RESTRICTED  
  
WT/BFA/W/639  
 
12 June 2023  
(23-3902) Page: 1/28 
Committee on Budget, Finance and Administration  Original: French  
 
 
REPORT OF THE INDEPENDENT EXTERNAL AUDITOR  
ON THE AUDIT OF THE FINANCIAL STATEMENTS OF  
THE WORLD TRADE ORGANIZATION (WTO)  
FOR THE FINANCIAL YEAR ENDED  
31 DECEMBER  2022  
The report of the independent External Auditor on the audit of the Financial Statements of the WTO 
for 2022 is attached.  WT/BFA/W/639  
 
- 2 - 
 
 
  
  WT/BFA/W/639  
 
- 3 - 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXTERNAL AUDIT OF  
THE WORLD TRADE 
ORGANIZATION  
 
AUDIT REPORT  
 
 FINANCIAL STATEMENTS OF THE 
WORLD TRADE ORGANIZATION  
FOR THE FINANCIAL YEAR ENDED  
31 DECEMBER 2022   
 
 
 
 
 
 
 
 
 
 
 
 
REFERENCE OF THE COUR DES COMPTES: OMC -2023 -1 
 
WT/BFA/W/639  
 
- 4 - 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BLANK PAGEWT/BFA/W/639  
 
- 5 - 
 
 
 1 TABLE OF CONTENTS  
 
 
I. OBJECTIVES AND SCOPE OF THE AUDIT  ................................ ................................ .. 3 
II. LIST OF RECOMMENDATIONS  ................................ ................................ .....................  4 
III. FOLLOW -UP OF RECOMMENDATIONS  ................................ ................................ ....... 5 
1. Follow -up procedure  ................................ ................................ ................................ .... 5 
2. Financial audit recommendations  ................................ ................................ ................  5 
3. Performance audit recommendations  ................................ ................................ ..........  9 
4. Conclusion on implementation of the recommendations  ................................ ...........  11 
IV. OBSERVATIONS AND RECOMMENDATIONS  ................................ .......................  12 
1. Presentation of financial statements  ................................ ................................ ..........  12 
2. General overview of the WTO's financial position  ................................ ......................  12 
2.1. Presentation of the simplified statement of financial position  .............................  12 
2.2. Presentation of the simplified statement of financial performance  .....................  14 
3. Main points relating to internal control  ................................ ................................ ....... 15 
3.1. Internal control structures  ................................ ................................ ...................  15 
3.2. Cases of fraud and suspected fraud  ................................ ................................ .. 16 
3.3. Information systems  ................................ ................................ ...........................  16 
4. Main points relating to accoun ting policies  ................................ ................................ . 17 
4.1. Long -term employee benefits  ................................ ................................ .............  17 
4.2. Write -offs and ex gratia  payments  ................................ ................................ ...... 22 
V. ACKNOWLEDGEMENTS  ................................ ................................ ..............................  23 
ANNEX: AUDIT ADJUSTMENTS TO THE FINANCIAL STATEMENTS  .............................  24 
 
 
  WT/BFA/W/639  
 
- 6 - 
 
 
 2 SUMMARY  
Part III of this report concerns the status of all recommendations issued by successive external 
auditors that had not been implemented by the cut -off date for the previous follow -up report. 
This follow -up covers all recommendations issued both in the financial audit reports and in the 
perfor mance audit reports.1 As at the date this report was submitted, of the 26 
recommendations in question, 14 had been implemented, or more than half (54%) of active 
recommendations. Implementation of the recommendations can be considered satisfactory.  
The Ex ternal Auditor has issued an unqualified opinion on the Financial Statements  of the 
WTO . Pursuant to the authority accorded under the Financial Regulations, the External Auditor 
makes some comments on the financial position, efficiency of procedures and fi nancial 
controls  
The WTO's financial position is characterized by negative net assets of CHF -834.5 million, 
stemming mainly from the fact that long -term employee benefits have been recognized in the 
Financial Statements since 2012, in accordance with IPS AS requirements. The long -term debt 
of CHF 1.7 billion, attributable to employee benefits, is not offset by assets in an equivalent 
amount. As the Organization records operating deficits every year, due to the increase in costs 
related to the Pension Plan and after service health insurance (ASHI), which reduces the 
plans' own capital, the negative net position represents the potential economic burden on the 
Organization.  
Regarding internal controls, much progress has been made, inter alia , with the establis hment 
of the Integrity Line, allowing potential cases of fraud to be reported, as well as the provision 
of staff training to raise awareness of the subject, the finalization of the administrative 
investigation procedure and the dissemination of an internal  control framework. The new anti -
fraud policy is being drafted and is expected to be finalized during the 2023 financial year.   
The Secretariat has made efforts to respond to information system governance issues, in 
particular concerning control systems. T he Secretariat's review of user access to ensure that 
the rights granted to staff in the accounting application are consistent with their duties is an 
appropriate practice. This review should be better documented in order to be able to identify 
the verific ations carried out.  
The amount of long -term employee benefits is largely derived from actuarial estimates made 
by the actuarial firm contracted by the WTO. According to the External Auditor, the Secretariat 
and its actuary have some leeway to improve the soundness of the assumptions relied upon 
and the traceability of the methods used to estimate these benefits.  
 
1 Only follow -up to the recommendations on the financial statements of the Pension Plan is dealt with 
separately. This can be found in the report on the Pension Plan.  WT/BFA/W/639  
 
- 7 - 
 
 
 3 I. OBJECTIVES AND SCOPE OF THE AUDIT  
1. In accordance with the engagement letter dated 24 November 2020 and with our 
notifications of 5 October 2022 and 28 March 2023, a team of seven auditors conducted the 
audit of the Financial Statements of the World Trade Organization (WTO) for the financial  year 
ended 31 December 2022.  The audit work was carried out at the WTO headquarters in 
Geneva in two phases:  
- an interim audit mission from 7 to 18 November 2022;  
- a final audit mission from 24 April to 12 May 2023.  
2. The audit of the Financial Statements was  carried out in accordance with the 
Regulations  44 to 46 of the Organization's Financial Regulations, with the terms of reference 
sent with the aforementioned notification letters, as well as the International Standards on 
Auditing (ISAs) and the Internati onal Standards of Supreme Audit Institutions (ISSAIs) on 
financial audits.  
3. The purpose of the audit was to determine, with reasonable assurance, whether the 
financial statements fairly present, in all material respects, the WTO's financial position as at 
31 December  2022 and the results of transactions recorded during the financial year, in 
accordance with the applicable financial reporting framework, in this case the International 
Public Sector Accounting Standards (IPSAS).  
4. The Financial Statements for the  financial year ended 31  December  2022 were sent to 
the External Auditor on 24  April 2023. During the audit process, at the request of the External 
Auditor, the Secretariat made non -substantive changes to certain notes, and issued amended 
Financial Stateme nts on 12 May 2023.  
5. Each observation and recommendation was discussed with the relevant officials. Senior 
management received the External Auditor's interim report on 26 May 2023 and their written 
comments have been fully taken into account in this report . 
6. In accordance with the terms of our engagement letter, this report includes a part on 
follow -up to recommendations made previously by the External Auditor.  
7. The External Auditor has issued an unqualified opinion  on the financial statements for 
the financi al year ended 31 December 2022.  WT/BFA/W/639  
 
- 8 - 
 
 
 4 II. LIST OF RECOMMENDATIONS  
8. The recommendations made are assigned a priority level, decided by the External Auditor:  
• Priority 1 : fundamental issue requiring management's immediate attention. Indicates 
the existence of a high level of risk for the management's objectives.  
• Priority 2 : less urgent control issue to be addressed by management. Indicates an 
intermediate level of risk.  
• Priority 3 : issue for which controls could be improved and to which management's 
attention is drawn. Indicates a moderate level of risk  
 Area  Priority  Recommendations  
Information 
systems  2 1. Improve annual access review documentation in order to be 
able to identify verifications and changes that have been 
carried out, by including: (a) the list of users and original 
associated rights; (b) where applicable, the exchanges 
showing a profile has been validated or invalidated; (c) the 
changes to be made and those  implemented in the system; 
and (d) a dated copy of the final list retrieved from the system 
after the changes have been made.  
Employee 
benefits  
 2 2. Consider examining the possibility of strengthening the 
robustness of long -term employee benefit estimates by: 
(a) assessing whether differentiating withdrawal rates and 
retirement rates by staff category and seniority would 
improve actuarial valuations; (b) examining the possibility of 
differentiating the rates of salary increases by staff category; 
(c) determining the rate of enrolment in the after -service 
health insurance plan upon retirement and the 
post -retirement lapse ratio and liability adjustment, if 
justified; (d) analysing the effect of weighting financial 
assumptions by currency combination s on defined benefit 
obligations as at the valuation date; and (e) justifying the 
medical inflation rate by means of a sufficient audit trail.  
Employee 
benefits  2 3. Carry out an analysis of the relative significance of actuarial 
assumptions in order to present those that are significant in 
the notes to the Financial Statements and maintain an 
appropriate audit trail.  
Employee 
benefits  2 4. Carry out a sensitivity analys is of the obligations of the 
Pension Plan and after -service health insurance plan at the 
balance sheet date for each significant actuarial assumption 
and present the results of these analyses in the notes to the 
Financial Statements.  WT/BFA/W/639  
 
- 9 - 
 
 5 III. FOLLOW -UP TO RECOMMENDATIONS  
1. Follow -up procedure  
9. This document on follow -up to the recommendations of the External Auditor includes 
information on the status, as at the date of submission of the Audit Report on the WTO's 2022 
Accounts, of all recommendations made by successive external auditors that were not 
implemented by the cut -off date of the previous follow -up report. It covers all recommendations 
made both in the financial audit reports (WTO and Pension Plan) and in the performance au dit 
reports.  
10. As the External Auditor reports only to the governing bodies, the recommendations it 
makes are primarily intended for them. The recommendations are within the scope of the 
governing bodies' oversight and steering function in managing the Organization.  
11. It is therefore important that these recommendations be endorsed by the governing bodies 
so that they constitute clear guidelines and road maps for implementation by the 
Organization's Secretariat. Unless a recommendation is explicitly rejected by the governi ng 
bodies, the External Auditor considers that the unreserved approval of a report is tantamount 
to a directive for the Secretariat to implement the recommendations contained therein.  
12. The status of the recommendations depends on the extent to which they h ave been 
implemented:  
- Closed : the recommendation was fully implemented under the same conditions as 
which it was made and in line with its intended objective;  
- Ongoing : implementation has started in the recommended direction, but actions are 
yet to be fina lized;  
- Open : implementation has not started (for whatever reason);  
- Lapsed : an old, unimplemented recommendation, whose implementation would prove 
unsuitable for the new management conditions, may lapse or be superseded by a new 
recommendation that better  meets the reference quality criteria.  
2. Financial audit recommendations  
13. The review of the status of the financial audit recommendations shows that, out of 
12 active recommendations as at the date of the previous report, nine had been fully 
implemented to d ate (i.e. 75%). Of the rest, three recommendations were ongoing.  
Table 1: Summary of the implementation of recommendations (financial audits)  
Issue  Implemented  Ongoing  Open  Lapsed  Total  Year / 
Observation 
No. 
       Strictly apply the provisions of IPSAS 1, paras. 127 
and 128, by setting out in the notes information 
relevant to an understanding of the financial 
statements.  X     
1.1/2020  
(2) 
Finalize the "Internal Control Framework of the WTO 
Secretariat".   X    3.1/2020  
(4) WT/BFA/W/639  
 
- 10 - 
 
 6 Issue  Implemented  Ongoing  Open  Lapsed  Total  Year / 
Observation 
No. 
Implement a business continuity plan to ensure 
the operational readiness of the procedures and 
actions of the operational divisions in the event of 
a crisis affecting IT resources.   X    
3.2/2020  
(5) 
Formalize the change management procedure for 
the Oracle EBS integrated management software 
package. Restrict authorized access to the 
development and production environment. Carry 
out a hierarchical review of ex post  validation of 
changes.  X     
3.2/2020  
(7) 
Evaluate the control procedures and valuation 
methods for current fixed assets, review those 
that need to be made more effective or compliant, 
and, at a minimum, carry out a complete inventory 
of fixed assets by the time the WTO presents its 
accounts for 2022.  X     
4.1/2021  
(1) 
Take note of the irrecoverable nature of the debt 
of the Government of Argentina related to the 
organization of the Eleventh Ministerial 
Conference and write it off in full.  X     
4.3/2021  
(2) 
Establish a procedure to identify, beyond the 
current short list, the WTO's related parties, and 
formalize the submission by key management 
personnel of a regularly updated declaration of 
interests and an annual declaration of the 
transactions between the WTO and such 
personnel (or their close family members).  X     
4.4/2021  
(3) 
Explore the possibility, for the implementation of 
administrative measures associated with 
penalizing late payments by Member States, of 
consolidating mandatory contribution debts with 
any other debts held by the WTO as a result of 
specific agreements concluded with the States 
concerned.  X     
4.4/2021  
(4) 
Value the Pension Plan liabilities in a prudent and 
consistent manner by using a discount rate that 
refers to market yields at the end of the reporting 
period on high -quality Swiss corporate bonds, 
rather than to the average interest rate for the last 
12 months on 10 -year Swiss Confederation 
bonds, a method that minimizes the value of long -
term liabiliti es without justification and does not 
appear to be in line with IPSAS 39.  X     
4.5/2021  
(5) 
Use a single discount rate for the actuarial 
valuation of all long -term employee benefit 
liabilities.  X     4.5/2021  
(6) 
Establish a special account for the after -service 
health insurance plan, and endow it gradually, 
using the funds currently put into the "special 
reserve account" and extraordinary contributions, 
with assets capable of covering its long -term 
liabilities.  X     
4.5/2021  
(7) 
Define and implement, by the end of the 2022 
financial year, procedures for managing user 
accounts, as an essential element of and in 
keeping with the Workday project management.   X    
4.6/2021  
(8) 
Financial subtotal  9 3 0 0 12  WT/BFA/W/639  
 
- 11 - 
 
 7 14. The External Auditor made a recommendation to strictly apply the main provisions of 
IPSAS 1, paragraphs 127 and 128, in the light of the practical recommendations of the 
International Financial Reporting Standards (IFRS), by setting out in the notes inform ation 
relevant to an understanding of the financial statements and to ensuring that the governing 
bodies and users are fully informed, combining factual explanations and figures (2020 -2). 
Given the progress made in the preparation of the financial statemen ts since this 
recommendation was made, it can be considered to have been implemented. The External 
Auditor will, however, continue to monitor the completeness of the information provided in 
future financial statements.  
15. The External Auditor made a recommen dation to finalize the "Internal Control Framework 
of the WTO Secretariat", suggesting that the framework be supplemented with operational 
provisions to ensure oversight and the efficiency of the framework, and that an appropriate 
system be established for  an annual assessment of its quality to support the internal control 
letter of representation produced by senior management (4 -2020). As explained in Section IV 
of this report, the internal control framework was sent to all WTO employees on 19  April 2023. 
This is the first step in developing and implementing a WTO -wide internal control strategy. 
However, the existing framework remains general and will be expanded upon over the coming 
financial years, in particular with the inclusion of matrices specifying c ontrols and who is 
responsible, as well as changes that will follow the implementation of the WTO's 
transformation plan. The External Auditor was also able to identify improvements in the anti -
fraud policy. All employees have received awareness -raising tra ining, and an administrative 
investigation procedure and a reporting channel (the Integrity Line) for the direct reporting of 
cases of fraud have been set up.  
16. In order to ensure the operational readiness of the procedures and actions of the 
operational div isions in the event of a crisis directly or indirectly affecting IT resources (5 -
2020), the implementation of a business continuity plan was suggested. This action is still 
ongoing, as explained in Section IV of this report. The recommendation could not be  fully 
implemented because the teams were unavailable and there was no budget.  
17. The External Auditor had recommended formalizing the change management procedure 
for the Oracle EBS integrated management software package, restricting authorized access 
to the  development and production environment, and, in the event that this separation of duties 
is found to be unachievable for organizational reasons, carrying out a hierarchical review of 
ex post  validation of changes on at least a quarterly basis (7 -2020). A change management 
procedure was drafted by the Information Technology Solutions Division in 2022. The 
procedure ensures that developments and tests are validated before they are rolled out, i n 
order to cover the risk of inappropriate changes being made to the system.  The tests carried 
out during our audit demonstrated the correct application of the procedure. This 
recommendation has been implemented.  
18. With regard to evaluating the control proce dures and valuation methods for current fixed 
assets, reviewing those that need to be made more effective or compliant, and, at a minimum, 
carrying out a complete inventory of fixed assets by the time the WTO presents its accounts 
for 2022 (1 -2021), this r ecommendation is considered to have been implemented. A complete 
inventory was conducted in the first quarter of 2023 and the fixed assets policy was revised 
and signed in May 2023, incorporating the External Auditor's request for a precise definition 
of the depreciation period for software.  
19. The External Auditor had recommended taking note of the irrecoverable nature of the debt 
of the Government of Argentina related to the organization of the Eleventh Ministerial 
Conference and writi ng it off in full (2 -2021). The entry was made in the 2022 accounts and 
the supporting documents provided.WT/BFA/W/639  
 
- 12 - 
 
 8 20. The External Auditor had recommended establishing a procedure to identify, beyond the 
current short list, the WTO's related parties, and formalizing the submission by key 
management personnel of a regularly updated declaration of interests and an annual 
declaration of the transactions between the WTO and such personnel, or their close family 
members (3 -2021). Subsequently, an annual declaration of tran sactions was introduced and 
signed in 2022 by each of the persons concerned, the list of which has been expanded to 
include members of the Pension Plan Management Board, the Chief of Staff to the Director 
General and the Director of Administration and Gene ral Services. The recommendation has 
therefore been implemented, but will be followed up annually by the External Auditor.  
21. The External Auditor had recommended exploring the possibility, for the implementation 
of administrative measures associated with pen alizing late payments by Member States, of 
consolidating mandatory contribution debts with any other debts held by the WTO as a result 
of specific agreements concluded with the States concerned (4 -2021). This recommendation, 
which has now been implemented,  was aimed specifically at Argentina and the United States. 
Argentina's debt liability related to MC11 has been written off. The United States' debt 
concerned the reimbursement of taxes for US staff working at the WTO. Considering that this 
debt should be distinguished from a contribution and that the United States has paid its 
contributions on time, the WTO, in agreement with the External Auditor, has indicated that it 
does not wish to consolidate this debt because, according to the Financial Regulations, the 
administrative measures apply only to the late payment of contributions.  
22. The External Auditor had recommended valuing the Pension  Plan liabilities in a prudent 
and consistent manner by using a discount rate that refers to market yields at the end of t he 
reporting period on high -quality Swiss corporate bonds, rather than to the average interest 
rate for the last 12  months on 10 -year Swiss Confederation bonds, a method that minimizes 
the value of long -term liabilities without justification and does not a ppear to be in line with 
IPSAS  39 (5 -2021). The WTO has recalculated the opening balance of the liabilities of the 
Pension Plan and the after -service health insurance (ASHI) plan using the discount rate 
derived from the Swiss yield curve as at 1  January  2022. It has also valued the closing 
liabilities as at 31  December  2022 of the two  defined benefit plans using the discount rate 
derived from the Swiss yield curve as at 31  December  2022. This recommendation has been 
implemented.  
23. The use of a single discount  rate for the actuarial valuation of all long -term employee 
benefit liabilities (6 -2021) has been taken into account. This recommendation is now 
considered to have been implemented, since, in 2022, the WTO used a single discount rate 
of 2.3%, derived as re commended from the Swiss yield curve as at 31  December  2022, to 
discount all long -term benefits to the measurement date.  
24. The External Auditor had recommended establishing a special account for the ASHI plan, 
and endowing it gradually, using the funds curre ntly put into the "special reserve account" and 
extraordinary contributions, with assets capable of covering its long -term liabilities (7 -2021). 
The recommendation was implemented in 2022, as the WTO now indicates the amount of 
cash available to cover the plan. In addition, the WTO has amended Note 4 to the Financial 
Statements, corrected the cash flow statement and updated Note 14 in accordance with the 
External Auditor's request.  
25. The implementation, by the end of the 2022 financia l year, of procedures for managing 
user accounts, as an essential element of and in keeping with the Workday project 
management, the application which has been used since 2022 to manage all human resources 
processes and the payroll of WTO staff (8 -2021), i s still ongoing. As explained in the section 
of this report covering our observations, certain processes are still not managed in Workday, 
such as education grants, because of their technical nature, and overtime, which would require  WT/BFA/W/639  
 
- 13 - 
 
 9 the purchase of an ad ditional module. Other improvements to the tool have also been 
identified and are being overseen by two newly recruited consultants. The procedures 
governing the creation and deletion of user accounts and the separation of duties still need to 
be establish ed to ensure that the access rights granted to staff are aligned with their duties 
and that one person, by virtue of the access rights, cannot carry out the entire payroll process.  
3. Performance audit recommendations  
26. Of the 14 recommendations resulting from successive financial performance audits since 
2018, five (i.e. 36%) may be considered as having been implemented, while nine are ongoing.  
Table 2: Summary of the implementation of recommendations (performance audit s) 
Issue  Implemented  Ongoing  Open  Lapse d Total  Year / 
Observation 
No. 
       Finalize the description of HR processes 
and the responsibilities of process 
owners.  X    
 4.1/2018  
(62) 
Prescribe a uniform and appropriate 
format for personnel files with limited 
access rights.  X    
 4.1/2018  
(64) 
Evaluate and review the regulations 
concerning home leave to avoid 
systemic weaknesses, which leave the 
Organization vulnerable to fraud.  X    
 4.1/2018  
(73) 
Enter into an agreement with the 
Pension Plan on the compensation 
conditions for early retirement.  X    
 4.1/2019  
(84) 
Rationalize trust funds by closing those 
that are inactive, and merging those with 
similar activities or the same donors; 
use this opportunity to harmonize 
management procedures.  X    
 4.2/2019  
(91) 
Submit a proposal to the Ministerial 
Conference whereby, in the event of a 
major, unexpected and prolonged crisis, 
the Director -General be given the 
requisite special powers to manage the 
Secretariat in a flexible and proactive 
manner.   X   
 4.1/2020  
(11) 
Finalize a set of regulations to provide a 
framework for teleworking when major 
crisis situations make it necessary.   X   
 4.4/2020  
(12) 
Formalize follow -up of the 
Organization's performance through 
quantified means and performance 
indicators.   X   
 5.2/2020  
(13) 
Close the support fund of the 
Independent Entity - Pre-Shipment 
Inspection, inactive since 2006, and 
terminate the agreement that created it 
because it is no longer needed.   X   
 2.37/2022  
(1) 
 WT/BFA/W/639  
 
- 14 - 
 
 10 Issue  Implemented  Ongoing  Open  Lapsed  Total  Year/  
Observation 
No. 
Establish a suitable steering body with 
access to management, financial and 
operational information in order to 
ensure the overall coordination of and 
coherence in the trust funds' strategies 
and activities, as well as the information 
provided on this activity to Members, 
whether contributors or not.   X   
 3.47/2022  
(2) 
Include in the quarterly and annual trust 
fund activity monitoring reports 
submitted to the CBFA, a statement of 
the income collected and expenditure 
recorded shown against future budget 
estimates.   X   
 4.80/2022  
(3) 
Supplement biennial technical 
assistance plans so as to present all 
WTO technical assistance activities in 
the broad sense, including capacity -
building activities, thereby providing 
Member States and stakeholders with 
comprehensive information, beyond 
technical and legal spec ificities, that can 
be correlated with the activities of the 
various funds contributing to the 
technical assistance strategy.   X   
 5.86/2022  
(4) 
Accept the consequences of the 
particular relationship between the 
regular budget and the Trade 
Facilitation Agreement Facility (TFAF) 
by reincorporating the Facility's assets 
and the financing for implementation of 
the Trade Agreement Facility (TFA) into 
the regular budget, with any subsequent 
financial needs covered by calls for 
contributions.   X   
 5.96/2022  
(5) 
Introduce cost accounting for trust funds 
so as to ensure a clear and 
comprehensive understanding of the full 
costs of each fund, identifying, among 
other things, the costs, in particular staff 
costs, borne by the regular budget.   X   
 5.101/2022  
(6) 
Performance subtotal  5 9   14  
 
27. The External Auditor had recommended finalizing the description of human resources 
processes and the responsibilities of process owners (62 -2018), and also prescribing a 
uniform and appropriate format for personnel files with limited access rights (64 -2018). In 
connection with these two related recommendations, the Workda y application was introduced 
in 2021, and stabilized in 2022 and early 2023. All human resources and payroll processes 
have been incorporated into the application, with the exception of some specific technical 
processes such as the calculation of overtime and education grants. All personnel files have 
been integrated into the tool, which is used to process payroll. Employee information can be 
modified by the employees themselves. Bank account details can only be changed by 
employees. The External Auditor co nsiders that these two recommendations have been 
implemented, but will remain attentive to any future developments concerning the tool, in 
particular any additional corrections or possible improvements to ensure the tool's 
sustainability and performance, w hich will be recorded in a file updated by two consultants. WT/BFA/W/639  
 
- 15 - 
 
 11 28. With regard to evaluating and reviewing the regulations concerning home leave to avoid 
systemic weaknesses, which leave the Organization vulnerable to fraud (73 -2018), various 
notices have been approved (home leave, travel expenses) and communicated to employees, 
which means that this recommendation can be closed.  
29. An agreement with the Pension Plan for the financial compensation of early retirement 
cases (84 -2019), drafted in 2022 and signed  in January 2023, allows for the implementation 
of the recommendation previously made in this regard.  
30. The External Auditor had issued three recommendations as part of its performance audit 
on the Organization's management of the COVID -19 health crisis and its impact. The 
implementation of these three recommendations is ongoing. The first recommendation 
(11-2020) was to submit a proposal to the Ministerial Conference whereby, in the event of a 
major, unexpected and prolonged crisis, the Director -General be g iven the requisite special 
powers to manage the Secretariat in a flexible and proactive manner. The WTO notes that the 
recruitment of a Chief Risk and Compliance Officer will help to ensure progress in this regard. 
The External Auditor will review progress  on this recommendation in the next audit.  
31. The finalization of a set of regulations to provide a framework for teleworking when major 
crisis situations make it necessary (12 -2020) is ongoing. So far, only a teleworking 
management policy has been establishe d. 
32. Implementation of the recommendation on formalizing follow -up of the Organization's 
performance through quantified means and performance indicators (13 -2020) is ongoing.  In 
2022, the Administration and General Services Division tested this system and pr oduced an 
end-of-year analysis report on the achievement of indicator -based targets. The system will be 
extended to all divisions in 2023. The External Auditor will review progress on this 
recommendation in the next audit.  
33. The External Auditor had recommen ded rationalizing trust funds by closing those that 
were inactive, and by merging those with similar activities or the same donors, and using this 
opportunity to harmonize management procedures (91 -2019). A 2022 performance audit on 
trust funds divided thi s previous recommendation into six separate recommendations (1 -2022 
to 6-2022). Given that the report was issued only recently and submitted to the Committee on 
Budget, Finance and Administration (CBFA) in March 2023, the WTO has only just begun to 
reflect  and work on the implementation of the recommendations. The status of these 
recommendations will be audited next year.  
4. Conclusion on implementation of the recommendations  
34. Implementation of the External Auditor's recommendations may be considered 
satisfacto ry, taking into account the constraints on international organizations when significant 
changes of usage, procedures and tools must be considered.  
35. Thus, of the 26 recommendations in question, 14 have been implemented, or more than 
half (54%) of active rec ommendations.  
36. The Secretariat has adopted a proactive attitude to the recommendations made.  
37. The External Auditor thanks the teams of the Administration and General Services 
Division for their assistance and willingness to document the follow -up of recomm endations.  
 WT/BFA/W/639  
 
- 16 - 
 
 12 IV. OBSERVATIONS AND RECOMMENDATIONS  
1. Presentation of the Financial Statements  
38. When conducting the audit, the External Auditor did not identify any anomalies requiring 
the Organization to recognize audit adjustments. However, at the request of the External 
Auditor, changes were made to the Financial Statements, during the audit, to m ake them 
easier to understand and to ensure that governing bodies and users are fully informed. 
Examples include: information on the actuarial gains and losses in the statement of changes 
in net equity; exact figures (amount of the provision for the right of use of the building, 
outstanding loan amounts); and coverage of ASHI obligations by the Special Reserve 
Account.  
39. The Financial Statements of the WTO for the financial year ending 31  December  2022 
comprise a statement of financial position, a statement of financial performance, a statement 
of changes in net assets/equity, a cash flow statement, and explanatory notes, including a 
summary of the main accounting policies.   
40. They do not include a statement of comparison of budget and actual amounts. However, 
IPSAS 1, paragraph 21, provides that "[w]hen the entity makes publicly available its approved 
budget", a complete set of financial statements comprises "a comparison of budget and actual 
amounts either as a separate additional financial statement or as a b udget column".  
41. Given that Table 17 in Note 21 presents the budget and actual amounts, the WTO has 
complied with IPSAS 1, paragraph 21. Hence, there is no need to submit the budgetary 
elements currently provided in Note 21 as a separate additional financia l statement.  
2. General overview of the WTO's financial position  
2.1. Presentation of the simplified statement of financial position  
Table 3: Simplified statement of the financial position of the WTO  
(in millions of CHF)  
 31/12/2022  31/12/2021  
Current assets      
Cash and cash equivalents  192.9  186.9  
Receivables  5.9 30.9 
Inventories  0.3 0.4 
Advances and prepayments  3.9 4.0 
Total current assets  203.0  222.2  
Non -current assets      
Tangible and intangible assets  110.2  115.5  
Pension Plan assets  641.3  739.1  
Total non -current assets  751.5  854.6  
TOTAL ASSETS (a)  954.6  1,076.8  
Current liabilities      
Payables, accruals and provisions  18.1 16.3 
Surplus due to Members  0  9.8 
Contributions received in advance or refundable contributions  54.2 67.4 WT/BFA/W/639  
 
- 17 - 
 
 13 Employee benefits  14.3 14.9 
Total current liabilities  86.6 108.4  
Non-current liabilities      
Loan  48.0 49.2 
Employee benefits  1,654.5  1,742.9  
Total non -current liabilities  1,702.5  1,792.1  
TOTAL LIABILITIES (b)  1,789.1  1,900.5  
NET ASSETS/EQUITY (a) -(b) -834.5  -823.7  
Source: WTO Financial Statements  (rounded amounts).  
42. The simplified statement of the financial position of the WTO, as presented above, shows 
negative net assets of CHF -834.5 million at the end of 2022, an increase of CHF 10.9 million 
in relation to the amount recorded at the end of 2021 in previous Financi al Statements. The 
existence of a negative net position stems from the fact that long -term employee benefits have 
been recognized in the Financial Statements since 2012, in accordance with IPSAS 
requirements. These benefits mainly concern obligations to st aff under the Pension Plan, 
amounting to CHF 1.4 billion at the end of 2022, and ASHI obligations, which amounted to 
CHF 240 million as at the same date. These amounts have decreased by CHF 32.7 million 
and CHF  53.5 million, respectively, in relation to th ose recorded in 2021. This decrease is 
mainly attributable to an increase in the discount rate as at 31 December 2022 in the estimate 
of defined pension obligations (see Section 4.1 below2).  
43. It is recalled that, in 2012, following the implementation of I PSAS requirements, the 
financial structure presented a negative net position of CHF -774.2 million, including an 
accumulated deficit of CHF -755.5 million, mainly resulting from the adjustment to recognize 
employee benefits, while the accounts' opening bal ance showed an accumulated surplus of 
CHF 0.7 million. The negative net position first seen in 2012 subsequently intensified, in 
structural terms, with successive deficits over the last 10 years, particularly in relation to 
Pension Plan and ASHI actuarial costs (see Section 2.2).  
44. The recognition of employee benefit liabilities is not offset by an equivalent amount of 
assets. Total balance -sheet assets at the end of 2022 amounted to CHF  954.6 million, 
CHF 641.3 million of which were Pension Plan assets, whil e the remainder comprised mainly 
cash and cash equivalents (CHF 192.9 million) and tangible and intangible assets 
(CHF  110.2  million). The Pension Plan, the liabilities of which amount to CHF 1.4 billion, is 
therefore only covered to the tune of CHF 641.3 million by Pension Plan assets. As for the 
ASHI regime, the liabilities of which amount to CHF  240.1  million, only CHF  10.3 million is 
covered by the Special Reserve Account Medical Insurance.  
45. As a result, the WTO does not have sufficient assets or reserves to guarantee the 
financing of these debts. As discussed above, nor can the WTO rely on accumulated surpluses 
from previous financial years, since its financial structure has deteriorated as a result of 
successive deficits  over the last 10 years. A negative net position cannot, however, be 
described as a cause for concern when it involves long -term debt, the payment of which is 
spread over time and which has an actuarial value that may fluctuate from year to year  
depending on changes in the discount rate. As acknowledged in IPSAS 1, paragraph 40, an 
entity may be considered as a going concern even though it may operate for extended periods 
with negative net assets.  This position, reflected in the Financial Statements, never theless 
enables Members to measure the potential economic burden on the Organization.
 
2 The trend in the value of benefits is, as a matter of principle, inverse to the trend in  actuarial rates.  WT/BFA/W/639  
 
- 18 - 
 
 14 2.2. Presentation of the simplified statement of financial performance  
Table 4: Simplified statement of the financial performance of the WTO  
(in millions of CHF)  
 
 2022  2021  
Revenue      
Assessed contributions  195.5  195.5  
Voluntary contributions  17.2 13.7 
Other revenue  2.6 2.6 
Total revenue  215.3  211.8  
Expenses      
Staff expenditure  126.7  136.8  
Contribution to ITC  18.2 18.2 
Actuarial cost for Pension Plan  54.3 34.9 
Actuarial cost for ASHI  17.1 16.4 
Other expenses  68.0 53.7 
Total expenses  284.3  260.0  
Surplus/deficit for the period  -69.0 -48.2 
Source: WTO Financial Statements  (rounded amounts).  
46. Revenue from voluntary contributions, which amounts to CHF  17.2 million, has increased 
by CHF 3.6 million compared to 2021 and is primarily channelled into three trust funds. The 
Standards and Trade Development F acility (STDF) project alone accounts for 46% of revenue 
from voluntary contributions, with 21 donors providing a total of CHF 8.7 million in 2022. The 
Doha Development Agenda Global Trust Fund (21 donors, CHF 3.9 million in 2022) and the 
Enhanced Integrat ed Framework - Executive Secretariat project (1 donor, CHF 3.7 million in 
2022) each get around 20% of the contributions received in 2022. The levels of Members’ 
voluntary contributions, at CHF  195.5  million, and those of Observers, at CHF 616,000, were 
little changed from the previous year.  
47. Despite the growth in voluntary contributions, the difference between the WTO’s revenue 
and expenses leads to a deficit of CHF  68.9 million, greater than the deficits recorded in 2021 
(CHF  48.2 million), 2020 (CHF  37.1 million) and 2019 (CHF  31.8 million). The Organization 
has, in fact, been consistently in deficit since the adoption of IPSAS in 2012, and this deficit 
tends to increase each year. The main reason for the deficit is the expenses related to the 
actuarial co sts of the Pension Plan (up CHF 19.4 million in 2022 to CHF 54.3 million)  and 
ASHI (up CHF 0.7 million to CHF 17.1 million). These costs are the result of WTO personnel 
vesting, over the course of their time spent with the Organization, future pension and medical 
coverage rights. The accounting expense related to vesting these entitlements is determined 
by an actuarial calculation that takes a number of assumptions into account, such as mortality 
and inflation.  
48. Particular considerat ion is needed when assessing these successive deficits because, 
although they are mostly related to elements that do not result in short - and medium -term cash 
outflows, they have become an accumulated structural deficit over the past 10 years. In a 
worst -case scenario, should the Organization's activities cease completely or even partially 
(due to the withdrawal of a significant proportion of Members, significant reduction in 
contributions, etc.), there would be no other choice but to deal with these liabil ity-related 
obligations, particularly as regards very long -term pension commitments.  WT/BFA/W/639  
 
- 19 - 
 
 15 49. The main expenditure line of the WTO, staff expenditure, decreased by CHF 10.7 million 
in 2022, from CHF 137.7 million in 2021 to CHF 127 million in 2022. This includes:  
- a decrease of CHF 3.7 million in the wage bill, which stood at CHF 87 million 
in 2022, compared to CHF 90.7 million in 2021. Given that the number of 
employees remained stable, edging up from 743 at the end of 2021 to 745 at 
the end of 2022, the lower wage bill is mainly due to difference in the profiles 
of the staff members who joined or left the Organization. Remuneration 
expenditure remained constant throughout the year after an average rate of 
salary increase of 1% on 1 January 2022. The compo sition of staff has not 
changed significantly in recent years. In 2022 and 2021, regular staff members 
accounted for just over two thirds of the permanent employees, i.e. 68%.  
- provisions and other liabilities related to employee benefits (i.e. separation 
grants, untaken annual leave, home leave, travel and removal, and education 
grants) decreased by CHF 4.8 million in 2022 (with CHF 3.8 million less spent 
on separation grants).  
- health, and death and invalidity insurance expenditure decreased by 
CHF 1.4 million in 2022.  
50. Growth in the number of staff members has been kept in check in recent years. In 2022, 
the number of employees, expressed in full -time equivalents, was 729, an increase of 3% 
compared to the 702 full -time equivalent employees in 2015. At the same time, the wage bill 
has decreased by 6% since 2015, when it was CHF 135 million.  
51. Expenditure on supplies and other general service costs increased by CHF 2.1 million in 
2022 compared to 2021, an increase of 12%. This trend is the result of, inter alia, higher 
building maintenance costs (up CHF 1.5 million) and gas and electricity expenditure (up 
CHF 0.42 million), linked to the surge in energy prices in Europe in 2022. Energy -saving 
measures have been put in place by the Secretariat. There were no other appreciable effects 
of inflation in 2022.  
52. Travel and mission expenses rose by CHF 5.6 million in 2022, reaching CHF 6.5 million. 
This hike stems from the resumption of travel in the second half of the year, with remote 
activities having been preferre d in the first half of 2022. As travel has resumed there has not 
been a noticeable attempt to make up for trips not made during the pandemic. Travel expenses 
are lower than before the pandemic; they totalled CHF 14.5 million in 2019.  
3. Main points relating t o internal controls  
3.1. Internal control structures  
53. The post of Head of the Office of Internal Oversight was vacant between January and 
June 2022. However, in the second half of the year, much progress was made with, inter alia , 
the establishment of the Integ rity Line allowing potential cases of fraud to be reported, the 
provision of staff training to raise awareness of the subject, the finalization of the administrative 
investigation procedure and the dissemination of an internal control framework. The new an ti-
fraud policy is being drafted and is expected to be finalized during the 2023 financial year.  
54. The Secretariat is therefore in the process of strengthening risk management, fraud 
detection and prevention, and internal controls in  general. The internal control framework is a  
document that will need to be updated and to detail the associated risks and persons 
responsible for each process identified.WT/BFA/W/639  
 
- 20 - 
 
 16 3.2. Cases of fraud and suspected fraud  
55. The External Auditor is not charged with identify ing cases of fraud or providing assurance 
on this matter. However, under ISA 240, the auditor is responsible for identifying the risks of 
material misstatement of the financial statements that could arise from cases of fraud, and 
takes their own fraud risk  assessment into account when defining their audit strategy and 
work.  
56. The Secretariat indicated that it had not received any reports of fraud in the financial year 
2022, or in 2021. However, internal control improvements had led to three cases of suspecte d 
fraud being reported in 2023. One of the cases had proved to be unfounded and the other two 
were still being investigated at the time of the audit.  
3.3. Information systems  
57. The Organization has made efforts to respond to information system governance issues,  
in particular concerning information system controls, and knowledge transfer and maintenance 
systems.  
58. Audit checks were more specifically focused on the accounting application developed on 
the basis of Oracle, and the implementation of the Workday3 application for human resources 
and payroll management.  
59. Incident management4, back -up management, and database and server management are 
delegated to the United Nations International Computing Centre.  A business recovery plan 
and a server restart procedure are in place to deal with emergency situations (disaster 
recovery plan). This plan and procedure were not formally tested in 2021 and 2022, while 
changes such as the phasing out of the Oracle HR syst em were made in the system. 
ISO 22301 recommends testing these plans as soon as a change is made to the systems.  
60. Beyond this purely technical aspect, the WTO does not have a general continuity plan. 
Such a plan must allow for the definition, in conjunctio n with the officers in charge, of the 
actions to be taken, specific to each of these business lines, when their continuity is impacted 
by certain emergency situations. It must also allow for people responsible for implementing 
those actions, in conjunction  with the Information Technology Solutions Division (ITSD), to be 
designated in each department. Implementation of a recommendation on this subject, issued 
in 2021, remains ongoing (see Section III on follow -up of recommendations). Actions have 
been undert aken to ensure IT continuity.  
61. In 2022, a qualitative and quantitative review of user access was carried out by the Oracle 
functional manager to ensure that the rights granted to staff in the accounting application are 
consistent with their duties and that accounts are deactivated when necessary. Based on a 
separation of duties matrix, such a review must make it possible to ensure, on a regular basis, 
that no user profile presents risks or incompatibilities. In the context of ISA 315, Appendix 6 
on general I T controls, including user access reviews, this review has not been sufficiently  
documented to be able to identify verifications and changes that have potentially been carried 
out. Greater traceability would make it possible to identify:  
- the list of users  and original associated rights;  
- where applicable, the exchanges with the officers in charge showing a profile 
has been validated or invalidated; 
 
3 Application used for human resources and payroll management.  
4 For example, software failures, or instances where the equipment causes IT service malfunctions or 
disruptions.  WT/BFA/W/639  
 
- 21 - 
 
 17 - the changes to be made and those implemented in the system; and  
- a dated copy of the f inal list retrieved from the system after the changes have 
been made.  
62. In 2022, the Organization formalized a separation of duties matrix for the Oracle software5, 
that identifies combinations of application roles that are areas of risk. For example, three  
people are able to validate a procurement request and add or change a third party, and three 
other people are able to create and validate an invoice, and create and validate a payment, 
although the accumulation of these rights is not recommended in terms of internal controls. 
Compensating controls have been identified in cases where service constraints require these 
combinations to be maintained. We support the application of this matrix in Oracle in order to 
modify or remove combinations of application ri ghts when they are risky.  
63. Any change affecting an integrated financial and accounting management software must 
be governed by a formal procedure specifying the authorizations to proceed with that change, 
and the steps and rules to follow. In order to ensu re the validation stage, access to the 
development environment and the production environment must be separate. This guarantees 
that a developer cannot change the code of the tool used by the business lines without prior 
validation. However, this is not th e case. Nevertheless, a procedure for Oracle6 was 
implemented in 2022 in order to carry out controls at each stage of change (development, 
testing and production) so as to contain the risk of inappropriate changes being made to the 
system.  
Recommendation No. 1. The External Auditor recommends that the Secretariat improve 
annual access review documentation in order to be able to identify verifications and 
changes that have been carried out, by including: (a) the list of users and original 
associated rights; (b) where applicable, the exchanges showing a profile has been 
validated or invalidated; (c) the changes to be made and those implemented in the 
system; and (d) a dated copy of the final list retrieved from the system after the changes 
have  been made.  
4. Main points relating to accounting policies  
4.1. Long -term employee benefits  
64.  Long -term employee benefits, which are recorded as liabilities in the statement of 
financial position, totalled CHF 1,654.5 million at the end of 2022, compared to 
CHF 1,742.9 million at the end of 2021, CHF 1,684.0 million at the end of 2020 and 
CHF 1,573.5  million at the end of 2019. Most of this amount derives from the actuarial 
estimates produced by the actuarial firm contracted by the WTO, as detailed in the table belo w. 
 
 
5 Processes concerned: procure to pay, reconciliation, journa l entry, period control and cash receipt.  
6 This is not a standard operating procedure, but a free format note.  WT/BFA/W/639  
 
- 22 - 
 
 18 Table 5: Statement of long -term employee benefits  
(in thousands of CHF)  
 Estimates by 
the actuarial 
firm WTO 
estimates  2022  2021  Variation  
Pension Plan  1,405,035  - 1,405,035  1,437,747  -2 % 
ASHI plan  240,119  - 240,119  293,654  -18 %  
Removal indemnity  - 1,684  1,684  1,747  -4 % 
Separation grant  - 7,668  7,668  9,715  -21 %  
Total  1,645,154  9,352 1,654,506  1,742,863  -5 % 
Source: External Auditor, based on the Financial Statements (rounded amounts). The above 
amounts are those valid as at 31 December of each accounting year.  
65. The fact that these liabilities have decreased, by around CHF 86.3 million 
(CHF  1,654.5  million - CHF 1,742.9 million), is primarily due to the Secretariat's use of a 2.3% 
discount rate, derived from t he Swiss yield curve established by the WTO's actuary as of 31 
December 2022, instead of the technical interest rate of Swiss pension plans determined by 
the Swiss Chamber of Pension Fund Experts, which stood at 1.68% as at 31 December 2021.  
66. An actuarial estimation involves complex methods and assumptions that have a 
considerable impact on the result obtained, as they are applied to a high volume of data. It is 
therefore important that the Secretariat has the means to assess the actuary's work , the result 
of which has a significant impact on the financial statements. As a result, the External Auditor 
decided to devote particular attention to audit procedures relating to long -term employee 
benefits. The main findings of this work are presented b elow.  
Recognition of invalidity  
67. Long -term invalidity benefits for 54 staff members, totalling CHF  11.34 million as at 
31 December 2022, were recognized as provisions pursuant to IPSAS 19 on provisions, 
contingent liabilities and contingent assets, despite the fact that paragraph 1(g) thereof 
provides for their exclusion from the scope of this Standard. In accordance with paragraphs 
5(c), 155(c) and 160 of IPSAS 39, these benefits should be classified as other long -term 
employee benefits. Moreover, the Secre tariat did not reassess these long-term benefits as at 
31 December 2022, despite the fact that the discount rate increased significantly by 200 basis 
points, rising from 0.3% as at 31 December 2021 to 2.3% as at 31 December 2022. This 
means that the liabil ities as at 31 December 2022 have been overvalued by approximately 
CHF 436,000.7  
68. The Secretariat has agreed that invalidity should be recognized as another long -term 
employee benefit rather than a provision and that, in the event of major developments, it 
should even be recalculated prior to the expiry of the three -year period. However , the 
Secretariat has stated that, due to costs, exemptions from IPSAS 39 will be indicated in the 
next Financial Statements in Note 1 on accounting policies.  
 
7 Calculations carried out by the External Auditor on the basis of the sensitivity analysis presented in the 
actuarial valuation report for the invalidity plan as at 31 December 2021, produced by the actuary of the WTO.  WT/BFA/W/639  
 
- 23 - 
 
 19 Recognition of untaken annual leave  
69. Pursuant to the Staff Regulations an d Staff Rules, the Secretariat is required to recognize 
accrued annual leave that is untaken at the end of the year, whether this be upon separation 
from service or when these days are taken as leave during service.  
70. In this connection, in accordance with S taff Regulation 6.7 and Staff Rule 111.3(a), staff 
members who, on leaving the Secretariat, have not exhausted the annual leave to which they 
are entitled shall be granted a sum based on the remuneration specified in the Staff Rules, in 
proportion to the n umber of days of annual leave they have accumulated, up to a maximum of 
60 working days.  
71. The Secretariat recognized all untaken annual leave accrued, which amounted to CHF 
10.7 million as at 31 December 2022, as a short -term employee benefit, including lea ve to be 
paid upon separation from service, even if this leave is not expected to be paid within the 
12 months following the end of the reporting period. This liability is calculated on the basis of 
the assumption that all eligible staff members will leave  the Secretariat on 1 January 2023.  
72. The Secretariat is of the view that IPSAS 39 clearly indicates that untaken annual leave 
constitutes a short -term liability and that none of this Standard's provisions indicate that paid 
annual leave should be considered  a long -term employee benefit.  
73. The External Auditor holds that short -term employee benefits should only include 
elements that are expected to be paid in full within the 12 months that follow the end of the 
financial year during which the staff members pro vided the relevant services.  This matter will 
be studied further in the next audit.  
Probative nature of actuarial assumptions  
74. As stated in paragraphs 77 and 78 of IPSAS 39, actuarial assumptions shall be unbiased 
and the best estimates of the variables that will determine the ultimate cost of long-term 
employee benefits.  
75. The External Auditor has identified five assumptions used i n the actuarial valuation of 
post-employment benefits (Pension Plan and ASHI) whose robustness could be strengthened, 
namely:  
- Withdrawal rates and retirement rates: withdrawal rates have been determined based 
on historical data from 2010 to 2018. Failing the announcement of a major and lasting 
change to staff policy, the Secretariat considers these historical data to be a reliabl e 
basis for the estimates. It is not clear, however, that these data reflect current trends 
or that they are predictive of future, long -term movements. Moreover, these rates are 
not differentiated by staff category or based on the number of years of servic e, even 
though withdrawal rates tend to be high in the first years of service and then decrease 
with seniority.  
- ASHI enrolment rate upon retirement and post -retirement lapse ratio: the Secretariat 
assumed that 100% of participants would opt into the ASHI plan upon retirement and 
that none of the participants would opt out of the yearly plan after their departure from 
the Organization. The actuary highlighted that this assumption may be conservative 
and could overvalue the defined be nefit liabilities by 2% to 3%, which is equivalent toWT/BFA/W/639  
 
- 24 - 
 
 20 between CHF 4.8 million and CHF 7.2 million. The actuary used a total enrolment 
rate due to the lack of historical statistics as at the valuation date.8  
- Rate of salary increases: this assumption is ma de on the basis of Pension Plan 
historical data, by applying rates of increase that differ according to the age of the 
participants. These rates are calculated independently of the participants' staff 
category. Since a participant's staff category is a det ermining factor in their career 
progression, it would be helpful to assess whether including this factor in the 
assumption would improve the quality of the actuarial valuation results.  
- Effect of currency combinations on financial assumptions: economic assu mptions 
such as the discount rate, the general inflation rate and the medical inflation rate were 
determined without being weighted by the main currency combinations in which the 
payments will be made once eligible staff members and their dependants have l eft, 
such as the Swiss franc, the euro and the US dollar.  
- Medical inflation rate: the Secretariat used a single medical inflation rate of 3.4 % to 
project gross initial medical claims because this assumption is consistent with the 
historical data from the  past 10 years. However, it did not provide the historical data 
with evidence demonstrating that these data are still relevant to the current situation 
and that they will fully reflect the expected increase in medical costs.  
Recommendation No. 2. The External Auditor recommends that the Secretariat 
consider examining the possibility of strengthening the robustness of long -term 
employee benefit estimates by: (a) assessing whether differentiating withdrawal rates 
and retirement rates by staff category an d seniority would improve actuarial valuations; 
(b) examining the possibility of differentiating the rates of salary increases by staff 
category; (c) determining the rate of enrolment in the after -service health insurance 
plan upon retirement and the post -retirement lapse ratio and liability adjustment, if 
justified; (d) analysing the effect of weighting financial assumptions by currency 
combinations on defined benefit obligations as at the valuation date; and (e) justifying 
the medical inflation rate by me ans of a sufficient audit trail.  
 
Audit trail relating to the estimation method  
76. The actuary uses the software, ProVal, access to which is limited for intellectual property 
related reasons. The Secretariat produced four reports for two participants as an example, 
which allowed the conformity of the actuarial valuation method (PUC9) with the method 
prescribed under IPSAS 39 to be validated. However, these four cases did not allow the 
conformity of the valuation method for the participant s/beneficiaries (1,121 for the Pension 
Plan and 1,280 for the ASHI plan) to be validated.  
77. One alternative could be to work with Excel on actual samples representing each staff 
category for each employee benefit, in order to ensure that the calculation form ulae used are 
consistent with the method prescribed under paragraph 69 of IPSAS 39. This point will be 
discussed further in the next audit.  
 
8 Page 9/21 of the actuarial report.  
9 Projected unit credit method.  WT/BFA/W/639  
 
- 25 - 
 
 21 Disclosure  of required  information  
78. With regard to the Pension Plan and the ASHI plan, the Secretariat has failed to disclose  
the following information in the notes to the Financial Statements, despite the fact that this is 
required under paragraphs 141 to 149 of IPSAS 39:  
- A description of t he regulatory framework in which the Pension Plan and the 
ASHI plan operate, for example the level of any minimum funding requirements, 
and any effect of the regulatory framework on these plans, such as the asset 
ceiling (para. 141(a)(ii)).  
- A description o f any other entity's responsibilities for the governance of the 
plans, for example responsibilities of trustees or of management of the plan 
(para. 141(a)(iii)).  
- A description of the risks to which the plans expose the Secretariat, focused on 
any unusual, Secretariat -specific or plan -specific risks, and of any significant 
concentrations of risk (para. 141(b)).  
- Actuarial gains and losses from changes in demographic assumptions 
(para.  141(c)(ii)).  
- Actuarial gains and losses from changes in financial assumpti ons 
(para.  141(c)(iii)).  
- The Secretariat's contributions to the ASHI plan (para. 143 (f)).  
- A description of any funding arrangements and funding policy that affect future 
contributions to both the Pension Plan and the ASHI plan (para. 149 (a)).  
- The expect ed contributions to the Pension Plan and the ASHI plan for the next 
reporting period in 2023 (para. 149 (b)).  
- Information about the maturity profile of the two plans' defined benefit 
obligations, including the weighted average duration of the obligations 
(para.  149 (c)).  
79. The valuation of the defined benefit obligations was based on 18 actuarial assumptions, 
including the following four that the Secretariat presented in the notes to the Financial 
Statements: the discount rate, the medical inflation rate, th e rate of salary increases and the 
general inflation rate.  
80. In accordance with paragraph 146 of IPSAS 39, the Secretariat shall disclose all the 
significant actuarial assumptions used to determine the present value of the benefit obligations 
under the Pensi on Plan and the ASHI plan as at the valuation date.  
81. In this regard, the Secretariat has failed to demonstrate that the 14 actuarial assumptions 
not presented in the notes to the Financial Statements are not significant or have no significant 
effect on the defined benefit obligations for the Pension Plan and  the ASHI plan.  WT/BFA/W/639  
 
- 26 - 
 
 22  
Recommendation No. 3. The External Auditor recommends that the Secretariat carry 
out an analysis of the relative significance of actuarial assumptions in order to present 
those that are significant in the notes to the Financial Statements and maintain an 
appropriate audit trail.  
 
Sensitivity analyses  
82. According to IPSAS 39 (paragraphs 146 and 147), the information on the defined benefit 
plans to be disclosed in the attached notes shall include a sensitivity analysis for each 
significant actuarial assumption and for all plans at the end of the reporting period.  
83. The sensitivity analysis of the actuarial assumptions presented in Note 14 to the Financial 
Statements was limited to two assumptions (discount rate and medical inflation rate). This 
analysis was not ca rried out for the inflation rate or for the rates of salary increases, despite 
the fact that these assumptions were mentioned in Note 14, which means that the Secretariat 
deemed them to be significant.  
84. In addition, the results of these analyses are only pr esented in the notes for the Pension 
Plan with regard to the discount rate. The Secretariat has not presented these analyses for 
the ASHI plan.  
Recommendation No. 4. The External Auditor recommends that the Secretariat: 
(a) carry out a sensitivity analysis  of the obligations of the Pension Plan and 
after -service health insurance plan at the balance sheet date for each significant 
actuarial assumption; and (b) present the results of these analyses in the notes to the 
Financial Statements.  
85. The Secretariat has  accepted this recommendation and deemed that the sensitivity 
analysis of the discount rate shall be presented for the two defined benefit plans and that, 
accordingly, in the case of the ASHI plan, the results of the sensitivity analysis of the discount 
rate and the medical inflation rate shall be presented in the notes to the Financial Statements.  
4.2. Write -offs and ex gratia  payments  
86. Ex gratia  payments and write -offs of cash, supplies, equipment and other assets, other 
than arrears of contributions, shall be submitted with the final accounts, in accordance with 
the provisions of Regulations 40 and 41 of the Financial Regulations. A statement of  such 
payments and write -offs was submitted to the External Auditor.  
87. Upon submission of the final accounts, the write -offs of CHF 220,000 in 2022, compared 
to CHF 17,000 in 2021, had been the subject of a full investigation by the Director -General, 
pursuant to Regulation 41 of the Financial Regulations. The main write -off of the financial year 
relates to the writing off, in accordance with the External Auditor's previous recommendation, 
of the debt of the Government of Argentina for the organization of the Eleventh Ministerial 
Conference, which stood at CHF 209,142. There we re no ex gratia  payments or other 
write -offs over the financial year. WT/BFA/W/639  
 
- 27 - 
 
 23 V. ACKNOWLEDGEMENTS  
88. The External Auditor extends its thanks to all the WTO teams for making themselves 
available and for the quality of the information provided during the audit.  
 
 
 
End of audit observations.  
 
 
 
 
 
 
 
 
 
 
 
 WT/BFA/W/639  
 
- 28 - 
 
 24 ANNEX: AUDIT ADJUSTMENTS TO THE FINANCIAL STATEMENTS  
The work of the External Auditor has not identified any audit adjustments, whether due to 
errors or judgmental differences.  
Audit adjustments  Impact on the statement of financial position  Impact on the 
statement of 
financial 
performance  Current 
assets  Non-
current 
assets  Current 
liabilities  Non-
current 
liabilities  Net 
position  
NONE  NONE  NONE  NONE  NONE  NONE  NONE  
Source: External Auditor  
 
__________