditors' recommendations is dealt with in the 
second part of this Report dealing with the Office of Internal Audit. 
3.2  Overview of the financial situation 
9.  In the case of financial year 2012, the analysis of the WTO's financial situation is more complex 
owing to the new accounting treatment stemming from the use of IPSAS. In the case of the statement of financial position, the WTO Secretariat presents the 2012 data in accordance with 
IPSAS standards, with a few exceptions mentioned below, and compares them with the restated 
2011 financial statements. It clearly explains this restatement in Note 3 on the first implementation of IPSAS. 
10.  On the other hand, in the statement of financial performance, as authorized by IPSAS 1, 
paragraph 151, only the 2012 data  are presented, the year of adoption of IPSAS. This situation 
hinders the clarity of the accounts. Some organizations present a comparison with the restated performance statement of the previous year, as required under the IFRS standards, which are 
more stringent than the IPSAS standards in this respect. 
11.  In any event, the statement of financial position for 2012 indicates a deficit 
of CHF 19.9 million
2, instead of a deficit of CHF 0.73 million in 2011, because of the inclusion of 
the actuarial losses relating to pensions and after-service health coverage, which have been taken 
into account for the first time in financial year 2012 in accordance with IPSAS. 
12.  The cash flow statement records an incr ease of CHF 22.48 million in cash and cash 
equivalents at the end of 2012, which is attributable to the increase in the provision for employee 
benefits (pensions and after-service health cove rage) and in contributions received in advance 
(in particular the statutory contributions of Singapore, Thailand and the United Arab Emirates) and voluntary contributions. 
13.  The 2011 accounts showed a closing surplus of CHF 27.717 million. Once restated 
in accordance with IPSAS, they show a net de ficit of CHF 706.733 million. This large change 
(CHF -734.450 million) is basically the result of the inclusion of the WTO's commitments relating to 
pensions and after-service health insurance as well as financial assets.
3 
14.  The statement of financial position at 31 December 2012 shows a net liability 
of CHF 774.215 million, above the figure for 2011 restated in accordance with IPSAS 
(CHF 706.733 million). This change in the net situat ion is essentially explained by the increase in 
                                               
2 CHF: Swiss franc. 
3 The Report criticizes below the fact that comm itments relating to reti rees were presented net 
of the accumulated financial asse ts for covering them: however, this presentation, which is not 
IPSAS-compliant, does not di stort the net situation. WT/BFA/W/303 
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  assets attributable to "work in progress" (CHF 68.09 million in 2012 as against CHF 39.64 million 
in 2011) for the headquarters renovation-extension project. 
15.  As pointed out in our previous reports, the transition to IPSAS standards has worsened the 
WTO's financial position insofar as it involved the inclusion in the accounts of the Organization's 
long-term commitments relating to its pension and health insurance schemes, whose value 
exceeds that of the financial assets, land, buildings and equipment of the Organization. 
These pension obligations are implicitly covered by the Member States in accordance with 
Article 21 of the Statutes of the Pension Fund: "In the event of dissolution of the WTO, the General 
Council shall take the necessary steps to guarant ee the benefits acquired under these Regulations 
by participants and beneficiaries at the date of di ssolution". Hence the net liability indicated in the 
statement of financial position is in no way comparable to that of the balance sheet for 
a private-sector company. 
3.3  Preparation for the WTO's transition to IPSAS 16.  In May 2009, the WTO Council adopted a plan for the gradual implementation of IPSAS by the 
beginning of 2013, with the presentation of financial statements for the 2012 financial year 
consistent with these standards. 
17.  In accordance with this plan, the WTO ad opted the presentation of financial statements 
consistent with IPSAS 1 for the 2009 accounts, calculated its commitments for the pension 
and health insurance plans in accordance with IPSAS 25 and prepared the recording of the WTO's assets in 2011, and increased the provision for employee benefits in 2012. 
18.  The WTO was to have completed the following final stages in the presentation of the accounts 
for 2012: 
- include, in the above-mentioned provision for employee benefits, benefits that had 
been calculated (and are mentioned in Note 12 to the financial statements for 2011) 
but which did not yet appear in that provision, namely, entitlement to installation 
grant, home leave, separati on grant, and, above all, pension and health insurance 
entitlements; 
formally adopt the amendments to the Organization's Financial Regulations required to bring them 
into line with IPSAS and update them; 
prepare the accounts services for changes in bookkeeping methods at the beginning of 2013 
in order to bring them into line with IPSAS. 
19.  The first of these stages was only partially completed. The long-term commitments 
relating to staff benefits and the financial assets accumulated to cover pension commitments is not IPSAS-compliant (see Chapter 5 of this report). 
20.  The second stage has not been carried out: the Organization's Financial Regulations have not 
been amended. That being said, the changes to be made seem minimal and basically concern reflecting the results of each financial year in line with the IPSAS. 
21.  The third stage has been completed with a varying degree of success. The WTO took the bold 
step of completely changing the rules for its daily bookkeeping in line with IPSAS, whereas other organizations retained their daily bookkeeping fo r cash accounts and converted them at the end 
of the financial year by means of a small team of specialists in IPSAS-compliant financial 
statements. The many errors detected during this audit bear witness to the difficulty of this choice. 
They also reflect the lack of supervisory staff in  the finance division in the months preceding the 
definitive transition to IPSAS owing to the depart ure of several staff members. It therefore seems 
desirable to recruit managers who are capable of supervising daily operations and periodically 
checking the provisional accounts and analysing major variations in them. 
Recommendation No. 1. The WTO Financial Regula tions should be updated in line with IPSAS 
and the senior-level staff of the finance service should be reinforced. WT/BFA/W/303 
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  Reply of the Secretariat. The Secretariat will propose amendments to the Financial Regulations 
concerning the attribution of results to the Committee on Budget, Finance and Administration. 
The Secretariat finance team is small. The specialis t in charge of implementation of IPSAS resigned 
in early 2013 to join another organization, which affected the quality of the implementation of the 
operations for closing the accounts. The Secretariat will recruit a replacement to ensure that an 
acceptable level of accounting expertise is maintained. 
3.4  Presentation of assets and liabilities in the statement of financial position 
22.  The statement of financial position does not include among non-current assets the amount 
of the financial assets accumulated by the WTO to cover its staff pension commitments (i.e. CHF 397.450 million at 31 December 2012), contrary to IPSAS 1.
4 The WTO continues 
to indicate these assets only in the financial statements of its Pension Plan. However, these assets 
should be presented in the statement of financial position since they belong to the Organization 
and are not managed by a truly independent pension plan as defined by IPSAS5, which would 
imply the creation of a body that is totally independent of the Organization. 
23.  Although Article 12 of the WTO Pension Plan Regulations states that the assets "shall be the 
property of the Plan" and "held separately from th e assets of the WTO", this provision is aimed at 
guaranteeing maximum autonomy in the management of these assets but does not deprive 
the WTO of their ownership. The Pension Plan's Regu lations do not give it legal personality as they 
do not define its legal nature. Article 4 of the Regulations provides for the composition of a Management Committee all of whose members are appointed by WTO entities
6, which shows 
that the Management Committee is an organ of the WTO. 
24.  Furthermore, Members agree to reimburse to the Plan the interest withheld at source 
on securities invested on their financial markets as they consider that these securities belong to the WTO and that the 1947 Convention on th e Privileges and Immunities of Specialized 
Agencies applies to them, as provided for in the 1994 Marrakesh Agreement Establishing the WTO. 
25.  In addition, the amount of the pension be nefits presented among non-current liabilities 
(CHF 548.343 million) is the difference between the gross obligation (CHF 945.793 million) and the 
financial assets mentioned above (CHF 397.450 million), as indicated in Note 1 to the financial 
statements on accounting policies. However, it is the gross amount of the pension obligation, i.e. CHF 945.793 million, that should appear in the liabilities, as the presentation of the amount 
of liabilities and corresponding assets in summary form is authorized only for wholly independent 
pension schemes under IPSAS.
7 
26.  The presentation of the assets and liabilities relating to staff pensions adopted by the WTO 
in the statement of financial position thus deviat es significantly from the IPSAS: as long as this 
presentation has not been remedied, the Organization's financial statement cannot be considered 
IPSAS-compliant. The fact that the WTO actuary8 continues to present the pension commitments 
net of the corresponding assets in the summary of its evaluations, despite the observations 
presented by the auditors since 2011, does not ex onerate the Organization from complying with 
the IPSAS in this regard. The indication of the method employed in Note 1 on accounting policies (in paragraph 28(b)), does not rectify the inappropriateness of this method.
9 
27.  It should nevertheless be pointed out that the practice in question does not alter the amount 
of the WTO's net situation, which remains a ne t liability of CHF 774.215 million, whether the 
                                               
4 See in particular paragraphs 7 and 88, (d) of IPSAS 1. 
5 See in particular IPSAS 25, paragraph 60. 
6 The Chairman of the Management Committee, four  of its members and their four alternates are 
elected by the General Council;  four other members and their four alternates are appointed 
by the Director-General. 
7 Our report on the financial st atements of the WTO Pension Plan  (WTOPP) for the financial year 
ended 31 December 2010 already pointed this out. 
8 See the report by the Mercer Company on the pension plan dated 1 April 2013. 
9 IPSAS 1, paragraph 30, states th at "inappropriate accounting po licies are not rectified either 
by disclosure of the accounting policies us ed, or by notes or explanatory material". WT/BFA/W/303 
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  pension-related assets and liabilities are fully presented in each part of the balance in accordance 
with IPSAS or in summarized form, as presented by the WTO.  
Recommendation No. 2. The WTO statement of fina ncial position should present on the assets 
side the amount of the Organization's financial assets related to staff pensions and on the liabilities 
side the gross amount of the corresponding ob ligations, in accordance with IPSAS 1 and 25, 
instead of summarizing these data. 
Reply of the Secretariat. The Secretariat presents  the accounts of the Secretariat, which are under 
the authority of the Director-General. The Pension Plan presents the accounts of the Pension Plan, 
which are under the authority of the Pension Plan Committee chaired by a member appointed 
by the General Council. The Secretariat presents the Secretariat's obligations in relation to the Pension Plan in its accounts. However, the Secretariat cannot consolidate the Plan into its accounts as the Plan is an entity that is independent of  the Secretariat in terms of both its management 
and its assets. The Director-General cannot sign off on the accounts of an entity that is not under 
his authority. 
3.5  Note 14 "employee benefits" 
3.5.1  The WTO's commitments relating to pe nsions and after-service health insurance 
28.  Note 14 presents first of all a Table 20 indi cating the amount of short-term and long-term 
employee benefits, which includes among long-ter m pension-related benefits the amount of the 
Organization's pension commitments and financial assets in summary form (CHF 548.343 million), 
instead of presenting its gross obligations (CHF  945.793 million). This point should be rectified 
in the same way as the amount of non-current liabilities in the statement of financial position, as indicated above. 
29.  Note 14 goes on to explain the breakdow n of employee benefits without mentioning the 
Pension Plan or the after-service he alth insurance for retirees (ASHI
10), and then presents 
a Table 42 concerning the actuarial assumptions. It did not mention any of the many data referred 
to in IPSAS 25, paragraph 141, which should be presented in the financial statements. These data 
include, for example, a general description of the type of plan, a reconciliation of opening and closing balances of the obligation and a four-year history of the main data (actuarial present 
value of the obligation, fair value of the financial assets and actuarial deficit). These data were not 
mentioned in the note
11, although they were produced by the actuary in Annex 5 of its report 
of 1 April 2013 on pensions and Annex 1 of its report of 2 April on the after-service health insurance scheme. 
30.  The Organization may include some or all of the data on pensions in the financial statements 
of its Pension Plan, traditionally presented independently from those of the Organization
12, 
but this would not exonerate the Organization from including them in its financial statements 
in accordance with IPSAS. The information concerned is essential for evaluating the long-term 
risks incurred by the Organization and comparing them with the assets accumulated to cover them. 
31.  The presentation of the financial statements of the Pension Plan provided for by its 
Regulations is in fact a formality which could be  done away with, since the IPSAS requirement is 
that all information concerning pensions and financial assets be presented in the Organization's financial statements.
13 
                                               
10 After-Service Health Insurance. 
11 With the exception of some actuarial assumptions wh ich are supposed to be included in the table that 
is not provided but was planned to be in the initial version of the financial statements. 
12 The financial statements of the Pension Plan are dr awn up under the authority of the Plan's Secretary, 
and not of the Director of Administration, contrary to the WTO financial statements; they are presented directly 
to the WTO General Council and not to the Budget Committee; but they are audited by the same external 
auditors (the 2012 statemen ts are scheduled to be audited in May 2013). They are not IPSAS-compliant. 
13 That being said, IPSAS does not rule out the pres entation of separate (and redundant) financial 
statements concerning part of the activity of an entity. There is at least one precedent: the OECD has retained WT/BFA/W/303 
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  Recommendation No. 3. Note 14 on employee benefits should present all the information required 
under IPSAS 25, paragraph 141, relating to the WT O's commitments for pensions and after-service 
health insurance and the financial assets accumulated to cover the pension commitments. 
Reply of the Secretariat. The Secretariat has immediately supplemented the notes to the financial 
statements for the financial year 2012 in order to present the information mentioned 
by the auditors. 
32.  The mortality tables used by the WTO actuary in its two reports concerning the Pension Plan 
and ASHI, respectively, are the EVK 2000 tables.14 These tables appear to underestimate longevity 
compared with other tables frequently used in Switzerland.15 
33.  It would be more prudent to use tables specially designed according to the specific longevity 
of international civil servants, such as the ICSLT 2008 tables16 developed by the actuary for the 
"coordinated organizations"17. 
Recommendation No. 4. For the actuarial calculations relating to the Pension Plan and after-service 
health insurance, the auditor recommends using mortality tables designed specifically 
for international civil servants. 
Reply of the Secretariat. The Secretariat will consult the actuary on the use of the mortality tables. 
3.5.2  Other provisions for employee benefits 
34.  The amount of the provisions for short-te rm benefits (CHF 12,370,000) should be revised 
downwards by CHF 115,000 owing to errors in the calculation of provisions relating to untaken 
annual leave and separation grants. 
35.  The amount of the provisions for long-term employee benefits (CHF 9,103,000) should also be 
revised downwards by CHF 149,000 owing to errors in the calculation of the provisions relating to removal expenses and separation grants. 
Table 2 Provision for long-term benefits 
(Corrected version, in CHF thousand) 
 Provision at 
31 December 2012 Provision at 
31 December 2011 
Other long-term benefits 8,954 8,440 
of which separation grant 7,366 6,888 
of which local staff 1,632 1,476 
of which international staff 5,734 5,412 
Long-term benefits 1,588 1,552 
Source: External auditor. 
                                                                                                                                               
financial statements for one of its pension schemes (the Provident Fund), while including the data from the 
statements in the Organization's financial statements. 
14 "Eidgenössischen Versicherungskas se (EVK)": Confederation Insurance Fund. This mortality table was 
created by a Swiss retirement fund whose new na me is "Caisse fédérale de pensions PUBLICA". 
15 According to the proceedings of the "9ème coll oque des rentes genevoises", published online, 
1% of men aged 65 in 2005 would reach the age of 100 years according to the EVK 2000 and LPP 2000 tables, compared with 9% according to the GRM 95 tables and 17% according to the ERM 2000 tables; for women, 3%, 17% and 25%, respectively, would reach the age of 100 years with the aforementioned tables. 
16 International Civil Servant Life Table. 
17 The six coordinated international organizations which jointly manage their remuneration scales 
and pension schemes are the European Space Agency , the European Centre fo r Medium-Range Weather 
Forecasts, the Council of Europe, the OECD , NATO and the Western European Union. WT/BFA/W/303 
- 12 - 
  Table 3 Provision for short-term benefits 
(Corrected version, in CHF thousand) 
 Provision at 
31 December 2012 Provision at 
31 December 2011 
Short-term staff benefits 12,255,872.80 12,848,649.25 
Separation grant  468,402.75 541,869.25 
Dependency allowance 50,000.00 50,000.00 
Education grant 1,182,446.00 1,179,100.00 
Untaken annual leave 891, 769.00 1,145,400.00 
Home leave 9,663,255.05 9,932,300.00 
of which permanent staff 9,404,783.00 9,810,329.00 
of which temporary staff 258,472.05 121,971.00 
Source: External auditor. 
36.  In addition, the commentary of Note 14 should have been modified. The percentage 
of international staff who return to their home co untry upon retirement mentioned in (b) is 56.9% 
(rather than 57.8%) and the average age of retirement is 62 years (and not 62.5 years). 
Recommendation No. 5. The provision for short-term and long-term employee benefits should be 
corrected, as should the comment in Note 14. 
Reply of the Secretariat. The Secretariat has accepted this recommendation and immediately made 
the advised corrections. 
3.6  Note 20 "segment reporting" 37.  In accordance with our recommendation of 2012 (Recommendation 3 in our previous report), 
the financial statements include a Note 20, "segment reporting", which gives a breakdown 
by segment of activity of the expenditure and revenue mentioned in the financial performance statement. 
38.  The Note distinguishes only two segments of activity, the regular budget and Trust Funds, 
whereas Note 1, "accounting policies", mentions six: the regular budget, the Appellate Body Operating Fund (ABOF), the Ministerial Operating Fund (MOF), the "Members' Transition Operating 
Fund (MTOF)"
18, the Appellate Body and its secretariat, and Trust Funds. This contradiction 
between Notes 1 and 20 should be removed by revising Note 1 . 
39.  The breakdown adopted is acceptable on a provisional basis as it corresponds to the 
traditional distinction within the WTO, which is legally pertinent, between regular budget 
and non-budget funds, the former stemming from the statutory contributions of all Members 
and the latter from voluntary contributions by some of them. 
40.  However, this breakdown does not corre spond to the objectives set by IPSAS 18, 
paragraph 9, on segment reporting: "(a) evaluati ng the entity's past performance in achieving 
its objectives, and (b) making decisions ab out the future allocation of resources". 
41.  It would be more relevant from this standpoint for the Secretariat to prepare 
segment reporting of the Organization's different  types of activity: international negotiations, 
dispute settlement, studies and statistics and training and technical assistance. The preparation 
of an activity-based budget, on which the Secretariat has been working for two years, 
should make it easier to carry out this task. 
42.  Several of our past recommendations are along these lines: 
                                               
18 The Appellate Body Fund covers some of the bo dy's operating costs, in particular the travel 
of its members and cost of temporary staff. The Mini sterial Operating Fund pays the costs of organizing 
ministerial conferences, and the Members' Transition Operating Fund covers part  of the WTO headquarters 
renovation-extension costs. WT/BFA/W/303 
- 13 - 
  - our Report for 2010 on the accounts for 2009 suggested calculating the total cost 
of training and technical assistance covered jointly by the regular budget and Trust Funds, and to clarify the customary and complex rules for the breakdown between these two financing sources; 
- our Report of 2012 on the 2011 accounts recommended calculating the total cost for 
consideration of each case by a panel or the Appellate Body, a cost which today is split up among the expenses of various divisions,  the Secretariat of the Appellate Body and 
the Appellate Body Operating Fund (ABOF). 
43.  It is therefore recommended that the Se cretariat study the development of a segment 
information table by major segment of WTO activity, a complex task which requires time and raises problems of allocation of support costs (activities of the services responsible for finance, 
legal advice, informatics, human resource management, etc.), which may either be distributed 
across functional activities or treated separately as autonomous cost centres. 
44.  In paragraphs 51 and following, IPSAS 18 lists all the elements that an entity should present 
in the framework of segment reporting. By way of example, paragraphs 53 and 54 mention 
respectively: 
- "an entity should disclose the total carrying amount of segment assets 
for each segment", 
- "an entity shall disclose the total carrying amount of segment liabilities 
for each segment". 
45.  As mentioned above, in Note 20, "segment reporting", the WTO only presents the breakdown 
by segment of the expenditure and revenue mentio ned in the statement of financial performance. 
The WTO should therefore in future supplement th e segment information in Note 20 in accordance 
with IPSAS 18. 
Recommendation No. 6. The Secretariat should study the possibility of presenting segment 
information (i) by major segment of WTO activity and (ii) for all the financial statements 
(and not only the statement of financial performance), in accordance with IPSAS 18. 
Reply of the Secretariat. The Secretariat only has the two entities presented for which it has 
specific assets and liabilities in accordance with IPSAS 18. Nevertheless, it agrees to present 
additional information on the expenses incurred under the various programmes. It will present the 
first results concerning 2013 separately. 
3.7  Note 23 "contingent assets and contingent liabilities" 
46.  Note 23 of the initial version of the financial statements does not include any contingent 
assets or liabilities.19 However, we have noted the existence of a number of litigations between the 
Organization and five serving or former staff members before the ILO Ad ministrative Tribunal. 
47.  The WTO should not constitute provisions for these litigations, whose outcome is highly 
uncertain. It should, however, have mentioned them in Note 23, under contingent liabilities, and the risk that the Organization may have to pay compensation to those concerned. 
48.  IPSAS 19, paragraph 100, calls for a brief descr iption of each class of  contingent liability. 
This obligation exists even wher e the subject of the litigation is staff pensions, details of which 
have so far been given in the financial statements of the WTO Pension Plan. The pensions paid by the WTO, the WTO liabilities relating to thes e pensions and the assets covering them concern 
WTO funds and should be mentioned in the WTO's financial statements. 
                                               
19 Contingent assets or contingent liabilities resulting from past events that will only be confirmed by the 
occurrence of uncertain future events which are not fully  under the entity's control. WT/BFA/W/303 
- 14 - 
  49.  However, the names of the staff members concerned and the grounds of the disputes should 
not be mentioned in the financial statements as they are covered by the confidentiality of the proceedings. 
50.  Likewise, the WTO should have included tw o contingent assets corresponding to the bank 
guaranties provided by the enterprises ca rrying out the headquarters extension work 
in accordance with their contracts with the Organization. These guaranties amount to 9% of the lump sum of CHF 16.5 millio n, or CHF 1.5 million in the case  of HRS, which is responsible 
for the intra-muros extension work, and 10% of the Implenia contract for CHF 38.7 million for the 
extra-muros extension work, i.e. CHF 3.87 millio n. Note 23 should therefore have mentioned 
contingent assets of CHF 1.5 million and 3.87 mi llion. The WTO may receive these sums in the 
event that it has to invoke these bank guaranties. 
Recommendation No. 7. The Secretariat should mention in Note 23 to the financial statements 
(i) under contingent liabilities, the existence of litigations between the WTO and staff members 
before the ILO Administrative Tribunal, and (ii) under contingent assets, the bank guaranties 
provided by the enterprises contracted to carry out the headquarters extension work. 
Reply of the Secretariat. The Secretariat has added the information mentioned by the auditors 
to the Notes to the financial statements. It has accepted this recommendation, 
which was immediately implemented. 
3.8  Income 
51.  The WTO is improving the rate of collection of statutory contributions from Members 
and Observers. 
3.8.1  Statutory contribu tions by Member States 
52.  Pursuant to Regulation 12 of the Fina ncial Regulations, the contributions of the 
157 Member States20 are determined as a percentage of the value of each country's international 
trade (imports plus exports) in relation to the total international trade of all WTO Members, 
according to a scale that is revised by the General Council each year. The minimum contribution is 
set at 0.015% of this value. Five reference years are taken into account, for example, 2005-2009 for the 2012 contributions. 
53.  In practice, each year the Organization assesses the contributions determined in the 
scale minus, where applicable, each State's share of  the distribution of the Organization's budget 
surpluses at the end of the preceding financia l  y e a r  ( p r e s c r i b e d  b y  R e g u l a t i o n  2 6  o f  t h e  
Financial Regulations) and the amount of interest credited under the Early Payment 
Encouragement Scheme. 
54.  Table 4 shows a progression in contribution s paid that is slightly higher than that 
of the contributions assessed in 2012 compared with 2011, and a decrease in arrears 
of 2012 contributions (-5%) and accumulated arrears (-2.87%). The latter represent 12.92% 
of the 2012 statutory contributions compared with 13.31% in 2011. At 31 December 2012, 61 Members out of 157 had payment arrears; fo r 26 of these, they exceeded CHF 100,000. 
The following were the highest amounts: 
- United States of America: (this debt only concerns 
2012 as the United States regularly pays part of its annual contribution the following year  (CHF 4,737,238) 
- Venezuela (CHF 2,626,804) 
- Spain (CHF 2,445,987) - Russia (CHF 1,415,888) 
- Mauritania (CHF 1,023,043) 
- Central African Republic (CHF 1,018,537) 
                                               
20 Four new Members joined the WTO in 2012: Vanuatu, Samoa, Montenegro and Russia. 
Former Yugoslavia still counts as  a Member of the WTO because of its contribution arrears amounting 
to CHF 830,439. WT/BFA/W/303 
- 15 - 
  55.  To encourage countries rapidly to pay their contributions, which are due on 1 January 
each year, pursuant to Regulation 13 of the Financial Regulations the WTO pays them interest between the date on which each one pays its contribution for the current financial year and 31 December. This interest is deducted from the amount of the assessed contributions with 
a two-year interval. Interest in 2010 lowered contributions for 2012. Until 2012, the WTO placed 
countries in arrears into four categories, depriv ing them of a certain number of rights depending 
on the length of time they had been in arrears. 
56.  The General Council has just revised this system of administrative measures applicable 
to countries in arrears and also extended it to Observer States, by decision of 3 October 2012 with effect as from 1 January 2013.
21 Members and Observers in arrears are now classed 
in three categories instead of four, and additional measures aimed at strengthening the 
arrangements depriving them of certain rights ma y henceforth be applied to them proportionally 
to the duration of their arrears. 
Table 4 Contributions by Member States assessed and paid in 2011 and 2012 
 (in Swiss francs) 
 2011 2012 2012/2011 
A. Statutory contributions by existing Member States 194,300,000  194,300,000 = 
B. Statutory contribution s by new Member States 0 1,466,150 - 
C. Distribution of the surp lus among Member States 0  0 = 
D. Interest earned and paid out to Member States with a 
two-year interval 183,949  152,151 -17.28%  
E. Total contributions assessed (E= A+ B-C-D) 194,116,051  195,613,999 +7.7%o  
F. Total contributions paid for the financial year  180,810,606  181,508,294 +3.8%o  
G. Arrears of contributions fo r the financial year (G=E-F)  13,305,445  14,105,705 6.01%  
H. Accumulated arrear s of contributions 25,856,798  25,113,079 -2.87%  
Source: External auditor, based on WTO data. 
3.8.2  Plans for absorption of the debt of certain Member States 
57.  In accordance with the external auditor's recommendation in relation to the financial 
statements for 2010, the Organization signs plans with countries in arrears for the absorption 
of their debt. Two new States have signed up to such plans in 2012 (Djibouti and Sierra Leone), 
while Gabon completed payment of the full amount of its absorption plan in 2012, thus recovering its rights. Compliance with the undertakings made was better in 2012, and the unpaid amounts 
due under the absorption plans decreased by 17.28% compared with 2011; four Members paid 
part of their debt in advance of their plans (see Table 5). 
58.  Negotiation of these plans resulted in writing off part of the pre-1988 debts, in accordance 
with a Council decision in 1994. The debts written off represent 25.13% of the original debt of the 
countries concerned. 
                                               
21 This reform was studied and proposed by a CB FA working party, which recommended it to the 
General Council on 20 September 2012. WT/BFA/W/303 
- 16 - 
  Table 5 Plans for absorption of the debt of  certain Member States currently being 
implemented 
(in Swiss francs) 
Member 
State Duration 
of the 
plan in 
years Date of 
termination 
of the plan Total 
arrears 
prior to the 
plan Arrears 
written 
off Amount of 
the 
absorption 
plan Amount 
of each 
annuity 
payable Amount 
not 
paid, in 
violation 
of the 
plan Amount 
paid in 
advance 
of the 
plan 
Burundi 20 12/30 1,189,888  297,141  892,747  36,460 - 77,100  
Central 
African 
Republic 30 12/39 1,096,836  297,141  799,695  26,657 54,655  
Chad 15 12/26 1,460,410  297,141  1,163,269  77,551  302,064  
Congo 5 12/14 1,112,836  297,141  815,695  163,140 215,601  
Côte 
d'Ivoire 10 12/19 828,578   828,578  82,858 -  
Democratic 
Republic of 
the Congo  5 12/15 757,854  296,941  460,913  92,183 64,574  
Djibouti 10 12/19 468,925   468,925  46,892 41,428  
Gambia 10 12/19 995,455  297,141  698,314  69,831  6,094  
Mauritania 25 12/34 1,237,988  297,141  940,847  37,634 50,906  
Niger 15 12/24 899,452  194,652  704,800  46,990 37,221  
Sierra 
Leone 15 12/25 1,265,529  297,141  968,118  64,541  43,935  
Togo 5 12/14 506,436  73,153  433,283  86,657 28  
Total   11,820,187  2,644,733  9,175,184  831,394 464,413 429,193  
Source: External auditor, based on WTO data. 
3.8.3  Provisions for arrears of contributions 
59.  The WTO used to provision 100% of arrears of statutory contributions. However, in line with 
our recommendations on the financial statements for 2008 and 2009, three years ago it adopted 
a less unrealistic method whereby it provisions according to the date of the arrears. It provisions 50% for arrears of over one year, 75% for arrear s of more than two years and 100% for arrears 
of over three years. 
60.  Nevertheless, this method exaggerates the risks incurred. Under the IPSAS standards 
the solution is to provision according to the reality of the risk incurred after a statistical analysis of the risk.  
Recommendation No. 8. The auditor recommends the adoption of a more realistic method 
of provisioning for arrears of contributions according to the risk incurred. 
Reply of the Secretariat. The Secretariat will cons ult the external auditor to study the possible use 
of another methodology. 
3.8.4  Contributions of Observer States 
61.  The 31 Observer States pay a contribution corresponding to the minimum contribution 
by Member States (CHF 29,145 in 2012). The amount of assessed contributions is the same as that in 2011 (CHF 903,495) and contributions paid rose by 2.87% (from CHF 903,495 
to CHF 929,451), some States having paid off their arrears, leading to an 8% decrease in payment 
arrears (from CHF 1,067,818 to CHF 928,360). 
62.  The largest amounts concern the following two countries, whose debts go back to 1997 
and 2001 respectively: 
- Sudan (CHF 337,804); 
- Sao Tome and Principe (CHF 306,529). WT/BFA/W/303 
- 17 - 
  63.  Vanuatu became a Member on 24 August 2012, although it had not paid its observer 
contribution for the first eight months of 2012, or  CHF 18,765. As the external auditor pointed out 
in connection with the 2008 accounts, States or customs territories which have observer status can only become Members if they have fully discharged their obligations as observers. 
Recommendation No. 9. The Secretariat should strictly comply with the provisions of Regulation 15 
of the Financial Regulations, under which Observers may only accede to the WTO if their financial 
obligations have been fully discharged. 
Reply of the Secretariat. The Secretariat confirms that Vanuatu was not in arrears on its 
contribution at the time of its accession. The amount due for the current year was not an arrear at 
that moment. The Secretariat will ensure that Members acceding to the WTO rapidly settle the pro rata amount of their contribution owed as an observer during the accession year.  
3.8.5  Refund of tax by the United States of America 
64.  Staff members of the WTO are exempt from in come tax. In the case of the United States, 
whose residents are obliged to pay income tax, the WTO pays it in their place, as do other international organizations, and is then reimbursed by the United States Government pursuant 
to an agreement of 22 December 2000. 
65.  In 2012, receivables for United States ta xes amounted to CHF 4.016 million, an increase 
of 76.7% over 2011 (CHF 2.272 m illion), owing to the accumulation of arrears, the rate 
of reimbursement being well below that of the increase in the amount owed to the WTO, 
despite the sending of many reminders. The latest reminder, dated 2 October 2012, claims CHF 2,877,391, taking into account the administrative procedure costs (in accordance with paragraph 12 of the above-mentioned agreement). 
Table 6 History of the debt of the Un ited States of America to the WTO 
(in Swiss francs) 
Year due 2008 2009 2010 2011 2012 Total debt 
Amount of the debt 339,326 101,666 1,000,823 1,435,666 1,138,961 4,016,442 
Source: External auditor, based on WTO data. 
66.  The WTO also continues to bear the additional costs because the United States refunds 
according to the "first income method", contrary  to the method advocated by the Administrative 
Tribunal of the International Labour Organization. This practice generates additional costs that 
cannot be recovered and these are shared among al l Member States. The additional costs recorded 
in the accounts under staff costs amounted to CHF 93,121 in 2012, as against CHF 160,101 in 2011. 
Recommendation No. 10. The Secretariat should pursue its efforts (i) to accelerate refund by the 
United States of the taxes of WTO staff who resided there; and (ii) to obtain this refund according 
to the method advocated by the Administrative Tribunal of the International Labour Organization 
(renewal of a previous recommendation). 
Reply of the Secretariat. The Secretariat will pursue its efforts in this area. 
3.9  Advances 
67.  Note 8 to the financial statements concerning advances and prepayments contained an error 
relating to the amount of advances on voluntary contributions made by the WTO to Trust Funds: 
an advance of CHF 271,183.11 to the Doha Fund concerning the advanced trade policy course had 
not been cancelled at the end of the exercise  when the project was closed, which implied WT/BFA/W/303 
- 18 - 
  a reduction in the amount of advances to Trust Funds, for which the actual amount is CHF 845,000 
rather than CHF 1,108,000.22 
Recommendation No. 11. The amount of the advances to Trust Funds mentioned in Note 8 to the 
financial statements should be corrected. 
Reply of the Secretariat. The Secretariat has accepted this recommendation and immediately 
corrected its accounts. 
3.10  Assets 3.10.1  Intangible assets 
68.  The statement of financial position recognizes intangible assets, the bulk of which 
(CHF 419,000) is internally developed software, taken into account for the first time in 2012 in accordance with IPSAS standards. 
69.  Paradoxically, the value of these software applications was calculated solely on the basis 
of the purchases of services by the informatics division when the software was being developed. 
The amount of these assets should also include the cost of WTO staff working hours spent developing the software. The development of analytical accounting in the WTO should enable this 
to be done in the coming months. 
70.  This internally developed software should also be amortized at the same rate as software 
purchased on the market. 
Recommendation No. 12. The Secretariat should (i) take account of the cost of WTO staff working 
hours spent developing new software in the amount of intangible assets indicated in the statement of financial position and (ii) amortize this software at a comparable rate to that for software 
purchased on the market. 
Reply of the Secretariat. The Secretariat immediately proposed a change in method for the length 
of amortization and corrected its accounts. It w ill study the possibility of including the time spent 
by its own computer specialists.  
3.10.2  Headquarters buildings 
71.  The WTO headquarters at 154 rue de Lausanne, Geneva, now has two buildings: 
the old building of Centre William Rappard (CWR), whose renovation and extension intra-muros by the covering-over and transformation of two former interior court yards are almost completed; 
the new building and underground car park on which it stands, remain part of the extra-muros 
extension, which are considered to have been delivered on 1 January 2013 (some work relating to the car park and cafeteria had not been comple ted on that date). The former chemin des Mines 
annex has not been occupied by the WTO since end December 2013. Other work still under way 
in April 2013 concerns the construction of security buildings and fencing around the entire 
headquarters financed by the Canton of Geneva. 
72.  The legal situation of the old building and the land on which it stands is as follows: under the 
"infrastructure contract" of 31 May 1995, the Canton of Geneva granted the Fondation des 
Immeubles Pour les Organizations Internationales (FIPOI) a 99-year "surface right" until 2094, and the FIPOI passed on the benefit of this right to the WTO. The WTO does not pay any rent but is 
responsible for all maintenance costs for the building. It has the right to build a new building on 
the land in question and receive rent. The old build ing will be returned to the Canton of Geneva 
without compensation at the expiry of the surface right or earlier should the Organization fail to 
comply with its obligations. Under Article 10 of  the 1995 contract, the party that has the surface 
right (i.e. the WTO, which has the second-degree right) must depreciate the old building over the 
duration of the surface right (99 years). 
                                               
22 Credits advanced to Trust Funds are reclassified to the charge account corresponding to the nature 
of the expenditure (in this case, a mission expens es account), after the su pporting documents for the 
expenditure by the Trust Fund have been submitted. WT/BFA/W/303 
- 19 - 
  73.  The new building which has just been built by the WTO will be handed over to the Canton 
of Geneva at the end of the surface ri ght against payment of an indemnity. 
74.  The WTO has control over the old building and benefits from the economic flows it generates, 
and must therefore indicate it in its assets in a ccordance with IPSAS 17, paragraph 14. It included 
the old CWR building in its opening balance at 1 January 2012 for CHF 60 million. This value is the 
amount recorded in the financial statements since Switzerland made the building available in 1995 for CHF 56 million and the investments made by the WTO prior to 1995 for CHF 4 million. 
75.  However, the Organization had not depreciated the building, contrary to IPSAS 17 and the 
infrastructure contract. In fact, it had not depr eciated the building at all between 1995 and 2012. 
76.  The external auditor has therefore recommend ed adopting the following accounting treatment 
for the old building: 
- entering an asset of CHF 60 million in th e statement of financial position for 1995; 
- entering a counterpart item on the liability side of CHF 60 million corresponding to the 
rights of the ceding authorities (Canton and FIPOI); 
- depreciating the asset and the contra-entry liability by 1/99
th annually so as to bring 
the value of the building down to zero at th e expiry of the surface right, when it will 
be returned without compensation to the Swiss authorities; 
- consequently, for 2012 indicate an exceptional depreciation of 17/99th 
of CHF 60 million, the date of entry into force of the surface right being taken as 1 January 1996, in accordance with IPSAS 17, paragraph 99. 
77.  In the case of the new building and und erground car park (extra-muros extension), 
we recommend the following accounting treatment: 
- recording an asset corresponding to the am ount of the work, i.e. CHF 43.2 million, 
on the date of entry into service, namely 1 January 2013; 
- not making a counterpart entry on the liability side (other than the effect of the cost 
of the work on the results), since the WTO is entitled to compensation for the buildings at the end of the infrastructure contract; 
- making an annual depreciation of 1/50
th, the conventional period for depreciation 
of buildings (or depreciating according to the specific depreciation period for each element of the work), and carrying out the necessary depreciations and re-valuations as necessary; the first depreciation should therefore be indicated 
at 31 December 2013. 
78.  Finally, in the case of the heavy work carried out inside the old building 
(intra-muros extension), we advise applying the same accounting treatment as for the 
new building, on the assumption that these works will be covered by a new contract
23 between the 
WTO and the Canton of Geneva that will provide for compensation at the end of the infrastructure contract, since they increase the value of the building: 
- recording an asset corresponding to the amount of the work (CHF 18 million 
at 1 January 2013 and CHF 20.5 million on conclusion), at 1 January 2013; 
- Not recording a contra-entry on the liability  side (other than the effect of the cost 
of the works on the results), since the WTO will receive compensation at the end 
of the contract; 
- Depreciating 1/50
th of the work annually (or depreciating according to the specific 
depreciation period for each element of the work), as from 31 December 2013. 
                                               
23 A new infrastructure contract is being prepared as at April 2013. WT/BFA/W/303 
- 20 - 
  Recommendation No. 13. The Secretariat should (i) indicate a counterpart liability for the asset of 
CHF 60 million indicated in the statement of financial position in relation to the old headquarters building and (ii) depreciate this asset over 99 years, in line with the length of the surface right 
granted by the infrastructure contract of 31 May 1995, as from 1 January 1996. 
Reply of the Secretariat. The Secretariat has accepted this recommendation and immediately 
carried out the requested corrections. 
3.10.3  Equipment 79.  The assets in the statement of financial position include CHF 12.264 million of work in 
progress for equipment and CHF 3.208 million for equipment already capitalized. The information 
given on these assets and their capitalization called for a number of observations. 
3.10.3.1  Information given 80.  Two types of information give n on the assets were inadequate. 
81.  Point 125 in Note 1 on accounting policies distinguishes several thresholds for depreciation 
of assets. The first two, described in point (b) below, are clearly explained; the third, concerning "assets acquired as part of a lot with a total value above CHF 500,000" was mentioned without 
further comment. It should be indicated that lots with a total value above CHF 500,000 are 
depreciated over ten years (depreciation period adopted for furniture), whatever the composition 
of the lot. However, lots of lesser value are broken down into various categories of assets, 
each depreciated according to its specific useful life. 
82.  It was very difficult to compare the assets included in the physical inventories with the 
accounting inventories (recorded in the Oracle accounting management software) owing to the lack of precision of the accounting inventories, which did not always indicate the nature of the 
items recorded. The name of each of the machines  used by the documents reproduction service, 
for example, was not indicated in the physical inventory of its goods. 
Recommendation No. 14. To improve the information given on the Organization's assets, 
(i) additional information should be given in point 16 of Note 1 on accounting policies and (ii) the physical inventories of the Organization's equipment should indicate more clearly the 
nature of each asset recorded. 
Reply of the Secretariat. The Secretariat immediately made the requested corrections. 
3.10.3.2  Capitalization thresholds 
83.  The WTO recognizes its equipment as assets as follows: 
- equipment acquired with a value abov e CHF 5,000 is recognized individually; 
- equipment acquired as part of a lot with  an individual value of between CHF 2,500 
and CHF 5,000 is recognized by lots when sufficiently numerous to form a lot 
of at least CHF 50,000; 
84.  Fully depreciated old assets and assets given to the WTO are not recognized. 
85.  This method has the drawback of not taking into account the following categories of assets, 
which should be indicated in the financial statements and in the Oracle system: 
- Certain "tempting" assets that are vulnerable to theft and subject to specific technical 
management by the informatics services, such as laptops or BlackBerry mobile 
phones, with an individual value of less than CHF 2,500. Although their unit value 
is limited, there are many units of such equipment representing a high total value that should be taken into account in order to give a faithful picture of the 
Organization's assets; WT/BFA/W/303 
- 21 - 
  - fully depreciated assets with a high gross individual value which may give rise 
to repair costs, such as two of the Organization's motor-vehicles or the enveloping machine.
24 
86.  The external auditor recommends recognizing by lots "tempting" assets with an individual 
value of less than CHF 2,500, and recognizing for a symbolic amount (e.g. CHF 1) fully depreciated 
motor-vehicles and machines with a high individual value that are still in service. 
3.10.3.3  Works of art 
87.  It is suggested that some of the art wo rks decorating the WTO should be depreciated. 
Works of art and decorations are valued at cost – with the exception of those given to the WTO, 
which are not recognized – but they are not depreciated, whereas some of them are affixed to the building and likely to be destroyed with it, and may be assimilated to fixtures and fittings which 
are generally depreciated over ten years. 
88.  Under IPSAS 17, paragraph 95, the Organization has five years to complete the recognition 
of its assets. 
Recommendation No. 15. The WTO should improve th e recording of its assets in the statement 
of financial position (i) by recognizing in lots the "tempting" goods that are managed in a particular 
way by the informatics division, even where th eir individual value is less than CHF 2,500; 
(ii) recognizing for a symbolic value assets that have already been depreciated but are still in service and have a high gross value, such as motor-vehicles and machines; and (iii) depreciating 
works of art and decorations in the same way as fixtures and fittings. 
Reply of the Secretariat. The Secretariat will st udy the implementation of this recommendation. 
3.11  Completion of the WTO headquarters extension project 
3.11.1  Compliance with the timetable and budget 
Table 7 Commissioning and financing of the project 
(CHF million) 
Project Financing by the Swiss authorities WTO 
financing Commissioning 
organization Grant Loan Total 
Renovation of the CWR building 45   45 0 FIPOI 
Security parameter (estimate) 8   0 FIPOI 
Intra-muros (extension of the 
CWR)  20 20 0 WTO 
Extra-muros (and car park) 10 (car park)  40 (building)  50 0 WTO 
Common facilities 0  0 0 21.3 WTO 
Making offices available 15  15 0  
Total 78  60 138 21.3  
Source: WTO. 
89.  The WTO headquarters renovation and extension project, which is nearly completed, 
comprised three major overlapping stages: 
- renovation of the headquarters building (Centre William Rappard), from January 2009 
to autumn 2012 (excluding renovation of the former restaurant area, which is 
programmed to start after the opening of the new restaurant25), for which FIPOI is the 
commissioning organization; 
- the intra-muros extension of the hea dquarters (roofing over and equipping 
two internal court yards), from July 2010 to March 2012, for which the WTO is the commissioning organization; 
                                               
24 Mercedes Minibus, bought for CHF 34,385.61 in 2006, and Ford Transit 350, bought for CHF 38,000 
in 2004; Pitney Bowes Di 800 enveloping machine bought before 2002. 
25 The new restaurant came into service on 7 April 2013. WT/BFA/W/303 
- 22 - 
  - the extra-muros extension (construction of a new building and underground car park 
next to the CWR), from March 2011 to December 2012, also commissioned by the WTO. 
90.  Two additional projects have been added to these major stages: 
- the building of an external security parameter, commissioned by FIPOI; 
- and the provision of common facilities for the whole project, for which the WTO is the 
commissioning organization. 
91.  The WTO has respected the initial timetable fo r carrying out the extra-muros extension, as the 
new building and its parking lot were delivered on schedule in December 2012, and was therefore able to move out of the chemin des Mines annex without having to pay the serious penalties provided for in the event of exceeding the term  of the lease of the annex. The intra-muros 
extension was delivered in April 2012, with a single  month's delay, despite the intermediary delays 
that arose in the delivery of the meeting rooms which complicated fitting them out. 
92.  The final total cost of the operation cannot yet be indicated as the payments of the work have 
not been completed in April 2013. Furthermore, the final general breakdown submitted by the 
enterprise in charge of the intra-muros extens ion has not been accepted by the Organization 
and will have to be the subject of negotiations or  recourse to arbitration as provided for in the 
contract between the Organization and the enterprise. 
93.  Nevertheless, it seems likely that the co s t  o f  t h e  w o r k  w i l l  c o m e  w i t h i n  t h e  b u d g e t  
of CHF 70 million fixed by the WTO (see Table 7 above). If the amount of the expenditure 
committed at 31 December 2012, CHF 70.18 million, is slightly over budget, this overspending 
should be offset by the lateness penalties owed by the above-mentioned enterprise. 
3.11.2  Method of recording expenditure for the work 94.  The financial statements originally presented to the auditors recorded all the expenses 
actually paid in 2012, but not the expenses relating to work carried out in 2012 but not yet paid, 
contrary to one of the basic principles of the IPSAS.
26 The following corrections are therefore 
recommended. 
95.  In the context of its dispute with the enterp rise HCR, which carried out the intra-muros work, 
the WTO withheld the last three instalments of the contractual payment due for the months of February, March and April 2012 for a total of  CHF 1,815,000. Whatever the outcome of this 
dispute, it seems most probable that the WTO will have to pay this amount, which can be 
calculated with certainty. The principle of prud ence therefore required that provision be made 
for it. 
96.  Two invoices concerning the project were re ceived by the Organization in December 2012 
and paid in 2013, for a total amount of CHF 40, 661.33. These should have been recorded in the 
2012 accounts as "payables" (debts to suppliers), as they correspond to work performed in 2012. 
97.  Two other invoices and the final breakdown of Wittfoht Planung Gmbh, for a total amount 
of CHF 519,901.36 were not recorded in 2012 as they were sent to the WTO and paid in 2013. 
They should nevertheless have been recorded in the 2012 accounts as "payables" (invoices not received), as the work was performed in 2012. The same applies to all or part of an invoice from Implenia for CHF 2,152,445.50, relating to addi tional work requested ("change orders"), 
much of which was taken delivery of by the WTO in 2012, and the final breakdown from the same 
enterprise for CHF 1.9 million. 
98.  In addition, the dispute with the firm HR S should have been mentioned in Note 23 as a 
contingent liability (see Chapter 7). 
                                               
26 Conceptual framework of the IF RS which applies to the IPSAS. WT/BFA/W/303 
- 23 - 
  99.  Lastly, an error of CHF 1,348,059.70 was found in the accounts relating to project financing. 
At 31 December 2012 the loan received from FIPOI for the extra-muros extension represented CHF 40 million and the subsidy from FIPOI for the car park amounted to CHF 9.62 million (whereas the original entries overestimated the amount of the loan and that of the grant). 
Recommendation No. 16. The Secretariat should (i) make provision for the amount of the 
undisputed invoices of one of the construction ente rprises, withheld in the context of a dispute; 
and (ii) record in the 2012 accounts the invoices received in 2012 corresponding to work 
performed in 2012 as "payables" (debts to suppliers) and the invoices not yet received in 2012 but corresponding to work performed in 2012 as "payables" (invoices not 
received); (iii) mention the dispute on a general breakdown with one of the construction 
companies among contingent liabilities; and (iv) rectifying the accounts the amount of the loan and the subsidy from FIPOI. 
Reply of the Secretariat. The Secretariat accepted this recommendation. It immediately entered 
the provision and the invoices mentioned above. It also supplemented the notes to the financial 
statements for 2012 in order to present the info rmation requested, and corrected the amount 
of the loan. 
3.12  International trade centre 100.  The International Trade Centre (ITC) is a joint technical cooperation agency of the WTO 
and the UN. It is the focal point for technical assistance and cooperation activities in the trade 
promotion field, within the UN system of assistance to developing countries. It is a "jointly controlled entity" as defined by IPSAS 8. 
101.  The ITC applies the UN financial rules and regulations and therefore does not produce 
IPSAS-compliant financial statements. It is planning to adopt IPSAS by 2014. 
102.  The WTO: 
- presents the contribution paid to the ITC among expenses in the statement 
of financial performance for CHF 18.9 million; 
- presents background information on the ITC in paragraph 112 of Note 1 
on accounting policies; 
- mentions in paragraph 113 of Note 1 that the WTO does not currently consolidate 
the ITC and will consolidate it in future using the equity method. 
103.  IPSAS 8 "Interests in joint ventures" requires that a venturer report his interests in a jointly 
controlled entity. Paragraph 43 of the Standa rd allows the use of the equity method. 
104.  The definition of the equity method in IPSAS 8 is the following: "The equity method (for the 
purpose of this Standard) is a method of accounting whereby an interest in a jointly controlled entity is initially recorded at cost, and adjusted thereafter for the post-acquisition change in the 
venturer's share of net assets/equity of the jointl y controlled entity. The surplus or deficit of the 
venturer includes the venturer's share of the surplus or deficit of the jointly controlled entity". 
105.  In paragraph 45, IPSAS 8 indicates that the equity method is described in IPSAS 7 
"Investments in associates". 
106.  IPSAS 7 states in paragraph 33 that if an associate uses accounting policies other than those 
of the investor for like transactions and events in similar circumstances, adjustments shall be made to conform the associate's accounting policies to those of the investor when the latter 
applies the equity method. 
107.  In paragraph 61 and following, IPSAS 8 lists all the elements that an entity must disclose 
concerning its interests in joint ventures. By way of example, paragraphs 61, 62 and 63 mention, 
respectively: WT/BFA/W/303 
- 24 - 
  - any contingent liability that the venturer has incurred in relation to its interests 
in joint ventures, and its share in each of the contingent liabilities that have been incurred jointly with other venturers; 
- any capital commitments of the venturer in relation to its interests in joint ventures 
and its share in the capital commitments that have been incurred jointly with other 
venturers; and 
- the aggregate amounts of each of current assets, non-current assets, 
current liabilities, non-current liabilities, revenue and expenses related to its interest 
in joint ventures. 
108.  As mentioned above, the WTO has not adjusted the ITC financial statements to bring them 
into line with its own accounting standards, has not used the equity method in reporting the ITC 
and has not presented all the information required under the standards. 
Recommendation No. 17. The Organization should adjust the financial statements of the ITC in 
order to bring them into line with its own accounting standards, use the equity method in reporting 
the ITC and present all the information required under the standards. 
Reply of the Secretariat. The Secretariat will consolidate the ITC when the latter produces its 
accounts in accordance with IPSAS. 
PART II: PERFORMANCE AUDIT 
1  OBJECTIVES AND SCOPE OF THE AUDIT 
1.  In accordance with the notification of  the First President of the Court of Audit 
on 30 January 2012, a team of five auditors conducted a performance audit of the WTO's Office of Internal Audit in Geneva, from 1 to 12 October 2012. The objective of this audit was: 
- to examine the efficiency and effectiveness of the activities of the WTO Office 
of Internal Audit (OIA); and 
- to ensure that the OIA complies with the international standards for internal audit. 
2.  The audit was conducted in accordance with the international standards of the Supreme Audit 
Institutions (ISSAI
27) and the Organization's Financial Regulations. 
3.  Each observation and each recommendation was discussed with the persons concerned. 
The closing meeting for the audit was held on 12 October 2012 with Ms Margaret Kireeta-Mwanja, 
head of the Office of Internal Audit, and Mr  Tristan Bauswein, Director of Administration 
and General Services, who recognized the relevance of our comments. This letter takes full account of their comments and replies. 
                                               
27 International Standards of Supreme Audit Institutions. WT/BFA/W/303 
- 25 - 
  2  SUMMARY OF FINDINGS AND RECOMMENDATIONS 
2.1  Main findings 
1. Since its establishment by the WTO in 2008, the Office of Internal Audit (OIA) has worked hard 
and efficiently, producing eight reports on topi cs corresponding to the main concerns of the 
Organization's management and issuing 156 reco mmendations, nearly all of which have been 
implemented or are in the process of implementation. 
2. The WTO Internal Audit Charter should be revised so as to give a WTO committee 
(probably the CBFA28) competence to follow internal audit matters. 
3. The scope of internal audit is confined to budgetary and financial matters. The Organization 
should supplement its internal control arrangements by drawing up the list of authorities 
competent to perform audits on matters other than strictly budgetary and financial issues. 
4. Some tasks of the Office of Internal Audit shou ld be defined more formally, in accordance with 
the International Standards for the Professional Practice of Internal Auditing: establishment and 
revision of annual audit plans with reference to the WTO risk management framework under 
preparation, and development of quality control programmes and annual training plans. 
2.2  Recommendations 
Recommendation No. 1. The WTO should revise its Internal Audit Charter to broaden the 
responsibilities of one of its committees with respect to internal audit. 
 
Recommendation No. 2. The Secretariat should issue documents indicating the procedures to be followed for (i) conducting investigations within the WTO, where necessary, on matters that are not strictly budgetary and financial; and ( ii) addressing complaints to management. 
 
Recommendation No. 3. Future annual internal audit plans should be drawn up with reference to the WTO risk management framework which the Secretariat is preparing and in coordination with 
the external auditors. 
 Recommendation No. 4. The Office of Internal Audit should (i) draw up multi-year audit plans; 
(ii) specify in its annual audit plans the amount of time scheduled and expected completion date 
for each audit; and (iii) formally revise its annual audit plans if necessary.  Recommendation No. 5. The Office of Internal Audit should establish a quality control 
and improvement programme including period ic internal and external evaluations. 
 Recommendation No. 6. The Office of Internal Audit should establish an annual training plan 
and publish a list of the training activities actually followed each year by the auditors. 
 3  OBSERVATIONS AND RECOMMENDATIONS 
4.  The Office of Internal Audit
29 was set up by the WTO Director-General, having been encouraged 
to do so by several reports of the Austrian external auditors.30 The OIA focuses exclusively 
on budgetary and financial questions, and it has intentionally been kept small, as the WTO only has a staff of about 700, all in Geneva. The OIA was established in April 2008 and has only 
two staff, one grade 10 in charge of internal audit and a grade 6 auditor, pursuant to the 
WTO Internal Audit Charter (section L: appointment and staffing).
31 
5.  The credits for the OIA consist almost entirely of staff costs, do not vary much from year to 
year and are limited. They represente d CHF 426,266 in 2009, CHF 472,921 in 2010 
and CHF 433,156 in 2011, or 0.19% of the WTO's total expenditure.32 In 2012 this amount will 
                                               
28 Committee on Bu dget, Finance and Administration. 
29 OIA. 
30 See the report of the Austrian auditors  on the 2006 accounts (document WT/BFA/W157, 
paragraphs 145 and 146). 
31 The Charter dates from 28 July 2008 (document WT /BFA/W175). The current version, twice amended 
(see below) dates from 16 August 2011 (document OFFICE (08)/55/Rev.1). 
32 The statement of financial performance for 2011 indicates total expenditure of CHF 217,824,012. WT/BFA/W/303 
- 26 - 
  certainly be smaller, as during most of the year its staff actually consisted of two members 
as against three from February to December 2011 (and in February 2012)33 and the appointment 
of a new staff member is not currently envisaged. 
6.  This report deals successively with the organiza tional location of the Office of Internal Audit 
and its methods. 
3.1  Organizational location of the office of internal audit 7.  The organizational location of the OIA is established by the above-mentioned Internal Audit 
Charter, which is inspired by the International St andards for the Professional Practice of Internal 
Auditing issued by the Institute of Internal Auditors
34 and annexed to the Charter (as the IIA Code 
of Ethics). 
8.  However, two points deserve careful scrutiny as the arrangements adopted deviate from the 
letter of the International Standards or the practices of other international organizations: 
the relationship between the OIA and the WTO bodies, and the scope of its work. 
3.1.1  The WTO Internal Audit Charter 
9.  The various chapters of the Charter deal with the following matters: 
- mission of the OIA; 
- its general objectives; 
- its scope of work; 
- its authority and prerogatives; - its independence; - the WTO management  responsibilities; 
- professional standards; 
- audit planning; - reporting; 
- appointment and staffing; and 
- revision clause. 
10.  The provisions of the Charter are entirely consistent with the International Standards 
as regards the rules to be followed by the auditors to ensure their independence and the quality 
of their work. They aim in particular at avoiding any conflict of interest and any involvement of the auditors in the exercise of operational responsi bilities within the WTO. They provide for the 
planning and conduct of audits according to methods that are practically identical to those applying 
to the external auditors, in order to guarantee the adversarial nature of proceedings: 
audited services must in particular systematically receive the draft reports of the OIA in order to be able to exercise their right of reply. 
11.  The WTO must provide the OIA with full cooperation, full information and written responses 
to all its reports, and promptly inform it of suspected cases of a fraudulent nature or malpractices. 
12.  The Charter establishes that the head of the OIA and the auditor are appointed for 
a maximum, non-renewable period of five years. This provision, the purpose of which is clearly 
both to guarantee the independence of the audi tors by ensuring that they do not establish 
too close links with the services they audit, and al so to ensure that the latter are regularly audited 
with fresh eyes, does not appear in the International Standards. The WTO Director-General, 
however, has just waived this provision by extending for one year the appointment of the head 
of the OIA to enable her to train her successor instead of leaving the Organization at the end of her five-year term roughly at the same date as the Director-General. 
                                               
33 An auditor appointed in April 2008 was moved to carry financial and accounting monitoring of the 
WTO headquarters renovation/extension project at the end of December 2008; an administrative assistant was 
assigned to the OIA from 2009 to end 2011; a temporary staff member with the necessary qualifications to be 
an auditor was appointed from February 2011 to March 2012; the new auditor entered on duty 
in February 2012 following a formal recruitment procedure. 
34 IIA. WT/BFA/W/303 
- 27 - 
  3.1.2  Relationship of the OIA with the WTO bodies 
13.  The OIA maintains links with the WTO Director-General alone, and not with senior 
management or the General Council of the Organi zation, contrary to the recommendation in the 
International Standards.35 
14.  This particularity of the WTO Internal Audit Charter may be noted in all areas of activity 
of the OIA: the Director-General alone approves  the Charter and its amendments, alone approves 
the audit plans and alone appoints the head of the OIA, who reports to him. 
15.  However, the International Standards suggest as good practice (in the "interpretation" 
to Standard 1110) that "the chief audit executive reports functionally to the board. Examples of functional reporting to the board involve the board: 
- approving the internal audit charter; 
- approving the risk-based internal audit plan; 
- receiving communications from the chief audit executive on the internal audit 
activity's performance relative to its plan and other matters; 
- approving decisions regarding the appo intment and removal of the chief audit 
executive; and 
- making appropriate enquiries of management and the chief audit executive 
to determine whether there are inappropriate scope or resource limitations." 
16.  The fact that the OIA reports directly to the Director-General himself, which is a major 
guarantee of its independence and authority, is not mandatory since the "interpretation" 
to Standard 1100, to which we have already referred, advocates "direct and unrestricted access 
to senior management" and not explicitly to the Director-General himself. There are two reasons 
why the internal audit does not report to a board: 
- in the WTO there is no body of a few members similar to the board of directors 
or supervisory board in a private-sector firm; and 
- the 157 WTO Members have traditionally wished to follow all matters without 
delegating them to a committee of a few members, such as the audit committees set 
up by other international organizations to have oversight over internal audits.
36 
17.  Nevertheless, the Charter does provide for consultation of WTO bodies in a few cases such as 
the following: 
- the audit plans of the OIA should take a ccount of the risks identified by Members 
through the WTO General Council (as well as by the Director-General 
and senior management); 
                                               
35 The "interpretation" to Standard 1100 of the Intern ational Standards specifies that "the chief audit 
executive has direct and unrestricted access to senior  management and the Board. This can be achieved 
through a dual-reporting relationship". 
36 However, there are some committees that do not consist of all Members: the WTO Pension Plan 
Management Committee, for example, has only four member s and four alternates appointed 
by the General Council and four members and four alternates appointed by the Director-General, 
as well as three experts, which is a similar membership to that adopted for the audit committees of some international organizations. WT/BFA/W/303 
- 28 - 
  - the Committee on Budget, Finance and Administration (CBFA) is informed 
of amendments to the Charter37, as in fact it was informed of the initial text 
of the Charter; 
- the annual report of the OIA is presen ted to the CBFA (but submitted to the 
Director-General, with a copy to the external auditors). 
18.  In the above three cases, the powers of th e bodies concerned are limited. The wishes of the 
General Council are taken into account, but consultation with the General Council is not 
compulsory, and the CBFA is only informed of amendments to the Charter and annual reports. 
19.  In practice, the information provided to the CBFA has been fuller than what is required under 
the letter of the Charter, since the head of the OIA has presented not only her annual reports to the Committee
38 but also the annual audit plans and the main findings and recommendations 
of the OIA in its audit reports. 
20.  Nevertheless, the CBFA has twice requested that its information and powers be broadened 
on the following points: 
- at its meeting on 9 October 2008, it expressed the wish to be able to propose 
amendments to the Internal Audit Charter and receive the audit reports (which would involve amending the Charter); 
- at its meeting on 13 March 2012, it expressed the wish that the annual reports 
of the OIA be more detailed and give an analysis of the recommendations issued by risk category. It also "invited" the internal and external auditors to examine certain questions concerning rumours of misuse of funds by WTO staff members, an invitation 
that is not consistent with the Charter, which does not allow the CBFA the possibility 
of proposing internal audit topics.
39 
21.  In order to comply more strictly with the International Standards, it would seem desirable 
for the WTO to amend the Internal Audit Charter in such a way as to increase the powers of one 
of the WTO bodies, either one that exists or on e that could be set up. Such an amendment would 
strengthen the independence of the OIA in case of conflict with the WTO Director-General. 
The International Standards advocate double repo rting to the board and the senior management 
as an internal audit service is always vulnerable to a risk of conflict with a body, even if the recent 
history of the WTO does not provide any such example. 
22.  In practice, there appear to be two possible solutions: 
- Creating an Audit Committee consisting of a few representatives of the Members, 
elected for example by the General Council, as well as a few experts who could be appointed by the Audit Committee on the proposal of the Secretariat
40; 
- attributing broader responsibilities regarding internal audit to the CBFA, which could 
meet in special session on audit problems, a solution which would have the advantage of involving all Members. In this case, the CBFA could have recourse to experts 
appointed, for example, according to the methodology described below in the event of 
the creation of a Committee on Risks. This second hypothesis is more consistent with 
the WTO's desire to involve all Members in the various aspects of management. 
                                               
37 The Charter has been amended twice, to move to the internal audit manual the provisions originally 
set out at Article J9 concerning quality control of auditing, and to provide for the appointment of an auditor in addition to the head of intern al audit in Article L. The CBFA was informed of these two amendments 
by the annual reports of the OIA for the years 2010 and 2011 (documents WT/BFA/W/226 and WT/BFA/W/259). 
38 See the records of the meetings of the CBFA on 9 October 2008, 25 May 2010, 12 July 2010, 
14 June 2011 and 13 March 2012. 
39 But only provides that the annual audit plans should  take account of risks identified by the Members 
through the General Council. 
40 This Audit Committee wo uld have other functions such as fo llowing the reports of the external 
auditors and the re gister of risks. WT/BFA/W/303 
- 29 - 
  23.  The new powers accorded to the committee thus selected should be modelled on those listed 
above in the "interpretations" already cited to IIA Standards 1100 and 1110: 
- The chosen committee would be linked to the OIA, as is the Director-General; - approval by the chosen committee of amen dments to the Internal Audit Charter; 
- approval of the internal audit plans; 
- approval of the appointment and possi ble removal of internal audit staff. 
24.  In addition, the audit reports could be co mmunicated to the chosen committee, except where 
the OIA and/or the Secretariat should deem otherw ise. The "interpretation" to Standard 1110 does 
not provide for the communication of all reports, but does state that the board should receive "communications from the chief audit executive on the internal audit activity's performance 
relative to its plan and other matters". Furthermore, it is obvious that some reports cannot be 
communicated in their entirety, for example if they  include confidential information or information 
that might appear in the personnel file of a staff member liable to sanction.  
Recommendation No. 1. The WTO should review its Internal Audit Charter to broaden the 
responsibilities of one of its committees with respect to internal audit. 
Reply of the WTO: when the Financial Regulations are revised, the WTO Secretariat will suggest to Members, through the CBFA, that: 
- the CBFA should meet at least once a year as the Audit Committee in order to deal 
with matters relating to external and internal audits; 
- the Internal Audit Charter should refer more  explicitly to interaction with the CBFA. 
3.1.3  Scope of work of the OIA 25.  Article E of the Internal Audit Charter confines the scope of work of the OIA to budgetary and 
financial matters with two slight exceptions: 
- Article E6 provides that the OIA is tasked  with both "financial and compliance audits" 
as well as "performance (value for money) audits"; but performance audits imply 
an assessment by the auditors of the effi ciency of the management of the audited 
entity, and that efficiency cannot be evaluated solely in financial terms; 
- the list of activities of the OIA given in points (e) to (l) in Article E6 includes 
"reviewing specific operations at the request of the Director-General 
and management", which could theoretically go beyond the budgetary and financial field. 
26.  The preparatory work for the Charter shows that the WTO did not wish to give the OIA 
too broad a function, so as to leave management the possibility of carrying out technical audit 
tasks itself (such as those entrusted to the technical cooperation audit unit, which reviews the activities of the WTO Institute for Training and Technical Cooperation
41), and also so that the OIA, 
with its staff of two members, should not be called upon to carry out too many tasks. 
The possibility of giving the OIA ombudsman-like functions of investigation in all areas in response to staff complaints was also ruled out. 
27.  The restricted scope of work of the OIA ha s been commented on by the external auditors 
in 2008, during our audit in October 2012, and by representatives of some Members in April 2012. 
- In September 2008 the external auditors recommended studying bringing closer 
together the technical cooperation audit unit and the OIA. This study was carried out 
                                               
41 See the Report of the external auditors for 2010 on the 2009 financial statements 
and performance audits. WT/BFA/W/303 
- 30 - 
  but the Secretariat considered that it was best to continue separating the financial 
audit and technical audit functions, as the tasks of the technical cooperation unit were highly specialized and involved a great deal of work in view of the number of training 
activities organized by the WTO; 
- the Office of Internal Audit considers that it would be helpful in some of its audits 
if the definition of its functions were widened to "operations" and not only budgetary and financial matters; 
- the representatives of some Members told the external auditors in April 2012 that 
they were surprised that, after it had discovered dysfunctions in the course of an audit of the security services, the OIA was entrusted with a supplementary mission that exceeded budgetary and financial matters. They also suggested establishing 
an organized system of complaints and charges of infringement of the Organization's 
rules (whistleblowing) in the WTO to enable staff to address criticisms and suggestions to the Secretariat without running the risk of disciplinary sanctions. 
28.  The foregoing sometimes contradictory observations call for differentiated replies. It seems 
to the external auditor, firstly, that amending the Charter to extend the OIA's powers to "operations" is not desirable as the staff of the OIA is too small to enable it to deal with a 
permanent increase in its workload. Moreover, the Ch arter provides the possibility for entrusting it 
with performance audits and investigations at the request of the Director-General, so that the scope of some of its audits can be broadened in case of particular need. 
29.  However, the limited scope of action of the OIA is open to question as the Organization does 
not have a body of inspectors which can carry out investigations into matters that are not strictly 
budgetary and financial, and as far as we know there is no document at present indicating who might be responsible for such investigations. 
30.  In the event of discovery of an unfore seen dysfunction involving the opening of an 
investigation, the Secretariat therefore has to im provise arrangements, with the risk of raising 
issues such as those described above. 
31.  The WTO is too small to be able to establish a body of inspectors such as exists in the 
United Nations. The alternative solution is to determine who should carry out investigations on matters that are not strictly budgetary and financial, and issue guidelines listing the persons who can conduct investigations of different kinds and the authorities responsible for selecting 
investigators and following up their work. The Secretariat is currently looking into this matter. 
The publication of written guidelines seems desirable. 
32.  As far as we know, there has been no case of a WTO staff member being penalized 
for criticizing the Secretariat. This problem therefore does not call for priority treatment. 
According to the information received by the auditors, complaints and grievances are sent to the Office of the Director-General and representati ves of Members. In addition, in September 2012 
a letter of complaint was sent out on the WTO intranet by a former staff member to all staff 
members, all delegations and the external auditors. 
33.  In order to maintain a healthy atmosphere in the Organization, it therefore seems advisable 
to channel staff complaints by indicating in an official WTO document to whom they should be 
addressed and recalling the protection which the staff rules provide. 
34.  There are two possible solutions: creating a telephone hotline under the oversight of an 
authority to be determined (Office of Internal Audit or WTO legal adviser, for example) or the 
issuing of an internal circular indicating the proper channels and format for making complaints 
and spelling out the protection provided by the staff rules. The Secretariat has preferred the second option and is drawing up the appropriate do cuments, and is also preparing to include this 
issue in staff training.  
Recommendation No. 2. The Secretariat should issue documents indicating the procedures to be 
followed for (i) conducting investigations within the WTO, where necessary, on matters that are 
not strictly budgetary and financial, and ( ii) addressing complaints to management. 
Reply of the WTO: the WTO legal adviser is  currently working on these documents. WT/BFA/W/303 
- 31 - 
  3.2  Methods of the office of internal audit 
3.2.1  Audit planning 35.  Article J9(a) of the Charter provides that the OIA shall develop a flexible annual audit plan 
in coordination with the external auditors using a risk-based methodology that inter alia  includes 
any risks identified by Members (through the General Council), the Director-General and senior 
management. 
36.  This Article complies fully with IIA Standard 2010, the "interpretation" to which states that 
if the organization does not have a risk management framework, the chief audit executive uses 
his/her own judgement of risks after consultation with senior management and the board. 
37.  In practice, the head of the OIA has pr epared annual audit plans for 2008, 2010, 2011 
and 2012. No plan was in fact prepared for 2009 as most of the 2008 plan was carried over 
to 2009.
42 
38.  The annual audit plans were essentially prep ared on the basis of the suggestions of the 
Director-General and directors of the WTO. This could not be otherwise, as the WTO does not so 
far have a risk management framework and the Fr ench external auditors' mandate began in 2008. 
39.  The external auditors did not subsequently pr opose audit topics to the OIA as they found that 
the audit plans were very much in line with th eir evaluation of the Organization's risks and, 
in several cases, with observations in their reports (see below). 
40.  The Secretariat is currently preparing a risk  management framework and the situation should 
change in future in this regard. It would be desirable, in accordance with the Charter and the International Standards, for the preparation of future audit plans to refer explicitly to this 
framework and take into account on a priority basis the highest risks identified from a budgetary 
and financial standpoint.
43 
41.  The internal and external auditors exchange information during each of the external auditors' 
visits to Geneva. It would be more in line with good practice to supplement these informal 
relations with a formalized exchange by e-mail during the preparation of the annual internal 
audit plan. 
Recommendation No. 3. Future annual internal au dit plans should be drawn up with reference 
to the WTO risk management framework which the Secretariat is preparing and in coordination 
with the external auditors. 
Reply of the WTO: When drawing up the audit plans, the OIA will incorporate the elements added 
by the introduction of a risk management system. 
3.2.2  Audit topics 
42.  Tables 1 and 2 below present the topics covered by the various audit plans and the 
completion dates of the corresponding reports. A number of comments may be made concerning 
the number of topics included in each plan and their choice. 
43.  The 2008 plan had four topics and was too ambitious to be carried out in a single year, 
in view of the small size of the OIA, and in  fact has not yet been completed: the audit 
on delegation of authority44 is very complex and will be completed by the end of 2012.45 
                                               
42 See the minutes of the meeting of the CBFA of 25 May 2010. The OIA started work in April 2008. 
Its first tasks were to prepare the 2008 audit plan and the Internal Audit Charter, dated 28 July 2008. It was 
beginning its audit work when the first mission of the French external auditors in September 2008 took place. 
43 A risk register should include all types of ri sks to which an organization may be exposed. 
Some political or media risks call for preventive meas ures which do not basically fall within the internal 
audit sphere. 
44 Delegation of authority refers both to delegati on of power and delegation  of signing authority. 
45 The provisional report was submitted to the Director-General on 2 August 2012. WT/BFA/W/303 
- 32 - 
  44.  The subsequent annual plans were more realistic: 
- the 2010 plan included only two new topics, - the 2011 plan did not include any new topics (but for the second time included 
the topic of outsourcing of services, which involved carrying out three different 
reports, on security, cleaning and informatics services, as well as several follow-up 
reports on implementation of earlier reports), and 
- the 2012 plan included only one new topic. 
45.  The number of follow-up reports has natura lly increased with each annual plan: from two 
in 2010 to six in 2012. 
46.  The small OIA team has thus carried out a great deal of work, as the scope of the reports 
is large (particularly in the case of delegation of authority, procurement, travel and payroll) 
and the subject matters dealt with are complex (in particular the audits on delegation of authority 
and outsourcing of informatics services). Howeve r, these annual plans could not be carried out 
during the reference year and did not give clear and precise information on the OIA workload 
in each case. 
47.  It is therefore suggested that in future a multi-year audit plan be drawn up which should 
include both the list of audits to be carried out on new topics and the list of follow-up reports 
for earlier audits. 
48.  If this suggestion is followed, the role of the annual audit plan would be to provide more 
precise information than is currently the case on the actual work of the OIA during each year and on the planned dates for completing the audits. The annual audit plans should 
therefore mention: 
- the list of audits included in the multi-year plan on which the OIA will work during the 
plan reference year, and the number of months or weeks of work scheduled 
for each audit; 
- the list of any new reports not included in the multi-year plan to be undertaken at the 
request of the Director-General or on the initiative of the OIA, and the number 
of months or weeks of work scheduled for each one; and 
- the expected completion date for each report. 
49.  The OIA has not so far mentioned with any precision the estimated duration of its audits in its 
audit plans since, being newly set up, it had little knowledge of the specific constraints in the WTO. 
It subsequently found that a good deal of time was required to explain to the services concerned 
the role of an internal audit, with which they were not familiar. 
50.  It also appears advisable to modify as necessary the annual audit plan and transmit the 
amended plan to those concerned. Audit plans shou ld not be a rigid framework, as the need to 
study new topics may arise in the course of the year and the length of time required for audits may prove longer than expected. 
Recommendation No. 4. The OIA should (i) draw up multi-year audit plans; (ii) specify in its 
annual audit plans the amount of time scheduled and expected completion date for each audit; 
and (iii) formally revise its annual audit plans if necessary. 
 
51.  The choice of the audit topics selected seems appropriate and in line with the concerns of the 
WTO Director-General and the external auditors , who have in particular made observations 
on procurement, travel (with regard to the Doha Development Agenda Global Trust Fund) and the informatics services, respectively, in their reports on the 2009, 2010 and 2011 
financial statements. WT/BFA/W/303 
- 33 - 
  Table 1 Annual audit plan topics 
Year New topics Topics from a previous year 
carried over into a new 
audit plan Follow-up of previous audits  
2008 Delegation of authority 
Procurement and contract management Travel Payroll   
2010 Informatics logistics 
Outsourcing Payroll 
Delegation of authority Travel 
Procurement 
2011  Outsourcing 
(security, cleaning, informatics) Travel 
Procurement Payroll Informatics logistics 
2012 Consultants Delegation of authority Travel 
Procurement 
Payroll 
Informatics logistics 
Cleaning 
Security 
Source: External auditor, based on OIA data. 
Table 2 Audit report completion dates 
Audit report topic Annual audit plans concerned Date report submitted 
to Director-General 
Procurement 2008 17 November 2008 
Travel 2008 13 October 2009 
Payroll 2008 and 2010 28 June 2010 
Informatics logistics 2010 2 December 2010 
Outsourcing (cleaning) 2010 and 2011 30 June 2011 
Outsourcing (security) 2010 and 2011 11 November 2011 
Outsourcing (security): supplementary report on use of video surveillance cameras Not included in annual audit plan, 
requested by Director-General 18 December 2011 
Supplement to report on cleaning 
services: Prodemco and Topnet Not included in annual audit plan, 
requested by Director-General 6 March 2012 
Source: External auditor, based on OIA data. 
3.2.3  Conduct of audits 
52.  The Internal Audit Charter states that the audit plan should be communicated to all persons 
concerned, informing them of the date, scope  and purpose of the audit (Article J9(b). 
This provision corresponds to Standard 2200 of the International Standards. 
53.  However, the notifications of audit activities sent to the services concerned do not indicate the 
duration of the audits or when they will start or end. It has also been found that the OIA could not 
indicate afterwards exactly how much time was spent on each audit. 
54.  The OIA has explained that it preferred not to provide precise audit timetables when it was 
starting up its activities so as not to undermine the confidence of those audited by giving them 
dates which would not always be respected. 
55.  Without going as far as to make a re commendation, it is nevertheless suggested 
that future audit notifications should be more precise and indicate the timetable for 
carrying out the audits. This is likely to be helpful both for the internal auditor 
to prepare more precise annual audit plans and to the audited services in planning their 
own work. 
56.  The Charter also specifies that at the end of audits other than special investigations46 
a provisional report should be submitted to the manager directly responsible in order to enable 
                                               
46 Article K(c): "for other cases other than inve stigation, a draft report shall be presented." WT/BFA/W/303 
- 34 - 
  him/her to reply within the given period (Article  K(c)). This goes further than Standards 2300, 
2400 and following of the International Standard s concerning the conduct and dissemination 
of audit results, which are drafted in very genera l terms and do not deal with the right of reply 
of those audited. 
57.  An isolated incident occurred at the end of the special supplementary audit on cleaning 
services concerning the contracts with the firms Prodemco and Topnet. At the end of the audit an 
end-of-audit meeting was organized but no prov isional report was addressed to the services 
concerned for comment because this was an ad ho c investigation, for which Article K(c) of the 
Charter does not require a draft report. 
58.  The final report was therefore submitted to the Office of the Director-General a few days after 
the end-of-audit meeting (6 March 2012) without waiting for one of the divisions concerned 
to send its written comments to the OIA, as it had said that it would do. The manager of the 
division concerned refused to speak at the end-of -audit meeting and said that she would submit 
written comments, and did so on 12 March, after the final report was submitted. 
59.  In the event, the OIA complied with the Ch arter. The sending of a draft report was not 
required in the case of an ad hoc report and th e organization of an end-of-audit meeting allowed 
all the audited services to give their views. 
3.2.4  Use of computerized tools 
60.  When the OIA needs specific accounting data to carry out an audit, it asks the informatics 
division to prepare data extraction modules suited to each audit, which may take time. The OIA would therefore like to have its own software application that would enable it to extract the 
accounting data it needs rapidly and independently. 
61.  The informatics division considers that there are three possible ways of meeting this request: 
- further developing the Qlikview  application which the OIA already possesses, 
which would involve recourse to an external consultant; 
- purchasing a specialized application for auditors such as IDEA or ACL; - creating a request catalogue for internal auditors in the Oracle system, which would 
also involve recourse to an external consultant. 
62.  The cost and performance of thes e three solutions should be compared 
and a proposal made to the OIA if one of them appears reasonable. 
3.2.5  Follow-up of recommendations 
63.  IIA Standard 2500 provides for the follow-up of internal audit recommendations. This is not 
included in the Charter but in the internal guidelines mentioned above (Part VII: follow-up of recommendations). The OIA annual reports give a very precise summary concerning the 
implementation of recommendations by the WTO services concerned. 
64.  According to the OIA, at 31 March 2013, 101 of its 164 recommendations (61.5%) had been 
fully implemented, 54 were being implemented (32.9%) and 9 (5.4%) had not yet 
been implemented. 
 WT/BFA/W/303 
- 35 - 
  Table 3 Implementation rate of recommendations 
Report topic Date submitted to 
Director-General Number of 
recommendations  Implemented 
(percentage of 
total) Being 
implemented Not yet 
implemented 
Procurement 17 November 2008 41 35 (85.3%) 4 2 
Travel 13 October 2009 23 14 (60.8%) 9 0 
Payroll 28 June 2010 33 15 (45.4%) 16 2 
Informatics 
logistics 2 December 2010 12 11 (91.6%) 0 1 
Outsourcing 
(cleaning) 30 June 2011 31 17 (54.8%) 13 1 
Outsourcing 
(security) 11 November 2011 24 9 (37.5%) 12 3 
Total  164 101 (61.5%) 54 9 
Source: External auditor, based on OIA data. 
65.  The lowest rate of implementation (45.4%) concerns the payroll report, 
of which 16 recommendations are still being implem ented at the time of reporting, and two, 
classified as significant, have not been implemented 25 months after the report was submitted. 
66.  This length of time is explained by the fact that the implementation of these various 
recommendations is subject to the prior prepar ation of the job profiles and the approval 
of personnel management guidelines by the Human Resources Division and the divisions 
concerned; these are sensitive matters that are currently being dealt with. 
67.  The OIA seeks to ensure that its recommendations are effectively implemented 
by sending many letters to the divisions conc erned and engaging in frequent stocktaking 
exercises.47 Thus, in the case of the 41 recommendations in the procurement report, 
there were five status updates from 30 November 2008 to 31 December 2011, and in the case of the 12 recommendations concerning informatics logistics there were three status updates 
from 2 December 2010 to end-2011. 
68.  The OIA also indicates the level of importance of its various recommendations and has 
recently begun to identify in its files exactly who is responsible for implementing each 
recommendation. 
3.2.6  Quality control and staff development 69.  Standard 1300 of the International Standards states that the head of internal audit must 
develop and maintain a quality assurance and improvement programme that covers all aspects 
of the internal audit activity. 
70.  The first version of the Charter implemented this standard by providing for the publication 
of an audit manual and the establishment of a quality control programme including an ongoing 
self-evaluation process and periodic internal and external evaluations of work quality (Article J(e) 
and (f) of the Charter of 28 July 2008). 
71.  The second version of the Charter is not so explicit. Given the small size of the OIA, it refers 
to Standard 2040
48 and provides for close daily supervision by the head of internal audit and the 
preparation of memoranda that state policies and procedures to be followed (Article J(e) of the Charter of 16 August 2011). 
72.  The purpose of thus rewording this provision in the Charter was to remove the obligation for 
the OIA to draft a complete official audit manual and replace it with the preparation of informal 
guidelines
49 that were internal to the OIA and theref ore neither published nor approved by the 
Director-General. 
                                               
47 Through specific "follow up" documents. 
48 IIA Standard 2040 provides that the head of intern al audit must establish policies and procedures 
to guide the internal audit activity. 
49 WTO internal audit guidelines . WT/BFA/W/303 
- 36 - 
  73.  These informal guidelines do provide for the establishment of a quality control programme 
but in practice this has not been developed. The programme should include the detailed list of external evaluations to be undertaken every five years and the internal evaluations (or self-evaluations) to be undertaken by the OIA, leading to detailed written conclusions 
submitted to senior management and the competent committee. The conclusions of the internal 
evaluations should list the points on which the OIA considers that it can improve and the timetable envisaged for doing so. 
74.  Exploitation of the audit evaluation questionnaires sent by the OIA to the audited services 
after each audit is an internal evaluation method that would be worth developing. 
75.  The replies to these questionnaires indica te that the audited services are appreciative, 
in particular of the quality and clarity of the final reports and the professionalism of the auditors. 
However, the questionnaire replies are not systematically exploited owing to the small number 
of replies received for certain audits. 
76.  In accordance with IIA Standard 1311 (point 8), the head of internal audit should report at 
least once a year "to senior management and the board
50 on the results of internal assessment, 
action plans to be implemented and their actual implementation". 
Recommendation No. 5. The OIA should establish a quality control and improvement programme 
including periodic internal and external evaluations. 
Reply of the WTO: this programme is being prepared. 
77.  The initial level of both theoretical and practical training of the WTO internal auditors 
is excellent. In particular, the head of intern al audit holds many useful professional diplomas51 
and also has extensive practical experience from the posts she has previously occupied. The same 
is true of her colleague. 
78.  In accordance with IIA Standard 1230, in ternal auditors must "enhance their knowledge, 
skills, and other competencies through continuing professional development". 
79.  In practice they indicate their training need s through standard forms provided to staff by the 
Human Resources Division and each year follow training courses corresponding to their activity. 
80.  However, the OIA does not have an annual training plan or a list indicating the training 
actually followed by internal auditors to substa ntiate the efforts made to update their knowledge. 
Recommendation No. 6. The OIA should establish an annual training plan and publish a list of the 
training activities actually followed each year by the auditors. 
Reply of the WTO: the WTO policy is that all staff members should submit a training and career development plan each year, as part of the an nual exercise of setting individual objectives. 
The internal audit staff are thus obliged to specify their training and career development needs 
at the beginning of each year. 
At the end of the year, during the performanc e evaluation exercise, the training followed 
and progress accomplished by each staff member are verified. Nevertheless, in line with this 
recommendation, training is henceforth to be controlled through a summary table indicating the 
training programmed and actually followed. This table will constitute the training plan. 
                                               
50 In practice the CBFA or the Audit Committee, if such a committee is established. 
51 She holds an MBA and is a qualified Certified Intern al Auditor, Certified Fraud Examiner and Certified 
Risk Management Auditor. She is cu rrently studying to qualify as a Ce rtified Information Systems Auditor. WT/BFA/W/303 
- 37 - 
  4  ACKNOWLEDGEMENTS 
We sincerely thank the members of senior management and staff of the WTO for their 
welcome and for the precise information that they supplied to us in the context of our enquiries.  
5  CONCLUSION 
On the basis of the audit conducted, the extern al auditors certify, with two reservations, 
that, in their view, the accounts for the financial year 2012 present fairly the financial position 
of the WTO as at 31 December 2012. 
 
End of audit comments. WT/BFA/W/303 
- 38 - 
  ANNEX I - FOLLOW UP TO RECOMMENDATIONS 
 Of the 14 recommendations concerning certification of the accounts closed 
at 31 December 2010, eight have been implemented, five are being implemented, and one has been accepted but not yet implemented or being implemented. 
 
 The nine recommendations in our performance audit of the WTO's IT system were all accepted and are being implemented by the new Director of the Information Technology 
Solutions Division. 
 
Table 1 Follow-up to the recommendations of  the external auditor on the financial 
statements for 2010 
 Recommendation Response of the 
Secretariat Comments of the 
auditors 
1 The text of the financial statements should be 
completed as follows: 
(i) By explaining in more detail in Note 4, 
"Receivables from Members and Observers", the year by year trend in these receivables and the provision for arrears in contributions; 
(ii) by indicating specifically in the liabilities 
column of the financial situation that the amounts due to donors correspond to deferred revenue; 
(iii) by indicating in Note 12, 
"Employee benefits", the updated amount of separation grants for which provision has to be made; and 
(iv) by explaining the origin of the 
differences between No te 13, "Trust fund 
balance due to donors", and the other financial statements. The recommendation was 
immediately implemented.
 Recommendation implemented. 
2 The WTO should adopt a plan to absorb arrears 
in contributions by Observers. The Working Group on 
Administrative Measures is 
continuing to examine the 
question and will report to 
the Committee on Budget, 
Finance and 
Administration. Recommendation accepted 
and being implemented. 
3 The WTO should pursue its efforts: 
(i) To accelerate refund by the United 
States of the taxes of WTO staff 
who resided there; and 
(ii) to obtain this re fund according to the 
method advocated by the Administrative Tribunal of the International Labour Organization. In 2011, the United States 
refunded taxes for the two previous years 
and more, thus paying off 
their arrears. Recommendation accepted 
and being implemented, but confirmed. WT/BFA/W/303 
- 39 - 
   Recommendation Response of the 
Secretariat Comments of the 
auditors 
4 The percentage of the levy on trust funds 
to finance Secretariat expenditure should 
be increased. The WTO will review the 
percentage of the levy on 
trust funds used to finance 
Secretariat expenditure as 
part of the review of the 
financial regulations. Recommendation 
accepted but not yet 
implemented and 
confirmed. 
5 The WTO should: 
(i) reorganize the procedure for certifying 
services provided; 
(ii) update annually the list of "suppliers" 
in the accounts management system; 
(iii) limit the rights of  buyers in the system; 
and 
(iv) use the system's procurement module. The procedure for 
certifying services provided will henceforward be carried out directly in the Oracle program by the services with the introduction of the Oracle "i-Procurement" module. This module will start to be used 
on 7 May 2012. 
In 2011, the suppliers' database was reviewed and a project is under way with the Procurement Section to make improvements to this database. The rights of buyers in Oracle were revised in 2011. Recommendation 
implemented. 
6 The WTO should: 
(i) continue regular analyses of movements 
in exchange gains and losses; and 
(ii) include in the internal control mechanism 
some tests for transactions in currencies 
for which the exchange  rates are entered 
manually. An analysis was carried 
out in the middle and end 
of the year in order to 
verify the consistency of 
the amount of exchange 
gains/losses. Recommendation 
implemented. 
7 The criteria for taking unpaid leave into account 
when calculating rental subsidy should be clarified. A new directive on 
calculating rental subsidy taking into account this recommendation has been 
issued by the Human 
Resources Division. Recommendation 
implemented. 
8 The WTO should formally  adopt the necessary 
procedures for introducing IPSAS 12 for the 
management of inventories. As of 2012, the calculation 
of the cost of inventories 
has taken into account the 
full cost. It includes in 
particular labour costs. Recommendation 
accepted, being 
implemented. 
9 The WTO should close the "suppliers" accounts 
for which the debts have been settled. The suppliers' database 
has been reconciled. The additional suppliers balance is reviewed every quarter. Recommendation 
implemented. 
10 The WTO should: 
(i) formally adopt in an internal note the 
procedures for making accounting 
entries concerning charges paid in 
advance; and 
(ii) introduce an intern al control system to 
detect inconsistencies in accounting 
balances, analyse them and make the 
necessary adjustments in the accounts. The charges paid in 
advance accounts were the 
subject of detailed revision 
at 31 December 2011. Recommendation 
implemented. 
11 The WTO should indicate the change in the 
method of accounting for advances relating to 
extra budgetary funds in Note 2 to the financial 
statements. The recommendation was 
implemented immediately. Recommendation 
implemented. WT/BFA/W/303 
- 40 - 
   Recommendation Response of the 
Secretariat Comments of the 
auditors 
12 During the transition to IPSAS, the WTO should 
adjust its budgetary and accounting practices 
for expenditure commitm ents and provisions 
for expenditure committed but not paid, and 
should adapt its Financial Regulations to be 
consistent with IPSAS 1 (paragraph 6), 
which provides that entries should be linked 
to the financial year concerned. In order to comply with 
IPSAS, the charges will be 
recorded in the accounts 
on the basis of the service 
provided/goods received. Recommendation being 
implemented. 
13 The WTO should make a comprehensive 
estimate of the cost of equipping the new installations being completed and propose a financing plan for these costs. This estimate has been 
made. Recommendation 
implemented. 
14 Before the end of the work the WTO should 
define more clearly the costs to be recorded as 
property plant and equipment and those to be 
left in the charges account. During the transition 
to IPSAS, this evaluation 
will be made. Recommendation 
accepted, being 
implemented. 
 WT/BFA/W/303 
- 41 - 
  Table 2 Follow up to the recommendations on the WTO's IT system (second part of the 
report on the 2010 financial statements) 
 Recommendation Response of the 
Secretariat Comments of the 
auditors 
1 With the assistance of an outside consultant, 
the study on the possible outsourcing of some of the Informatics Division's activities included in this Division's "I T Strategy" for 2007-2009 
and then postponed should be resumed. Accepted Recommendation 
accepted, being implemented. 
2 Temporary staff for the Informatics Division 
should only be recruited as and when needed, 
in accordance with the rules in force in the 
Organization, and consideration should be given 
to social measures for temporary staff who have 
been working in the Division for a long time. Accepted Recommendation 
accepted, being 
implemented. 
3 There needs to be proper strategic 
consideration to enable the list of the new services to be provid ed by the IT system 
and the advances expected in IT systems to be determined. Accepted Recommendation 
accepted, being implemented. 
4 Before deciding on any new application, 
there should systematically be a comparison 
of the principal internal and external solutions 
possible, taking into account all the costs which 
the Organization will have to face in the future. Accepted Recommendation 
accepted, being 
implemented. 
5 As soon as possible, a comparison of the 
integrated management system (IMS) software 
packages available on the market should 
be undertaken. Accepted Recommendation 
accepted, being 
implemented. 
6 All documents relating to bids should 
systematically  be dated. Accepted Recommendation 
accepted, being 
implemented. 
7 The action plan proposed by a consultant 
in 2006 in order to improve the quality of the WTO's IT services, in accordance with the ITIL standard, should be fully implemented. Accepted Recommendation 
accepted, being implemented. 
8 Basic training in the WTO's IT systems should 
be made compulsory for all new staff members. Accepted Recommendation 
accepted, being 
implemented. 
9 A policy for protecting personal data should be 
defined and controls for its proper implementation introduced. Accepted Recommendation 
accepted, being implemented. 
 
__________