RESTRICTED  
  
WT/BFA/W/335  
8 September 2014  
(14-5059)  Page: 1/35  
Committee on Budget, Finance and Administration  Original: French  
 
   
  
 
  
 
  
LETTER OF FINAL OBSERVATIONS ON  THE FINANCIAL STATEMENTS OF 
THE WORLD TRADE ORGANIZATION (WTO) FOR THE YEAR ENDED 
31 DECEMBER 2013 AND PERFORMANCE AUDIT WT/BFA/W/335 
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  TABLE OF CONTENTS 
1  OBJECTIVES AND SC OPE OF THE AUDIT ....................................................................... 4  
2  LIST OF MAIN FINDINGS  AND RECOMMENDATIONS .................................................... 5  
2.1  Main findings ............................................................................................................ . 5 
2.2  Recommend ations ...................................................................................................... 5  
3  OBSERVATIONS AND RECOMMENDATIONS .................................................................. 6  
3.1  Follow-up of earl ier recommend ations ........................................................................... 6  
3.1.1  Recommendations of the external auditor .................................................................... 6  
3.1.2  Recommendations of  the internal  audit ....................................................................... 8  
3.2  Overview of the financial situation................................................................................. 9  
3.3  Applicatio n of IPSAS ................................................................................................... 9  
3.4  Presentation of assets and liabilities in the statem ent of financia l position .......................... 10 
3.5  Note 1 on a ccounting me thods .................................................................................... 10 
3.6  Note 14 "Empl oyee benefits" ....................................................................................... 10 
3.6.1  The WTO's commitments relating to pe nsions and after-servic e health insurance ............. 10 
3.6.2  Provision for removal indemnity ................................................................................ 11 
3.6.3  Provision for annual leave ........................................................................................ 11 
3.7  Advances to staff ....................................................................................................... 12 
3.8  Note 20 "Segme nt reporting" ...................................................................................... 12 
3.9  Note 21 on bu dget information .................................................................................... 13 
3.10  Note 22 "Key ma nagement personnel" ........................................................................ 14 
3.11  Revenue ................................................................................................................. 14 
3.11.1  Statutory contributi ons by Member  States ................................................................ 14 
3.11.2  Plans for absorption of the debt of certain Member States ........................................... 15 
3.11.3  Provision for arrears of contributions ........................................................................ 16 
3.11.4  Refund of tax by  the United States .......................................................................... 16 
3.12  Accounts payable ..................................................................................................... 17 
3.13  Assets .................................................................................................................... 17 
3.13.1  Financing of works on headquarters ......................................................................... 17 
3.13.2  Note 9 on equipment ............................................................................................. 18 
3.13.3  Depreciation of the WTO headquarters  buildings ........................................................ 18 
3.14  Internationa l Trade Centre ........................................................................................ 19 
4  ACKNOWLEDG EMENTS ............................................................................................... 20  
5  CONCLU SION ............................................................................................................. 20  
6  OBJECTIVES AND SC OPE OF THE AUDIT ..................................................................... 21  
7  LIST OF FINDINGS AND RECOMMEND ATIONS ............................................................ 21  
7.1  Main findings ............................................................................................................  21 
7.2  Recommendations of this report .................................................................................. 21 WT/BFA/W/335 
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  7.3  OBSERVATIONS AN D RECOMMEND ATIONS ................................................................... 22 
7.4  WTO staff tr ends since 2008 ....................................................................................... 22 
7.5  Staff prom otion policy ................................................................................................ 24 
7.5.1  Slowdown in grade progression ................................................................................. 25 
7.5.2  Description of job profiles ........................................................................................ 26 
7.6  Policy to encourag e internal mobility ............................................................................ 29 
7.7  Computerization of certain tasks .................................................................................. 29 
7.8  Acknowledgment of in dividual pe rforma nce ................................................................... 30 
7.9  Training policy ..........................................................................................................  31 
7.10  Temporary contract policy ......................................................................................... 32 
7.11  Systematic utilization of pe rformance evaluati on interviews ........................................... 33 
7.12  Social asse ssment report .......................................................................................... 33 
7.13  Organization  and methods ........................................................................................ 34 
8  ACKNOWLE DGMENTS ................................................................................................. 34  
9  ANNEX 1 ..................................................................................................................... 35  
 WT/BFA/W/335 
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  1  OBJECTIVES AND SCOPE OF THE AUDIT 
1.  In accordance with our letter of notification of 19 December 2013, a team of five external 
auditors conducted an audit of the World Trade Organization (WTO) in Geneva from 31 March to 11 April 2014. The purpose of the audi t was to examine the Organization's financial 
statements for the year ended 31 December 2013. 
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)
1. 
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 2014. 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 one reservation. The reasons for our 
opinion are set out in the report, in the chapter relating to the International Trade Centre. 
6.  The second part of the report resumes and updates the findings of the performance audit on 
the management of WTO personnel, conducted by six auditors from 23 September to 2 October 2013. 
                                               
1 International Public Sector Accounting Standards. WT/BFA/W/335 
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  PART I: CERTIFIED ACCOUNTS FOR 2013 
2  LIST OF MAIN FINDINGS AND RECOMMENDATIONS 
2.1  Main findings 
 The WTO has presented financial statements rectified in one essential respect compared 
to those of 2012, in order to ensure consistency with the IPSAS: application of the 
standards relating to long-term employee benefits (pensions and after-service health 
insurance). However, these financial statements are not yet in conformity with the IPSAS 
as regards the International Trade Centre (ITC), a "jointly controlled entity" of the WTO 
and the UN. 
 Our recommendations are to remedy this situation and to make minor improvements 
to the accounting methods for some operations and the presentation of the notes to the 
financial statements. The notes should indicate the changes in accounting methods and 
explain the main developments in the accounts compared to the previous financial year. 
2.2  Recommendations 
The recommendations are classed in order of priority: 
 Priority 1: essential point, requiring senior management's immediate attention; 
 Priority 2: control point of a less urgent na ture, to be addressed by senior management; 
 Priority 3: point on which controls could be improved, to which senior management's 
attention is drawn. 
a. Recommendation No. 1 (Priority 3). The exte rnal auditor recommends reviewing the way 
in which the provision for paid leave is calculated so as to avoid staff on leave without 
pay being included in this provision. 
b. Recommendation No. 2 (Priority 2). The ex ternal auditor recommends taking the 
measures required to liquidate pending advances to staff. 
c. Recommendation No. 3 (Priority 1). The external auditor recommends that 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 (confirmation and 
development of Recommendation No. 6 in last year's report). 
d. Recommendation No. 4 (Priority 2). The external auditor recommends presenting 
in Note 21 to the financial statements all the information required under IPSAS 24 
for comparison between the original and final budgets. 
e. Recommendation No. 5 (Priority 2). The ex ternal auditor recommends the adoption 
of a more realistic method of provisioning for arrears of contributions (confirmation 
of Recommendation No. 5 in last year's report). 
f. Recommendation No. 6 (Priority 3). The external auditor recommends that 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 (confirmation of Recommendation No. 10 in last year's report). 
g. Recommendation No. 7 (Priority 3). The extern al auditor recommends (i) making a clear 
distinction in accounts payable between debt s for which invoices have not yet been 
received and other "payables" (debts to suppliers); and (ii) clearing or writing-off old debts. WT/BFA/W/335 
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  h. Recommendation No. 8 (Priority 2). The external auditor recommends specifying the 
loan repayment schedule in an amendment to the WTO's loan agreements with the Building Foundation for International Organisations (FIPOI). 
i. Recommendation No. 9 (Priority 3). The external auditor recommends including in 
Note 21 on buildings a breakdown for WTO headquarters in terms of buildings and 
elements with different depreciation periods. 
j. Recommendation No. 10 (Priority 1). The external auditor recommends that the WTO 
should(i) adjust the financial statements of th e ITC in order to bring them into line with 
its own accounting standards; (ii) use the equity method in reporting the ITC; and (iii) 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 impl ementation of our previous recommendations 
(Report of 20 June 2013 on the financial statements for the financial year ended 
31 December 2012 and performance audit) and noted that of the 23 recommendations, 15 had been implemented (65.21%), two were in the proc ess of being implemented (8.69%), and six had 
not been implemented (26.08%), as indicated in Table 1 below. All the recommendations 
concerning the Office of Internal Audit performa nce audit have already been implemented except 
one, which is in the process of being implemented. 
Table 1 Implementation of recommendations by the external auditor 
Recommendations Implementation  Ongoing  Not 
implemented Total Relevant 
paragraph 
of the 
Report 
Certified financial statements for 2012 
1. The WTO Financial Regulations should be 
updated in line with the IPSAS and the 
senior-level staff of the finance division should 
be reinforced  X   16-21 
2. Present on the assets side of the statement 
of financial position the amount of the Organization's financial assets accumulated to cover staff pension commitments and on the liabilities side the gross amount of the 
corresponding obligations, in accordance with 
IPSAS 1 and 25 X    22-27 
3. In the notes to the financial statements, 
present the information required under 
IPSAS 25 relating to the WTO's pension and 
after-service health insurance commitments 
and the financial assets accumulated to cover 
the pension commitments     28-31 
4. For the actuarial calculations relating to the 
Pension Plan and after-service health insurance, use mortality tables designed specifically for international civil servants X    32-33 
5. Correct the provision for short-term and 
long-term employee benefits and the relevant 
comment X    34-36 
6. Present segment information (i) by major 
segment of WTO activity; and (ii) for all the financial statements, in accordance with IPSAS 18   X  37-45 WT/BFA/W/335 
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  Recommendations Implementation  Ongoing  Not 
implemented Total Relevant 
paragraph 
of the 
Report 
7. Mention in the notes 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 guarantees provided by the enterprises 
contracted to carry out the headquarters 
extension work X    46-50 
8. Adopt a more realistic method 
of provisioning for arrears of contributions, according to the risk incurred   X  59-60 
9. 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 X    61-63 
10. Pursue efforts (i) to accelerate refund by 
the United States of the taxes of WTO staff; and (ii) to obtain this refund according to the 
method advocated by the ILO Administrative 
Tribunal   X  64-66 
11. Correct the amount of the advances to 
trust funds mentioned in the notes to the 
financial statements X    67 
12. (i) Take account of the cost of WTO staff 
working hours spent developing new software in the amount of intangible assets; and (ii) amortize this software at a rate comparable to that of software purchased on the market   X  68-70 
13. (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 X    71-78 
14. Improve the information given on the 
Organization's assets (i) by supplementing the note on accounting policies; and (ii) indicate more clearly the nature of each asset
 
recorded in the physical inventories of the 
Organization's equipment X    81-82 
15. Improve the recording of 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 their 
individual value is less than CHF 2,500; (ii) by 
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) by 
depreciating works of art and decorations in 
the same way as fixtures and fittings   X  87-88 WT/BFA/W/335 
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  Recommendations Implementation  Ongoing  Not 
implemented Total Relevant 
paragraph 
of the 
Report 
16. (i) Make provision for the amount of the 
undisputed invoices of one of the construction enterprises, withheld in the context of a dispute; (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 X    94-99 
17. Adjust the financial statements of the ITC 
in order to bring them into line with the WTO's 
accounting standards, use the equity method 
in reporting the ITC and present all the 
information required under the standards   X  100-108 
Internal audit performance audit 
1. Revise the Internal Audit Charter to 
broaden the responsibilities of one of the WTO 
committees with respect to audit X    13-24 
2. 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
  X   25-34 
3. Draw up future internal audit plans with 
reference to the WTO risk management 
framework under preparation and in 
coordination with the external auditors X    35-41 
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 X    42-50 
5. The Office of Internal Audit should establish 
a quality control and improvement 
programme including periodic internal and 
external evaluations X    69-76 
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 X    77-80 
Total 15 2 6 23  
Source: External auditor. 
 
3.1.2  Recommendations of the internal audit 
8.  The Table below shows the rate of implementati on of the recommendations in the reports of 
the Office of Internal Audit: 156 out of 198 ( 78.78%) have been implemented, 14 are in the 
process of being implemented (7.07%), and 28 have not been implemented (14.14%). WT/BFA/W/335 
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  Table 2 Implementation of internal audit recommendations 
Subject of 
reports Date of 
reporting to 
Director-General Number of 
recommendations Implemented Ongoing Not 
implemented 
Procurement 17/11/08 41 41 0 0 
Travel 13/10/09 23 20 3 0 
Payroll 28/06/10 25 21 1 3 
Informatics 02/12/10 12 11 1 0 
Outsourcing 
(cleaning) 30/06/11 31 30 1 0 
Outsourcing 
(security) 11/11/11 21 20 1 0 
Consultants and 
service providers 21/12/12 26 12 7 7 
Tangible assets 
and 
consumables 23/12/13 19 1 0 18 
Total  198 156 14 28 
Source: External auditor, based on data pr ovided by the Office of Internal Audit. 
 
3.2  Overview of the financial situation 
9.  The statement of financial performance for 2013 indicates a deficit of CHF2 5,075,000 instead 
of a deficit of CHF 19,897,000 in 2012. This change is mainly attributable to the recognition as 
extraordinary revenue of the grants of CHF 10 million and CHF 2.9 million from the Building 
Foundation for International Organisations (FIPOI) for the creation of an underground car park and 
the renovation of WTO headquarters. 
10.  The 2013 accounts show a net deficit of CHF 594,449,000 compared to CHF 786,370,0003 in 
2012. This drop of CHF 191,921,000 in net liability is basically the result of the decrease in WTO 
commitments for pensions and after-service health insurance.4 
11.  As pointed out in our previous reports, the transition to IPSAS 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, the value of which 
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 dissolution". 
3.3  Application of IPSAS 
12.  In May 2009, the WTO General Council adopted a plan for the gradual implementation 
of IPSAS, which was due to be completed with the presentation of financial statements for 
the financial year 2012 consistent with these Standards. 
13.  The plan has been implemented according to sch edule, but the external auditor considered 
that the financial statements for the financial year 2012 presented in 2013 were not 
                                               
2 Swiss francs. 
3 This amount of CHF 786,370,000 is the figure given in the financial statements for 2012, restated by 
the WTO in the 2013 statement of financial position to take into account the external auditor's 
recommendations. 
4 This development, elaborated on below, is attributab le to the changes in the ac tuarial discount rate for 
WTO commitments and the long-term rate of increase in WTO salaries. WT/BFA/W/335 
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  IPSAS-compliant in the following two important respects, thus prompting an audit opinion with 
reservations: the presentation in the financial position statement of non-current assets and employee benefit obligations, and the presentation  of WTO interests in the International Trade 
Centre (ICT). The WTO has changed its presentati on in respect of the statement 
of financial position but has not done so as  regards the presentation of its interests 
in the ITC. It has, however, presented a communication from the ITC stating that the 
latter's accounts will be brought into line with IPSAS for the financial year 2014; 
fulfilment of this undertaking will have to be verified next year.  
14.  Pursuant to Recommendation No. 1 in our repo rt on the 2012 accounts, the WTO Financial 
Regulations are being updated in line with IPSAS, and the finance division's senior-level staff has just been reinforced. 
3.4  Presentation of assets and liabilities in the statement of financial position 
15.  Recommendation No. 2 in our report on the 2012 accounts advocated that the statement of 
financial position should present on the assets side the amount of the Organization's financial 
assets relating 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. This important recommendation has been implemented in the 2013 accounts. 
3.5  Note 1 on accounting methods 
16.  Note 1 on accounting methods indicates the amount of the investment grants from FIPOI for 
the construction of a car park (CHF 10 million) and for the renovation and maintenance of WTO headquarters (CHF 2,973,000), whereas the purpose of this note is to describe the accounting 
methods applied in the financial statements. 
17.  The detailed explanations given on these gran ts and the corresponding amounts should be 
moved to Notes 15 and 18, which deal with loans and grants and with revenue, respectively. 
18.  Note 1 specifies the depreciation periods for the various categories of WTO assets, except in 
the following two cases: vehicles and the buildings' windows. 
19.  After the external auditors issued a provisional recommendation on the subject, 
the Organization amended Note 1 as follows: 
a. the detailed explanations on investment grants have been moved to Notes 15 
(Loans and Grant) and 18 (Revenue); 
b. the depreciation periods have been specified for all categories of assets. 
3.6  Note 14 "Employee benefits" 
3.6.1  The WTO's commitments relating to pensio ns and after-service health insurance 
20.  In accordance with Recommendation No. 3 in our report on the 2012 financial statements, 
Note 14 presents the information required under IPSAS 25, paragraph 141, relating to the WTO's 
commitments for pensions and after-service health insurance (ASHI
5) and the financial assets 
accumulated to cover the pension commitments. 
21.  However, Note 14 does not provide any explan ation concerning the large decrease in the 
amount of these commitments between the financial years 2012 and 2013. 
22.  The reports of the Organization's actuary show th at this decrease is attributable to two main 
factors: the increase in the actuarial discount rate for commitments and assets, from 2.10% in 
2012 to 2.60% in 2013, and the reduction in the rate for future salary increases, that is to say the 
inflation rate over ten years and then the amount of inflation plus 0.5% in subsequent years, whereas in 2012 the hypothesis adopted was the inflation rate plus 1%. 
                                               
5 After Service Health Insurance . WT/BFA/W/335 
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  23.  This reduction in the rate of salary increase s was adopted by working groups set up by the 
WTO Pension Plan Management Committee. It is based on the experience gathered over recent years, in which the rate of increase in salaries was lower than the amount of inflation plus 1%, especially as since 2000 the Organization has taken steps to slow the career progression of staff 
(see Part II of this report, on personnel management). 
24.  Following the provisional recommendation by the external auditor on this subject, the 
Organization included in Note 14 on employee benefits an explanation concerning the large 
decrease in the WTO's commitments for pensions and after-service health insurance in 2013 
compared with 2012. 
25.  The mortality tables used by the WTO actuary in its two reports concerning the Pension Plan 
and ASHI, respectively, are the EVK 2000 tables
6, modified by 2% per year. 
26.  Our Recommendation No. 4 proposed using tables specially designed according to the specific 
longevity of international civil servants, such as the ICSLT 2008 tables7 developed by the actuaries 
for the European Union and the "coordinated organizations".8 
27.  One of the working groups set up by the WTO Pension Plan Management Committee studied 
the matter and considered that the advantages and drawbacks of the various available tables balanced out, and so did not advocate adopting a change in tables. 
28.  The recommendation has thus been followed up seriously. Nevertheless, we advise 
making a regular comparison of the availabl e mortality tables, especially as the ICSLT 
tables, specifically designed for internat ional organizations, were updated in 2013. 
3.6.2  Provision for removal indemnity 
29.  Note 14 indicates that the average rate of the separation indemnity taken into account for the 
calculation of the relevant provision is based on the average indemnity paid over the six preceding financial years. 
30.  The average unit cost thus calculated fo r 2013 is CHF 14,832.38. For the years 2011 and 
2012, this average unit cost was calculated on the basis of the average indemnity paid since 2000, i.e. over the previous 11 or 12 years. 
31.  Using that basis for the calculation, the average unit cost of staff removal would 
be CHF 16,551.56 for 2013 rather than CHF 14,832. 38. The provision for removal indemnity thus 
calculated would be CHF 1,561,853 rather than CHF 1,399,626. 
32.  The Organization rightly considers that it is more relevant to calculate these provisions on the 
basis of recent figures, but it did not mention this change in the method used and its impact 
on the statements in Note 14 at the start of our audit. 
33.  Following the provisional recommendation by the external auditor on this subject, 
the Organization mentioned in Note 14 to the financial statements for 2013 this change in the 
method of the calculation of removal indemnity and its impact on the accounts. 
3.6.3  Provision for annual leave 
34.  At 31 December 2013, the WTO had 17 officials on special leave without pay. Under Staff 
Rule 109.4, these officials are no longer entitled to annual leave. 
                                               
6 "Eidgenössische Versicherungskasse (EVK)": Confed eration Insurance Fund. This mortality table was 
created by a Swiss retirement fund whose new na me is "Caisse fédérale de pensions PUBLICA". 
7 "International Civil Servant Life Table (ICSLT)". 
8 The six coordinated international organizations which jointly manage their remuneration scales and 
pension schemes are the European Space Agency, the European Centre for Medium-Range Weather Forecasts, the Council of Europe, the OECD, NATO  and the Western European Union. WT/BFA/W/335 
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  35.  However, an official on special leave continues to be taken into account for the calculation 
of the provision for paid leave. The amount conc erned is below the threshold that would require 
a change in the provision in the financial statements. Nevertheless, this error should be corrected in future and the necessary steps taken to avoid repeating it (by adjusting the software used for 
calculating this provision, for example). 
Recommendation No. 1 (Priority 3). The external auditor recommends reviewing the way in which 
the provision for paid leave is calculated so as to avoid staff on leave without pay being included 
in this provision. 
 
Reply of the Secretariat. The Secretariat accepts the recommendation and will do as suggested. 
3.7  Advances to staff 
36.  Advances to staff rose from CHF 2,386,000 at 31 December 2012 to CHF 3,104,000 
at 31 December 2013, an increase of 30.09%. 
37.  This increase comes from the CHF 537,000 in home leave travel costs, which were not 
considered advances before April 2013 but rather directly included as expenditures. The amount of home leave travel is now considered an advance until such time as the official provides the 
supporting documents for the travel, the amount then being put down as a charge. 
38.  Although this change of method has an impact on the result for 2013, it was not mentioned 
in Note 8 on advances. 
39.  It was also found that many advances dated back over several months but the officials 
concerned had not yet provided the supporting evidence for their travel. 
40.  It is therefore advisable to speed up the process of obtaining the supporting documents for 
home leave travel by setting a reasonable deadline for the regularization of the advances. 
41.  Following a provisional recommendation by the external auditor on this subject, 
the Organization has mentioned the change in accounting method adopted in 2013 in Note 8 on advances to staff. 
Recommendation No. 2 (Priority 2). The external auditor recommends taking the measures 
required to liquidate pending advances to staff. 
 
Reply of the Secretariat. The Secretariat will take the necessary action to liquidate pending 
advances. 
 3.8  Note 20 "Segment reporting" 
42.  The WTO's financial statements include a Note 20 ("Segment reporting"), which gives 
a breakdown by segment of activi ty of the expenditure and revenue mentioned in the statement 
of financial performance. 
43.  The note distinguishes two segments of activity, the regular budget and Trust Funds. 
The breakdown adopted corresponds to the dist inction made within the WTO between regular 
budget and non-budget funds, the former stem ming from the statutory contributions of all 
Members and the latter from voluntary contributions by some of them. 
44.  This breakdown does not correspond to the objectives set by IPSAS 18, paragraph 9, 
on segment reporting: "A segment is a distinguishable activity or group of activities of an entity for which it is appropriate to separately report financial information for the purpose of (a) evaluating 
the entity's past performance in achieving its objectives, and (b) making decisions about the 
future allocation of resources." WT/BFA/W/335 
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  45.  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. 
46.  Several of our past recommendations are along these lines: 
a. our Report for 2010 on the 2009 accounts 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; and 
b. 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). 
47.  It is therefore recommended that the Secretar iat should study the development of a segment 
information table by major segment of WTO activity, a complex tasks 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 can either be distributed across functional activities or treated separately as autonomous cost centres. 
48.  In paragraphs 51 and following, IPSAS 18 lists al l the elements that an entity should present 
in the framework of segment reporting. By way of example, paragraphs 53 and 54 mention 
respectively: 
a. "an entity should disclose the total carrying amount of segment assets for each 
segment";  
b. "an entity shall disclose the total carrying amount of segment liabilities for each 
segment". 
49.  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, as was already recommended in  Recommendation No. 6 of our report on the 
accounts for 2012. 
Recommendation No. 3 (Priority 1). The external auditor recommends that the Secretariat should 
study the possibility of presenting segment info rmation (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 (confirmation and de velopment of Recommendation No. 6 in last 
year's report). 
 
Reply of the Secretariat. Bearing in mind that  there are only two entities presented, the 
Secretariat will study the possibility proposed by th e external auditor. Nevertheless, it considers 
that it is impossible to present the financial position on the basis of segment information given the 
structure of the WTO's assets and liabilities.  3.9  Note 21 on budget information 
50.  Note 21 to the WTO's financial statements presents a reconciliation of the results of budget 
execution and the accounting results in conformity with IPSAS at 31 December 2013. 
51.  IPSAS 24 also requires: 
 in paragraph 14, a presentation of the original and final budget amounts, 
i.e. a comparison of the amounts of revenue and expenditure approved and the actual amounts at the end of the financial year;  WT/BFA/W/335 
- 14 - 
   in paragraph 29, an explanation of whether changes between the original and the final 
budget are a consequence of reallocations within the budget, or of other factors. 
Recommendation No. 4 (Priority 2). The external au ditor recommends presenting in Note 21 to the 
financial statements all the information requ ired under IPSAS 24 for comparison between the 
original and final budgets. 
 
Reply of the Secretariat. The Secretariat has compared the original and final budgets for 2013 
in the first section of its 2013 Financial Performance Report entitled Budget Performance. The Secretariat will study the possibility of prov iding more detailed information in Note 21. 
 3.10  Note 22 "Key manage ment personnel" 
52.  Note 22 to the financial statements concerns the information on key management personnel 
required under IPSAS 20. 
53.  In paragraph 34 the Standard requires that an entity shall disclose the following information: 
a. the aggregate remuneration of key ma nagement personnel and the number of 
individuals receiving remuneration within this category; 
b. the total amount of all other remuneration and compensation provided to key 
management personnel. 
54.  In the amounts presented in Note 22 to the financial statements, the WTO has not included 
the amounts for untaken annual leave paid to some of the key management personnel after they left the Organization in 2013, although such amounts are an integral part of their 
2013 remuneration. 
55.  Following a provisional recommendation by th e external auditor on this subject, the 
Organization has added the amounts relating to untaken annual leave paid in 2013 to the 
information provided on the remuneration of key management personnel in Note 22 to the 
financial statements. 
3.11  Revenue 
56.  The WTO is continuing to improve the rate of collection of statutory contributions from 
Members and Observers. 
3.11.1  Statutory contributions by Member States 
57.  Pursuant to Regulation 12 of the Financial Regu lations, the contributions of the 159 Member 
States
9 are determined as a percentage of the va lue 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, 2006-2010 for 
the 2013 contributions. 
58.  In practice, each year the Organization assesses the contributions determined in the scale 
minus, where applicable, each State's share of th e distribution of the Organization's budget 
surpluses at the end of the preceding financial ye ar (prescribed by Regulation 26 of the Financial 
Regulations) and the amount of interest credited under the Early Payment Encouragement Scheme. 
59.  Table 5 shows a progression in contributions paid that is slightly higher than that of the 
contributions assessed in 2013 compared with 2012, and a decrease in arrears of 2013 contributions (-3.8%) and accumulated arrears (-12.3%). The latter represent 11.25% 
of the 2013 statutory contributions (CHF 195,551,000), compared with 12.82% in 2012. 
                                               
9 Two new Members joined the WTO in 2013: Laos and Tajikistan. Former Yugoslavia still counts as a 
Member of the WTO because of its contribution arrears amounting to CHF 830,439. WT/BFA/W/335 
- 15 - 
  At 31 December 2013, 51 Members out of 159 and nine Observers had payment arrears 
(including two Members which also had arrears as former Observers); for 20 of these, the arrears exceeded CHF 100,000. The following were the highest amounts: 
United States (this debt only concerns 2013, as the United States regularly pays part 
of its annual contribution the following year) (CHF 11,445,000) 
Mauritania (CHF 1,038,000) 
Central African Republic (CHF 939,000) 
Dominican Republic (CHF 873,000) 
 
60.  To encourage countries rapidly to pay their contributions, which are due on 1 January each 
financial 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 2011 lowered contributions for 2013. Furthermore, until 2012 the WTO placed countries in arrears into four categories, depriving them of a certain number of rights depending on the length of time they had been in arrears. 
61.  The General Council has revised this system  of administrative measures applicable 
to countries in arrears and also extended it to Ob server States, by decision of 3 October 2012 with 
effect as from 1 January 2013. 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 may henceforth be  applied to them proportionally to the duration 
of their arrears. 
Table 3 Contributions by Member States assessed and paid in 2012 and 2013 
(in Swiss francs) 
 2012 2013 2013/2012 
A. Statutory contributions by existing Member States 194,300,000  195,500,000 +0.6%  
B. Statutory contribution s by new Member States 1,466,150  51,258 -96.50%  
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 152,151  144,352 -5.1%  
E. Total contributions assessed (E= A+ B-C-D) 195,613,999  195,406,906 -0.1% 
F. Total contributions paid for the financial year 181,508,294  181,843,472 +0.2%10 
G. Arrears of contributions fo r the financial year (G=E-F)  14,105,705  13,563,434 -3.8%  
H. Accumulated arrears of contributions  25,113,079  22,016,121 -12.3%  
 
Source: External auditor, based on WTO data.  
3.11.2  Plans for absorption of the debt  of certain Member States 
62.  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 debts. 
63.  Compliance with the undertakings made was le ss good in 2013, and the unpaid amounts due 
under the absorption plans (including Mauritania) increased by 5.23% compared with 2012. Mauritania was removed from the absorption plan arrangement because of non-compliance with its 
undertakings and placed in category III (most rest rictive) of the above-mentioned administrative 
measures. 
                                               
10 The unpaid amounts in violation of the absorption plans represented CHF 488,731 (including 
Mauritania) compared with CHF 464,413 in 2012. WT/BFA/W/335 
- 16 - 
  64.  On the other hand, Congo and the Democratic Republic of Congo completed payment of their 
debt in advance of their plans. 
65.  Negotiation of these plans resulted in the writing off of part of the pre-1988 debts, 
in accordance with a Council decision in 1994. The debts written off represented 22.38% of the 
total original debt of the countries concerned. 
Table 4 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 Balance 
due at 
31/12/13 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  462,639 - 156,988  
Central 
African 
Republic 30 12/39 1,096,836  297,141  799,695  939,102 53,180  
Chad 15 12/26 1,460,410  297,141  1,163,269  824,709  183,458  
Côte 
d'Ivoire 10 12/19 828,578   828,578  624,391 107,113  
Djibouti 10 12/19 468,925   468,925  283,038 1,681  
Gambia 10 12/19 995,455  297,141  698,314  417,063  1,927  
Niger 15 12/24 899,452  194,652  704,800  593,155 76,315  
Sierra 
Leone 15 12/25 1,265,529  297,141  968,118  835,249 31,411  
Togo 5 12/14 506,436  73,153  433,283  202,665 116,010  
Total      5,182,011 385,710 342,373  
 
Mauritania  25 12/34  1,237,988  297,141  940,847  1,037,524  103,021  
Source: External auditor, based on WTO data. 
 
3.11.3  Provision for arrears of contributions 
66.  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. 
67.  Nevertheless, this method exaggerates the risk incurred. Under IPSAS the solution is to 
provision according to the reality of the risk incurred after a statistical analysis of the risk. 
Recommendation No. 5 (Priority 2). The external  auditor recommends the adoption of a more 
realistic method of provisioning for arrears of contributions (confirmation of Recommendation 
No. 5 in last year's report). 
 
Reply of the Secretariat. The Secretariat will cons ult the external auditor to study the possible use 
of another methodology. 
3.11.4  Refund of tax by the United States 
68.  Staff members of the WTO are exempt from inco me 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 WT/BFA/W/335 
- 17 - 
  international organizations, and is then reimbursed by the United States Government pursuant to 
an agreement of 22 December 2000. 
69.  In 2013, receivables for United States taxes amounted to CHF 4,893,000, an increase 
of 21.8% over 2012 (CHF 4,016,000), 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 9 October 2013, claims CHF 3,738,000 (US$4,119,000), taking into account the administrative procedure costs 
(in accordance with paragraph 12 of the above-mentioned agreement). 
70.  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 115,370 in 2013, as against CHF 93,121 
in 2012. 
Recommendation No. 6 (Priority 3). The external auditor recommends that 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 (confirmation of Recommendation 
No. 10 in last year's report). 
 
Reply of the Secretariat. The Secretariat will pursue its efforts in this area.  
3.12  Accounts payable 
71.  Note 11 to the financial statements on accounts payable distinguishes between debts for 
which invoices have not yet been received (accruals) and debts to suppliers (payables) for 2013 
that were only settled in 2014. 
72.  Some items were found to have been applied erroneously, and CHF 556,000 had been classed 
as payables although the corresponding invoices were only issued in 2014 and should have been 
classed as accruals. 
73.  In addition, some 15 invoices concerning ten suppliers for a total amount of CHF 14,720 date 
from before 1 January 2013. It would seem to be urgent to settle them or write them off in case of dispute if the amounts concerned are not actually owed by the WTO. 
Recommendation No. 7 (Priority 3). The external auditor recommends (i) making a clear 
distinction in accounts payable between debts for which invoices have not yet been received and 
other "payables" (debts to suppliers); and (ii) clearing or writing off old debts. 
Reply of the Secretariat. The Secretariat accepts this recommendation and will follow the 
suggested indications. 
 
3.13  Assets 
3.13.1  Financing of works on headquarters 
74.  The WTO received an interest-free loan of CHF 60 million to finance some of the 
renovation-extension work on its headquarters (CHF 20 million for the "intramuros" project and 
CHF 40 million for the "extramuros" project). It repaid a first instalment of the loan amounting 
to CHF 1,200,000 in 2013. 
75.  The loan agreement for the CHF 20 million of the "intramuros" project specifies that the first 
instalment of the 50-year loan should be pa id by the WTO on 31 December of the year 
of acceptance of the works, which took plac e on 30 April 2012. This first instalment of 
CHF 400,000 (1/50 of CHF 20 million) should therefore have been repaid in 2012 and not in 2013. WT/BFA/W/335 
- 18 - 
  76.  The loan agreement for the CHF 40 million of the "extramuros" project, delivered in 2013, 
does not specify the date on which the WTO should begin repayments. 
77.  It would therefore be desirable to attach amen dments to the two loan agreements specifying 
the repayment schedule for the two loans. 
Recommendation No. 8 (Priority 2). The extern al auditor recommends specifying the loan 
repayment schedule in an amendment to the WTO's loan agreements with the Building Foundation 
for International Organizations (FIPOI). 
 
Reply of the Secretariat. The Secretariat will consult FIPOI to assess the possibility of an 
amendment. 
 
3.13.2  Note 9 on equipment 
78.  Table 21 on buildings in Note 9 on equipment should include a breakdown between the 
various parts of WTO headquarters (Centre William Rappard, the "intramuros" extension, 
the "extramuros" extension and the new underground  car park) and the various elements of each 
of these parts, which have different depreciation periods. 
Recommendation No. 9 (Priority 3). The external auditor recommends including in Note 21 on 
buildings a breakdown for WTO headquarters in terms of buildings and elements with different 
depreciation periods. 
 
Reply of the Secretariat. The Secretariat accepts the recommendation and will follow the 
suggested indications.  
 3.13.3  Depreciation of the WTO headquarters buildings 
79.  The Centre William Rappard (CWR) was included in the (IPSAS-consistent) opening balance at 
1 January 2012 for CHF 60 million. This value corresponded to the amount entered in the infrastructure agreement of 31 May 1995 (CHF 56 million) plus the amount of CHF 4 million in 
investments made by the WTO prior to 1995. The CWR was not depreciated prior to the 
Organization's accounting shift to the IPSAS methodology. 
80.  In 2012, the CWR was depreciated in accordance with IPSAS for an amount of CHF 606,000 
corresponding to 1/99
th of its value and the provision for right of use was adjusted by an 
equivalent amount and entered at CHF 49,697,000.  The 99-year period adopted is that of the 
"surface right" granted by the above-mentione d infrastructure agreement signed between the 
Canton of Geneva and FIPOI and the WTO.11 This surface right thus originally lasted from 1995 
to 2094. 
81.  No depreciation was made in 2013 because a new infrastructure agreement was signed on 
29 August 2013, which cancelled the former surf ace right and replaced it with a new 99-year 
surface right running in principle from 2013 to 2109. However, there is some uncertainty as to the 
starting point of this new right, which may be either the date of signing of the new agreement 
(29 August 2013) or the date of the recording of the initial surface right agreement by the Geneva 
Land Register (8 February 2010), or the future  date of recording of the new surface right 
agreement by the Geneva Land Register. 
82.  Pending a legal solution, we advise making a new depreciation of CHF 606,000 in 2013 and 
reducing the above-mentioned provision on the liability side. When the new surface right legally 
enters into force after it has been registered, depr eciation should then begin on the first day of the 
month following the date of validity of the new surface right. 
83.  Following a provisional recommendation by the external auditor on this subject, 
the Organization depreciated the CWR by CHF 606,000 in 2013 as in 2012. The Organization has 
                                               
11 The FIPOI is the grantee of the 99-year "surface right" but passed on the benefit of this right to 
the WTO. WT/BFA/W/335 
- 19 - 
  indicated that it is awaiting the date of the re cording of the new surface right agreement by the 
Geneva Land Register to revise its accounting treatment of the CWR. 
3.14  International Trade Centre 
84.  The International Trade Centre (ITC12) 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. 
85.  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. 
86.  The WTO: 
 presents the contribution paid to the ITC among expenses in the statement of financial 
performance for CHF 18,100,000; 
 presents background information on the ITC in paragraph 2 of Note 1 on accounting 
policies; and 
 mentions in paragraph 3 of Note 1 that the WTO does not currently consolidate the ITC 
but will consolidate it in future using the equity method. 
87.  IPSAS 8, "Interests in joint ventures", requires th at a venturer report his interests in a jointly 
controlled entity. Paragraph 43 of the Standa rd allows the use of the equity method. 
88.  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". 
89.  In paragraph 45, IPSAS 8 indicates that the equity method is described in IPSAS 7 
"Investments in Associates". 
90.  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. 
91.  In paragraph 61 and following, IPSAS 8 lists all the elements that an entity must disclose 
concerning its interests in joint ventures. By wa y of example, paragraphs 61, 62 and 63 mention, 
respectively: 
 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 interests in joint ventures. 
92.  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 und er the Standards. In this respect, therefore, 
the financial statements are not yet IPSAS-compliant , and the external auditor must therefore give 
an opinion with a reservation. This reservation could be lifted next year if the ITC financial 
                                               
12 International Trade Centre – ITC. WT/BFA/W/335 
- 20 - 
  statements are brought into line with IPSAS for th e financial year 2014, as the ITC has informed 
the WTO. 
Recommendation No. 10 (priority 1). The external auditor recommends that the WTO should 
(i) adjust the financial statements of the ITC in order to bring them into line with its own 
accounting standards; (ii) use the equity method in reporting the ITC; and (iii) present all the 
information required under the Standards. 
Reply of the Secretariat. The Secretariat will study the situation of the ITC in order to define the 
nature of the ITC in relation to the relevant IPSAS with a view to adopting an appropriate 
accounting treatment.  4  ACKNOWLEDGEMENTS 
93.  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 
94.  On the basis of the audit conduc ted, the external auditor certif ies, with the reservation given 
in the opinion, that, in its view, the accounts for the financial year 2013 present fairly the financial position of the WTO as at 31 December 2013. WT/BFA/W/335 
- 21 - 
  PART II: PERFORMANCE AUDIT 
6  OBJECTIVES AND SCOPE OF THE AUDIT 
95.  In accordance with our letter of notification of 3 December 2012, a team of six external 
auditors conducted an audit of the World Trade Organization (WTO) in Geneva from 23 September 
to 2 October 2013. The purpose of the audit13 was to review the implementation of the 
recommendations contained in our letter of final observations of November 2008 relating to the 
management of WTO staff. 
96.  The audit was conducted in compliance with the International Standards of Supreme Audit 
Institutions (ISSAI14) of the International Organization of Supreme Audit Institutions (INTOSAI15) 
and the WTO's Financial Regulations. 
97.  Each observation and recommendation was discussed with the persons concerned. This letter 
takes full account of their comments and replies. 
98.  This letter of observations relates solely to the management of personnel. Our observations 
concerning the accounts will be directly incorporated in our 2014 report on the 2013 accounts. 
7  LIST OF FINDINGS AND RECOMMENDATIONS 
7.1  Main findings 
a. In a short space of time, the WTO Human Resources Division (HRD) has launched 
a major reform package, involving a heavy workload, in accordance with the 
recommendations we made in 2008. 
b. It has taken measures to reduce the number and duration of temporary contracts 
and to encourage internal staff mobility, and has introduced a new performance 
award system. 
c. This new system was applied unevenly in 2012 and should be strengthened, in the 
context of an overall wage policy assessment, by increasing the performance-based 
share of staff remuneration. 
d. HRD has introduced a promotion slowdown poli cy and has almost completed a job profile 
description exercise. The description phase is a necessary step in rationalizing the 
promotion policy; it must be completed and supplemented by a second phase involving 
a post classification overhaul. These steps are essential if the WTO is to gradually 
re-establish a grade distribution in keeping with its organizational logic. Successful implementation of these tasks requires support from the WTO's senior 
management, and all directors need to be closely involved. 
e. Deterioration of the social climate within HRD can only be remedied by establishing 
a clearer separation between the functions relating to routine personnel management 
and those involving preparation of the reform s, and by appointing a deputy director 
to monitor routine personnel management. 
7.2  Recommendations of this report 
Recommendation No. 1. The WTO should finalize the post description and definitive 
post classification policy, by more closely invo lving all deputy directors-general and directors 
in determining the last stages of this policy (priority recommendation). 
                                               
13 In the course of this audit, the team also prepar ed the certification of th e accounts of the WTO for 
the financial year 2013, examining the procedures for transition to IPSAS and the Organization's internal 
control systems. 
14 International Standards of Supreme Audit Institutions. 
15 International Organization of Supreme Audit Institution. WT/BFA/W/335 
- 22 - 
  Recommendation No. 2. The Human Resources Division should complete the computerization 
of personnel files. 
Recommendation No. 3. The Secretariat should consider introducing a remuneration system 
that gives greater importance to individual performance. 
Recommendation No. 4. We recommend the development of a proper multi-year training plan 
(confirmation of Recommendation No. 15 of 2008). 
Recommendation No. 5. To improve the climate within HRD, (i) the functions involved in shaping 
the reforms and those relating to routine personne l management should be more clearly separated 
and (ii) a deputy director in charge of routine personnel management should be appointed. 
7.3  OBSERVATIONS AND RECOMMENDATIONS 
99.  Our letter of final observations of November 2008 contained some general information 
on WTO staff and made the following recommend ations relating to personnel management: 
a. that post classification at the WTO be the su bject of a systematic policy so that it is 
completed within a limited period of around one year (Recommendation No. 10); 
b. that the time for moving up from one grade to the next be extended 
(Recommendation No. 11); 
c. that professional mobility be given greater importance among the criteria taken into 
account for promotion, at least for those staff members whose expertise does not 
require that they remain in a particular post (Recommendation No. 12); 
d. the establishment of a database on the professional skills of each staff member, so as to 
facilitate the introduction of a forward-looking policy for managing jobs and skills 
(Recommendation No. 13); 
e. the revision of the award system and the de velopment of a remuneration system that 
gives greater importance to individual performance (Recommendation No. 14); 
f. the development of a multi-year training plan (Recommendation No. 15); 
g. that every contract of over 11 months' duration be reviewed, that measures to absorb 
these contracts be proposed and submitted to the Budget Committee each year and 
that, in the case of drivers, externalization of part of this service be considered in order 
to absorb the large amount of overtime noted (Recommendation No. 16); 
h. that evaluation interview reports be review ed in order to highlight their strengths 
and weaknesses, and allow those responsible to improve the methods used to fix 
objectives, evaluate performance and provide advice on career development 
(Recommendation No. 17); 
i. the establishment of a proper social assessment report and regular updates on human 
resources (Recommendation No. 18). 
100.  This report re-discusses these various issues and addresses the organizational and 
methodological problems within the Human Resources Division noted in the course of this audit. 
7.4  WTO staff trends since 2008 
101.  The number and the composition of WTO staff have hardly changed since 2008. 
The Organization had a total of 729 staff at 1 January 2013 compared to 721 at 1 September 2008 
(+ 1.10%). Permanent staff numbered 674 compared to 668 and temporary staff 55 compared WT/BFA/W/335 
- 23 - 
  to 53. Professionals accounted for 57% of the total headcount compared to 54% in 2008 
and support staff for 43% compared to 46%.16 
102.  The proportion of women at the WTO has increased slightly (55% compared to 54.1%) 
and their ranking in the Organization is improving:  the percentage of women in professional posts 
has risen (43.79% of total posts compared to 39% in 200517), and they hold a larger number 
of positions in grades 9, 10 and 11 (99 women at these grades in 2013, i.e. 42.5% of the 233 posts within these grades, compared to 72, i.e. 35.8% of the 201 posts concerned 
in 2005). In 2013, only one woman held a position at the highest grade (grade 12). 
103.  The number of nationalities represented at the WTO is on the rise: 77 at 31 December 2012 
compared to 69 in 2008.
18 Fifteen countries are represented by at least ten staff members 
and 26 by a single staff member. French nationals are the most numerous (175 staff members), 
followed, as in 2008, by British (65), Spanish (43), Swiss (36) and US nationals (28). 
104.  Staff distribution by department coming under a deputy director-general changed between 
September 2008 and 1 January 201319: the number of professionals in Department No. 4 
(Administration and General Services) fell from 155 to 128 - which may be interpreted as a sign 
of overall improvement in productivity - and th ose in Department No. 2 (Cooperation) increased 
from 46 to 80. 
Table 1 Staff distribution by department at 1 January 2013 
Staff Department 
No. 1 Department 
No. 2 Department 
No. 3 Department 
No. 4 Senior 
management Total 
Professionals 73 80 42 128 61 384 
Department 
professionals as a 
percentage of total 
professionals 19% 20.8% 11% 33.3% 15.9% 100.0% 
Department 
professionals as a percentage of total department staff 74.5% 66.7% 77.8% 43.0% 58.7% 57.0% 
Support staff 25 40 12 170 43 290 
Department support 
staff as a percentage of total support staff 8.6% 13.8% 4.1% 58.6% 14.9% 100.0% 
Department support 
staff as a percentage 
of total department 
staff 25.5% 33.3% 22.2% 57.0% 41.3% 43.0% 
Total 98 120 54 298 104 674 
Percentage of total 
staff 14.6% 17.8% 8.0% 44.2% 15.4% 100.0% 
Source: External auditor, based on data provided by the WTO. 
                                               
16 Data supplied by the WTO. 
17 In this instance, the comparisons provided by the WTO are based on 2005. 
18 According to the WTO Annual Report 2009. 
19 The distribution of divisions by department in the WTO has just been modified by the new 
Director-General. WT/BFA/W/335 
- 24 - 
  Table 2 Staff distribution by department at 19 September 2008 
Staff Department 
No. 1 Department 
No. 2 Department 
No. 3 Department 
No. 4 Senior 
management Total 
Professionals 72 46 37 155 51 361 
Department 
professionals as a 
percentage of total 
professionals 20% 12.7% 10.2% 43% 14.1% 100.0% 
Department 
professionals as a percentage of total department staff 72.7% 60.5% 75.5% 44.0% 55.4% 54.0% 
Support staff 27 30 12 197 41 307 
Department support 
staff as a percentage of total support staff 8.8% 9.8% 4% 64.1% 13.3% 100.0% 
Department support 
staff as a 
percentage of total 
department staff 27.3% 39.5% 24.5% 56.0% 44.6% 46.0% 
Total 99 76 49 352 92 668 
Percentage of 
total staff 14.8% 11.4% 7.3% 52.7% 13.8% 100.0% 
Source: External auditor, based on data provided by the WTO. 
 
105.  Staff costs amounted to CHF 150.8 million in December 2012 compared 
to CHF 140.5 million in December 2008. This 7.33% rise exceeds th e increase in staff 
(1.10%) over the same period, as a result, inter alia , of in situ  promotions20; this trend 
gives Members particular cause for concern,  as evidenced by the discussions in the 
Committee on Budget, Fina nce and Administration. 
106.  The Secretariat specifies that the costs en suing from grade progression and in situ 
promotions are around CHF 217,000 per annum (inclu ding the impact on pensions), leading to 
overruns of the annual staff budget. 
7.5  Staff promotion policy 
107.  In 2008, we recommended that "post classification  at the WTO be the subject of a systematic 
policy so that it is completed within a limited period of around one year" (Recommendation No. 10) 
and that "the time for moving up from one grade to the next be extended" (Recommendation No. 11). 
108.  In 1999, the WTO adopted a classification of staff and posts in 12 grades differing from that 
of the United Nations Organization, and established very liberal rules for moving from one grade to the next (one year of service at a particular grade was enough to obtain a promotion to the next higher grade, compared to four years at the UN). In practice, progression to the next higher grade 
was viewed at the WTO as a means of increasing a staff member's remuneration even if the 
person promoted did not perform new functions. 
109.  This situation has led to a grade pyramid compri sing more staff in the highest than in the 
lower grades; it is costly, as the best paid grades are overrepresented, and causes management 
anomalies and frustration, since many staff members are accountable to supervisors in the same grade as their own. 
                                               
20 "In situ " promotions are promotions granted to a staff member that do not involve any 
new responsibilities. WT/BFA/W/335 
- 25 - 
  110.  Our recommendations were therefore aimed at facilitating a reform of the staff promotion 
policy that would re-establish a grade pyramid in keeping with good practice, by increasing the mandatory time in grade before promotion from one grade to the next and by encouraging the establishment of a classification of posts in every division. Such a reform would make grade 
advancement contingent upon a genuine need and make it possible to ascertain whether the 
capabilities of candidates for a post were consistent with the predetermined profile for that post. 
111.  The WTO did not begin implementing these recommendations until 2010, by slowing down 
progression from one grade to the next and initia ting a job profile description process (Phase 1), 
prior to a complete post classification overhaul (Phase 2). Phase 1 has not yet been fully completed, nor is it fully understood and accepted by the other directors. 
7.5.1  Slowdown in grade progression 
112.  The Organization did not amend its Staff Regulations between 2008 and 2010, and the 
minimum time in grade for moving up from on e post to the next remains set at one year. 
Since 2010, however, progression from one grade to the next has been slowed down: the number 
of progressions declined from around 50 per annum in prior years to 41 in 2010 and to 18 in 2011. 
The number of progressions to grade 10 fell from nine in 2009 to six in 2010 and to 0 in 2011, when they were voluntarily frozen. Moreover, in  January 2011 the Director-General informed staff 
of the freezing of in situ  promotions. 
113.  Furthermore, the most senior positions vacated have systematically been filled by staff 
at lower grades than before, generally by grade 6 staff in professional posts. 
114.  Lastly, the promotion policy was officially u pdated by Administrative Memorandum No. 970 
(OFFICE(11)/53) of November 2011, which specifies that every promotion must meet 
an organizational need and that the incumbent must have the capability to perform the job at a higher grade. 
Table 3 Number of promotions by grade since 1996 
Year Grade 
2 to 321 Grade 
3 to 4 Grade 
4 to 5 Grade 
5 to 6 Grade 
6 to 7 Grade 
7 to 8 Grade 
8 to 9 Grade 
9 to 10 Total 
1996 4 14 4  18 1 1 5 5 52 
1997 5 3 11 5 1 4 14 4 47 
1998  12 5  5 2 5 13 4 46 
1999  6 12 11 2 11 14 4 60 
2000  10 5  6 2 11 7 10 51 
2001  8 12 1 7 8 12 10 58 
2002  6 7  5 9 5 12 10 54 
2003 2 7 8 9 3 6 10 6 51 
2004  3 14  6 6 7 5 10 51 
2005 2 7 6 3 4 10 9 7 48 
2006 1 4 6  9 2 9 13 7 50 
2007 1 6 7 4 6 5 12 5 46 
2008 1 5 7  9 7 6 8 10 53 
2009 1 6 8 4 3 6 13 9 50 
2010 1 3 7  3 3 7 11 6 41 
2011  3 4 4 1 4 2  18 
Total 17 103 123  102 59 105 160 107 776  
Source: External auditor, based on  the document "Responses to CBFA Questions on Human Resources" 
of 25 March 2013. 
                                               
21 Moving up from grade 2 to grade 3, from grade 3 to grade 4, and so forth. WT/BFA/W/335 
- 26 - 
  115.  This policy has yielded initial positive results: the grade-12 headcount has diminished 
by half, and overstaffing in grade 10 has begun to decrease (two staff members); in contrast, the number of staff in grades 11 and 9 has increased by 58.3% and 15.2%, respectively; and the recruitment, mostly at grade 6, of new st aff has led to a larger headcount in this grade. 
116.  The policy being implemented is a break with the former in situ  promotion practices. 
The slowdown in grade progression and the recrui tment of professionals at lower grades reduces 
budget costs and fosters the gradual re-e stablishment of a normal grade pyramid. 
However, the return to a coherent distribution of grades will clearly require long years of effort. 
7.5.2  Description of job profiles 
7.5.2.1  A process nearing completion 
117.  In 2008 we noted that the WTO's classification of posts according to the 12 grades adopted 
in 1999 had not been completed. Classification did not proceed according to a systematic 
procedure entrusted to HRD but on an ad hoc basis, at the request of a staff member or a director for the division concerned. We accordingly recommended that HRD adopt a systematic 
post classification policy and implement this poli cy within a limited period of around one year. 
118.  In HRD's view, one of the major reasons behind the failure to complete the classification 
of posts was the absence of a reliable descripti on of posts at the WTO. HRD did not therefore 
finalize the classification process begun in 1999, which is now well out of date, but introduced 
a post (job profiles) description policy, which would later be complemented to establish a final classification of posts, superseding that initiated in 1999. Final classification (Phase 2) will differ 
from post description (Phase 1) insofar as it will specify the grade corresponding to each post. 
Indeed, it would have been difficult to set the gr ades in Phase 1, since there are currently major 
discrepancies in grade among equivalent posts. It was therefore necessary to begin by comparing the actual functions performed at the WTO in each post before setting the corresponding grade 
and hence the remuneration scale. 
119.  With the help of consultants, HRD has accordingly worked with each division, first to create 
"generic" job profiles corresponding to jobs in the same category, and then to establish individual 
job profiles corresponding to each post. The job profiles specify the nature of the work, 
the supervisors to whom staff are accountab le, the level of education, experience 
and interpersonal capability necessary to perform each function and the performance indicators 
suited to each post. 
120.  The WTO Secretariat indicates that the job profile exercise has been facilitated by the 
development of output plans by division, setting the year's objectives for each division and the human resources needed to meet these objectives. 
121.  This post description process has led to the creation of new categories of post, such as that 
of "dispute settlement lawyer", corresponding to the specific needs of certain divisions
22 
but not recognized in the traditional classification. 
122.  The post description phase is almost complete, and 91% of posts (566 out of 620) have been 
described. Only the four Divisions listed in the Table below have yet to finish their task. However, even in the Divisions that have finished the description of job profiles, these have not yet been officially communicated to or  verified by the staff concerned. 
                                               
22 The Legal Affairs Division and the Rules Division. WT/BFA/W/335 
- 27 - 
  Table 4 Divisions yet to complete post descriptions 
Divisions Number 
of posts Number of 
job profiles 
described Implementation 
rate 
Administration and General Services 69 54 78.2% 
Information and External Relations  46 42 94.3% 
Institute for Training and Technical 
Cooperation 41 39 95.1% 
Languages, Documentation 
and Information Management 138 116 84.0% 
Source: External auditor, based on data provided by the WTO. 
 
123.  Work to date has already facilitated the recruitment of new staff at a lower grade than that 
of the former incumbents of vacant posts, sinc e the post descriptions showed that recruiting 
at a lower grade could meet the Organization's needs: 48 recruits between 2010 and 2013, 
i.e. 39% of vacancies, filled the posts in questi on at a lower grade than that of the previous 
incumbents. 
Table 5 Recruitment grades of new post incumbents in 2010-2013 
 2010 2011 2012 2013 
Recruitment at the same grade 13 7 8 11 
Recruitment at a higher grade 6 5 1 4 
Recruitment at a lower grade 9 13 11 15 
Recruitment to a new post 11 8 - 1 
Total recruitments 39 33 20 31 
Source: External auditor, based on data provided by the WTO. 
 
7.5.2.2  A poorly understood and at times ill-accepted process 
124.  Having noted in the course of our audit that the post description process was being 
challenged by other divisions in the Organization, we sent a questionnaire to all directors 
and interviewed some of them so as to better understand their misgivings. 
125.  The survey reveals a degree of consensus on subs tance, criticism as to the method employed 
and some very strong differences of opinion among directors: 
 although post classification is acknowledged to be useful, some directors wonder 
whether it would not have been better to update and complete the previous 
classification, skipping the intermediary job profile description stage; 
 the quality of the post descriptions is not ca lled in to question, because the descriptions 
were mainly drafted by the divisions themselves; 
 the help afforded by one external consultant was considered poor, but this proved of 
little significance as the consultant was brought in only at the beginning of the process 
and the post descriptions were drafted almost entirely by the divisions themselves; 
 some divisions said that they drafted the job profiles without any assistance from HRD, 
while others welcomed HRD's support; and 
 the directors differ radically in their assessm ents of the role to be played by the 
description of job profiles in overall personnel policy: some maintain that this role was 
not explained to them and that they failed to understand it, while others say that HRD's 
explanations were very clear and the Division answered their questions perfectly. WT/BFA/W/335 
- 28 - 
  126.  The aforementioned criticism by some directors is surprising at first glance, because the role 
of job profiles in personnel policy and the policy itself have been very clearly explained both in legal texts (Administrative Memoranda) and in the many documents
23 presented 
at a number of briefings. These documents are, moreover, available online on the WTO website. 
127.  It seems to us that the attitude of directors who consider that the role of job profiles 
in personnel policy and the policy itself were not explained to them stems from the following: 
 the fact that the directors were not consulted before this policy was introduced: they 
were under the impression that the policy was imposed on them, whereas WTO tradition 
is founded on consensus among directors, who enjoy a wide margin of discretion; 
 the impression that the post description process was a matter for HRD but did not enjoy 
senior management's full support (in practice, the process was clearly backed 
by Mr Pascal Lamy and his chief of staff, bu t there appeared to be less conviction among 
the deputy directors-general); 
 failure to take account of the management problems facing directors affected by the 
strict policy of slowing down progression from one grade to the next since 2008-2010. 
Some directors would like to promote staff to secure better acceptance of reforms likely to improve the productivity of their divisions and are unsure of the future of high-ranking 
staff who are now in positions requiring lower capabilities (grade-10 staff in posts 
described as corresponding to grade 7, for example) and of career opportunities in the Organization for new staff recruited at grade 6. 
128.  These misgivings partly reflect traditional adherence at the WTO to highly decentralized 
management. They are quite natural inasmuch as the policy being implemented disrupts 
long-standing habits. 
129.  They probably also illustrate one shortcomin g in the process under implementation: the 
deputy directors-general and the directors were not sufficiently consulted prior to the launching 
of the post description exercise and the introduc tion of the promotion slowdown, as the meetings 
organized for them were designed to explain a policy that had already been decided rather than to 
elicit their views on the policy to be applied. 
130.  Prior consultation of the directors would have highlighted their specific short- and long-term 
personnel management concerns and would have allowed their wishes to be taken into account in policy implementation. 
131.  We consider it essential to finalize the post description and final post classification policy as it 
was launched in 2010, for this policy is a key component of any reform of human resource 
management methods aimed at optimizing staff recruitment and promotion, encouraging internal 
mobility and regularizing grade distribution. 
132.  T o  t h a t  e n d ,  i t  w i l l  b e  n e c e s s a r y  t o  i n v o lve the upper echelons of the Organization 
in determining and implementing the last stages of  the ongoing reform process (completion of post 
descriptions and final post classification), by convening them to frequent meetings, soliciting their 
views and asking them to explain their concerns regarding personnel management in each division. 
133.  In particular, the part played by post descrip tion and classification in overall personnel 
management policy (recruitment, advancement, in ternal mobility) needs to be explained once 
again, and concerns regarding the future of high-ranking staff who are now in positions requiring lower capabilities as well as promotion opportunities for new recruits must be addressed. 
134.   We also consider it desirable that HRD should draw up, jointly with the directors, 
medium-term staff evolution plans for each division, showing the ideal structure that each division should aim to achieve (number of posts, post cl assification, and optimal grade of the incumbent) 
and the stages required to advance towards that goal. 
                                               
23 PowerPoint slides. WT/BFA/W/335 
- 29 - 
  135.  The success of this policy implies strong engagement by the new senior management, 
and, for example, the holding of meetings of  all deputy directors-general and directors, 
under the Director-General's leadership. 
136.  Recommendation No. 1 . The WTO should finalize the post description and final post 
classification policy, by more closely involving all directors in determining the last stages of this 
policy (priority recommendation). 
7.6  Policy to encourage internal mobility 
137.  Our 2008 report recommended that "professional mobility be given greater importance 
among the criteria taken into account for promotion, at least for those staff members whose expertise does not require that they remain in a particular post" (Recommendation No. 12). 
138.  Notwithstanding a policy introduced in 2001
24 to encourage internal mobility, mobility levels 
at the WTO remained very low: between 2005 and 2007, less than 3% of staff had been 
redeployed during each of those years, i.e. an annual average of 17 individuals. 
139.  In accordance with our recommendation, the internal mobility policy was reviewed 
and encouraged by Administrative Memoranda No. 966 of 10 February 2010 and No. 970 
of November 2011 (OFFICE(11)/ 53), which state that the principle of mobility within 
or between divisions is an important element to be considered in the promotion process. 
140.  Internal mobility statistics for the past three years show that this policy failed to yield its first 
significant results until 2012, when 36 staff members changed posts. The figure might have been higher if it had been possible to meet 27 pending transfer requests, which were blocked for a variety of reasons, such as poor performance of  the applicant (one case), conflicts (five cases), 
matching of applicants' posts with the needs of the Organization (eight cases), and lack of posts 
corresponding to the applicants' requests and profiles (13 cases). Moreover, some transfers are not prompted by the interests of service or care er development goals but by internal conflicts 
(seven cases out of 36 in 2012). 
141.  Our 2008 recommendation concerning st aff mobility can thus be considered 
to have been implemented and the me asures adopted should be pursued. 
Table 6 Recent internal transfers 
Years Intra-division 
transfers Inter-division 
transfers Total 
2010 4 11 15 
2011 7 11 18 
2012 17 19 36 
Source: External auditor, based on data provided by the WTO. 
 
7.7  Computerization of certain tasks 
142.  Our 2008 report recommended "the establishment of a database on the professional skills 
of each staff member, so as to facilitate the introduction of a forward-looking policy for managing 
jobs and skills" (Recommendation No. 13). 
143.  Such a database would have facilitated the introduction of a proper forward-looking policy for 
managing jobs and skills. It would involve recording the information relating to staff capabilities, 
including the history of professional experience in and outside the WTO, and the information 
resulting from annual performance evaluation interviews, whereas today only purely administrative data concerning each staff member's career are computerized. 
                                               
24 By Administrative Memorandum No. 934 of 31 January 2001 and No. 936 of 26 July 2001, and by 
the Notice to the Staff of 19 January 2007. WT/BFA/W/335 
- 30 - 
  144.  The creation of such a database had been proposed by the previous HRD Director and 
two successive invitations to tender had been issued, leading to the identification of a service provider to build up an online database.
25 
145.  The hiring of this service provider was ultima tely postponed, because the new HRD Director 
rightly considered the job profile description  policy to be a matter of higher priority. 
Computerization of annual staff performance evaluation reports (see below) should greatly facilitate the creation of such a database. 
146.  HRD's response to the auditors specifies that the job profile descriptions include a section 
on the capabilities and aptitudes required for each  post. However, this is not the same as what 
was recommended by the external auditor: it is not a question of recording the capabilities needed to carry out the duties of a post (also a useful task) but of recording each staff member's real 
capabilities in an electronic supplement to his/her personal file, so as to facilitate the search 
for capabilities available within in the Organi zation, for example in the context of the staff 
mobility policy. 
147.  Our recommendation concerning the creation of a database on the professional skills of each 
staff member has consequently not been implemented. 
148.  We further noted in the course of our audit that computerization of each WTO staff member's 
file, begun with the help of a consultant, had not been completed: some of the files are 
in electronic form whereas others are still in hard copy, which poses practical archiving problems for HRD. 
149.  Recommendation No. 2 . The Human Resources Division should complete the 
computerization of personnel files. 
7.8  Acknowledgment of individual performance 
150.  Our 2008 report recommended "the revision of the awards scheme and the development 
of a remuneration scheme that gives greater importance to individual performance" 
(Recommendation No. 14). 
151.  Every year, the WTO grants all of its staff salary increases linked to the cost of living 
and "performance-based salary increments" according to grade and length of service 
in a particular grade. Performance-based increments are granted to all staff members if their supervisor considers their services to be "satisfactory" at the time of their annual performance evaluation interviews. 
152.  "Performance-based salary increments" are the equivalent of step increments awarded by 
other organizations to allow progression from the minimum to the maximum of the salary range in 
each grade. 
153.  At the Members' request (but not at the WTO's initiative), a performance-related award 
system was set up in 2004. 
154.  The system provided little encouragement, because the awards were only very small 
amounts (CHF 3,000 to 5,000) compared with average remuneration and were not linked to grade. 
Moreover, some directors gave them without taking account of performance, granting one to each of their staff in turn each year. 
155.  The award system was revised by Administra tive Memorandum No. 949/Rev.3 of July 2011, 
which provides for non-"pensionable"
26 "performance rewards". Performance rewards are 
grade-linked, since they amount to 3.5% of th e midpoint salary in each grade (from CHF 2,189 
per annum for grade 1 to CHF 6,497 for grad e 10, in 2011). They are granted only 
                                               
25 See our performance audit of the WTO's IT syst em, published in our report on the 2010 accounts. 
The technique in question is called "Software as a service". 
26 i.e. which do not give rise to any deduction of  pension contributions or to additional pension 
entitlements. WT/BFA/W/335 
- 31 - 
  to staff members whose performance has been rated "significantly exceeds" in their annual 
performance evaluation interviews. They are discussed among the directors, within each 
department, and then at the level of the Organizati on as a whole, whereupon the list of recipients 
is issued. As was the case of the awards instituted in 2004, their amount must not exceed 2% 
of the total net salary budget, minus the performance-based increments mentioned above. 
156.  In practice, the aggregate amount of performance rewards and the number of recipients 
is declining from year to year, as some directors refuse to give them, arguing that no one in 
their divisions exceeds job requirements. Such behaviour has prompted personal messages from 
the Director-General to the directors concerned, re minding them of the obligation to grant bonuses 
to staff members who exceed their set objectives, which must be clear and measurable. 
Table 7 The new award policy in figures (2009-2012) (in Swiss francs) 
Year 2009 2010 2011 2012 
Number of recipients 79 83 65 49 
Amount disbursed 
for awards granted 379,500 375,000 360,000 360,000 
Source: External auditor, based on data provided by the WTO. 
 
157.  The award system is so alien to the WTO's traditional culture that HRD is giving consideration 
to the introduction of other reward schemes carrying no financial benefits. 
158.  Our recommendation was thus applied but without any conclusive results. In our view, 
given the high level of average WTO salaries, the Secretariat should consider increasing 
the individual performance-based salary fraction of total remuneration, at least for staff members in the highest grades. This objective could inter alia  be achieved by not automatically carrying over 
from one year to the next the aggregate amou nt of "performance-based salary increments" 
granted to each staff member but by making part of this fraction of remuneration variable from one year to the next. 
159.  Recommendation No. 3 . The Secretariat should consider introducing a remuneration 
system that gives greater importance to individual performance. 
7.9  Training policy 
160.  Our 2008 report recommended "the development of a multi-year training plan" 
(Recommendation No. 15). 
161.  Our report noted that a training section had just been set up in HRD and that the training 
budget had been increased from CHF 300,000  to CHF 1,700,000 between 2003 and 2008. 
It recommended placing this policy on a more formal  footing by developing a proper training plan 
reaffirming the objectives pursued and schedulin g the activities to be implemented over the 
biennium budget period. 
162.  Shortly after we submitted our report, the trai ning policy was redefined by Administrative 
Memorandum No. 962 of December 2008, which sets out the content of the training policy and 
provides for the annual target share of the training budget that should go to each WTO staff member, the determination of each staff member's training needs, and a systematic evaluation 
of each training activity. 
163.  According to the Memorandum, all the requests made by staff constitute the Organization's 
training plan. It is therefore not surprising that there is no document specifying the procedures for 
developing and steering a proper multi-annual training plan and that we failed to receive 
any document outlining a training plan. We were nonetheless informed that a training plan had been launched for the period 2011-2013 and that a new plan was under preparation for the period 2014-2016. 
164.  The training budget has decreased since 2009. According to HRD, it is sufficient in the light 
of the needs expressed by staff. WT/BFA/W/335 
- 32 - 
  Table 8 Trend in training expend iture since 2008 (in Swiss francs) 
 2008 2009 2010 2011 2012 
Total training expenditure 1,285,251 1,689,342 1,249,227 994,004 1,155,815 
Training expenditure as a 
percentage of total staff 
costs 1.70% 2.00% 1.80% 1.70% 1.70% 
Source: External auditor, based on data provided by the WTO. 
 
165.  Training policy has clearly not been a priori ty in recent years. We therefore reiterate 
our recommendation to develop a proper multi-year  training plan reaffirming the WTO's training 
objectives and including a list of scheduled training activities aimed at meeting these objectives. 
166.  Recommendation No. 4 . We recommend the development of a multi-year training plan 
(confirmation of Recommendation No. 15 of 2008). 
167.  The WTO Secretariat indicates that it will refine the preparation of multi-year training plans 
following completion of the job profile exercise, which will allow a better assessment of staff 
training needs. 
7.10  Temporary contract policy 
168.  Our 2008 report recommended that "every contract of over 11 months' duration be 
reviewed, that measures to absorb these contracts be proposed and submitted to the 
Budget Committee each year and that, in the case of drivers, externalization of part of this service be considered in order to absorb the large amo unt of overtime noted" (Recommendation No. 16). 
169.  Whereas "temporary assistance contracts" are defined as contracts not exceeding 12 months 
that may be extended only in exceptional cases,  we noted that the WTO had extended temporary 
staff in their positions over continuous periods of several years. 
170.  This situation was partly remedied by the creation of several new regular positions 
in 2003, 2005, 2006 and 2007. Moreover, the temporary assistance policy was revised by Note WT/BFA/W/123/Rev.2 of December 2004, which limits temporary jobs to very specific exceptional situations (temporary peaks in work load, replacement of staff on long periods of 
leave, etc.). In 2008, it was nonetheless found that some contracts were being unduly extended. 
171.  We have noted a reduction in the number of temporary contracts over the past two years, 
as shown in the Table below. However, the duration of these contracts frequently exceeds the 
regulatory 12 months, and contracts are still frequently renewed. Out of a sample of 27 people 
under temporary contract for more than the previous three years, from 2009 to 2013 a total of 455 temporary contracts were issued, i.e. 17 contracts per person, of an average duration 
of three months and a cumulative average duration of four years for each temporary 
staff member. 
Table 9 Number of staff under temporary contract 
 2008 2009 2010 2011 2012 
Number of staff under temporary 
contract at 31 December 53 60 62 57 50 
Number of staff under temporary 
contract in the course of the year 376 349 376 387 314 
Source: External auditor, based on data provided by the WTO. 
 
172.  In order to limit the number and duration of temporary contracts, HRD recommends 
the issuing of six-month contracts and requests the divisions not to extend their duration beyond 
11 months. In the event of contract renewal, HRD informs the persons concerned that the total duration of their successive contracts may not exceed five years and specifies this time-limit WT/BFA/W/335 
- 33 - 
  in each person's last contract, so that such contracts cannot be turned into regular contracts, 
in conformity with Staff Rule 104.2.27 HRD supports Recommendations Nos. 1 and 2 of our 2011 
report that temporary staff for the Informatics Division should only be recruited as and when needed, and that some of the Division's activities  such as the development of new IT applications 
should be outsourced instead of WTO staff members being assigned to any such task for months 
on end. 
173.  Our 2008 report mentioned the many temporary contracts issued for drivers in order 
to reduce the high cost of overtime. As stated  in our report on the 2011 accounts, the problem 
was resolved by the recommendation made to directors in December 2008 no longer to use their drivers for night work but to use a taxi service introduced at the time, which reduced drivers' overtime by 75%, with taxi rates entailing very limited expenditure. 
174.  The recommendation concerning temporary contracts can therefore be considered 
to have been implemented in the case of dr ivers and to be under implementation in the 
general case. 
7.11  Systematic utilization of perfor mance evaluation interviews 
175.  Our 2008 report recommended that "evaluation interview reports be reviewed in order 
to highlight their strengths and weaknesses, and allow those responsible to improve the methods 
used to fix objectives, evaluate performance and provide advice on career development" 
(Recommendation No. 17). 
176.  The implementation of this recommendation was facilitated by the posting online, in 2011, of 
each staff member's performance evaluation report, drawn up on the basis of the annual 
performance evaluation interview. 
177.  Performance evaluation interviews are cove red by Administrative Memorandum No. 967 
of February 2010, which reaffirms their systematic nature and their impact on the 
two complementary remuneration  schemes referred to above. 
178.  HRD systematically analyses these reports
28 and informs senior management of the results 
of its analyses and of the lessons to be drawn for the future. 
179.  The recommendation concerning the ut ilization of performance evaluation 
interviews has thus been implemented. 
7.12  Social assessment report 
180.  Our 2008 report recommended "the establishment of a proper social assessment report 
and regular updates on human resources" (Recommendation No. 18). 
181.  Indeed, we had noted that the Organization's annual report did not contain all the data 
needed to understand the WTO staff policy and the following aspects in particular: 
 age distribution of staff; 
 breakdown of staff members by category and by grade; 
 analysis of staff flows (recruitment, retirement, internal mobility ...); 
 follow-up of priority plans such as post classification, absorption of temporary staff  
and development of mobility; 
 remuneration policy; 
 level of absenteeism;  
 assessment of training. 
                                               
27 This Article stipulates that "[u]pon the recommendation of the Appointment Board, and without 
prejudice to Staff Regulation 4.3, the Director-Gener al may grant a regular contract to staff members upon  
completion of five years of continuous service under fi xed-term conditions and who,  by their qualifications, 
performance and conduct, have fully demons trated, on the basis of their performance  evaluation  reports, their 
suitability as international civil servants and have show n that they meet the requir ed standards of competence, 
integrity and efficiency."  
28 This is done in a very genera l way, with due respect for the co nfidentiality of personal data. WT/BFA/W/335 
- 34 - 
  182.  HRD indicates that it is preparing the assessmen t report in question and the regular updates 
but that these documents have not yet been issued. Implementation of the recommendation 
concerning the social assessment report and th e regular updates is therefore considered 
to be under way.  
7.13  Organization and methods 
183.  HRD has consistently initiated a large number of reforms since 2010. These efforts have 
increased its workload and have contributed to a deterioration in the social climate within the 
Division, as evidenced by several warning signs, an d the following in particular: part of HRD staff 
sent letters to the previous and the new Director-General complaining about the Division's organization and methods. Moreover, the number of voluntary departures and cases of sick leave in HRD can be considered as high.
29 
184.  The letters sent to the successive Directors-General by part of the Division's staff are the 
subject of an investigation that was still ongoing at the time of writing. The investigation should lead to reform proposals complementing those put forward in this report. 
185.  The uneasiness among HRD staff can firstly be attributed to the increased workload 
in shaping and implementing reforms, whereas the Division's traditional tasks involved routine personnel management. The Director's agenda is overloaded, leading to slow day-to-day 
decision-making and major delays in responding to incoming messages. 
186.  The situation could be improved by more clearly separating the tasks involved in shaping the 
reforms and those relating to routine personnel management in HRD, and by appointing a highly experienced deputy director to monitor routine personnel management. In fact, although in 2010 
the Division was divided into two sections respectively responsible for strategy and routine 
management, the different functions are still intertwined in practice and the Director is constantly called upon to monitor HRD's tasks as a whole. Th e appointment of a deputy with solid experience 
of human resource management would allow the Director to focus primarily on preparing 
the reforms. 
187.  Recommendation No. 5 . To improve the climate within HRD, (i) the functions involved 
in shaping the reforms and those relating to routine personnel management should be more 
clearly separated and (ii) an experienced deputy director in charge of routine personnel management should be appointed. 
8  ACKNOWLEDGMENTS 
188.  The external auditor extends his sincere thanks to the Director of the Human Resources 
Division, all the WTO directors and their staff for their welcome and for the precise information that was supplied to him. 
189.  End of audit observations. 
                                               
29 It should be borne in mind that the pe rcentage of staff members on sick leave 
(4.57% in the HRD) is higher in some other divisions of the WTO (according to HRD statistics for 2011, 
11.81% in the Technical Cooperation Division an d 8.54% in the Languages, Documentation and 
Information Management Division, for exam ple, and 5.2% for th e WTO as a whole). WT/BFA/W/335 
- 35 - 
  9  ANNEX 1 
Table 10 Trend in staff distribution by grade between 2006 and 2012 
Grades 12/D2 11/D1  10/P5  9/P4 8/P3  7P/P2  6P 7G 6G 5 4 3 2 1 Total  
Number by 
grade at 
31/12/06 13 12 108 92 77 35 4 36 68 87 62 50 7 0 651 
% by grade 
at 31/12/06 2% 4% 3.2%  27% 23% 10% 1% 11% 20% 26% 18% 15% 2% 0% 100%  
Number by 
grade at 
01/09/12 6 19 106 106 71 38 35 35 63 96 61 34 3 0 673 
% by grade 
at 01/09/12 0.9%  2.8%  15.8%  15.8%  10.5%  5.6%  5.2%  5.2%  9.4%  14.3%  9.1%  5.1%  0.4%  0% 100%  
Trend 
2012/2006 (53.8%)  58.3% (1.9%)  15.2%  (7.8%)  8.6%  775.0%  (5.2%)  (7.4%)  10.3%  (1.6%)  (32.0%)  (57.1%)  0% 3.4%  
Source: External auditor, based on data provided by the WTO. 
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