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WT/BFA/144  
 
15 October 2014  
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Committee on Budget, Finance and Administration    
 
REPORT OF THE MEETING HELD ON 17 SEPTEMBER 2014 
The Committee on Budget, Finance and Administration met on 17 September 2014 under the 
chairmanship of Ambassador Francisco Alberto Lima. The terms of reference and composition of 
the Committee are set out in document WT/L/44/Rev.1. The agenda contained in document 
WTO/AIR/4342 was adopted.  
1  2013 FINANCIAL PERFORMANCE REPORT (WT/BFA/W/334) 
1.1.  A member of the Secretariat presented th e 2013 Financial Performance Report. This was the 
second report presented in compliance with the International Public Sector Accounting Standards (IPSAS). The External Auditor while certifying th e account had expressed only one reservation, 
compared to the last two years. The reservation lifted by the Auditor was related to the Pension 
Plan and resulted from the change s, brought by the Secretariat, in the structure of the financial 
statements to comply with the Auditor's recommendation. 
1.2.  Significant improvements were done in comparison to the first year of the International Public 
Sector Accounting Standards (IPSAS) implementation. The only reservation expressed by the Auditor in 2013 was related to the consolidation of the International Trade Centre (ITC) accounts 
which remained the same reserve notified last year. The ITC was not yet operating with the IPSAS 
as it was still operating under the UN specific accounting standards. To assess the feasibility of this recommendation, the Secretariat would have to wait the ITC to implement the IPSAS and also to verify whether the consolidation of the ITC could be really applicable under the IPSAS, as a joint 
venture. 
1.3.  Regarding the budgetary performance in 2013, the approved 2013 budget amounted to 
CHF 197 million and the budgetary expenditures to CHF 187 million. That generated savings for 
about CHF 10 million, 50% of which was related to personnel staff expenditure and 50% to non-
staff expenditure. Two main reasons explained this budgetary saving: the Secretariat had tightly monitored personnel expenditures and had improved measures to streamline processes.  
1.4.  The Secretariat announced that budgetary savings led to a net surplus of about 
CHF 14 million. However, the introduction of IPSAS  produced a new financial result for 2013 that 
amounted to a deficit of almost CHF 5.1 million. The significant deterioration in the result was due to the actuarial valuation of the WTO’s liabilities  towards the pension plan and the after-service 
health insurance benefits of WTO staff. Financ ial statements under IPSAS disclosed liabilities 
towards the pension and health insurance systems that amounted to nearly CHF 660 million at the end of 2013, compared to CHF 820 million at the end of 2012. That positive variance was 
essentially related to external factors such as long-term interest rates and inflation. 
1.5.  A Member requested whether the Committee could expect a proposal from the Director-
General regarding the surplus and when the Committee could expect that proposal. Some 
Members expressed the need of learning more regarding the issue of the segment reporting 
between trust fund and regular budget in the financ ial statement. A Member highlighted that this 
point was also discussed in the Working Group on Fi nancial Regulations. He also wanted to know 
what would be the right accounting method to capture ITC in the WTO financial statements. A 
Member underlined that it has been challenging for the Secretariat to operate within a zero 
nominal growth since 2011. Several Members ra ised the question of the budgetary savings 
accumulated from 2010 to 2013 and requested to be  informed how this amount dealt with. One 
Member declared that this surplus should not be used to fund liabilities towards the pension and 
health insurance. The Member added that IPSAS liabilities should be shown on the financial 
statements but do not need to be financed yet and it would be decided by Members at a later WT/BFA/144 
 
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  stage. Most of Members agreed that the Committee should wait for the final reports of its two 
Working Groups to take a decision on this matter. 
1.6.  A member of the Secretariat declared that the balance of the surplus account amounted to 
about CHF 30 million. He underlined that according to the Financial Regulations, the Director-
General had to make a recommendation to the Committee to use that Surplus amount. He also 
reassured Members of the fact that the Secretariat was not allowed to use that amount for any expenditure without consulting Members. He also  emphasized that the surplus account did not 
take into account liabilities incurred on the pension and health insurance benefits. The actual 
accounting result was a loss instead of a surplus. He also informed the Committee that the Members' Transition Operating Fund (MTOF) was about to be closed disclosing a remaining balance of more than of CHF 1 million. 
2  2013 EXTERNAL AUDIT REPORT (WT/BFA/W/335) 
2.1.  The representative of the First President of  the French Court of Audit (the Auditor) thanked 
the Director-General and the Secretariat for the cl ose co-operation during the audit. He declared 
that the 2013 report was focused on the audit of the WTO 2013 financial statements and a 
performance audit regarding the implementation of  the recommendations raised by the Auditor in 
2009 at the Human Resources Division. On the basis of the audit conducted, the Auditor certified 
the 2013 WTO financial statements with one rese rvation, related to the consolidation of the 
International Trade Centre (the ITC) accounts, which was also raised by the Auditor last year.  
2.2.  The Auditor recommended that the Secretariat include in the financial statements some 
segment information in order to present a breakdow n by sector of activity. The Auditor underlined 
that the Secretariat had already implemented an activity based-budget. He also recommended to 
agree with the "Fondation des Immeubles pour les organisations internationals" (FIPOI), on an amendment to provide a clearer schedule of paymen t for the loan of CHF 60 million that the WTO 
received in the context of the WTO renovation project. The Auditor also made a number of other 
recommendations that the Secretariat had already implemented. Such as those aiming to improve  the structure of the note to the financial statem ents and the effectiveness of information or the 
recommendation related to  recovery of the tax receivables from Member countries among others. 
2.3.  The Auditor presented the results of the pe rformance audit of the Human Resources Division. 
The objective of this performance audit was to ve rify the implementation of the recommendations 
made in 2009. He addressed a number of recommendations that were listed to the Committee. 
Some recommendations had been applied, like reducing the number of temporary contracts and 
reducing overtime expenditure. Other recomme ndations, as starting to reflect a modern 
remuneration system at WTO that would take into account the individuals performances, or 
completing job profiling, would be part of the stra tegic review initiated by the Director-General at 
the end of 2013. The Auditor reassured the Members that the pending recommendations had been passed to the German External Auditor for the follow-up. 
2.4.  Most Members warmly thanked the outgoi ng Auditor and welcomed the German External 
Auditor. A Member referred to the recommendatio n regarding the refunding tax from the United 
States and brought some clarifications to the Committee. He informed the Committee that he had already been in contact with the Secretariat and that the liability was being reduced progressively. 
The Secretariat welcomed this information and thanked the Member for resolving this issue. 
Several Members thanked the Auditor and the Secretariat for their reports.  
2.5.  A Member expressed a concern and wanted to have further clarification on one specific 
recommendation regarding the training selectio n process of developing countries. The Member  
insisted that it was an added value for officials returning to the Capital. A Member wished to know the Secretariat's views about the External Audit recommendation on jobs classification and 
description. He also raised a few recommendations made regarding in-situ promotions and the 
number of temporary contracts. A member of the Secretariat declared that the exercise on job profiling had been completed to 95% and that temp orary contracts had been significantly reduced. 
In addition, he suggested to present figures at a later meeting on the progress achieved in this 
area.  WT/BFA/144 
 
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  2.6.  The Chairman on behalf of the Committee thanked the Members for their questions and their 
interests in the different subjects and also thanked the Auditor for his last report and for his constructive work through those past six years. The Chairman also welcomed the German External Auditor. The Committee took note of the 2013 Financial Performance and 2013 External Audit 
reports and made the following recommendation to the General Council.  
2.7.  The Committee recommends that th e General Council approve the transfers 
between budgetary sections as outlined in paragraphs 2.22 and 2.29 of document 
WT/BFA/W/334. The Committee further reco mmends that the General Council approve 
the audited accounts for 2013. In accordance with Financial Regulation 24 and Financial 
Rule 4.4, transfers between WTO budgetary sect ions were necessary in order to cover excess 
expenditure over approved appropriations by savings. It was a recurrent practice performed 
annually.  
3  PROGRESS REPORT ON THE ORGANISATIONAL REVIEW OF WTO SECRETARIAT 3.1.  The Director-General (DG) updated the Committee with an interim report on the 
Organizational review. The DG first thanked the French Court of Audit for their work over the last 
six years. He also thanked the two Chairs of th e Working Groups on the Financial Regulations and 
the After Service Health Insurance (ASHI). He  welcomed the German External Auditor.  
3.2.  The DG underlined that since he had addressed to the Committee in October 2013, the 
Secretariat had faced changing demands, including a significant increase in the level of activity of Dispute Settlement. Actions were taken by the Secretariat by allocating resources to the Legal Affairs Division, Rules Division and to the Appellate Body Secretariat. The WTO Secretariat had 
recruited a number of junior lawyers on a basis of a temporary one to two-year contract. He 
underlined that more resources would be allocated in these areas in the future. He emphasized that all the actions taken by the Secretariat would not affect the zero nominal growth of the 2014-
2015 budget. The Secretariat remained focused on the strategic priorities as promised in 2013. 
The first priority was to determine priorities within  a fixed budget; the second priority was to keep 
staff expenditure within a threshold; the third priority was to achieve continuous productivity 
gains, on which the DG requested Members' suppo rt on the implementation of the streamlining 
measures, approved by the General Council in 2011. The fourth action was to launch the Organizational review and to reallocate the workforce based on Members' priorities. 
3.3.  The DG said that the Organizational review was a very important task. The Secretariat 
wanted to provide Membership with best services to deliver the efficiency and the quality expected 
by Members. The DG notified that the "inverted pyramid" was also an important element of this 
review. After consultations with Senior Management, he concluded that the overall divisional 
structure was appropriate and did not require a major overhaul. Four WTO Directors positions had 
been advertised after being sure that the review did not show the need to consolidate divisions. 
The DG said that he was looking at each Division to identify their optimal structure. The number of 
staff at grade 10 had already been reduced from 118 to 100. The DG underlined that posts would 
have to move from divisions in order to meet  work priorities. He added that the staffing structure should be kept flexible and should serve as a benchmark. The DG concluded on this topic by informing that the Senior Management would monitor this closely to ensure that the optimum 
structure is achieved to serve the Membership. 
3.4.  Then the DG listed the four areas  identified by the WTO staff at the beginning of the 
Organizational review process: Promotions, Mobility, Rules and Management. He expressed his 
gratefulness to the staff and to the Management for their engagement in this review. The DG 
mentioned that he had had constructive exchange with the "Rapporteurs" and members of the Joint Recommendation Groups. He recognized that the final recommendations submitted by the 
"Rapporteurs" had been, in the main, reasonable, constructive and achievable and underscored 
that they would be delivered  taking into account  the constraints of the given budgetary envelope. 
The DG concluded that this report to Members was an interim one and that Members' support and engagement were essential through the on-going process. 
3.5.   Several Members thanked the DG for his detailed report and appreciated the direction taken 
by the Secretariat in this review. Some Members expressed their gratefulness for taking into account Members' concerns expressed during his first meeting with the Delegations at the WT/BFA/144 
 
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  Committee, at the end of 2013. Members also underlined the important need to invert the pyramid 
and to monitor the grading structure. A Member hi ghlighted the fact that the Secretariat should 
keep focused on diversity during  the on-going Organizational review. Other Members were curious 
to know how Directors and the Management were engaging on introducing these new reforms. One 
Member asked to circulate the Director-General speech to the Committee. 
3.6.   In reply to a Member's request, the DG mentioned that he would be made available his 
statement on the Members' Website. Some Members underlined and thanked the Secretariat for 
having respected the financial constraints in this review process.  
3.7.  The DG answered questions and concerns rais ed by delegations. He emphasized the fact that 
changing the system was complex. He also reminded the Committee that the WTO Directors and staff were given a chance to express themselves during the review.  
3.8.  Then, the DG informed the Members about expa nding the role of the Office of internal audit 
to an oversight function through the expected re placement of the Head of the Office in March 
2015. A mediator would also be appointed.  
3.9.  The DG was still expecting the final results of the work done on Promotions. He underlined 
that it was important for staff to have a certain level of predictability on how their careers could evolve at the WTO. The foreseen changes could be  implemented within the budgetary constraints. 
3.10.  The DG concluded that the Committee would be informed of the final results of the 
Organizational review. The Chair thanked the DG and indicated that the Committee would continue to closely look at this matter in its upcoming meetings. 
3.11.  The Chairman on behalf of the Committee thanked the Director-General for 
updated the Committee with an interim re port on the Organizational review. The 
Committee took note of the report. 
4  PROGRESS REPORT OF THE WORKING GROUP ON THE LONG TERM EMPLOYEE BENEFIT 
OBLIGATIONS (ASHI) 
4.1.  The Chairman of the Work ing Group on ASHI updated the Committee on the on-going work 
of the Working Group, which had met three time s since its establishment in April 2014 and would 
meet again on 23 of September 2014. The insurance Company Van Breda would be present at that 
meeting to discuss the health insurance benefit for staff and discuss ways of controlling medical inflations. He reminded the Committee that all Members were invited taking part to the on-going work of the Working Group. He added that more de tails would be available at the next meeting of 
the Committee. 
4.2.  The Chair of the Committee pointed out the complexity of this review and hoped that the 
Working Group would reach results on this matter bearing in mind that it was a sensitive issue for 
WTO Staff. The Chair concluded by urging the Committee to look into this issue carefully and 
seriously. He also mentioned that the Committee looked forward to receiving the final outcome of the work of the Working Group.  
4.3.  The Committee took note of the report. 
5  PROGRESS REPORT OF THE WORKING GROUP ON THE WTO FINANCIAL REGULATIONS 5.1.  The Chairman of the Work ing Group on WTO Financial Regulations updated the Committee on 
the on-going work of the Working Group which had met four times since its establishment in April 
2014. The Chair listed the different regulations which needed to be revised. He indicated that the 
Working Group recommended to review the Financial Regulations at least every four years. Several recommendations were listed to the Committee reflected in the draft report which would 
be submitted in due course to the Committee. The draft report had been shared with the outgoing 
and incoming External Auditors. He thanked the Members of the Working Group for their active 
participation and engagement in this work. He also thanked the Secretariat for their guidance on 
the on-going work. He added that Members were most welcomed to join the Working Group. WT/BFA/144 
 
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  5.2.  The Chairman of the Committee drew the attention of the Committee on the message sent by 
the Chair of the Working Group on Financial Regulations in August 2014 and urged Members to submit their comments to the Working Group in or der to conclude the report in a satisfactory 
manner. Then, the Chairman concluded by thanking  the two Chairs of the Working Groups and by 
informing the Committee that both Chairs were still expected to submit their final report to the 
Committee by the end of December 2014. 
5.3.  The Committee took note of the report. 
6  BUDGET AND FINANCE REPORT – 2
ND QUARTER 2014 (WT/BFA/W/337)  
6.1.  A member of the Secretariat presented the situation regarding Members' and Observers' 
contributions received in the second quarter of 2014. Receipts of contributions were in line with last year. The cash position of the Organization was satisfactory and slightly higher than last year. 
With respect to Members' contributions, 69% of the overall assessment had been received. On the 
Observer side, 52% had been received. As of 30 June 2014, 81 Members and 13 Observers had no outstanding balances. 
6.2.  The number of Members and Observers subject to administrative measures had not changed 
since the 1
st quarter report presented in March 2014. 13 Members and 1 Observer were subject to 
administrative measures.  
6.3.  The 2014 budget remained on track at the end of the second quarter with an expenditure 
rate of 49% of the budget being committed. Th ere was an slight over-expenditure under 
temporary assistance due to the cost of the Dispute Settlement lawyers recruited on two-year contracts. 
6.4.  The Committee took note of the report. 
7  DOHA DEVELOPMENT AGENDA GLOBAL TRUST FUND (DDAGTF) (WT/BFA/W/336)  7.1.  A member of the Secretariat then presented the financial situation on trust funds with 
particular focus on evolution in contributions since the end of the second quarter 2014 report 
provided to the Committee. Voluntary contributions amounting to CHF 5.8 million across all funds had been received from France, Germany, Ireland,  New Zealand, Norway and the USA.  Of that 
amount CHF 2.9 million was for the DDAGTF, CHF 1. 5 million for trade facilitation, CHF 0.8 million 
for the Mission Interns Programme and CHF 0.6 m illion for the STDF. The implementation of the 
2014 activities would not meet any difficulty considering current balances, however, some additional funding would be necessary in certain areas before the end of the year to ensure a 
smooth start for activities in 2015. 
7.2.  The Chair thanked delegations for their co ntribution and encouraged the Committee, though 
this difficult time, to continue to make contributions to maintain activities. The Committee took 
note of the report. 
8  PENSION PLAN ACTUARIAL REPORT (WT/BFA/W/338) 8.1.  The Chair of the WTO Pension Plan Manageme nt Board presented the report on the actuarial 
position of the WTO Pension Plan. He explai ned to the Committee how the Working Group, 
established by the Management Board in October 2012, had proceeded with its review and analysis of the actuarial position of the Plan . He indicated that the Working Group would be 
focused on developing recommended actions to address the gap between the projected long term 
costs of the Plan and the current level of contributions to fund the Plan.  
8.2.  He underlined the importance of the Pension Plan and committed to providing the Committee 
with periodic updates on the work of the Management Board until the time when formal 
recommendations could be presented. He then in formed the Committee that the board would meet 
on the 25 November 2014. The recommendations ma de to the General Council would be conveyed 
through the Committee.  
8.3.  The Committee took note of the report. WT/BFA/144 
 
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  9  2013 ANNUAL REPORT ON GRADING STRUCTURE AND PROMOTIONS 
(WT/BFA/W/331/REV.1) 
9.1.  The Deputy Director-General in charge of Administration presented the revised version of the 
report presented at the previous meeting and cont aining the additional information requested.   
9.2.  A Member highlighted the importance to work on the job profiling exercise and on the 
inverted pyramid of the grade structure. In ad dition, it was requested to provide additional 
information on how the staff population is presently allocated in each grade. 
9.3.  The Committee took note of the report. 
9.4.  The Chair concluded by indicating that the next formal meeting of the Committee was 
scheduled for 7 November 2014. In addition, a further meeting could be scheduled to engage discussion on the internal audit arrangement. 
 
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