RESTRICTED  
  
WT/BFA/138  
 
12 July 2013  
(13-3740)  Page: 1/4  
Committee on Budget, Finance and Administration   
 
 REPORT OF THE MEETING HELD ON 3 JULY 2013 
The WTO Committee on Budget, Finance and Administration met on 3 July 2013 under the 
chairmanship of the Permanent Representative Mi chael V. Stone (Hong Kong, China). The terms of 
reference and composition of the Committee are set out in document WT/L/44/Rev.1. The agenda 
contained in document WTO/AIR/4151 was adopted.   
1  2012 FINANCIAL PERFORMANCE REPORT (WT/BFA/W/304) 
1.1.  The Director-General presented the 2012 Fi nancial Performance Report. This was the first 
report presented in compliance with Internationa l Public Sector Accounting Standards (IPSAS). The 
implementation of IPSAS has been achieved using on ly internal resources available in the financial 
management services and on the schedule approved by the General Council in 2009. The Director-
General thanked the External Auditor. The External Auditor while certifying the account has expressed two reservations.  
1.2.  The first reservation was related to the Pe nsion Plan. The External Auditor recommended the 
consolidation of the assets and liabilities of the Pension Plan with those of the WTO Secretariat. 
The accounts were only disclosing the net liability of the Secretariat towards its Pension Plan. The 
Director-General explained that he had no execut ive responsibility over the WTO Pension Plan. The 
Pension Plan had its own governance structure, independent from the Secretariat, reporting directly to the General Council. Members would need to modify the financial rules of the WTO Secretariat and of the WTO Pension Plan to provide for a consolidation as recommended by the 
External Auditor. 
1.3.  The second reservation was related to the recording of ITC, the joint venture between the 
WTO and the UN. It was not possible for the WTO to record ITC as a joint venture in its accounts 
as it was still operating under the UN specific accounting standards that were not compliant with 
IPSAS. ITC was expected to implement IPSAS in the coming years. 
1.4.  The Director-General indicated that the External Auditor had also made a number of other 
recommendations; most of them being immediately implemented. He stressed the importance to 
maintain the appropriate level of resources in the financial management services in order to ensure the quality and integrity of the accounting processes. 
1.5.  He recalled that Members had approved his proposal to have a 2012 budget at zero nominal 
growth. The budgetary saving for 2012 amounted to CHF 11 million. Half of the savings were 
achieved on personnel-related expenditure and the other half on non-staff expenditure. The savings were explained by: 1) the implementation of IPSAS with a one time saving estimated at 
CHF 2 to 3 million; 2) tighter controls on personnel requirements and a reduction in temporary 
assistance expenditure of CHF 4 million; and 3) the implementation of streamlining measures as 
approved by Members at the end of 2011 that incl uded a saving of CHF 1.5 million on external 
interpretation and translation, CHF 0.5 million on printing and CHF 0.2 million on printing.  
1.6.  The budgetary savings led to a net surplus of almost CHF 15 million, due to additional 
contributions from new Members, a reduction in the provision for outstanding contributions and a 
higher level of miscellaneous income. However th e introduction of IPSAS produced a new financial 
or accounting result. The financial result for 2012 amounted to a deficit of almost CHF 20 million. 
The significant deterioration in the result was due to the actuarial valuation of the WTO’s liabilities towards the pension plan and the after-service health insurance benefits of WTO staff. Members 
would have to consider revising the WTO Financial Rules to accommodate the new financial result. WT/BFA/138 
 
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  They would also need to review at the long-term financial situation of the WTO Secretariat. The 
first financial statements under IPSAS disclosed liabilities towards the pension and health insurance systems that amounted to near ly CHF 820 million at the end of 2012. 
2  2012 EXTERNAL AUDIT REPORT (WT/BFA/W/303) 
2.1.  The representative of the First President of the French Court of Audit (the External Auditor) 
first thanked the Secretariat for the close co-operati on during the audit. He declared that the 2012 
report was focused on the audit of the WTO 2012 financial statements and a performance audit of 
the internal audit function. On the basis of the audit conducted, the External Auditor certified the 
2012 WTO financial statements with two reservations, related to the accounting of pension plan and the joint venture on ITC. 
2.2.  The External Auditor recommended updating the WTO Financial Rules to reflect both the 
pension plan's assets and liabilities. He also recommended reinforcing the management of the 
financial management services to enhance the control and limit the risk of error, and to review the recording of intangible assets. The External Auditor also reviewed the financial situation of the 
Building Project and expected to perform a final review in 2013.     
2.3.  The External Auditor presented the results of the performance audit of the internal audit 
function. He expressed an overall positive conclusion for this function that was established in 2008 
and that had two staff. The review was based on the International Standards for the Professional 
Practice of Internal Auditing as established by the Institute of Internal Auditors. Six recommendations were formulated to further enhance the internal audit function; starting by reinforcing the reporting line to the Committee in the Internal Audit Charter. He also made 
recommendations related to investigation and whistleblowing policies, multi year audit and training 
plans.   
2.4.  Several Members thanked the External Audito r and the Director-General for their reports and 
highlighted the importance of the full implementa tion of IPSAS. Members raised questions on the 
important difference between the positive budget performance and the negative accounting result, and the Building Project financial situation. One Member drew attention to the importance of 
technical assistance activity. Another Member indicated that the issue of the Pension Plan was 
important.  
2.5.  The Committee also warmly thanked the External Auditor for its report. The Committee took 
note of the 2012 Financial Performance and 2012 Ex ternal Audit reports and recommended to the 
General Council the following re commendation for approval:  
2.6.  The Committee recommends that th e General Council approves the transfers 
between budgetary sections as outlined in paragraphs 34 and 41 of document 
WT/BFA/W/304. The Committee further recomme nds that the General Council approves 
the audited accounts for 2012. 
3  DIRECTOR-GENERAL END OF TERM REPORT TO THE COMMITTEE (WT/BFA/W/305) 
3.1.  The Director-General presented his end of term report to the Committee. This report 
consolidates the reforms that have been engage d over the last eight years to modernize the 
management of financial and human resources, information technology and information management, as well as delivering on a new building and the one site solution for the WTO 
campus. He recalled that his commitments to the Committee in 2005 were to build on the existing 
qualities of the Secretariat to make it even more effective, more efficient and more responsive to the new challenges; using a prudent and conservative approach, concentrating on improving 
economies of scale and investing in existing resources. In summary, the WTO Secretariat has 
become a stronger institution. 
3.2.  The Director-General shared his experiences in managing the Secretariat and stressed three 
points. First, the biggest asset of the Organization was its staff and Members should continue 
investing to maintain working conditions for WTO staff. Investing in the staff was investing in the strength of the organization that serves Members. Second, there were still opportunities to better leverage technological progress and redesign pr ocesses to achieve efficiencies. However there WT/BFA/138 
 
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  were limits to containing costs in an environment of increasing demands on the Secretariat. The 
zero nominal growth in budgets would show its limitations if the Secretariat was expected to 
deliver fully on its mandate. Finally, the increa sing demands on accountability and results based 
management had reduced Members’ temptation  to “micro manage” this Member driven 
Organization. Trust was an essential ingredient. The Director-General thanked the Committee for 
the trust afforded during the last eight years. The Director-General also thanked the successive Chairs of the Committee, the management and the staff of the Secretariat. 
3.3.  Members took the floor and thanked the Director-General for his report. First, they stressed 
that the precedent set by the Director-General in reporting directly and in person to the 
Committee had been highly appreciated, and had in creased the transparency and accountability of 
the Secretariat. They hoped that this precedent would be followed in future. Several Members 
highlighted the importance of having completed the building project and reunited WTO Staff in a 
single campus. They commended the Director-Gener al for having delivered the building project on 
time and within the financial envelope initially conceived for it, which was rare for projects of this 
size. Several Members thanked the Director-Gener al for having modernized the financial and 
human resources management of the Secretariat, enhanced the Secretariat's transparency and accountability to Members including through the establishment of an Office of Internal Audit, and 
achieved important efficiency gains to reduce the WTO budget and score important savings at a 
time of serious financial constraint for many  WTO Members. Several Members commended the 
measures introduced to profile jobs, to enhance diversity and to reform promotions. The Committee requested that such a prudent management of the Secretariat's financial and human 
resources be continued in future. 
3.4.  The Committee took note of the report. 4  PROGESS REPORT ON THE MODERNIZATION OF THE MANAGEMENT OF RESOURCES 
4.1.  A member of the Secretariat presented a pr ogress report on the implementation of the new 
resources management approach based on activities and outputs. The objectives were to measure expenditure by output/activity to provide more relevant expenditure reporting; to enhance 
management accountability as it included staff expenditure; and to facilitate more informed 
decisions regarding the allocation of resources with in the Secretariat. He detailed the methodology 
used and the results for 2012 in each of the main output areas. He informed the Committee that data were being collected in 2013 and would be compared to 2012 to analyse the evolution. Some 
output elements would be introduced in th e 2014/2015 budget. Performance measurements and 
more precise cost allocation principles would also be gradually introduced. 
4.2.  The Committee took note of the report. 
5  INTRODUCTION TO THE 2014/2015 ITC BUDGET (JOB/BFA/1) 
5.1.  The Acting Executive Director of the International Trade Centre introduced ITC's preliminary 
budget estimate for 2014/2015. He first reminded about the joint funding of the ITC regular 
budget by the WTO and the UN, and about the dual approval process by the two parent 
organisations. He informed the Committee that th e UN General Assembly had adopted a resolution 
(A/RES/67/248) for budgetary reductions across the UN  Secretariat, including ITC. In line with this 
resolution, ITC's proposed budget for the biennium 2014/2015 will be reduced by approximately 
CHF 1.9 million from the current biennium. In genera l terms, ITC foresees that the budget cut will 
be shared proportionally between staff costs and non-staff costs around a ratio of 70% for post reduction and 30% for non-post with the aim of minimizing the impact on the beneficiaries of the 
activities managed by ITC. He also took the opportunity to update the Committee on the activities 
and progress achieved by ITC recently. ITC will take stock of the Aid-for-Trade platform and the results from the Bali Ministerial Conference to further contribute to the Discussions about the 
design of the pos-2015 Millennium Development Go als. Strategic priorities for the next biennium 
will include: to grow services exports from developing countries; to increase contribution to regional trade integration; and to help SMEs to access and move up regional and global value chains. Finally, the ITC presented its new web based development results dashboard. 
5.2.  Members expressed their continued support to  the ITC and highlighted the effort engaged in 
result-based management. Some Members also enquired about the criteria used by ITC to select WT/BFA/138 
 
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  projects; how the budget reduction will impact its activities, especially in Latin America or in its 
regional offices.  
5.3.  The Committee took note of the simplified fascicle of ITC’s Proposed Programme Budget for 
the biennium 2014/2015. 
6  INFRASTRUCTURE CONTRACT 
6.1.  The Chair reminded the Committee that it had been previously informed about the revised 
infrastructure contract and that the Secretariat had organized an additional information session for 
the Committee members the week before this meeting. Members had no further comments or 
questions.  
6.2.  The Committee recommended to the General Council the following recommendation for 
approval: 
6.3.  The Committee recommends that th e General Council approves the revised 
infrastructure contract as presented in document WT/BFA/W/298. 
7  TENDERING PROCESS FOR THE APPOINTM ENT OF THE EXTERNAL  AUDITOR FOR THE 
PERIOD 2014-2019 
7.1.  A member of the Secretariat presented the document to be issued to launch the tendering 
process to appoint the External Auditor for a six- year mandate starting with the accounts of 2014. 
The document had been presented to the current External Auditor who gave two comments that 
would be included. 
7.2.  The Chair proposed that the document pres ented be circulated as a draft by email to the 
Committee Members. Members were invited to raise their questions and comments to the 
Secretariat. The Chair would then finalize and issu e the official document by Friday 12 July 2013.  
8  OTHER BUSINESS 8.1.  The agenda item related to human resources was postponed to a next meeting due to timing 
issues. 
8.2.  The Chair informed the Committee that the incoming Director-General had signed both 
documents put before him: his contract and the oath of office which all staff would sign when 
joining the WTO. There were no changes in the conditions of service compared to his predecessor. 
8.3.  The Chair also held an informal meeting of the Committee on 1 July 2013 where he raised 
the issue about the rise in the dispute settlement activity and its impact on the resources of the 
Secretariat. Delegations expressed an interest to  review the situation and suggested to hold an 
informal meeting of the Committee on Thursday, 11 July to obtain further information from the 
Secretariat on the situation. 
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