RESTRICTED  
 
WT/L/984  
13 July 2016  
(16-3763)  Page: 1/9  
 
 REPORT OF THE INDEPENDENT EXTERNAL AU DITOR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION PENSION PLAN (WTOPP) 
FOR THE YEAR ENDED 31 DECEMBER 2015 
Contents 
 
1   EXECUTIVE SUMMARY ................................................................................................. 2  
2   SCOPE AND APPROA CH OF THE AUDIT ........................................................................ 3  
2.1   Scope of  the Audit ..................................................................................................... 3 
2.2   Audit Objective and Approach ...................................................................................... 3  
2.3   Audit Conclusion ........................................................................................................ 3  
3   COMMENTS / AUDIT FINDINGS ................................................................................... 4  
3.1   General Overview of the Plan´s Financial Situation ......................................................... 4  
3.2   Invest ment Policy ...................................................................................................... 5 
3.3   Market Value / Securities ............................................................................................ 6  
3.4   Reimbursement of  Withholding Tax .............................................................................. 7  
3.5   Internal Au ditor´s Co mment ....................................................................................... 7  
4 ACKNOWLEDG EMENT .................................................................................................... 7  
ANNEX  ........................................................................................................................ .... 8 
 
 
 
 WT/L/984  
 
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  1  EXECUTIVE SUMMARY 
My team and I have audited the financia l statements of the WTO Pension Plan 
1. My team and I have audited the financial statements of the World Trade Organization 
(hereinafter “WTO”) Pension Plan for the financial period from 1 January to 31 December 2015. 
Responsibility of Management 
2. The Management Board of the WTO Pension Plan  is responsible for preparing the financial 
statements in accordance with the Financial Regulations of the Plan. 
Responsibility of the External Auditor 
3. My responsibility is to express an opinion on these financial statements based on my audit. 
Scope of the audit 4. The audit included the examination of evidence supporting the amounts and disclosures in the 
financial statements. It also included an assessment of the underlying accounting principles and 
significant estimates made by the Management Board. 
I conducted my audit in conformity with the International Standards on Auditing 
5. I conducted my audit in conformity with International Standards on Auditing (ISA) as adopted 
and amended by the International Organization of Supreme Audit Institutions (INTOSAI) and 
issued as International Standards for Supreme Au dit Institutions (ISSAI). These standards oblige 
me to comply with ethical requirements and to plan and carry out the audit to obtain reasonable 
assurance that the financial statements are free from material misstatement.  
The financial statements present fairly the financial position 
6. As a result of my audit, I am of the opinion th at the financial statements present fairly, in all 
material respects, the financial position as of 31 December 2015. 
I placed an unqualified opinion on the financial statements 7. The audit revealed no weaknesses or errors which I considered material to the accuracy, 
completeness and validity of the financial statements as a whole. I have placed an unqualified 
audit opinion on the financial statements of the WTO Pension Plan for the year ended 31 December 2015. 
Areas covered by this report 
8. My report includes observations and recommendations intended to contribute to the 
improvement of financial management. For 2015, my audit work has mainly covered the areas described in the following paragraphs. 
Acknowledgement 
9. I wish to convey my appreciation for the cooperation and assistance extended by the 
Management Board, management and staff of the Secretariat. I am very grateful for their 
assistance during the entire external audit process. 
 
 WT/L/984  
 
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  2  SCOPE AND APPROACH OF THE AUDIT 
2.1  Scope of the Audit Principles governing my audit 10. My staff and I have audited the financial statements of the WTO Pension Plan for the financial 
period from 1 January to 31 December 2015. We also examined the related financial accounts and 
transactions in WTO Headquarters in Geneva and in the office of TRIANON in Lausanne. 
Responsibility of Management 
11. The Management Board of the WTO Pension Plan is responsible for the preparation and fair 
presentation of these financial statements in acco rdance with the Financial Regulations of the Plan, 
and with such internal controls as Management determines are necessary to permit the preparation of financial statements that are free from material misstatement, whether due to fraud 
or error. 
Responsibility of the external auditor  12. I am responsible for expressing an opinion on the financial statements based on evidence 
obtained during my audit. I planned and performed the audit so as to obtain reasonable assurance 
that the financial statements are free from material misstatement.  
Audit of the financial statements  
13. The financial statements of the WTO Pension Plan, together with my audit report and the audit 
opinion, were discussed with the Management Board.  It took note of the contents of my report. 
2.2  Audit Objective and Approach Objective of financial audit: Forming the audit opinion 
14. The objective of the audit was to enable me to form an opinion on whether the expenditures 
recorded for the year had been incurred for th e purposes approved, whether expenses were 
properly categorized and recorded in accordance with Financial Regulations; and whether the 
financial statements present fairly the financial position as of 31 December 2015. 
Testing convinced me of the correct ness of the financial statements 
15. My audit opinion is based on the testing of transactions recorded in the financial statements. 
The examination was carried out to ensure that the financial statements accurately reflect the 
accounting records and present fairly the financial situation of the WTO Pension Plan. 
2.3  Audit Conclusion I found no material weaknesses. I placed  an unqualified opinion on the financial 
statements. 
16. Notwithstanding the observations in this report, my examination revealed no weaknesses or 
errors which I considered material to the accuracy, completeness and validity of the financial 
statements as a whole. In accordance with normal practice, my team reported additional findings 
to the Management of the Secretariat in the course  of the audit. I have placed an unqualified audit 
opinion on the financial statements of the WTO Pension Plan for the year ended 31 December 
2015. WT/L/984  
 
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  3  COMMENTS / AUDIT FINDINGS 
3.1  General Overview of th e Plan´s Financial Situation 
The excess of income over expenditure as at 31 December 2015 is CHF 9.5 million 
17. The Income and Expenditure Statement shows a su rplus (excess of income over expenditure) 
of CHF 9.5 million as at 31 December 2015 (2014:  CHF 46.8 million), thus a decrease of CHF 37.3 
million. This is basically a result of the decrease in profit on securities to zero in 2015, reflecting 
general trends in the financial markets. In 2015,  the total income decreased to CHF 32.1 million 
(2014: CHF 66.5 million), a decrease of CHF 34.5 million. These effects were only partly 
compensated by an increase.  On the expense side, periodic benefits increased to CHF 16.7 million (+ CHF 1.5 million). This was 
compensated by an increase in regular and addition al contributions to CHF 21.6 million (+ CHF 1.9 
million). 
Benefits paid out increased to CHF 19.7 million 18. The benefits paid out in 2015 increased to CHF 19.7 million (2014: CHF 17.9 million) and 
were fully covered by the contributions (2015: CHF 31.6 million) which were used to cover the loss 
on investment, too. 
Loss in investments totalled CHF 0.6 million in 2015 
19. The investment portfolio registered losses of CHF 0.6 million in 2015 (2014: investment 
income of CHF 36.9 million). A CHF 1.0 million loss incurred due to negative currency revaluation and negative interests, owing partly to the policy of the Swiss National Bank (SNB). This loss exceeded a modest profit of CHF 0.5 million registered on securities.  
Admin. expenses stable at CHF 752,217 
20. Investment and other administrative expenses were nearly stable with a total of CHF 752,217 
(2014: CHF 764,541).  
Securities and cash increased by CHF 7.0 million 
21. Total assets increased from CHF 486.7 million (as at 31 December 2014) to CHF 495.9 million 
(as at 31 December 2015) mainly due to the increase in securities and cash/cash equivalents by 
CHF 7.0 million. 
As at 31 December 2015 the Pl an served 284 beneficiaries 
22. As at 31 December 2015, the Plan served 284 beneficiaries and accounted for 712 active 
participants.  
23. These 284 beneficiaries comprise 131 retirees, 88 persons who took early retirement, 10 
beneficiaries of survivor's pensions, 19 children of beneficiaries and orphans, and 19 disabled 
persons. They also include 17 former staff members whose deferred pensions will begin to be paid 
after 2015. 
Audit findings and recommendations 24. The following paragraphs contain audit findings and recommendations and provide 
background information. 
Actuarial rate of return for 2015, net of inflation: 1.11 per cent 
25. The actuarial rate of return on investment, net of inflation, (1.11 per cent) was slightly 
positive due to a negative Consumer Price Index for Switzerland of -1.3 per cent in 2015. WT/L/984  
 
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  Table 1: Calculation of the actuarial rate  of return, net of inflation (in CHF) 
Actuarial rate of return 2012 2013 2014 2015 
a. Value of assets as of 1 January 348,800,016 396,539,355 440,342,527 486,697,204 
b. Value of assets as of 31 December  396,539,355 440,342,527 486,697,204 495,898,233 
i. Adjusted1 Investment income 34,489,624 33,480,802 36,486,230 -930,196 
Average assets = (a+b-i)/2  355,424,874 401,700,540 445,276,751 491,762,817 
Actuarial rate of return in nominal terms = 
i/average assets 9.70% 8.33% 8.19% -0.19% 
Consumer Price Index for Switzerland2 -0.40% 0.10% -0.30% -1.30% 
Actuarial rate of return, net of inflation  10.10% 8.23% 8.49% 1.11% 
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
Table 2: Trend in actuarial rates of return in nominal terms (%) 
2008 2009 2010 2011 2012 2013 2014 2015 
-36.53%  +21.29%  +3.52%  -1.10%  +9.70%  +8.33%  + 8.19% -0.19% 
Source:  External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
3.2  Investment Policy 
Management Board defined an invest ment policy for asset allocation 
26. Asset allocation is the main source of port folio returns. Therefore, WTOPP's Management 
Board defined and implemented an investment policy for the Plan. 
Asset allocation includes equities, bonds and real estate 
27. The Plan's investment policy, defined in 2004 and implemented from 2005 onwards, sought to 
achieve a high net rate of return of 3.5 per cent by emphasizing equities, pegged at 70 per cent of the portfolio (with 10 per cent invested in emerging markets), in preference to bonds (20 per cent) 
and real estate (10 per cent). 
Allocation target: equities 40 per cent, bonds 40 per cent and real estate other 20 per 
cent 
28. On 14 October 2009, the Management Board adopted the following new portfolio breakdown, 
while at the same time maintaining the target of  3.5 per cent net rate of return, not including 
inflation:  
 Equities: 40 per cent (of which 32 per cent in developed market securities and 8 per 
cent in emerging market securities);  
 Bonds: 40 per cent;  
 Real estate: 20 per cent. 
 
                                               
1 Investment income according to the Income and Expenditure Statement minus management fees and 
bank charges. 
2 Rate of variation in the Consumer Price Index (CPI) for December compar ed to December of the 
previous year, as reported by the Swiss Federal Office of Statistics. WT/L/984  
 
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  Allocation as of 31 December 2015: equities 40.2 per cent, bonds 35.6 per cent and real 
estate 19.3 per cent 
29. Asset allocation as of 31 December 2015 of the Pl an's portfolio is close to the targets: 40.2 
per cent in equities (of which 32.9 per cent in developed markets and 7.2 per cent in emerging 
markets), 35.6 per cent in bonds; 19.3 per cent in real estate, and 4.9 per cent in cash. 
Table 3: Breakdown of assets and investme nt performance (in nominal terms) of the 
classes of assets in 2015 
(in CHF millions) 
Assets Value of assets 
end of 2015 
(CHF millions) Asset 
allocation 
(strategy) Performance 
(in nominal terms 
over 1 year) Performance 
(in nominal 
terms over 3 
years) 
Global equities  197.9 (40.2%)  40% -1.8% 10.1% 
Developed markets 162.3 (32.9%) 32% 0.2%  
Emerging markets 35.6 (7.2%) 8% -9.9%  
Bonds  
 175.2 (35.6%)  40% -4.0% 0.5% 
CHF short-term 
investment  8.3 (1.7%) 4%   
Investment grade 
bonds USD 63.4 (12.9%) 14% 0.1%  
Emerging countries 
bonds 66.8 (13.6%) 14% -1.5%  
Senior loans 36.7 (7.4%) 8% 0.6%  
Real estate 95.7 (19. 3%) 20% 9.6% 5.3% 
Cash 24.4 (4.9%) 0%   
Total  493.2 (100%)   -0.2% 5.3% 
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
3.3  Market Value / Securities 
Market value of securities  with different results 
30. My team audited the details of securities in the financial statements and the related 
documentation of funds. We noted that the current market value of one position was approx. CHF 0.5 million higher than stated. The related positi ons in the income and expenditure statement and 
in the balance sheet should be updated. 
I recommend reviewing and updating th e reporting and documenting process  
31. The Secretariat agreed and amended the financial statements during our audit. I recommend 
reviewing and updating the reporting and docume nting process between WTO and Funds to avoid 
misunderstandings or different results concerning market value of positions in the financial statements. WT/L/984  
 
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  3.4  Reimbursement of Withholding Tax 
Pension Plan requests reimbursement of dividends 32. Dividends earned from the WTOPP's securities are subject to fiscal levies at source. The Plan 
requests their reimbursement from the tax authorities in the countries concerned because the 
WTO is exempt from tax pursuant to the 1994 Marrakesh Agreement and the 1947 Convention on 
the Privileges and Immunities of the United Nations and Specialized Agencies. 
33. In practice, the WTOPP authorizes the banks that are the custodians of its investments to 
obtain reimbursement of withholding taxes. 
34. However, statutory limitation periods should not put an end to attempts to recover debts: 
taxes should not be considered as time-barred, according to general legal principles, if their reimbursement was requested within the legally set time frame and if the fiscal service concerned 
is solely responsible for the failure to reimburse. 
I recommend further efforts of the Secretariat to recover debts. 35. To improve transparency and completeness of the financial statements, I reiterate the 
recommendation of my previous report that the Se cretariat should make further efforts to recover 
the debts related to withholding tax not reimbursed by the tax authorities of the countries concerned. The WTOPP Secretariat will continue its efforts to recover withholding taxes by 
cooperating with the WTO Missions of the countries concerned. 
3.5  Internal Auditor´s Comment No Internal Auditor´s comments in 2015 36. The WTO's internal audit service has not conducted an audit of the WTOPP in 2015. 
4 ACKNOWLEDGEMENT 
I am grateful for the support received during the audit. 37. I wish to express my appreciation for the cooperation and assistance extended by the 
Secretariat of the Pension Plan, the management and staff of the WTO. I am very grateful for their 
assistance during the entire external audit process. 
 
  
 WT/L/984  
 
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List of Recommendations 
 
Issue Reference: 
Chapter, Year Recommendation 
 WTO´s Comment / 
Implementation Status 
Value of pension 
commitments 3.2/2014 I recommend that the financial statements of the WTOPP 
include the value of pension commitments (liabilities) as this 
is an essential element in assessing the situation of a 
pension plan. The WTOPP Secretariat accepted 
the recommendation and 
amended the notes and added a 
footnote. done 
Reserve / 
provision for 
operating costs 3.3/2014 I recommend that some further detail on the WTO costs be 
provided and a more up-to-date estimate be made. Further I 
recommend that the regulations be reviewed with the 
intention of clarifying the situation and, if necessary, 
specifying a procedure for settlement or waiver. In November 2015, the General 
Council adopted revised 
regulations for the Pension Plan 
where it is clarified that the 
expenses borne by the Plan 
exclude "costs incurred by the 
WTO in providing a Secretariat 
in support of the Plan".  done 
Reimbursement 
of withholding tax 3.4/2014 and 
3.4/2015 I reiterate the recommendation that the Secretariat should 
make further efforts to recover the debts related to withholding tax not reimbursed by the tax authorities of the 
countries concerned. Efforts to recover withholding 
taxes are ongoing.  
A follow up table of the process 
for recovering such taxes is 
available. 
In recent years, the Plan's 
investments have not been 
subjected to further 
unrecoverable withholding taxes. ongoing 
Market value / 
securities 3.3/2015 We noted that the current market value of one position was 
approx. CHF 0.5 million higher than stated. The financial statements were 
corrected to take into account 
the most recent valuation of the   
  WT/L/984  
 
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Chapter, Year Recommendation 
 WTO´s Comment / 
Implementation Status 
The Secretariat agreed and amended the financial 
statements during our audit.  
I recommend reviewing and updating the reporting and 
documenting process between WTO and Funds to avoid 
misunderstandings or different results concerning market 
value of positions in the financial statements. position concerned.  
Most of the other WTOPP assets 
are invested in funds for which 
market valuations are promptly 
available at year end: they are 
less likely to be affected by 
similar discrepancies. 
Nonetheless, the Secretariat will 
reinforce its verification of 
reports produced by the 
WTOPP's service providers 
against reports received directly 
from fund managers.  
 
 
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