WORLD TRADE  
ORGANIZATION  WT/BFA/W/188 
28 September 2009 
 
 (09-4508) 
Committee on Budget, Finance and Administration Original:   French 
  
 
     
 
    
 
REPORT BY THE EXTERNAL AUDITORS ON THE FINANCIAL STATEMENTS 
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 
 
Court of Audit
 
 
 WT/BFA/W/188 
Page 2  
 
  I. INTRODUCTION 
1. In order to prepare the certified accounts for the 2008 financial year, a team of five auditors 
carried out two audits of WTO services from 17 September to 1 October 2008 and 15 to 
30 April 2009.  These two audits were followed by  two letters containing final observations dated 
17 November 2008 and 30 July 2009, which are reproduced  virtually in their entirety in this report.  
The audits focused mainly on: 
 (a) Maintenance of the WTO accounts and linki ng of operations to the financial year; 
 (b) collection of the Organization's income, especially statutory and voluntary 
contributions; 
 (c) cash and cash equivalents; 
 (d) procurement; 
 (e) outstanding commitments;  (f) provisions;  (g) human resource management;  and  (h) the WTO headquarters extension project. 
 
2. The audit was conducted in compliance with th e WTO's Financial Regul ations and Financial 
Rules and the contract concluded between the WTO and the Court of Audit. 
3. The auditors confirm that they had access to the accounts, supporting doc uments and all other 
relevant documentation. 
4. Every observation and recommendation was discuss ed with the officials concerned.  The 
closing conferences took place on 1 October 2008 and 29 April 2009 and the provisional observations 
were amended in the light of wr itten comments submitted by the WTO. 
II. LIST OF RECOMMENDATIONS 
Recommendation No. 1:  We recommend the adoption of  a plan for applying International Public 
Sector Accounting Standards (IPSAS). 
 
Recommendation No. 2:  We recommend that the list of leasing contracts in effect should be indicated in a note in the financial statements showing the am ounts paid, those outstanding and the status of the 
services covered by these contracts in order to highlight, where applicable, the amount of the 
advances made to lessors.  
Recommendation No. 3:  We recommend that ne gotiations be undertaken with lessors for 
remuneration of the advances they receive.  Recommendation No. 4:  We recommend that the WTO follow closely the implementation of the 
contract to enhance the security of its prem ises in order to prevent any further delays. 
 
Recommendation No. 5:  We recommend that the WTO follow up leasing contracts more systematically and undertake regular reconciliation of  the positions of the Organization and of the 
lessor.  Recommendation No. 6:  We recommend that operati ons financed through extra-budgetary funds be 
integrated in the financial statements covering WTO activities as a whole. 
 Recommendation No. 7:  We recommend that the Office of Internal Audit be reinforced.  WT/BFA/W/188 
 Page 3 
 
 
  Recommendation No. 8:  We recommend the negotiation of arrangements to settle Member States' 
arrears of contributions.  Recommendation No. 9:  We recommend that the provision for arrears of contributions be calculated taking into account the Organization's assessment of the risk of non-payment. 
 
Recommendation No. 10:  We recommend (i) negotia tions with observer States on arrangements for 
settlement of their arrears;  and (ii) that provision  be made for contributions in arrears for Observers 
under the same terms as those recommended for Member States.  
Recommendation No. 11:  We recommend strict observa nce of the provisions of Regulation 15 of the 
Financial Regulations, which makes accession to th e WTO by Observers contingent upon discharge 
of their financial obligations.  Recommendation No. 12:  We recommend that effort s continue (i) to accelerate refund by the 
United States of the taxes of WTO staff who reside d there;  (ii) to obtain refund according to the 
method stipulated by the Administrative Tribunal of the International Labour Organization;  and 
(iii) in addition, we recommend that a note be incl uded in the financial statements showing the cost 
incurred by the reimbursement method currently applied by the United States.  Recommendation No. 13:  We recommend that post classification at the WTO be the subject of a 
systematic policy so that it is completed within a limited period of around one year. 
 Recommendation No. 14:  We recommend that the mi nimum time for moving up from one grade to 
the next be extended.  
Recommendation No. 15:  We recommend that pr ofessional mobility be gi ven greater importance 
among the criteria taken into account for promotion, at least for those staff members whose expertise 
does not require that they remain in a particular post.  Recommendation No. 16:  We recommend the establis hment of a database on the professional skills 
of each staff member, so as to facilitate the intr oduction of a forward-looking policy for managing 
jobs and skills. 
 Recommendation No. 17:  We recommend the revision of the awards scheme and the development of 
a remuneration scheme that gives greater importance to individual performance.  
Recommendation No. 18:  We recommend the development of a multi-year training plan. 
 Recommendation No. 19:  We recommend that ever y contract of over 11 months duration be 
reviewed, that measures to absorb these cont racts be proposed and submitted to the Budget 
Committee each year and that, in th e case of drivers, externalization of part of this service be 
considered in order to absorb the large amount of overtime noted. 
 
Recommendation No. 20:  We recommend that the eval uation interview reports be reviewed in order 
to highlight their strengths and weaknesses, and allo w those responsible to improve the methods used 
to fix objectives, evaluate performance and provide advice on career development. 
 
Recommendation No. 21:  We recommend the establishment of a proper social assessment report and 
regular updates on human resources.  Recommendation No. 22:  We recommend that attenti on be paid to submission of all the supporting 
documents required by the Staff Rules for gran ting allowances for dependent spouses, dependent WT/BFA/W/188 
Page 4  
 
  children or secondary dependants, particularly ta x notifications (for allowances for dependent 
spouses), birth certificates (for allowances for de pendent children) and medical certificates (for 
disabled children).  Recommendation No. 23:  We recommend that (i) docum ents attesting to the actual reinstallation of 
the persons concerned in their country of origin  be submitted when payment of a separation from 
service grant is requested at the rate fixed for that country;  and (ii) this scheme should be reviewed because its justification is not evident in the case of staff members who have worked for a long time 
outside their country of origin.  
Recommendation No. 24:  We recommend the review of certain criteria for education grants that are 
very difficult to verify.  Recommendation No. 25:  As regards the rental subsidy, we recommend that (i) the wording of the rules on the subsidy be clarified for short-term cont racts;  and (ii) the rules on joint tenancy and 
graduated amounts be strictly observed. 
 Recommendation No. 26:  We recommend that (i) th e rule on prior authorization for overtime be 
observed;  (ii) a comprehensive note be sent to all staff members recalling the overtime regime;  
(iii) precise rules be set for compensating overtime;  and (iv) compensation be encouraged.  
Recommendation No. 27:  We recommend that cash flow forecasts be systematically updated. 
 Recommendation No. 28:  We recommend that bank reconciliations be accelerated, closed within a 
reasonable time, and that a staff member r esponsible for these be formally appointed. 
 
Recommendation No. 29:  We recommend that agreem ents be negotiated with banks concerning 
remuneration of current accounts.  Recommendation No. 30:  We recommend that bank  interest and charges on current accounts be 
divided between the budgetary and extra-budgetary funds.  
Recommendation No. 31:  We recommend that an inv estment policy be defined, together with the 
relevant rules to be observed.  Recommendation No. 32:  We recommend that an in formation system be introduced to allow all 
procurement procedures to be followed up (purch ase requisitions, purchase orders, invoices, delivery 
notes, inventory numbers … ), accessible to all th e divisions concerned (P rocurement and Finance 
Sections, operational services).  Recommendation No. 33:  We recommend that it be to tally prohibited to make any purchases without 
the prior agreement of the Procurement Section.  
Recommendation No. 34:  We recommend that the process under way for analysing and formalizing 
the follow-up, inventory and accounting of stocks of publications and souvenirs be completed. 
 Recommendation No. 35:  We recommend the in troduction of analytical accounting in the 
Publications section so as to be able to value the stocks according to the methods laid down in 
IPSAS 12. 
 Recommendation No. 36:  We recommend that some of the responsibilities for implementing this project be externalized.  If this solution is not a dopted, it is highly desirable to recruit an expert in 
Swiss building law.  WT/BFA/W/188 
 Page 5 
 
 
  III. OBSERVATIONS 
A. FINANCIAL STATEMENTS  
1. Preparation of the WTO's transition to IPSAS 
5. On 9 March 2008, a steering committee, chaired by the Deputy Director-General of the WTO 
responsible for finance, proposed to the Directo r-General that the Organization should submit its 
financial statements (but not its budget) in an IPSAS-compliant manner as  from the 2012 financial 
year and that it prepare for this in the overlappi ng stages described below, following a detailed plan 
prepared by a working group from the Finance Division and the Informatics Division:1 
 - Prerequisite stage (June 2009 to July 2010):  updating of the information system by 
adopting the latest version of Oracle software; 
 
 - First stage (April 2009 to September 2010):  adaptation of the WTO's accounts and 
financial statements2; 
  - Second wave (April 2009 to December 2012):  assess the value of the land, buildings 
and other tangible and intangible assets and presentation in the accounts of 
commitments relating to staff benefits, pa rticularly the pension fund and medical 
cover of retired staff members; 
  - Third stage (June 2010 to December 2011):  strict separation of accounting periods 
for fulfilling commitments and receiving inco me, particularly voluntary contributions 
(which should be classified as deferred inco me when they are to finance costs in 
future financial years);  calculation of ex change gains and losses on the date of the 
transactions concerned. 
 6. The note to the Director-General describing the transition to IPSAS identifies two major 
changes involved when adopting IPSAS:  highligh ting in the financial statements the long-term 
commitments for the WTO pension fund and for cap ital outlay (now treated as costs) and their 
amortization.  These two changes will mean an in crease in the Organization's liabilities, which will 
probably exceed its assets, thus meaning that th e WTO's financial position would deteriorate but 
would give a more faithful picture of the situation. 
7. It is therefore important for the WTO to take  a position on the plan proposed either by 
adopting it as such or by amending it, if this is the wish of the Director-General or the Budget 
Committee or the WTO Council, to which the Director-General must submit the project. 
Recommendation No. 1:  We recommend the adop tion of a plan for applying International 
Public Sector Accounting Standards (IPSAS) 
 
 In May, 2009, the General Council adopted the recommendation by the Budget, Finance and 
Administration Committee that the WTO begin the pr ocess of implementing the International Public 
                                                     
 
1 See the report of 25 February 2009, "IPSAS Project Plan". 
2 The major practical implications of adopting the IPSAS identified by the WTO are the following:  
submission of two annual reports on the financial stat ements, which will be consistent with IPSAS, and on 
budget performance, which will continue to be based on cash, as in the other international organizations that 
have adopted IPSAS or are considering doing so;  defi ning the suitable accounting me thodology for each of the 
different WTO components (Appellate Body, extra-budgeta ry funds, restructuring f unds … );  obligation to 
reconcile the budget and accounts figures and distinction to be made between commitments and short- and 
long-term assets. WT/BFA/W/188 
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  Sector Accounting Standards (IPSAS) with the objective of issuing IPSAS compliant financial 
statements for the 2012 reporting period. 
 
Modified presentation of the 2008 financial stat ements on operations financed under the budget
 
 
8. Each year, the WTO submits the "Director-Gener al's Budgetary and Financial Report", which 
includes financial statements on the Organization's activities financed through the mandatory statutory 
contributions by its Member States, and the "Dir ector-General's Report on Extra-Budgetary Funds", 
which contains the financial statements on ac tivities financed through voluntary contributions, 
according to the special allocations for each progr amme decided by a Member State or group of 
Member States. 
9. Without awaiting adoption of the aforemen tioned recommendation, the WTO changed the 
presentation of its financial statements for 2008 on op erations financed through its budget in order to 
bring them into line with IPSAS 1:3  the traditional tables, with the exception of those on following up 
budgetary expenditure, now follow the model described  in the standard and are entitled as follows, in 
conformity with the standard: 
 - "Statement of financial position" instead of "Statement of assets and liabilities for the 
year 2007"4; 
  - "Statement of financial performance" in stead of "Income and expenditure account"; 
 
 - the statements concerning the surplu s account, the working capital fund and the 
WTO annex building fund remain the same but are presented according to the model 
prescribed by the standard. 
 10. The only missing elements are the tables for the cash flow statements and changes in net 
assets, prescribed in IPSAS 1. 
11. The budget lines in the statements are those prescribed by the standard.  The financial 
statement does not, however, contain the budget lin es that will be introduced during the following 
stages described above, namely, financial assets, land and buildings, equipment, intangible assets, 
staff benefits and short- and long- term deferred income.  Likewise, pe nsions paid out during the year 
and the balance of financial operations are not indi cated in the statement of financial performance.  
Moreover, this latter statement s hows expenditure for three components (the WTO Secretariat, the 
Appellate Body, and losses on foreign exchange tran sactions), without breaking down expenditure for 
the WTO and the Appellate Body by category (personnel, consultants, travel, etc.). 
12. The new statements show the data for 2007, revised by grouping them according to the new 
accounting lines adopted in 2008.  These revised da ta are consistent with those submitted in the 
financial statements for 2007.  There are many and very clear notes in the financial statements and the 
budget lines to which they relate are always indicated.  This new presentation therefore allows 
Members of the Budget Committee and th e WTO Council and Observers to follow 
developments in the successive accounts of the Or ganization, while at the same time becoming 
prepared for the IPSAS presentation.  
                                                     
 
3 See the Director-General's Budgetary and Financial Report for 2008 (WT/BFA/W/181 of 
15 April 2009). 
4 See the Director-General's Budgetary and Financial Report for 2007 (WT/BFA/W/168 of 
16 September 2008).  WT/BFA/W/188 
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  Absence of a note concerning leasing contracts in the financial statements  
 13. In their remarks on the 2007 accounts, the Austrian  external auditors noted that a five-year 
leasing contract had been concluded in order to e nhance the security of WTO premises.  Under this 
leasing contract, since 2005 each year the Organizati on has had to pay CHF 330,000 to the lessor, 
who in turn pays the security invoices submitted by the WTO.  As security work has been delayed, the 
amounts paid by the lessor were less than the CHF 330,000 paid yearly by the WTO, and the amount 
receivable from the lessor (i.e. CHF 758,765 at th e end of 2007) does not appear in the financial 
statement.  The external auditors therefore r ecommended that "a narrative section should be added 
within the Director-General's Report to list a ll ongoing lease contracts", as long as the accounts were 
not fully IPSAS-compliant. 
14. The situation has changed some what since that recommendation.  At the end of 2008, the 
lessor had been paid a total amount of CHF 1,320,000, while the invoices paid by the lessor only amounted to CHF 347,064.86, of which CHF 237,711.71 were paid out during that financial year.  
The advances to the lessor as repayments under the contract therefore amounted to CHF 972,935.14;  
these are not accounted for as receivables and are not th e subject of a note in the financial statements. 
15. Accounting for this advance in the "receivables" accounts would mean changing the 
accounting methods and modifying the financial stat ements for 2008.  This modification should be 
accompanied by a presentation of data for 2007 revi sed according to the new method.  In the 
meantime, while awaiting adoption of IPSAS, an expl anatory note should be attached to the financial 
statements. 
Recommendation No. 2:  We recommend that the list of leasing contracts in effect should be 
indicated in a note in the financial statements  showing the amounts paid, those outstanding and 
the status of the services covered by these contract s in order to highlight, where applicable, the 
amount of the advances made to lessors. 
 
 A note to the financial statement on leasing contracts was included in the financial statement for 2008. 
 
16. With reference to Article 2.3 of the general te rms for leasing contracts ("financial leasing"), 
advances on costs paid by the lessor before the accepted period of leasing yield interest for which the lessee is liable.  The WTO, however, has not nego tiated the inclusion of similar clauses providing for 
remuneration of funds advanced before the service s covered by the contract are provided.  For 
example, there is no provision for interest on the sums advanced by the WTO and not yet disbursed, which amounted to CHF 972,935.14 on 31 December 2008. 
Recommendation No. 3:  We recommend that negotiations be undertaken with lessors for 
remuneration of the advances they receive. 
 
 In 2009, the WTO modified its approach to leasi ng contracts in order to prevent any advance 
of funds by the Organization. 
 
17. According to Article 9.2 of the general terms of the contract, the contract is cancelled if the 
procurement contract is not fulfilled or is subseque ntly annulled or if the subject of the leasing can 
definitively not be supplied. 
18. Following the accumulated delays in implementing the WTO's security programme, the 
leasing contract was in danger of being annulle d pursuant to the aforementioned provisions of 
Article 9.2.  Following a meeting requested by the lessor, the WTO informed the latter, in a letter WT/BFA/W/188 
Page 8  
 
  dated 13 November 2007, that the situation would retu rn to normal in 2008 and the majority of orders 
could be sent out during that financial year. 
19. The procedures for revising the specifications and the choice of bidder, however, were not 
completed during the time-limit set and the procurement was only finally concluded on 
25 March 2009, the expenditure in 2008 only bei ng CHF 237,711.71, and the balance of the advance 
to the lessor increased in comp arison with the previous year. 
Recommendation No. 4:  We recommend that the WTO follow closely the implementation of the 
contract to enhance the security of its prem ises in order to prevent any further delays. 
 
 The contract on security of the premises is proceeding well and will be completed by the end 
of October 2009.  
20. The WTO does not reconcile the balances in its  files with those of the leasing company 
during the "contract loading" stage.  Moreover, it h as been noted that its files do not always contain 
the invoices endorsed for payment, but simply copies prio r to endorsement.  In addition, some of these 
copies have not been placed in the files, which m eans that there are gaps between the extra-account 
balance held by the WTO and that of the company. 
21. Examination of the WTO's files concerning this contract on purchasing security equipment 
shows that invoices for a total amount of CHF 58,3 97 were paid in 2008, whereas the statement sent 
by the lessor shows an amount of CHF 237,711.71. 
Recommendation No. 5:  We recommend that  the WTO follow up leasing contracts more 
systematically and undertake regular reconciliation of the positions of the Organization and of 
the lessor. 
 
 The WTO has been conducting quarterly rec onciliations with the leasing companies 
concerning the fulfilment of their contracts since 30 June 2009. 
 
Presentation of the 2008 financial statements on extra-budgetary funds
 
 22. Presentation of the 2008 financial statements on extra-budgetary funds
5 has changed little 
compared with the report for 2007.6  Two of the three traditional tables have been given the titles 
"Consolidated financial situation" instead of "Cons olidated assets and liabilities" and "Statement of 
financial performance" instead of "Consolidated inco me and expenditure".  The third table "Held to 
the credit of donors" remains unchanged.  The budg et lines remain almost identical but the tables 
permit a comparison of all the data for 2008 with those for the preceding year, which was not the case 
for the financial statements in 2007. 
23. The Organization has not yet decided what accounting methodology to use for these funds 
when IPSAS are implemented and this decision is pa rt of the first stage cited above.  IPSAS 1 and 6 
do not provide any indications for situations comparable to that of the WTO.  The need to incorporate into IPSAS-compliant financial statements la nd, buildings and equipm ent and also pension 
commitments, however, speaks in favour of integr ating activities financed through extra-budgetary 
funds in the single financial statements.  In fact, la nd, buildings and equipment are the same for all the 
WTO's activities.  The staff involved solely in ex tra-budgetary activities are clearly delineated, but are 
                                                     
 
5 See the document "Director-General's Re port on Extra-Budgetary Funds for 2008" 
(WTO/BFA/W/182 of 15 April 2009). 
6 See the document "Director-General's Re port on Extra-Budgetary Funds for 2007" 
(WTO/BFA/W/169 of 16 September 2008).  WT/BFA/W/188 
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  not the only the staff members to be engaged in  such activities:  WTO senior management, for 
example, participates in all the Organization's activiti es.  It would therefore be  difficult to identify the 
pension commitments that relate solely to ex tra-budgetary activities and making the actuarial 
calculations for a limited number of staff such as those engaged in such activities would not be very relevant.  It therefore appears to us preferable  to include the extra-budgetary operations in the 
financial statements on activities financed through the WTO budget, while at the same time giving 
detailed indications regarding these operations in the notes to the financial statements. 
Recommendation No. 6:  We recommend that operations financed through extra-budgetary 
funds be integrated in the financial statements covering WTO activities as a whole. 
 
 The WTO is addressing the integration of the financial statements for extra-budgetary funds 
in the context of the transition to IPSAS, taking into  account the Organization's obligations to donors.  
The two statements should be merged into one for the first time with the 2009 financial statement. 
 
The 2008 accounts covering implementati on of the WTO budget (brief presentation
) 
 
24. The 2008 statement of financial performance in the Director-General's Budgetary and 
Financial Report shows a strong decline in the surplus in 2008 (CHF 3,069,690), three times lower 
than that for 2007 (CHF 9,943,208), despite a sli ght increase (+1.58 per cent) in the Organization's 
income (CHF 187,200,417 compared with CHF 184,280,093 in 2007). 
25. This deterioration is attributable to the 6. 07 per cent increase in the WTO Secretariat's costs 
(CHF 179,542,075 compared with CHF 169,261,956), mainly caused by two events that were not 
foreseen when the 2008 budget was adopted: 
 - The meeting of the Trade Negotiations Committee in June 2008, which brought 
together ministers from 70 countries to try to revive the Doha Round negotiations, 
involving expenditure of CHF 1,616,834;  these costs could not be charged to the 
CHF 875,885 provision of 31 December 2007, set up solely to cover the cost of 
plenary conferences of ministers of the Member States; 
  - the need to rehouse 250 staff members in  provisional premises in chemin des Mines 
during the renovation and extension of the WTO headquarters, at a total cost of 
CHF 3,517,736;  it only proved possible to start this work earlier than expected 
because a financial agreement was reach ed with the Swiss authorities on 
1 August 2008 (see below) and no provisi on had been made for this expenditure 
during the 2008 financial year, while the financial statement at 31 December 2008 
shows that provision of CHF 8,051,715 had just been set up to cover the cost of extending the WTO headquarters to be borne by the Organization. 
 
26. The financial statement at 31 December 2008 shows a marked deterioration in the 
Organization's surplus of assets over liabilities, attr ibutable to an increase of 31.56 per cent in 
commitments (CHF 68,300,423 in 2007 to CHF 77, 286,435) against a slight fall in assets (-0.002 per 
cent), from CHF 80,352,139 to CHF 80,125,455). 
27. The strong increase in commitments is mainly a ttributable to the creation of a provision of 
CHF 8 million for the extension of the WTO headqua rters mentioned above, d oubling of the reserve 
for outstanding commitments at 31 December (C HF 2,070,006 to CHF 5,283,085) and an increase 
from CHF 875,885 to CHF 1,475,885 in the provision  already mentioned for ministerial conferences. 
28. The lower value of assets is attributable to a reduction of 2.71 per cent in cash in the bank 
(CHF 47,974,314 to CHF 46,669,416) and of  21.53 per cent in stocks (CHF 749,270 to WT/BFA/W/188 
Page 10  
 
  CHF 587,883).  This last figure is the result of the work at headquarters, which led to a large amount 
of valueless entries and a voluntarily low level of re plenishment of stocks, difficult to store while the 
headquarters were being renovated. 
29. The WTO's financial position remains sound, although the transition to IPSAS will see it 
deteriorate because it will mean including in the accounts the Organization's long-term commitments 
to its pensioners
7 (for their retirement and sickness insura nce), whose amount will probably exceed 
that of the financial assets, land, buildings8 and equipment of the Organi zation.  The Organization's 
net financial position may therefore become nega tive.  Nevertheless, pension commitments are 
implicitly covered by Member Stat es under Article 21 of the Pension Fund Rules:  "In the event of 
dissolution of the WTO, the General Council shall ta ke the necessary steps to guarantee the benefits 
acquired under these Regulations by participants an d beneficiaries at the date of dissolution."  The 
probable deficit in the financial position is not theref ore in any way comparable to that of a private 
company. 
The 2008 accounts for extra-budgetary funds (brief presentation ) 
 
30. Considerable stability is the main feature of the extra-budgetary fund accounts.  For 2008, 
total expenditure (CHF 28,571,441.98, an increase of 2.25 per cent compared with 2007) was, like the 
previous year, well below the credit available (CHF 49,234,121.19).  The year ended with CHF 20,662,679.21 of credit brought forward, only slightly lower (by CHF 12,559.73) than that for 2007 (CHF 20,675,238.94). 
31. The relatively slow pace at which credit in the various funds is disbursed has not incited the 
Organization to seek further donations, which expl ains the decrease of 10.31 per cent in voluntary 
contributions (from CHF 28,588,959.72 to CHF 25, 640,138.93).  There are no arrears in voluntary 
contributions and therefore there is no provision for such a line. 
32. The deterioration in the financial performance  of extra-budgetary funds, going from a surplus 
of CHF 3,341,414.45 in 2007 to a deficit of CHF 12,559.73 in 2008 because of lower income, mainly 
as a result of the aforementioned decrease in volunta ry contributions, is therefore no cause for alarm. 
33. It should be noted that two extra-budgetary fu nds officially utilize staff paid through the 
Organization's regular budget:  these concern, respectiv ely, the "2007 Annual Pub lic Forum" (the fund 
was closed in 2008) and the "Preservati on and enhanced dissemination of GATT and 
WTO documents").  In addition, the "Doha Deve lopment Agenda Global Trust Fund", since its 
creation in 2001, has received CHF 1 million from th e regular budget in order to offset any cash flow 
problems that might arise and this amount has neve r been returned to the budget.  These findings 
plead in favour of integrating operations finan ced through extra-budgetary funds in single financial 
statements, in accordance with our Recommendation No. 6. 
The Office of Internal Audit
 
 
34. In our September 2008 audit, we noted that the Office of Internal Audit, set up in 
March 2008, had not yet presented any report regarding its audit plan for 2008, including four issues 
to be addressed:  delegation of authority, procur ement and contract management, travel, and payroll 
management. 
                                                      
7 The report of 14 July 2008 of the Mercer firm of  actuaries evaluated the pension fund commitments at 
CHF 1,408 million and the assets of the fu nd at CHF 366 million at 31 December 2007. 
8 The Organization's headquarters agreement estim ates the value of the WTO headquarters at 
CHF 56 million and its infrastructure contract of 17 May 1995 has to be estimated at its "true value", pursuant to 
IPSAS 17, taking into account the CHF 130 million for the planned work on the extension.  WT/BFA/W/188 
 Page 11 
 
 
  35. The Office submitted its first - excellent - report (see below) on 14 November 2008 and is 
addressing travel and delegation of au thority, topics that were origina lly planned for 2008.  This delay 
can be explained both by the in-depth nature of the verification of procurement and by the smaller 
team, which now only comprises the head of the O ffice, whose colleague has gone to the Finance 
Unit, where she is following up the renovation and extension of the WTO headquarters, together with 
a secretary.  This staff level appears insufficien t for an organization of the size of the WTO. 
Recommendation No. 7:  We recommend that the Office of Internal Audit be reinforced. 
 
 The Office of Internal Audit comprises an experienced auditor, who manages the Office, and 
an assistant.  In 2009, the assistant began to attend  training courses relating to internal audit.  The 
Office also obtained the assistance of a trainee in 2009, and this will be continued in 2010.  These 
measures appear to be sufficient for the time bei ng, given the size of the Organization, the special 
risks and the practice in comparable organizations.   The WTO is not planning any additional 
measures over the next two years. 
 B. R
ESULTS  
Statutory contributions by Member States  
 36. Pursuant to Regulation 12 of the Financial Re gulations, the contributions of the 153 Member 
States of the WTO are determined as a percentage of  each country's international trade (imports plus 
exports) in relation to the total international trade of all WTO Members, according to a scale that is 
revised each year by the General Council.  The mini mum contribution is set at 0.015 per cent of this 
trade.  Five reference years are taken into acc ount, for example, 2001-2005 for the 2008 contributions. 
37. In practice, each year the Organization calls for the contributions determined in the scale 
minus, where applicable, each State's share of th e distribution of the Organization's budget surpluses 
at the end of the preceding financial year (prescrib ed by Regulation 26 of the Financial Regulations) 
and the amount of interest credited under the Early Payment Encouragement Scheme.  For the 
first time in its history, the WTO refunded budge t surpluses for the 2006 and 2007 financial years. 
38. The following table shows that in 2008 assessed c ontributions were slightly lower than in 
2007 because part of the 2007 surplus was reimbursed to Member States and a large amount of interest was earned.  The total contributions actually paid fell in parallel with the assessed 
contributions and the amount of arrears fell during the 2008 financial year and barely moved up in the 
case of accumulated arrears.  The latter accounted for 14 per cent of contributions by States. 
Contributions from Member States Called For and Paid in 2007 and 2008  
(in CHF) 
 2007 2008 2008/2007 
% 
A Statutory contributions by existing Member States  180,500,000  183,396,223  +1.60 
B Statutory contributions by new Member States  478,696  375,052  -21.65 
C Distribution of the surplus among Member States  0  5,496,223  
D Interest earned and paid out to Member States  238,546  508,375  +113.11 
E Total call for contributions (E = A+ B-C-D)  180,740,150  177,766,677  -1.65 
F Total contributions paid  169,560,134  166,916,703  -1.56 
G Arrears of contributions for the financial year (G = E-F)  11,180,016  10,849,974  -2.95 
H Accumulated arrears of contributions  25,306,400  25,407,996  +0.40 WT/BFA/W/188 
Page 12  
 
   
39. Payment arrears accounted for 6.10 per cent of the total amount of assessed contributions in 
2008 and accumulated payment arrears for 13.85 per cen t of the amount of statutory contributions for 
2008 (existing and new Member States combined).  At 31 December 2008, 51 Member States out of 
153 had payment arrears;  24 of these had payment arrears exceeding CHF 100,000;  the following are 
the highest amounts: 
 - United States of America (CHF 7,526,187 for the year 2008 alone, but this country 
regularly pays part of its annual contribution the following year); 
  - Chad (CHF 1,312,980); 
 
 - Sierra Leone (CHF 1,231,471);   - Mauritania (CHF 1,210,433).  
40. The latter three countries have systematic arr ears which date back before 1988.  Among the 
24 countries mentioned above, 16 have debts dating back to arrears preceding 2003 and 11 have debts 
preceding 1988.  Besides the United States of America, only three developed countries have arrears for the 2008 financial year:  Chinese Taipei (CHF 1,054,655), Kuwait (CHF 421,623) and Chile 
(CHF 166,713). 
41. To encourage countries to pay their contributio ns rapidly, which are due on 1 January each 
year according to Regulation 13 of the Financial Regulations, since 1988 (at the time of the GATT), 
the WTO has paid them interest calculated between  the date on which each one pays its contribution 
for the current financial year and 31 December.  This interest is deducted from the amount of the 
assessed contributions with a two year interval:  interest in 2006 lowered contributions for 2008. 
42. To absorb their arrears in contributions, the WTO places countries in arrears into 
four categories, depriving them of a certain number of rights within the Organization
9, depending on 
the size of their debt, and is negotiating ar rangements to absorb their debts with the 
Dominican Republic (which has not yet signed any definitive agreement but nevertheless respects the 
proposed payment plan), Gabon, Niger, Chad a nd the Central African Republic.  If the States 
concerned sign such a plan and observe it, their right s are restored.  The negotiation of this type of 
agreement appears to be the only way of absorbing the longest-standing debts. 
Recommendation No. 8:  We recommend the ne gotiation of arrangements to settle Member 
States' arrears of contributions. 
 
 The Committee on Budget, Finance and Administration set up a Working Group to review 
Administrative Measures with respect to outstanding  contributions on 11 May 2009.  At the same 
time, the WTO is strengthening its measures to follow up arrears.  The first settlement plan with the 
Republic of Gabon was approved by the General Council  in May 2009. 
 
Provision for contributions in arrears  
 43. The accumulated amount of contributions in a rrears is the subject of two symmetrical 
accounting entries in the financial statement:  rece ivables under contributions by Member States 
amounting to CHF 25,407,996 in the assets and a provi sion for arrears of the same amount in the 
liabilities.  It is quite normal to include all the receivables in the assets, but the provision should not 
                                                     
 
9 Any country classified in category II (which has arrears of one to two y ears of contributions) is 
systematically cited before the WT O General Council, for example.  WT/BFA/W/188 
 Page 13 
 
 
  cover 100 per cent of arrears, even when contacts with the countries concerned and past experience 
allows the date at which the arrears will be settled to be foreseen.  As has already been indicated, the 
behaviour of the United States of America, for exampl e, the largest contributor to the Organization, is 
easily predictable and is similar in the majority of international organizations. 
44. It would appear more logical to only make 100 per cent provision for debts whose absorption 
appears uncertain and to adopt a lower rate of provi sion (50 per cent, for example) for debts when the 
Organization knows the future date of payment becau se of information it considers reliable.  Such a 
practice would not be contrary to its Financial Regulations, where Regulation 17 provides that "A 
Provision for contributions in arrears shall be main tained.  It shall be funded through the Surplus 
Account", without determining the rate at which it should be provisioned.  This would be more 
consistent with IPSAS.  IPSAS 19, for example,  states with regard to provisions corresponding to 
obligations that "the amount recognized as a provision should be the best estimate of the expenditure required to settle the present obligation at the reporting date". 
Recommendation No. 9:  We recommend that th e provision for arrears of contributions be 
calculated taking into account the Organizatio n's assessment of the risk of non-payment. 
 
 The WTO Secretariat will be reviewing the ca lculation of the provision and will make a 
recommendation to the Committee on Budget, Finance and Administration by the beginning of 2010. 
 
Contributions by Observers
 
 
45. Observer States pay a contribution corresponding to the minimum contribution mentioned 
above for Member States.  Their number remained stable (32) from 2007 to 2008, but the amount of 
contributions fell by 2.59 per cent (CHF 847,410 to CHF 825,407) because of the departure of Observers that became Members and the arrival of new Observers.
10 
46. The amount of the contributions paid by Observers was CHF 506,027 in 2008. 
47. Arrears in contributions by Observers represente d a total of CHF 1,255,203, a 10.66 per cent 
increase in comparison with 2007 (CHF 1,134,20 0).  The largest amounts concern the following 
countries: 
 - Vanuatu (CHF 314,624, whose arrears date from 1995); 
  - Sudan (CHF 251,796, whose arrears date from 1997); 
 
 - Seychelles (CHF 247,644, whose arrears date from 1998);   - Sao Tome and Principe (CHF 191, 254, whose arrears date from 2001). 
 
48. In view of the volume of these arrears, ne gotiations should be held with the countries 
concerned on plans to absorb their arrears and a provision for the risk of non-payment of such 
contributions should be established, realistically assessed in light of the indications given by the 
representatives of these countries and the experience gained by the Organization. 
                                                     
 
10 Observers pay their contributions pro rata temporis  if they become Observers or change status 
during the course of a year.  The following countries ch anged their status from that of Observer to that of 
Member:  Viet Nam, 11 January 2007, Ukraine, 16 May 2008, and Cape Verde, 23 July 2008.  In 2007, 
Comoros and Liberia became Ob servers, on 9 October and 18 December, respectively. WT/BFA/W/188 
Page 14  
 
  Recommendation No. 10:  We recommend (i) negotiations with Observer States on 
arrangements for settlement of their arrears;  and (ii) that provision be made for contributions 
in arrears for Observers on the same term s as that recommended for Member States. 
 
 The WTO Secretariat will examine the possibility of making provision for contributions in 
arrears for Observers and will ma ke a recommendation to the Committee on Budget, Finance and 
Administration by the beginning of 2010. 
 
49. Regulation 15 of the WTO's Financial Regulations  provides that States or customs territories 
with Observer status may not become Members of the Organization unless they have fully discharged 
their financial obligations as Observers. 
50. Nevertheless, Cape Verde became a Member on 23 July 2008, even though it had not paid its 
contribution for the first six months of 2008, amounting to CHF 14,750, which it only paid in April 2009. 
Recommendation No. 11:  We recommend strict observance of the provisions of Regulation 15 
of the Financial Regulations, which makes acce ssion to the WTO by Observers contingent upon 
discharge of their financial obligations. 
 
 The WTO will step up its controls to ensure ob servance of the provisions of Regulation 15 of 
the Financial Regulations.  The WTO recalls that  Cape Verde had paid its arrears for the years 
preceding 2008 before becoming a Member of the Organization. 
 
Refund of tax by the United States of America
 
 51. Staff members of the WTO are exempt from income tax.  In the case of the United States of 
America, whose residents are obliged to pay income  tax, the WTO pays it in their place, as do other 
international organizations, and is  then reimbursed by the Ameri can Government, pursuant to an 
agreement of 22 December 2000.  The terms for this refund gave rise to many comments by the 
Austrian external auditors. 
52. In 2008, receivables in relation to United St ates taxes amounted to CHF 2,882,173, an 
increase of 63.81 per cent in comparison with 2007.  This sharp rise is caused by the increase in the 
number of WTO staff members previously residing  in the United States (from 22 in 2006 to 27 in 
2007), to the fiscal burden per employee, which rose by 43.52 per cent in 2008
11, and above all to the 
accumulation of arrears, the rate of reimbursement being much slower than the increase of the debt to the WTO and no refund was made in 2008 despite the dispatch of many reclamatory letters.  The following table shows that certain of these arrears are long-standing. 
Breakdown of the WTO's Claim on the United  States of America by Year of Origin  
(in CHF) 
Year 2002-2003 2004 2005 2006 2007 2008 Total 
Amount to be 
refunded  21,759 187,263  258,828  483,999  761,146  1,169,178  2,882,173
 
53. In their comments on the 2007 financial year, th e Austrian external a uditors noted that the 
United States refund was based on the "first-income method", even though this led to additional costs 
                                                      
11 The increase in the fiscal burden per employee is caused by the increase in their average salary and 
in the Swiss franc against the United States dollar.  WT/BFA/W/188 
 Page 15 
 
 
  (CHF 50,726 in 2007), which were not recoverabl e and were therefore shared among all Member 
States, and were contrary to the "last-income method" prescribed by the case law of the Administrative Tribunal of the International Labour  Organization (ILOAT).  The WTO has asked the 
United States to comply with this case law, in several letters, the last of which was sent on 
21 September 2008 to the Permanent Representative of the United States to the Organization, but no 
reply has been received. 
54. The extra cost incurred by the method contested rose to CHF 71,713.30 in 2008 and is 
recorded under staff costs.  It should be indicated in a note to the financial statements. 
55. The WTO is seeking to externalize the handling of  requests for refunds by the United States.  
It initially utilized an accountancy firm, but this di d not give satisfaction:  the cost of CHF 5,890 was 
recorded under receivables, because the agreem ent between the WTO and the United States of 
22 December 2000 provides for the possibility of reimbursing the cost of the administrative 
procedures required to implement it.  Recovery of this claim appears uncertain.  The Organization is 
now preparing to use the services of another in ternational organization, which subcontracts its 
assistance for recovering such claims. 
Recommendation No. 12:  We recommend that ef forts continue (i) to accelerate refund by the 
United States of the taxes of WTO staff who reside d there;  (ii) to obtain refund according to the 
method stipulated by the Administrative Tribuna l of the International Labour Organization;  
and (iii) in addition, we recommend that a note be included in the financial statements showing 
the cost incurred by the reimbursement meth od currently applied by the United States. 
 
 The WTO will continue its efforts to obtai n refund of taxes by the United States and a change 
in the method applied.  Financial information concerning the cost incurred by the reimbursement 
method was included in the financial report for 2009.  The notes to the 2009 financial statements were 
modified to include a clearer indica tion of the amount of the debt. 
 C. S
TAFF COSTS  
General information on the Orga nization's personnel management  
 
Statistical data 
 
56. At September 2008, the WTO employed 668 permanent staff members, broken down into 
"professionals" (54 per cent) and "support staff" ( 46 per cent);  at 1 January 2008, temporary staff 
members numbered 49. 
57. Department No. 412, which covers administrative and informatics services, interpretation and 
documentation, accounts for over half the total number of staff (52.7 per cent), including 
44 professionals and 56 support staff. 
58. Staff costs (CHF 140.9 million) envisaged in September 2008 for the current financial year 
represent 72.4 per cent of expenditure under the re gular budget (including the Appellate Body) and 
40 per cent of expenditure under extra-budgetary funds , a total of 68.2 per cent of the WTO's total 
expenditure for 2008. 
59. WTO staff come from 70 different countries and there is an almost equal balance between 
women (54.1 per cent) and men (45.9 per cent). 
                                                      
12 At the WTO, a department comprises all the divisions coming under the same Deputy 
Director-General. WT/BFA/W/188 
Page 16  
 
  Breakdown of Permanent Staff by Gender and Nationality13 
(at 21 March 2007) 
Country Women Men 
Germany  5  12 
Canada  8  17 
Spain  30  16 
France  101  77 
United Kingdom  57  20 
United States  21  8 
Switzerland  22  13 
Other  94  124 
Total  338  287 
Source :  WTO's Annual Report 2007. 
 
Breakdown of Staff by Department at 19 September 2008  
Staff Department 
No. 1 
Legal Affairs, 
Statistics Department 
No. 2 
CooperationDepartment 
No. 3 
Agriculture,
Services and
Environment Department 
No. 4 
General 
AdministrationDirector-General's 
Office Total  
Professionals  72  46  37  155  51  361 
Percentage of 
total 
professionals  19.9%  12.7%  10.2%  42.9%  14.1%  100.0% 
Percentage of 
staff in the 
department  72.7%  60.5%  75.5%  44.0%  55.4%  54.0% 
Support staff  27  30  12  197  41  307 
Percentage of 
support staff  8.8%  9.8%  3.9%  64.2%  13.4%  100.0% 
Percentage of 
staff in the department  27.3%  39.5%  24.5%  56.0%  44.6%  46.0% 
Total  99  76  49  352  92  668 
Percentage of 
total staff  14.8%  11.4%  7.3%  52.7%  13.8%  100.0% 
 
Policy for developing staff mobility  
 60. Staff mobility in the WTO is very low:  from 2005 to 2007, each year less than 3 per cent of 
staff members changed posts, i.e. an average of 17 per year.  This situation can be explained, 
inter alia , by historical factors:  the large number of specialists (interpreters and translators, experts), 
who can only with difficulty change  their posts, and the traditionall y decentralized nature of the 
Organization's management, inherited from the GATT.  The larger divisions have a wide measure of 
autonomy and their staff members rema in there for their entire careers. 
                                                     
 
13 Only countries having more than 15 WTO staff members are included in this table.  WT/BFA/W/188 
 Page 17 
 
 
  61. The WTO decided to change this situati on and the Human Resources Division (HRD) was 
asked to adopt some measures in this sense (see the administrative memorandums Nos. 934 of 
31 January 2001 and 936 of 26 July 2001, and th e personnel note of 19 January 2007).  This new 
policy aims to encourage transfers within divisions and from one department to another, both in the 
interests of the staff members' careers and in that of the Organization.  The aforementioned note calls 
on staff members to inform their directors of their desire for a transfer and directors to inform the 
HRD of these desires. 
62. This new policy is, however, coming up against ser ious administrative obstacles:  failure to 
complete the classification of posts, the unequal breakdown of staff among grades, the absence of a career management policy and a database of staff memb ers' skills, an awards policy that is not very 
encouraging and the traditional limits of training policy, which has only r ecently been developed. 
Failure to complete the classification of staff
 
 63. In 1999, four years after its creation, the WTO adopted a classification for staff members and 
posts in 12 "classes" or "grades" (except for senio r management such as the Director-General and the 
Deputy Directors-General) that differs from that of the United Nations Organization.  Staff members 
of the GATT in 1999 were immediately integrated into the new classification on an individual basis, but the classification of posts according to th e new manning table today appears to be far from 
complete.  The Organization is unable to indicate, without a prior search, the number of posts already classified, whereas this information should be followed up regularly. 
64. The results of a study carried out by an out side consultancy in 1999 have not met with 
consensus, which has greatly contributed to slowing down the process.  Classification of each post 
does not follow a systematic procedure entrusted to the HRD but is only done occasionally, at the 
request of each division, when staff members retire,  for example, or when the recruitment of a new 
staff member is requested.
14  As an indication, the departure of the person in charge of the 
Documentation Service, who personally held the grade 10, led to a survey by the HRD on the nature 
of this post and it was classified at grade 8, with th e transfer of a grade 8 staff member to replace him. 
65. An examination of staff members in the vari ous grades (see below) makes it highly probable 
that posts are being occupied by over-qualified st aff members, who are therefore too highly paid in 
comparison with the requirements of their jobs.  This probably explains the slow pace at which the 
divisions are classifying their posts.  At 1 January 2008, the salary scale was the following: 
                                                      
14 A request for classification of a post may also be initiated by the staff member occupying the post or 
by his supervisor, for example, when the relevant tasks have changed or been expanded. WT/BFA/W/188 
Page 18  
 
  Scale of Annual Net Salaries and "Pensionable" Remuneration15 in Effect at 1 January 2008  
(in CHF) 
Range 
Grade  
Minimum Maximum Increase 
 1 Net salary 
Pensionable remuneration 52,687 
59,266 71,800 
84,800 2,160 
 2 Net salary 
Pensionable remuneration 57,420 
65,481 78,270 
94,244 2,297 
 3 Net salary 
Pensionable remuneration 62,572 
72,187 85,283 
104,348 2,440 
 4 Net salary 
Pensionable remuneration 68,258 
79,890 93,032 
115,783 2,594 
 5 Net salary 
Pensionable remuneration 74,695 
88,987 101,791 
128,703 2,764 
 6 Net salary 
Pensionable remuneration 81,799 
99,198 111,489 
143,413 2,945 
 7 Net salary 
Pensionable remuneration 93,303 
116,121 127,166 
168,454 3,266 
 8 Net salary 
Pensionable remuneration 116,562 
151,399 155,543 
215,344 3,497 
 9 Net salary 
Pensionable remuneration 138,479 
186,630 179,447 
256,866 3,600 
 10 Net salary 
Pensionable remuneration 164,802 
231,203 200,094 
293,264 3,790 
 11 Net salary 
Pensionable remuneration 193,743 
281,808 220,732 
329,599 2,131 
 12 Net salary 
Pensionable remuneration 211,306 
313,046 230,034 
346,228 2,324 
 ADG Net salary 
Pensionable remuneration 245,441 
373,464   
 DDG Net salary 
Pensionable remuneration 265,907 
410,097   
 
66. Completing the post classification would provide the staff with clear choices and facilitate 
their mobility.  The HRD, with the aid of a c onsultancy firm, is currently considering a new 
methodology for classifying posts. 
Recommendation No. 13:  We recommend that post classification at the WTO be the subject of 
a systematic policy so that it is completed within a limited period of around one year. 
 
 The WTO Secretariat will carry out a review of pos t classification starting in 2010 in order to 
help strengthen the performance management s ystem by introducing objective and common criteria 
for each grade and post.  
67. The distribution of staff into the 12 grades menti oned above is very une qual:  17.1 per cent of 
staff members are to be found in grade 10, the highest level accessible to non-senior management.  
This situation is particularly surprising as the average age in the Organization is not very high 
(44 years). 
68. This can be explained by the much more rapid promotion of WTO staff members compared 
with those in the United Nations Organization:  the only condition for moving up from one grade to 
another is a minimum duration of one year, whereas in the United Nations four years of service in a 
                                                     
 
15 "Pensionable" remuneration is used to calculate pension rights.  WT/BFA/W/188 
 Page 19 
 
 
  particular grade are required.  In practice, some staff members have been promoted after two years, or 
even one year at a particular level. 
Comparison of Grades at th e WTO and at the United Nations  
WTO grades 1 to 5 6 7 8 9 10 11 12 
UN grades G-1 to G-5 G-6 or P1 G-7 or P2 P3 P4 P5 D1 D2 
 
Breakdown of Permanent Staff by Grade  
Grade 2 3 4 5 6 7 8 9 10 11 12 DDG DG Total 
Staff 
members 5 39 64 90 68 82 80 96 114 15 10 4 1 668 
 
69. It is in the interests of staff members who are promoted rapidly within their division to remain 
there rather than to change units.  Professional mobility does not presently constitute a criterion of 
choice that is taken into account for promotion, but the Organization is reviewing this in order to give 
it greater importance.  The decision is hampered by  the concern not to disadvantage specialists who 
are unable to change divisions. 
Recommendation No. 14:  We recommend that  the minimum time for moving up from one 
grade to the next be extended. 
 Promotion policy is currently under review. 
Recommendation No. 15:  We recommend that  professional mobility be given greater 
importance among the criteria taken into account  for promotion, at least for those staff 
members whose expertise does not require th at they remain in a particular post. 
 
 Internal mobility policy is currently under review.  A process that is managed more actively 
by the senior management would help to develop th e skills of staff members and ultimately of the 
Organization itself. 
 
70. Until now, the careers of WTO staff members ha ve mainly been managed in each division, 
without any overall plan for human resource manage ment.  The HRD is aware of this shortcoming 
and is trying to develop a real forward-l ooking policy for managing jobs and skills. 
71. This effort is hampered by the absence of a computerized database on the skills of staff 
members, including their professional experience both within and outside the WTO and information provided by the annual evaluation interviews.  On ly purely administrative data on staff are 
computerized.  The reports on evaluation interviews  are indeed sent to the HRD but are only dealt 
with manually. 
Recommendation No. 16:  We recommend the est ablishment of a database on the professional 
skills of each staff member, so as to facilitate the introduction of a forward-looking policy for 
managing jobs and skills. 
 
 The HRD has asked that a system for managing the training programme be introduced in the 
Informatics Division in 2010.  This system coul d possibly be extended to include a database on 
professional skills. 
 WT/BFA/W/188 
Page 20  
 
  The awards policy provides little encouragement
 
 72. Each year, the WTO grants all its staff salary increases linked to the cost of living (in 2008, 
these meant a 1.3 per cent increase in the overall payroll cost) and performance-related increases 
according to grade and length of service in a particul ar grade, which are granted to all staff members 
if their supervisor considers their services to be " satisfactory" at the time of their annual evaluation 
interview.  Each year, 2 per cent of the budget lin es for the payroll are allocated for salary increases 
and performance-related awards.  In 2007, only seven staff members did not receive 
performance-related increases. 
73. At the request of Member States (but not at  the WTO's initiative, which underlines the scant 
importance traditionally given by the Organizati on to performance-related staff management), a 
performance-related award scheme was set up in 2004. 
74. The scheme adopted does not provide much encouragement:  indeed, the awards are only 
given each year to around 15 per cent of the eligible  staff, are only very small amounts (CHF 3,000 to 
5,000) compared with the average salary and are not linked to grade.  Moreover, some directors give 
them without taking into account performance, granti ng one to each of their staff in turn each year. 
Recommendation No. 17:  We recommend the revision of the awards scheme and the 
development of a remuneration scheme th at gives greater importance to individual 
performance. 
 
 The current awards scheme was ag reed in 2009.  It will be rep laced by an alternative scheme 
so as to take better account of performance.  
Recent initiation of a training policy
 
 75. Staff mobility can be encouraged through traini ng policy, allowing staff members to acquire 
new skills and disseminating a managerial culture am ong staff.  Traditionally, training policy was not 
very developed within the GATT and the WTO, a breeding ground for experts more accustomed to 
communicate their own skills than aware of the interest of ongoing training.  The only courses given to the staff were languages and informatics. 
76. For the past three years there has been a traini ng section in the HRD.  Allocations for training 
have shown a sharp increase, from CHF 300,000 to  CHF 1,700,000 between 2003 and 2007, and the 
training available has been placed on a formal basi s.  It comprises three components, intended to 
develop, respectively: 
 - Skills relating to the essential competence required for each post; 
  - technical skills for updating knowledge;  and 
 
 - managerial skills.  77. Training has been proposed for each of the compone nts and the staff has been informed of all 
the training available.  The online information on training could, however, usefully be complemented by the development of a formal training progr amme setting out the precise objectives sought and 
providing a programme for all training activities lasting for at least the same term as the budgetary 
biennium.  WT/BFA/W/188 
 Page 21 
 
 
  Recommendation No. 18:  We recommend the de velopment of a multi-year training plan. 
 
 A multi-year training programme was developed in the areas of performance management, 
managerial capacity building, and core skills.  A si milar programme is being developed for technical 
skills in the framework of a broader career management policy. 
 
Management of temporary staff  
 78. A "contract for temporary assistance" is defined as a contract not exceeding 12 months, which 
may only be extended in exceptional cases (for example, a long period of sick leave by the person 
replaced), but does not allow the same post to be occ upied continuously.  It is the subject of special 
regulations. 
79. The way in which temporary assistance has been used has led to an aberration, to which the 
Organization has reacted.  In fact, temporary assist ance has been used to re medy the failure to create 
permanent posts, even though the workload continue d to increase.  Several dozen people thus found 
themselves in the same post on temporary contracts that were continuously renewed over several 
years.  These were mainly people employed in the Administration Division, Language Services and 
Informatics. 
80. In 2001, a certain number of people had been  in the same post on a temporary contract 
financed from the temporary assistance budget for at least four years.  Initially, the Organization 
proposed a fixed-term contract of one year
16 renewable from year to year.  In 2003, the General 
Council agreed that permanent posts should be  created for these staff members and, from 2006 
onwards, their contracts were change d into permanent contracts after five years without examining the 
justification for the post.  This system gives quasi -automatic access to status as a WTO staff member 
with the risk of increasing the number of permanent staff without justification and without the guarantee of a competition. 
81. In the second stage, after reviewing its need s, the WTO decided to create 35 posts in the 
2005, 2006 and 2007 budgets  financed at no budgetary cost by suppressing vacant posts, including 
directors' posts.  The Budget Committee gave specifi c authorization for the creation of these posts.  A 
competition was arranged for these 35 posts and internal  candidates were able to apply.  The majority 
of persons in the aforementioned situ ation were recruited for these posts. 
82. Awareness of the risk of such a situation r ecurring led to redefinition of the policy on 
temporary work, in particular through note WT /BFA/W/123/Rev.2 of 8 December 2004.  Use of 
temporary assistance was limited to the following cases: 
 - Temporary peaks in workload, particul arly for translation, text processing and 
document reproduction; 
 
 - situations where manual workers are sometimes required for a short period; 
  - replacement of staff on long-term sick leave or maternity leave;   - trainees with contracts limited to three to six months;  
 
- s hort-term consultants for specific tasks, for example, in the computer sphere; 
 
                                                      
16 Still financed from the temporary assistance budget. WT/BFA/W/188 
Page 22  
 
   - recruitment to lessen the exaggerated amount of overtime by certain permanent staff 
members; 
  - tasks of an exceptional nature, which mu st be approved by the Budget Committee. 
 
83. In addition, a monitoring programme was initiated: 
 - Extension of contracts relating to the implementation of projects financed through 
extra-budgetary funds must not lead to fi nancing from the Organization's regular 
budget; 
 
 - any contract other than replacing someone  on leave without pay or on maternity leave 
for over three months and any extension of a contract for over three months must be 
approved by the Director of Finance, who keeps the Budget Committee informed; 
  - no temporary contracts may be extended beyond 11 months unless there are 
exceptional circumstances;  any extension mu st be the subject of a decision by the 
Budget Committee. 
 84. In addition, in order to lessen the cost of temporary work, it was decided to examine each 
contract individually, to exercise stronger control over overtime and encourage compensatory time off, and to seek opportunities to externalize work. 
85. The Budget Committee was duly informed of the cases covered by these new rules.  On the 
basis of the information given to the Committee in July 2008, it can be seen that 14 contracts of over 
11 months are financed out of the regular budget (t en of which relate to vacant posts) and 11 from 
extra-budgetary funds.  Among the latter, eight concern the Internet training programme, which 
explains the increase in the percentage of temporary assistance at the WTO at 1 January 2008. 
86. An examination of the list of contracts s hows that the average duration of temporary 
assistance is long (11½ months at 22 September 2008)  and that some contracts are extended to an 
excessive degree (for example, five contracts for 18 months or more, financed out of the regular budget, including one of 34 months covering a vacant post). 
87. Special mention should be made of the numerous  temporary contracts for drivers, intended to 
limit the large amount of overtime by the WTO's perman ent drivers.  It has been suggested that this 
service should be externalized, but the HRD, which s hould be responsible for monitoring this type of 
reform, is not aware of the follow-up given to this  initiative (the Administration Division has been 
given responsibility for the matter). 
Trend in the Number of Temporary Contracts  
Contracts 1 January 2004 1 January 2005 1 January 2006 1 January 2007 1 January 2008
Number  94  80  76  33  49 
% of total staff  13.4  11.3  11.0  4.8  6.9 
 
Recommendation No. 19:  We recommend that ev ery contract of over 11 months duration be 
reviewed, that measures to absorb these contra cts be proposed and submitted to the Budget 
Committee each year and that, in the case of driv ers, externalization of part of this service be 
considered in order to absorb the large amount of overtime noted. 
  WT/BFA/W/188 
 Page 23 
 
 
   The WTO Secretariat is currently reviewing the situation and is working on more rigorous 
control mechanisms for temporary assistance.  Th e excessive overtime clocked up by the drivers has 
been resolved by introducing a taxi  service from November 2008 onwards. 
 
Introduction of a performance management policy  
 
88. The WTO wishes to evaluate the performance of its  staff in order to ensure that the efforts 
made correspond to the Organization's objectives, which themselves are the subject of strategic 
consideration by the Director-General and the Organization's senior management. 
89. It seeks to develop management of performance by fixing a series of "inter-linked" goals, 
starting with the highest levels in the Orga nization down towards the staff as a whole. 
90. With this aim in view, the HRD has taken th e following initiatives, of variable scope, which 
have not yet all been implemented: 
 - Improvements to the staff evaluation po licy, notably by training managers and 
involving the staff in modern methods such as the evaluation of supervisors by their 
subordinates; 
  - the introduction of evaluation of the trai ning given (currently, consideration is being 
given to assessment of the results of the training given by the aforementioned managers, based on their perception, after a certain lapse of time, of the improvement in performance of their subordinates who received training); 
 
 - initiation of a programme of inter-service me ntoring (the mentors do not belong to the 
same service as the beginners they assist) in  order to assist the integration of new 
arrivals, dialogue among services and break ing down barriers in the Organization; 
 
 - introduction of standards for the classification of posts (an effort that illustrates the 
delays accumulated in this area, as mentioned above); 
  - the establishment of a network of competence on legal issues;   - modernizing the section of the annua l report dealing with human relations. 
 
91. The evaluation interviews in 2007 led to an a bundant flow of forms to the HRD, which should 
enable these documents to be utilized for the purpose of the managerial training of those in charge. 
Recommendation No. 20:  We recommend that e valuation interview reports be reviewed in 
order to highlight their strengths and weakness es, and allow those responsible to improve the 
methods used to fix objectives, evaluate  performance and provide advice on career 
development. 
 
 The HRD will be reviewing a selection of evaluation interview reports.  Training will also be 
provided to ensure greater clarity in the fixing of objectives and career development. 
 
 In the near future, all supervisors will be subjected to a 180
o evaluation.  This should help to 
determine, among other things, the extent to wh ich the performance management system has been 
properly set up. 
 WT/BFA/W/188 
Page 24  
 
  The lack of a social assessment report and regular updates in the WTO
 
 92. The auditors consider that the aforementioned initiative should be broa dly developed and lead 
to the publication of a proper social assessment report for the WTO, showing in particular the 
following elements, which do not appear in the annual report: 
 - Age distribution of the staff; 
  - breakdown of staff members by category and by grade;   - analysis of staff flows (recruitment, retirement, internal mobility … ); 
 
 - follow-up of priority plans such as certifi cation of posts, absorption of temporary staff 
or the development of mobility; 
  - salary policy; 
 
 - the extent of absenteeism;   - assessment of training.  93. This social assessment report could be co mplemented by regular updates for senior 
management. 
94. This policy would mean systematic centraliza tion of statistical information by the HRD, 
which currently does not always possess such informa tion, as well as a review of the "Oracle" data 
system of the WTO, which currently contains too little data on human relati ons, and more exchanges 
with other divisions. 
Recommendation No. 21:  We recommend the establishment of a proper social assessment 
report and regular updates on human resources. 
 
 The WTO would also like to introduce this tool.  However, it will require IT resources.  With 
an integrated database, it would be possible to suppl y all of the necessary data for each staff member 
(name, grade, social benefits, transf er, promotion, etc.).  This proj ect should be undertaken in 2011. 
 
Allowances
 
 95. During auditing of the 2008 accounts, the auditors  carried out surveys to verify the proper 
payment of the various allowances given to the staff: 
 - Allowances for dependent spouses, depe ndent children and secondary dependants; 
  - installation grant;   - separation from service grant;  
 - education grant and advances; 
  - rental subsidy.   WT/BFA/W/188 
 Page 25 
 
 
  96. They compiled samples of beneficiaries in each of the categories of allowance, taking into 
account an overall percentage of staff member s and a percentage in each of the possible 
sub-categories of beneficiary. 
97. For each of these allowances and for each samp le, how the procedure was applied, whether 
the supporting documents required for payment of the sums due were in the st aff member's file and 
whether the amount paid was correct were verified. 
98. The auditors found that, in general, the files were properly managed, particularly regarding 
installation grants and edu cation grants and advances17, and no remarks are called for.  This finding 
highlights the reforms that are being made in th e HRD, which has made efforts to improve the 
management of staff costs. 
99. Nevertheless, the management of  allowances needs to be mode rnized, certain aspects of the 
regulations updated and more st ringent monitoring of the submission of supporting documents is 
required. 
100. Personnel files would be clearer if they included the fullest possible and most up-to-date 
description of the civil and administrative status of each staff member, with the "hard" copy being 
accompanied by an electronic version as the service does not use the job management module usually 
proposed by developers of pe rsonnel management software. 
Allowances for dependent spouses, depe ndent children or secondary dependants  
 101. These are the allowances most commonly paid as 430 out of the WTO's 667 staff members 
are entitled to such allowances.  Th ey are governed by rules 106.13 and 106.14 of the Staff Rules and 
are the subject of a general note to the staff updated each year (OFFICE (08)/41 of 17 July 2008 for 
the year 2008). 
102. The concept of "dependent spouse" not only a pplies when the spouse does not have any paid 
activity but also when, if he/she works, income is not more than CHF 59,266 for 2008, increased to 
CHF 59,562 for 2009.  A staff member requesting payment of this allowance must provide the 
supporting evidence (a copy of the tax statement fo r the spouse's earnings, and attestation that no 
income has been earned or an attestation by th e employer indicating the earnings for the year). 
103. If a secondary dependant does not have any income, the staff member who ensures most of 
the support must provide at least half of the support and in any event a minimum of CHF 5,208, corresponding to twice the amount of the dependency allowance. 
104. If the secondary dependant has an income, the st aff member must at least match the total of 
this income. 
105. The auditors chose 22 files covering the whole range of family situations in order to verify for 
international or local staff, professional or support staff, the conditions of payment for the various 
types of allowance. 
106. With regard to dependent spouses, it was found that no evidence had so far been required in 
cases where it was declared that a spouse had no in come, contrary to the aforementioned rule.  The 
                                                     
 
17 Nevertheless, one file on an education grant for a disabled child (giving entitlement to a grant of 
100 per cent of the cost of education in this case) di d not contain a certificate from the Medical Service:  the 
recommendation on ensuring that certif icates from the Medical Service ar e submitted therefore applies to 
education grants. WT/BFA/W/188 
Page 26  
 
  information note for 2009 (OFFICE (09)/19 of 27 March 2009) nevertheless requires that a tax 
declaration for 2008 be submitted for a pplications relating to 2008 or, in  its absence, an attestation has 
to be filled in. 
107. Subject to this reservation, no anomaly was found in the files relating to each category. 
108. Regarding dependent children, it was found that in the case of 17 staff members with 
children, eight files did not contain the birth certificate for one or all the children, which the 
regulations require the staff member to provide.  This lack of a birth certificate is sometimes offset by a mention of the attestation in an NPA ("Note fo r Personnel Action"), which seems to prove that the 
certificate was sent to the service even if it no longe r appears in the file, or by the presence of other 
pieces of evidence such as copies of the children's cartes de légitimation .  In one file, it was noted that 
there was an attestation of identity documents  dated 24 January 1991 certifying the birth of 
two children in October that year, i.e. nine months later. 
109. In the case of disabled children, which allows  certain allowances to be paid under more 
favourable conditions (for example, th e education grant), it is noted th at the relevant provisions do not 
appear in any specific service note and the parents co ncerned are requested to contact the HRD.  The 
latter request the submission of an attestati on from an external physician, endorsed by the 
WTO Medical Service and subject to annual review.  It was noted that none of the files, fortunately in a very limited number, do not include the Medical Service's attestation, even though in one case an 
NPA mentions that the attestati on does not appear in the file. 
110. Regarding secondary dependants, it was noted that it was difficult to obtain rapidly the 
mandatory evidence regarding the amount of the pe nsion paid to the staff member's parents, who 
sometimes came from a country far away, and the imprecise nature of the documents given as proof 
of the amounts paid by the staff member for the person's upkeep. 
Recommendation No. 22:  We recommend that a ttention be paid to submission of all the 
supporting documents required by the Staff Ru les for granting allowances for dependent 
spouses, dependent children or secondary depe ndants, particularly tax notifications (for 
allowances for dependent spouses), birth certif icates (for allowances for dependent children) 
and medical certificates (for disabled children). 
 
 The HRD is continuing to request all of th e documentation concerni ng dependant spouses and 
children.  Reminders were made in the administrative circular issued at the beginning of 2009 and in 
communications to staff.  The HRD has intr oduced the necessary controls in this respect.  
 
Separation from service grant
 
 111. This grant is governed by rule 111.9 of the Staff Rules cited above, although any staff 
member whose appointment took effect prior to  1999 may continue to receive an alternative 
indemnity called the "repatriation grant", which ex isted before the new separation from service grant 
was introduced, where that amount is higher than th at of the separation grant (see rule 116.4 of the 
Staff Rules on the repatriation grant). 
112. Rule 111.9:  "(a) The WTO shall pay a separation grant under Staff Regulation  10.7 and under 
Annex 5 of the Staff Rules  to a staff member upon separation from service.  (b) For the purpose of 
Annex 5, length of service shall be deemed to comprise the total period of a staff member's 
continuous service with the WTO in paid status, regard less of type of contract.  (c) In the event of the 
death of a staff member, th e separation grant shall be paid to th e spouse or, if none, to the dependent 
child or children.  If there is no such surviving dependant, paymen t shall be made to the estate."  WT/BFA/W/188 
 Page 27 
 
 
  113. The auditors examined six files out of the 23 staff members concerned by payment of the 
grant in 2008, which involved a cost of CHF 403,711.35. 
114. Among these cases, they noted the special situati on of one staff member, aged 60 at the time 
of his departure on 31 December 2008.  Although several documents in the file, including a courtesy letter addressed to the person concerned by the Director-General of the Organization, mention 
retirement, it would appear that this staff memb er was also given a termination indemnity for 
dismissal corresponding to action "desirable in view of the needs of the WTO", for which the conditions, notably financial conditi ons, are determined "on terms mu tually agreed with the staff 
member", in accordance with Regulation 10.3 of the WTO Staff Regulations. 
115. As this was specifically a case of termination, it gave entitlement to the combined payment of 
the separation from service grant - whose amount, accord ing to Annex 5 to the Staff Regulations, is in 
such cases equal to twice the average salary of a ll WTO staff members for internationally recruited 
staff members - with a freely negotiated inde mnity, for which there is no ceiling, under 
Regulation 10.3 of the Staff Regulations.  In th e case in question, the amount actually received upon 
departure, including also the payment of compensation for 57 days of leave not taken (out of an 
authorized maximum of 60) thus amounted to the large sum of CHF 320,000. 
116. The auditors also noted one situation in which a staff member requested payment of the grant 
together with the grant for reinstallation in his country of origin, submitting proof of his actual reinstallation, contradicted by contrary proof from the Swiss local authorities. 
117. The relevance of this grant does not appear obvi ous in the case of international civil servants 
who have worked at the GATT and then the WTO for a large number of years, have sometimes 
become Swiss nationals or who have married spous es from another country and are not always eager 
for repatriation. 
Recommendation No. 23:  We recommend that  (i) documents attesting to the actual 
reinstallation of the persons concerned in their co untry of origin be submitted when payment of 
a separation from service grant is requested at the rate fixed for that country;  and (ii) this 
scheme should be reviewed because its justification is not evident in the case of staff members 
who have worked for a long time outside their country of origin. 
 
 The HRD will continue to request all documents attesting to  reinstallations.  If necessary, the 
supporting documents will be checked with the competent authorities. 
 Education grant and advances
 
 118. It may be questioned whether the Organization really has the capacity to verify that, in an 
institution attended by a child, "basic elements of  formal education (such as reading, writing and 
counting) are included in the instruction" - see Administrative Memorandum No. 961/Rev.1 of 
10 June 2008, page 2 - or to ensure that the t eaching the child receives in  an institution that is 
sometimes geographically very far away reaches the threshold of 20 hours per week (see the same Memorandum, page 2), which is not necessarily sel f-evident from the documents provided by the 
institutions when the children are registered.  A lthough underlining the inevitable complexity of the 
regulations to be introduced in an organizati on whose staff members come from many different 
countries, the auditors recommend th at, whenever it is deemed possi ble, certain aspects of the Staff 
Regulations and its implementing te xts should be revised in order to provide a regulatory framework 
that is as functional as possible with a view to  streamlining management of the arrangements and 
helping to limit problems of interpretation and errors or omissions of management, which can 
sometimes be caused by a system that is too complex. WT/BFA/W/188 
Page 28  
 
  Recommendation No. 24:  We recommend the review of certain criteria for education grants 
that are very difficult to verify. 
 
 The WTO Secretariat will continue to insist on the submission of supporting documents.  The 
HRD will consider the possibility of establishing working relations with the schools concerned in 
order to speed up the process and obtain more precise information.  
Rental subsidy
 
 119. The rental subsidy scheme, defined in the note to the staff OFFICE (01)/65/Rev.1 of 
26 June 2008, applies to international staff recru ited for a maximum period of seven years starting on 
the 31
st day following the date on which they take up their post (in other words, when the period 
during which they receive the installation grant expir es).  The rental subsidy is payable from the first 
day of the lease or from the first day of the entitleme nt, whichever is later.  Staff members holding 
short-term contracts are not eligible for the rental subsidy. 
120. If the rent is to be shared with someone other than the spouse or dependants and the lease is in 
the name of the staff member, the rental subsidy scheme only applies to that portion of the rent paid by the staff member.  Information on this point is also requested on the application form. 
121. The basis for calculating the subsidy is the diffe rence between the net rent paid by the staff 
member (up to the reasonable maximum rent  level set out in a scale that depends, inter alia , on family 
status) and the individual threshold amount determ ined on the basis of a percentage of the staff 
member's net salary plus spouse allowance and specia l post allowance, if applicable.  The rate is 
21 per cent for dependent persons and 23 per cent for those without dependants. 
122. The rental subsidy is graduated:  for the first four years it is 80 per cent of the aforementioned 
base, 60 per cent in the fifth year, 40 per cent in the sixth and 20 per cent in the seventh. 
123. Eligibility for this subsidy and its amount are theref ore likely to be affected by several factors:  
change of dwelling, modified rental, change in the composition of the family and in the number of 
dependants, increase in salary and the time that  has elapsed since entitlement to the subsidy. 
124. The auditors chose five files at  random out of the list of 47 st aff members benefiting from this 
subsidy in 2008.  Two of these files show anomalies: 
 - Notification of an allowance calculated on an incorrect basis because the decrease in 
the percentage from 40 per cent to 20 per cent was omitted although the staff member 
concerned was in the seventh and final year during which he could claim the subsidy;  
better wording of the forms for calculating the subsidy should enable this type of mistake to be avoided; 
  - another file showed a similar anomaly;  moreover, the date for taking into account 
entitlement to the subsidy in this case cove rs a period during which the staff member 
still had a temporary contract.  The service indicates that the regulations are ambiguous, at least in the French text, and that the WTO does not consider the probationary period prior to a permanent c ontract to be a "short-term contract" 
preventing an allowance being granted. 
 Recommendation No. 25:  As regards the rental su bsidy, we recommend that (i) the wording of 
the rules on the subsidy be clarified for short-term contracts;  and (ii) the rules on joint tenancy and graduated amounts be strictly observed. 
  WT/BFA/W/188 
 Page 29 
 
 
   The HRD is continuing to ensure that th e rules are observed and that the necessary 
documents are received.  The administrati ve circular will be amended accordingly. 
 
Overtime  
 
125. In 2008, overtime for all the Organization's activities cost CHF 891,732 (including the 
Appellate Body and the extra-budgetary funds);  45. 57 per cent of this amount (CHF 406,417) related 
to the ministerial conference held in July. 
126. The overtime scheme is authorized by Regulati on 6.3 of the WTO's Financial Regulations and 
has been the subject of a summary information note sen t to all staff.  Since 2007, it has been indicated 
that overtime, systematically paid until then, may at  the staff member's choi ce either be compensated 
in time off or paid.  There is no rule, however, stating how to compensate for overtime (for example, 
by indicating how work at the weekend and at night is compensated) and this form of compensation is 
not explicitly encouraged. 
127. Overtime is estimated in relation to the regul atory working week, which is 40 hours on the 
basis of five working days of eight hours each, from Monday to Friday.  Any hours worked over the 
eight hours daily is considered to be overtime.  Since 1 January 2007, overtime is not taken into 
account unless it has been authorized at least 48 hours in  advance.  A form used to authorize, verify 
and certify the details of overtime during the week must imperatively be approved and signed by the 
person in charge of the division to which the staff member belongs. 
128. Overtime worked from Monday to Friday is pa id according to an "ordinary" rate that 
corresponds to the normal hourly cost of work plus 50 per cent for the first three hours over and above 
the eight hours daily or according to a "special" rate (double the hourly rate) as of the fourth hour. 
129. If a staff member has to work on Saturday or  Sunday, any hour work ed is deemed to be 
overtime and is compensated, for Saturdays, according to the ordinary rate for the first three hours and 
then at the special rate as of the fourth hour.  On Sunday, any hour worked is deemed to be special 
overtime. 
130. Any hours worked at night, which are normally only the case for security guards, with some 
exceptions, also including Saturdays and Sundays, receive a supplement of 25 per cent of the hourly rate.  Staff members other than security guards ar e not usually paid this, except during exceptional 
periods of activity such as the annual ministeria l conference, where certain services (print shop, 
drivers … ) work very long hours.  According to oral  information, a waiver is then expressly given to 
the staff members concerned and a special allocation in the overall cost of the ministerial conference 
is set aside to pay overtime.  No document attesti ng to the special authorization could, however, be 
found in the files in which it should have appeared. 
131. Special measures have been taken to lessen th e number of hours of overtime by drivers, 
which until now has been the service most concerned.   Accordingly, directors attending meetings late 
at night have been asked to take taxis and not call on the drivers. 
132. The auditors verified the application of the procedures for authorization and payment of 
overtime for interpreters, drivers and the print shop. 
133. In the case of translators and interpreters, pr ior authorization and observance of all the 
approvals required from supervisors are fully respect ed, and it is easy to plan overtime in advance, 
even though the exact number of hours cannot be estimated as this depends on the length of the 
conferences or meetings. WT/BFA/W/188 
Page 30  
 
  134. In the case of drivers, because they have to ma ke many urgent trips, the forms authorizing and 
validating overtime are sometimes only completed after the overtime has b een worked and are the 
subject of partial approval.  As there is in prac tice no choice between time off and payment, all the 
staff members ask to be paid.  As to the attempts  to lessen the number of hours of overtime worked by 
drivers, which sometimes reaches limits that are in compatible with normal working hours in public or 
private organizations (one driver, for example, worked for 116 hours during the week of the 
ministerial conference in 2008, sometimes working for 20 hours a day), it would appear that eliminating the possibility of utilizing the services of a driver at night and paying the cost of taxis for 
the directors concerned, introduced in October 2008, has only had a limited impact.  Although overtime paid in this respect has in fact fallen sli ghtly, taxis are only marginally used and since they 
were introduced there have only been 16 trips involv ing six persons.  The Organization points out that 
the directors concerned in practice use their own pers onal vehicles rather than taxis if meetings last 
until late. 
135. In the print shop, whose workload is directly  affected by large-scale events (ministerial 
conference, public forum), authorization is given prior to working overtime and the number of hours 
taken as time off (17 per cent in 2008) is much higher th an that in other services.  It would appear that 
this exception is attributable to the fact that the h ead of the print shop encourages his staff to take time 
off. 
136. The measures taken to control the amount and conditions of overtime by WTO staff members 
have been noted, as well as the limits of this exercise in the context of the heavy burden on an 
organization that is responsible for large events that require specific logistics.  It is suggested that 
special solutions for organizing and planning work should be sought so as to ensure that the 
Organization is not exposed to the dangers of an excessive number of hours worked by some of its 
staff members, as is regularly the case at ministerial conferences. 
137. It is also noted that managing overtime by m eans of forms filled in by hand does not fully 
prevent the practice of post-dating of authorizations  and that the electronic handling of the procedure 
would allow the dates of authorization to be verified  quite reliably, together with use of a data entry 
form that would block the procedure if one of the approval stages had not been completed by the supervisor concerned.  Using a time management model in the Oracle software, if necessary specially adapted, directly interfaced with payroll manage ment, could be a satisfactory response to this 
objective. 
138. It is also recommended that a note be sent to all staff members explaining the overtime 
regime, describing the procedure for authorization a nd approval, justification for overtime and, with 
the exception of staff categories specifically mentione d (drivers, translators, print shop staff), the 
maximum working hours applicable to staff, a ma ximum of 60 hours being the benchmark commonly 
applied in Europe. 
Recommendation No. 26:  We recommend that (i) the rule on prior authorization for overtime 
be observed;  (ii) a comprehensive note be se nt to all staff membe rs recalling the overtime 
regime;  (iii) precise rules be set for compen sating overtime;  and (iv) compensation be 
encouraged. 
 
 The WTO Secretariat is currently review ing its overtime policy and will make a 
communication to staff. 
  WT/BFA/W/188 
 Page 31 
 
 
  D. ASSETS  
Cash flow management  
 139. Although there is no statement of the cash flow situation, availability (cash flow and cash 
equivalents
18) at 31 December 2008 can be broken down as follows: 
Situation of Funds Available at the WTO at 31 December 2008  
(in CHF) 
 Budgetary 
funds Extra-budgetary 
funds Total budgetary funds 
plus extra-budgetary 
funds Working 
capital fund Overall total 
31 December 2008  22,301,846   24,367,570  46 ,669,416  9,704, 080  56,373,496 
31 December 2007  25,271,178   22,702,533  47 ,973,711  9,379, 142  57,352,853 
Variation 
2008/2007  -11.75%  7.33%  -2.72%  3.46%  -1.71% 
 
140. In order to monitor cash flow, the Finance De partment keeps separate accounts, but does not 
use the Oracle system, which shows the immediate cash flow situation at the time it is consulted and 
allows retrospective studies of the actual position to be undertaken at the end of each month, although 
it does not permit the daily cash flow trend to be followed, which is important in order to assess the 
efficacy of an investment policy.  Such a functio n, which could be developed in the Oracle system, 
would ensure a better follow-up.  The Orga nization is considering this suggestion. 
141. Forecasts of the monthly cash flow are made acco rding to the average income received during 
the three preceding financial years, but they are not updated despite the gaps between the true 
situation and the forecasts, shown in  the following table.  It would appear advisable to update these 
forecasts systematically, in particular, in orde r to decide what investments should be made. 
Gaps Between Cash Flow Forecasts and the True Situation  
(in CHF millions) 
Month (2008) Forecast Monthly percentage  True situation Monthly percentage 
January  46.30  0.22  46.94  0.23 
February  23.94  0.11  33.64  0.16 
March  29.67  0.14  19.45  0.10 
April  23.25  0.11  29.21  0.14 
May  7.45  0.04  3.47  0.02 
June  14.27  0.07  13.77  0.07 
July  6.15  0.03  6.14  0.03 
August  5.45  0.03  10.09  0.05 
                                                      
18 At the end of 2008, the WTO's investments were for a term of less than three months 
(22 February 2009 for budgetary funds and 24 March 2009 for extra-budgetary funds) and can therefore be 
considered as cash equivalents. WT/BFA/W/188 
Page 32  
 
  Month (2008) Forecast Monthly percentage  True situation Monthly percentage 
September  2.58  0.01  1.50  0.01 
October  14.66  0.07  4.83  0.02 
November  4.72  0.02  13.05  0.06 
December  33.01  0.16  22.17  0.11 
Total  211.45  100%  207.26  100% 
 
Recommendation No. 27:  We recommend that cash  flow forecasts be systematically updated. 
 
 The cash flow forecast upda ting method has been reviewed  and changes were introduced as 
of 1 August 2009. 
 
Bank reconciliations  
 
142. Bank reconciliations show full consistency between the bala nces in the accounts and the 
balances in the bank accounts.  This situation can be explained by the slow pace of reconciliation 
operations, which are usually closed towards the 15th of the following month, as can be seen from the 
timetable of reconciliation of the UB S accounts from August to December 2008. 
Timetable of Bank Reconciliations  
Month Date of receipt of bank confirmations from 
the UBS Date of signature of the reconciliation 
statement 
August 2008 2 September 18 September 
September 2008 6 October 10 November 
November 2008 1 December 16 December 
December 2008 5 January 2009 15 January 2009 
 
143. Internal arrangements in the Finance Unit ensure  proper separation of payers and auditors.  
Although each person's role is known within the service,  there is no formal designation of the person 
responsible for bank reconciliation. 
Recommendation No. 28:  We recommend that  bank reconciliations be accelerated, closed 
within a reasonable time and that a staff memb er responsible for these be formally appointed. 
 
 The persons responsible for bank reconciliatio ns were officially appointed in a new 
procedure introduced on 29 June  2009.  This procedure imposes a time limit of seven working days 
after the end of the month for the prepara tion and approval of bank reconciliations.  Since 
1 February 2009, bank reconciliations  have been prepared and approved  within an average period of 
5.6 working days. 
  WT/BFA/W/188 
 Page 33 
 
 
  Remuneration of current accounts  
 144. Current accounts are remunerated at a daily rate set by the banks.  The interest is not 
negotiated and no agreement has been signed for this  purpose.  The rates paid by the various banks 
have varied throughout the year, as can be seen from the following table: 
Rate of Remuneration of the WTO's Current Accounts  
Bank accounts Minimum rate Maximum rate 
UBS (Swiss francs) 0.125%  1.778% 
UBS (euros) 1.288%  3.593% 
UBS (US dollars) 0.125%  3.954% 
UBS (pounds sterling) 0.837%  4.620% 
Crédit Suisse (Swiss francs) 0.125%  Constant rate 
La Poste 0.125%  Constant rate 
Account held for the working capital fund 0.125%  Constant rate 
Account held for WTO II 0.125%  Constant rate 
 
145. The total amount of interest earned from current accounts is recorded in the miscellaneous 
income section of the WTO's regular budget.  In 2008, it amounted to CHF 175,171, a drop of 
13.9 per cent in comparison with 2007.  The lower inte rest received can be explained by the level of 
cash available and by the significant decrease in inte rest rates given by the UBS, the main depositary 
of WTO funds, which reflects the sharp drop in mark et rates.  The downward trend became marked 
from September 2008 onwards. 
146. An agreement with the banks on remuneration of current accounts should help to limit the 
impact of negative fluctuations in the market. 
Recommendation No. 29:  We recommend that ag reements be negotiated with banks concerning 
remuneration of current accounts. 
 
 The rate applied by the UBS to the WTO is generally higher than that for other UBS clients.  
However, the fall in market rates has changed the sit uation.  The WTO  will review its approach to the 
management of current accounts in order to limit the amount left on deposit in these accounts by the 
end of 2009.  However, it appears impossible to nego tiate a rate that would cancel out the impact of 
market fluctuations. 
 
Distribution of charges and interest on current accounts  
 
147. The WTO's use of electronic payments has pe rmitted a considerable reduction in bank 
charges for the management of current account s, which fell from CHF 19,685 in 2006 to CHF 12,993 
in 2008: 
Trend in Charges on Current Accounts (in CHF ) 
 2006 2007 2008 
Swiss franc accounts  15,352.10  9,501.45  9,824.80 
US dollar accounts  2,798.77  1,679.38  1,982.30 
Euro accounts  995.27  643.41  665.96 
Pound sterling accounts  53 9.43  392.06  520.28 
TOTAL  19,685.57  12,216.30  12,993.34 WT/BFA/W/188 
Page 34  
 
   
148. The charges on current accounts with the banks are not divided between budgetary and 
extra-budgetary funds.  Interest and charges (b ank commission) on the current accounts are, by 
default, fully recorded in the budgetary funds.  C onsequently, the amount of interest (CHF 175,171) 
and bank charges (CHF 12,993) appear to be inco nsistent in comparison with the funds available 
situation in the current account at the end of the year, whereas the situation of these two categories of 
funds shows a comparable amount (CHF 22,30 1,846 for budgetary funds and CHF 24,367,570 for 
extra-budgetary funds). 
Recommendation No. 30:  We recommend that bank interest and charges on current accounts 
be divided between the budget ary and extra-budgetary funds. 
 
 The WTO Secretariat will study the feasibility of  such a division of the current accounts with 
a view to implementation at the end of 2009. 
 
Investment
 
 
149. Pursuant to Regulation 34 of the Financial Regulations, the Director-General may make 
non-speculative short-term investments of moni es not needed for immediate requirements. 
150. At 31 December 2008, the investment portfolio amounted to CHF 49,219,260, divided 
between the UBS for the major part (C HF 35,219,260) and the Crédit Suisse. 
151. This division, 71.55 per cent for the same financia l institution, appears to be too risky.  The 
investments with the Crédit Suisse in 2008 we re only made belatedly, on 22 October and 
16 December 2008, at the initiative of the new Head of the Finance Unit. 
152. The WTO does not have any investment policy that determines the priorities to be observed 
(security of capital, liquidity and rate of return), the minimum cash threshold above which the investment of available funds is authorized, th e method to be followed when analysing risk and 
deciding on investments, and the checks to be put in place in order to verify observance of this policy. 
Recommendation No. 31:  We recommend that an investment policy be defined, together with 
the relevant rules to be observed. 
 
 The WTO Secretariat has a very prudent investme nt policy which will be formalized before 
the end of 2009. 
 
Procurement
 
 153. Aware of the weaknesses of its procurement system, in 2008 the WTO decided to reform it by 
appointing a new Head of the Procurement Section,  having an audit conducted by its Office of 
Internal Audit, and then following the recommendations of the audit. 
154. Under this programme, the Procur ement Section, comprising five staff members, has become 
independent, been separated from the Infrastructur e Section, and a new head was appointed in 
June 2008 in order to define and implement a centr alized procurement policy within the WTO, at a 
time when the renovation and extension of the hea dquarters mean that procurement of supplies and 
equipment will increase. 
155. The first report of the Office of Internal Audit, submitted on 14 November 2008, underlined 
the serious weaknesses of the previous arrangements and made recommendations to correct them:  WT/BFA/W/188 
 Page 35 
 
 
   - Absence of centralized procurement:  all WTO divisions have the right to purchase;  
the procurement section automatically gives them purchase orders without verifying whether the items requested are in stock or obliging them to compare prices; 
  - lack of detailed instructions on procurement procedures; 
 
 - there is no database indicating the items available within the Organization;  the WTO 
explained, however, that partial databa ses had been created for the Economat and 
the Informatics Service ; 
 
 - assistants are accustomed to obtaining office supplies through the same supplier; 
  - failure to respect the obligation to s eek tenders for any procurement exceeding 
CHF 50,000 (Rule 10.3 of the Organization's Financial Rules) a nd sometimes there 
are no purchase orders, particularly in the case of the WTO library; 
 
 - in some cases, failure to request purch ase requisitions and no formal arrangements for 
these; 
  - unclear distribution of responsibilities between the Procurement Section, which 
should ensure that operations are consis tent with the rules on procurement and 
contracts, and the Finance Unit, which should monitor consistency with the budget 
lines; 
  - the Oracle computer system is insuff iciently used even though it could allow 
procurement exceeding the CHF 50,000 thr eshold from the same suppliers to be 
monitored and could distri bute copies of purchase orders to all the divisions 
concerned; 
  - lack of a database on suppliers and list of pre-approved WTO suppliers;  failure to file 
contracts; 
 
 - lack of systematic recording of goods purchased from the stores; 
  - some staff members have remained too long (ten or even 30 years) in the 
Procurement Section. 
 
156. Implementation of the internal audit's recomme ndations has been systematically followed up 
and the Procurement Section has prepared a prop osed procurement policy and procurement handbook, 
which should be approved in 2009.  Hencefor ward, procurement exceeding CHF 50,000 is 
systematically subject to a call for bids. 
157. Surveys carried out in the course of our audit showed that the behaviour criticized by the 
Office of Internal Audit had not completely ceased, even though substantial progress was noted.  For 
example, the electronic follow-up of procurement by the competent division is inadequate and on 
16 April 2009 there was a gap of CHF 1,415,844 betw een the amount of the orders given for the last 
six months of 2008 (CHF 8,073, 616) and the payments made  (CHF 6,657,772), because of 
insufficient information in the S ection which, depending on the case: 
 - Is not aware that certain purchases that it considers have not yet been paid, relating to 
security, for example, have in fact not been made, the purchase order having been 
modified; 
 WT/BFA/W/188 
Page 36  
 
   - failure to follow up purchases made under leasing contracts; 
  - failure to readjust certain invoices that  are lower than the corresponding estimates; 
  - failure to follow up graduated deliverie s corresponding to purchase orders covering 
the whole year; 
  - in addition, the Procurement Section is not aware of the content of certain 
procurement directly made by the Technical  Services, Publications, the informatics 
and communications services (Information Media Relation Division), although the 
Oracle system allows all such operations to be followed up, the division does not 
know how to utilize its potential to the full. 
 158. These inadequacies can be explained both by  the absence of written pocurement procedures 
disseminated within the Organization and by the fact  that the information system of the Procurement 
Section is not networked with the Finance Section and the operational units i nvolved in procurement, 
which do not therefore transmit the necessary information for following up procurement. 
159. Moreover, some divisions simulta neously engage in expenditure of the same nature (purchase 
of toner for photocopiers), amounting to CHF 182,189, well above the CHF 50,000 threshold from which calls for bids are compulsory. 
Recommendation No. 32:  We recommend that an information system be introduced to allow all 
procurement procedures to be followed up (pur chase requisitions, purchase orders, invoices, 
delivery notes, inventory numbers … ), accessibl e to all the divisions concerned (Procurement 
and Finance Sections, operational services). 
 
 The WTO Secretariat would like to improve the information system allowing procurement 
procedures to be followed up within the framew ork of the reform of the procurement service.  
However, the cost of such a system was es timated at CHF 150,000 at the end of 2008. 
 
Recommendation No. 33:  We recommend that it be totally prohibited to make any purchases 
without the prior agreement of the Procurement Section. 
 
 The new procurement policy approved on 21 July 2009 defines the charter of respective responsibilities of the Procurement Section and the re questing services.  In particular, it provides that 
all procurement must go through the Procurement Section. 
 
Stocks
 
 
160. The WTO's Publications Section updates the situa tion of stocks of its own publications, those 
it purchases outside and "souvenirs" (promotional items) sold by the Organization.  WT/BFA/W/188 
 Page 37 
 
 
  161. The table below was prepared on the basis of the breakdown provided to the auditors: 
Situation of Stocks in the Publications Section in 2008  
(in CHF) 
Stock WTO 
publications Extra-budgetary 
fund publicationsPublications 
bought Souvenirs Total 
Opening stock 
January  497,697.92  20,087.92  156,306.72  51,523.45  725,616.01 
Stocks entering in 
2008  444,782.64  0  107,073.63  36,209.98  588,066.25 
Stocks going out in 
2008  -459,474  -11,964.09  -112,685.08  -31,991.31  -616,114.48 
Including those free 
of charge or at 
paper/ink cost in %  77.20%  100%  10.60%  15.50%  62.30% 
Adjustment of the 
inventory  -13,405.68  3,906.94  -2,856.35  -5,780.10  -18,135.19 
Valueless entries 
(obsolescence)  -106,075.01  0  0  -956.25  -107,031.26 
Stock at 31/12/2008*  363,525.87  12,030.77  147,838.92  49,005.77  572,401.33 
*After adjustment 
 
162. According to the above data, in 2008 - as in 2007 - the items to be given away represented 
some two thirds of the value of the total st ock and over three quarters of WTO publications. 
163. The above figures and the documents transmitted hi ghlight the differences in comparison with 
the non-negligible physical inventories, largely becau se of the complexity of the system and the lack 
of interfaces.  In fact, determination of the final le vel of the stocks means reconciling the stocks in the 
accounts, the actual stocks and the stocks held by P ublications.  Although the system is still imperfect, 
the auditors have noted an improvement in the s ituation between 2007 and 2008 as regards the size of 
the gap on closure and analysis of the process. 
164. In 2007, the gap at the closing inventory was CHF 108,462.44.  After a lengthy analysis, it 
was lowered to an unexplained figure of CHF 9,301.44.  In 2008, the gap in the inventory at 31 December 2008 was CHF 18,135.19, including in particular a loss of 10 per cent on souvenirs, 
attributable to losses or items stolen, which the service concerned is trying to reduce.  The WTO 
points out that this gap in the inventory only represents 3 per cent of the total stocks at 
31 December 2008. 
165. The auditors have noted that formalization effo rts and an initial analysis of the process were 
the subject of a note in April 2008 and that Publi cations and the Finance Unit are continuing their 
efforts to improve the management of stocks. 
Recommendation No. 34:  We recommend that  the process under way for analysing and 
formalizing the follow-up, inventory and accounting of stocks of publications and souvenirs be completed. 
 WT/BFA/W/188 
Page 38  
 
   The WTO Secretariat will pursue its efforts to  improve the process of follow-up, inventory and 
accounting for the stocks of public ations and souvenirs.  At the same time, it will review its global 
approach to the sale and distribution of  publications by the end of 2009. 
 
166. The auditors have noted the significant effort made by the Publications section to reconcile 
the stocks during renovation and extension of the WTO headquarters, almost one third of the total 
stock consisted of valueless items in  2007 but only 15 per cent in 2008. 
167. The value of publications and souvenirs is assessed partly on the basis of their cost:  that of 
the goods consumed to produce them (paper a nd ink), in the case of WTO publications, and the 
purchase price, for publications bought outside and souvenirs.  These methods will have to change 
when the transition to IPSAS takes place.  In f act, IPSAS 12 (paragraphs 11 and 12) provides for the 
following methods of measuring inventories. 
168. Items intended for distribution at no charge should be measured by one of the following 
two methods which produce the lowest cost: 
 - The "cost" method, covering the purchase price, transport and handling costs and any 
other costs, for goods purchased, and the co st of goods consumed  in the production 
process, the cost of conversion (direct labour  cost) and general costs (amortization, 
indirect labour cost … ), in the case of goods produced; 
  - the "current replacement cost" method, that  is to say the cost needed to purchase or 
produce the goods. 
 
169. Goods to be sold should be measured accordi ng to one of the following two methods that 
leads to the lowest cost:  the "cost" method defined a bove or the "net realizable value", in other words, 
the estimated selling price minus the estimated cost of making the sale. 
Recommendation No. 35:  We recommend the in troduction of analytical accounting in the 
Publications section so as to be able to value th e stocks according to the methods laid down in 
IPSAS 12. 
 
 The WTO Secretariat will consider introducing a nalytical accounting as part of the transition 
to IPSAS. 
 The WTO headquarters extension project
 
 170. Since its creation in 1995, the WTO has had a main building, the "Centre William Rappard 
(CWR)", situated on avenue de La usanne in Geneva, and an annex that was originally in avenue 
Blanc (70 work places), and then in avenue Rothschild  (100 work places).  In order to cope with the 
increase in its staff, in 2001 the WTO first decide d to establish a new annex on avenue de France in 
Geneva, designed for 450 work places, to  replace that in avenue Rothschild. 
171. Through an agreement dated 17 December 2003 , the Building Foundation for International 
Organisations (FIPOI) granted a loan of CHF 5 milli on for this purpose, intended to cover the design 
study fees and the bidding procedure, and in a letter of 2 November 2001 from its Permanent 
Representative, the Federal Council promised an in terest-free loan of CHF 50 million repayable over 
a period of 50 years to finance the cost of building this annex.  The amount of this loan commitment 
was raised to CHF 60 million in July 2005. 
172. The WTO selected the firm of architects to carry  out this project, had the terms drawn up and 
issued a call for bids in September 2005, with th e time-limit for bids set at 20 December 2006.  The  WT/BFA/W/188 
 Page 39 
 
 
  selection procedure was suspended, however, and the time-limit for submitting bids deferred until 
December 2006, then July 2007, at the instigation of the new Director-Gener al, Mr Pascal Lamy, in 
order to study the feasibility of a new project that  would enable all staff members to be gathered 
together under the same roof. 
173. After having compared two types of technical so lution, either transferring the headquarters to 
a new site in Geneva or extending the current build ing, the Organization chose the latter solution, in 
agreement with the Swiss authorities, particularly  because of its lower cost (the two solutions 
envisaged for moving the WTO headquarters were es timated, respectively, to be CHF 255 million and 
CHF 275 million, compared with CHF 150 million in the first instance for the CWR extension project
19). 
174. The extension project comprises three separate operations:  renovation of the current building, 
the Centre William Rappard (CWR), the intra-mural ex tension of this building,  consisting of covering 
one of the internal courtyards with glass a nd arranging the new areas thus covered, and the 
extra-mural extension consisting of a new building very close to the CWR, over its south parking 
area. 
175. In November 2007, the Swiss Permanent Representative informed the WTO Budget 
Committee that the Confederation would grant an interest-free loan of CHF 60 million repayable over 
a period of 50 years, through the FIPOI, and would make a grant of CHF 70 million, and this was 
confirmed by the agreement of 1 August 2008 signed between the WTO and the Swiss Confederation. 
176. The new project, which should be completed by the end of 2012 according to the 
aforementioned agreement of 1 August 2008, calls for the following remarks: 
The obligations of the Swiss authorities con cerning the WTO's infrastructure needs lack 
precision: 
 
177. Article G of the infrastructure contract signe d by the WTO, the Swiss Confederation, the 
Republic and Canton of Geneva and the FIPOI on  17 May 1995 provides for the following if the 
facilities at the CWR are no longer sufficient to meet  the Organization's infrastructure needs:  the 
WTO "expects that the Swiss Confederation will place at its disposal, free of charge, use of other 
premises" and the Swiss Federal Council "is ready to place at the disposal of the WTO the necessary facilities on terms that take account of the interests of the Organization and correspond to Switzerland's policy as a host country". 
178. This latter provision therefore has to be inte rpreted in the light of Switzerland's policy 
towards the various international organizations  it hosts.  A letter from the Swiss Permanent 
Representative to the WTO, dated 2 November 2001, c ites the precedents for four organizations that 
recently constructed buildings in Geneva, without  specifying the assistance given by Switzerland in 
each case:  the World Health Organization, the World Meteorological Organization, the Inter-Parliamentary Union, and the In ternational Telecommunication Union. 
179. It is also important to know whether the Headqua rters Agreement is in fact applicable, despite 
the fact that a second condition precedent "granting of  a credit by the Geneva Grand Council" for the 
construction of a car park with at least 400 spaces in  the proximity of the WTO (articles K and O of 
the Headquarters Agreement) has not been lifted, wh ich prevents this contract from being registered 
by the Genevan Land Register a nd, consequently, its opposability. 
                                                     
 
19 According to the report of the Budget Committee of 12 July 2007. WT/BFA/W/188 
Page 40  
 
  180. The WTO belatedly tried to compare the treatme nt given by the Swiss authorities to various 
international organizations.  In early 2008, it received a copy of the model surface area contract 
proposed by the FIPOI to international organizations .  At a meeting organized on 30 April 2008, with 
those mentioned in the letter of 2 November 2001 (with the exception of the WHO), it emerged that different organizations had refused certain conditions  in the model contract and were still negotiating 
with the FIPOI.  Although the legal meaning of "po licy of the host country" in the model contract is 
understood, the Swiss authorities' political will to ad apt the text to each organization's situation is 
difficult to determine. 
181. It would appear, nevertheless, that the c onditions given to the WTO since 1995 through its 
Headquarters Agreement and its infrastructure contract  are in general more favourable than those in 
the model contract, particularly the surface area rights it has over the three plots of land it occupies, 
which belong either to the Confederation or to the Canton of Geneva, and are given for 99 years, 
instead of the 50 years proposed or applied to other organizations. 
The Swiss authorities' participation in the fina ncing of the project is significant, but the 
project's cost appears to be under-estimated: 
 
182. The financing modalities for the project are dete rmined in the agreem ent of 1 August 2008, 
supplemented by a financing plan drawn up by th e FIPOI on 30 April 2008.  The overall cost of the 
project, estimated to be CHF 130 million, is covere d by the interest-free loan of CHF 60 million and 
the grant of CHF 70 million mentioned above.
20  The agreement of 1 August 2008 also determines the 
modalities for settling the problem caused by aband oning the avenue de France project, which are 
highly satisfactory for the WTO. 
183. In effect, it settles the FIPOI's claim in excha nge for the WTO's assignment of all the studies 
for the project:  these are valued at CHF 5,153,05 4.39;  the FIPOI buys these in exchange for its 
CHF 5 million claim and also pays CHF 153,054.39 to the WTO "considering that the WTO paid an additional amount of CHF 153,054.39 to finan ce the project and the related studies". 
184. The agreement of 1 August 2008 at last prepares for lifting the condition precedent not 
implemented inasmuch as it confirms (Article 6)  that 400 parking spaces are to be provided in the 
future Sécheron car park which the Canton of Gene va has undertaken to build, and provides for an 
adjustment of the infrastructure contract of 2 June 1995 (Article 15). 
185. The financing terms are satisfactory as they  only make the WTO (and consequently its 
Member States because of their share of the Orga nization's annual budget) r esponsible for repayment 
of the interest-free loan of CHF 60 million.  But a decision by the Confederation reduced the amount 
determined without cutting back the project accordingly. 
186. The cost of the project, estimated to be CHF 150 million in July 2007 (according to the report 
of the Budget Committee of 12 July 2007) has b een lowered to CHF 130 million, even though the 
amount of the grant from the Confederation (CHF 70 million) had been definitively established, 
without its content being modified.  It would appear that the WTO could have obtained an 
interest-free loan for a higher amount, but it has alwa ys held the view, as recalled in the letter of 
19 December 2007 from the Director-General to the President of the Swiss Confederation, that 
WTO Members considered that repayment of th e interest-free loan of CHF 60 million was "the 
ceiling for their contribution to the project". 
                                                     
 
20 The financing plan drawn up by the FIPOI on 30 April 2008 refers to the security work needed to 
make the WTO's headquarters secure, estimated to be CHF 6.4 million and likely to be financed by the Canton 
of Geneva, but so far there is no text determining the modalities for this project and its financing.  WT/BFA/W/188 
 Page 41 
 
 
  It is not certain that the project will in future allow the objective of grouping all WTO staff 
under the same roof to be achieved: 
 
187. The table of WTO's future needs as regards posts, drawn up for the purpose of the project, 
envisages the following: 
 - 800 posts in 2007 (654 permanent staff members of the WTO and 146 consultants, 
trainees, temporary staff, etc.); 
  - 884 (722 plus 162) in 2017;  
 - 911 (744 plus 166) in 2020; 
  - 1,006 (822 plus 184) in 2030;  and   - 1,111 (908 plus 203) in 2040, i.e. an increase of 38.87 per cent (1 per cent yearly) 
over 33 years. 
 188. This estimate of around 1,100 posts in 2040 is lowe r than the first scenario envisaged by the 
WTO, showing growth of 3 per cent in staff numbers each year, as was the case during the first 
11 years of the Organization's existence, culminating in 1,500 posts by 2025. 
189. Furthermore, WTO has very considerable meeting room requirements;  the regulations for the 
architectural competition launched by the WTO indicate that "The number of people actually in the 
building at any given time often exceeds 2,000."  The growing need for meeting rooms recorded 
during the first 11 years of the WTO's operations was 22 per cent. 
190. It would appear that, in order to limit the co st, the extension project has been designed for 
only 1,100 work places:  800 in th e current building (the CWR) by  increasing the occupancy density, 
and 300
21 in the extension itself, which was the s ubject of an architectural design competition 
launched on 1 September 2008. 
191. There is thus a risk that, in the long term, th e WTO, contrary to its objective of grouping all 
staff members under the same roof, will once again be obliged to utili ze an annex such as that in 
rue Rothschild, in use today, or that in chem in des Mines (250 work places), which will shortly 
accommodate some of the staff during renovations at the CWR. 
The solution chosen involves legal and political risks  
 192. The legal opinion given by the firm of la wyers Lenz and Staehlin on 26 March 2007 shows 
that the three plots on which the CWR and its future extension are situated are in three areas that are 
all protected, for which the relevant laws explicitl y provide for the possibility of granting a waiver: 
 - Zone 5 is defined in the implemen ting law for the Federal Law on Land-Use 
Management as a residential area for houses; 
  - the "green zone" is defined by the same Law as land for public recreational use;  
                                                     
 
21 The regulations for the architectural design co mpetition provide for 12 offices for directors, 
90 individual offices, 95 two-person offices and ten three/four-person offices, which should create 332 work 
places, in excess of the objective of 300 work places specified in the regulations. WT/BFA/W/188 
Page 42  
 
   - the "protection perimeter" is defined by the Cantonal Law on the General Protection 
of the Lake Shore, which defines those sect ors that must remain open to the public 
and those sectors that may not be built on. 
 193. Obtaining a building permit, issued by the Department of Construction and Information 
Technology (DCTI) of the Canton of Geneva, therefor e appears "extremely difficult", according to the 
aforementioned legal opinion, and involves waiv ers from the three protection regimes for the 
aforementioned land. 
194. Moreover, when the WTO was negotiating with the Swiss authorities, leading to conclusion 
of the agreement of 1 August 2008, the authorities indicated that simple waivers would not suffice in 
this case and that it was necessary "to amend the Cantonal Law on the Protection of the Lake Shore" 
(Article 14 of the agreement). 
195. These legal problems are likely to be exacerbated by politicization of the problem.  This risk, 
which was pointed out in our letter of 17 November 2008 containing our observations, has 
materialized because on 26 April 2009 a "referendum  committee" launched the procedure required to 
collect the 4,000 signatures needed to organize a mu nicipal referendum against the project to extend 
the WTO's headquarters.  The success of this refe rendum - which will be held in September if the 
procedure succeeds - would not be decisive from th e legal standpoint because it is the responsibility 
of the Grand Council of the Canton of  Geneva to adopt or not adopt the cantonal legislation needed to 
obtain waivers from the three perimeters of protecti on cited above in the parc Barton site where the 
WTO headquarters is situated, but traditionally,  Swiss assemblies do not oppose the will of the 
people.  Such a municipal referendum is also lik ely to be supplemented by a cantonal referendum 
when the Grand Council votes on the legislati on giving waivers from the protection perimeters. 
196. The Organization therefore runs a serious risk of  having to cancel part of its project.  It is 
trying to avoid this by organizing a communication campaign in consultation with the Swiss authorities concerned, which support the project at th e Confederation, cantonal and communal levels.  
In particular, it is planned to create a scale model showing that the project would only have a limited 
impact on the parc Barton. 
The WTO has not given itself all the resources n eeded to direct this large-scale operation
 
 197. The Organization does not have experience of commissioning large-scale building projects 
and it wants to complete in four years, from 2009 to  2012 (according to Article 14 of the agreement of 
1 August 2008) a CHF 130 million project divided into three overlapping phases: 
 - Renovation of the existing building, from early 2009 to mid-2011 (operation 
estimated at CHF 45 million); 
  - "Intra-mural extension" of the current building, from early 2010 to the end of 2012 
(operation estimated at CHF 20 million); 
  - "Extra-mural extension", from early 2011 to the end of 2012 (operation estimated at 
CHF 65 million, including the rental of a temporary building in chemin des Mines to accommodate some of the staff during the works). 
 
198. From a technical point of view, the project does not appear to present any special problems, 
apart from the need to renovate the building with out interrupting work, but overseeing the operations 
will be complex because the aforementioned thre e stages overlap and are the responsibility of 
different people, and the estimated budget appears tight.  WT/BFA/W/188 
 Page 43 
 
 
  199. The commissioning of the work is shared between  the WTO for the two extensions, intra- and 
extra-mural, and the FIPOI for the renovation of the ex isting building.  It was also originally planned 
that the FIPOI would be the commissioning agency for the underground car park with 200 spaces situated under the extra-mural extension, which it is financing. 
200. The WTO launched the architectural design competition mentioned above in order to select 
the contractor for the extra-mural extension.  For th is extension, it has chosen the same contractor as 
the FIPOI, in order to facilitate coordination of  the two operations for transforming the existing 
building.  This employment of the same contractor will not resolve all the problems:  the WTO and the FIPOI do not agree on the detailed definition of the works under the renovation programme;  the 
Organization fears that it will have to bear the co st of work that should have been part of the 
renovation work under the intra-mural work. 
201. The WTO will also have to monitor the cons truction of the underground car park with 
400 spaces also envisaged in the agreement of 1 Augus t 2008:  this work will be financed by the 
Canton of Geneva and carried out under the supervision of the FIPOI (probably by a private promoter 
within the framework of a public/p rivate partnership contract). 
202. In order to limit the risks and remain within  the envelope determined for the extra-mural 
extension, it is envisaged that a construction contra ct will be agreed with a general enterprise for a 
global sum.  It is in fact imperative that the enve lope available to the WTO is respected, bearing in 
mind the determination of Member States, men tioned above, and that the small amount of the 
Organization's annual investment allocation would not allow costs over and above this envelope to be 
absorbed. 
203. This initiative is positive, but requires close mon itoring of the work in order to distinguish 
those inevitable adjustments decided in the course of the work at the initiative of one of the partners 
that fall within the global sum from those that ca ll for the signature of additional clauses to the 
original contract. 
204. In order to direct this operation, take respons ibility as commissioning organization for part of 
the work and monitor the work for which the FIPOI is responsible, since 2004 the WTO has 
employed an experienced architect, accustomed to  working in Geneva with the FIPOI on building 
sites intended for international or ganizations, and she has been appointed "Head of the Infrastructure 
Section".  This Section comprises 47 staff me mbers (including electricians, technicians and 
maintenance staff), mainly involved in maintaining the building but to be used for this project. 
205. The small team exclusively devoted to the project, headed by the architect, has been 
strengthened in conformity with the recommendati ons in our letter of 17 November 2008 containing 
our observations, by making available a secretary, a ppointing a person in charge  of procurement and a 
person responsible for financial follow-up (a former member of the aforementioned Office of Internal 
Audit), but it does not include any expert in Swi ss building law or technical support for the head of 
the project. 
206. The Organization has moreover decided in principle to act as the commissioning organization 
for the construction of the new building and its underground car park, in conformity with the recommendations of our letter of 17 November 2008, whereas responsibility for these two works was 
originally to have been divided. 
207. The legal complexity of the operation, its high co st and the imperative need to remain within 
the agreed budget lead us to recommend the externali zation of part of the responsibility for carrying 
out this project, for example, by recruiting a delegated commissioning agency. WT/BFA/W/188 
Page 44  
 
  Recommendation No. 36:  We recommend that so me of the responsibilities for implementing 
this project be externalized.  If this solution is not adopted, it is highly desirable to recruit an 
expert in Swiss building law to reinf orce the WTO "infrastructure section". 
 
 The WTO Secretariat has reviewed the spec ific needs of the project and plans to have 
recourse to the external assistance of a delegated  commissioning agent (leader), of a consultant 
specializing in the management of construction projects to help the Secretariat in defining needs and 
following up the different projects, and of a la w firm specializing in Swiss building law. 
 
E. F
OLLOW -UP TO PREVIOUS RECOMMENDATIONS  
Follow-Up to the Recommendations of the External Auditors on the 2007 Accounts (Budgetary Section ) 
Document WT/BFA/W/168  
Recommendation Follow-up 
Page 25, §127.  The repayments under a finance 
leasing contract are CHF 0.7 below the repayments 
made by the WTO. The situation has not changed (see above). 
Page 43, §4.  The establishment of a procedure to 
disclose the cost of air tickets purchased in advance but not used. A procedure was established in January 2009. 
Page 43, §5.  Reduce the number of air tickets 
purchased in advance and neither utilized nor 
reimbursed. Recommendation implemented. 
Page44, §8.  Propose a new policy for procurement 
and choice of suppliers. The new Head of the Procur ement Section is preparing 
this policy, which should be adopted in 2009 (see above). 
Page 44, §10.  Develop rules for compensation of 
overtime. Not implemented (see above). 
Pages 44 and 45, §10 and 16.  Implement electronic 
recording of overtime. The situation has not changed (see above). 
Page 45, §16.  Reduce the amount of overtime 
worked by drivers. Since November 2008, directors have been encouraged 
to take taxis rather than use drivers if meetings run late.  This measure has had limited financial impact (see 
above). 
Page 45, §20.  Calculate reimbursement of 
American taxes according to the last income method in line with the ILOAT decision. Not implemented. 
Page 46, §22.  Receive Mexico's outstanding 
reimbursement of CHF 344,618. The contribution was paid on 30 June 2008. 
Page 47, §23.  Segregate the functions of Director 
of the Administration and General Services 
Division and the Secretary of the WTO Pension Plan. The situation has not changed. 
Page 47, §27.  Improve the inventory process in the 
publications unit. The improvements made are insufficient (see above). 
Page 47, §29.  Receive payment of the outstanding 
contribution from former Yugoslavia. Not implemented while awaiting a political solution. 
Page 47, §35.  Archive WTO contracts. Implemented.  A central archiving system and IT 
database have been established for the WTO contracts. 
Page 48, §36 and 37.  Record liabilities for medical cover for retirees in the financial statements. Being prepared.  An actuary has been engaged to 
calculate these liabilities. 
  WT/BFA/W/188 
 Page 45 
 
 
  Follow-Up to the Recommendations of the External Audito rs on the 2007 Accounts (Extra Budgetary Section ) 
Document WT/BFA/W/169  
Recommendation Follow-up 
Page 25, §84.  Distribute  the overhead fees charged 
on trust fund expenditure equally among the donors.Recommendation implemented.  The standard rate of 
fees is 13%.  In the European Union, which has a rate of 7%, the remaining 6% are attributed to staff costs. 
Page 26, §86.  Formalize the practice of apportioning balances of less than CHF 20,000 amongst the other donors to the trust fund. Implemented and explained in the 2008 financial 
statements. 
Page 26, §89.  Establish an action plan on trade-related technical assistance (TRTA). Implemented. 
Page 26, §92.  Establish a procedure to disclose the 
cost of unused air tickets. Implemented (see above).  Unused air tickets account for 
less than 5% of the total. 
Page 26, §93.  Provide supporting documents for costs of training organized by partners other than 
the WTO. Implemented.  Supporting documents are requested from 
those giving regional trade policy courses. 
 
Follow-Up to Recommendations in the Letter of Final Observations from the French Auditors  
Dated 17 November 2008  
Recommendation Follow-up 
Recommendation 1 (R1):  Keep separate cash flow 
accounts for budgetary and extra-budget ary funds. Recommendation examined but not accepted, the 
"inter-company account" prov iding sufficiently precise 
information. 
R2:  Attach statements of credits and debts classified by date to the financial statements. Not implemented. 
R3:  Establish accounting on  a quantity basis. To be implemente d during the transition to IPSAS. 
R4:  Bring cash advances into conformity with the 
Organization's Financial Rules (determine the list of 
expenditure likely to be paid in cash and regular monitoring of the cash situation). Implemented. 
R5:  Strengthen the team responsible for the WTO 
extension project. Partly implemented.  See above. 
R6:  Externalize some of this team's tasks. Under consideration.  See above. 
R7:  Simplify supervision of the work by giving the 
same contractor responsibility for the new building 
and for the underground car park. A decision in principle to comply with this 
recommendation has been taken.  See above. 
R8:  Speed up the classification of posts. A proposal was submitted for this purpose in 
November 2008. 
R9:  Lengthen the minimum time for moving up from one grade to the next. Not implemented. 
R10:  Take professional mobility into account in the 
criteria for promotion of staff members. Mobility is one factor among others for promotion.  A 
pilot exercise was carried out  at the end of 2008 to 
facilitate the voluntary mobility of 15 staff members in 
15 divisions of the OECD. 
R11:  Establishment of a database on the careers and skills of the staff. Not implemented, lack of time in the Informatics 
Service. 
R12:  Review the awards system. On 16 Oc tober 2008, the Director-General announced a 
reform for 2010. 
R13:  Develop a multi-year training programme. A programme covering two financial years is under 
consideration for the 2010-2011 biennium. WT/BFA/W/188 
Page 46  
 
  Recommendation Follow-up 
R14:  Regularly review temporary contracts of over 
11 months. Measures have been taken to speed up recruitment 
(whose slow pace is the cause of temporary contracts) and to gain a better idea of the decisions to be taken at 
the end of a contract. 
R15:  Utilize the reports on evaluation interviews. Implemented when examining professional mobility 
requests. 
R16:  Develop a social assessment report of the 
WTO and regular updates on the situation. The HRD has requested a model of a social assessment 
report (which was provided by the auditors).  The current management follow-up reports remain within the HRD. 
 
IV. ACKNOWLEDGEMENTS 
208. We thank the members of senior management and staff of the WTO for their welcome and the 
precise information that they supplied to us in the context of our enquiries. 
V. CONCLUSION 
209. On the basis of the audit conducted, the extern al auditors certify that, in their view, the 
accounts for the financial year 2008 present fairly the financial position of the WTO as at 31 December 2008. 
__________