RESTRICTED  
  
WT/L/1008  
 
12 July  2017 
(17-3745) Page: 1/9 
 Original: English  
 
WTO PENSION PLAN  
 
REPORT OF THE INDEPENDENT EXTERNAL AUDITOR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION PENSION PLAN (WTOPP)  
FOR THE YEAR ENDED 31 DECEMBER  2016  
Contents  
1  EXECUTIVE SUMMARY  ................................ ................................ ................................ .. 2 
2  SCOPE AND APPROACH OF THE AUDIT  ................................ ................................ .........  3 
2.1  Scope of the Audit  ................................ ................................ ................................ ........  3 
2.2  Audit Objective and Approach  ................................ ................................ ........................  4 
2.3  Audit Conclusion  ................................ ................................ ................................ ...........  4 
3  COMMENTS / AUDIT FINDINGS  ................................ ................................ ....................  5 
3.1  General Overview of the Plan's Financial Situation  ................................ ............................  5 
3.2  Investment Policy  ................................ ................................ ................................ .........  6 
3.3  Withholding Taxes  ................................ ................................ ................................ ........  7 
3.4  Internal Auditor's Comment  ................................ ................................ ...........................  8 
4  ACKNOWLEDGEMENT  ................................ ................................ ................................ ... 8 
ANNEX: LIST OF RECOMMENDATIONS  ................................ ................................ ..............  9 
 
 WT/L/1008  
 
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  1  EXECUTIVE SUMMARY  
My team and I have audited the financial 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  2016. 
Responsibility of Management  
2.  The Management Board of the WTO Pension Plan is r esponsible 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 audi t 
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 the International Standards on Auditing (ISAs) as 
adopted and amended by the International Organization of Supreme Audit Institutions (INTOSAI) 
and issued as International Standards for Supreme Audit 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 that the financial statements present fairly, in all 
material respects, the financial position as of 3 1 December  2016. 
I placed an unq ualified 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 financi al statements of the WTO Pension Plan for the year ended 
31 December  2016.  
Areas covered by this report  
8.  My report includes observations and recommendations intended to contribute to the 
improvement of financial management . For 2016, my audit work has mainl y 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 
assistanc e during the entire external audit process.  WT/L/1008  
 
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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  Decembe r 2016. We also examined the related financial accounts and 
transactions in WTO Headquarters in Geneva . 
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 accordance 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.  My objectives are to obtain reasonable assurance about whether the financial statements as a 
whole are free from material misstatements, whether due to fraud or error, and to issue an 
auditor 's report with audi t opinion . Reasonable assurance is a high level of assurance, but is not a 
guarantee that an audit conducted in accordance with ISAs will always detect each and every 
material misstatement . Misstatements can arise from fraud or error and are considered mat erial if, 
individually or in the aggregate, they could reasonably be expected to influence the economic 
decisions of users taken on the basis of these financial statements.  
As part of an audit in accordance with ISAs, I exercise professional judgement and maintain 
professional scepticism throughout the audit.  
 
I also:  
 
 identify and assess the risks of material misstatement of the financial statements, 
whether due to fraud or error, design and perform audit procedures responsive to those 
risks, and obtain au dit evidence that is sufficient and appropriate to provide a basis for 
our opinion . The risk of not detecting a material misstatement resulting from fraud is 
higher than for one resulting from error, as fraud may involve collusion, forgery, 
intentional omi ssions, misrepresentations, or the override of internal control;  
 obtain an understanding of internal control relevant to the audit in order to design audit 
procedures that are appropriate in the circumstances, but not for the purpose of 
expressing an opini on on the effectiveness of WTOPP 's internal control;  
 evaluate the appropriateness of underlying accounting policie s and the reasonableness of 
accounting estimates and related disclosures made by Management;  
 evaluate the overall presentation, structure and content of the financial statements, 
including the disclosures, and whether the financial statements represent the underlying 
transactions and events in conformity with the principles o f fair presentation.  
My team communicated with those charged with gover nance the planned scope and timing of the 
audit and significant audit findings, including any significant deficiencies in internal control that we 
identify during our audit.  
 
Audit of the financial statements  
13.  The financial statements of the WTO Pension Pla n, together with my audit report and the audit 
opinion, were discussed with the Management Board . It took note of the contents of my report.  WT/L/1008  
 
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  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 the purposes approved, whether expenses were 
properly categorized and recorded in accordance with Financial Regulations ; and whether the 
financial stat ements present fairly the financial position as of 31  December  2016.  
Testing convinced me of the correctness of the financial statements  
15.  My audit opinion is based on the testing of transactions recorded in the financial statements . 
The examination was carr ied 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, m y 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  2016.  WT/L/1008  
 
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  3  COMMENTS / AUDIT FINDI NGS 
3.1  General Overview of the Plan 's Financial Situation  
The excess of income over expenditure as at 31  December  2016 is CHF  39.6 million  
17.  The Income and Expenditure Statement shows a surplus (excess of income over expenditure) 
of CHF  39.6 million as at 31  December  2016 (2015 : CHF 9.5 million), thus an increase of 
CHF 30.1 million.  
This is a result of an increase in profit on securities in 2016 to CHF  34.2 million . In 2016, the total 
income increased to CHF  64.9 million (2015 : CHF 32.1 million), an increase of  CHF 32.8 million.  
 
However, income from contributions slightly decreased to CHF  30.7 million ( - CHF 0.6 million) . The 
regular contributions by the organization and by participants amount to CHF  28.7 million 
(- CHF 0.3 million).  
 
Periodic benefits in 2016 : CHF 19.2 million  
18.  Benefits paid out consist of periodic benefits (2016 ; CHF 19.2 million, mostly retirement and 
early retirement benefits) and lump sum benefits (2016:  CHF 4.3 million , mostly for 
commutations).  
Total benefits paid out increased to CHF  23.5 million  
19.  The total benefits paid out in 2016 increased to CHF  23.5 million (2015 : CHF 19.7 million) and 
were fully covered by the contributions (2016 : CHF 30.7 million).  
Negative interests totalled CHF  88,000 in 2016  
20.  CHF 88,000 losses on investment incurre d due to negative credit interests, owing to the policy 
of the Swiss National Bank (SNB) . This loss is outreached by a profit of CHF  34.2 million registered 
on securities.  
Administrative expenses slightly increased to CHF  782,385  
21.  Investment and other admin istrative expenses slightly increased with a total of CHF  782,385 
(2015 : CHF 752,217).  
Securities increased by CHF  42.9 million  
22.  Total assets increased from CHF  495.9  million (as at 31  December  2015) to CHF  535.5  million 
(as at 31  December  2016) mainly due to the increase in securities by CHF  42.9 million . 
As at 31  December  2016 the Plan served 328 beneficiaries  
23.  As at 31  December  2016, the Plan served 328 beneficiaries and accounted for 703 active 
participants.  
24.  These 328 beneficiaries comprise 149 retirees, 107 persons who took early retirement, 
10 beneficiaries of survivor 's pensions, 20 children of beneficiaries and orphans, and 21 disabled 
persons . They also include 21 former staff members whose deferred pensions will begin to be paid 
after 2016.  
Audit fin dings and recommendations  
25.  The following paragraphs contain audit findings and recommendations and provide 
background information.  WT/L/1008  
 
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  Actuarial rate of return : 6.77% 
26.  The actuarial rate of return on investment, net of inflation (6.77 %) was positive.  
Table 1 : Calculation of the actuarial rate of return, net of inflation (in CHF)  
Actuarial rate of return  2012  2013  2014  2015  2016  
a. Value of assets as of 
1 January  348,800,016  396,539,355  440,342,527  486,697,204  495,898,233  
b. Value of assets as of 
31 December  396,539,355  440,342,527  486,697,204  495,898,233  535,529,801  
i. Adjusted1 Investment 
income  34,489,624  33,480,802  36,486,230  -930,196  33,792,675  
Average assets =  
(a+b -i)/2 355,424,874  401,700,540  445,276,751  491,762,817  498,817,680  
Actuarial rate of return in 
nominal terms = i/average 
assets  9.70%  8.33%  8.19%  -0.19%  6.77%  
Consumer Price Index for 
Switzerland2 -0.40%  0.10%  -0.30%  -1.30%  0.00%  
Actuarial rate of return, 
net of inflation  10.10%  8.23%  8.49%  1.11%  6.77%  
Source : External  Auditor, on the basis of information provided by the WTOPP Secretariat.  
Table 2 : Trend in actuarial rates of return in nominal terms (%) 
2008  2009  2010  2011  2012  2013  2014  2015  2016  
-36.53% +21.29% +3.52% -1.10% +9.70% +8.33% +8.19% -0.19% +6.77% 
Source : External Auditor, on the basis of information provided by the WTOPP Secretariat.  
3.2  Investment Policy  
Management Board defined an investment policy for asset allocation  
27.  Asset allocation is the main source of portfolio returns . Therefore, WTOPP 's Management 
Board defined and implemented an investment policy for the Plan.  
Asset allocation : equities, CHF bonds, real estate and cash  
28.  The Management Board of WTOPP adopted the following portfolio breakdown:  
 equities : 40% (of which 32 % in developed market securities  and 8 % in emerging market 
securities);  
 CHF bonds : 36% (bonds hedged in CHF);  
 real estate : 20%; 
 cash: 4%. 
Allocation as of 31  December  2016 is close to the targets  
29.  Asset allocation as of 31  December  2016 of the Plan 's portfolio is close to the targets : 
41.8% in equities (of which 33.2 % in developed markets and 8.6 % in emerging markets), 
34.1% in CHF bonds ; 19.7% in real estate, and 4.4 % in cash.  
                                                
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 compared to December of the 
previous year, as reported by the Swiss Federal Office of Statistics.  WT/L/1008  
 
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  Table 3 : Breakdown of assets and investment performance (in nominal terms) of the 
classes of assets in 2016  
(in CHF million s) 
Assets  Value  of assets 
end of 2016 
(CHF  millions)  Asset 
allocation  
(strategy)  Performance  
(in nominal terms 
over 1 year ) Performance  
(in nominal terms 
over 3 years ) 
Equities  223.6 (41.8%)  40%  8.2%  6.7%  
Developed markets  177.6 (33.2%)  32%  7.4%   
Emerging markets  46.0 (8.6%)  8% 11.2%   
CHF bonds  182.9 (34.1%)  36%  5.7%  2.1%  
Investment grade 
bonds US $ 66.6 (12.4%)  14%  1.5%   
Emerging countries 
bonds  74.4 (13.9%)  14%  9.3%   
Senior loans  41.7 (7.8%)  8% 6.7%   
Real estate  105.2 (19.7%)  20%  7.2%  7.1%  
Cash  23.3 (4.4%)  4%   
Total  535.0 (100%)   6.8%  4.9%  
Source : External Auditor, on the basis of information provided by the WTOPP Secretariat.  
3.3  Withholding Taxes  
Withholding taxes to be recovered : CHF 615 ,662 
30.  The 2016 financial statements of the WTO Pension Plan include a position "Withholding taxes 
to be recorded " with an amount of CHF 615,662 as "Current Assets ". On the liability side WTOPP 
shows as "Reserves " a position "Unrecoverable withholding taxes " with an amount of CHF 396,000.  
WTOPP is exempt from taxes : taxes could be recovered after the respective taxable 
period  
31.  As withholding taxes to be recovered WTOPP declared amounts of withholding tax levied by 
national tax authorities and subject to recove r after 3 1 December  2016. The WTOPP is exempt 
from most national taxes such as income or corporation taxes, interest taxes, capital gain taxes as 
well as resulting withholding taxes because the WTO – as an international organization – is a 
tax-exempt entit y and the WTOPP benefits from this exemption as a depending fund of the WTO 
without a separate legal personality . In some cases, the national tax authorities have withheld 
taxes from WTOPP transactions ; these taxes could be recovered after the respective t axable 
period . WTOPP stated these withholding taxes at 3 1 December  2016 as an asset (receivable) 
"Withholding taxes to be recorded ". 
The amount of CHF 615,662 includes CHF 396,000 withholding taxes paid in Canada, Denmark, 
France, Greece, Israel, Italy, Lu xembourg and Poland between 2000 and 2011 . Correspondingly, 
WTOPP has stated the amount of CHF 396,000 as a reserve on the liability side because the value 
of these refund claims is not eligible as an asset under IPSAS.  
 
Relevant periods for refunding are exceeded  
32.  The biggest tax amounts (withheld from 2000 to 2011) have been withheld by Italy : 
€192,808 ; Canada : Can$115,481 and France €60,935 . In all countries the time-limit for possible 
tax refunds already was exceeded in 2014 . Since January  2015, WTOPP is  inquiring the Permanent 
Mission of Canada regarding a special arrangement to reimburse the paid Canadian withholding 
taxes, however, without any tangible progress . WTOPP has not informed about other inquiries or 
activities regarding this issue with the re spective national tax authorities . We state that the paid 
withholding taxes for the years 2000 to 2011 canno t be refunded by the national tax authorities by 
regular practice because the relevant periods are exceeded and the terms and regulations i n tax 
matters are very strict in all these countries . This is also attributable to the fact that WTOPP did 
not fully comply with the legal and technical requirements until 2011/2012 . However, it could be 
possible to find a solution by political means . In this conte xt WTOPP shall consider note the 
cost-benefit ratio.  WT/L/1008  
 
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  Recommendation  
33.  I recommend a write off of the positions "Withholding taxes to be recorded " and 
"Unrecoverable withholding taxes " with the same amount of CHF 396,000 . Possible tax refunds as 
a result of p olitical means or other agreements shall be considered as miscellaneous income in the 
respective year of the actual payment.  
3.4  Internal Auditor 's Comment  
No internal auditor 's comments in 2016  
34.  The WTO 's internal audit service has not conducted an audit of th e WTOPP in 2016.  
4  ACKNOWLEDGEMENT  
I am grateful for the support received during the audit  
35.  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/1008  
 
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  ANNEX:  
LIST OF RECOMMENDATIONS  
No. Issue  Reference : 
Chapter, 
Year Recommendation  WTO 's Comment / 
Implementation  Status  
1 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 
2 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 inc urred by the WTO 
in providing a Secretariat in 
support of the Plan".  done 
3 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 
withhold ing 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  
4 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 Secretariat agreed and amended 
the financial st atements 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.  The financial statements 
were corrected to take into 
account the most recent 
valuation of the 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.   done 
5 Withholding 
taxes  3.3 / 2016  The 2016 financial statemen ts of the 
WTO Pension Plan include a position 
"Withholding taxes to be recorded " 
with an amount of CHF 615,662 as 
"Current Assets ". On the liability side 
WTOPP shows as "Reserves " a 
position "Unrecoverable withholding 
taxes " with an amount of 
CHF 396,000.  
Related to my recommendation 
concerning withholding taxes before I 
recommend a write off of the 
positions "Withholding taxes to be 
recorded " and "Unrecoverable 
withholding taxes " with the same 
amount of CHF 396,000 . Possible tax 
refunds by political means or other 
agreements shall be considered as 
miscellaneous income in the 
respective year of the effective 
payment.  The WTOPP Secretariat 
accepted the 
recommendation ; 
implementation is on the 
way. ongoing  
__________