Annual financial reportand financial statements

Year to December 31, 2016

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2016

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

CONTENTS
Page
Number
ANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

3
3
3

INDEPENDENT AUDITOR’S REPORT23

FINANCIAL STATEMENTS
STATEMENT I - Statement of Financial Position
STATEMENT II – Statement of Financial Performance
STATEMENT III – Statement of Changes in Net Assets
STATEMENT IV – Statement of Cash Flow
STATEMENT V – Statement of Comparison of Budget and Actual Amounts
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Objectives and Budget of the Organization
Note 2: Significant Accounting Policies
Note 3: Cash and Cash Equivalents
Note 4: Investments
Note 5: Receivables
Note 6: Inventories
Note 7: Equipment
Note 8: Investment Property
Note 9: Intangible Assets
Note 10: Land and Buildings
Note 11: Other Non-Current Assets
Note 12: Payables and Accruals
Note 13: Employee Benefits
Note 14: Transfers Payable
Note 15: Advance Receipts
Note 16: Borrowings
Note 17: Provisions
Note 18: Other Current Liabilities
Note 19: Contingent Assets and Liabilities
Note 20: Leases
Note 21: Related Party Transactions
Note 22: Net Assets
Note 23: Reconciliation of Statement of Budgetary Comparison and Statement of Financial
Performance
Note 24: Revenue
Note 25: Expenses
Note 26: Financial Instruments
Note 27: Exchange Gain and Loss
Note 28: Events After the Reporting Date
Note 29: Segment Reporting

26
26
27
28
29
30
32
32
33
38
39
39
40
41
42
43
44
47
48
48
54
56
57
57
58
58
58
59
60

ANNEXESANNEX I – Statement of Financial Position by Source of Funding [Unaudited]
ANNEX II – Statement of Financial Performance by Source of Funding [Unaudited]
ANNEX III – Special Accounts by Donor Contributions
ANNEX IV – WIPO Ex Gratia Payments

72
72
73
74
75

1

61
63
64
65
69
70
70

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Organization’s mandate, governing bodies andprocedures are set out in the WIPO Convention, which
established WIPO in 1967.

ANNUAL FINANCIAL REPORTINTRODUCTION

WIPO’s Member States determine the direction,budget and activities of the Organization through thedecision-making bodies. The main policy anddecision-making bodies of WIPO are the General
Assembly, the Conference and the Coordination
Committee. The General Assembly consists of States
party to the WIPO Convention which are members of
any of the Unions administered by WIPO. The
Conference is composed of the States party to the
WIPO Convention, and is, inter alia, the competentbody for adopting amendments to the Convention.
The Coordination Committee consists of elected
members of the Executive Committees of the Paris or
the Berne Unions or both, one-fourth of the States
party to the WIPO Convention which are not membersof any of the Unions, and Switzerland, as the State on
whose territory the Organization has its headquarters.

The financial statements of the World Intellectual
Property Organization (WIPO) for the year to
December 31, 2016, are submitted to the Assembliesof the Member States of WIPO as required byRegulation 6.7 of the Financial Regulations and Rules(FRR). The financial statements have been preparedin accordance with International Public Sector
Accounting Standards (IPSAS), as developed andapproved by the International Public Sector
Accounting Standards Board (IPSASB).
The report of the External Auditor on the audit of the2016 financial statements, together with his opinion on
the financial statements, are also submitted to the
Assemblies of the Member States of WIPO asprescribed under Regulation 8.11 and Annex II of the
FRR.

The General Assembly appoints the WIPO Director
General upon nomination by the Coordination
Committee. The Director General is the chief
executive of the Organization. The Director General isassisted by the Senior Management Team (consistingof the Deputy Directors General and the Assistant
Directors General, plus the Legal Counsel and the
Director of the Human Resources Management
Department) in providing the strategic direction of
WIPO’s programs and in managing their respective
Sectors and Programs to ensure the delivery of resultsin line with the Organization’s strategic goals and theProgram and Budget.

The annual financial report, including financial
statement discussion and analysis, is presented in thisdocument alongside the financial statements.

FINANCIAL STATEMENT
AND ANALYSISDISCUSSION

The following financial statement discussion andanalysis includes an overview of the Organization’s
operations and environment, financial objectives andstrategies, risk management strategy, financial
performance and financial position during the year to
December 31, 2016. It has been prepared inaccordance with IPSASB Recommended Practice
Guideline 2, and is intended to provide an explanationof the significant items, transactions, and events
presented in the financial statements and the factorsthat influenced them. This discussion and analysis is
not part of WIPO’s financial statements; however, it
should be read together with WIPO’s financial
statements (pages 23 to 68).

WIPO generates most of its revenue from fees which
are paid by users of its intellectual property services
for patents, trademarks and industrial designs. These
services are provided through the Patent Cooperation
Treaty (PCT), Madrid and Hague systems. In 2016,
fees from these activities represented 91.6 per cent of
the Organization’s total revenue, with PCT system
fees alone representing 75.0 per cent. The driver forrevenue from these fee-paid services is theinternational demand for intellectual property titles.
This demand is influenced by the performance of the
global economy, although since 2010 global
intellectual property filing activity has continued to
grow despite uneven economic recovery from theglobal financial crisis that began in 2008. Latest
available statistics up to the end of 2015 show thatworldwide patent and trademark applications havegrown each year since 2010. Global patentapplications rose to 2.89 million in 2015, representing
a 7.8 per cent increase over 2014. An estimated 5.98

Overview of WIPO’s Operations andEnvironment
WIPO is the global forum for intellectual property
services, policy, information and cooperation. It is a
specialized agency of the United Nations, with 189
Member States. The Organization’s mission is to leadthe development of a balanced and effective
international intellectual property system that enables
innovation and creativity for the economic, social andcultural development of all countries. The

3

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

revised in 2015. WIPO’s reserves are accounted foras the net assets of the Organization, and serve tominimize the impact of income shortfalls and maximize
the probability that the Organization can meet its
obligations in the short term and maintain financial
stability. One core element of the policy is themechanism for establishing the required level ofreserves as a percentage of the estimated biennial
expenditure of the Unions administered by theOrganization. The policy also establishes theprinciples and approval mechanism for the use ofreservesforone-time
projects
forcapitalimprovements and exceptional circumstances.

million trademark applications were filed worldwide in2015, 15.3 per cent more than in 2014. Global
industrial design activity increased more modestly in2015 (annual growth of 2.3 per cent in applications,and 0.6 per cent in the number of designs contained inapplications), though this followed a decline in 2014.
Other external factors which may influence theOrganization’s revenue from its fee-paid services
include research and development investment levels,
technological confidence levels, and exchange rate
fluctuations. For the PCT system in particular, otherimportant factors include the level of PCT fees ascompared to those offered by other filing routes, theattractiveness and value of PCT services as comparedto other filing routes, and individual corporate patent
strategies.

The Organization manages its investments inaccordance with its Policy on Investments, which was
also revised during 2015. The policy states that the
primary objectives of the Organization’s investment
management, in order of importance, shall be (i)preservation of capital; (ii) liquidity and (iii) within theconstraints of (i) and (ii), the rate of return. The
Organization aims to achieve a market rate of return
whenever appropriate and possible for both operating
and core cash.

Overview of WIPO’s Financial Objectives
and Strategies
The financial activities of WIPO are governed by its
Financial Regulations, which are approved by theGeneral Assembly. Financial Rules are established by
the Director General in accordance with the provisionsof the Financial Regulations. WIPO’s Member States
are informed of any modification of the Financial
Rules. The Financial Rules govern all the financial
management activities of the Organization. Authority
and responsibility for the implementation of the
Financial Regulations and Rules is delegated by the
Director General to the Controller.

Overview of WIPO’s Risk Management
Strategy
WIPO’s Risk Management Policy sets out theOrganization’s approach to managing risks andinternal controls in a consistent and business-oriented
manner, in order to support the achievement of its
strategic goals and expected results. It iscomplemented by WIPO’s Risk and Internal Control
Management Manual, which covers the day-to-day
operational details of risk and internal control
management. The policy and the manual, together
withtheorganizationalarrangements,
theestablishment of roles and responsibilities, processes
and activities for the management of risks and internal
controls represent WIPO’s Risk Management
Framework.

Every two years, the Director General presents a
Program and Budget to Member States for approval. It
details objectives, performance measures andbudgetary planning for all proposed activities. The
Program and Budget for the 2016/17 biennium wasapproved by the Assemblies of the Member States of
WIPO on October 14, 2015. The Program and Budget
provides the planning for the biennium within theoverall strategic context of the Medium-Term Strategic
Plan.

Under the guiding principles of WIPO’s Risk
Management Policy, risk management is considered
an organization-wide responsibility. All staff areresponsible for managing risks and the ultimate
accountability for risk management lies with the Senior
Management Team. Strategic or organizational levelrisks are identified and reviewed by WIPO’s Risk
Management Group, which is chaired by the Director
General. Risk management is performed as anintegral part of the Organization’s Results-BasedManagement cycle. The risk management strategy is
guided by the risk appetite set by the Member States
in WIPO’s Risk Appetite Statement.

The Organization uses a Results-Based Management
system to ensure that resources are budgeted andutilized in line with organizational results and priorities.
Organizational performance is measured andanalyzed on a regular basis through performanceindicators, targets and baselines. Under this system,
both the Program and Budget and the Medium-Term
Strategic Plan form part of WIPO’s planning
framework, along with annual work plans andindividual staff objectives.
The Organization manages the levels of its reserves inaccordance with its Policy on Reserves, which was

4

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Overview of the Financial Statements

Financial Statement Highlights

The financial statements prepared in accordance withIPSAS consist of:

The 2016 WIPO financial statements prepared inaccordance with IPSAS show a surplus for the year of
32.0 million Swiss francs. The Organization’s net
assets increased from 279.1 million Swiss francs in2015 to 311.3 million Swiss francs as at December 31,
2016.

Statement of Financial Position - details the net assets(the difference between total assets and total
liabilities) of the Organization. This statement provides
information about the financial strength of theOrganization, and the resources which are available tosupport its future objectives;

The 2016 surplus of 32.0 million Swiss francs can becompared to a surplus of 33.3 million Swiss francs in2015. Total revenue in 2016 was up by 5.8 million
Swiss francs on the 2015 figure. Most significantly,
revenue from PCT system fees increased by 15.3
million Swiss francs compared to the prior year,
although this was partly offset by a decrease of 8.3
million Swiss francs in Madrid system fees revenue.
Total expenses rose by 7.0 million Swiss francs
compared to 2015. Personnel expenditure increasedby 8.1 million Swiss francs in 2016, largely due to the
movement in the Organization’s liability for AfterService Health Insurance (ASHI), which is recognized
as an expense for the year. The cost of contractual
services also rose by 2.3 million Swiss francs
compared to 2015, although expenses for travel,
training and grants, and supplies and materials, werelower than the prior year (by 1.6 million Swiss francs
and 1.5 million Swiss francs respectively).

Statement of Financial Performance - measures thenet surplus or deficit (the difference between total
revenue and total expenses) for the year. This
statement provides information on the Organization’ssources of revenue, and the cost of its activities. The
annual surplus or deficit is presented on a full accrualbasis of accounting, recognizing revenue in the period
it is earned and expenses when incurred, regardlessof when the associated cash is received or paid;
Statement of Changes in Net Assets - identifies thechange in the net asset position during the year. This
statement highlights the sources of changes in the
Organization’s overall financial position, includingchanges due to the surplus or deficit for the period;
Statement of Cash Flow - presents the movements ofcash during the year resulting from operating,investing and financing activities. This statement
provides information on how cash has been raised
and used during the year, including borrowing andrepayment of borrowing, and the acquisition anddisposal of fixed assets. In contrast to the Statementof Financial Performance, the Organization’s net cash
flow measures the difference between cash coming
into the Organization and cash going out;

WIPO’s total assets increased from 977.0 million
Swiss francs as at December 31, 2015, to 1,027.2
million Swiss francs as at December 31, 2016. Cashand cash equivalents totaled 529.8 million Swiss
francs at the end of 2016 (51.6 per cent of total
assets). This represents an increase of 40.3 million
Swiss francs compared to the prior year, which wasachieved despite the Organization making a further
lump sum repayment of 16.0 million Swiss francs inJanuary 2016 against its loan with the BanqueCantonale de Genève and the Banque Cantonale
Vaudoise (BCG/BCV). In addition, at the end of 2016
the Organization held 12.5 million Swiss francs ofinvestments, representing funds held in term deposits
with a remaining period of more than three months.
No such investments were held at the end of 2015.
WIPO maintains significant investment in fixed assets,
including land, buildings, investment property,
intangible assets and equipment with a total net bookvalue of 411.1 million Swiss francs (40.0 per cent of
total assets). The land upon which the Organization’s
New Building was constructed was revalued during
2016, resulting in an increase of 2.2 million Swiss
francs. Although additions of 2.5 million Swiss francs
were made to buildings, intangible assets andequipment during 2016, the net book value of fixed
assets was reduced by a depreciation andStatement of Comparison of Budget and Actual
Amounts - presents a comparison of the budget
amounts under the Program and Budget, and theactual amounts for the year. This statement isprepared on the budgetary basis which is a modified
accrual basis. It provides information on the extent towhich resources were obtained and used inaccordance with the approved budget;
Notes to the Financial Statements - assist inunderstanding the principal financial statements. The
Notes comprise a summary of significant accounting
policies and other explanatory information. They also
disclose information required by IPSAS which is notpresented on the face of the principal financial
statements.

5

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

amortization charge of 11.4 million Swiss francs forthe year.

BCG/BCV loan, which had been used to finance partof the cost of construction of the New Building. The
decision to repay the loan was taken in the context ofexisting interest rate conditions, including negativeinterest rates for Swiss franc deposits, and inaccordance with the objective of capital preservation,
as stipulated in WIPO’s Policy on Investments.

The principal liabilities of the Organization as at
December 31, 2016 are payables and advancereceipts of 369.3 million Swiss francs (51.6 per cent of
total liabilities) and employee benefit liabilities of 188.4
million Swiss francs (26.3 per cent of total liabilities).
The largest employee benefit liability for theOrganization is the ASHI liability, which totalled 154.3
million Swiss francs at the end of 2016. During 2016
the IPSASB issued a new standard dealing with
employee benefits, with an implementation deadline ofJanuary 1, 2018. This standard will change the way inwhich WIPO is able to account for its ASHI liability,
and will require previously unrecognized accumulated
actuarial losses to be recognized as part of the liability
in the statement of financial position. Borrowings
totaled 88.7 million Swiss francs at the end of 2016.
Following the year end, in January 2017 theOrganization took the decision to repay in full theremaining balance of 70.5 million Swiss francs of its

The Organization’s net assets, consisting of its
Reserves and Working Capital Funds, totaled 311.3
million Swiss francs at the end of 2016. During theyear the Working Capital Funds component of 2.0
million Swiss francs for the PCT Union was returned to
the Member States of the PCT Union throughdeductions from contribution invoices. The increase of
2.2 million Swiss francs in the value of the New
Building land was recognized directly in net assets
through an increase in the Revaluation Reserve
Surplus.§Financial Performance
The Organization’s results for 2016 showed a surplus
for the year of 32.0 million Swiss francs, with total
revenue of 387.7 million Swiss francs and total
expenses of 355.7 million Swiss francs. This can becompared to a surplus of 33.3 million Swiss francs in2015, with total revenue of 381.9 million Swiss francs
and total expenses of 348.6 million Swiss francs.

The Program and Budget result for 2016 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 62.5 million
Swiss francs. The 2016 result for the Organization
under IPSAS includes Special Accounts, Projects
financed from reserves, and the impact of adjustments
related to full accrual accounting in accordance withIPSAS:

Summary of financial performance by source of funding
Program andBudgetSpecial
Accounts

2016

2016

Projects
Financed from
Reserves
2016

IPSAS
Adjustm ents

Total

Total

2016

2016

2015

(in millions of Swiss francs)
Total revenue

384.7

10.3

-

-7.3

387.7

381.9

Total expenses

322.2

9.8

4.7

19.0

355.7

348.6

Net surplus/(deficit)

62.5

0.5

-4.7

-26.3

32.0

33.3

6

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

The chart below summarizes the principal differences
between the Program and Budget surplus of 62.5
million Swiss francs, and the surplus for the whole
Organization prepared on an IPSAS basis of 32.0
million Swiss francs:
Movement from budget result to IPSAS result 2016
62.5

+0.5

-4.7

-0.5

millions of Swiss francs

-6.3

-11.4
+2.5

32.0

Capitalizationof buildings
additions,equipment,
software

IPSAS RESULTPER
FINANCIALSTATEMENTS-10.6

BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financedfromreserves

Revenue
Deferral of Depreciation
recognition revenue fromandunder Special
fees
amortization
Accounts

Entity differences

Accounting basis differences

The application of full accrual basis accounting inaccordance with IPSAS leads to a number of‘accounting basis differences’ which impact theresult for the year. The net impact of theseadjustments is a reduction in the surplus of 26.3
million Swiss francs:
Under IPSAS, revenue from voluntary
contributions under Special Accounts is
recognized as the conditions in the donor
agreements are fulfilled and expense isincurred in line with the program of work. The
resulting adjustment leads to a decrease in the
result for the year of 0.5 million Swiss francs.



In applying IPSAS, revenue from fees isdeferred until it is deemed to have been

Full accrual
basis

earned, which in the case of international
applications is when final publication takes
place. For PCT applications, a receivable isalso recognized where an application has been
filed but no fee has been received by theOrganization. The total net impact of theseadjustments is a reduction in revenue of 6.3
million Swiss francs. This is principally due toan increase in the balance of deferred revenue
from fees (PCT, Madrid and Hague systems),
which moved from 219.2 million Swiss francs
as at December 31, 2015 to 230.7 million
Swiss francs as at December 31, 2016. Overthe same period, receivables from PCT fees
increased from 40.9 million Swiss francs to
46.4 million Swiss francs.

The WIPO financial statements as prepared inaccordance with IPSAS include all areas andactivities of the whole Organization. The inclusionof the results before IPSAS adjustments for Special
Accounts (surplus of 0.5 million Swiss francs) and
Projects financed from reserves (deficit of 4.7
million Swiss francs) represent ‘entity differences’
between the budget result and the surplus per the
IPSAS financial statements.



Changes in
employeebenefitliabilities

7

The result for 2016 on an IPSAS basis includes
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets as the cost of these assets is
spread over their useful lives. The total cost ofdepreciation and amortization for the year was
11.4 million Swiss francs.



IPSAS requires that employee benefits earned
by staff but not yet paid be recognized as

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016(principally the Organization’s contribution for
the ASHI premiums of retirees). As a result, the
IPSAS adjustment required to bring employee
benefit liabilities into line with IPSAS compliant
calculations was 10.6 million Swiss francs,
resulting in a corresponding increase in
expense.

liabilities of the Organization. The IPSAS
adjustments bring the total liabilities recognizedin the financial statements into line with the
IPSAS compliant calculations of theseliabilities, including those prepared by external
actuaries.
Employeebenefitliabilities
recognized under IPSAS (ASHI, repatriation
grant and travel, accumulated annual leave,home leave, overtime and the Closed PensionFund) increased by 17.1 million Swiss francs
during 2016. Under the Program and Budget, a
6.0 per cent charge is applied to the cost of
posts for the funding of after-service employee
benefit liabilities. In 2016, this charge
generated a balance of 6.5 million Swiss
francs, following deductions for after-service
employee payments during the period

Under IPSAS, costs relating to theimprovement of buildings are capitalized. This
reduces the expense for the year 2016 by 2.1
million Swiss francs. Similarly, the acquisitionof certain equipment and software is capitalized
under IPSAS, further reducing the expense forthe year by 0.4 million Swiss francs.

Revenue Analysis
Composition of 2016 revenue on an IPSAS basis(in millions of Swiss francs)

Madrid system
fees
59.6
(15.4%)

Assessedcontributions
17.3(4.4%)

Voluntarycontributions
10.2(2.6%)

Hague system fees
5.0
(1.3%)

PCT system fees
290.7
(75.0%)

Other revenue
4.9(1.3%)

2016 total revenue:
387.7m Swiss francs

Total revenue of the Organization for 2016 was
387.7 million Swiss francs, representing an increaseof 1.5 per cent compared to the 2015 total revenueof 381.9 million Swiss francs. The largest source ofrevenue during 2016 was PCT system fees,
accounting for 75.0 per cent of total revenue.
Revenue from PCT system fees rose by 5.6 percent compared to 2015.

system fees fell by 12.2 percent compared
to 2015.
381.9mSwiss francs
Hague system fees, Lisbon system fees, assessed
contributions, voluntary contributions (including
contributions by donors to Special Accounts, andsubventions to the Lisbon Union) and other revenue(investment, publications, arbitration and mediationand other/miscellaneous revenue) comprise theremaining 9.6 per cent of the Organization’s total
revenue. The following table provides a summary of
the changes by revenue type compared to the prioryear.

Madrid system fees were the second largest sourceof revenue during the year 2016, representing 15.4
per cent of total revenue. Revenue from Madrid

8

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Change in revenue 2015 – 2016
2016

2015

Net Change

Net Change(in millions of Swiss francs)%

Revenue
Assessed contributions

17.3

17.8

-0.5

-2.8

Voluntary contributions

10.2

10.3

-0.1

-1.0

Publications revenue

0.5

0.5

-

-

Investment revenue

-

1.5

-1.5

-100.0PCT system

290.7

275.4

15.3

5.6

Madrid system

59.6

67.9

-8.3

-12.2

Fees

Hague system
Sub-total fees

5.0

3.9

1.1

28.2

355.3

347.2

8.1

2.3

1.6

1.5

0.1

6.7

2.8

3.1

-0.3

-9.7

387.7

381.9

5.8

1.5

Arbitration and Mediation
Other/miscellaneous revenue
Total revenue

PCT revenue is principally comprised ofinternational filing fees (the basic fee, plus
supplementary page fees, less reductions for efilings and least developed countries). The total
PCT system fees revenue figure also comprises
other fees (including handling and transfer fees)
and foreign exchange gains and losses:
Detail of PCT system fees 2012-2016
2016

2015

2014

2013

2012

(in millions of Swiss francs)
International filing fees

281.8

263.6

275.0

262.3

Payment regularization 2004-2013

-

4.7

-

-

-

Other fees

3.8

4.1

3.9

3.9

3.9

Exchange gain/(loss) on fees received

5.2

-0.7

-1.7

-6.0

7.5

Other exchange gain/(loss)

-0.1

3.7

1.4

-2.7

-

Total PCT system fees

290.7

275.4

278.6

257.5

252.0

Revenue from PCT system fees on an IPSAS basis
increased by 5.6 per cent compared to 2015. In the
IPSAS
financialstatements,
revenueforinternational filing fees from PCT applications is
recognized only on publication of the application. In
2016 there were 210,454 publications compared to200,928 in 2015.

240.6

the following graph shows how annual revenue has
moved in line with the number of publishedapplications in the year. Two factors led to higher
numbers of publications in 2014 when compared tothe trend for the other years presented in the graph.
Firstly, in 2014 there were fifty-three weeks ofpublications, instead of the usual fifty-two.
Secondly, there was a surge in PCT applications inMarch 2014 due to the entering into force one year
earlier of the Leahy-Smith America Invents Act.

When looking at revenue from PCT international
filing fees as recognized in accordance with IPSAS,

9

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

230,000

290

220,000

280
270

210,000

260

200,000250

190,000

240
230

180,000

220

170,000

Revenue (millions of Swiss
francs)Number of publications

PCT - International filing fees and publications 2012-2016

210

160,000

200
2012

2013

2014

Number of publications

2015

2016

International fees for published applications

Exchange gains and losses are incurred on PCTinternational filing fees where these are received incurrencies other than the Swiss franc. WIPO
establishes equivalent amounts of fees in various
currencies for each year according to the exchange
rates prevailing on the first Monday of October ofthe preceding year. Equivalent amounts can bereset during the year if the exchange rate between
the other currency and the Swiss franc is changed
by 5.0 per cent or more for more than four
consecutive Fridays. The equivalent amounts
applicable at the date of filing an application
determine how much an applicant should pay in thelocal currency. The actual amount recognized by
WIPO in Swiss francs is determined by the United

Nations Operational Rates of Exchange (UNORE)
at the date of receipt of payment. The exchange
gain or loss on fees arises as the difference
between the equivalent Swiss franc fee and theactual amount in Swiss francs at the date ofpayment. In the year 2016, the Organization madea net exchange gain of 5.2 million Swiss francs on
PCT fees received (international filing fees andhandling fees). This gain concerned principally feesin Japanese yen (gain of 4.4 million Swiss francs in2016). In 2015, 2014 and 2013, WIPO incurred a
net exchange loss on fees received, whereas in2012 a net gain of 7.5 million Swiss was registered:

Detail of exchange gain/(loss) on PCT fees received 2012-2016
2016

2015

2014

2013

2012

(in millions of Swiss francs)
Currency of fee paym ent:
US dollar

0.7

2.6

0.1

-1.5

Japanese yen

4.4

-1.6

-1.3

-4.9

1.8

Euro

0.4

-1.4

-0.4

0.7

-0.1

Other currencies
Total exchange gain/(loss) on fees
received

-0.3

-0.3

-0.1

-0.3

1.6

5.2

-0.7

-1.7

-6.0

7.5

10

4.2

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

USD – Comparison of PCT equivalent amount rate and UNORE 2012-2016
1.04
1.02
1.00

0.98
0.96
0.94

0.92
0.90
0.88
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14USD Fee rates

Dec-14Jun-15

Dec-15Jun-16

Dec-16

USD UNORE rates

JPY – Comparison of PCT equivalent amount rate and UNORE 2012-2016
0.013
0.012
0.011
0.010

0.009
0.008
0.007
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14JPY Fee rates

Dec-14Jun-15

Dec-15Jun-16

Dec-16JPY UNORE rates

EUR – Comparison of PCT equivalent amount rate and UNORE 2012-2016
1.270

1.220

1.170

1.120

1.070

1.020
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14EUR Fee rates

Dec-14Jun-15EUR UNORE rates

11

Dec-15Jun-16

Dec-16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Madrid system fees principally comprise basic fees
received from applications for registrations orrenewals and fees for subsequent designations:
Detail of Madrid system fees 2012-2016
2016

2015

2014

2013

2012

(in millions of Swiss francs)
Basic fees (registrations and renew als)

49.7

56.7

46.0

45.9

42.7

Subsequent designations

4.8

5.5

4.7

4.5

4.0

Other fees

5.1

5.7

4.4

5.0

4.9

Total Madrid system fees

59.6

67.9

55.1

55.4

51.6

In accordance with IPSAS, revenue from Madrid
fees for registrations, renewals and subsequent
designations is recognized in the financial
statements upon publication. Revenue fromregistrations and renewals (but not including otherfees) as recognized in accordance with IPSAS hasgrown as the number of registrations and renewals
have increased year on year. As noted, revenue
from Madrid system fees fell by 12.2 per cent in2016 compared to 2015. Madrid system
registrations in 2016 fell by 13.9 per cent, totaling
44,728 against 51,938 in 2015. Although Madrid
applications in 2016 grew by 7.4 per cent comparedto the prior year, there was an increased backlog inregistrations linked in part to system issues with the
Madrid International Registration Information
System:90,00060.0

85,00055.0

80,00050.0

75,00070,00045.0

65,00040.0

60,00035.0

55,00050,000

30.0
2012

2013

2014

Registrations and renewals

2015

2016

Fees for published registrations and renewals

12

Revenue (millions of Swiss
francs)Number of registrations and renewals

Madrid - basic fees and registrations/renewals 2012-2016

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Hague system fees totaled 5.0 million Swiss francs
for 2016. As with PCT and Madrid system fees,
revenue from fees related to the processing of
applications is recognized when the application has
been published. Hague system fees increased by
28.2 per cent compared to 2015. Hague
registrations rose from 3,581 in 2015 to 5,233 in
2016. Growth in Hague system activity is linked tothe accessions of the Republic of Korea in 2014
and of Japan and the United States of America in2015. Lisbon system fees totaled 25 thousand
Swiss francs in 2016, compared to 17 thousand
Swiss francs in 2015.

9.8 million Swiss francs of voluntary contributions
represents revenue received under Special
Accounts. This revenue is recognized as work is
performed and expense incurred in line with therelevant agreement.
Investment revenue totalled 21 thousand Swiss
francs in 2016. Although investment revenue was
1.5 million Swiss francs in 2015, this figure wasalmost entirely comprised of a 1.4 million Swiss
francs increase in valuation of the Organization’s
investment property, the Madrid Union Building. The
Organization continues to hold most of its cash
balances with the Swiss Federal Finance
Administration (AFF), and in February 2015 the AFF
introduced zero per cent interest rates to these
deposit accounts. This interest rate remained
unchanged throughout 2016. Arbitration andmediation revenue of 1.6 million Swiss francs,
publications revenue of 0.5 million Swiss francs andother/miscellaneous revenue of 2.8 million Swiss
francs for the year 2016 were broadly in line withthe prior year.

Revenue from assessed contributions of 17.3
million Swiss francs in 2016 represents 4.4 per centof total revenue, while revenue from voluntary
contributions of 10.2 million Swiss francs in 2016
represents 2.6 per cent of total revenue. In 2016
voluntary contributions included 0.4 million Swiss
francs of subventions received under Article
11(3)(iii) of the Lisbon Agreement. The remaining

Expense Analysis
Composition of 2016 expenses on an IPSAS basis(in millions of Swiss francs)

Contractual services
74.4(20.9%)

Personnel expenditure
224.4(63.1%)

Operating expenses
21.9(6.2%)
Travel, training andgrants15.8(4.4%)
Depreciation andamortization
11.4(3.2%)
Other expenses
7.8(2.2%)

2016 total expenses:
355.7m Swiss francs

13

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Detailed breakdown of 2016 expenses(in millions of Swiss francs)
Personnel
expenditure
224.4

Contractual
services
74.4

Operatingexpenses
21.9

Posts
Temporary staff
Other staff costs

204.7
12.9
6.8

Conferences
Publishing
Individual contractual services
Other contractual services

4.0
0.1
11.5
58.8

Premises and maintenanceCommunication
Representation & other operating expenses

18.3
2.1
0.8
0.7

United Nations joint services

Travel, training
and grants
15.8

Staff missions
Third-party travel
Training and related travel grant

Buildings depreciation
Depreciation
Equipment depreciation
and amortization
Intangible assets amortization
11.4

Other
7.8

Internships and WIPO fellow ships
Supplies and materials
Furniture and equipment
Finance costs

5.2
8.8
1.8

9.4
0.6
1.4

3.3
2.0
0.2
2.3

Total expenses of the Organization for 2016 were355.7 million Swiss francs, representing an increaseof 2.0 per cent compared to 2015 total expenses of348.6 million Swiss francs. The largest expense for
the Organization was personnel expenditure of
224.4 million Swiss francs, representing 63.1 percent of total expenses. Contractual services of 74.4
million Swiss francs were the second largest
expense for the Organization, followed by operating
expenses of 21.9 million Swiss francs. The tablebelow provides a summary of the changes byexpense type compared to the prior year:

Change in expenses 2015 - 2016
2016

2015

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

224.4

216.3

8.1

Internships and WIPO fellow ships

3.3

3.1

0.2

3.7
6.5

Travel, training and grants

15.8

17.4

-1.6

-9.2

Contractual services

74.4

72.1

2.3

3.2

Operating expenses

21.9

21.2

0.7

3.3

Supplies and materials

2.0

3.5

-1.5

-42.9
-75.0

Furniture and equipment

0.2

0.8

-0.6

Depreciation and amortization

11.4

11.1

0.3

2.7

Finance costs

2.3

3.1

-0.8

-25.8

355.7

348.6

7.1

2.0

Total expenses

14

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
142.5 million Swiss francs, 63.5 per cent of total
personnel expenditure for 2016. The next biggest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which totaled
26.4 million Swiss francs in 2016. WIPO’s
mandated contribution to the UNJSPF is currently
15.8 per cent of a staff member’s pensionable
remuneration. After-service employee benefits of
21.6 million Swiss francs represent the cost to theOrganization of ASHI, repatriation grant and travel,
and accumulated annual leave. The expense for2016 is equivalent to the actual cash payments forthese benefits, plus the movement in the amount of
the total liability in the year. Allowances of 16.2
million Swiss francs represent 7.2 per cent of total
staff expenditure. Allowances include principally
education grants for 5.6 million Swiss francs,
dependency allowances for 5.0 million Swiss francs
and home leave for 1.8 million Swiss francs. The
cost of the Organization’s contribution to monthly
collective medical insurance premiums for active
staff totaled 9.5 million Swiss francs for the year
2016. Other personnel expenditure of 8.2 million
Swiss francs includes mainly expenses relating to
the recognition of provisions for litigation with WIPO
personnel (6.2 million Swiss francs).

Composition of 2016 personnel expenditure on an IPSAS basis(in millions of Swiss francs)

UNJSPF
26.4(11.8%)
Post adjustment
41.6(18.5%)

After-service
employee benefits
21.6(9.6%)
Allowances
16.2(7.2%)
Collective medical
insurance
9.5(4.2%)Net base salary
100.9(45.0%)

Other
8.2(3.7%)

2016 total personnel expenditure:
224.4m Swiss francs

15

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Total personnel expenditure in 2016 of 224.4 million
Swiss francs has increased by 3.7 per centcompared to total personnel expenditure of 216.3
million Swiss francs in 2015. The table below
provides a detailed breakdown of personnel
expenditure and the variance compared to 2015:
Change in personnel expenditure 2015 – 2016
2016

2015

Net Change(in millions of Swiss francs)

Net Change%

Net base salary

94.0

93.6

0.4

0.4

Post adjustment

38.6

38.0

0.6

1.6

UNJSPF contribution

24.6

24.4

0.2

0.8

Allow ances

15.7

16.1

-0.4

-2.5

After-service employee benefits

21.6

15.4

6.2

40.3

Collective medical insurance

8.8

8.6

0.2

2.3

Other post staff expenditures

1.4

2.6

-1.2

-46.2

Staff in posts expenditure

204.7
-

198.7

6.0

3.0

Net base salary

6.9

8.7

-1.8

-20.7

Post adjustment

3.0

4.0

-1.0

-25.0

UNJSPF contribution

1.8

2.3

-0.5

-21.7

Allow ances

0.5

0.5

-

0.0

Collective medical insurance

0.7

0.9

-0.2

-22.2
-100.0

Other temporary staff expenditures

-

0.1

-0.1

Staff in tem porary positions expenditure

12.9
-

16.5

-3.6

-21.8

Other staff costs

6.8

1.1

5.7

518.2

224.4

216.3

8.1

3.7

Total personnel expenditure

While the expense for staff in posts has increased
by 6.0 million Swiss francs compared to 2015, theexpense for staff in temporary positions has fallen
by 3.6 million Swiss francs. The increase in the
expense for staff in posts is principally due to theafter-service employee benefits cost. This has
increased by 6.2 million Swiss francs compared to2015 following the movement in the ASHI liability
between 2015 and 2016. Other staff costspresented separately in the table above represent
costs common to both posts and temporary
positions (professional accident insurance, Closed
Pension Fund costs and litigation costs). Other staff
costs have increased by 5.7 million Swiss francs
compared to 2015, primarily due to movements inlegal provisions related to WIPO personnel.

professional competence. The cost of internships
and WIPO fellowships in 2016 was 3.3 million Swiss
francs, relatively stable when compared to the prioryear figure of 3.1 million Swiss francs.
Travel, training and grants total 15.8 million Swiss
francs for 2016, and account for 4.4 per cent of total
expenses. This represents a decrease of 1.6 million
Swiss francs compared to 2015. Both third-party
travel (conference participants and lecturers)
expense and staff mission costs were lower than in2015 (by 0.8 million Swiss francs and 0.7 million
Swiss francs respectively).
Contractual services in 2016 total 74.4 million Swiss
francs. These expenses have increased by 3.2 percent compared to the figure of 72.1 million Swiss
francs for 2015. Contractual services in the year
2016 concern primarily commercial translation
services (25.1 million Swiss francs), IT commercial
services (11.7 million Swiss francs), individual
contractual services (11.5 million Swiss francs), andInternational Computing Centre services (11.6
million Swiss francs).

The cost of interns and WIPO fellowships is shown
separately in the financial statements. Internships
and WIPO fellowships are not included as part ofpersonnel expenditure as they are not covered by
WIPO’s Staff Regulations and Rules. WIPO
fellowships aim to provide individuals withexperience to strengthen their knowledge and16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Operating expenses in 2016 total 21.9 million Swiss
francs, representing an increase of 3.3 per centcompared to the 2015 total of 21.2 million Swiss
francs. Operating expenses in 2016 comprisemainly premises and maintenance costs (18.3
million Swiss francs) and communication expenses(2.1 million Swiss francs).

As previously noted, expenses under IPSAS include
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets, as the cost of these assets is
spread over their useful lives. For 2016,
depreciation and amortization total 11.4 million
Swiss francs, compared to 11.1 million Swiss francs
for 2015.

Expenses for supplies and materials of 2.0 million
Swiss francs have fallen by 42.9 per cent comparedto the prior year, mainly due to large softwarepurchases which took place in 2015. Furniture andequipment expenses are also lower, totaling 0.2
million Swiss francs in 2016 compared to 0.8 million
Swiss francs in 2015. The decrease is largely due
to higher IT equipment purchases in 2015 for the
New Conference Hall. Furniture and equipment
expenses concern those items which do not meet
the Organization’s threshold of 5,000 Swiss francs
for capitalization.

Finance costs totaled 2.3 million Swiss francs in2016, compared to 3.1 million Swiss francs in 2015.
Finance costs are principally interest repayments on
the BCG/BCV loan, totaling 2.1 million Swiss francs
in 2016. These interest repayments were 0.8 million
Swiss francs lower than the prior year as the loanbalance has been reduced by significant lump sum
repayments in November 2015 (24.0 million Swiss
francs) and January 2016 (16.0 million Swiss
francs).

have also been directly impacted by the return of
2.0 million Swiss francs of Working Capital Funds to
the Member States of the PCT Union, and anincrease of 2.2 million Swiss francs in the
Revaluation
Reserve
Surplusfollowingarevaluation of the New Building land. This 2016
movement in net assets follows a 70.3 million Swiss
francs increase in net assets during the 2014/15
biennium:

Financial Position
As at December 31, 2016, the Organization has net
assets of 311.3 million Swiss francs, with total
assets of 1,027.2 million Swiss francs and total
liabilities of 715.9 million Swiss francs. The surplus
for 2016 of 32.0 million Swiss francs hascorrespondingly increased net assets. Net assets

Movement in net assets 2013 to 2016
+32.0

+2.2
-2.0

311.3

Return ofWorking
Capital Funds

Net assets
Decem ber31, 2016

+33.3

279.1
+37.0

245.8

millions of Swiss francs

208.8

Net assets
Decem ber31, 2013

Surplus on an
IPSAS basis
2014

Net assets
Decem ber31, 2014

Surplus on an
IPSAS basis
2015

Net assets
Decem ber31, 2015

17

Surplus on an
IPSAS basis
2016

Land
revaluation
increase

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

The following chart provides a summary of theStatement of Financial Position of WIPO as at
December 31, 2016. Total assets of 1,027.2 million
Swiss francs are composed primarily of cash, cash
equivalents, investments and fixed assets. Total
liabilities of 715.9 million Swiss francs are
principally payables and advance receipts,
employee benefits and borrowings:

Summary of assets and liabilities December 31, 2016

1,027.2

Net assets
311.3

millions of Swiss francs

Cash & cash
equivalents
and investments
542.3

715.9

Payables andadvance receipts
369.3

Fixed assets
411.1

Employee benefits
188.4
Borrowings
88.7

Other 73.8

Other 69.5

AssetsLiabilities

totaling 2.1 million Swiss francs for additions andimprovements to existing buildings were capitalized.
An updated valuation of the Organization’s land on
which the New Building is constructed was
performed during 2016 by an independent expert.
This resulted in an increase in the fair value of theland of 2.2 million Swiss francs. The total
depreciation and amortization charge against all
fixed assets was 11.4 million Swiss francs for 2016.

AssetsThe Organization has cash, cash equivalents andinvestment balances of 542.3 million Swiss francs,
representing 52.8 per cent of total assets. This
includes amounts totaling 161.8 million Swiss francs
which are classified as restricted, and amounts
totalling 108.6 million Swiss francs which represent
strategic cash. The total balance of 542.3 million
Swiss francs is 52.8 million Swiss francs higher
than the balance of 489.5 million Swiss francs at theend of 2015. The balance of cash and equivalents
has increased despite the Organization making alump sum repayment of 16.0 million in January
2016 against the BCG/BCV New Building loan.

The following table summarizes the fixed assets
held by the Organization. Land and property isclassified differently under IPSAS depending on the
purpose for which it is used, or the nature of thecontractual right or agreement under which it isheld. Apart from the land and property included
below as fixed assets, the Organization leases
additional depots and storage facilities in Geneva,
and has leases for some of its external offices (seeNote 20). The Organization has also been granted

The Organization holds significant fixed assets(land, buildings, investment property, intangible
assets and equipment) with a total net book value of
411.1 million Swiss francs. During 2016, costs

18

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

land surface rights on which certain headquarterbuildings are located. These rights, acquired at nocost, are not recognized in the financial statements
but are disclosed (see Note 9).

Liabilities
As at December 31, 2016, payables and advancereceipts total 369.3 million Swiss francs, andprincipally include deferred revenue for theprocessing of international applications (under the
PCT, Madrid and Hague systems) for 230.7 million
Swiss francs. This deferred revenue balance mainly
concerns PCT system fees of 228.0 million Swiss
francs. Revenue from fees relating to theprocessing of international applications is deferred
until the related application is published. At any
given time, a number of PCT applications will havebeen filed with either receiving offices or WIPO
which have yet to be published. As at December 31,
2016, for applications with a 2015 or 2016 filing
date, it is estimated that approximately 171,719
applications were unpublished. At the end of theprior year 2015, approximately 155,534 applications
filed in 2014 or 2015 were unpublished and thedeferred revenue balance for PCT system fees was
217.1 million Swiss francs.

Fixed assets as at December 31, 2016
Decem ber 31, 2016
Net Carrying
ount(in millions Am
of SwissClassification in
the Financial
Statem ents

francs)New Building Site

30.8

Land (Note 10)

Security Perimeter

8.7

Buildings andConstructions in Use(Note 10)

New Conference Hall

65.7

Buildings andConstructions in Use(Note 10)

New Building

150.9

Buildings andConstructions in Use(Note 10)

A. Bogsch Building

46.9

Buildings andConstructions in Use(Note 10)

G. Bodenhausen Building I

10.1

Buildings andConstructions in Use(Note 10)

G. Bodenhausen Building II

3.7

Buildings andConstructions in Use(Note 10)

PCT Building

58.7

Buildings andConstructions in Use(Note 10)Madrid Union Building

6.2

Investment Property(Note 8)Land surface rights

25.1

Intangible Assets(Note 9)Softw are (acquired anddeveloped)

2.7

Intangible Assets(Note 9)Equipment

1.2

Equipment (Note 7)

Furniture and furnishings

0.4

Furniture andfurnishings (Note 7)

Total fixed assets

Employee benefit liabilities of 188.4 million Swiss
francs are mainly comprised of the ASHI liability of
154.3 million Swiss francs, which represents 81.9
per cent of the total employee benefits liability as at
December 31, 2016. The ASHI liability has
increased by 17.1 million Swiss francs compared to2015. The liability is calculated by an independentactuary, and reflects the acquired future cost of
WIPO’s share of collective medical insurance
premiums for both existing WIPO retirees and the
projected number of active WIPO staff who will
retire in the future.
Composition of employee benefits liabilities as
at December 31, 2016

411.1

Other assets of the Organization totaling 73.8
million Swiss francs include accounts receivable,
inventories and advance payments. Within this, themost significant balance is PCT debtors totaling
46.4 million Swiss francs. At any given time, asignificant number of PCT applications have been
filed with receiving offices and possibly received by
WIPO, for which no corresponding fee payment has
been received by the Organization. The balance of
PCT debtors has increased compared to the prioryear, when it totaled 40.9 million Swiss francs. At
the end of 2015, approximately 12.8 per cent ofapplications filed during the preceding twelve
months remained unpaid. At the end of 2016, thispercentage rose to approximately 15.7 per cent.

19

Decem ber 31,
2016

Percentage of
Liability(in millions of
Swiss francs)%

After-Service Health Insurance(ASHI)

154.3

81.9

Repatriation grant and travel

15.4

8.2

Accumulated leave

12.6

6.7

Closed Pension Fund

2.6

1.4

Education grant

2.0

1.1

Accrued overtime

0.5

0.3

Home leave

0.4

0.2

Separation benefits

0.3

0.1

Performance rew ards
Total em ployee benefit
liabilities

0.3

0.1

188.4

100.0

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

for WIPO’s collective medical insurance plan
introduced from January 1, 2017. The graph below
shows how both the ASHI liability and theunrecognized actuarial losses have developedsince 2009, and includes actuarial forecasts for
2017-2020 (applying the same assumptions as forthe 2016 calculation). The graph also shows how
discount rates and medical cost trend rates havechanged since 2009.

The ASHI liability has been increasing steadily overthe last eight years, and based on actuarial
projections is expected to continue to increase in
the future. The calculation performed by the
independent actuary incorporates a number ofactuarial assumptions, including discount rate,
medical cost trend rates, staff turnover rates andmortality rates. Changes to these assumptions year
on year lead to actuarial gains and losses. Under
IPSAS, WIPO currently applies the corridor method
to its accounting treatment of these actuarial gains
and losses, which means that they are notimmediately recognized in the financial statements.
In July 2016 the IPSASB issued IPSAS 39, a new
standard for employee benefits, with a required
implementation date of January 1, 2018. WIPO has
not implemented IPSAS 39 in 2016, and is currently
analyzing the impacts of this new standard. Under
IPSAS 39, the corridor approach for the recognitionof actuarial gains and losses is removed, andtherefore the implementation of IPSAS 39 would
require the recognition of currently unrecognizedactuarial losses in the statement of financial
position. As at December 31, 2016, WIPO had atotal unrecognized cumulative actuarial loss of
166.5 million Swiss francs relating to ASHI,
representing an increase of 87.7 million Swiss
francs compared to the prior year. This increase in
the cumulative actuarial loss was due tomovements in the discount rate and medical costtrend rate, and also the impact of higher premiums

Borrowings represent the Foundation for Buildings
for International Organizations (FIPOI) loan (18.2
million Swiss francs) and the BCG/BCV New
Building loan (70.5 million Swiss francs). Total
repayments of the principal on these loans were
21.3 million Swiss francs in 2016. In January 2016
the Organization made the second of its scheduled
lump sum repayments towards the reimbursementof the BCG/BCV New Building loan, for the amountof 16.0 million Swiss francs. As previously noted, inJanuary 2017, the Organization took the decision to
repay in full the remaining balance of 70.5 million
Swiss francs of the BCG/BCV loan. The
Organization’s other liabilities totaling 69.5 million
Swiss francs include 62.5 million Swiss francs of
current accounts held on behalf of applicants andcontracting parties, and also 7.0 million Swiss
francs of provisions for legal costs.

Movement in ASHI benefit obligation 2009 - 2020

5.00

400.0

3.00
200.0

2017 -2020 actuarial forecast

2.00

100.0
1.00

0.0

0.00

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Liability recognized in statement of financial position

Unrecognized actuarial losses

Discount rate

Medical cost trend rate

20

2020

per cent

millions of Swiss francs

4.00
300.0

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016equivalents which are classified as restricted.
Restricted cash includes current accounts held forthird parties (applicants under the PCT, Madrid andHague systems, and also certain contracting
parties), fees collected on behalf of contracting
parties, deposits received in connection withpending procedures related to trademarks, andSpecial Accounts held on behalf of donors ofvoluntary contributions. Strategic cash represents
the funds held by the Organization which have been
allocated for the future financing of after-service
employee benefit liabilities, including ASHI. Thebalance of strategic cash was 108.6 million Swiss
francs as at December 31, 2016.

Cash Flow
The Organization’s cash, cash equivalents andinvestments balance as at December 31, 2016 is542.3 million Swiss francs, compared to 489.5
million Swiss francs as at December 31, 2015. Thisbalance has been increasing since 2011. The
increase of 52.8 million Swiss francs between 2015
and 2016 has been achieved despite a lump sum
loan repayment of 16.0 million Swiss francs inJanuary 2016.
The Organization generally holds its cash deposits
in instant access bank accounts. During 2016 theOrganization continued to hold significant balancesin notice accounts (with notice periods of up to 35days) and term deposit accounts (for periods up to
12 months). This has allowed the Organization to
avoid incurring charges on certain instant accessbank accounts following the introduction of negativeinterest rates during the previous year.

As already noted, in January 2017, the Organization
took the decision to repay in full the remainingbalance of 70.5 million Swiss francs of its BCG/BCV
loan. The early repayment of the loan balance wasmade on January 26, 2017, and as a result WIPO
incurred a penalty charge of 11.6 million Swiss
francs, calculated by reference to the present valueof all outstanding interest due on the loan. Following
the loan repayment, the Organization’s cash andcash equivalents were therefore reduced by 82.1
million Swiss francs.

In the financial statements cash, cash equivalents
and investments are presented separately between
restricted, unrestricted and strategic cash balances.
There are several elements of cash and cash

Cash, cash equivalents and investment balances 2010-2016

600.0
Total
474.5

millions of Swiss francs

500.0

400.0

300.0

Total
383.5

Total
379.7

156.7

154.3

226.8

225.4

2010

2011

Total
408.1

Total
409.9

152.8

149.5

85.2

Total
489.5

Total
542.3
108.6

88.9

161.8
164.6

161.9

200.0

100.0

255.3

260.4

2012

2013

224.7

238.7

2014

2015

271.9

0.0

Unrestricted cash

21

Restricted cash

2016

Strategic cash
(funds for after-service employee
benefits)

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

The principal cash inflows to the Organization are
payments of PCT system fees. Monthly cash
inflows from PCT system fees averaged 24.7 million
Swiss francs during the year 2016 compared to25.2 million Swiss francs during the year 2015. As
can be seen from the following table, there can besignificant variations in the cash inflows between

months. Inflows from PCT system fees were notably
higher in July, August and November 2016
compared to other months in the year due to catchup payments from a receiving office.

Monthly PCT system cash inflows 2014-2016

40.0
35.0

millions of Swiss francs

30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan

Feb

Mar

Apr
2016

May

Jun

2015

22

Jul
2014

Aug

Sep
Average

Oct

Nov

Dec

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

INDEPENDENT AUDITOR’S REPORTToTHE GENERAL ASSEMBLY
THE WORLD INTELLECTUAL PROPERTY ORGANISATION

OpinionWe have audited the financial statements of the World Intellectual Property Organization (WIPO),
which comprise the statement of financial position (statement I) as at 31 December 2016, thestatement of financial performance (statement II), statement of changes in net assets (statement
III), statement of cash flows (statement IV), statement of comparison of budget and actual amounts(statement V) for the year then ended, and notes to the financial statements including significant
accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of WIPO as at 31 December 2016, and its financial performance and its
cash flows for the year then ended in accordance with International Public Sector AccountingStandards (IPSAS).

Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are described in the Auditor's Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of WIPO in accordance with the
ethical requirements that are relevant to our audit of the financial statements and we have fulfilled ourother ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the Financial Statements and Auditor's Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the annual financial report for the year ended 31 December 2016, but does not include thefinancial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report inthis regard.

23

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statementsin accordance with IPSAS, and for such internal control as management determines isnecessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing WIPO's ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate WIPO or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing WIPO's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatements, whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users takenon the basis of these financial statements.
As part of an audit m accordance with ISAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of WIPO's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on WIPO's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or conditions may cause WIPO tocease to continue as a going concern.

24

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016



Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements
Furthermore, in our opinion, the transactions of WIPO that have come to our notice or that we havetested as part of our audit have, in all significant respects, been in accordance with WIPO's Financial
Regulations and Rules and its legislative authority.
In accordance with the Regulation 8.10 of WIPO's Financial Regulations and Rules, we have also
issued a long-form report on our audit of WIPO.

25

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT I – STATEMENT OF FINANCIAL POSITION
as at December 31, 2016
(in thousands of Swiss francs)

ASSETS
Current assets
Cash and cash equivalents
Investments
Contributions receivables
Exchange transactions receivables
Inventories
Non-current assets
Equipment
Investment property
Intangible assets
Land and buildings
Contributions receivables
Exchange transactions receivables
Other non-current assets

Decem ber 31, 2016

Decem ber 31, 2015

3
4
5
5
6

529,817
12,5001,483
59,064
1,520
604,384

489,496
1,226
52,5681,597
544,887

7
8
9
10
5
5
11

1,609
6,210
27,813
375,489
225
2,756
8,743
422,845

2,134
6,210
28,981
380,518
298
5,030
8,934
432,105

1,027,229

976,992

Note

TOTAL ASSETSLIABILITIESCurrent liabilities
Payables and accruals
Employee benefits
Transfers payable
Advance receipts
Borrowings

12
13
14
15
16

10,763
28,86384,874
269,582
5,258

22,102
23,031
84,160249,381
21,258Provisions
Other current liabilities

17
18

6,989
62,519468,848817
55,771
456,520

Non-current liabilities
Employee benefits
Borrowings

13
16

159,567
83,462

148,487
88,721

Advance receipts

15

4,069
247,098

4,201
241,409715,946697,929

270,889
16,786
17,266
6,342

231,945
23,73015,046
8,342

311,283

279,063

TOTAL LIABILITIES
Accumulated Surpluses
Special Projects Reserve
Revaluation Reserve Surplus
Working Capital Funds

22
22
22
22

NET ASSETS

The accompanying notes form an integral part of these financial statements
Director General

26

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT II – STATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2016
(in thousands of Swiss francs)

2016

2015

Assessed contributions

17,337

17,801

Voluntary contributions

10,176

10,255

Publications revenue

426

487

Investment revenue

21

1,500

PCT system

290,719

275,392

Madrid system

59,58067,925

Hague system

4,956

3,931

Lisbon system25

17355,280

347,265

Arbitration and Mediation

1,641

1,508

Other/miscellaneous revenue

2,832

3,127

387,713

381,943

Personnel expenditure
Internships and WIPO fellowships

224,353
3,261

216,266
3,151

Travel, training and grants

15,81017,394Contractual services

74,39872,090Operating expenses

21,946

21,200

Supplies and materials

2,039

3,583

Furniture and equipment

172

827

Depreciation and amortization

11,424

11,055

Finance costs

2,310

3,107

TOTAL EXPENSES

355,713348,673

SURPLUS/(DEFICIT) FOR THE YEAR

32,00033,270Note
REVENUE

24

Fees

Sub-total fees

TOTAL REVENUE
EXPENSES

25

27

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT III – STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2016
(in thousands of Swiss francs)

Accum ulated
Surpluses

SpecialProjects
Reserve

Net Assets at January 1, 2015

195,196

27,20915,046

8,342

245,793

Surplus/(deficit) for the year 2015

38,436-5,166--33,270Adjustment to Special Projects Reserve-1,654

1,654

-

-

-

-33

33

-

-

-

231,945

23,73015,046

8,342

279,063

Items recognized directly in Net Assets

-

-

2,220

-2,000220

Total of item s recognized directly in Net
Assets in 2016

-

-

2,220

-2,000220

Surplus/(deficit) for the year 2016

35,595-3,595--32,000Adjustment to Special Projects Reserve

2,267-2,267---

Transfer to Accumulated Surpluses

1,082-1,082---

270,889

16,786

17,266

6,342

311,283

Note

Transfer to Accumulated Surpluses
Net Assets at Decem ber 31, 2015

Net Assets at Decem ber 31, 2016

22

22

28

Revaluation
Working
Reserve
Capital Funds
SurplusNet Assets
Total

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT IV – STATEMENT OF CASH FLOW
for the year ended December 31, 2016
(in thousands of Swiss francs)

Note

2016

2015

Statement II

34,72837,487

Cash flow s from operating activities
Surplus (deficit) for the period (1)Interest earned

24

21

75

Interest paid on borrow ings

16

-2,119-2,918Depreciation and amortization

7, 9 & 10

11,424

11,055

Increase (decrease) in employee benefits

13

16,912

10,289(Increase) decrease in inventories

6

77

150

(Increase) decrease in receivables

5-4,406

5,126(Increase) decrease in other assets

11

191

190

Increase (decrease) in advance receipts

15

20,069

8,848

Increase (decrease) in payables and accruals

12-11,339-8,213

Increase (decrease) in transfers payable

14

714

601

Increase (decrease) in provisions

17

6,172

-96

Increase (decrease) in other liabilities

18

6,748

-7,79979,192

54,795-2,195-7,174

Net cash flow s from operating activities
Cash flow s from investing activities
Additions to buildings and equipment

7 & 10

Disposal of equipment

7

-

-

Increase in intangible assets

9

-287

-576

Increase in investment property

8--1,425

Increase in investments

4-12,500--14,982-9,175

Net cash flow s from investing activities
Cash flow s from financing activities
Proceeds from borrowings

16

-

-

Repayment of borrowings

16-21,259-29,258

Return of Working Capital Funds-2,000-Net cash flow s from financing activities-23,259-29,258-630-1,37440,321

14,988

Effect of exchange rate changes on cash and cash
equivalents

27

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3489,496474,508

Cash and cash equivalents at end of the year3529,817

489,496(1) – Excluding interest earned and interest paid on borrowings, and the effect of exchange rate changes on cash and cash
equivalents. Interest earned is included in investment revenue, see Note 24. For detail of interest paid on borrowings, see Note 16.
For the effect of exchange rate changes on cash and cash equivalents, see Note 27.

29

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE
for the year ended December 31, 2016
(in thousands of Swiss francs)

Original Budget
2016"Final" Budget
2016

Actual Revenue oncom parable basis
2016

Difference
2016

(1)

(1)

Assessed contributions

17,361

17,361

17,357-4

Voluntary contributions

-

-

392

392

PCT system

284,423

284,423

296,369

11,946

Madrid system
Hague system

63,3594,819

63,3594,819

60,116
5,072-3,243
253

Lisbon system

15

15

25

10

352,616

352,616

361,582

8,966

1,250

1,250

1,641

391

155

155

426

271

Investment revenue

-

-

21

21

Other/miscellaneous

1,900

1,900

3,265

1,365

373,282

373,282

384,684

11,402(2)

Fees

Sub-total fees
Arbitration and Mediation
Publications

TOTAL(1) - columns Original Budget and “Final” Budget represent the first year of the approved 2016/17 biennial budget.
(2) - represents the difference between the “Final” Budget 2016 and actual revenue on a comparable basis for the year ended
December 31, 2016.

30

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSES
for the year ended December 31, 2016
(in thousands of Swiss francs)
Original
Budget2016(1)"Final"Budget2016(1)

Actual Expense
on a com parable
basis 2016

Program Title
Patent Law

2,620

2,620

2,581

39

2

Trademarks, Industrial Designs & Geographical Indications

2,399

2,399

2,293

106

3

Copyright and Related Rights

8,307

8,307

7,348

959

4

Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

3,034

3,034

3,045

-11

5

The PCT System

103,345

103,345

93,861

9,484

6

Madrid System

28,74428,744

26,7392,005

7

WIPO Arbitration and Mediation Center

5,640

5,640

5,077

563

8

Development Agenda Coordination

1,809

1,809

1,645

164

9

Africa, Arab, Asia and the Pacific, Latin America and the
Caribbean Countries, Least Developed Countries

15,731

15,731

14,160

1,571

10Transition and Developed Countries

3,903

3,903

3,690

213

11

The WIPO Academy

6,481

6,481

5,765

716

12

International Classifications and Standards

3,487

3,487

3,118

369

13

Global Databases

2,831

2,831

3,156

-325

14

Services for Access to Information and Know ledge

3,462

3,462

3,169

293

15

Business Solutions for IP Offices

6,794

6,794

6,758

36

16

Economics and Statistics

2,969

2,969

2,741

228

17

Building Respect for IP

1,839

1,839

1,905

-66

18

IP and Global Challenges

3,130

3,130

2,871

259

19

Communications

8,158

8,158

7,687

471

20

External Relations, Partnerships and External Offices

6,124

6,124

5,177

947

21

Executive Management

10,188

10,188

9,429

759

22

Program and Resource Management

16,455

16,455

14,511

1,944

23

Human Resources Management and Development

12,236

12,236

17,873-5,637

24

General Support Services

23,49323,493

20,584

2,909

25

Information and Communication Technology

25,93225,932

21,8694,063

26Internal Oversight

2,641

2,641

2,049

592

27

Conference and Language Services

19,215

19,215

17,6091,606

28

Information Assurance, Safety and Security

8,833

8,833

7,967

866

30

SMEs and Entrepreneurship Support

2,999

2,999

2,857

142

31

The Hague System

3,748

3,748

4,006

-258

32

Lisbon System

UN

UnallocatedProgram1

TOTAL
Net surplus/(deficit)

(2)

664

664

636

28

3,160

3,160

-

3,160

350,371

350,371

322,176

28,19522,911

22,91162,50839,597IPSAS adjustments to surplus (3)-26,383

Projects financed from reserves-4,673Special Accounts financed from voluntary contributions

Difference
2016

548

Adjusted net surplus per IPSAS

32,000(1) - columns Original Budget and “Final” Budget represent the first year of the approved 2016/17 biennial budget. The Original
Budget is based on the biennial budget of 707.0 million Swiss francs, which was approved by the Assemblies of the Member Statesof WIPO on October 14, 2015.
(2) - represents the difference between the “Final” Budget 2016 and actual expense on a comparable basis for the year ended
December 31,2016.
(3) – the IPSAS adjustments to the surplus are detailed in Note 23 of these financial statements.

31

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTES TO THE FINANCIAL
STATEMENTS
WIPO is governed by the following constituent bodies,
established by the WIPO Convention, which meet
every second year in ordinary session and traditionallymeet in extraordinary session in alternate years:

NOTE 1: OBJECTIVES AND BUDGET OF
THE ORGANIZATION
The World Intellectual Property Organization (WIPO)
was established in 1967, replacing the Bureau for theProtection of Intellectual Property (known by the
French acronym for Bureaux Internationaux Réunis
pour la Protection de la Propriété Intellectuelle, BIRPI)
which had been established in 1893 to administer theParis Convention for the Protection of Industrial
Property (1883) and the Berne Convention for theProtection of Literary and Artistic Works (1886). In
1974, WIPO was recognized as a specialized agencyof the United Nations.
WIPO’s mission is the promotion of innovation andcreativity for the economic, social and culturaldevelopment of all countries, through a balanced andeffective international intellectual property system.
WIPO’s broad-ranging activities are grouped into fourmain areas of work: providing intellectual property
services through the Organization’s Global IP
systems; developing and maintaining the technicalinfrastructure which not only supports the international
IP system, but also provides access to its outputs,
enhances data flows, and enables global cooperation;
serving as a multilateral forum for discussions on thenormative development of intellectual property policy;
and facilitating the use of IP for social, cultural andeconomicdevelopment,bymainstreaming
development
considerations
anddeliveringdevelopment cooperation activities horizontally acrossall of the Organization’s programs.



The General Assembly, consisting of States party
to the WIPO Convention which are members of
any of the Unions, is responsible for appointing
the Director General for a fixed term of not lessthan six years, for the adoption of the budget of
expenses common to all Unions, adoption of the
Financial Regulations, inviting States to become
members, and other functions specified by theConvention.



The Conference consists of all Member States
whether or not they are members of any of theUnions.
The Conference adopts its budget,
adopts amendments to the Convention andperforms other functions as appropriate.



The Coordination Committee consists ofmembers of the Executive Committees of theParis or the Berne Unions or both, one-fourth of
the States party to the WIPO Convention which
are not members of any of the Unions, andSwitzerland, as the State on whose territory theOrganization
has its
headquarters.
The
Coordination Committee nominates candidates
for Director General, drafts the agenda for the
General Assembly, and performs other duties
allocated to it under the WIPO Convention.

WIPO is funded from fees derived from services
provided by the Organization, assessed contributions
paid by its Member States and voluntary contributions
from Member States and other donors. The
Organization operates within the framework of abiennial program and budget which provides theappropriations
that
constitutethebudgetary
expenditureauthorizations
approvedbythe
Assemblies for the financial period. The approval of
the appropriations provides the authority for the
Director General to commit and authorize expenses
and to make payments for the purposes assigned
within the limits of the appropriations.

The Organization functions in accordance with the
WIPO Convention signed in Stockholm on July 14,
1967 and as amended on September 28, 1979.
WIPO currently has 189 Member States. WIPO isbased in Geneva, Switzerland with external offices in
Beijing, Moscow, Rio de Janeiro, Singapore andTokyo, and a coordination office in New York. The
Organization enjoys privileges and immunities as
granted under the 1947 Convention on Privileges and
Immunities of Specialized Agencies of the United
Nations and the 1970 Headquarters Agreement with
the Swiss Federal Council, notably being exempt frompaying most forms of direct and indirect taxation.

32

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

substantially ready for their intended use. Borrowing
costs relating to the construction of the New Building(interest and fees) and the New Conference Hall
(commission on undrawn loan amounts) were
capitalized as work in progress during the respective
construction phases (see Note 10). Borrowing costs(interest and fees) relating to the acquisition from theWorld Meteorological Organization of the land rights(droits de superficie) to the site on which the PCT
building has been constructed were capitalized as partof the asset value (see Note 9).

NOTE 2: SIGNIFICANT ACCOUNTINGPOLICIES
Basis of Preparation
These financial statements have been prepared inaccordance with and comply with International Public
Sector Accounting Standards (IPSAS). The financial
statements are presented in Swiss francs, which is thereporting and functional currency of WIPO, and allvalues are rounded to the nearest thousand. The
accounting policies have been applied consistently to
all years presented.

All other borrowing costs are recognized as expenses
in the Statement of Financial Performance in the
period in which they are incurred.

The financial statements have been prepared on thebasis of historical cost, unless stated otherwise. The
statement of cash flow is prepared using the indirect
method. The financial statements are prepared on an
accrual and going-concern basis.

Foreign Currency Transactions
The functional currency of WIPO is the Swiss franc. Alltransactions occurring in other currencies aretranslated into Swiss francs using the United Nations
Operational Rates of Exchange (UNORE) which
represent those prevailing at the date of thetransactions. Both realized and unrealized gains andlosses resulting from the settlement of suchtransactions and from the translation at the reporting
date of assets and liabilities denominated incurrencies other than WIPO’s functional currency arerecognized in the Statement of Financial Performance.

IPSAS Standards 34, 35, 36, 37 and 38 have been
applied in 2016, which is prior to their required
implementation date of January 1, 2017. These
Standards have had no impact on the Organization’s
financial statements.
In July 2016 the IPSAS Board issued IPSAS 39
Employee Benefits. This new standard supersedes
IPSAS 25, and has a required implementation date ofJanuary 1, 2018. WIPO has not implemented IPSAS
39 in 2016, and is currently analyzing the impacts ofthis new standard. Under IPSAS 39, the corridor
approach for the recognition of actuarial gains andlosses is removed. WIPO currently applies the corridor
approach in relation to its liability for After-Service
Health Insurance (ASHI), and therefore theimplementation of IPSAS 39 would require therecognition of currently unrecognized actuarial losses(see Note 13).

Revenue Recognition
Revenue from exchange transactions comprising thefees charged for applications under the Patent
Cooperation Treaty (PCT) system, the Madrid systemand the Hague system is recognized at the date of
publication. Revenue from fees received for
applications not published at the reporting date isdeferred until publication has been completed. The
portion of the PCT application fee covering the costsof translation of non-English language patentability
reports received after publication is also deferred until
the translation is completed. All other fees under the
PCT, Madrid and Hague systems are recognizedwhen the services covered by the fee have been
provided. Revenue from publications is recognized
upon full delivery of the good. Revenue from
Arbitration and Mediation services is recognized upondelivery of the services related to the submission of arequest covered by the fee received.

Cash and Cash Equivalents
Cash and cash equivalents include cash in hand,deposits held at call with banks, deposits held up to 90
days and other short-term highly liquid investmentsthat are readily convertible to cash and subject toinsignificant risk of changes in value.

Borrowing Costs
General and specific borrowing costs directly
attributable to the acquisition, construction or
production of qualifying assets, which are assets thatnecessarily take a substantial period of time to get
ready for their intended use, are added to the cost of
those assets until such time as the assets are

Revenue from non-exchange transactions such as
voluntary contributions to Special Accounts supported
by enforceable agreements is recognized as revenue
at the time the agreement becomes binding unless theagreement includes conditions related to specific33

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

performance or the return of unexpended balances.
Such agreements require initial recognition of aliability to defer revenue recognition and then revenue
is recognized as the liability is discharged throughperformance of the specific conditions included in theagreement.

shop. A perpetual inventory is maintained of the
publications for sale and sample physical counts areundertaken throughout the year to verify inventory
balances. At the end of each year items removed fromthe catalogue of publications for sale or free
distribution, along with items for which it is anticipatedthat there will be no further free distribution or
anticipated sales, are taken out of the inventory andtheir value is written down to zero.

Assessed contributions are recognized as revenue atthe beginning of each year of the budget period towhich the assessment relates.

The cost of paper and other supplies used in the
production process has been valued using the first-in,
first-out (FIFO) method. Items held in the retail shop
are valued at cost to the Organization, and aremarked down to reflect net realizable value if
damaged or obsolete. No inventories are pledged as
security for liabilities.

Expense Recognition
Expenses are recognized as goods are received andas services are delivered.

Receivables
Receivables from exchange transactions include fees
which are charged to users of WIPO’s intellectual
property services through the PCT, Madrid and Hague
systems. These are measured at the fair value of theconsideration receivable for PCT, Madrid and Hague
system fees once the international application has
been filed.

Equipment
Equipment is valued at cost less accumulated
depreciation and impairment. Equipment is recognized
as an asset if it has a cost of 5,000 Swiss francs ormore per unit. Gains and losses on disposal are
determined by comparing the proceeds with thecarrying amount of the asset and are included in theStatement of Financial Performance. Heritage assets
including donated works of art are not valued in thefinancial statements.

Receivables from non-exchange transactions include
uncollected assessed contributions. These aremeasured at the fair value of the consideration
receivable. An allowance for non-recoverable
receivables is recorded equal to the assessed
contributions frozen by action of the General
Assembly plus contributions receivable from Member
States that have lost the right to vote in accordancewith Article 11, paragraph 5 of the WIPO Convention.

Depreciation is charged so as to write off the full costof equipment over its estimated useful life using thestraight-line method. Where equipment is only in use
for part of the year (due to acquisition, disposal orretirement during the year), depreciation is charged
only for the months during which the asset was in use.
The following ranges of useful lives are applied to thedifferent classes of equipment:

Inventories
Inventories include the value of publications held forsale and publications distributed free of charge, thevalue of supplies and materials utilized in the
production of publications and the value ofmerchandise held in the retail shop. Publications held
for sale are valued at the lower of cost or net
realizable value, and publications distributed free ofcharge are valued at cost. The cost of finishedpublications is determined by using an average cost
per printed page (excluding costs of marketing anddistribution) multiplied by the number of pages ofpublications held in the publications inventory. The
value of publications that are withdrawn from sale orfree distribution is written off during the year in which
they become obsolete.

Class
Communications and IT
equipment
VehiclesFurniture and furnishings

Estimated useful life

5 years
5 years
10 years

The carrying values of equipment are reviewed for
impairment if events or changes in circumstancesindicate that the book value of the asset may not berecoverable. If such an indication exists, therecoverable amount of the asset is estimated in orderto determine the extent of impairment loss, if any. Any
impairment loss is recognized in the Statement of
Financial Performance.

An annual physical inventory is conducted of all stocksof publication supplies and items for sale in the retail34

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

initial recognition of buildings in use as at January 1,
2010, the date of transition to IPSAS, the value when
new was determined by reference to a deemed costcalculated by an external consultant and representing
the value of each component at construction plus
improvements existing at the initial recognition, lessaccumulated depreciation based upon the remaining
useful life of each component. Subsequent costs ofmajor renovations and improvements to buildings andconstructions that increase or extend the future
economic benefits or service potential are valued at
cost.

Investment Property
Investment property is carried at fair value as
determined by an independent valuation inaccordance with International Valuation Standards.
Changes in fair value are recognized in the Statementof Financial Performance.

Intangible Assets
Intangible assets are carried at cost less accumulated
amortization and impairment. Amortization is provided
on a straight-line basis on all intangible assets of finite
life, at rates that will write off the cost or value of theassets over their useful lives. The useful lives of majorclasses of intangible assets have been estimated asfollows:
Class

Estimated useful life

Software acquired externally
Software internally developed
Licenses and rights

5 years
5 years
Period of license/right

Depreciation is charged so as to write off the full costof buildings and constructions in use over theirestimated useful lives using the straight-line method.
Where buildings and constructions are only in use forpart of the year (due to acquisition, disposal orretirement during the year), depreciation is charged
only for the months during which the asset was in use.
The following ranges of useful lives are applied to thedifferent components of buildings and constructions:Component

Acquired computer software licenses are capitalizedbased on costs incurred to acquire and bring to use
the specific software. Software or software licenses
purchased externally are recognized as an asset if
they have a cost of 5,000 Swiss francs or more perunit. Costs that are directly associated with thedevelopment of software for use by WIPO arecapitalized as intangible assets only if the recognition
criteria under IPSAS 31 are met. Direct costs include
the software development employee costs. Internallydeveloped software is recognized as an asset if it has
a cost of 100,000 Swiss francs or more.

Structure – concrete/metallic
Structure – concrete/wood
Structure – specialist access
FaçadePerimeter walls
Perimeter bollards
Land Improvements
Roof
Floors, walls, stairways
Flooring, wall coverings
Specialist fittings - fixed
equipment
Specialist fittings – kitchenequipment
Specialist fittings – fixed
conference equipment
Specialist fittings - turnstiles
Heating and ventilation
Sanitary facilities
Electrical installations
Elevators

The rights to use property in the Canton of Geneva
acquired by the Organization through purchase havebeen recognized at historic cost and are amortizedover the remaining period of the grant. The rights touse property granted by the Canton of Geneva
acquired without cost, that revert back to the Canton
at the end of the grant, are not valued in the financial
statements.

Land and Buildings

Estimated useful life
100 years
80 years
50 years
50 years
80 years
20 years
40-50 years
50-60 years
50 years
20-40 years
40 years
20-40 years
15 years
20 years
25-30 years
40 years
25-50 years
40 years

The carrying values of buildings and constructions arereviewed for impairment if events or changes incircumstances indicate that the book value of theasset may not be recoverable. If such an indication
exists, the recoverable amount of the asset isestimated in order to determine the extent of
impairment loss, if any. Any impairment loss isrecognized in the Statement of Financial Performance.

Land is carried at fair value as determined by anindependent valuation in accordance with International
Valuation Standards. Changes in fair value arerecognized directly in net assets through the
Revaluation Reserve Surplus. Buildings andconstructions in use are valued at the cost of
construction when new plus the cost of subsequent
improvements, less accumulated depreciation. For the35

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

objective evidence of impairment as a result of one ormore events that has occurred after the initialrecognition of the asset (an incurred ‘loss event’) andthat loss event has an impact on the estimated future
cash flows of the financial asset or the group offinancial assets that can be reliably estimated.

Financial Instruments
Financial Assets
Initial recognition and measurement
Financial assets within the scope of IPSAS 29
Financial Instruments: Recognition and Measurement
are classified as financial assets at fair value throughsurplus or deficit, loans and receivables, held-tomaturity investments or available-for-sale financial
assets, as appropriate. The Organization determines
the classification of its financial assets at initialrecognition. The Organization's financial assets
include cash and short-term deposits, investments,
loans, and receivables.

Financial Liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 areclassified as financial liabilities at fair value throughsurplus or deficit or loans and borrowings, as
appropriate. The Organization determines theclassification of its financial liabilities at initialrecognition. All financial liabilities are recognizedinitially at fair value and, in the case of loans andborrowings, plus directly attributable transaction costs.
The Organization’s financial liabilities include tradeand other payables and loans and borrowings.

Subsequent measurement
The subsequent measurement of financial assets
depends on their classification.
Financial assets at fair value through surplus or deficit
Financial assets at fair value through surplus or deficit
include financial assets held for trading and financial
assets designated upon initial recognition at fair value
through surplus or deficit. Financial assets areclassified as held for trading if they are acquired forthe purpose of selling or repurchasing in the nearterm. Financial assets at fair value through surplus ordeficit are carried in the Statement of Financial
Position at fair value with changes in fair value
recognized in surplus or deficit.

Subsequent measurement
The measurement of financial liabilities depends ontheir classification.
Financial liabilities at fair value through surplus ordeficitFinancial liabilities at fair value through surplus ordeficit include financial liabilities held for trading andfinancial liabilities designated upon initial recognition
as at fair value through surplus or deficit. Financial
liabilities are classified as held for trading if they are
acquired for the purpose of selling in the near term.
Gains or losses on liabilities held for trading arerecognized in surplus or deficit.

Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. After initial
measurement, such financial assets are subsequently
measured at amortized cost using the effective
interest method, less impairment. Amortized cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the effective interest rate. Losses
arising from impairment are recognized in surplus ordeficit.

Loans and borrowings
After initial recognition, loans and borrowings aresubsequently measured at amortized cost using theeffective interest method. Gains and losses arerecognized in surplus or deficit when the liabilities are
derecognized as well as through the effective interest
method amortization process. Amortized cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the effective interest rate.

Derecognition
The Organization derecognizes a financial asset or,
where applicable, a part of a financial asset or part ofa group of similar financial assets when the rights toreceive cash flows from the asset have expired or are
waived.

Derecognition
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replacedby another from the same lender on substantiallydifferent terms, or the terms of an existing liability aresubstantially modified, such an exchange ormodification is treated as a derecognition of theoriginal liability and the recognition of a new liability,
and the difference in the respective carrying amounts
is recognized in surplus or deficit.

Impairment of financial assets
The Organization assesses at each reporting datewhether there is objective evidence that a financial
asset or a group of financial assets is impaired. A
financial asset or a group of financial assets isdeemed to be impaired if, and only if, there is36

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Employee Benefits

Segment Reporting

Liabilities are established for After-Service Health
Insurance (ASHI) and repatriation grants and travel as
determined by an independent actuary on an annual
basis utilizing the projected unit credit methodology ofvaluation. For the ASHI liability actuarial gains andlosses are recognized utilizing the corridor approachand amortized over the average years of futureservice of active staff. In addition, liabilities are
established for the value of accumulated leave, homeleave not taken, overtime earned but unpaid,
separation benefits and performance rewards and for
education grants payable at the reporting date thathave not been included in current expenditure.

Segment reporting is based upon the Unions that form
WIPO. Revenue and expenses incurred by theOrganization are allocated among the Unions inaccordance with an allocation methodology approvedby the WIPO Assembly [Program and Budget
2016/17, Annex III]. The methodology allocatesrevenue and expenses to each program and then toeach Union based on a combination of direct revenue
and expense, staff head count and each Union’s
ability to pay which is itself determined according to a
combination of current revenue and reserves. WIPO’s
assets and liabilities are not allocated to individual
segments, since ownership rests with theOrganization as a whole, however, each Union’sshare of the Organization’s net assets including
Reserves and Working Capital Funds is recognized bysegment (see Note 29).

WIPO is a member organization participating in the
United Nations Joint Staff Pension Fund (the UNJSPF
or the Fund), which was established by the United
Nations General Assembly to provide retirement,
death, disability and related benefits to employees.
The Fund is a funded, multi-employer defined benefit
plan. As specified by Article 3(b) of the Regulations of
the Fund, membership in the Fund shall be open to
the specialized agencies and to any otherinternational, intergovernmental organization which
participates in the common system of salaries,
allowances and other conditions of service of theUnited Nations and the specialized agencies.

Changes in Presentation
In the Statement of Financial Position, in order toincrease the alignment of terminology with other UN
system organizations, “Accounts receivable (nonexchangetransactions)”
has
been
renamed“Contributions receivables”, and “Accounts payable”
has been renamed “Payables and accruals”.
In the Statement of Financial Performance, theexpense category previously called “Travel andfellowships” has been renamed “Travel, training andgrants” to better distinguish the nature of this expensefrom WIPO fellowships. In Note 13 “Accrued overtime”
has been renamed “Overtime and credit hours” tomore accurately reflect the nature of this liability.

The Fund exposes participating organizations toactuarial risks associated with the current and former
employees of other organizations participating in theFund, with the result that there is no consistent andreliable basis for allocating the obligation, plan assets,
and costs to individual organizations participating in
the plan. WIPO and the UNJSPF, in line with the otherparticipating organizations in the Fund, are not in aposition to identify WIPO’s proportionate share of thedefined benefit obligation, the plan assets and thecosts associated with the plan with sufficient reliability
for accounting purposes. Hence WIPO has treatedthis plan as if it were a defined contribution plan in linewith the requirements of IPSAS 25. WIPO’s
contributions to the Fund during the financial period
are recognized as expenses in the statement offinancial performance.

Use of Estimates
The financial statements necessarily include amounts
basedonestimatesandassumptions
bymanagement. Estimates include, but are not limited to:
ASHI and repatriation grants and travel liabilities (thevalue of which are calculated by an independentactuary), other employee benefit liabilities, provisions
for litigation, valuation of publications inventory,financial risk on accounts receivable, accrued charges
and the degree of impairment of fixed assets. Actual
results could differ from these estimates. Changes in
estimates are reflected in the period in which they
become known.

Provisions
Provisions are recognized when the Organization has
a legal or constructive obligation as a result of a past
event, whereby it is probable that an outflow ofresources will be required to settle the obligation andwhere a reliable estimate of the amount of theobligation can be made.

All balances are presented in thousands of Swiss
francs, as a result small rounding differences may
occur.

37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 3: CASH AND CASH EQUIVALENTS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Cash on hand
Deposits with banks - Swiss francs

12

14

113,61775,465

Deposits with banks - other currencies

6,788

16,603Funds invested with AFF - Swiss francs

139,418

146,619

361

-

7,170

-

Term deposits less than 3 months - Swiss francs
Notice accounts - Swiss francs
Notice accounts - other currencies

4,574

18

Total unrestricted cash

271,940

238,719

Current accounts held for third parties - Swiss francs

61,80255,315Current accounts held for third parties - other currencies

717

456

84,874

84,160

Deposits with banks Special Accounts - Swiss francs-

108

Deposits with banks Special Accounts - other currencies-

223

Fees collected on behalf of contracting parties - Swiss francs

Notice accounts Special Accounts - Swiss francs

14,42821,598

Total restricted cash

161,821

161,860

Funds invested with AFF - Swiss francs

88,917

88,917

Term deposits less than 3 months - Swiss francs

7,139

-

Total strategic cash

96,056

88,917

Total cash and cash equivalents

529,817

489,496

Cash deposits are generally held in instant accessbank accounts. During 2016 the Organization
continued to hold significant balances in noticeaccounts (with notice periods of up to 35 days) andterm deposit accounts (for periods up to 12 months).
This has allowed the Organization to avoid incurring
charges on certain instant access bank accounts
following the introduction of negative interest rates
during the previous year.


The Organization continues to hold deposit accounts
with the Swiss Federal Finance Administration (AFF).
Following the implementation of new provisions by the
AFF relating to the opening and keeping of deposit
accounts, from December 15, 2017 WIPO will nolonger be able to hold deposits with them. Until thisdate WIPO cannot increase the balance of its existing
deposits. The interest rate on deposits held with the
AFF was 0.00 per cent during 2016.



Madrid and Hague systems to deposit funds to be
used for future applications and renewals, and forcertain contracting parties to transfer funds
collected on behalf of the Organization;
fees collected on behalf of contracting parties tothe Madrid Agreement and Protocol, Hague
Agreement and on behalf of PCT International
Searching Authorities (ISAs) by the WIPO
International Bureau Receiving Office;deposits received in connection with pending
procedures related to trademarks, other than the
portion estimated to represent advance receipts
for the Organization;
Special Accounts held on behalf of donors ofvoluntary contributions.

The Organization holds funds allocated for the futurefinancing of after-service employee benefit liabilities,
including ASHI. Under WIPO’s Policy on Investments,
these funds are classified as strategic cash. As at
December 31, 2016, the total balance of these funds
was 108.6 million Swiss francs, split between cash
and cash equivalents (96.1 million Swiss francs) andinvestments (12.5 million Swiss francs, see Note 4).

The following categories of cash and cash equivalents
are classified as restricted:
current accounts held for third parties. WIPO
provides facilities for applicants under the PCT,38

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 4: INVESTMENTS
Decem ber 31,
2016

As at December 31, 2016, WIPO’s investments
represent term deposits with a remaining period of
more than 3 months but less than 12 months. Theseterm deposits all relate to funds allocated for the futurefinancing of after-service employee benefit liabilities,
which are classified as strategic cash in accordancewith WIPO’s Policy on Investments.

Decem ber 31,
2015(in thousands of Swiss francs)
Term deposits more than 3months - Sw iss francs
Term deposits more than 3months - other currencies

12,500---Total strategic cash

12,500-Total investm ents

12,500-NOTE 5: RECEIVABLES
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Unitary contributions

1,256

Voluntary contributions

999

227

227

Contributions receivables - current

1,483

1,226

PCT debtors

46,36840,949Madrid debtors

341

676

Hague debtors

2

1

Other debtors

1,638

1,707

Sw iss taxes reimbursable

1229

USA taxes reimbursable

1,367

689

Concessionary advance for USA taxes

252

545

Staff advances for education grants

4,962

4,882

Other funds advanced to staff

319

341

UPOV expenditure reimbursable

1,562

1,213

Funds advanced to UNDP

459

356

Advance for FCIG concessionary loan

125

123

Prepaid expenditure

1,468

868

FCIG loan amortization

189

189

59,06452,568Exchange transactions receivables - current
Paris Union

80

99

Berne Union

136

187

Nice Union

7

10

Locarno Union

2

2

225

298

USA taxes reimbursable

2,756

5,030

Exchange transactions receivables - non-current

2,756

5,030

Total receivables

63,52859,122Contributions receivables - non-current

39

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Assessed contributions represent uncollected revenue
related to the WIPO unitary contribution systemapproved by the Assemblies of the Member States
and the Unions administered by WIPO. The
Assemblies fix the value of a contribution unit in Swiss
francs together with the Budget for a biennial financial
period. Contribution classes are each required tocontribute a specific number of contribution units.
Member States are free to choose the classdetermining the basis under which they will contribute,other than certain developing countries that
automatically belong to one of three special classes.

Swiss taxes reimbursable include payments for VAT,
stamp tax and Swiss Federal withholding tax for which
the Organization is eligible for reimbursement under
its headquarters agreement with the Government of
Switzerland.
USA taxes reimbursable represents amounts
advanced to US authorities on behalf of US citizens
employed at WIPO, for the payment of income taxes
due to the United States of America. Under
agreements between the Organization and the USA,these amounts are reimbursable to the Organization.
USA taxes reimbursable are measured at amortized
cost, which is calculated based on historical payment
patterns.

An allowance has been established to offset both thevalue of receivables due from assessed contributions
and the Working Capital Fund contributions due from
Unions which relate to periods prior to the introductionof unitary contributions in 1994. The allowance covers
amounts due from Member States that have lost theright to vote under Article 11, paragraph 5 of the
WIPO Convention and contributions from least
developed countries which have been frozen by actionof the Assemblies. The total of the allowance as at
December 31, 2016 is 6.3 million Swiss francs (6.3
million Swiss francs as at December 31, 2015).

UPOV expenditure reimbursable represents payments
made on behalf of the International Union for theProtection of New Varieties of Plants by theOrganization for which reimbursement has not yet
been received.
Funds advanced to the United Nations Development
Program (UNDP) are utilized to make payments onbehalf of the Organization. The total debtor amountshown includes amounts for requests made to UNDP
for payments for which confirmation has not yet been
received or for which the confirmation is in the processof being verified.

PCT debtors represent unpaid international filing feesfor PCT applications filed prior to the reporting date.
This includes an estimate of those international patentapplications received by national receiving offices
prior to the reporting date but not transferred to theOrganization’s PCT International Bureau by thereporting date.

NOTE 6: INVENTORIESInternational staff, other than those living in their homecountry, are eligible to receive a grant covering 75.0
per cent of the costs of education for dependent
children until the fourth year of post-secondary schoolstudies, but not beyond the end of the school year inwhich the child reaches the age of 25. Maximum
grants are established for each country. International
staff are eligible to receive an advance equal to theestimated amount of the education grant for each childat the beginning of the scholastic year. Staff advancesfor education grants represent the total grants
advanced for the 2016-2017 scholastic year.

Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Finished publications

1,339

1,429

Paper supplies

80

56

Retail Shop

101

112

1,520

1,597

Total inventories

The write-down of finished publications inventories to
net realizable value amounted to 35 thousand Swiss
francs (27 thousand Swiss francs in 2015). There
have been no reversals of write-downs.

40

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 7: EQUIPMENT
Movem ent 2016

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2016
Gross carrying amount

11,4152,659

14,074

Accumulated depreciation-9,745-2,195-11,940

1,670

464

2,134

Net carrying am ount
Movem ents in 2016:
Additions

89

-

89

Disposals

-93

-124

-217

Disposals depreciation
Depreciation
Total m ovem ents in 2016

93

124

217

-537

-77

-614

-448

-77

-525

Decem ber 31, 2016
Gross carrying amount

11,411

2,535

13,946

Accumulated depreciation-10,189-2,148-12,337

1,222

387

1,609

Net carrying am ount

Movem ent 2015

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2015
Gross carrying amount

10,4082,650

13,058

Accumulated depreciation-9,195-2,117-11,312

1,213

533

1,746

Net carrying am ount
Movem ents in 2015:
Additions

1,021

9

1,030

Disposals

-14

-

-14

Disposals depreciation

14

-

14

-564

-78

-642

457

-69

388

Depreciation
Total m ovem ents in 2015
Decem ber 31, 2015
Gross carrying amount

11,4152,659

14,074

Accumulated depreciation-9,745-2,195-11,940

Net carrying am ount

1,670

464

2,134

All equipment in the inventory is valued at cost lessdepreciation based upon the straight-line basis.
Furniture and furnishings are depreciated over a ten
year useful life. All other equipment is depreciatedover a five year useful life. As at December 31, 2016,

WIPO holds fully depreciated equipment which is stillin use for a gross carrying amount of 11.0 million
Swiss francs. Heritage assets including donated works
of art are not recognized as assets on the Statementof Financial Position.

41

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 8: INVESTMENT PROPERTY
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Opening balance
Fair value gains/(losses) on valuation
Closing balance

The Organization acquired in 1974 the Madrid Union
Building, an investment property in Meyrin, Canton of
Geneva, Switzerland. The building had first beenbrought into service in 1964. The property is held atfair value based on a valuation at October 1, 2015
carried out by an independent expert holding
recognized and relevant professional qualifications
with recent experience in property valuation in the
Canton of Geneva. Fair value was determined on an
investment based valuation, whereby the estimatedfuture income stream from the property is capitalized
at an appropriate investment yield. The yield wasselected by reference to the perceived quality andduration of the income and the potential for further
rental growth, and was cross-referenced by theevidence provided by comparable transactions. The
valuation as at October 1, 2015 resulted in an
increase in the fair value of the building of 1.4 million
Swiss francs. This increase was recognized in 2015
as investment revenue in the Statement of Financial
Performance.

6,210

4,785

-

1,425

6,210

6,210

Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Not later than one year

353

310

Later than one year and not later
than five years

626

612

-

3

979

925

Later than five years
Total non-cancellable
operating leases

In 2016 the income from rental of the building totaled
366 thousand Swiss francs, and the operating
expenditures of the building totaled 399 thousand
Swiss francs. These expenditures included renovation
costs of 237 thousand Swiss francs for fourapartments. The Organization is not aware of any
restrictions on the realizability or remittance ofrevenue from the investment property.
The operating expenditures do not include
depreciation of the building. At the reporting date there
are no contractual obligations to purchase, construct
or develop investment property nor for the repairs,
maintenance or enhancement of the existing property.
However, under Swiss building regulations, it isrequired that work be carried out to renovate thefacades of the existing property. This work should becompleted by December 31, 2019. An estimation of
the future cost of this work of 0.8 million Swiss francs
has been incorporated into the latest valuation as at
October 1, 2015.

The leasing of apartments, parking and other facilities
in the Madrid Union Building is managed by a leasing
agent responsible for collecting all rental income andpaying for all expenditures incurred in the operation of
the building. Leases are generally for periods of five
years and are based on the form of lease approved by
the Canton of Geneva. All leases are non-cancellable
during the period of the lease. The managing agent
receives 3.90 per cent of the gross rental income ascompensation for its services. The value of noncancellable leases as at December 31, 2016 is asfollows:

42

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 9: INTANGIBLE ASSETS

Movem ent 2016

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2016
Gross carrying amount

34,290

1,115

3,919

188

39,512

Accumulated amortization-8,719-513-1,299--10,531

25,571

602

2,620

188

28,981

Additions

-

-

-

287

287

Transfers

-

-

-

-

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-440

-223

-792

-

-1,455

-440

-223

-792

287

-1,168Gross carrying amount

34,290

1,115

3,919

475

39,799

Accumulated amortization-9,159-736-2,091--11,986

25,131

379

1,828

475

27,813

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total

Net carrying am ount
Movem ents in 2016:

Amortization
Total m ovem ents in 2016
Decem ber 31, 2016

Net carrying am ount

Movem ent 2015

(in thousands of Swiss francs)
January 1, 2015
Gross carrying amount

34,290

803

3,258

585

Accumulated amortization-8,279

-347

-561

-

-9,18726,011

456

2,697

585

29,749Additions

-

312

-

264

576

Transfers

-

-

661

-661

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-440

-166

-738

-

-1,344

-440

146

-77

-397

-768

Gross carrying amount

34,290

1,115

3,919

188

39,512

Accumulated amortization-8,719-513-1,299--10,531

25,571

602

2,620

188

28,981

Net carrying am ount

38,936

Movem ents in 2015:

Amortization
Total m ovem ents in 2015
Decem ber 31, 2015

Net carrying am ount

43

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

In 1996, the Organization acquired from the World
Meteorological Organization (WMO) the land surface
rights to parcel 4008 in Petit-Saconnex in the City ofGeneva that had been granted to WMO by the
Republic and Canton of Geneva at a cost of
34.3 million Swiss francs including interest and fees.
At the date of purchase the original rights had aremaining period of 78 years under Swiss law expiringin 2073, unless renewed by the Canton. The historiccost is being amortized over the remaining useful life.
The land on which the Árpád Bogsch and Georg
Bodenhausen buildings are located is the property of
the Republic and Canton of Geneva which has
granted the Organization surface rights including theright to construct buildings for a period of 60 years

with an option exercisable solely by the Organizationof an extension for an additional period of 30 years.
These surface rights were acquired by theOrganization at no cost and no value has beenrecognized in the financial statements, as theOrganization does not have the right to dispose of therights which revert to the Republic and Canton of
Geneva unless renewed.
As from January 1, 2012, WIPO has been capitalizing
the cost of externally acquired and internallydeveloped software. Intangible assets underdevelopment relate to internally developed software
which has not yet been brought into use.

NOTE 10: LAND AND BUILDINGSThe Organization’s land and buildings comprise its
headquarters at Place des Nations, Geneva,
Switzerland and include land, buildings and a security
perimeter. Following the transition to IPSAS fromJanuary 1, 2010, buildings which were occupied atthat date were valued at an amount determined
independently by external consultants, which
represents the estimated value of the building whennew (deemed cost of construction) including theestimated value of renovations and major repairs
made since original occupancy less accumulated
depreciation and impairment. Buildings which arebrought into use after January 1, 2010 are initiallyvalued at cost. All buildings are depreciated according
to the straight-line method based upon the useful lifeof each major component of the building.

and takes into account the quality of the spaces aswell as the location. The yield has been selected byreference to the perceived quality and duration of theincome and the potential for further rental growth andis cross-referenced by the evidence provided bycomparable sales.
Three major construction projects have been
completed since the implementation of IPSAS in 2010.
The New Building was brought to use in 2011 and the
New Conference Hall in 2014. In 2015 WIPO
completed a major project to upgrade the safety andsecurity standards of its existing buildings, in line with
the implementation of the recommendations of theUnited Nations Security Management System. This
project comprised the New Access Centre (included
as part of the Árpád Bogsch building), the Security
Operations Centre (included as part of the Georg
Bodenhausen building I), and the Security Perimeter(held as a standalone construction).

The land upon which the New Building wasconstructed was acquired by the Organization at a
cost of 13.6 million Swiss francs in 1998 and wasrevalued to fair value based on International Valuation
Standards as determined by an independent appraiser
at December 31, 2009 at 28.6 million Swiss francs.
The net result of the revaluation of 15.0 million Swiss
francs is included in the Revaluation Reserve Surplus
which forms part of WIPO’s net assets. An updated
valuation of the land was performed by anindependent appraiser at December 31, 2016. Thisvaluation indicated an increase in the fair value of theland of 2.2 million Swiss francs. Market value wasestimated by capitalizing at an appropriate investment
yield the future potential income stream from theproperty. The potential income is based oncomparable
rentalsinthemarket44

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Movements for land and buildings in 2016

Movem ent 2016

Year in Service

Total Land andBuildings

Buildings and Constructions in Use

Land

New Building Site

Security
Perimeter

New ConferenceHall

New Building

A. Bogsch
Building

1998

2015

2014

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2016
Cost/valuation

28,6008,996

70,456167,03156,97912,838

4,523

67,771--91-2,732-13,809-9,009-2,269-705-8,061

28,6008,905

67,724

153,22247,97010,5693,818

59,710380,518

Additions

-

-

57

784

670

215

4

376

2,106

Revaluation

2,220

-

-

-

-

-

-

-

2,220

Impairment

-

-

-

-

-

-

-

-

-

Depreciation

-

-271

-2,095-3,124-1,736-651-122-1,356-9,355

2,220

-271

-2,038-2,340-1,066

-436

-118

-980

-5,02930,8208,996

70,513

167,815

57,64913,053

4,527

68,147

421,520--362-4,827-16,933-10,745-2,920-827-9,41730,8208,634

65,686150,882

46,904

10,1333,700

58,730

13

13

13

13

13

Accumulated depreciation andimpairment charges

417,194-36,676

Net carrying am ount

Movem ents in 2016

Net m ovem ents in 2016

Decem ber 31, 2016
Cost/valuation
Accumulated depreciation andimpairment charges-46,031

Net carrying am ount
Check

4

13

4

13

45

375,489
4

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Movements for land and buildings in the prior year 2015

Movem ent 2015

Year in Service

Land

Work in
Progress

New Building Site

Security
Construction

Security
Perimeter

New Conference
Hall

1998

N/A

2015

2014

Total Land andBuildings

Buildings and Constructions in Use

New Building

A. Bogsch
Building

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2015
Cost/valuation
Accumulated depreciation andimpairment charges
Net carrying am ount

28,60012,510-67,926

166,249

52,97010,826

4,523

67,446

411,050

-

-

-

-672

-10,704-7,290-1,645-583-6,713-27,60728,60012,510-67,254

155,545

45,680

9,181

3,940

60,733

383,443

Movem ents in 2015
Additions

-

2,133

-

2,530

782

361

13

-

325

6,144

Transfers-14,643
-

8,996
-

-

-

3,648
-

1,999
-

-

-

-

Impairment-

Depreciation

-

-

-91

-2,060-3,105-1,719-624-122-1,348-9,069Net m ovem ents in 2015-

-12,510

8,905

470

-2,323

2,290

1,388

-122

-1,023-2,92528,600-8,996

70,456167,03156,97912,838

4,523

67,771

417,194---91-2,732-13,809-9,009-2,269-705-8,061-36,676

28,600-8,905

67,724

153,22247,97010,5693,818

59,710380,518

13

13

13

13

13

13

13

-

Decem ber 31, 2015
Cost/valuation
Accumulated depreciation andimpairment charges
Net carrying am ount
Check

4

13

4

46

4

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 11: OTHER NON-CURRENT ASSETS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Loan to FCIG

8,428

8,305

Advance for FCIG concessionary loan

126

251

FCIG loan amortization

189

378

8,743

8,934

Total other non-current assets

mortgage repayments, the amortization of theadvance and the rental of parking spaces) until theend of the lease in 2018 would be as follows:

In 1991 the Organization entered into an agreementwith the International Centre of Geneva Foundation(FCIG) related to the construction of a building on rue
des Morillons in Geneva, Switzerland at a total cost of
20.4 million Swiss francs. The agreement provided for
the Organization to advance the initial sum of
10.0 million Swiss francs, plus a further sum of
1.0 million Swiss francs representing interest on theinitial advance, equaling a total advance of
11.0 million Swiss francs. The balance of theconstruction cost was covered by a mortgage between
FCIG and the Banque Cantonale de Genève (BCG).
The Organization also entered into an agreement tolease the building from FCIG. The lease agreement
was renewed for a period of seven years fromJanuary 1, 2012.

Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Not later than one year
Later than one year and not later
than five years
Later than five years
Total future lease paym ents

508

560

507

1,115

-

-

1,015

1,675

Upon vacating the premises, WIPO is to be repaid thebalance of the 11.0 million Swiss francs advance after
amortization. FCIG will also retain 1.0 million Swiss
francs from the advance for restoration of the building
to its original condition.

Under the current lease agreement between the
Organization and FCIG, both parties have the right toterminate the agreement at any point through mutual
consent formalized in writing. The annual amount ofrent payable by WIPO is equivalent to the annual
repayments (interest plus repayments of the principal)
on the mortgage between FCIG and the BCG. The
rent paid by WIPO on this basis during 2016 totaled
231,020 Swiss francs (232,596 Swiss francs during2015). The current rate of interest, fixed through to
December 31, 2018, is 1.48 per cent. Since
January 1, 2012, WIPO has also recognized anannual amortization charge of 188,679 Swiss francs
against its advance to FCIG. Further, theOrganization also leases covered parking spaces, fora cost of 110,922 Swiss francs in 2016. In theabsence of a mutual termination of the leaseagreement, WIPO’s future payments (including the

For presentation in the financial statements, the total
value of the amortization is treated as an advancepayment of rent, and is split into both its current
portion (see Note 5) and non-current portion. The
total value of this advance payment as at
December 31, 2016 is 0.4 million Swiss francs. The
remaining balance of WIPO’s advance to FCIG istreated as a concessionary loan in accordance withIPSAS, and is measured at amortized cost. Theinterest-free element of the concessionary loan is
also recognized as an advance payment, and is split
into both its current portion (see Note 5) and noncurrent portion. This advance payment is reduced
over the period of rental agreement, and as at
December 31, 2016 has a total value of
0.3 million Swiss francs.

47

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 12: PAYABLES AND ACCRUALS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Trade creditors - accounts payable

10,21518,197

Miscellaneous transitory liabilities

293

3,777

Other trade creditors

255

128

10,763

22,102

Total payables and accruals

Payables and accruals include invoices received from suppliers not yet settled including the revaluation of invoices
payable in currencies other than the Swiss franc.

NOTE 13: EMPLOYEE BENEFITS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Accumulated leave

1,638

2,021

Separation benefits

329

463

Closed Pension Fund

327

339

2,036

2,025

Home leave

409

303

Overtime and credit hours

524

608

1,943

1,929

Repatriation grant and travel

Education grant
Performance rew ards

240

277

After-Service Health Insurance

21,417

15,066

Total current em ployee benefit liabilities

28,86323,031

Closed Pension Fund

2,277

2,403

Accumulated leave

10,977

10,534

Repatriation grant and travel

13,383

13,387After-Service Health Insurance

132,930

122,163

Total non-current em ployee benefit liabilities

159,567

148,487

Total em ployee benefit liabilities

188,430

171,518

Employee benefits comprise:
Termination benefits which include an indemnity
payable to staff members holding a permanent or
fixed term contract whose appointment is terminatedby the Organization prior to the end of their contract.

Short-term employee benefits that include salary,allowances, grant on initial assignment, grants for theeducation of dependent children, paid annual leave,
paid sick leave, accident and life insurance;
Long-term employee benefits (or after-service
employee benefits) which include post-employment
benefits such as After-Service Health Insurance(ASHI), and other long-term employee benefits suchas separation benefits consisting of grants upon
repatriation, repatriation travel and shipping of
personal effects; and48

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Short-Term Employee Benefits

school year/university year and December 31, 2016
for which fees are therefore due. The total liability at
the reporting date is 1.9 million Swiss francs(1.9 million Swiss francs at December 31, 2015).

The Organization has recognized liabilities for thefollowing short-term benefits, the value of which isbased on the amount payable to each staff member at
the reporting date.

Performance rewards: under the WIPO Rewards andRecognition Program staff who have demonstrated
excellent performance may be considered for paymentof a lump sum cash reward of either
2,500 Swiss francs or 5,000 Swiss francs. Based on
decisions taken during the year, the total amount of
performance rewards payable to staff as at
December 31, 2016 totaled 0.2 million Swiss francs(0.3 million Swiss francs at December 31, 2015).

Accumulated leave: staff members are eligible for 30days annual leave. Under the Staff Regulations andRules (SRR) staff members may accrue up to 15 daysof annual leave in a given year, and a total
accumulated balance of 60 days. However, those staff
members who accumulated more than 60 days prior
to January 1, 2013, are entitled to retain them until
December 31, 2017. Although annual leave is a shortterm employee benefit, as staff have the right toaccumulate unused annual leave and receive
payment in lieu thereof on separation from service, aportion of accumulated leave is classified as a noncurrent liability. In exceptional circumstances, a staff
member may be granted advance annual leave up toa maximum of 10 working days. These staff members
are included in the calculation of the overall balance ofaccumulated leave. The total outstanding liability at
the reporting date is 12.6 million Swiss francs(12.6 million Swiss francs at December 31, 2015).

Long-Term Employee Benefits
Closed Pension Fund (CROMPI): Prior to becoming
a participating organization in the UNJSPF, WIPO’s
predecessor organization had its own pension fundestablished in 1955. This pension fund was closed to
new members on September 30, 1975 and continues
for those who were members at the time of closure
under the management of a Foundation Council. In
accordance with a convention between the Closed
Pension Fund and the Organization and with adecision of the ILO Administrative Tribunal of theInternational Labour Organization (ILOAT), WIPO has
obligations to finance certain costs relating to the
Closed Pension Fund:

Home Leave: certain internationally recruited staff
members are eligible for home leave for themselves
and their dependents to the country in which they
have their home every second year. The total
outstanding liability for home leave earned but nottaken at the reporting date is 0.4 million Swiss francs(0.3 million Swiss francs at December 31, 2015).
Overtime and credit hours: certain staff members
are eligible to be paid in cash for overtime accrued
after the expiry of a period established in the SRR.
Staff members following the flexible working timesystem may accumulate credit hours for time worked
beyond 40 hours a week. Staff members with
sufficient credit hours (up to a maximum of 16 hours)
may request to take credit leave. The total liability at
the reporting date for overtime and credit hours is
0.5 million Swiss francs (0.6 million Swiss francs at
December 31, 2015).
Education grant: certain internationally recruited staff
members, other than those living in their homecountry, are eligible to receive a grant covering 75.0
per cent of the costs of education for dependent
children until the fourth year of post-secondary schoolstudies, but not beyond the end of the school year inwhich the child reaches the age of 25. The liability foreducation grants payable relates to the number ofmonths which have elapsed between the start of the49the obligation to cover the cost of pensions paid
to former staff participating in the Closed Pension
Fund before they reach the age of 65. Basedupon the latest actuarial valuation performed for
2016,
there
is
no
liability
asatDecember 31, 2016 (2 thousand Swiss francs in2015) as all participants have now reached theage of 65;



the obligation, based upon a decision of the
ILOAT in 2006, to cover certain differences
between the pension receivable of Closed
Pension Fund members under the Closed
Pension Fund and that receivable from the
UNJSPF which, based upon the latest actuarial
valuations performed for 2015, is estimated at
2.6 million Swiss francs as at December 31, 2016(2.7 million Swiss francs in 2015).

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Repatriation grant and travel: The Organization has
a contractual obligation to provide benefits such as
repatriation grants, travel and removal for certain
internationally recruited staff members at the time of
their separation from service. For professional staff in
temporary positions, the cost of repatriation travel andremoval on separation from service is estimated by
WIPO and is treated as a current liability. Forinternationally recruited professional staff in posts, theliability for repatriation grant, travel and removal iscalculated by an independent actuary. The total
liability was estimated as follows at the reporting date:

Actuarial
Valuation

Decem ber 31,
2016

Decem ber 31,
2015

Total

Total

WIPO Estim ate(in thousands of Swiss francs)
Current liability

1,319

717

2,036

2,025

Non-current liability

13,383-

13,383

13,387

Total liability - repatriation grant and travel

14,702717

15,41915,412Contributions paid by the Organization for repatriation
grant and travel totaled 0.8 million Swiss francs for2016 (1.3 million Swiss francs in 2015). Expected
contributions to repatriation grant and travel in 2017
are 0.9 million Swiss francs.

Concerning the actuarial valuation of repatriation grant
and travel, the table below details the expense forrepatriation grant and travel recognized in theStatement of Financial Performance:
Decem ber 31,
2016

Decem ber 31,
2015

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the repatriation grant and travel liability for2016 and the previous four years:(in thousands of Swiss francs)

Interest cost

71

100

Current service cost

1,281

1,134

Actuarial (gain)/loss
Expense recognized in theStatem ent of Financial
Perform ance

-632

1,499

720

2,733

2016

Defined benefit obligation

2014

2013

2012

14,702 14,739 13,279 12,097 12,215

Experience (gain)/loss
adjustments on plan liability

Actuarial gains and losses for repatriation grant andtravel are recognized immediately in the Statement of
Financial Performance. The table below details thechange in the repatriation grant and travel defined
benefit obligation:
Decem ber 31,
2016

2015

(in thousands of Swiss francs)

224

1,135 -1,295

-41

2,122

The principal assumptions used in determining therepatriation grant and travel liability and defined
benefit obligation were as follows:

Decem ber 31,
2015

Decem ber 31,
2016

Decem ber 31,
2015

Discount rate

0.30%

0.50%

Rate of salary increase

2.43%

3.38%

Discount rate

0.50%

0.80%

Rate of salary increase

3.38%

3.52%

(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year
Interest cost
Current service cost

14,73913,279

71

100

1,281

1,134

Contribution paid

-757

-1,273

Actuarial (gain)/loss on obligation
Defined benefit obligation at
end of year

-632

1,499

14,702

14,739Weighted-average assumptions
to determine benefit obligations

Weighted-average assumptions
to determine net cost50

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

After Service Health Insurance (ASHI): The
Organization also has a contractual obligation toprovide post-employment medical benefits for its staff
members in the form of insurance premiums for thecollective medical insurance plan. Staff members (andtheir spouses, dependent children and survivors)
retiring from service are eligible for ASHI coverage ifthey continue to participate in the collective medical
insurance plan after separation from service. In
accordance with WIPO’s SRR, a share of 65 per centof the monthly medical insurance premium is paid by
the Organization. From January 1, 2017, monthly
medical premiums amount to 596 Swiss francs for
adults and 265 Swiss francs for children (previously
552 Swiss francs and 246 Swiss francs for adults andchildren respectively). The present value of thedefined benefit obligations for post-employment

medical benefits is determined using the projected unit
credit method including discounting the estimatedfuture cash outflows using a discount rate based upon
both Swiss franc high grade corporate bonds andSwiss government bonds. In accordance with IPSAS
the Organization’s ASHI liability is considered as
unfunded as no plan assets are held in a legally
separate entity or fund, and therefore no plan assets
are deducted from the liability as recognized in thestatement of financial position. However, it should be
noted that the Organization has established separate
funds for the future financing of after-service
employee benefit liabilities, including ASHI (see Notes
3 and 4). On the basis of an actuarial valuation carriedout in December 2016 by an independent office, theOrganization’s ASHI liability was estimated as follows
at the reporting date:
Decem ber 31,
2016

ASHI

Decem ber 31,
2015(in thousands of Swiss francs)

Current liability

21,417

15,066

Non-current liability

132,930

122,163

Total liability - ASHI

154,347

137,229

benefit obligation to the liability recognized in theStatement of Financial Position:

The table below details the expense for ASHI
recognized in the statement of financial performance:
Decem ber 31,
2016

Decem ber 31,
2015

Decem ber 31,
2016(in thousands of Swiss francs)

Interest cost

2,146

1,837

Current service cost

12,920

9,238

4,922

939

Amortization of net actuarial(gain)/loss
Expense recognized in theStatem ent of Financial
Perform ance

19,988Decem ber 31,
2015(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year

12,014WIPO applies the corridor method for the recognitionof actuarial gains and losses for ASHI. Under thisaccounting policy, a portion of net actuarial gains andlosses is recognized if the net cumulative
unrecognized gains and losses at the end of theprevious reporting period exceed 10 per cent of thepresent value of the defined benefit obligation at that
date. The table below details the changes in the ASHI
defined benefit obligation, and reconciles the defined

216,075

154,449

Interest cost

2,146

1,837

Current service cost

12,9209,238

Contribution paid

-2,870-2,643

Actuarial (gain)/loss on obligation

92,61653,194

Defined benefit obligation at
end of year

320,887

216,075-166,540-78,846

154,347

137,229

Net actuarial gain/(loss)
unrecognizedLiability recognized in theStatem ent of Financial
PositionContributions paid by the Organization for ASHI
totaled 2.9 million Swiss francs for 2016(2.6 million Swiss francs in 2015). Expected
contributions to ASHI in 2017 are 2.9 million Swiss
francs.

51

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the ASHI liability for 2016 and the previous
four years:
2016

2015

2014

2013

2012

(in thousands of Swiss francs)
Defined benefit obligation

320,887

216,075

154,449

137,670

131,320

3,377

190

-15,301

1,606-6,704

Experience (gain)/loss adjustments on plan liability

The principal assumptions used in determining the
ASHI liability and defined benefit obligation were as
follows:
Decem ber 31,
2016

Decem ber 31,
2015

Discount rate

0.75%

1.00%

Rate of sickness premium increase

3.50%

2.75%

Weighted-average assumptions to determine benefit obligations

Weighted-average assumptions to determine net cost
Discount rate

1.00%

1.20%

Rate of sickness premium increase

2.75%

3.00% as of 2012
then linear decrease to2.50% as of 2017
then constant

Assumed healthcare cost trends have a significant
effect on the amounts calculated for the ASHI liability.
A one percentage point change in assumed
healthcare cost trends would have the following
effects:
1 per cent decreasein assum ed healthcare trend rate

Assum ed health caretrend rate as applied

1 per cent increase inassum ed health caretrend rate

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2016

254,183

Per cent variation-20.8%

Service and interest cost for the year to
December 31, 2016

11,595Per cent variation-23.0%

52

320,887

411,66728.3%

15,066

19,845
31.7%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

United Nations Joint Staff Pension Fund

After assessing the actuarial sufficiency of the Fund,
the Consulting Actuary concluded that there was norequirement, as at December 31, 2013, for deficiency
payments under Article 26 of the Regulations of theFund as the actuarial value of assets exceeded theactuarial value of all accrued liabilities under the Fund.
In addition, the market value of assets also exceeded
the actuarial value of all accrued liabilities as of thevaluation date. At the time of this report, the General
Assembly has not invoked the provision of Article 26.

The Fund’s Regulations state that the Pension Board
shall have an actuarial valuation made of the Fund at
least once every three years by the Consulting
Actuary. The practice of the Pension Board has been
to carry out an actuarial valuation every two years
using the Open Group Aggregate Method. The
primary purpose of the actuarial valuation is todetermine whether the current and estimated future
assets of the Pension Fund will be sufficient to meetits liabilities.

During 2016, WIPO contributions paid to UNJSPF
amounted to 26.4 million Swiss francs (26.7 million
Swiss francs in 2015). Expected contributions due in2017 are 27.3 million Swiss francs.

WIPO’s financial obligation to the UNJSPF consists of
its mandated contribution, at the rate established by
the United Nations General Assembly (currently at 7.9
per cent for participants and 15.8 per cent for member
organizations) together with any share of any actuarial
deficiency payments under Article 26 of theRegulations of the Fund. Such deficiency payments
are only payable if and when the United Nations
General Assembly has invoked the provision of Article
26, following determination that there is a requirementfor deficiency payments based on an assessment of
the actuarial sufficiency of the Fund as of the valuation
date. Each member organization shall contribute tothis deficiency an amount proportionate to the total
contributions which each paid during the three years
preceding the valuation date.

The United Nations Board of Auditors carries out anannual audit of the UNJSPF and reports to the
UNJSPF Pension Board on the audit every year. The
UNJSPF publishes quarterly reports on its
investments and these can be viewed by visiting the
UNJSPF at www.unjspf.org.

An actuarial valuation was performed as at
December 31, 2015, however this valuation reportwassubsequently
withdrawnfollowingtheidentification of anomalies in the census data provided
to the Consulting Actuary. The previous actuarial
valuation performed as at December 31, 2013
revealed an actuarial deficit of 0.72 per cent (a deficitof 1.87 per cent in the 2011 valuation) of pensionable
remuneration, implying that the theoretical contribution
rate required to achieve a balanced position as at
December 31, 2013 was 24.42 per cent ofpensionable remuneration, compared to the actual
contribution rate of 23.70 per cent. The next actuarial
valuation will be conducted based on the position at
December 31, 2017.
At December 31, 2013, the funded ratio of actuarialassets to actuarial liabilities, assuming no future
pension adjustments, was 127.5
per cent(130.0 per cent in the 2011 valuation). The funded
ratio was 91.2 per cent (86.2 per cent in the 2011valuation) when the current system of pension
adjustments was taken into account.

53

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 14: TRANSFERS PAYABLE
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Madrid Union complementary fees

35,613Madrid Union supplementary fees

3,099

3,491

Madrid Union individual fees

14,451

16,874Madrid Union handling fees
Madrid Union deposits
Hague Union distribution
Madrid and Hague Union repartition fees
AMC deposits
PCT International Searching Authorities
USPTO search fees due to EPO
Total transfers payable

38,63017

18

23,841

17,959

489

553

5,107

4,322

914

695

1,339

1,599

4

19

84,874

84,160Madrid Union Individual fees: In accordance with
Article 8(7) of the Madrid Protocol and Rule 38 of theCommon Regulations, contracting parties may
establish fees which are collected by the Organizationand payable to contracting parties within the monthfollowing the recording of the registration ordesignation of renewal for which the fee was paid.
Contracting parties that have elected to establish
individual fees are not eligible to receive thecomplementary and supplementary fees describedabove. The amounts shown as payable represent thefees to be transferred at the end of the reporting
period.

The Organization collects fees on behalf of thecontracting parties of the Madrid Agreement andProtocol and the Common Regulations of the Hague
Agreement. The Organization’s PCT International
Bureau collects funds from applicants to cover thecost of payments of International Searching
Authorities. In addition, the Organization collects feesto be paid directly to mediators, arbitrators or panelists
for cases treated through the Arbitration andMediation Centre. The Organization holds these funds
on a temporary basis until they are transferred to thefinal beneficiary in accordance with the various
treaties and agreements administered by theOrganization.

Madrid Union deposits: The Organization receives
payments from applicants under the Madrid system
which represent deposits in connection with pending
procedures related to trademarks. The portion ofthese deposits which is estimated to represent funds
collected by WIPO on behalf of third parties to betransferred later in accordance with the treaty is
included within transfers payable in the financial
statements. The portion of these deposits which isestimated to represent fees of the Organization
received in advance is included within advancereceipts in the financial statements (see Note 15).

Madrid Union Complementary and Supplementary
fees: In accordance with the Madrid Agreement(Article 8(2) (b and c)) and the Madrid Protocol (Article
8(2) (ii and iii)) the Organization collects
complementary and supplementary fees of 100 Swiss
francs per application or renewal on behalf of thecontracting parties. The amount due to eachcontracting party varies based upon the services
provided by the party (examination undertaken).
Funds are transferred annually in the first half of theyear following the reporting date.

54

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Hague Union Distribution: In accordance with Rules
13.2(a)(iii), 13.2(e) and 24.2 of the Common
Regulations under the Hague Agreement, theOrganization collects ordinary state fees, state
renewal fees and novelty examination fees on behalfof contracting parties for international registrations or
their renewals. These funds are payable to thecontracting parties on a monthly basis. The amountshown as payable represents the amounts to betransferred at the end of the reporting period.

PCT International Searching Authorities: The
International Bureau collects fees from applicants forinternational patents filed at the International Bureau
to cover the costs of the international searches which
are performed by International Searching Authorities
designated by the Organization pursuant to the PCT.
The amount shown in the prior table represents theamount to be transferred to International Searching
Authorities at the reporting date.
USPTO search fees due to EPO: In accordance with amemorandum of understanding between theEuropean Patent Office (EPO), the United States
Patent and Trademark Office (USPTO) and WIPO,
PCT search fees to be transferred from the USPTO(as a PCT receiving office) to the EPO (as an
International Searching Authority) are received by
WIPO from the USPTO and then transferred by WIPO
to the EPO. The objective of this memorandum of
understanding is to improve the management ofsearch fee transfers and reduce losses incurred by theInternational Bureau under PCT Rule 16.1(e) due toexchange rate fluctuations. The amount shown in theprior table represents the balance of transfers
received by WIPO but not yet transferred to the EPO
at the reporting date.

Madrid and Hague Union Repartition Fees: The
Organization holds funds payable to contracting
parties when no clear payment instructions have been
received or the contracting party requests thatpayment be held pending confirmation. The amountshown includes the sum of 1.8 million Swiss francs
due to all of the countries making up the former
Federal Republic of Yugoslavia, that is, Bosnia andHerzegovina, Croatia, Montenegro, Serbia, Slovenia
and The former Yugoslav Republic of Macedonia.
Payment will be effected as soon as a mutual
agreement between the concerned Member States as
to the amounts due to each country has been received
by the International Bureau.
AMC Deposits: The Organization collects fees forarbitrations undertaken through its Arbitration andMediation Centre covering domain names and otherissues related to intellectual property. In addition to
the fee paid to the Organization, participants deposit
an amount equal to the estimated fee of the arbitrator.
If the arbitrator’s fee exceeds the estimate, theOrganization requires the participants to provide theadditional funds required. The amount collected is
paid directly to the arbitrator and is not recognized asincome by the Organization. The amount shown in theprior table represents the net amount paid byparticipants but not paid to the arbitrator as of thereporting date.

55

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 15: ADVANCE RECEIPTS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Madrid Union deposits

19,551

12,920Industrial design deposits

944

687

PCT/IBRO deposits

451

468

3,188

1,899

PCT system deferred revenue

227,975

217,071

Madrid system deferred revenue

2,297

1,761

Hague system deferred revenue

463

346

Non-exchange deferred revenue

14,581

14,097

Advance payment of contributionsFIPOI deferred revenue

132

132

269,582249,381FIPOI deferred revenue

4,069

4,201

Total non-current advance receipts

4,069

4,201

273,651

253,582

Total current advance receipts

Total advance receipts

In many cases, the Organization collects fees andcharges for services before the services are
performed completely, or before the fee is earned inaccordance with the treaties, agreements, protocols
and regulations administered by the Organization.
Revenue from fees related to the processing ofinternational applications (under the PCT, Madrid andHague systems) is recognized when the application
has been published. Revenue for additional page fees
related to PCT applications is deferred until the related
application is published. In addition, the part of thefees for PCT applications which covers the cost oftranslation of patentability reports not filed in the
English language is deferred until the translation has
been completed. All revenue from fees such as
renewals, extracts, modifications, abandonment,
transfers,
confirmations
andadjustments
isrecognized when the service has been performed.

Voluntary contributions from donors to Special
Accounts containing conditions requiring theOrganization to provide services to recipient
governments or other third parties are treated asdeferred income until the services covered by thevoluntary contributions are performed, whereupon
income is recognized.
The construction project to upgrade the safety andsecurity standards of existing WIPO buildings waspartly financed by the Foundation for Buildings forInternational Organizations (FIPOI). Construction work
financed by the FIPOI has been capitalized as part ofthe cost of the Security Perimeter, and acorresponding amount recognized as deferred
revenue. The balance of deferred revenue as at
December 31, 2016 was 4.2 million Swiss francs (4.3
million Swiss francs as at December 31, 2015). This
revenue is recognized gradually as the Security
Perimeter is depreciated over its useful life.

56

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 16: BORROWINGS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
FIPOI loan

1,358

1,358

BCG/BCV New Building loan

3,900

19,900Total current borrow ings

5,258

21,258FIPOI loan

16,862

18,221

BCG/BCV New Building loan

66,60070,500Total non-current borrow ings

83,462

88,721

Total borrow ings

88,720109,979

The Organization borrowed funds (50.8 million Swiss
francs and 8.4 million Swiss francs approved in 1977
and 1987 respectively) from the FIPOI for the purposeof constructing its headquarters buildings in Geneva,
Switzerland. These loans were originally subject tointerest payments. However, in 1996 the Swiss
Federal Department of External Relations agreed towaive any further payments of interest and the loans
currently require the reimbursement of principal only.

remaining balance of the loan of 70.5 million Swiss
francs, with final repayment taking place on January
26, 2017 (see Note 28: Events After the ReportingDate).

NOTE 17: PROVISIONS
Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)

In February 2008, the Organization entered into acontract with the Banque Cantonale de Genève (BCG)
and the Banque Cantonale Vaudoise (BCV) to borrow
114.0 million Swiss francs, plus a possible
supplementary amount of 16.0 million Swiss francs, tobe used to finance part of the cost of the constructionof the New Building, available for use until February
28, 2011. The supplementary amount of 16.0 million
Swiss francs was drawn down on January 27, 2011.
The interest rate has been fixed at the Swiss franc
Swap LIBOR for up to 15 years, plus a margin of
between 0.30 per cent to 0.70 per cent dependent on
the length of the term as determined by theOrganization. Interest payments in 2016 totaled 2.1
million Swiss francs, with a weighted average interest
rate of 2.93 per cent during the year. In addition to thepayment of interest, the contract provides for anannual repayment of principal equal to 3.0 per cent of
the total amount borrowed beginning on February 28,
2012 for the original loan of 114.0 million Swiss francs
and the supplementary loan of 16.0 million Swiss
francs.

Legal costs

6,989

817

Total provisions

6,989

817

The movement in provisions during 2015 and 2016 isdetailed as follows:
Legal Costs(in thousands of Swiss francs)
Balance as at Decem ber 31, 2014

913

Movem ents in 2015:
Additional provisions made642

Amounts used-250

Unused amounts reversed-488

Balance as at Decem ber 31, 2015

817

Movem ents in 2016:
Additional provisions madeIn November 2015 the Organization made the first of
its scheduled lump sum repayments towards the loan
for the amount of 24.0 million Swiss francs. A second
lump sum repayment for 16.0 million Swiss francs wasmade in January 2016. In January 2017, theOrganization took the decision to repay in full the

6,645

Amounts used-27

Unused amounts reversed-446

Balance as at Decem ber 31, 2016

6,989

As part of its normal activities, the Organization is
subject to litigation. Events occurring prior to
December 31, 2016 have created certain legal
obligations at the reporting date. As it is probable that57

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

these obligations will require future settlement and as
the settlement amounts can be reliably estimated, aprovision for legal costs has been established. The
timing of any future settlements is uncertain at thereporting date. The amount of the provision has been
estimated as closely as possible on the basis of
information available.

also have cases which have not yet reached theappeal stage (requests for review and workplace
related conflicts and grievances). For these cases theamount of any claim is yet to be confirmed, andtherefore no provision is recognized. There are no
contingent liabilities for possible settlement payments
by the Organization arising from these cases at thereporting date.

NOTE 18: OTHER CURRENT LIABILITIES
Decem ber 31,
2016

The International Computing Centre (ICC) wasestablishedin
January
1971
pursuanttoResolution 2741 (XXV) of the United Nations General
Assembly. ICC provides Information Technology andCommunications services to Partners and Users in the
United Nations System. As a Partner bound by the
Mandate of the ICC, WIPO would be proportionately
responsible for any third party claim or liability arisingfrom or related to service activities of the ICC as
specified in the ICC Mandate. At 31 December 2016,
there are no known claims that impact WIPO.
Ownership of assets is with ICC until dissolution. Upondissolution, the division of all assets and liabilities
amongst Partner Organizations shall be agreed by theManagement Committee by a formula defined at thattime.

Decem ber 31,
2015(in thousands of Swiss francs)
PCT current accounts - Italy and
Japan

717

456

Other current accounts

61,80255,315

Total other current liabilities

62,51955,771The Organization provides facilities for applicantsunder the PCT, Madrid and Hague systems to deposit
funds entitled “current accounts” for which theOrganization acts as custodian pending the use of thefunds to cover fees required to be paid in connection
with individual applications and renewals. These funds
are held until such time as specific applications are
filed. On receipt of the application and authorization,
the current account balance is reduced and the funds
are considered deposits until the application has beenregistered.

As at December 31, 2016, the Organization has noncancellable contracts for the delivery of goods andservices for a total value of 1.1 million Swiss francs.
WIPO has contractual commitments relating to noncancellable lease arrangements. These are detailed in
Note 20.

In addition, the Organization maintains bank accounts
in its name to provide a mechanism for certain
contracting parties to transfer funds which theseparties have collected on behalf of the Organization.
Until such time as the contracting party informs theOrganization that funds held in these accounts
represent income belonging to the Organization, thebalance remaining in the accounts is not recognized
as revenue.

NOTE 20: LEASESWIPO as Lessee
The Organization leases additional depots andstorage facilities in the Geneva area, and space for its
external offices in Rio de Janeiro and Tokyo (paid withvoluntary contributions to a Special Account), and its
coordination office in New York. In addition, theOrganization leases printing and photocopying
equipment. The value of future minimum lease
payments under non-cancellable operating leases is
as follows:

NOTE 19: CONTINGENT ASSETS AND
LIABILITIES
Several members of WIPO personnel are in disputewith the Organization. Cases before the WIPO Appeal
Board (WAB) and the ILO Administrative Tribunal(ILOAT) for which provisions have been made arereflected in Note 17. No provision has been made forcertain other cases before the WAB or the ILOAT
where legal advice indicates it is not probable that aliability will arise. The estimated value of contingent
liabilities for possible payments by the Organizationforclaimsarising
from
these
cases
is
105,000 Swiss francs at the reporting date. Personnel

Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)
Not later than one year
Later than one year and not later
than five years
Later than five years
Total non-cancellable
operating leases

58

356

391

54

232

-

-

410

623

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

WIPO as Lessor
The Organization has entered into a number ofagreements whereby it leases space in or on its
headquarters buildings to third parties. These leases
are all cancellable subject to notification periods
specified in the agreements. The total amount ofrental income from these arrangements in thereporting period was 0.6 million Swiss francs (0.6
million Swiss francs in 2015). The Organization alsoleases apartments, parking and other facilities in the
Madrid Union Building. The value of non-cancellable
leases and rental income for the Madrid Union
Building is provided in Note 8.

The Organization has also entered into an agreement
to lease a building from the International Centre of
Geneva Foundation (FCIG). The details of thisagreement, including future lease payments, areprovided separately in Note 11.
The Organization has no outstanding leases qualifying
as finance leases at the reporting date. The total
amount of lease payments for depots, storage
facilities and office space recognized as an expense in
the reporting period was 1.7 million Swiss francs (1.9
million Swiss francs in 2015).

Regulations and Rules, and applicable to all staff. In
addition, the Director General, Deputy Directors
General and Assistant Directors General receive
representation
allowances.
Key
management
personnel are members of the UNJSPF to which thepersonnel and the Organization contribute and arealso eligible for participation in the collective medical
insurance plan. Key management personnel and theiraggregate remuneration are detailed in the following
table. There were no loans to key management
personnel or to their close family members which were
not available to other categories of staff. There was noother remuneration or compensation to key
management personnel or to their close family
members.

NOTE 21: RELATED PARTY
TRANSACTIONSThe Organization is governed by the WIPO General
Assembly composed of representatives of Member
States party to the WIPO Convention which are
members of any of the Unions. These representatives
do not receive remuneration from the Organization.
The Organization is managed by a Director Generaland by Deputy and Assistant Directors General andofficers (key management personnel) who are
remunerated by the Organization. The aggregate
remuneration paid to key management personnel
includes salaries, allowances, statutory travel andother entitlements paid in accordance with the Staff
2016
Num ber of
Individuals(as an average)

2015
Aggregate
rem uneration(in thousands of
Swiss francs)

Num ber of
Individuals(as an average)

Aggregate
rem uneration(in thousands of
Swiss francs)

Director General, Deputies and Assistants

8.29

2,921

8.92

3,352

Senior Officers

12.21

3,739

11.08

3,564

Rules and Regulations of UPOV, the office of UPOV,
consisting of the UPOV Secretary General and staff,
exercises its functions in complete independence of
the Organization. The Organization is responsible forproviding space, personnel administration, financial
administration, procurement services and otheradministrative support to UPOV in accordance withthe terms of an agreement between the Organizationand UPOV dated November 26, 1982. UPOV
reimburses the Organization for the cost of suchservices in accordance with the terms of said
agreement. In 2016 the Organization received
618 thousand Swiss francs from UPOV to cover thecost of these services. In addition, WIPO receives full
reimbursement of all funds disbursed on behalf of
UPOV.

WIPO has no controlled entities and no interests inother entities which would require disclosure under
IPSAS 34-38. WIPO is a member of the UNJSPF andcertain of its former staff are members of WIPO’s
CROMPI. The relationship with these two funds is
explained in detail in Note 13.
The Organization has a relationship with theInternational Union for the Protection of New Varieties
of Plants (UPOV) whereby the Director General of theOrganization serves as Secretary General of UPOV.
The Council of UPOV which serves as UPOV’s
governing body consists of the representatives of thecontracting parties to the International Convention for
the Protection of New Varieties of Plants ofDecember 2, 1961, as revised. In accordance with the59

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 22:

NET ASSETS

Movem ent 2016

January 1,
2016

Item s
Projects
recognized Program andSpecialFinanceddirectly in
BudgetAccounts
from
Net Assets
Reserves
Surplus/(deficit) before IPSAS

Adjustm ents
IPSAS
Transfer toto Special
adjustm ents Accum ulated
Projects
for the year
Surpluses
Reserve

Decem ber31, 2016(in thousands of Swiss francs)
Program and Budget
2016
Special Accounts
2016
Accumulated
Surpluses
Special Projects
Reserve--

62,508----26,913-35,595

-

-

-

-

548

-

-

-548

-

-

231,945

-

-

-

-

2,267

-

36,677

270,889

23,730----4,673-2,267

1,078-1,082

16,786

Revaluation Reserve
Surplus15,046

2,220

-

-

-

-

-

-

17,266

Working Capital
Funds

8,342

-2,000

-

-

-

-

-

-

279,063220

62,508548-4,673--26,383-

Net assets

6,342
311,283

The Organization’s total net assets represent thebalance of its reserves, which include its Reserves(Accumulated Surpluses, Special Projects Reserve
and Revaluation Reserve Surplus) and Working
Capital Funds. The Organization manages the level of
its reserves in accordance with its Policy on Reserves.
In 2015 the policy was revised and adopted by the
Fifty-Fifth Series of Meetings of the Assemblies of theMember States of WIPO. The target levels of theOrganization’s reserves, including Working CapitalFunds, are defined at the level of Unions, on the basisof percentages of estimated biennial expenditure foreach Union.

returned to the Member States of the PCT Union,
through deductions from contribution invoices in 2016.
The Accumulated Surpluses of the Organization
represent the accumulated net result of operations in2016 and prior periods after the impact of IPSAS. The
Revaluation Reserve Surplus includes the cumulative
results of revaluations of the land owned by theOrganization on which the New Building has been
constructed (see Note 10). The fair value has been
determined by an independent valuation. Following
the latest revaluation as at December 31, 2016, thefair value of the land was increased by
2.2 million Swiss francs.

The Policy on Reserves requires a clear separation
between Working Capital Funds and other elements of
the reserves in accounting and reporting terms. The
Working Capital Funds are established for providing
advance financing of appropriations should there be atemporary liquidity shortfall, and for such otherpurposes as the Assemblies of Member States and of
the Unions shall decide. The Working Capital Funds
are financed by contributions and are held in trust by
WIPO for the Member States of the respective Unions.
Following approval by the Fifty-Fifth Series of
Meetings of the Assemblies of the Member States of
WIPO, the Working Capital Funds component of
2.0 million Swiss francs for the PCT Union has been

WIPO’s Policy on Reserves also establishes theprinciples and approval mechanism for the use ofreservesforone-time
projects
forcapitalimprovements and exceptional circumstances. The
Special Projects Reserve contains the appropriations
to these projects financed from reserves, lessaccumulated expenditure. The Special Projects
Reserve was created following the revision of WIPO’s
Policy on Reserves in 2015. Its balance at thereporting date reflects amounts to be used for projects
already approved. The following table details the
projects which are financed by reserves, theexpenditure during the year and the remainingbalance as at December 31, 2016:60

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Total projectbudgetCum ulative
Cum ulative
Rem aining
Expenditure
expenditure to adjustm ents to balance as atyear ended
Decem ber 31, Decem ber 31, Decem ber 31, Decem ber 31,
2015
2015 (2)20152016(in thousands of Swiss francs)

Adjustm ents
year ended
Decem ber 31,
2016 (3)Rem ainingbalance as at
Decem ber 31,
2016-

Special Projects
Security

7,600-7,640

141

101

-

-101

Maps modernization

13,804-13,062

-

742

-742

-

-

Madrid system database

1,200-1,093

-

107

-24

-

83

ERP project

25,341-16,256-

9,085-1,852-

7,233

ICT capital investment

5,180-4,619

-

561

-386

-

175

Security enhancement

700

-

-

700

-129

-

571

ECM implementation

2,068

-75

-

1,993

-449

-

1,544

PCT building renovation
Geneva lake w ater coolingsystemAB building basement
renovation
AB building w indow s
replacement
Safety and fire protection

6,000

-84

-

5,916

-353

-

5,563

750

-263

-

487

-

-

487

960

-5

-

955

-240

-

715

300

-47

-

253

-47

-

206

Developm ent agenda
New Construction and
New Conference HallNew Construction (1)New Conference Hall
(including architectural andtechnical project)

Total reserve funded
projects

400

-123

-

277

-68

-

209

64,303-43,267

141

21,177-4,290-101

16,786

7,182-6,302

-

880

-

-880

-

157,643-158,764

1,412

291

-93

-198

-

75,200-75,627

1,809

1,382

-294

-1,088-232,843-234,391

3,221

1,673

-387

-1,286-304,328-283,960

3,362

23,730-4,677-2,267

16,786

4

Revenue in year 2016

-4,673Net deficit in year 2016

(1) The New Construction project was financed by borrowings, see Note 16.
(2) Reflects adjustments related to the cancellation of ULOs for prior periods which were booked as Miscellaneous Income.
(3) Adjustments in 2016 relate to closed projects – Security, Development agenda, New Construction and New Conference Hall.

modified accrual basis for the first year of thebiennium was 384.7 million Swiss francs. Actual
expenditure on a modified accrual basis for the firstyear of the biennium was 322.2 million Swiss francs.

NOTE 23: RECONCILIATION OF
STATEMENT OF BUDGETARYCOMPARISON AND STATEMENT OFFINANCIAL PERFORMANCEThe Program Performance Report for 2016 provides
an explanation of both the changes between theoriginal and final budget after transfers, and thematerial differences between the budget and theactual amounts. WIPO’s budget and financial
accounts are prepared using two different bases. The
Statement of Financial Position, Statement of
Financial Performance, Statement of Changes in Net
Assets and Statement of Cash Flow are prepared on afull accrual basis, whereas the Statement ofComparison of Budget and Actual Amounts(Statement V) is prepared on a modified accrual basis.

The WIPO Program and Budget is established on amodified accrual basis in accordance with the
Financial Regulations and Rules, and is approved by
the Assemblies of the Member States. The Programand Budget for the 2016/17 Biennium established abudget for the biennium of expenditure of
707.0 million Swiss francs.
For 2016, the first year of the biennium, the original
and final budget estimate for income was373.3 million Swiss francs, and for expenditure
350.4 million Swiss francs. Actual income on a

61

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

As required by IPSAS 24, reconciliation is provided
between the actual amounts on a comparable basis
as presented in Statement V and the actual amounts
in the financial accounts identifying separately any
basis, timing and entity differences. This is provided
separately for the annual periods of the biennium, andalso for the complete biennium in the financial
statements of the second year of the biennium (thiswill be included in the 2017 financial statements).
WIPO’s budget is adopted by the Assemblies on abiennial basis, however, separate estimates areprepared for each of the two annual periods.
Therefore, there are no timing differences to report.
Basis differences occur when the approved budget isprepared on a basis other than the full accrual
accounting basis. Basis differences include thedepreciation of assets, full recognition of provisions
and deferral of unearned revenue. Entity differences
represent the inclusion in WIPO’s financial accounts ofSpecial Accounts and projects financed from reserves,which are not included in WIPO’s published Programand Budget. Presentation differences represent thetreatment of additions to buildings, equipment andintangible assets, and gains on investment property as
investing activities in the Statement of Cash Flow
(Statement IV).

Reconciliation for 2016
2016
Operating

Investing

FinancingTotal(in thousands of Swiss francs)
Actual am ount on com parable basis (Statem ent V)

62,508Depreciation and amortization--

62,508-11,424-11,424--

Equipment acquisition and disposal

-

89

-

89

Capitalization of construction expense

-

2,106

-

2,106

Capitalization of intangible assets

-

287

-

287

Changes in employee benefit liabilities-10,629---10,629

Deferral of revenue from fees

-6,303---6,303

Other revenue

136

-

-

136

Change in provision for doubtful debts

-20

-

-

-20

Inventory recognition

-77

-

-

-77

Special Accounts revenue recognition

-548

-

-

-548

Total Basis differences-28,865

2,482--26,383

Projects financed from reserves
Special Accounts-4,673

-

-

548

-

-

-4,673548

Total Entity differences-4,125---4,125

Actual am ount in the Statem ent of Financial
Perform ance (Statem ent II)

29,5182,482-

32,00062

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 24: REVENUE

Programand Budget

Special
Accounts

2016

2016

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2016

2016

Total

2016

2015

(in thousands of Swiss francs)

Assessed contributions

17,357---20

17,337

17,801

10,255

Voluntary contributions
Contributions to Special Accounts-

10,332

-

-548

9,784

Subventions to Lisbon Union

392

-

-

-

392

-

Sub-total voluntary contributions

392

10,332--548

10,176

10,255

Publications revenue

426

-

-

-

426

487

Investment revenue

21

-

-

-

21

1,500

PCT system

296,369---5,650290,719

275,392

Madrid system

60,116---536

59,58067,925

Hague system

5,072

-

-

-116

4,956

3,931

Lisbon system

25

-

-

-

25

17

361,582---6,302355,280

347,265

1,641

-

-

-

1,641

1,508

Exchange gain (loss)

529

-1

4

-

532

816

Program support charges

951

-

-

-951

-

-

1,785

9

-

506

2,300

2,311

384,684

10,340

4-7,315

387,713

381,943

Fees

Sub-total fees
Arbitration and Mediation

Other/miscellaneous revenue
Total revenue

Amounts shown for the Program and Budget
represent actual revenue received related to theOrganization’s budget as adopted by the Assemblies.

IPSAS adjustments are principally related to thedeferral of unearned revenue. Revenue from voluntary
contributions is deferred until earned through thedelivery of the specific services provided in the plan ofwork agreed with the donor.

Voluntary contributions include revenue received inconnection with contributions made by donors toindividual projects under Special Accounts notincluded in the Program and Budget. During 2016 theOrganization received the payment of subventions
under Article 11(3)(iii) of the Lisbon Agreement. These
subventions are classified in the table above as
voluntary contributions to the Program and Budget.

Revenue from PCT, Madrid and Hague system fees isdeferred until earned through the publication of theinternational application in accordance with the rulesof each of the Unions.

63

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 25: EXPENSES

Programand Budget

Special
Accounts

2016

2016

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2016

2016

Total

2016

2015

(in thousands of Swiss francs)
Posts

191,533

1,973

342

10,810204,658

198,651

Temporary staff

12,562

378

282

-328

12,894

16,477

Other staff costs

6,927

-

-

-126

6,801

1,138

211,022

2,351

624

10,356

224,353

216,266

Total Personnel expenditure
Internships

497

-

-

-

497

502

WIPO fellow ships

2,764

-

-

-

2,764

2,649

Total Interns and WIPO fellow ships

3,261

-

-

-

3,261

3,151

Staff missions

4,689

516

1

1

5,207

5,867

Third-party travel

6,590

2,171

-

-

8,761

9,588

Training and related travel grant

1,134

708

-

-

1,842

1,939

Total Travel, training and grants

12,413

3,395

1

1

15,81017,394

Conferences

3,714

315

-

-

4,029

4,298

Publishing

58

16

-

-

74

41

Individual contractual services

10,484

419

683

-71

11,515

11,690

Other contractual services

55,039

2,175

1,657

-91

58,78056,061

Total Contractual services

69,295

2,925

2,340

-162

74,39872,090Premises and maintenance

18,057115

1,710-1,604

18,27817,364

Communication
Representation and other operating
expenses

2,076

18

-

-

2,094

2,195

778

4

-

90

872

807

United Nations joint services

685

17

-

-

702

834

Total Operating expenses

21,596154

1,710-1,51421,946

21,200

Supplies and m aterials

2,020

14

2

3

2,039

3,583

Furniture and equipm ent

261

-

-

-89

172

827

-

-

-

11,424

11,424

11,055

2,308

2

-

-

2,310

3,107

-

951

-

-951

-

-

322,176

9,792

4,677

19,068355,713348,673

Depreciation and am ortization
Finance costs
Program support costs
Total expenses

Before the impact of IPSAS adjustments, expenses in
the Program and Budget, Special Accounts andProjects financed from reserves are reported on amodified accrual basis, whereby expenses arerecognized when goods are received and services are
rendered. IPSAS adjustments concern principally therecognition of depreciation and amortization against
the cost of fixed assets. Adjustments are also
recognized to capitalize expenses for the acquisitionof equipment, additions of buildings and constructions,or the acquisition and development of intangible
assets. Adjustments are made to personnel
expenditure as a result of bringing employee benefit
liabilities, including ASHI, into line with IPSAS
compliant calculations.

64

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

with values based on cash flows discounted using
a discount rate of 2.09 per cent.

NOTE 26: FINANCIAL INSTRUMENTS
The Organization is exposed to certain foreign
currency exchange, credit, interest rate and liquidity
risks which arise in the normal course of its
operations. This note presents information about theOrganization’s exposure to each of the above risks
and the policies and processes for measuring andmanaging risk.

Set out below, is a comparison by class of the carrying
amounts and fair value of the Organization’s financial
instruments:
Carrying
am ount
Financial assets

Receivables

55,754

Loans

8,428

8,428

529,817529,817

Cash and cash equivalents
Investments

55,754

12,50012,500606,499

606,499

Receivables

51,81851,818

Loans

8,305

8,305

489,496

489,496

549,619549,619

Carrying
am ount

Fair value

2015

Cash and cash equivalents

Financial liabilities(in thousands of Swiss francs)

2016

Fair values
The fair value of the financial assets and liabilities areincluded at the amount at which the instrument could
be exchanged in a current transaction between willing
parties, other than in a forced sale or liquidation. The
following methods and assumptions were used toestimate the fair values:(in thousands of Swiss francs)

2016

The Organization manages its investments inaccordance with its Policy on Investments. In 2015 thepolicy was revised and adopted by the Fifty-Fifth
Series of Meetings of the Assemblies of the Member
States of WIPO. The revised policy contains two
specific investment policies, one covering operating
and core cash and a second one covering strategic
cash. Operating cash is the cash required by theOrganization to meet daily payment requirements andto ensure that an amount equivalent to the target
reserves is available in liquid assets. Core cash is thebalance of cash remaining once operating andstrategic cash have been deducted. Strategic cash is
the cash which has been set aside to finance afterservice employee benefit liabilities, including ASHI.

Fair value

Borrow ings

88,72088,720

Payables and accruals

10,763

10,763

Transfers payable

84,87484,874Current accounts

62,51962,519

246,876

246,876

Borrow ings

109,979

109,979

Payables and accruals

22,102

22,102

Transfers payable

84,16084,160Current accounts

55,771

55,771

272,012272,0122015

Cash and short-term deposits, receivables fromexchange transactions, accounts payable andother current liabilities approximate their carrying
amounts largely due to the short-term maturitiesof these instruments;

Credit risk
Credit risk is the risk of financial loss to theOrganization if counterparties to financial instruments
fail to meet their contractual obligations, and it arises
principally from the Organization’s loans, receivables,
and cash and cash equivalents. The carrying amountof financial assets represents the maximum credit
exposure. The maximum exposure to credit risk as at
December 31, 2016 was as follows:

Long-term loans, receivables and borrowings areevaluated by the Organization based onparameters such as interest rates and risk
characteristics.
Allowances
have
been
established for receivables from non-exchangetransactions which cover amounts due from
Member States that have lost the right to voteunder Article 11, paragraph 5 of the WIPO
Convention and for contributions from least
developed countries which have been frozen byaction of the Assemblies. The concessionary loan
to FCIG is recognized at amortized cost withvalues based on cash flows discounted using a
discount rate of 1.48 per cent. USA taxes
reimbursable are recognized at amortized cost

Decem ber 31,
2016

Decem ber 31,
2015(in thousands of Swiss francs)

65

Receivables

55,754

Loans

8,428

51,8188,305

Cash and cash equivalents

529,805

489,483

Investments

12,500-Maxim um exposure to credit
risk

606,487549,606

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016The Organization’s receivables from non-exchangetransactions are almost exclusively from its Member
States representing sovereign governments, andtherefore risks related to credit are considered minor.
An allowance has been established against the asset
value of accounts receivable to reflect receivables forwhich payment is not anticipated in the short-term.

Money market investments, bonds, notes or otherobligations and other fixed income products may only
be held with institutions with a minimum short-term
credit rating of A-2/P-2 or a minimum long-term credit
rating of A-/A3. The only exception to this relates tocorporate issuances (corporate bonds and commercial
paper) which may have a short-term rating of A-3/P-3
or a long-term rating of BBB-/Baa3.

In accordance with the Organization’s Policy on
Investments, deposits may only be held withinstitutions with a minimum short-term credit rating of
A-2/P-2 or a minimum long-term credit rating of A-/A3.
AAA
Credit Rating

A-1+

Investm ents

Per cent

A-1

Sw isssovereignA-2

Unrated(cash on hand)

Total

529,817

S&P short-term(in thousands of Swiss francs)

Decem ber 31, 2016

Cash and cash equivalents

The credit ratings attached to cash and cash
equivalents and investments as at December 31, 2016is as follows:

375,011

1,367

108,353

45,074

12

-

-

-

12,500-12,500375,011

1,367

108,353

57,574

12542,317

69.1%

0.3%

20.0%

10.6%

0.0%

100.0%

Liquidity risk

low-risk asset classes which are easily liquidated atlittle or no cost. Core cash will be invested over the
medium term (periods exceeding twelve months), insuch a way that occasional access to a portion of the
cash is possible thus facilitating scheduled large
payments. Strategic cash is to be invested over thelong term, and currently has no short or medium term
liquidity requirements.

Liquidity risk is the risk of the Organization not being
able to meet its obligations as they fall due.
The Organization does not have significant exposure
to liquidity risk as it has substantial unrestricted cash
resources which are replenished from the results of its
operations. The Organization’s Policy on Investments
requires that operating and core cash are invested insuch a way to ensure the liquidity necessary to meet
the Organization’s cash flow requirements. Operating
cash balances are invested over the short term
(periods not exceeding twelve months to maturity) in

The following table provides a maturity analysis of
WIPO’s borrowings as at December 31, 2016. In
January 2017 the Organization took the decision to
repay in full the remaining balance of the BCG/BCV
loan (see Note 28: Events After the Reporting Date):

1 year or less
Decem ber 31, 2016

1-5 years

Later than 5 years

Total(in thousands of Swiss francs)

FIPOI loan

1,358

5,433

11,42918,220BCG/BCV New Building loan

3,900

15,60051,00070,500Total borrow ing

5,258

21,03362,42988,7201 year or less

1-5 years

Later than 5 years

Total

Decem ber 31, 2015

(in thousands of Swiss francs)

FIPOI loan

1,358

5,433

12,788BCG/BCV New Building loan

19,90015,60054,90090,400Total borrow ing

21,25821,03367,688109,979

66

19,579

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016The Organization’s contributions to the UNJSPF andits payments to ICC are made in US dollars. The
Organization has a further exposure to exchange risk
in connection with the cost of pensions for staff
previously enrolled in the Closed Pension Fund who
are now members of the UNJSPF. In addition, theOrganization has external offices in Brazil, China,
Japan, Russia and Singapore, and a coordination
office in the USA, with limited assets in local currency.
There are no hedging contracts in place as at thereporting date.

Currency risk
The Organization receives revenue from fees andvoluntary contributions in currencies and incurs
expenses in currencies other than its functional
currency, the Swiss franc, and is exposed to foreign
currency exchange risk arising from fluctuations ofcurrency exchange rates. The mechanism for
managing foreign currency exchange risk in relation to
PCT international filing fees is discussed in detail in
the financial statement discussion and analysis which
precedesthese
financialstatements.
The
Organization is also exposed to exchange risk arisingfrom the currency differences between amounts
payable to International Searching Authorities
pursuant to the Regulations under the Patent
Cooperation Treaty and amounts received by national
patent offices for international search fees fromapplicants for international patents.

Currency exchange rate sensitivity analysis
The currency exchange rate sensitivity analysis isbased on reasonable shifts in exchange rates. A rateof 10.0 per cent has been applied to financial assets
and financial liabilities held in currencies other thanthe Swiss franc to summarize the effect on surplus in
the tables below:

December 31, 2016
Original currency:

USD

JPY

EUR

(in thousands of Swiss francs)
Total in the financial statem ents:
Financial assets
Cash and cash equivalents

2,939

115

8,238

PCT debtors

21,770

9,709

7,539

USA taxes reimbursable

4,123

-

-

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

2,883

982

1,578

Total effect on surplus of -ve m ovem ents

-2,883-982-1,578Financial liabilities
PCT current accounts

-

627

89

Accounts payable

625

11

205

Transfer payable

1,024

-

214

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

165

64

51

Total effect on surplus of -ve m ovem ents

-165

-64

-51

Market risk

As previously noted, In January 2017 the Organization
took the decision to repay in full the remaining balanceof the BCG/BCV loan (see Note 28: Events After theReporting Date). The Organization does not currently
use financial instruments to hedge interest rate risk.
The interest rates and maturity profile on financial
instruments as at December 31, 2016 and December
31, 2015 are as follows:

Market risk is the risk of changes in market prices,such as interest rates, affecting the Organization’s
income or the value of its financial instrument
holdings. Given prevailing interest rates at the current
time, the Organization has included no investment
revenue in its budget for 2016/17 Program andBudget.

67

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Interest rate atreporting date
Decem ber 31, 2016

1 year or
less%

Financial assets
Funds invested w ith AFF (including restricted balancesand strategic cash)

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

0.000

375,011--375,011

Term deposits w ith Raiffeissen (including strategic cash)

0.010

20,000--20,000

Notice accounts w ith Société Générale

0.600

4,574

-

-

4,574

Notice accounts w ith UBS (including restricted balances)

0.000

21,598--21,598

2.943

3,900

15,60051,00070,5001 year or
less

1-5 years

Later than 5
years

Total

Financial liabilities
BCG/BCV New Building loan

Interest rate atreporting date
Decem ber 31, 2015
Financial assets
Funds invested w ith AFF (including restricted balancesand strategic cash)%(in thousands of Swiss francs)

0.000

375,011--375,011

Short-term investments w ith Credit Suisse

0.000

47,000--47,000

Notice accounts w ith UBS (including restricted balances)

0.000

21,598--21,5982.802

19,90015,60054,90090,400Financial liabilities
BCG/BCV New Building loan

Interest rate sensitivity analysis
If the average interest rate during the year had been
50 basis points higher or lower, the interest income orinterest expense would have been affected as follows:
Increase (+) / decrease (-)
in basis points

Effect on surplus(in thousands of Swiss francs)

2016
Financial assets
Funds invested w ith AFF

Term deposits w ith Raiffeissen

Notice accounts w ith Société Générale

Notice accounts w ith UBS

68

+50

1,875

-50

-1,875

+50

91

-50

-91

+50

5

-50

-5

+50

108

-50

-108

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

NOTE 27: EXCHANGE GAIN AND LOSS

Gain

Loss

Net Impact
2016

Net impact
2015(in thousands of Swiss francs)
PCT system fees gain/(loss)
Accounts receivable
PCT fees received
PCT International Searching Authority
Total PCT system fees realized gain/(loss)
PCT bank accounts
PCT current accounts and debtors
Total PCT system fees unrealized gain/(loss)
Total PCT system fees gain/(loss)

217
5,571
799
6,587
603
577
1,180
7,767

-97
-407
-849
-1,353-1,146-156-1,302-2,655

120
5,164
-50
5,234
-543
421
-122
5,112

31
-686
4,427
3,772
-1,765
989
-776
2,996

95
61
156

-78
-84
-162

17
-23
-6

-24
23
-1

Other gain/(loss)
Accounts payable
Total other realized gain/(loss)
Bank accounts
Special Account bank accounts
Other assets and liabilities
Total other unrealized gain/(loss)
Total other gain/(loss)

1,834
1,834
1,242
9
4,659
5,910
7,744

-1,666-1,666-1,345-10-4,190-5,545-7,211

168
168
-103
-1
469
365
533

495
495
457
-42
-94
321
816

Total exchange gain/(loss)

15,667-10,028

5,639

3,811

The Organization realizes exchange gains and losseson accounts payable and accounts receivabletransactions incurred in currencies other than Swiss
francs based on the exchange rate in effect on thedate of the transaction. Exchange gains and losses
are realized on international filing fees and handlingfees under the PCT where these are received by theOrganization in currencies other than Swiss francs,
and on payments made to ISAs under the PCT which
are valued in the currency of the ISA but collected by
WIPO in Swiss francs or by the national receiving

office in its local currency. In addition, unrealizedexchange gains and losses relating to the revaluationof bank accounts and other monetary assets andliabilities into Swiss francs at the exchange rate ineffect on the reporting date are recognized on thefinancial statements. The net effect of all exchange
gains and losses of 5.6 million Swiss francs gain in2016 (3.8 million Swiss francs gain in 2015) isrecognized within revenue in the Statement of
Financial Performance, principally within the line PCT
system fees.

Arbitration and Mediation gain/(loss)
Arbitration and Mediation bank accounts
Arbitration and Mediation other assets and liabilities
Total Arbitration and Mediation unrealized gain/(loss)

69

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

The WIPO contribution-financed Unions have been
consolidated for presentation purposes.
These
include the Paris, Berne, Locarno, Nice, Vienna and
IPC Unions along with the functions covered by the
WIPO Convention. The Patent Cooperation Treaty
Union, Madrid Union, Hague Union and Lisbon Union
are each governed by an Assembly which meetsannually to adopt a budget and take such otheractions as may be appropriate under the relevant
treaties.

NOTE 28: EVENTS AFTER THE
REPORTING DATEWIPO’s reporting date is December 31, 2016 and its
financial statements were authorized for issue on
April 28, 2017.
In January 2017, the Organization took the decision to
repay
in
full
the
remainingbalanceof
70.5 million Swiss francs of its BCG/BCV loan which
had been used to finance part of the cost of
construction of the New Building. The remaining
tranches of the loan had been scheduled to mature in2019 and 2025. The early repayment of the loanbalance was made on January 26, 2017, and as aresult WIPO incurred a penalty charge of
11.6 million Swiss francs, calculated by reference tothe present value of all outstanding interest due on theloan. Following the loan repayment, the Organization’s
cash and cash equivalents were therefore reduced by
82.1 million Swiss francs, while current and noncurrent
liabilities
werereducedby
3.9 million Swiss francs and 66.6 million Swiss francs
respectively. The early repayment penalty isrecognized in full in 2017 as a finance cost in thestatement of financial performance.

WIPO’s assets and liabilities, other than the reserves
representing net assets, are owned by or are theresponsibility of the entire Organization and not assets
or liabilities of individual Unions or segments. The
assets and liabilities generally support a wide range ofservice delivery activities across multiple Unions(segments). The only exception is the investment
property in Meyrin which is owned by the Madrid
Union. Therefore, individual assets and liabilities will
not be reflected in the disclosure of information for
individual segments or Unions. Only the net assets orreserves, including the Reserves and Working CapitalFunds are shown by individual segment.
Most revenue (contributions, fees, publications) is
accounted for by Union in WIPO’s accounts. Revenue
from interest earnings has been allocated among theUnions based upon total cash reserves and current
revenue in 2016. Expenses are accounted for byprogram and then re-allocated to the various Unions
based upon a methodology accepted by the WIPO
General Assembly as part of the adoption of WIPO’s
2016/17 Program and Budget.

The decision to repay the loan was taken inaccordance with the objective of capital preservation,
as stipulated in WIPO’s Policy on Investments. Given
existing interest rate conditions, including negativeinterest rates for Swiss franc deposits, there is a cost
avoidance benefit from repaying the loan whencompared to investment of the funds in a risk-free
Swiss franc asset of comparable tenor. In repaying theloan the Organization also achieved an immediatesaving of 0.3 million Swiss francs (calculated bycomparing interest which would have been payable
over the remaining life of the loan as against thepenalty charge paid in 2017).

A separate segment has been established for Special
Accounts,
representing voluntary
contributions
administered by WIPO on behalf of individual donors
to carry out programs related to WIPO’s mandate.
Revenue and expenses related to Special Accounts
are accounted for separately in the financial
accounting system.

NOTE 29: SEGMENT REPORTING

The only inter-segment charge represents the costs ofprogram support incurred by the Unions in support ofSpecial Accounts. Program support costs are charged
to the Special Accounts based on a percentage of
total direct expenditure specified in the agreementwith the donor making the voluntary contribution.

Segment reporting is presented in a format which
represents the various Unions as the segments thatmake up WIPO. The Unions were created by thevarious treaties administered by WIPO.

70

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

LisbonTotal(in thousands of Swiss francs)
REVENUE
Contributions
Fees

17,357

-

-

-

392

10,332

28,081-

296,369

60,116

5,072

25

-

361,582

Interest

1

13

7

-

-

-

21

Publications

27

338

61

-

-

-

426

Other/miscellaneous

653

653

653

653

653

8

3,273

Arbitration and Mediation

86

1,040

492

20

3

-

1,641

18,124298,413

61,329

5,745

1,073

10,340395,024

Sub-total revenue on budgetary basis
Miscellaneous revenue projects financed from reserves
IPSAS adjustments to revenue
TOTAL REVENUE

1

1

1

1

-

-

4

-10

-5,552

-143

-111

-

-1,499-7,315

18,115292,862

61,187

5,635

1,073

8,841

387,713

190

2,312

79

-

-

-

2,581

459

-

1,490

344

-

-

2,293

5,701

1,509

138

-

-

-

7,348

3,045

-

-

-

-

-

3,045

-

93,861----

93,861

EXPENSES
1
2
3
4

Patent Law
Trademarks, Industrial Designs & Geographical
Indications
Copyright and Related Rights
Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

5

The PCT System

6

Madrid System--

25,556

1,145

38

-

26,739

7

WIPO Arbitration and Mediation Center

264

3,219

1,523

61

10

-

5,077

8

Development Agenda Coordination
Africa, Arab, Asia and the Pacific, Latin America andthe Caribbean Countries, Least Developed Countries

48

1,462

135

-

-

-

1,645

414

12,589

1,157

-

-

-

14,160910Transition and Developed Countries

108

3,280

302

-

-

-

3,690

11

The WIPO Academy

168

5,126

471

-

-

-

5,765

12

International Classifications and Standards

218

2,744

125

31

-

-

3,118

13

Global Databases

-

2,386

732

38

-

-

3,156

14

Services for Access to Information and Know ledge

52

2,543

522

49

3

-

3,169

15

Business Solutions for IP Offices

198

6,008

552

-

-

-

6,758

16

Economics and Statistics

80

2,437

224

-

-

-

2,741

17

Building Respect for IP

56

1,694

155

-

-

-

1,905

18

IP and Global Challenges

84

2,553

234

-

-

-

2,871

19

Communications

225

6,834

628

-

-

-

7,687

20

External Relations, Partnerships and External Offices

151

4,603

423

-

-

-

5,177

21

Executive Management

422

6,920

1,741

305

41

-

9,429

22

Program and Resource Management

580

9,811

3,488

575

57

-

14,511

23

Human Resources Management and Development

800

13,116

3,299

579

79

-

17,87324

General Support Services

920

15,081

3,827

665

91

-

20,584

25

Information and Communication Technology

828

15,873

4,083

1,003

82

-

21,86926

Internal Oversight

92

1,504

378

66

9

-

2,049

27

Conference and Language Services

789

12,922

3,250

570

78

-

17,60928

Information Assurance, Safety and Security

357

5,846

1,471

258

35

-

7,967

30

SMEs and Entrepreneurship Support

84

2,540

233

-

-

-

2,857

31

The Hague System

-

-

-

4,006

-

-

4,006

32

Lisbon System

-

-

-

-

636

-

636

16,333

238,773

56,216

9,695

1,159

-

322,176

Projects financed from reserves

276

2,952

1,251

195

3

IPSAS adjustments to projects financed from reserves

-84

-716

-274

-4

-

-

-1,078Sub-total expenses on budgetary basis
Financed from reserves:

Special Accounts

4,677

-

-

-

-

-

9,792

9,792

IPSAS adjustments to expense

1,049

15,340

4,011

623

74

-951

20,146TOTAL EXPENSES

17,574

256,349

61,204

10,509

1,236

8,841

355,713

Reserves and Working Capital Funds as at
Decem ber 31, 2015

24,918

212,692

55,167-12,699-1,015-

279,063--2,000-----2,000

113

1,645

387

67

8

-

2,220

1,516

56,6893,863-4,144-89

548

58,383Return of Working Capital Funds
Revaluation of land
2016 result on budgetary basis
IPSAS adjustments to result
Reserves and Working Capital Funds as at
Decem ber 31, 2016

-975

-20,176-3,880

-730

-74

-548

-26,383

25,572

248,850

55,537-17,506-1,170-311,283

Note; The Madrid Union has assumed the financing of the Hague Union’s contribution of 3 million Swiss francs to the IT Modernization Program of the
Madrid and Hague international registration systems. The amount will be reimbursed by the Hague Union to the Madrid Union as soon as the level ofreserves of the Hague Union Reserve Fund so allows.

71

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

ANNEX I - STATEMENT OF FINANCIAL POSITION BY SOURCE OF FUNDING [UNAUDITED]
as at December 31, 2016
(in thousands of Swiss francs)
Program and Budget
December 31,
2016
ASSETS
Current Assets
Cash and cash equivalents
Investments
Contributions receivables
Exchange transactions receivables
Inventories
Other current assets

December 31,
2015

Projects financed fromreserves

Special Accounts
December 31,
2016

December 31,
2015

December 31,
2016

IPSAS Adjustm ents

December 31,
2015

December 31,
2016

Consolidated

December 31,
2015

December 31,
2016

December 31,
2015

520,7192,240
14,888
194,706
732,553

467,623
1,892
16,176
189,646
675,337

21,59815-6,866
14,747

21,929136-7,71814,347

232-187,840-187,608

26-181,928-181,902-12,500
12,500-757
43,9291,520
44,692-56-666
36,2301,597
37,105529,817
12,5001,483
59,064
1,520
604,384

489,496

3,395
25,414
5,589
9,057
43,455

3,395
25,415
5,733
9,245
43,788--137,419
137,419

137,419
137,419

1,609
2,815
27,813
212,656-5,3642,756-314
241,971

2,134
2,815
28,981
217,684-5,4355,030-311
250,898

1,609
6,210
27,813
375,489
225
2,756
8,743
422,845

2,134
6,210
28,981
380,518
298
5,030
8,934
432,105

776,008

719,125

14,747

14,347-50,189-44,483

286,663

288,003

1,027,229

976,992

15,880-23,616
61,03447,975
5,258
6,989
62,676
176,196

26,190-22,062
66,20133,933
21,258817
56,093
182,43021
296
13,882
14,19973
328
14,843
15,244-5,138-55-5,193-4,105-55-4,16052,23823,840207,725-157
283,646-56
44,82017,959200,605-322
263,006

10,763
28,86384,874
269,582
5,258
6,989
62,519468,848

22,102
23,031
84,160249,381
21,258817
55,771
456,520

108,891
83,462
192,353

101,023
88,721
189,744

-

-

-

-

50,676
4,069
54,74547,464
4,201
51,665

159,567
83,462
4,069
247,098

148,487
88,721
4,201
241,409

TOTAL LIABILITIES

368,549

372,174

14,19915,244-5,193-4,160338,391

314,671

715,946697,929

Accumulated Surpluses
Special Projects Reserve
Revaluation Reserve Surplus
Working Capital Funds
NET ASSETS

401,117
6,342
407,459

338,609
8,342
346,951

548
548

-897
-897

-61,782
16,786-44,996-64,053
23,730-40,323-68,994
17,266-51,728-41,714
15,046-26,668

270,889
16,786
17,266
6,342
311,283

231,945
23,73015,046
8,342
279,063

Non-Current Assets
Equipment
Investment property
Intangible assets
Land and buildings
Contributions receivables
Exchange transactions receivables
Other non-current assets

TOTAL ASSETSLIABILITIESCurrent Liabilities
Payables and accruals
Employee benefits
Transfers payable
Advance receipts
Borrow ings
Provisions
Other current liabilities
Non-Current Liabilities
Employee benefits
Borrow ings
Advance receipts

72

1,226
52,5681,597
544,887

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

ANNEX II - STATEMENT OF FINANCIAL PERFORMANCE BY SOURCE OF FUNDING [UNAUDITED]For the year ended December 31, 2016
(in thousands of Swiss francs)
Program and Budget

2016

Special Accounts

2015

2016

2015

Projects financed fromreserves

IPSAS Adjustm ents

2016

2016

2015

Consolidated

2015

2016

2015

REVENUE
Assessed contributions

17,357

17,359

-

-

-

-

-20

442

17,337

17,801

Voluntary contributions

392-

10,332

9,427

-

-

-548

828

10,176

10,255

Publications revenue

426

487

-

-

-

-

-

-

426

487

Investment revenue

21

75

-

-

-

-

-

1,425

21

1,500

PCT system

296,369

302,096

-

-

-

-

-5,650-26,704

290,719

275,392

Madrid system

60,11665,873

-

-

-

-

-536

2,052

59,58067,925

Hague system

5,072

4,043

-

-

-

-

-116

-112

4,956

3,931

Lisbon system

25

17

-

-

-

-

-

-

25

17

361,582

372,029

-

-

-

-

-6,302-24,764

355,280

347,265

1,641

1,508

-

-

-

-

-

-

1,641

1,508

Exchange gains

529

847

-1

-49

4

18

-

-

532

816

Program support charges

951

993

-

-

-

-

-951

-993

-

-

1,785

3,744

9

-

-

-

506

-1,433

2,300

2,311

384,684

397,042

10,340

9,378

4

18

-7,315-24,495

387,713

381,943

216,266

Fees

Sub-total fees
Arbitration and Mediation

Other/miscellaneous revenue
TOTAL REVENUE
EXPENSES
Personnel expenditure

211,022

215,400

2,351

2,566

624

1,153

10,356-2,853

224,353

Internships and WIPO fellow ships

3,261

3,151

-

-

-

-

-

-

3,261

3,151

Travel, training and grants

12,413

13,775

3,395

3,541

1

78

1

-

15,81017,394Contractual services

69,29567,399

2,925

2,977

2,340

1,813

-162

-99

74,39872,090Operating expenses

21,59625,639

154

152

1,710

1,696

-1,514-6,287

21,946

21,200

Supplies and materials

2,020

3,527

14

42

2

61

3

-47

2,039

3,583

Furniture and equipment

261

1,812

-

-

-

332

-89

-1,317172

827

Construction

-

-

-

-

-

-

-

-

-

-

Depreciation and amortization

-

-

-

-

-

-

11,424

11,055

11,424

11,055

2,308

3,103

2

4

-

-

-

-

2,310

3,107

-

-

951

993

-

-

-951

-993

-

-

TOTAL EXPENSES

322,176

333,806

9,792

10,275

4,677

5,133

19,068-541

355,713348,673

SURPLUS/(DEFICIT) FOR THE YEAR

62,50863,236548-897-4,673-5,115-26,383-23,954

32,00033,270Finance costs
Program support costs73

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

ANNEX III
SPECIAL ACCOUNTS BY DONOR CONTRIBUTIONS(in Swiss francs)
Reim bursem ents
to donors

Foreign exchange(gain)/loss
absorbed by
WIPO

40.00

-

-

10,774.76

99,483.76--

138,023.21--

1,163,701.38-1,059.60-22,252.54

252,586.07--

14,733.95

128,072.20--

110,242.45-

226,480.92--

101,335.71

-

40.96

-

-

29,002.10

40.96

-

40.96

-

-

53,970.66-

29,772.91

2,084.05

31,856.96

20,211.92-907.11---

10,040.00

1,305.20

11,345.20--

3,014.89-54.87-289,323.13

174,632.86

482,459.51
6,408.18

62,726.90
21,724.95

545,186.41
202,765.99

90,142.24-

704,634.12

140,180.00--

56,509.50-

55,344.65

3,874.10

59,218.75--

237,245.39

-

-

-

-

-

72,126.59

9,376.45

81,503.04--

715,095.18

8,940.16

64,608.32--

64,608.32

58,890.80

1,318.87

7,225.20

67,434.87--

6,113.61

1,651,639.58

1,600,000.00--366.05

1,599,633.95

235,549.35

1,259,821.25

193,234.30

1,688,604.90--

1,562,668.63

344,934.94

468,646.00-

326.54

468,972.54

245,709.92

225,292.64

59,714.64

530,717.20--

283,190.28

4,969,999.26

3,830,000.00-

309.86

3,830,309.86

899,267.86

2,576,871.26

443,977.40

3,920,116.52--

4,880,192.60

276,309.48

5,746.00--

5,746.00

123,069.70

40.00

14,773.10

137,882.80--

144,172.68

144,425.61

98,765.43--

98,765.43-

25,936.66

1,815.60

27,752.26--

215,438.78

WPORT

64,582.62--

847.93847.93

-

40.68

5.25

45.93

64,364.25-1,020.37-

Portugal CHF

WPTCH

-

64,364.25--

64,364.25

-

-

-

-

-

-

64,364.25

Republic of Korea/Copyright

WKRCR

529,651.76

336,896.01--44.24

336,851.77

60,370.10

302,466.59-

362,836.69--

503,666.84

Republic of Korea/Copyright/Professional Officers

WKRPO

315,140.56

156,573.00--

156,573.00

134,772.10

40.00

16,177.45

150,989.55--

320,724.01

Republic of Korea/Intellectual Property

WKIPO

1,053,391.46

710,385.21-

140.92

710,526.13

51,271.45

512,192.38-

563,463.83--

1,200,453.76

Republic of Korea/Professional Officers

WKRJP

730,582.51

663,876.00--

663,876.00

368,037.31

40.00

44,169.30

412,246.61--

982,211.90

Republic of Korea/Education

WKRED

317,318.46

334,574.80

-

-7.84

334,566.96-

141,051.69

7,053.10

148,104.79--

503,780.63

Republic of Korea/Building Respect IP

WKRBR

50,475.05

126,336.01

-

-0.09

126,335.92-

112,820.52

5,641.05

118,461.57--

58,349.40

Spain (CHF)
WESCH
Trusted Intermediary Global Accessible Resources pilot
WTIGA
project

107,220.63

165,276.33

-

0.10

165,276.43-

159,682.26

20,758.70

180,440.96--

92,056.10

2,827.37

-

-

-

-

-

1,917.45

249.25

2,166.70--

660.67

United Nations Office for Partnerships (UNOP) / UNFIP

148,623.82

49,200.00---118.75

49,200.00

3,718.37
20,554.92

297.45-45,184.18

20,554.92---118.75-

4,015.82

Uruguay (CHF)

WUIP1
WUYCH
WUSC1

-

98,400.00--85.5698,314.44-

31,422.10

4,096.00

35,518.10--

127,950.15

United States of America/ USPTO Creative industries
Miscellaneous closed funds-in-trust

ZZ

-

-

-

-2.21

-2.21

-

-

-

-

-

2.21

-

13,852,561.96

10,889,204.13--618.71

10,888,585.42

2,351,571.45

6,481,818.35

951,061.04

9,784,450.84

526,788.24-1,925.27

14,427,983.03

Incom e 2016

Balance as ofDecem ber 31,
2015

Expenditure 2016

Fund-in-Trust
Donor

Fund code

Accredited indigenous and local communities

W_IGC

663.20

-

-

-

-

-

40.00

-

Australia

WAUST

110,218.64

-

-

39.88

39.88

-

9,539.76

1,235.00

Australia

WAUS2

-

1,301,667.88

-

56.71

1,301,724.59-

122,150.96

15,872.25

Brazil (CHF)

WBRES

230,333.53

-

-

-

-

-

-21,192.94

Brazil South

238,314.65

-

-

-

-

-

113,338.25

China SIPO

WBRST
WCNSP

-

327,821.39

-

-4.76

327,816.63-

226,480.92

Costa Rica

WCORI

29,868.24---825.18-825.18-

40.96

El Salvador

WELSA

55,348.87---1,337.25-1,337.25-

European Union (Pakistan Project)

WPAKI

52,469.84--

506.15506.15Finland (CHF)

WFICH

14,360.09---

France/Industrial Property
Germany/ Junior Professional Officers

WFRIP
WDEJP

960,497.40
407,871.37

289,378.00
140,180.00-

Ibero-American Program of Industrial Property

WIBER

239,954.64

56,509.50

Italy/Intellectual Property

WITIP

796,598.22

Italy/Junior Professional Officers

WITJP

Japan/Africa - LDCs

WJPAF

Japan/Copyright

WJPCR

Japan/Industrial Property

WJPIP

Japan/Junior Professional Officers

WJPOJ

MexicoWMEXIPortugal

TOTAL

Funds received

Interest

Exch. Rate diffStaff
expenditure

Total income

Other direct
expenditure

Administrative
support costs

Total
expenditure

Balance as ofDecem ber 31,
2016623.20255,143.14

62,796.34

This schedule is prepared in accordance with the requirements of donor reporting under UNSAS which does not include expenditure accruals. IPSAS adjustments to the closing balances(December 31, 2016) are not included in this schedule but are included in the figures shown in Note 15 Advance Receipts (see line ‘Non-exchange deferred revenue’).

74

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2016

ANNEX IV
WIPO EX Gratia PAYMENTS
Financial Regulation 5.10 states that a summary statement of ex gratia payments for the calendar year shall be included in
the annual financial statements of the Organization.


In February 2016 a payment for the amount of 10,000 Swiss francs was made to a staff member of the Organization inrecognition of the consequences of an inadvertent miscommunication concerning his early retirement;

In July 2016 a payment for the amount of 4,937 Swiss francs was made to a staff member of the Organization ascompensation for financial losses incurred as a result of his reassignment to a WIPO External Office.

75

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