RESTRICTED  
  
WT/BFA/W/421  
12 June 2017 
(17-3124) Page: 1/57 
Committee on Budget, Finance and Administration   
 
  REPORT OF THE INDEPE NDENT EXTERNAL AUDIT OR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS  OF THE WORLD TRADE O RGANIZATION (WTO)  
FOR THE YEAR ENDED 3 1 DECEMBER 2016  
1   EXECUTIVE SUMMARY  ................................ ................................ ................................ . 3 
2   SCOPE AND APPROACH O F THE AUDIT  ................................ ................................ ........  6 
2.1   Scope of the Audit  ................................ ................................ ................................ ....... 6 
2.2   Audit Obj ective and Approach  ................................ ................................ .......................  6 
2.3   Audit Conclusion  ................................ ................................ ................................ ..........  7 
3   FINANCIAL AUDIT  ................................ ................................ ................................ ....... 8 
3.1   General  ................................ ................................ ................................ ......................  8 
3.2   Contributions  ................................ ................................ ................................ ..............  8 
3.3   Financial Position/Performance  ................................ ................................ ..................... 10 
3.3.1    Statement of Financial Position  ................................ ................................ .................. 10 
Assets and Liabilities  ................................ ................................ ................................ .......... 10 
Cash and Cash Equivalents  ................................ ................................ ................................ ..11 
Receivables from Members and Observers  ................................ ................................ ............ 12 
Inventories  ................................ ................................ ................................ ....................... 12 
Other receivables  ................................ ................................ ................................ ............... 12 
Advances and prepayments  ................................ ................................ ................................ .13 
Building  ................................ ................................ ................................ ............................ 13 
Equipment  ................................ ................................ ................................ ........................ 13 
Pension Plan Assets  ................................ ................................ ................................ ............ 14 
Assessed contributions received in advance  ................................ ................................ ........... 14 
Short-term employee benefits  ................................ ................................ ............................. 14 
Loan ................................ ................................ ................................ ................................ .16 
Pension Benefits  ................................ ................................ ................................ ................ 16 
ASHI ................................ ................................ ................................ ................................ 16 
Net assets (total)  ................................ ................................ ................................ ............... 17 
3.3.2    Statement of Financial Performance  ................................ ................................ ........... 17 
Revenue and Expenses  ................................ ................................ ................................ .......17 
Net result/surplus (deficit) for the period  ................................ ................................ .............. 18 
4   PERFORMANCE AUDIT  ................................ ................................ ...............................  19 
4.1   Information Confidentiality  ................................ ................................ .......................... 19 
Focus and objectives  ................................ ................................ ................................ .......... 19 WT/BFA/W/421  
 
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  Previous Audit Results  ................................ ................................ ................................ ........ 19 
General Principles on Information Confidentiality  ................................ ................................ ...20 
Personnel Aspects  ................................ ................................ ................................ .............. 20 
Organizational Aspects  ................................ ................................ ................................ .......21 
Aspects of Physical Security  ................................ ................................ ................................ 24 
4.2   Organization of Sessions of the Ministerial Conference  ................................ .................... 25 
Focus and objectives  ................................ ................................ ................................ .......... 25 
Decision on date and venue  of sessions  ................................ ................................ ................ 25 
Guidelines on organizing sessions  ................................ ................................ ........................ 26 
Project planning  ................................ ................................ ................................ ................. 27 
4.3   Termination indemnities  ................................ ................................ .............................. 28 
Focus and objectives  ................................ ................................ ................................ .......... 28 
Increase of termination indemnities ................................ ................................ ...................... 28 
Early retirement for redeployment of posts  ................................ ................................ ........... 29 
Mutually agreed termination due to behavioural reasons  ................................ ......................... 29 
Cases of exceptional circumstances with additional payment in  lieu of notice  ............................. 30 
5   CASES OF FRAUD OR SU SPECTED FRAUD  ................................ ................................ .. 31 
6   ACKNOWLEDGEMENT  ................................ ................................ ................................  31 
LIST OF ABBREVIATION S AND ACRONYMS  ................................ ................................ .... 32 
ANNEX /LIST OF RECOMMENDATI ONS ................................ ................................ ............  33 
 WT/BFA/W/421  
 
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  1  EXECUTIVE SUMMARY  
My team and I have audited the financial statement s of the WTO.  
1.  My team and I have audited the financial statements of the World Trade Organization 
(hereinafter "WTO") for the financial period from 1  January to 31  December  2016. These 
comprise:  
 the statement of financial position;  
 the statement of financi al performance;  
 the statement of cash flows;  
 the statement of changes in net assets;  
 notes and annexes to the financial statements.  
Responsibility of Management  
2.  The Management of WTO is responsible for the preparation and fair presentation of the 
financial  statements in accordance with IPSAS and for such internal control as Management 
determines necessary to enable the preparation of financial statements that are free from material 
misstatement, whether due to fraud or error.  
In preparing the financial stat ements, the Management is responsible for assessing WTO 's ability 
to continue as a going concern, disclosing, as applicable, matters related to going concern and 
using the going concern basis of accounting unless Management either intends to liquidate WTO  or 
to cease operations, or has no realistic alternative but to do so.  
 
Those charged with governance are responsible for overseeing the WTO 's financial reporting 
process.  
 
Responsibility of the External Auditor  
3.  My responsibilities are to obtain reasonable assurance about whether the financial statements 
as a whole are free from material misstatements, whether due to fraud or error, and to issue an 
auditor 's report that includes my opinion . Reasonable assurance is a high level of assurance, but is 
not a guar antee that an audit conducted in accordance with ISAs will always detect each and every 
material misstatement . Misstatements can arise from fraud or error and are considered material if, 
individually or in the aggregate, they could reasonably be expected t o influence the economic 
decisions of users taken on the basis of these financial statements.  
As part of an audit in accordance with ISAs, I exercise professional judgement and maintain 
professional scepticism  throughout the audit.  
 
I also:  
 
  identify and assess the risks of material misstatement of the financial statements, whether 
due to fraud or error, design and perform audit procedures responsive to those risks, and 
obtain audit evidence that is sufficient and appropriate to provide a basis for our opi nion. 
The risk of not detecting a material misstatement resulting from fraud is higher than for 
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, 
misrepresentations, or the override of internal control;  
  obtain an un derstanding of internal control relevant to the audit in order to design audit 
procedures that are appropriate in the circumstances, but not for the purpose of 
expressing an opinion on the effectiveness of WTO 's internal control;  
  evaluate the appropriaten ess of underlying accounting policie s and the reasonableness of 
accounting estimates and related disclosures made by Management;  
  conclude on the appropriateness of Management 's use of the going concern basis of 
accounting and, based on the audit evidence obtained, whether a material uncertainty 
exists related to events or conditions that may cast significant doubt on the WTO 's ability 
to continue as a going concern . If we conclude that a material uncertainty exists, we are 
required to draw attention in our  auditor 's report to the related disclosures in the financial WT/BFA/W/421  
 
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  statements or, if such disclosures are inadequate, to modify our opinion . Our conclusions 
are based on the audit evidence obtained up to the date of our auditor 's report . However, 
future events or conditions may cause WTO  to cease to continue as a going concern;  
  evaluate the overall presentation, structure and content of the financial statements, 
including the disclosures, and whether the financial statements represent the underlying 
transaction s and events in conformity with the principles of fair presentation.  
My team communicated with those charged with governance the planned scope and timing of the 
audit and significant audit findings, including any significant deficiencies in internal contro l that we 
identify during our audit.  
 
Scope of the audit  
4.  The audit included the examination, on a test basis, of evidence supporting the amounts and 
disclosures in the financial statements . It also included an assessment of the underlying 
accounting princi ples, and significant estimates made by the Director -General, as well as an 
evaluation of the overall presentation of the financial statements.  
I have conducted my audit in conformity  with the Inter national Standards on Auditing  
5.  I conducted my audit in con formity with the International Standards on Auditing (ISAs) as 
adopted and amended by the International Organization of Supreme Audit Institutions (INTOSAI) 
and issued as International Standards for Supreme Audit Institutions (ISSAI) . These standards 
require that I plan and perform the audit to obtain reasonable assurance about whether the 
financial statements are free from material misstatement.  
I am independent of the WTO  in accordance with the ethical requirements that are relevant to my 
audit of the fin ancial statements and I have fulfilled all other ethical responsibilities in accordance 
with these requirements.  
 
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for 
my opinion.  
 
My audit provides a reason able basis for the audit opinion  
6.  The ISAs, as well as the ISSAI, require the auditor to carry out an audit of an organisation 's 
accounts and financial transactions which includes examining, on a test basis, evidence supporting 
the amounts and disclosures i n the financial statements . It also includes assessing the accounting 
principles and significant estimates made by the Director -General, as well as evaluating the overall 
presentation of the financial statements . I believe that my audit provides a reasonab le basis for 
the audit opinion.  
The financial statements present  fairly the financial position  
7.  As a result of my audit, I am of the opinion that the financial statements present fairly, in all 
material respects, the financial position as at 31  December  2016, that they have been prepared in 
accordance with International Public Sector Accounting Standards (IPSAS) and WTO's  stated 
accounting policies, and that the transactions have been in accordance with the Financial 
Regulations . Furthermore, I assume that t he IT system the Secretariat is responsible for and which 
it is using for accounting and the preparation of the financial statements is working properly and 
according to ISSAI standards (even though I had no chance to verify that in the course of this 
audit), especially concerning IT security (see also my recommendations in previou s reports).  
I have placed an unqualified audit opini on on the financial statements  
8.  The audit revealed no weaknesses or errors which I considered material to the accuracy, 
complete ness and validity of the financial statements as a whole . Therefore I have placed an 
unqualified audit opinion on WTO's  financial statements for 2016.  WT/BFA/W/421  
 
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  Areas covered by this report  
9.  My report includes observations and recommendations intended to contribute t o the 
improvement of financial management . For 2016, my audit work has mainly covered the areas 
described in the following paragraphs.  
Overall financial situation (Part  3) 
10.  In accordance with Chapter XIII of the Financial Regulations, I present an analysis of WTO's  
financial statements . In Part 3 of my report I comment on the overall financial situation.  
Performance audit areas covered by this report (Part  4) 
11.  Regulation  44 of the Financial Regulations stipulates that my annual audit shall also include 
perfor mance audits as defined by the INTOSAI Auditing Standards . This year, my performance 
audit has mainly covered the areas of information confidentiality, the organization of sessions of 
the Ministerial Conference and special topics concerning HR (termination  indemnities).  
WTO delivered financial stat ements in accordance with IPSAS  
12.  The financial statements for the year ending 31  December  2016 are prepared and presented 
in accordance with IPSAS.  
Cases of fraud or suspected fraud (Part  5) 
13.  The Secretariat reporte d that it did not have any information on cases of fraud or suspected 
fraud. During our audit, my team did not detect any cases of fraud or suspected fraud.  
Acknowledgement (Part  6) 
14.  I wish to convey my appreciation for the cooperation and assi stance extend ed by the 
Director -General, the Management and staff of the Secretariat . I appreciate that the Secretariat is 
continuously reviewing and improving the financial statements, thus making the job for me and 
my team easier . I am very grateful for their assista nce during the entire external audit process.  
List of Recommendations (Annex)  
15.  My team reviewed monitored the pending implementation of recommendations made in last 
year's report.  
 WT/BFA/W/421  
 
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  2  SCOPE AND APPROACH O F THE AUDIT  
2.1  Scope of the Audit  
Principles governing my audit  
16.  My staff and I have audited the financial statements of the WTO for the financial period from 
1 January to 31  December  2016. These statements comprise the statement of financial position, 
the statement of financial performance, the statement of cash flows, the statement of the changes 
in net assets and notes and annexes to the financial statements . We also examined the related 
financial accounts and transactions.  
Responsibility of Management  
17.  The Director -General is responsible for the preparation and fair presentation of these financial 
statements in accordance with WTO 's Financial Regulations, and with such internal controls as 
Management determines are necessary to ensure the preparation of financial statements that are 
free from material misstatemen t, whether due to fraud or error.  
Responsibility of the External Auditor  
18.  I am responsible for expressing an opinion on the financial statements based on evidence 
obtained during my audit . I planned and performed the audit in such a way as to obtain 
reasona ble assurance that the financial statements are free from material misstatement.  
Audit of the financial statements  
19.  The financial statements of the WTO, together with my audit report and the audit opinion, 
have been discussed with the Director -General . He has taken note of the contents of my report.  
Performance audits  
20.  In addition to my audit of WTO's  financial statements, accounts and financial transactions, I 
carried out the reviews (under Regulation 44 of the Financial Regulations) that I deemed 
necessary with respect to the efficiency and effectiveness of processes and procedures and the 
financial consequences of existing administrative practices.  
2.2  Audit Objective and Approach  
Objective of financial audit : Forming the audit opinion  
21.  The objective of the audi t was to enable me to form an opinion on whether the expenditure 
recorded for the year had been incurred for the purposes approved by the General Council ; 
whether revenues and expenses were properly categoriz ed and recorded in accordance with WTO 's 
Financi al Regulations ; and whether the financial statements presented fairly the financial position 
as at 31  December  2016.  
Substantive testing convinced me of the correctness of WTO 's records.  
22.  My audit opinion is based on substantive testing of the transactions recorded in all areas of 
the financial statements . The examination was carried out to ensure that the financial statements 
accurately reflect the accounting records and present fairly the financial situation of the WTO.  
 
 
 WT/BFA/W/421  
 
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  2.3  Audit Conclusion  
I found no mater ial weaknesses . I have placed an unqualified opinion  on WTO's  financial 
statements  
23.  Notwithstanding the observations in this report, my examination revealed no weaknesses or 
errors which I considered material to the accuracy, completeness and validity of th e financial 
statements as a whole . In accordance with normal practice, my team reported additional findings 
to the Management of the Secretariat in the course of the audit . I certify that the financial 
statements and schedules present fairly the financial situation of WTO, and I have placed an 
unqualified opinion on WTO's  financial statements for 2016.  
 WT/BFA/W/421  
 
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  3  FINANCIAL  AUDIT  
3.1  General  
My team examined the accounting records  
24.  My audit included a general review, and such tests of the accounting records and other 
supporting evidence as I considered necessary in the circumstances . These audit procedures are 
primarily designed to allow an opinion on WTO's financial statements to be formed.  
Random sample check  
25.  We analysed data records and transactions . From a total of 63, 343 records we eliminated 
automatically generated bookings using the audit software "IDEA". We clustered all transactions 
and took a random sample of a significant number of the remaining transactions . We checked 
whether invoices and the related documents had been filed in accordance with the regulations and 
cross-checked the basis for payment and the necessary approvals . No transactions examined gave 
cause for criticism . The Secretariat was able to clarify all open questions.  
I report  on WTO 's financial de velopment  
26.  In the following paragraphs, I report on trends and tendencies and provide background 
information . For that purpose, my staff carried out an analysis of several of the Organization 's key 
figures and their trend.  
3.2  Contributions  
2016 budget was appr oved by General Council  
27.  WTO activities are financed from the regular budget covering expenses and income for a 
biennium, this time 2016-2017. The 2016 budget was approved by the General Council on 
recommendation by the CBFA (Committee on Budget, Finance an d Administration) . The budget is 
financed from assessed contributions and miscellaneous income . The 2016 approved budget 
amounted to CHF  197.2  million and represents the first year of the biennium 2016 -2017.  
Calculation of contributions  
28.  The contributions a re calculated based on each Member State´s international trade (imports 
plus exports) in relation to the international trade of all WTO Member States, based on statistics 
over a five year period.  
Reviewing of contributions  
29.  I reviewed contributions for 2016 .  
2016  Assessed 
Contributions*  % Outstanding 
Contributions  % 
Member States  195.6   16.5  
Observers  0.6  0.6  
Total  196.2  91 17.1 9 
* (Differences due to rounding .) 
Source : WTO Financial Statements 2016 ; in million  CHF.  
In 2016, assessed Member States ' contributions amount to CHF  195.6  million  
30.  Assessed contributions by Member States amount to CHF  195.6  million, contributions by 
Observers are CHF  0.6 million . At the end of 2016, WTO has 164 Member States ; two new Member 
States, Afghanistan and Liberia, f ormally acceded in 2016.  WT/BFA/W/421  
 
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  31.  Assessed contributions paid in advance by Members and Observers amount to 
CHF 16.8 million . In 2016, just like in 2015, due to the negative interest rate of the Swiss National 
Bank (SNB), Members gained no interest . Negative intere st was covered by the WTO budget and 
not charged to the Members.  
Outstanding contributions totalled CHF  16.5 million, 67 Members have payment arrears  
32.  The outstanding contributions totalled CHF  16.5 million - coming from a peak in 2003 with a 
total of CHF  31.5 million outstanding contributions and CHF  22.9 million in 2015. 67 (after 56 in 
the year before) out of 164 Members had payment arrears ; five Members are following a payment 
plan to suspend Administrative Measures . Details of Administrative Measures an d their different 
levels are defined in Annex B of WTO's  Financial Regulations.  
Administrative Measures for M embers/Observers with arrears  
33.  Pursuant to Regulation 14 in the WTO Financial Regulations Members and Observers with 
arrears shall be subject to Adm inistrative Measures . There are three categories of Administrative 
Measures depending on the number of years of outstanding contributions.  
Five Membe rs are following a payment plan  
34.  The majority of the 67 Members with payment arrears have outstanding paymen ts since a 
short period of time . There are five Members following a payment plan to suspend Administrative 
Measures.  WT/BFA/W/421  
 
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  3.3  Financial Position/Performance  
Table 1 – Statement of Financial Position as at 3 1 December  2016*  
(In million  CHF) 
 2016  2015  2014  
Current  Assets     
Cash and cash equivalents  132.9  120.6  107.7  
Receivables from Members  6.8 14.4 9.9 
Receivables from Observers  0.6 0.6 0.5 
Inventories  0.4 0.4 0.4 
Other receivables  2.8 5.6 3.6 
Advances and prepayments  5.4 5.3 5.2 
Non-Current Assets     
Building 124.3  127.3  118.4  
Equipment  13.2 15.4 16.9 
Intangible assets  0.4 0.5 0.6 
Pension Plan Assets  535.5  496.3  487.6  
TOTAL ASSETS  822.3  786.5  750.8  
Current Liabilities     
Payables  2.8 6.6 3.5 
Accruals  5.1 2.8 1.0 
Assessed contributions received in 
advance  16.8 16.3 13.9 
Voluntary contributions refundable  34.5 35.7 32.6 
Short -term employee benefits  12.1 12.6 12.6 
Grant  - 0.1 - 
Non-Current Liabilities     
Loan 55.2 56.4 57.6 
Pension benefits  982.0  855.6  1,209.6  
ASHI 110.9  245.5  342.9  
Other lon g-term employee benefits  7.7 9.3 10.6 
Funds  - - 4.3 
TOTAL LIABILITIES  1,227.2  1,240.9  1,736.9  
    
NET ASSETS  (404.9)  (454.5)  (986.1)  
WCF 10.9 10.8 10.7 
Actuarial gain (loss)  325.8  248.3  (226.1)  
Accumulated surplus  (806.4)  (778.0)  (770.7)  
Provision for right of use - CWR 59.2 59.8 48.5 
Reserves  12.2 8.2  
Extra Budget Fund Allocation  -6.5 -3.4  
TOTAL NET ASSETS  (404.9)  (454.5)  (986.1)  
* (Differences due to rounding.)  
Source : WTO Financial Statements 2016 and 2015 . 
3.3.1   Statement of Financial Position  
Assets and Liabilities  
My team examined the stat ement of assets and liabilities  
35.  Full reporting of assets and liabilities in a balance sheet enables the reader to understand the 
financial position of an organization . Such a statement of financial position is  also required under 
IPSAS . My team examined this statement and the presentation of the major underlying accounts.  WT/BFA/W/421  
 
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  Assets  
Current Assets  
Cash and Cash Equivalents  
Overall cash situation with a total of CHF  132.9  million is sufficient  
36.  WTO' s overall cash sit uation is sufficient . Compared to the balance in the previous year, total 
cash and cash equivalents increased by CHF  12.3 million from CHF  120.6  million in 2015 to 
CHF 132.9  million as at 31  December  2016 (CHF  107.7  million in 2014) . Cash and cash 
equivale nts include cash in hand and cash accounts at bank.  
Cash deposits in CHF increased in 2016  
37.  The increase in 2016 is mainly due to a cash deposit in CHF amounting to CHF  122.9  million 
(CHF 115.1  million in 2015).  
38.  Other currencies (USD, EUR and GBP) are of mi nor importance for WTO . In 2016, the total 
amount of assets in other currencies was equivalent to approximately CHF  9.9 million (thereof 
8.3 million  in USD).  
Four eyes principle co ncerning signature authorities  
39.  Pursuant to the financial regulations of the WTO, all payments shall be made by authorized 
officials of the Finance and General Services . There is no specifi c regulation regarding the 
four eyes principle for the signature authorities.  
For all funding and payments WTO is using three house banks : UBS, Credit Suisse and 
Post Finance . All these banks sent us a confirmation of their business relationship with the WTO 
maintained as per booking date 3 1 December  2016. Enclosed to these confirmations they listed 
the persons who are authorized for bank transfer s with their signatures . Except the DG, all 
designated officials are authorized only to jointly sign transactions (2 by 2 authorizations) . 
However, the DG can make bank transfers individually, without a second signatory (unique 
signatory).  
 
Recommendatio n: revise financial regulations  
40.  I recommend that WTO replace the applicable unique signatory by the DG to a joint signature 
2 by 2 authorizations . Furthermore I recommend WTO revise the financial regulations regarding 
bank transactions and payments with resp ect to the four eyes principle in all relevant cases.  
In 2015 the SNB lowered the interest rate to -0.75% 
41.  On 15 January  2015, the Swiss National Bank (SNB) announced to lower the interest rate by 
0.5 percentage points to -0.75%. 
In 2016 the SNB persisted i n implementing its policy of negative interests  
42.  Following the SNB decision, WTO's  main banking partners introduced negative interest rates 
of -0.75% on the accounts in CHF for account balances exceeding CHF  50 million as of 
1 April 2015. This is still the current status in 2016.  
Exemption limits with Swiss banks totalling  CHF 110  million  
43.  According to the financial statements, WTO 's cash and cash equivalents amount to more than 
CHF 132 million . Because of the monetary policy of the SNB (see above) the WTO pa id negative 
interests in 2016 . Since 2015, the WTO is benefitting from an exemption limit by their main house 
banks ; CHF 70 million by the UBS, and CHF  40 million with Credit Suisse.  WT/BFA/W/421  
 
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  For 2016 WTO paid a total of CHF 227,299 of negative interests.  
44.  However, WTO paid in 2016 negative interests related to the regular budget of CHF 87,282 
and the trust funds CHF 31,101 (CHF 139,789) as well as rela ted to the WTO Pension Plan 
CHF 87,510 . In total, WTO was charged by negative interests with an amount of CHF 227,29 9. 
For WTO, there is a risk of negative interests of up to CHF  1 million per annum.  
45.  All limits can be changed unilaterally by the UBS and/or Credit Suisse at short notice, so the 
WTO is being faced with a risk of negative interests of up to CHF  1 million p er annum.  
Receivables from Members and Observers  
Provision for arrears amounts to CHF  9.9 million  
46.  Receivables from Members and from Observers (receivables from non -exchange transactions) 
include a provision for outstanding contributions . The provision for arrears from Members and 
Observers amount to CHF  9.9 million (CHF  9.4 million from Members ; CHF 0.5 million from 
Observers).  
Payment plans are covering arrears of CHF  2.6 million, 16% of all outstanding 
contributions  
47.  There are five Members following the ag reed payment plan with total arrears of 
CHF 2.6 million . Two Members with outstanding contributions are not compliant with the payment 
plan. There is a total of 13 Members in different categories of Administrative Measures : five in 
category I (after one bu t less than two full year's outstanding contributions) ; three in category II 
and five in category III (after three full year's outstanding contributions).  
CHF 2.6  million  (16%) of a total of CHF 16.5  million  of outstanding contributions are covered by 
paym ent plans . 
 
Inventories  
Inventories consist mainly of WTO pu blications and co -publications  
48.  Inventories within current assets for WTO are mainly publications and co -publications totalling 
CHF 0.4 million.  
Some inventories are held  in external storage facili ties 
49.  Not all inventories are held internally ; a part of the WTO publications and co -publications are 
stored at a third party storage facility.  
Other receivables  
Recoverable United States taxes amount to CHF  2.5 million  
50.  Other receivables include recoverable  taxes, e.g. from the United States (US) or Switzerland . 
In 2016, other receivables totalled CHF  2.8 million (2015 : CHF 5.6 million) ; CHF 2.5 million of the 
2016 total were recoverable US taxes.  
WTO pays estimat ed US tax for staff in advance  
51.  Staff members of WTO, like those of other international organizations, are exempt from 
income tax . Nevertheless, the US requires its citizens and residents to pay tax worldwide . The 
WTO pays estimated tax payments in advance and asks for a reimbursement from the US Tax 
Authorities based on an agreement between WTO and US of 22  December  2000.  
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  52.  The WTO Secretariat 's method of calculating reimbursements is different from the method 
used by the US Government, although the WTO method is validated by the International Labour 
Organization (ILO).  
Different reimbursement method s result in a write off for WTO  
53.  In 2016, the amount non -reimbursable for the WTO totalled CHF  200,040 (2015 : 
CHF 236,447).  
Advances and prepayments  
Advances and prepayments amount to a total of CHF  5.4 million 
54.  In 2016, advances and prepayments with a total of CHF  5.4 million include staff advances 
made for salary, travel and education grants representing CHF  2.8 million ; advances relating to 
trust funds activities with an amount of CHF  1.6 million and other a dvances (e.g. payments made 
to suppliers, consultants and insurances) of CHF  0.9 million.  
Non-Current Assets  
Building  
The net carrying  amount for building as at 31  December  2016 is CHF  124.3  million  
55.  With regard to non -current assets, a balance sheet item o f high value is "building " with a net 
carrying amount of CHF  124.3  million (2015 : CHF 127.3  million) . The accumulated depreciation 
concerning buildings as at 31  December  2016 amount to CHF  10.2 million (depreciation for 2016 
only: CHF 3 million).  
Registrat ion of the CWR contract on 7 August  2015 
56.  The infrastructure contract between WTO and Swiss authorities concerning the Centre William 
Rappard (CWR) building was signed on 7  August  2015. The registration defines the 99 -year 
time-frame of ownership for WTO.  
CWR building is granted by the Canton of Geneva and the F IPOI as a 99 -year surface 
right  
57.  WTO headquarters building at 154 rue de Lausanne, Geneva has two buildings : the old 
building of CWR and the new building constructed by the WTO itself . The CWR building  and the 
land were granted by the Canton of Geneva and the Building Foundation for International 
Organizations (FIPOI) as a 99 -year "surface right ". 
Equipment  
Equipment totals CHF  13.2 million  
58.  The total value of equipment amounts to CHF  13.2 million (2015 : CHF 15.4 million) . The most 
significant items are furniture (CHF  5.8 million), audio visual equipment (CHF  5 million), security 
equipment (CHF  1.4 million) and IT equipment (CHF  0.8 million).  
No regular physical inventory for assets (exc eption : publicatio ns) 
59.  For equipment assigned to non -current assets there is no procedure for a regular physical 
inventory . Only for i nventories (see above) categoriz ed as current assets there is a regular 
physical inventory.  WT/BFA/W/421  
 
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  WTO has no suitable stocktaking system  
60.  The WTO re cords goods as assets in two separate computer data files, one for IT and one for 
non-IT assets . The stock value entered in the system is the value of the purchase order, not of the 
invoice . The calculation of depreciation is based on the invoices . Therefo re, the department of 
finance enters the value of the invoices . Depreciation is calculated manually . As mentioned in my 
report last year, the WTO has no suitable stocktaking system in place . An overall update and 
general check and correction of data on loc ations where the assets were placed was done for IT 
assets last time in 2014 . We were informed that the WTO is planning to implement software which 
supports comprehensive stocktaking . During our audit procedure for the FS 2016 in April 2017, the 
process wa s still ongoing . The procurement process is finalized, appropriate software to manage 
the assets is selected and implementation should be done within third quarter of 2017.  
I repeat my recommendation of implementing a stocktaking system  
61.  I still recommend t o WTO implementing a proper system which contains all assets . The 
process is ongoing ; I will monitor and review results and experiences next year.  
Pension Plan Assets  
Fair value of Pension Plan assets : CHF 535.5  million  
62.  At the beginning of 2016 (31  Decembe r 2015) the fair value of Plan assets was 
CHF 496.3  million . With all expenses, contributions and benefits paid, the fair value as at 
31 December  2016 was CHF  535.5  million.  
Employer contr ibutions 2016 : CHF 18.2  million  
63.  The total of all employer contributi ons for 2016 amount to C HF 18.2  million  (2015 : 
CHF 19.3 million).  
The actuarial gain amount to CHF 17.9  million  
64.  The actuarial gain on plan assets net of actual investmen t expenses for 2016 is 
CHF 17.9 million (in 2015 : CHF - 20.2 million ). 
Benefits paid in  2016 : CHF 19.2 million  
65.  Benefits paid from the Plan amount to CHF  19.2 million (2015 : CHF 19.7 million).  
Liabilities  
Current Liabilities  
Assessed contributions received in advance  
Contributions paid in advance : CHF 16.8 million  
66.  The total amount of contribu tions paid in advance by Members and Observers is 
CHF 16.8 million (2015 : CHF 16.3 million) . In 2016 (due to negative interest rates) Members 
gained no interests.  
Short -term employee benefits  
Short -term employee benefits total CHF  12.2 million  
67.  Short -term e mployee benefits comprise dependency allowance, untaken annual leave, 
education grant, home leave, separation grant and provision for bonus . The total as at 
31 December  2016 amounts to CHF  12.2 million.  WT/BFA/W/421  
 
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Short -term Employee 
Benefits  31/12/2016  
(in million CHF)  
Dependency allowance  0.05  
Untaken annual leave  8.73 
Education grant  1.27 
Home leave  0.97 
Separation grant  0.29 
Provisional for Bonus  0.84 
Total  12.15  
 
WTO 's Internal Audit is conducting  an audit concerning home leave  
68.  Regarding the finding in our sample check last year concerning fraud related to home leave 
we appreciate the audit conducted by WTO's Internal Audit . An audit concerning general home 
leave processes is still ongoing ; I will comment results and the implementation of 
recommendations  in my next report.  
I repeat my recommendation of rev iewing the rules for home leave  
69.  I repeat my recommendation to WTO of reviewing the rules for HL, especially the calculation 
of the lump sum . A benchmark study is already made by WTO, conclusions for WTO and further 
actions are still ongoing . I will monitor and review results and experiences next year.  
Provision for invalidity case  
70.  Concerning a provision for an invalidity case in 2015 WTO established a provision within the 
FS 2016 for one case of invalidit y and allocated CHF 750,000 to it . This might be not sufficient to 
cover all related costs.  
I recommend reviewing the provision  
71.  In view of the prospective monthly payments from 2017 onwards I recommend reviewing 
whether more funds have to be allocated to t his provision.  
Untaken annual leave/ Overtime  
72.  The financial statements of the WTO include as "Employee benefits liabilities " as at 
31 December  2016 a position "Untaken annual leave " with an amount of CHF 8,725,000 . This 
position includes the accrued untaken  annual leave by permanent and temporary staff with an 
amount of CHF 8,608,000 as well as the accrued overtime by permanent and temporary staff with 
an amount of CHF 117,000 (1,438 hours) . For more transparent and meaningful financial 
statements WTO shall calculate and identify all employee benefit liabilities in detail regarding their 
different entitlement and/or justification.  
Recommendation : Separation of "Overtime " 
73.  I recommend that WTO stat e the positions "Untaken annual leave " and "Overtime " separately  
and explain the number of considered days/hours and the calculation of the liabilities comparing 
the relevant data of the previous financial year in the notes attached.  WT/BFA/W/421  
 
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  Non-Current Liabilities  
Loan  
WTO received an interest -free loan of CHF  60 million  
74.  The WTO received a CHF  60 million loan from the Swiss authorities to finance renovation work 
on its headquarters (CHF  20 million for the south and north courtyards and another CHF  40 million 
for the new administrative building).  
The annual repayment is CHF  1.2 million ; the residual debt as at  31.12.2016 is 
CHF 55.2 million  
75.  The loan is interest -free; its term is 50 years . WTO started repayment in 2013 with 
CHF 1.2 million (1/50 of CHF  60 million) ; in 2016, WTO repaid another CHF  1.2 million. T he total 
of the res idual debt as at 31  December  2016 is CHF  55.2 million.  
Pension Benefits  
Pension b enefits total CHF  982.0  million  
76.  The WTO Pension Plan is a defined benefit plan . The value of its commitments according to 
IPSAS amounts to CHF  982.0  million as at 31  December  2016 (2015 : CHF 855.6  million).  
Discount rate as a n essential assumption is 2.25 % 
77.  The key actuarial assumption is 2.25 % for the discount rate for pension benefit obligations . 
The expected long -term rate of return on plan assets changed to 2.75 %, assumption  for inflation 
is 0.60 %. 
ASHI  
ASHI total CHF  110.9  million  
78.  The After Service Health Insurance (ASHI) benefits are calculated, just like the pension 
liability, by consulting actuaries . At the end of 2016, the liability total led CHF  110.9  million 
(2015 : CHF 245.5  million).  
Actuarial g ain in 2016 : CHF 147.8  million  
79.  For ASHI WTO shows in the financial statements as of 31  Decem ber 2016 a net liability of 
CHF 110,932,000 as "Employee benefits " (note 14) . This liability was calculated by a consulting 
actuary based  on WTO edited personnel data and past payment experience.  
In 2017 WTO changed the responsible consulting actuary for ASHI . The current actuarial valuation 
for the ASHI obligation as at 31  December  2016 was provided by Ernst & Young Actuary Counsel, 
Paris on 26  April 2017. Compared to the net liability as of 31  December  2015 the obligation 
decreased from CHF 245,531,000 to CHF 110,932,000 . The huge decrease mainly results from a 
unique actuarial gain of CHF 147,778,000 . The actuarial gain on the ASHI obliga tion due to a 
change of assumptions is mainly explained by:  
 
 the new health insurance contract with the Allianz Company, starting on 1 January  2017. 
The main impact due to the new contract is the decrease of the total monthly 
contributions (CHF 550 instead  of CHF 621 before);  
 the change in the medical inflation rate . The new actuary did not apply a medical 
inflation scale by age like the previous consulting actuary;  
 WT/BFA/W/421  
 
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  The ASHI obligation as of 31  December  2016 is reflecting the WTO Secretariat strategy for 
managing health insurance liabilities from December  2016. The ASHI obligation (proportion by 
WTO as employer) currently is not funded by the Member States . The yearly contributions by the 
WTO are paid from the regular budget "pay as you go ". 
 
Net assets (to tal) 
Net assets/equity of th e period is CHF  (404.9)  million  
80.  Considering all assets as at 31  December  2016 (CHF  822.3  million) and all liabilities 
(CHF 1227.2  million) there is a negative total net assets/equity of CHF 404.9  million (2015 : 
CHF -454.5  millio n). This is mainly due to the inclusion of the pension and ASHI liabilities in the 
financial statements and their valuation according to IPSAS . In particular the pension liability will 
be offset by future contributions and return on investment income.  
3.3.2   Statement of Financial Performance  
Revenue and Expenses  
The table below shows comparative  figures of 2014, 2015 and 2016  
81.  The IPSAS equivalents of income and expenditure are revenue and expenses (as shown in the 
Statement of Financial Performance) . The table pr esents the figures for 2014, 2015 and 2016.  
Table 2 – Statement of Financial Performance as at 3 1 December  2016*  
(In million  CHF) 
 2016  2015  2014  
Revenue     
Contributions / Members  195.5  195.6  195.6  
Contributions / Observers  0.6 0.7 0.7 
Voluntary contr ibutions to trust funds  19.8 20.5 21.2 
Revenue from publications  0.6 0.7 0.3 
Other revenue  1.1 2.8 0.6 
Extraordinary revenue  - - 2.5 
Pension Plan revenues  9.6 19.2 20.5 
Total Revenue  227.2  239.4  241.7  
    
Expenses     
Staff expenditure  (133.5)  (134. 7) (129.5)  
Actuarial cost for ASHI  (13.2)  (14.8)  (11.5)  
Actuarial cost for pension  (26.4)  (18.8)  (33.8)  
Temporary Assistance  (22.9)  (20.6)  (20.6)  
Supplies /other Service Costs  (15.5)  (16.3)  (14.7)  
Travel & Hospitality  (12.6)  (12.8)  (12.3)  
Implementin g Partners  (4.6) (4.7) (5.6) 
Contribution to ITC  (18.8)  (18.5)  (18.5)  
Ministerial Conference Operating Fund (variation)  (0.5) 0.6 (0.6) 
Appellate Body Operation Fund (variation)  (0.4) (0.3) (0.1) 
Depreciation  (5.7) (6.3) (5.5) 
Provision for contributi ons in arrears  (1.4) 0.9 (0.03)  
Depreciation of provision for right of use - CWR - 0.6 (11.3)  0.6 
Financing Costs  (0.18)  (0.08)  (0.04)  
Write off and previous year adjustments  0 (1.2) 0 
Loss on foreign exchange transactions  (0.5) 0.3 0.3 
Total Expenses  (255.5)  (246.0)  (251.9)  
    
Surplus (deficit) for the Period  (28.2)  (6.6)  (10.2)  
 
Source : WTO Financial Statements 2016 and 2015 ; *(Differences due to rounding).  WT/BFA/W/421  
 
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  Revenue  
Total revenue amoun ts to CHF  227.2  million  
82.  Revenue at year -end total led CHF  227.2  million (2015 : CHF 239.4  million).  
Contributions in 2016 total CHF  196.1  million  
83.  The most significant revenue item are contributions from Members and Observers amounting 
to CHF  196.1  million (CHF  195.5 + 0.6  million ). 
Voluntary contributions on trust f unds amount to CHF  19.8 million  
84.  Voluntary contributions on trust funds decreased from CHF 20.5  million in 2015 by 
CHF 0.7 million to CHF  19.8 million in 2016.  
Expenses  
Total expenses amount  to CHF  255.5  million  
85.  Total expenses as at 31  December  2016 are CHF  255.5 million (2015 : CHF 246 million).  
Staff expenditures of CHF  173.1  million  represent more than two thirds  
86.  More than two thirds of the expenses (68 %) are chiefly due to staff expenditures (salaries, 
annual leave, pension, health insurance among others) wi th a total of CHF  173.1  million 
(2015 : CHF 168.3  million).  
More details concerning staff expenditur e see chapter performance audit  
87.  As announced last year, this year my team made a special analysis concerning staff 
expenditure, especially termination indemn ities. Please find more details in the chapter 4.3 
Performance Audit - termination indemnities.  
In 2016 expenses for ASHI amount to CHF  13.2 million and for pension CHF  26.4 million 
88.  The expenditures for ASHI (CHF  13.2 million) and pension (CHF  26.4 million ) are in the FS of 
2016 explained in note 19 and in table 62.  
Expenditure for temporary assistance amounts to CHF  22.9 million  
89.  Another important item within expenses is temporary assistance with an amount of 
CHF 22.9 million (2015 : CHF 20.6 million).  
WTO 's contributi on to the ITC : CHF 18.8 million  
90.  The WTO's  contribution to the International Trade Centre (ITC) is another significant expense 
which, as at 31  December  2016, amounts to CHF  18.8 million, an increase of CHF 0.3  million . 
Net result/surplus (deficit ) for the period  
Net result (deficit) for the period  amounts to CHF  (28.2)  million  
91.  The net result (deficit) for the period 2016 is CHF  (28.2)  million  compared to CHF  (6.6) million  
in 2015 and after CHF  (10.2)  million  in 2014.  
 WT/BFA/W/421  
 
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  4  PERFORMANCE AUDIT  
4.1  Informatio n Confidentiality  
Focus and objectives  
Audit Scope and Audit Methodology  
92.  My staff and I continued auditing the handling of information of the WTO Secretariat as part of 
the performance audit . Primarily we looked into the Secretariat 's procedure regarding i nformation 
confidentiality . Therefore my staff observed the efforts made by the Secretariat to ensure that 
sensitive data is protected in an adequate way.  
To get an overview, we analysed  applicable documents and retrieved relevant information in the 
WTO in formation systems . Furthermore my staff conducted interviews with Management and 
expert staff and inspected some relevant premises . In addition we r aised detailed questions in 
two information requests which were responded by the Secretariat.  
 
Audit Objecti ve 
93.  The main objective of the audit was to assess whether adequate measures have been taken to 
ensure the confidentiality of sensitive data . I applied relevant internationally accepted 
management standards as criteria of my audit.  
Previous Audit Results  
Previous findings and response of the Secretariat  
94.  In my report for the year 2015 we stated that the documentation of the relevant processes 
was not adequate to counteract the risks for confidentiality of data and information and that the 
handling of confident ial information was not standardized within WTO . I recommended providing 
the WTO staff with extended guidelines and appropriate procedures on how to deal with 
confidential information.  
The Secretariat agreed with the recommendation . It announced to provide  an online training for all 
WTO staff and to draft new guidelines, e.g. the "Information Classification Policy " and the 
corresponding "Information Classification Standard " which will be available on the intranet after 
approval . Furthermore the Secretariat pointed out that the results of the current "Inventory of Key 
Information Assets " would define further practical application measures of the policy . In addition, 
technical tools to support the policy and application by the users were planned for implementa tion 
(Public Key Infrastructure project approved for 2017) and study (Data Labelling /Data Leakage 
Prevention systems to be evaluated in 2017).  
 
Current status of the implementation o f the announced measures  
95.  Making the announced Information Security Awarene ss online training available for all users is 
scheduled for this year.  
The announced "Information Classification Policy " and the corresponding "Information 
Classification Standard " have not been implemented yet as they still have to be reviewed and 
approve d by the Joint Advisory Committee.  
 
The announced "Inventory of Key Informa tion Assets " was still ongoing . 
 
The planned technical tools were not ready for implementation as the further approach was 
depending on the development of a recently started migrati on project.  WT/BFA/W/421  
 
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  General Principles on Information Confidentiality  
Importance of information confidentiality for the WTO  
96.  Taking into account the WTO 's role as an independent international institution and the related 
value of an excellent reputation of the insti tution, the importance of information confidentiality for 
the WTO is very high.  
Unauthorized disclosure of confidential information could have negative consequences for the 
WTO, such as a loss of confidence among the Members as well as damage to reputation  in the 
public.  
 
General principles for the protection of classified information  
97.  Classified information (e.g. information classified as "confidential ") may be consulted only by 
individuals needing to do so in the course of their duties . No one may be provi ded with classified 
material unless and until those duties so require ( "need-to-know" principle).  
State of the art measures have to be taken to protect classified information against any risk of loss 
of confidentiality, availability or integrity . The relat ing measures should be documented 
adequately.  
 
Basic measures on information confidentiality  
98.  To reach an appropriate protection of confidential information, measures have to be taken in 
the areas of  
 Personnel, e.g. clarification of responsibilities, reliab ility check of staff, ensuring 
awareness of staff, training etc.  
 Organization,  e.g. verification of requirements with regard to confidentiality, 
implementation and documentation of rules, guidelines, procedures concerning 
classification, labelling, handlin g of sensitive information etc.  
 Physical Security,  e.g. access controls and physical protection of storage rooms, use of 
appropriate equipment, physical controls of confidential material etc.  
 IT, e.g. implementation of separated, secured storage areas and advanced access 
controls, implementation of adequate logging functions, monitoring of log files, physical 
and logical protection of communications equipment, etc.  
Current audit findings  
99.  Considering the timeline of the provision of answers and documents by the Secretariat we 
have not been able to give a concluding evaluation of the topic by now . Therefore the following 
paragraphs consider selected parts of the topic . Additional and more detailed studies still have to 
be undertaken.  
Personnel Aspects  
Responsi bilities  
100.  Responsibility for information confidentiality is assigned to different functions respectively 
individual WTO staff members . Beside the policy -making "Information Technology and Security 
Steering Committee " (ITSSC) the manager of the Security and Safety Service is responsible for 
the physical security measures while the information security officer is responsible for IT security 
measures . The final authority resides with the DG who is advised by the Chairman of the ITSSC, 
based on the work of the I TSSC.  WT/BFA/W/421  
 
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  Conclusion  
101.  Responsible Management and staff could declare the particular tasks of the named 
functions/persons so that there seems to be no gap of responsibilities . However, regarding the 
rules and procedures in place (see para.  109) there still remai n some uncertainties particularly 
about the handling of classified physical material in parts of the Secretariat.  
Recommendation  
102.  I suggest opening a discussion in the Secretariat whether it would be helpful to formalize 
how the Secretariat governs general security . There is a need to coordinate the Secretariat 's 
efforts in the area of information confidentiality, especially regarding classified physical material, 
disaster recovery or response to major crisis . This governance should particularly e.g.  
 help to  harmonize rules and procedures;  
 serve as an advisory function to the divisions;  
 safeguard that established rules and instructions are implemented and adopted properly;  
 carry out examinat ions following suspected cases.  
Reliability of staff  
103.  In contrast to g overnmental agencies the WTO is not able to implement and execute security 
clearances regarding its staff or contractors for ensuring their reliability . Criminal background 
checks are only made for contractors engaged in the fields of security, cleaning, c atering and IT . 
Concerning the own staff at present no checks are in place.  
The Secretariat stated that it takes part in a working group with UN agencies . The working group 
is negotiating with Interpol to have access to their data . The final response of In terpol to provide 
the data for criminal background checks is still pending . The WTO Security and Safety Service has 
proposed to conduct a background check for potential new staff before finalizing their recruitment 
when the regarding data of Interpol would  be available.  
 
Conclusion  
104.  I welcome the approach to enhance the procedures of recruitment by implementing 
elements of checking the reliability of potential WTO staff . As the requirement of background 
checks is shared by UN agencies we also welcome the com mon approach.  
Recommendation  
105.  I encourage the WTO to proceed the chosen way and to keep the contact with the UN 
agencies to enhance procedures and to develop new ideas concerning this matter.  
I suggest broadening the approach of background checks in future also to the permanent and 
temporary staff.  
 
Organizational Aspects  
Organizational units dealing with confidential information  
106.  Based on our information request on information confidentiality to list all organizational units 
in the WTO working with confident ial information, we got the response that "each division deals 
with confident information ". In a meeting with WTO Management my team was informed that - 
among others - the units concerned are the following:  
 Office of the Director -General;  
 Appellate Body Se cretariat;  
 Office of Internal Oversight ; 
 Legal Affairs Division;  
 Rules D ivision;  
 Administratio n and General Services Division;  WT/BFA/W/421  
 
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   Human Resources Division;  
 Accessions Division;  
 Information Technology Solutions Division ; and 
 Languages, Documentation and Inform ation Management Division.  
Requirements of the WTO divisions wit h regard to information confidentiality  
107.  To get an overview of requirements on information respectively IT Security the IT Security 
Officer of the WTO initiated an "Inventory of Key Information  Assets ". All organizational units were 
asked to indicate their needs with regard to availability, integrity and also confidentiality of the 
information they are dealing with . This evaluation is still pending due to capacity reasons.  
Conclusion  
108.  I welcome t he approach of the Secretariat performing the "Inventory of Key Information 
Assets " to get a more substantial overview of existing requirements concerning information 
confidentiality . An evaluation of the responses would probably also result in a clearer k nowledge 
base regarding the units that are tasked with confidential information - the results might help to 
clarify the partly uncertain information with regard to some divisions whether they are involved in 
the handling of confidential information or not.  
Recommendation  
109.  I encourage the WTO to complete the mentioned inventory as soon as possible . I suggest to 
strengthen the capacity of the responsible unit, e.g. by temporary support, to achieve this and 
other aims in a more timely manner . The results should  be taken as a basis to establish a 
transparent landscape of the needs of the Secretariat concerning information confidentiality.  
Standards, rules, guidelines, procedures  
110.  Based on a question of our information request to provide us with all relevant standa rds, 
rules, guidelines, procedures related to information confidentiality in the WTO, the Secretariat 
stated in a first response that there were no other documents except the drafts of the "Information 
Classification Policy " and the corresponding "Informat ion Classification Standard ". During the 
ongoing studies we saw some other documents concerning information confidentiality . Therefore 
we asked in an additional information request, amongst other things, to clarify this topic.  
111.  Summarizing the Secretariat 's response to the additional information request together with 
the results of my team 's research, the existing standards, rules, guidelines, procedures related to 
information confidentiality in the WTO are the following:  
General requirements regarding the c onfidentiality of information in the WTO are documented in 
the 
 
 "WTO Staff Regulations " (e.g. Regulation 1.7:  "Staff members shall exercise the utmost 
discretion in regard to all matters of official business. ") 
 Standards of Conduct (Annex A of the staff re gulations)  
 "WTO Short Term Staff Rules " (e.g. Rule ST01.7:  "Staff members shall exercise the 
utmost discretion in regard to all matters of official business ." Rule ST01.8 : "… In 
particular, when requested to assist in the dispute settlement mechanism staff  members 
shall respect the continuous disclosure obligations detailed in the WTO standards of 
conduct. ") 
 "Policy  on the Security Classification of Electronic Documents and Data" (OFFICE (08)/15 
as of 2 5 March  2008). This policy addresses the need to regula te the access to electronic 
documents and other data consistently across the organization . It also defines a general 
classification scheme for all documents and data that are stored and/or processed in 
electronic form, in order to allow for the application  of appropriate safeguards and the 
consistent handling of sensitive data across the organization.  WT/BFA/W/421  
 
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  This policy shall be replaced by a new  
 
 "Information Confidentiality Classification Policy ". The policy will cover all information 
held in the Secretariat as defined by the Information Security Policy, regardless of origin 
or format except for official WTO documents . It defines general principles for the 
classification of information and the responsibilities in regard to the implementation of 
the policy.  
This f uture policy shall be supplemented by a new  
 
 "Information Classification Standard ", where some standards in regard to labelling, 
storage, transmission, audit and monitoring will be defined.  
Special requirements regarding the handling of confidential inform ation in the area of Dispute 
Settlement (Appellate Body Secretariat [ABS], Legal Affairs Division [LAD], Rules Division) are 
documented in the  
 
 "Rules of Conduct for the understanding on rules and procedures governing the 
settlement disputes " (WT/DSB/RC/1 as of 11 . December  1996) ( "DSU Rules of 
Conduct "). 
 "Extract from a LAD Memorandum regarding Rules of Conduct ". This document contains 
explanations of relevant parts of staff regulations, staff rules and the DSU Rules of 
Conduct.  
 "Internal procedures on con fidential information and physical evidence in LAD panel and 
arbitration proceedings " (as of 11  April 2013). This document describes procedures that 
"serve to ensure effective protection for physical evidence and confidential information, 
in particular bus iness and strictly confidential information (BCI/SCI), in WTO panel and 
arbitration proceedings serviced by the Legal Affairs Division (LAD) ". 
 "Internal procedures on confidential information in rules division panel proceedings " (as 
of 18  September  2013). This document describes procedures that "serve to ensure 
effective protection of physical evidence and confidential information in WTO panels 
serviced by the Rules Division, and apply to all persons who are part of the WTO 
Secretariat team assisting a Rule s panel (including translators assisting the dispute) ". 
 "Protection of Information (BCI) in the DS Registry ". This document describes "elements 
presently in place to ensure security of physical business -confidential information (BCI) 
and Strictly Confident ial Information (SCI) " in the DS Registry.  
 "Security Measures Currently In Place " (in ABS) . This document contains a list of 
physical security measures in regard to access protection and interception protection in 
the Appellate Body Secretariat . It also me ntions recommendations of the Security and 
Safety Service on future action.  
 Specialized additional "Procedural Rulings " for specified disputes dealt in the Appellate 
Body, e.g.  
o  "European Communities and Certain Member States – Measures Affecting Trade in 
Large Civil Aircraft / AB -2010-1 - Procedural Ruling ", 
o  "United States – Anti-Dumping and Countervailing Measures on Large Residential 
Washers from Korea / AB -2016-2 – Procedural Ruling " 
that contain, amongst others, additional procedures to protect sensit ive information.  
 
Conclusion  
112.  Considering the available documents we noticed that in the area of Dispute Settlement a 
number of documents exists that include specific and practical measures on how to deal with WT/BFA/W/421  
 
- 24 - 
 
  confident information in the involved units . The documents show also a high level of awareness 
regarding information confidentiality in this area.  
I welcome this approach although some of the documents have partly a very high level of detail 
that seems to be unnecessary . I am also of the opinion that t he existing documents could be 
harmonized so that comparable requirements are handled in the same way . This could help staff to 
work faster and more effectively in this sensitive area.  
 
Regarding the situation beside the area of Dispute Settlement we notic ed that apart from some 
general declarations in the staff regulation documents there is only a future policy with a 
supplementary internal standard that deals with the important topic of information confidentiality.  
 
Although I welcome the future standard as a step in the right direction by defining principles of 
classification of information and giving some procedural indications with its internal standard, 
there is still room for improvement . In particular I am of the opinion that more detailed procedures  
for the practical dealing with confident information should be made available to the staff . Clear 
instructions should be given e.g. regarding classified physical material.  
 
Recommendation  
113.   I encourage the responsible of the Secretariat to discuss in which  way the rules and 
procedures in the area of Dispute Settlement could be harmonized and possibly simplified.  
I recommend providing such procedures, considering the results of the "Inventory of Key 
Information Assets " and taking into account the already exi sting procedures in the area of Dispute 
Settlement . In this respect I repeat my not yet implemented recommendation of the previous 
report to set up extended guidelines (see para. 92/93) . I also recommend accompanying the 
implementation of procedures with s uitable training to increase the awareness of staff concerning 
information confidentiality throughout WTO.  
 
As a result of efforts in this regard followed by applying well -defined appropriate procedures, the 
Secretariat and its staff could get a thorough u nderstanding of the importance of information 
confidentiality and finally an appropriate level of protection of its sensitive data.  
 
Aspects of Physical Security  
Examination of physical security  
114.  In the scope of examinin g physical security , my team, in a fi rst step, reviewed the process of 
implementing security measures and visited some secured premises of the WTO together with the 
Security and Safety Service (SSS).  
Process of implementation of security measures  
115.  A number of organizational units required in r ecent years security equipment or the 
establishment of security areas or security rooms for the protection of their confidential material . 
In doing so, each unit described verbally their needs ; the required measures were implemented by 
SSS in the way as it  deemed necessary.  
There was neither a documentation of the unit 's requests nor a documentation of the 
decision -making process regarding the chosen solution . There were also no relevant standards 
taken into account to achieve a best practice solution . The implemented security technology 
resulted from the current experience with the already used equipment by SSS.  
 
The Secretariat stated that SSS will reassess this approach once the new policies on information 
security and confidentiality have been issued.  
 
Conclusion  
116.  The current approach is not suitable regarding the importance of an appropriate protection of 
confidential material . An undocumented process that does not consider relevant standards might WT/BFA/W/421  
 
- 25 - 
 
  lead to excessive expenditures and/or inefficient solutio ns. Therefore I welcome the plan to 
reassess the described procedure.  
Recommendation  
117.  Executing the mentioned reassessment I recommend initially  
 define a clear process with designation of the involved functions respectively individual 
WTO staff members;  
 set up comparable criteria of protection;  
 Take relevant standards into account ( e.g. EN 1047 regarding fire resistance, 
EN 1627/1630 regarding anti -burglar security, etc.);  
 document all relevant s teps of the particular measures;  
 the process of implementing se curity measures should also consider existing and future 
policies regarding security, business continuity and disaster recovery.  
4.2  Organization of Sessions of the Ministerial Conference  
Focus and objectives  
Audit focus  
118.  The audit focused on the Secretariat 's activities, its organizational structure, procedures and 
existing regulations regarding the organization of sessions of the Ministerial Conference . The 
auditors analy sed the existing rules, guidelines and other relevant documentation, files and 
records hel d by the Secretariat . The auditors conducted interviews with WTO staff members of the 
involved divisions . The fieldwork was carried out in April and May 2017. 
Audit objective  
119.  The main objective of the audit was to evaluate the existing approach to organize  sessions of 
the Ministerial Conference in the Secretariat.  
Decision on date and venue  of sessions  
Ministerial Conference as supreme decision -making  body  
120.  The Ministerial Conference is the supreme decision -making body of the WTO and usually 
meets in session s every two years . The Ministerial Conference brings together all Members of 
WTO. It can take decisions on all matters under any of the multilateral trade agreements.  
Sessions of the Ministerial Conference  
121.  Since 1996, ten sessions of the Ministerial Confer ence have been held in different Member 
States . Three of the Ministerial Conference sessions took place in Geneva (in 1998, 2009 and 
2011) . The Tenth Session of the Ministerial Conference was held in Nairobi in December  2015. The 
Eleventh Session of the Mi nisterial Conference will be held in Buenos Aires in December  2017. 
Rules of Procedure for Ministerial Conferences  
122.  According to the Rules of Procedure for Ministerial Conferences the date of each regular 
session shall be fixed by the Ministerial Conference  at the previous session.  WT/BFA/W/421  
 
- 26 - 
 
  In practice, General Council takes decision on date and venue of sessions  
123.  In practice up to now, the Ministerial Conference mandated the General Council to hold 
consultations and to take a decision on the date and venue of its nex t session . The General Council 
is the WTO 's highest level decision -making body in Geneva, meeting regularly to carry out the 
functions of the WTO . If Member States come forward with proposals to host the Ministerial 
Conference, the General Council consults  on those specific offers.  
Decision on Eleventh Session of the Ministerial Conference  
124.  For the Eleventh Session of the Ministerial Conference the General Council 's Chairman 
started the relevant consultations in May 2016 involving all Member States . The Chai rman 
informed the Member States that it would be desirable for the General Council to take a decision in 
July 2016 to allow sufficient time for the necessary logistical preparations for the Eleventh Session 
of the Ministerial Conference . The General Counci l decided to hold the Eleventh Session of the 
Ministerial Conference in Buenos Aires at its meeting in October  2016. 
Secretariat 's duty to organize sessions of the Ministerial Conference  
125.  Following the decision on date and venue, it is one of the Secretaria t's main duties to 
organize the session of the Ministerial Conference.  
Biannual budget for Ministeria l Conference is CHF  1.2 million  
126.  If the offer of a Member State to host a session of the Ministerial Conference is accepted by 
the decision -making body the Member State is required to cover all expenses of the Ministerial 
Conference exceeding CHF  1.2 million (CHF  600,000 annually) which are allocated to fund sessions 
of the Ministerial Conference.  
Expenses for Ministerial Conferences hel d in Geneva are CHF  1.8 million  
127.  In the event that there is no Member State that offers to host a session of the Ministerial 
Conference or such offers are not accepted by the decision -making body, the session is held in 
Geneva . The total expenses of the Geneva sessions of the Mi nisterial Conference amounted to 
CHF 1.8 million (i.e. in 2009 and 2011).  
Conclusion  
128.  I acknowledge that it is under the genuine authority of the Ministerial Conference to decide 
on the date of the next session of the Ministerial Conference or to give manda te on this matter to 
the General Council . Given this, we stated the potential risk that a delay in the decision process 
may affect a sufficient time frame for organizing the following session of the Ministerial 
Conference . I would like to point out that it  is important for the Secretariat to rely on a sufficient 
time frame in order to prepare arrangements with the host Member State or to organize the 
session of the Ministerial Conference in Geneva . A sufficient time frame shall also take into account 
the al location of additional funding needed if a session is to be held in Geneva.  
Recommendation  
129.  I recommend that the Secretariat assess the minimum time frame it considers to be 
sufficient to organize sessions of the Ministerial Conference . The Secretariat may consider 
addressing that the Ministerial Conference takes into consideration the existing rules of procedures 
regarding the decision on date and venue of its following sessions and the need of a sufficient time 
frame for the Secretariat to organize session s and to allocate additional funding if needed.  
Guidelines on organizing sessions  
Secretariat 's roles and responsibilities  
130.  The Secretariat regularly sets up a Task Force to co -ordinate the Secretariat 's work for the 
Ministerial Conference . Other staff may be called upon to assist the Task Force as needed . The WT/BFA/W/421  
 
- 27 - 
 
  Task Force chair determines, in coordination with Directors concerned, a list indicating responsible 
staff and allocation of divisional responsibilities . In 2017 the Task Force drafted a list of roles and 
responsibilities with an organizational chart and breakdown of the preparation tasks.  
Ministerial Conference Handbook for prospective hosts  
131.  Based on their lessons learned, the Secretariat issued a Ministerial Conference Handbook in 
2016. The Handbook i s intended to provide guidance to potential hosts and outlines in general 
terms the process of selecting venues for Ministerial Conferences, basic considerations and 
requirements.  
Lessons learned report  
132.  In 2016, the Secretariat assessed the Tenth Session o f the Ministerial Conference and 
identified lessons learned on a variety of aspects that might be helpful in organizing future 
sessions of the Ministerial Conference . The Secretariat stated in its lessons learned report on the 
logistics that each session o f the Ministerial Conference is different and poses its own distinctive 
set of challenges . The Secretariat concluded that project management and the development of a 
project plan are essential and play an indispensable role in ensuring that each part of pr oject 
preparation is handled coherently.  
Risk register for Ministerial Conferences  
133.  In 2013, the Secretariat drafted a risk register and proposed mitigating measures related to 
sessions of the Ministerial Conference . The Secretariat stated that it has not i ssued the draft risk 
register or continuously followed up the project risk register since then.  
Secretariat to establish guidelines on organizing Ministerial Conferences  
134.  The Secretariat stated that it considers issuing a comprehensive internal guideline on  
organizing Ministerial Conferences . It expects the guideline to be issued in 2018.  
Conclusion  
135.  I acknowledge the efforts the Secretariat has made to improve project management of 
organizing sessions of the Ministerial Conference . In this regard we consider  the Handbook for 
prospective hosts and the lessons learned report as important inputs to consolidate internal 
knowledge and to streamline project management and project organization . I agree that each 
session of the Ministerial Conference poses different challenges . However, project management 
and project organization comprise a set of elements that does not change each session . Therefore 
I encourage the Secretariat to continue on consolidating existing knowledge and issuing the 
anticipated guidelines . The existing draft project risk register should be incorporated during that 
process.  
Recommendation  
136.  I recommend that the Secretariat continue its efforts on issuing a guideline on organizing 
Ministerial Conferences . I further recommend that the Secretariat in corporate and follow up risks 
related to the organization of sessions of the Ministerial Conference in its risk register on a project 
based approach.  
Project planning  
Major effort to organize Ministerial Conference sessions  
137.  For the Eleventh Session of the Ministerial Conference to be held in Buenos Aires in 
December  2017, the Director -General informed staff on the composition of the Task Force in 
May 2017. The Director -General pointed out that the Ministerial Conference was an important 
event and that it wo uld call for a major effort from the Secretariat in all areas and at all levels.  WT/BFA/W/421  
 
- 28 - 
 
  Secretariat has no knowledge on involved FTE  
138.  The Secretariat has not calculated the Full Time Equivalent (FTE) of Secretariat staff involved 
in the organization of sessions of  the Ministerial Conference . The Secretariat stated that it would 
be impossible to do it . The workload of every staff member involve d would heavily depend on 
inter alia the selected venue, the lead time for preparatory activities, the effectiveness of the 
host's task force and local employees, the substance of negotiations, or the number of colleagues 
that are authorized to travel.  
Other projects may suffer substantial delays  
139.  The auditors have recognized some of the Secretariat 's projects ‒ other than organ izing 
sessions of the Ministerial Conference – that suffered substantial delays . The delays were 
specifically attributed to extraordinary workloads to organize sessions of the Ministerial Conference 
(e.g. delays in issuing important policies or in planning  renovation projects) . In some areas the 
auditors examined gaps in the backup situation of involved staff due to the high workload and 
extended duty travels related to organizing Ministerial Conference sessions.  
Conclusion  
140.  I acknowledge that organizing Min isterial Conference sessions is one of the most important 
duties of the Secretariat . We agree on the Secretariat 's opinion that a calculation of FTE depends 
on a variety of aspects . However, conducting an examination on the scope of FTE spent on the 
organi zation of Ministerial Conference sessions, the Secretariat could better predict the impact on 
the involved Secretariat 's staff "common " workload . Additionally, the examination 's result may 
lead to a better allocation of the WTO staff resources . Furthermore  the auditors are of the opinion 
that the project "Ministerial Conference " internally appears as an additional workload for the 
involved Secretariat 's staff to cover – even if MC's are regular events and should be part of the 
normal workload of the staff . If there is no compensation or sufficient backup the duration of 
projects related to the "common " workload will be consequently affected.  
Recommendation  
141.  I recommend that the Secretariat assess the workload related to the organization of 
Ministerial Confere nce sessions and its impact to the common workload of the involved staff 
members . I recommend that the Secretariat additionally consider calculating more realistic time 
frames for other projects of involved staff members.  
4.3  Termination indemnities  
Focus and objectives  
Audit focus  
142.  In my audit report for 2015 I noted that HR processes and special topics would be an issue 
in the audit of FY 2016 . This time my team focused on termination indemnities.  
Audit objective  
143.  The main objective of the audit was to evaluate  the existing approach and to analyse  the 
underlying processes.  
Increase of termination indemnities  
In 2014 : 5 cases of termination indemnities ; in 2015 19 case s and in 2016 another 
16 cases  
144.  In my 2014 audit, my team identified five cases of te rmination in demnities paid 
(CHF 554,000), two thereof with substantial amounts (CHF 255,000 and CHF 186,000) . We had 
been told that those were particular cases and negotiated termination indemnities would not incur 
very often.  WT/BFA/W/421  
 
- 29 - 
 
  In 2016 : all 16 cases totalling CHF 3.0  million  
145.  In my audit for the financial year 2015 there were even more – 19 – cases with a total 
volume of CHF  2.6 million . Today, the statement of financial performance for 2016 contains 
termination indemnities of CHF 3.0  million , allocated to 16 cases.  
 Reason for indemnity  2016  2015  2014  
(a) Early retirement for the purpose 
of redeployment of post to legal 
division  7 cases, totalling 
CHF 1.3 million  12 cases, totalling 
CHF 1.8  million  - 
(b) Mutually agreed termination 
due to behavioural reasons / 
interper sonal issues;  other 
separation desirable for WTO 
according to staff regulation 
10.3( c) 7 cases, totalling 
CHF 1.4 million  2 cases, totalling 
CHF 0.3 million  2 cases, totalling 
CHF 0.5 million  
(c) Separation due to health 
reasons according to staff 
regulat ion 10.3 (b) 2 cases, totalling 
CHF 0.3  million  1 case, totalling 
CHF 0.9 million  - 
(d) Abolition of the post  - 3 cases, totalling 
CHF 0.4 million  - 
(e) Other  - 1 case, totalling CHF 
0.005  million  3 cases, totalling 
CHF 0.1 million  
 
Early retirement for redeployment of posts  
19 cases of ea rly retirement for redeployment  
146.  Regarding this category of indemnity reasons the HR department explained that WTO had 
committed itself to redeploying significant resources to divisions dealing with dispute settlement . 
This became more and more urgent as some staff members had complained about the time 
required for their cases to be heard.  
147.  HR states that due to the zero nominal growth policy of WTO it was neither possible to 
create new posts from the regular budget nor pra ctical to wait for vacancies to occur through 
retirements . A decision was made to explore the possibility of identifying candidates for early 
retirement . Directors agreed to give up the respective posts in order to reallocate them to the 
dispute settlement  divisions.  
Mutually agreed termination due to behavioural reasons  
11 cases of mutually agreed termin ation due to behavioural  reasons  
148.  Indemnities were paid in 11 cases based on mutually agree d terminations due to behavioural 
reasons, interpersonal issues o r other separation desirable for WTO according to staff regulation 
10.3(c). 
This category of termination indemnity payments comprises, inter alia , the following cases:  
 
 A person had been dismissed due to serious misconduct . This person then appealed the 
decision to the ILO Administrative Tribunal (ILOAT) which confirmed the allegation of 
serious misconduct . However, ILOAT also considered that WTO had not sufficiently taken 
into account the person 's medical condition as a possible mitigating factor . After 
weighing risks and chances WTO opted for a settlement, applied retroactively on the 
date of the original separation.  
 One person was on long -term sick leave (275 days over four years) . Due to a potential 
remaining on long -term sick leave for further years and  the person 's inability to 
successfully integrate in other positions within WTO a voluntary agreed separation was 
proposed to the person in the interest of both parties.  WT/BFA/W/421  
 
- 30 - 
 
   One person was separated following the recommendation of the Office of Internal 
Oversi ght after an investigation on this staff member.  
 The separation from two other persons in 2014 and 2015 had its origin in "interpersonal 
issues ". One of these persons was even granted an additional 50 % on the indemnity, 
which thus comprised 18 instead of 1 2 monthly salaries (plus other payments).  
 WTO granted four persons a mutually agreed terminatio n according to staff 
regulation  10.3(c) based on their long -term sick leave, whereas WTO did not classify 
these cases as separation due to health reasons accordi ng to staff regulation 10.3 (b). 
Conclusion  
149.  I generally understand and accept the WTO internal decision -making process and weighing 
up of chances and risks.  
Recommendation  
150.  However, I recommend considering whether cases like the above could be handled more 
restrictively in terms of indemnity payments . This includes the application of all disciplinary 
measures in preparation of a notice, in particular written warnings . Where it is known that WTO is 
likely to pay indemnities to avoid court procedures this could  create incentives for inappropriate 
working attitude . I suggest that OIO analy ses the termination indemnity policy, in particular 
regarding the above cases.  
Cases of exceptional circumstances with additional payment in lieu of notice  
In exceptional circum stances : payment in lieu of notice is possible.  
151.  According to staff regulation 10.5 and staff rule 111.7 a staff member whose contract is 
terminated as above shall be given notice at the latest three months before the date of 
termination . In exceptional cir cumstances payment in lieu of notice may be authorized.  
33 out of 40 cases : exception became the normal case.  
152.  Out of the 40 termination agreement cases in 2014 -2016, 33 persons received such 
payment in lieu of notice . Hence, the exception became the normal  case. 
153.  WTO explained that those three months payments in lieu of notice were mainly offered in 
order to compensate for the short time frame from when the discussions took place and the 
proposed date of separation . Due to budgetary reasons the separations h ad to be effected until the 
end of the respective year.  
Recommendation  
154.  I recommend that separations becoming necessary be planned and initiated earlier in order 
to avoid such payments.  
 WT/BFA/W/421  
 
- 31 - 
 
  5  CASES  OF FRAUD OR SUSPECTE D FRAUD  
No cases of fr aud or suspected frau d detected  
155.  The Secretariat reported that it did not have any information on cases of fraud or suspected 
fraud. During our audit, my team detected no such cases.  
6  ACKNOWLEDGEMENT  
I am grateful for the su pport received during the audit  
156.  I wish to express my ap preciation for the cooperation and assistance extended by the 
Director -General, the Management and staff of the WTO . I appreciate that the Secretariat is 
continuously reviewing and improving the financial statements, thus making the job for me and 
my team easier . I am very grateful for their assistance during the entire external audit process.  WT/BFA/W/421  
 
- 32 - 
 
  LIST OF ABBREVIATION S AND ACRONYMS  
ABS    Appellate Body Secretariat  
ASHI    After Service Health Insurance  
CHF    Swiss Francs  
COBIT    Control Objectives for Inform ation and Related Technology  
CWR    Centre William Rappard  
DDG    Deputy Director -General  
DG    Director -General  
DGO    Office of the Director -General  
EUR    Euro 
FIPOI     Building Foundation for International Organizations  
FM    Facility Management  
FMS    Facility Management Services  
FS    Financial Statements  
FTE    Full Time Equivalent  
GATT     General Agreement on Tariffs and Trade  
GBP    British Pound  
HL    Home Leave  
HRD    Human Resources Division  
IAS    International Accounting Standards  
ILO    International Labour Organization  
ILOAT     ILO Administrative Tribunal  
INTOSAI    International Organization of Supreme Audit Institutions  
IPSAS     International Public Sector Accounting Standards  
IPSASB    International Public Sector Accounting Standards Board  
ISA    International Standards on Auditing  
ISSAI     International Standards for Supreme Audit Institutions  
IT    Information Technology  
ITC    International Trade Centre  
ITIL    IT Infrastructure Library  
ITSSC     Information Technology and Security Steering  Committee  
ITSD    Information Technology Solutions Division  
ITSP    Information Technology Security Policy  
LAD    Legal Affairs Division  
OIA    Office of Internal Audit  
OIO    Office of Internal Oversight  
PM    Procurement Manual  
PMI    Project Management  Institute  
SSS    Safety and Security Services  
SNB    Swiss National Bank  
UBS    Union Bank of Switzerland  
UN    United Nations  
US    United States  
USD    United States Dollar  
VAT    Value Added Tax  
WCF     Working Capital Fund  
WTO    World Trade Organizat ion  
  WT/BFA/W/421  
 
- 33 - ANNEX / 
LIST O F RECOMMENDATIONS  
No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
1 Uncollectible 
contributions  3.2 / 2014  Pursuant to Regulation 14 in the WTO Financial 
Regulations Members and Observers with arre ars shall 
be subject to Administrative Measures . Furthermore, 
there might be (inactive) Members without a payment 
plan but with long -term outstanding contributions (e.g. 
states no longer in existence) . As required by IPSAS 
contributions uncollectible shall  be completely written 
off. This is not a standard practice within WTO.  
 
I recommend developing a practice or procedure and 
deciding how to deal with uncollectible contributions 
(e.g. in the case of states no longer in existence like 
Yugoslavia).  The uncol lectible contributions from the 
Former Yugoslavia were written -off in 2015 
and incorporated in the Audited Financial 
Statements.  done 
2 Accounting 
transactions 
foreign currencies  3.3.1 / 2014  WTO uses the United Nations Operational Exchange 
Rate for accou nting transactions concerning foreign 
currencies . There is no official decision or document 
supporting this practice.  
 
I recommend that the Secretariat ask for an 
authorization and  an official decision to use 
UN Operational Exchange Rate as official accoun ting 
rate for WTO transactions.  The Secretariat accepted the 
recommendation and presented during our 
audit a memorandum concerning this topic 
signed by the DDG.  done  
  WT/BFA/W/421  
 
- 34 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
3 Recoverable US 
taxes  3.3.1 / 2014  Other receivables include recoverable taxes, e.g. fro m 
the United States (US) or Switzerland . Staff members 
of WTO, like those of other international organizations, 
are exempt from income tax . Nevertheless, the US 
requires its citizens and residents to pay tax 
worldwide . The WTO pays estimated tax payments i n 
advance and asks for a reimbursement from the US 
Government based on an agreement between WTO 
and US of 22  December  2000. 
 
I recommend, just like my predecessor the years 
before, pursuing efforts to accelerate the refunding 
procedure and negotiating and agreeing with the US 
Government on a similar reimbursement method 
based on the ILO approach.  Recommendation Accepted  
All past backlog of claims solved, including 
for 2015.  
Only claims for US taxes for 2016 are to be 
reimbursed in 2017, given the one year 
time-lag. done  
4 Short -term 
employee 
benefits  3.3.1 / 2014  I requested respectively suggested several 
adjustments regarding the figures, phrases and 
presentation in the tables of note 14 . In particular, this 
pertained to updated calculation bases and the clarity 
of descriptions of provisions concerning short -term 
employee benefits.  The Secretariat accepted the 
recommendation and will follow the 
suggested indications.  done 
5 Staff 
expenditures  3.3.2 / 2014  For improving transparency I recommended that more  
explanations and more details in Note 19 for expenses, 
especially for staff expenditures, e.g. a table with 
details to the different types of staff expenditures be 
given.  The Secretariat accepted the 
recommendation and included Table 62 in the 
report with  details concerning staff 
expenditures including trust funds.  done 
6 Temporary 
assistance  3.3.2 / 2014  Like for staff expenditures I recommend giving more 
details concerning this item in Note 19.  The Secretariat accepted the 
recommendation and included Ta ble 63 in the 
report with details concerning temporary 
assistance including trust funds.  done  
  WT/BFA/W/421  
 
- 35 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
7 ITC consolidation  3.3.2 / 2014  The ITC is a joint technical cooperation agency of the 
UN and WTO . Originally established in 1964 by the 
General Agreement on Ta riffs and Trade (GATT), ITC 
has operated since 1968 under the joint aegis of GATT 
and the UN . It is operated jointly (as outlined in the 
financial statements of WTO) and therefore - based on 
IPSAS 8 - a jointly controlled entity.  
 
WTO is documenting the ab ove mentioned payment to 
ITC as expenses within the statement of financial 
performance and is not consolidating ITC . According to 
IPSAS 8 ITC is legally a jointly controlled entity ; 
important is only the ability, not the de facto control ; 
therefore WTO has  to consolidate ITC.  
 
Even if actually WTO might have just limited or no 
control, the legal situation still defines ITC as a jointly 
controlled entity and there is no proof or document 
stating any other fact . I recommend that WTO 
negotiate with ITC or with  the UN and clearly define 
the legal situation, especially concerning control . If 
there might be a new contract documenting that ITC is 
just a grant taker without any control from WTO, this 
reservation could be removed and WTO financial 
statements might be  completely in line with IPSAS.  According to new IPSAS standards 35 -37 
consolidation is no longer required by the EA 
(details see Report).  closed  
8 Procurement 
planning  4.1 / 2014  The WTO Secretariat has to ensure that the divisions 
reliably define their needs before allocating the 
divisional budgets . I recommend that WTO specify the 
procedures for needs assessment and the 
requirements of procurement planning . To ensure 
compliance with the regulations and coherence 
between all divisional practices I recomm end that WTO 
define clear responsibilities and establish high level 
managerial approval of the procurement plans.  All PPs have been presented except the ITSD 
which is scheduled by mid -May. done  
  WT/BFA/W/421  
 
- 36 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
9 Requisition of 
consulting 
services  4.1 / 2014  To minimise risks of duplication of efforts, impropriety 
and fraud in the requisition of consulting services, I 
recommend that WTO Secretariat strengthen its 
internal coordination and control . The Secretariat 
should examine how the control mechanisms could be 
supporte d by an automated comparison of data.  A restricted folder has been created in 
L:\Restricted \SSA List to be shared between 
HRD staff and Procurement . This folder is 
managed by HRD and contains all the 
individuals who have SSA contracts with the 
WTO. The Pro curement team has been given 
read only rights to the folder so they are able 
to check and ensure a consulting firm does 
not also have an individual contract.  
HR discussed with the IT division options for 
an automated checking process and HR has 
decided to also add a declaration to the 
contracts asking the individual consultant to 
declare whether they have any other 
contracts with the WTO.  done 
10 Amendments to 
contracts  4.1 / 2014  I recommend that the Secretariat implement 
procedures to ensure that reques ting units always 
have to involve the Procurement Section in advance 
before they accept modifications to the purchase 
order, even more so if these modifications result in an 
adjustment of the price . To ensure sound management 
of the WTO budget, such modifi cations have to be 
subject to the identification and availability of sufficient 
funds in advance . I also recommend establishing an 
automated notification to the Procurement Section if 
the amount of the purchase order diverges from the 
amount requested in t he invoice.  Recommendation partially accepted  
In order to enhance and implement the 
recommendation the policy for invoice 
settlement is going to be amended . The 
amendment shall rule each cases of 
mismatch between POs and related invoices 
and shall provide procedural guidance to 
stakeholders . Concerning the establishment 
of automatic notification that include the 
cases explicated in the policy, this was 
assessed by ITSD but not consider a priority 
item among the ERP planned updates.  closed   
  WT/BFA/W/421  
 
- 37 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
11 Contract 
mana gement  4.1 / 2014  I recommend developing a procedure to ensure 
appropriate documentation and that availability, 
reliability, and integrity of information and records on 
all procurements are safeguarded . I also recommend 
evaluating the organizational links between the 
Procurement Section and the requesting divisions . In 
addition, it might prove appropriate to highlight the 
importance of sound contract management and 
transparent documentation to the staff members of the 
Secretariat.  Procurement has implemente d the 
e-tendering system on 1 4 February  2017. 
The e-tendering solution package includes a 
contract management (CM) Module provided 
at no additional cost to WTO for year 1 . The 
module has some interesting features such as 
the email prompts for contract rene wals, 
warning flags when contract documents are 
past their expiry date or email reminders for 
expiring contracts . The purchaser can easily 
set an alarm and in efficient timely manner 
proceed with a new tender before expiration 
of the current contract.  done 
12 Adoption of IT 
standards  4.2 / 2014  I recommend that the Secretariat apply international 
standards and best practices for the IT environment in 
combination with the establishment of its IT policy 
framework (see above) . In doing so, the Secretariat 
should consider its individual characteristics like its 
size and tasks and modify suitable standards according 
to its requirements . Only in exceptional cases the 
Secretariat 's special needs should justify an exception 
or extension, it may define and document  these 
special guidelines for itself . Depending on their 
importance and nature, different standards can be 
defined as mandatory or optional . However, some key 
elements should be implemented as a minimum to 
reach an appropriate level of IT governance maturi ty. 
These standards should cover the areas mentioned 
above (IT governance, IT service management, IT 
project management and information security 
management) and could also be extended to cover 
efficiency issues and the compatibility requirements of 
applica tions and databases . Adherence to these 
standards should be monitored in an appropriate 
manner.  A formal project management guideline will 
be distributed to all ITSD staff members in 
June.  
Change management as a formal process 
started in may within the inf rastructure 
branch of the Division while discussion will be 
held with the application teams how to best 
control change.  
A manager was selected to be the problem 
manager, a process was defined and the IT 
Division will be trained on it in June.  
The person in  charge of IT Finance, 
procurement and Assets is to write -up our 
process in a formal document by end 2017.  ongoing   
  WT/BFA/W/421  
 
- 38 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
13 Business 
strategy, IT 
strategy  4.2 / 2014  I encourage the Secretariat to define and document a 
general business strategy with an adequate  level of 
detail not only but also as a requirement description in 
regard to a needs -based IT environment . I recommend 
that the Secretariat set up an appropriate IT policy 
framework that should be aligned with the business 
strategy.  
 
The framework should f ulfil the requirements 
mentioned before as a minimum standard containing 
documentation of need s analyses, assessment of 
existing systems, current procedures, planning, 
strategies and also future targets . The existing 
documents could be used as input when t hey have 
been updated . The initiatives and activities already in 
place to improve elements of the Secretariat 's IT policy 
could be integrated in the preferably overarching 
approach . Management should ensure that the 
components of this framework are periodi cally updated 
and communicated to all relevant parties across the 
Secretariat . It should also monitor their 
implementation and evaluate the results.  The portfolio for 2017 was selected in Jan 
(Attached ITSSC summary and Portfolio "live" 
document in attachm ent split between jan17 
decision and live projects) and the process of 
managing it is on -going as a D2D operational 
process (Monthly PMO, quarterly ITSSC 
meetings).  closed  
14 IT security  4.2 / 2014  I acknowledge the Secretariat 's efforts to improve 
WTO's IT security in order to reduce the IT 
environmental risk exposure . I strongly recommend 
that the Secretariat follow the recommendations of the 
IT security assessment as soon as possible . Without 
interfering with the ongoing audit of the OIA on this 
matter  I will continue to monitor the improvement of 
WTO's IT security.  See.4.2 / 2015 below  … . closed   
  WT/BFA/W/421  
 
- 39 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
15 Black list   3.1 / 2015  During our sample check my team noted that WTO is 
not using a "black list" or "sanction list" (similar e.g. to 
UN procedures) . There is no procedure or policy how 
to handle this issue for contracts and procurement.  
 
I recommend considering the implementation of a 
black list or sanction list as this is common practice in 
other international organizations.  Since February  2017, WTO has i mplemented 
the e-tendering module through the United 
Nations Global Marketplace (UNGM), the 
common procurement portal of the United 
Nations system of organizations . As part of 
the registration application all Vendors are 
required to declare (both for paren t and/or 
subsidiary entities, as applicable) that they 
are not, nor associated with a company or 
individual, under procurement prohibition by 
the United Nations, including but not limited 
to prohibitions derived from the Compendium 
of United Nations Securi ty Council Sanctions 
Lists. done  
  WT/BFA/W/421  
 
- 40 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
16 Cash situation /  
negative interests  3.3.1 / 2015  Following the SNB decision main partner banks 
introduced negative interest rates as of 1 April 2015. 
Currently, the WTO is benefitting from an exemption 
limit of CHF 50  million by the UBS and CHF 40  million  
by Credit Suisse resulting in negative interest of 
approximately CHF 400.000, based on average cash 
balances for 2015, after factoring in the thresholds at 
which no interest is levied . But these limits can be 
changed un ilaterally by the UBS and / or Credit Suisse 
at short notice, so the WTO is being faced with a risk 
of negative interests of up to CHF 1  million  per annum 
if the exemptions are no longer granted.  
 
To reduce risks and to prevent negative interests we 
recomm end the following options:  
 
 premature repayment of ongoing loans such as the 
building loan, if possible;  
 review/update the financial investment policy;  
 negotiate with the main banks and the Swiss 
authorities on mid -term and long -term exemptions 
for negativ e interests (this could be more effective 
together with other international organizations and 
institutions based in Geneva e.g. the UN) . • The loan agreement with the Swiss 
Government has a clause that only allows 
payment of the annual repayment for the 
given year only.  Most institutions in 
Switzerland are averse to holding large sums 
of cash due to the negative interest regime in 
place.  Furthermore, the cash received in any 
given year is attributable to that year's 
budget and considering that there is usua lly a 
lag in contributions received, cash flow is a 
strong consideration that would not make it 
prudent to use funds to pay in advance.  
• A New Treasury Policy was approved, 
implemented and presented to the CBFA in 
2016. This incorporates several changes s uch 
as the extension of the investible asset 
classes to include bonds and longer -dated 
term deposits and a  revision of the minimum 
credit -rating to A -. 
• Attempts to engage with other international 
organizations based in Geneva were not 
successful.  Most of  the entities stated that 
the Swiss Authorities that they had spoken to 
stated that this is a systemic matter taken by 
the Central Bank.  It affects all institutions, 
including Swiss companies and Government 
bodies, rendering exceptions unfeasible for 
any p arty. done  
  WT/BFA/W/421  
 
- 41 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
17 Buildings  3.3.1 / 2015  CWR building is granted by the Canton of Geneva and 
the FIPOI as a 99 -year surface right.  
Given the current situation we recommend the 
following (in accordance with IPSAS 17):  
 
 entering an asset of CHF 60  million  (or a n 
estimated equivalent value of the CWR building and 
the use of the land), position "CWR building "; 
 depreciating the asset by 1/99th annually so as to 
bring the value of the use of the building down to 
zero at the expiry of the surface right, starting in 
2015 (in 2015 pro  rata for four months);  
 entering a corresponding equity of CHF 60  million  
(or the estimated equivalent value) as liability.  The Secretariat has accepted and 
immediately implemented the 
recommendation of the Auditor.  done 
18 Inventory  3.3.1 / 2015  There is no regular physical inventory for assets 
(exception : publications) . WTO has no suitable 
stocktaking system, depreciation is calculated 
manually.  
 
I recommend that WTO implement a suitable system 
which contains all assets.  An asset Inventor y software was selected 
through a tender process . The service 
provider foresees implementation during 
second and third quarter of 2017 and the go 
live by September  2017. ongoing  
19 Home leave  3.3.1 / 2015  Regarding the finding (see para 25) in our sample 
check we additionally looked into the approved home 
leave (HL) in 2014 and 2015 with a total amount of 
CHF 2,873,352 and related procedures . In this context 
we filtered the HL of beneficiary staff from selected 
countries all over the world . The analysis of  the lump 
sums showed a wide variation of home leave amounts 
paid even for the same country or town.  
 
I recommend reviewing the rules for home leave . A 
benchmark with other international organizations could 
be helpful.  The secretariat  conducted a compariso n 
against other international organizations, 
both qualitative and quantitative, to assess 
its Home Leave procedures . The current 
procedures and processes are currently under 
assessment by the OIO.  Meetings and 
discussions have been held with concerned 
officials of the Budget and Finance Section 
and suggested enhancements are being 
deliberated on.  ongoing   
  WT/BFA/W/421  
 
- 42 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
20 Establishing an 
Office of Internal 
Oversight  
 4.1 / 2015  WTO established an Office of Internal Oversight (OIO) . 
The WTO expanded the tasks of the forme r Office of 
Internal Audit (OIA) but it is not providing the new 
OIO with more audit staff.  
 
I recommend that WTO evaluate the number and 
qualification of staff necessary to fulfil the tasks of the 
OIO. I recommend reviewing the new Audit Work Plan 
so that  it is more based on comprehensible criteria like 
volume of costs or level of risk as well as on the 
provided staff capacity.  The Head of the Office of Internal Oversight 
assumed duty in September  2016. He 
presented the presented the OIO's biannual  
plan (2 017 and 2018) to the CBFA in 
February  2017. This included the staffing 
plan with an additional resource to be 
recruited within the next 12 months.  
 
A working group that had been set up to 
assess whether or not to establish an Audit 
Committee at the WTO has  concluded its 
mandate.  Its conclusion was that at this 
stage an Audit Committee should not be 
established.  done 
21 Staffing of the 
posts in the OIO  4.1 / 2015  All posts of the OIO were vacant when we started to 
audit this issue in November  2015. No deput y for the 
OIO was installed . There were no Internal Audit 
Reports issued for the years 2014 and 2015 . Since 
December  2015 there is an Interim Head of OIO.  
 
I recommend that WTO identify important or critical 
positions in the WTO in general and settle repla cement 
rules for these posts.  The Office is staffed with 2 people (Head and 
an administrative Assistant) . A budget 
allocation has been made to recruit a third 
staff member (an Auditor).  done  
  WT/BFA/W/421  
 
- 43 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
22 Risk 
management  4.1 / 2015  The WTO established a risk managem ent policy for the 
entire Secretariat at the end of 2012 with the objective 
to strengthen its internal governance structure and its 
internal control system . Risks of damages in the WTO 
building were not listed in the risk register.  
 
I recommend  including m itigating measures faster.  The Risk Manager closely monitored the 
implementation of mitigation measures to 
ensure that the probability of the occurrence 
of the risks remains low and their impacts.  
 
On critical and high priority risks, the Risk 
Manager moni tored the development of risk 
mitigation plans and the execution of 
immediate actions.  
 
As a result of this cyclical and iterative 
process, additional risk issues were closed.  
 
The Deputy Director -General in charge of 
Administration reviewed and endorsed t he 
Risk Register and submitted to the 
Director -General.  
 
An annual Secretariat Risk Management 
report on critical risks was presented to the 
Committee on Budget, Finance, and 
Administration on 3 1 March  2017. done  
  WT/BFA/W/421  
 
- 44 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
23 Strategic Review  4.1 / 2015  I recommend  in a first step publishing an overarching 
document which summarizes the idea, the objectives 
and the achieved results of the Strategic Review . 
Furthermore I recommend that WTO extend the 
initiative by aspects which concern the core business 
of the WTO to reach the objective of a Strategic 
Review.  The Strategic Review that the DG spoke to in 
his maiden speech forecast on the Secretariat 
and its operations . The overarching document 
of the Strategic review can be found in the 
following link 
http://intranet/en/news/archive/news0059.htm  
 
The DG's speech set the objectives and the 
working methods . Related documentation 
and the status of the strategic review are 
constantly reported on a dedicated intranet  
page.  
http://intranet/en/wto_me/review/review.htm  
 
There have been several achievements 
i.e. Promotions, Mobility exercises and many 
others (access via the link above).  done  
  WT/BFA/W/421  
 
- 45 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
24 IT governance  4.2 / 2015  My team analysed modifications of existing 
documentation concerning IT, information security and 
information confidentiality and took note of the efforts 
for advancing the IT strategy in the Secretariat . We 
also monitored the processing of examinati ons made 
by or on behalf of the former Office of Internal Audit 
(OIA), respectively the new Office of Internal 
Oversight (OIO) . Recommendations:  
 
 to appl y international standards and best practices 
for the IT environment covering the areas of IT 
governance , IT service management, IT project 
management and information security 
management and to implement them in the 
existing and future structures and documents;  
 to define and document a general business 
strategy with an adequate level of detail not only 
but also as a requirement description in regard to a 
needs -based IT environment . I encourage in this 
regard the Secretariat to promote the current 
initiative to discuss strategic and scenario planning . 
If the realiz ation of a business strategy will not be 
practicable for the WTO, business requirements 
concerning IT should be analysed and collected in 
the whole organization with a common approach 
and also specified and documented in an 
overarching IT strategy.  
 to set up an appropriate IT policy framework, 
aligned  with the general business strategy or rather 
specified business requirements, containing the 
results and the documentation of requirement 
analyses, assessment of existing systems, current 
procedures, planning, strategies and future targets . 
In a first ste p I suggest to finalize and implement 
the available drafts of the "WTO Enterprise 
Architecture " and the "2016-2019 IT strategy ". Reco1 : The Secretariat Agrees with 
recommendation.  
The plan the secretariat is following is along 
these lines : Formal Incident and request 
management implementation by end 2016, 
elimination of legacy platform and leveraging 
of an ITIL compliant tool to improve our 
Software Asset management and Contract 
Management in 2016 (Manage engine/Service 
desk plus), problem manager role esta blished 
in 2016 and effective beg 2017, change and 
release management and CMDB to be 
initiated in 2016, information security policy 
development and information risk framework 
all planned in 2016.  
Reco2 : The Secretariat agrees that having a 
business strateg y would be useful for IT 
strategy and planning . ITSD participates with 
other Divisions to the discussions about 
strategic and scenario planning.  
Reco3 : The 2016 -2019 IT strategy was 
developed after talking to all business 
Divisions about their requirements , reviewing 
the existing systems, evaluating the results 
of a user survey and evaluating our maturity 
against a COBIT framework . It will be 
updated every year ensuring the business 
requirements are up to date . We are not 
planning to complete the overall IT  
architecture but to focus our effort on the 
development of data architecture . Precise 
planning of how to do this work will be done 
in the next few weeks.  done  
  WT/BFA/W/421  
 
- 46 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
25 IT security  4.2 / 2015  I recommend that OIO and IT security staff focus their 
work on the im plementation of the IT security 
assessment 's recommendations to achieve a significant 
improvement of the WTO 's IT security.  
 
I also recommend that Management take into account 
that for some staff the Ministerial Conferences held 
every two years are an exte nsive extraordinary 
workload in addition to their regular duties . I suggest 
considering these tasks in regard to the analysis of 
personnel requirements.  Concerning the second recommendation 
about personnel requirements, the 
2016-2019 project planning incl uded in the IT 
Strategy takes into account Ministerial 
conference resource requirements.  
 
We are progressing in several major domains 
of the audit . Specifically, the overarching 
Information Security Policy as well as 
Confidentiality Classification Policy h ave been 
validated at the latest session of ITSSC 
(21.10.2016), and are in final stages of 
preparation for submission for approval to 
the DG . Furthermore, the key information 
assets inventory is progressing, and is 
scheduled to be over by end November  2016 
(to be followed by risk assessment end -16 to 
beg-17). Delays as compared to the original 
planning result fro m a lengthy recruitment 
process.  
 
This setback with recruitment in 2016 has 
resulted in a review of schedules of most 
major inform ation security in itiatives by 4  to 
6 months.  
 
June 2017: 
 
The recruitment of the security engineer is 
nearly complete and the recommendation is 
awaiting DG's approval.   
ongoing   
  WT/BFA/W/421  
 
- 47 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
26 Information 
confidentiality  4.2 / 2015  In connection with the improvement of IT security 
governance, the Secretariat drafted a new 
"Information Classification Policy " with an 
accompanying "Technical Standard ". I appreciate the 
current approaches to update the WTO 's policy 
concerning information confidentiality . However, 
documentation of the proce sses was not adequate to 
counteract the risks for confidentiality of data and 
information.  
 
I recommend providing the WTO staff with extended 
guidelines and appropriate procedures on how to deal 
with confidential information.  The Secretariat agrees with th is 
recommendation.  
An online training for all WTO Staff is being 
prepared : The content is based on a UN 
common curriculum which is being adapted 
to a WTO case . In addition, the 
IT management was reinforced with clearer 
lines of ownership within the Divisio n and the 
formal approval for a new head of 
applications last week.  
The intranet information was also updated . 
The draft of the Information Confidentiality 
Classi fication Policy has been finaliz ed by the 
ITSSC, and submitted for review and 
approval to the Joint Advisory Committee, as 
it affects staff roles and responsibilities . 
Review of the policy has been undertaken by 
the JAC and specific suggestions made to the 
originators of the document and they will 
revise the proposed texts.  
Once finaliz ed, informat ion classification 
guidelines will be made part of the user 
awareness programme.  
Technical tools to support the policy and aid 
the users are planned for implementation 
(Public Key Infrastructure project approved 
for 2017) and study (Data Labelling  / Data 
Leakage Prevention systems to be evaluated 
in 2017) . The results of the information 
assets inventory / risk assessment (which 
map directly to the policy categories) would 
define further practical application measures 
of the policy . The policy will be includ ed in 
the upcoming CBT InfoSec awareness course.  ongoing   
  WT/BFA/W/421  
 
- 48 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
27 Facility 
management 
strategy and 
framework  4.3 / 2015  My team analysed WTO 's facility management (FM) 
activities, its organisational structure, procedures and 
existing regulations as part of the  performance audit . 
We analysed the existing policies, guidelines and other 
relevant documentation like files and records held by 
the WTO Secretariat . The WTO Secretariat stated that 
it has not adopted the relevant FM standards and has 
currently no specifi c overarching FM strategy in place . 
It further mentioned that recent FM activities rather 
were in response to current issues than to support 
proactively maintenance of the building and premises.  
 
I recommend that WTO Secretariat apply 
internationally accep ted FM standards and best 
practices as a guidance to its FM activities in order to 
ensure the most effective and efficient use of 
resources . In this regard I encourage the WTO 
Secretariat to initiate and periodically update and 
enhance a generic "FM policy  framework " considering 
the already existing documents as input . I further 
recommend improving the internal and external 
coordination and communication.  The Secretariat shared the draft Strategic 
Facilities Plan with the External Auditors and 
subsequently  made amendments to take 
on-board some of the suggestions expressed 
by the external auditors during a meeting they 
held with the relevant Secretariat staff 
members to discuss the draft Strategic 
Facilities Plan.  
The DDG in charge of Administration has 
endorsed the Strategic Facilities Plan and it is 
being implemented.  
After an extended assessment process 
regarding the pros and cons of establishing an 
FM Committee, the conclusion was that there is 
a proliferation of committees in the 
organization.  Therefore,  the Secretariat does 
not agree to establish an FM Committee.  What 
the Secretariat interpreted from the audit 
recommendation is that various Sections and 
Divisions involved in matters pertaining to the 
building and premises have to engage more 
and collabor ate on aspects dealing with the 
ongoing maintenance, renovation, 
enhancements, refurbishment, management of 
the grounds and other aspects relating to the 
WTO facilities.  The Secretariat has thus 
instituted a core team comprising of the Chiefs 
of the FM, Se curity and Conference Services to 
discuss any planned activities and actions 
affecting the building and make 
recommendations to the Director AGSD for 
decision -making, as appropriate, before these 
are undertaken.  The core team will engage 
other relevant par ties as and when necessary.  
As an example, this team, together with a 
person from Budget and Finance, worked 
together to develop the Strategic Facilities Plan 
referred to above.  ongoing   
  WT/BFA/W/421  
 
- 49 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
28 Staff distribution  4.3 / 2015  The reduction of posts is decided o n a case to case 
basis, within FMS and SSS there is no concept 
reflecting the minimum staff requirements.  
 
I recommend initiating an overarching concept 
reflecting the minimum staff requirements for FM.  
 
Although the auditors based their recommendation on 
the last recent staff cuts within FMS and SSS, a 
concept is basically necessary to define staff 
requirements within FM Services . Without an objective 
assessment of FM Services, there is no evidence that 
FM Services is currently or in future understaffed or  
even overstaffed.  The Secretariat agrees with the gist of the 
recommendation but is unable to implement:  
 
The staff requirements are decided by the 
Director General, with the professional input 
of the HR Division, taking into account the 
relative needs fo r resources throughout the 
organization . Furthermore, the Director 
General has a target structure of the 
organization that was developed taking into 
account the projected needs of the 
organization and the quest to address the 
inverted pyramid structure . No Division, let 
alone a Section, has authority or expertise to 
determine the resource needs for itself.  closed  
29 Backup situation  4.3 / 2015  Within FMS the function of recording inventory was not 
in service from May to November  2015 due to sick 
leave of a staff member . The backup situation of FMS 
and SSS is not sufficiently organized . The existing 
backup documentation lacks the designation of backup 
staff and of related duties in detail for several 
functions.  
 
I recommend ensuring sound and reliable backu p 
plans and introducing a written guidance on 
replacement of staff in case of longer absence.  The Secretariat accepted the 
recommendation:  
 
Backup plans were strengthened . As 
recommended, HRD introduced a written 
admin memorandum no.977 on sick leave 
guida nce on 3 1 January  2017. 
 done 
30 Pending repairs 
and projects 
related to 
construction 
works  4.3 / 2015  The renovation and extension works were completed in 
2012-2013, but necessary repairs of defects are still 
pending.  
 
I recommend improving efforts to a ddress construction 
works related defects or damages and initiating a 
written procedure on the termination of the defects 
liability periods.  WTO secretariat followed the 
recommendation and improved its effort in 
addressing construction shortcomings.  
 
Throu gh a stronger contract management 
deficiency liabilities will be addressed 
promptly and solved before the end of the 
defect liability period.  
 
The signage project will be completed in 
Autumn 2017.  ongoing   
  WT/BFA/W/421  
 
- 50 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
31 Links a nd 
interactions 
between FMS 
and SSS  4.3 / 2015  My team observed cooperation and coordination 
between FMS and SSS . Within its large scope of 
responsibilities SSS also detects malfunctions of the 
building and its equipment by its 24/7 security patrols 
and safety inspections . In order to ensure p roper 
maintenance of the building SSS reports malfunctions 
to FMS via help requests, including proposals for 
measures which might improve the security 
infrastructure . We noticed inconsistencies as to 
cooperation between SSS and FMS . The interaction 
between  FMS and SSS could be improved.  
 
I recommend that WTO Secretariat evaluate the 
current structures, links and interactions between FMS 
and SSS in order to provide measures to streamline 
cooperation between FMS and SSS.  As recommended, In order to reduce 
dependencies and overlaps between SSS and 
FM, a budget of about CHF 250,000 has been 
transferred  to SSS on a trial period of 
12 months . This budget transfer will make 
SSS independent for all fire safety 
equipment . At year -end a review will be 
carried out to s ee how this transfer has 
worked.  
 done  
  WT/BFA/W/421  
 
- 51 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
32 Cash and cash 
equivalents  3.1.1 / 2016  Pursuant to the financial regulations of the WTO, all 
payments shall be made by authorized officials of the 
Administration and General Services Division . There is 
no specific  regulation regarding the four eyes principle 
for the signature authorities.  
 
For all funding and payments WTO is using three 
house banks : UBS, Credit Suisse and Post Finance . All 
these banks sent us a confirmation of their business 
relationship with the W TO maintained as per booking 
date 3 1 December  2016. Enclosed to these 
confirmations they listed the persons who are 
authorized for bank transfers with their signatures . 
Except the DG all designated officials are authorized 
only to jointly sign transactions  (2 by 2 
authorizations) . However, the DG can make bank 
transfers individually, without a second signatory 
(unique signatory).  
 
I recommend that WTO replace the applicable unique 
signatory by the DG to a joint signature 2 by 2 
authorizations . Furthermore, I recommend that WTO 
revise the financial regulations regarding the current 
regulations for bank transactions and payments with 
respect to the four eyes principles in all relevant cases.  The recommendation is not premised on 
accurate facts because Financia l Regulations 
38(c) and (d) make it imperative to have the 
four eye principle for payments . The relevant 
extract from the regulations read as follows:  
 
"The Director -General shall : 
 
(c) cause all payments to be made on the 
basis of appropriate supporting d ocuments 
and other documents which ensure that the 
services or goods have been received and 
that payments have not previously been 
made;  
 
(d) designate the officers who may receive 
monies, incur obligations and make payments 
on behalf of the WTO . All payme nts shall 
require a minimum of two signatories ; 
 
The text that is underlined and in bold implies 
the four eyes principle.  
 
In view of the above, there is no need to 
review the financial regulations . The policy 
regarding payments, which authorizes the 
Director-General to be the sole signatory in 
some instances will be revised to include the 
four eyes principle since it is not aligned with 
the above financial regulations.  ongoing  
33 Provision for 
invalidity case  3.1.1 / 2016  Concerning a provision for an inv alidity case in 2015 
WTO established a provision within the FS 2016 for 
one case of invalidity and allocated CHF 750,000 to it . 
This might be not sufficient to cover all related costs.  
 
In view of the prospective monthly payments from 
2017 onwards I recomm end reviewing whether more 
funds have to be allocated to this provision.  The Secretariat agrees with this 
recommendation and will look into the 
approach for determining provisions for legal 
cases to assess whether this amount is 
appropriate or needs to be revised upwards.  ongoing   
  WT/BFA/W/421  
 
- 52 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
34 Overtime  3.1.1 / 2016  The financial statements of the WTO include as 
"Employee benefits liabilities " as at 3 1 December  2016 
a position "Untaken annual leave " with an amount of 
CHF 8,725,000 . This position includes the accrued 
untaken annual leave by permanent and temporary 
staff with an amount of CHF 8,608,000 as well as the 
accrued overtime by permanent and temporary staff 
with an amount of CHF 117,000 (1,438 hours) . For 
more transparent and meaningful financial statements 
WTO shall calculate and identify all employee benefit 
liabilities in detail regarding their different entitlement 
and/or justification.  
 
I recommend that WTO state the positions "Untaken 
annual leave " and "Overtime " separately and explain 
the number of conside red days/hours and the 
calculation of the liabilities comparing the relevant 
data of the previous financial year in the notes 
attached.  The WTO will prepare the 2017 Employee 
benefits liabilities tables to separately present 
the provision for the remaining  untaken 
annual leave dues and that for the remaining 
hours attributable to Compensatory Time Off 
(CTO).  ongoing  
35 Information 
confidentiality/  
Personnel aspects  4.1 / 2016  I suggest opening a discussion in the Secretariat 
whether it would be helpful to setup the crosscutting 
function of a "general " security officer . This function 
could coordinate the Secretariat 's efforts in the context 
of information confidentiality, especially as to classified 
physical material . This central contact person could 
partic ularly e.g.  
 
 help to harmonize rules and procedures;  
 serve as an advisor to the divisions;  
 safeguard that established rules and instructions 
are implemented and adopted properly;  
 carry out examinations following suspected cases.  The overarching issue, from  the Secretariat's 
perspective, is that there needs to be an 
effective link between the Information 
Security Officer and Security Services . Before 
looking at a new role, formalizing how this 
link functions within the existing governance 
would already be be neficial.  
 
Therefore, the Secretariat does not accept 
this recommendation.  ongoing   
  WT/BFA/W/421  
 
- 53 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
36 Information 
confidentiality / 
Personnel aspects  4.1 / 2016  I suggest broadening the approach of background 
checks in future also to permanent and temporary 
staff. The hi ring of staff on Fixed Term appointment 
is already preceded by reference checks . To 
do it for temporary staff might imply delays 
and/or additional costs . The possibility of 
outsourcing reference checks will be explored 
as a way to cope with the additional volume 
of conducting reference checks for temporary 
staff. For temporary staff hired for very short 
periods, such reference checks might not be 
productive . Similarly, in cases of 
unanticipated and urgent replacement, such 
reference checks for temporary sta ff might 
not be viable.  ongoing  
37 Information 
confidentiality / 
Organizational 
aspects  4.1 / 2016  I encourage the WTO to complete the mentioned 
inventory as soon as possible . I suggest strengthening 
the capacity of the responsible unit, e.g. by temporary  
support, to achieve this and other aims in a more 
timely manner . The results should be taken as a basis 
to establish a transparent landscape of the needs  of 
the Secretariat concerning information confidentiality.  The Secretariat will look into the best ma nner 
of completing the inventory of Key 
Information Assets in a timely manner.  ongoing  
38 Information 
confidentiality / 
Organizational 
aspects  4.1 / 2016  I encourage the responsible of the Secretariat to 
discuss in which way the rules and procedures in th e 
area of Dispute Settlement could be harmonized and 
possibly simplified.  
 
I recommend providing such procedures, considering 
the results of the "Inventory of Key Information 
Assets " and taking into account the already existing 
procedures in the area of Di spute Settlement . In this 
respect I repeat my not yet implemented 
recommendation of the previous report to set up 
extended guidelines (see para. 92/93) . I also 
recommend accompanying the implementation of 
procedures with suitable training to increase the 
awareness of staff concerning information 
confidentiality throughout WTO.  The Secretariat is of the view that at this 
stage it would be more important for it to 
concentrate its efforts on enhancing the 
Secretariat -wide procedures and processes 
pertaining to  Confidentiality of Information 
and establishing overarching guidelines that 
can be employed by various Divisions, as 
they prepare specific internal procedures . It 
is more important for the Secretariat to build 
its policies, standards practices and trainin g 
rather tha n focus on standardising only 
3 Divisions.  
 ongoing   
  WT/BFA/W/421  
 
- 54 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
39 Information 
confidentiality / 
Aspects of 
physical security  
 4.1 / 2016  Executing the planned reassessment I recommend 
initially  
 
 defining a clear process with designation of the 
involved f unctions respective ly individual WTO staff 
members;  
 setting up comparable criteria of protection;  
 taking relevant standards into account 
(e.g. EN 1047 regarding fire resistance, 
EN 1627/1630 regarding anti -burglar security, 
etc.);  
 documenting all relevant steps of the particular 
measures.  
The process of implementation of security measures 
should also consider existing and future policies 
regarding security, business continuity and disaster 
recovery.  The Secretariat agrees to take explore 
implementing feasib le aspects of this 
recommendation.  ongoing   
  WT/BFA/W/421  
 
- 55 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
40 Ministerial 
Conference / 
Decision on date 
and venue of 
sessions  
 4.2 / 2016  I recommend that the Secretariat continue its efforts 
on establishing a guideline on organizing Ministerial 
Conferences.  
 
I further recommend that the Secretariat incorporate 
and follow up risks related to the organization of 
sessions of the Ministerial Conference in its risk 
register on a project based approach.  Many documents exist regarding the 
preparation for and management of 
Ministerial Conferences e.g. the Roles and 
Responsibilities document ; the Requirements 
List; a Lessons Learned document from 
MC10 ; project plans ; floor plans of meeting 
and conference rooms and other spaces to be 
used during the Conference ; an Agreement 
with t he Host Country detailing the 
obligations and deliverables by each party ; 
and several information notes sent to 
Members and other prospective Participants 
etc. 
 
In view of the above, it is important not to 
have an inundation of preparatory materials 
that c ould lead to hours spent on planning 
and crowding -out focus on implementation 
and other core aspects of the Ministerial 
Conferences.  
 
The Secretariat will develop a risk register, 
using a consultative process across Divisions 
and come up with mitigating ac tions. From 
the Secretariat's perspective, this plus all the 
above -mentioned documents would be 
enough.  ongoing   
  WT/BFA/W/421  
 
- 56 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
41 Ministerial 
Conference/  
Guidelines on 
organizing 
sessions  
 4.2 / 2016  I acknowledge the efforts the Secretariat has made to 
improve project management of organizing sessions of 
the Ministerial Conference . In this regard I consider 
the Handbook for prospective hosts and the lessons 
learned report as important inputs to consolidate 
internal knowledge and to streamline project 
management and proj ect organization.  
 
I recommend that the Secretariat continue its efforts 
on issuing a guideline on organizing Ministerial 
Conferences . I recommend that the Secretariat 
incorporate and follow up risks related to the 
organization of sessions of the Ministeri al Conference 
in its risk register on a project -based approach.  The Secretariat sees this recommendation as 
being exactly the same as Recommendation 
No. 41 above.  It, therefore, requests 
clarification of the distinction so that an 
appropriate comment can b e stated.  ongoing  
42 Ministerial 
Conference/  
Project planning  
 4.2 / 2016  I recommend that the Secretariat assess the workload 
related to the organization of Ministerial Conference 
sessions and its impact to the common workload of the 
involved staff membe rs. I recommend that the 
Secretariat additionally consider calculating more 
realistic time frames for other projects of involved staff 
members.  Ministerial Conferences and the implication of 
various individuals in this are a major 
consideratio n when perfor mance objectives 
are set with people who are closely involved 
in preparing for and servicing Ministerial 
Conferences, during a year in which the 
Ministerial Conference is to be held.  
 
Therefore, some projects were rationalized 
and deferred to the following  year so as to 
not over -encumber the people responsible for 
these areas in 2017.  Examples include some 
projects that are to be delivered by ITSD and 
Conference Services as well as Security 
Services.  The objectives set for the relevant 
individuals took acco unt of the workload from 
the Ministerial Conference activities.  ongoing   
  WT/BFA/W/421  
 
- 57 - No. Issue  Reference : 
Chapter, Year  Recommendation  WTO 's Comment/  
Implementation  Status  
43 Termination 
indemnities / 
Mutually agree d 
termination due 
to behavioural 
reasons  
 4.3 / 2016  I recommend considering whether cases like the above 
could be handled more restrictivel y in terms of 
indemnity payments . This includes the application of 
all disciplinary measures in preparation of a notice, in 
particular written warnings . Where it is known that 
WTO is likely to pay indemnities to avoid court 
procedures this could create inc entives for 
inappropriate working attitude . I suggest that OIO 
analy ses the termination indemnity policy, in particular 
regarding the above cases.  The Organization does not pay indemnities or 
increase such indemnities to avoid court 
procedures.  It examines  each case to 
determine the extent to which litigation could 
be a major risk and concern for the 
Organization . It ought to be noted that the 
Organization has to pay a significant amount 
of money for each individual case that any 
staff member takes to the I LO Tribunal and 
that such cost often outweighs the amount 
paid for indemnity.  
 
We would welcome the views of the OIO on 
any improvements on the termination 
indemnity policy.  ongoing  
44 Termination 
indemnities / 
Cases of 
exceptional 
circumstances 
with addi tional 
payment in lieu 
of notice  4.3 / 2016  I recommend that separations becoming necessary be 
planned and initiated earlier in order to avoid such 
payments.  The Organization will aim to initiate any 
separations before the end of the third 
quarter, with a view to the separation taking 
effect at the end of the year.  ongoing  
 
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