Annual financial reportand financial statements

Year to December 31, 2015

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2015

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

CONTENTS
Page
Number
ANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

3
3
3

INDEPENDENT AUDITOR’S REPORT24

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: Accounts Receivable, Advances and Prepayments
Note 5: Inventories
Note 6: Equipment
Note 7: Investment Property
Note 8: Intangible Assets
Note 9: Land and Buildings
Note 10: Other Non-Current Assets
Note 11: Accounts Payable
Note 12: Employee Benefits
Note 13: Transfers Payable
Note 14: Advance Receipts
Note 15: Borrowings
Note 16: Provisions
Note 17: Other Liabilities
Note 18: Contingent Assets and Liabilities
Note 19: Leases
Note 20: Related Party Transactions
Note 21: Reserves and Fund Balance
Note 22: Reconciliation of Statement of Budgetary Comparison and Statement of Financial
Performance
Note 23: Revenue
Note 24: Expenses
Note 25: Financial Instruments
Note 26: Exchange Gain and Loss
Note 27: Events After the Reporting Date
Note 28: Segment Reporting

26
26
27
28
29
30
34
34
35
41
43
44
45
46
47
48
51
52
52
58
60
61
62
62
63
63
64
65

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 – Ex Gratia Payments

78
78
79
80
81

1

66
69
70
71
75
76
76

2

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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 and the Coordination Committee. The
General Assembly consists of States party to the
WIPO Convention which are members of any of theUnions administered by WIPO. The Coordination
Committee consists of elected members of the
Executive Committees of the Paris or the Berne
Unions, one-fourth of the States party to the WIPO
Convention which are not members of any of theUnions, 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, 2015, are submitted to the Assembliesof the Member States of WIPO in accordance with
Regulation 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 the2015 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 Program 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, 2015. 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 24 to 75).

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 2015,
fees from these activities represented 90.9 per cent of
the Organization’s total revenue, with PCT system
fees alone representing 72.1 per cent.
The driver for revenue from these fee-paid services is
the international 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 2014 show thatworldwide patent and trademark applications havegrown each year since 2010. However worldwide
industrial design applications fell in 2014 after morethan twenty years of growth.

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 188
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

Other external factors which may influence theOrganization’s revenue from these services include

3

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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.

reserves 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.
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 Program andBudget Committee is informed of any modification of
the Financial Rules. The Financial Rules govern all
the financial management activities of theOrganization. Authority and responsibility for the
implementation of the Financial Regulations andRules is delegated by the Director General to theController.

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 2014/15 biennium wasapproved by the Assemblies of the Member States of
WIPO on December 12, 2013. The Program andBudget provides the planning for the biennium within
the overall 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 wasrevised 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 of4

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Overview of the Financial Statements

Financial Statement Highlights

The financial statements prepared in accordance withIPSAS consist of:

The 2015 WIPO financial statements prepared inaccordance with IPSAS show a surplus for the year of
33.3 million Swiss francs, and a corresponding
increase in net assets from 245.8 million Swiss francs
in 2014 to 279.1 million Swiss francs as at December
31, 2015.

A Statement of Financial Position which 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 2015 surplus of 33.3 million Swiss francs can becompared to a surplus of 37.0 million Swiss francs in2014. Total revenue in 2015 was up by 11.7 million
Swiss francs on the 2014 figure, due principally to anincrease of 12.8 million Swiss francs in Madrid system
fees revenue. Total expenses rose by 15.4 million
Swiss francs compared to 2014. Although personnel
expenditure remained relatively stable compared tothe prior year, nearly all other categories of expense
increased, most notably contractual services whichwere 8.5 million Swiss francs higher in 2015 than in2014.

A Statement of Financial Performance whichmeasures the net surplus or deficit (the difference
between total revenue and total expenses) for theyear. This statement provides information on the
Organization’s sources of revenue, and the cost of its
activities. The annual surplus or deficit is presented ona full accrual basis of accounting, recognizing revenue
in the period it is earned and expenses when incurred,regardless of when the associated cash is received or
paid;

WIPO’s total assets increased from 969.4 million
Swiss francs as at December 31, 2014, to 977.0
million Swiss francs as at December 31, 2015. Cashand cash equivalents totaled 489.5 million Swiss
francs at the end of 2015 (50.1 per cent of total
assets). This represents an increase of 15.0 million
Swiss francs compared to the prior year, which wasachieved despite the Organization making a lump sum
repayment of 24.0 million Swiss francs in November
2015 against one of its loans. WIPO maintains
significant investment in fixed assets, including land,buildings, investment property, intangible assets andequipment with a total net book value of 417.8 million
Swiss francs (42.8 per cent of total assets). 2015 saw
continued investment in fixed assets, including
additions of 6.2 million Swiss francs to buildings andconstructions. Although the New Conference Hall
(NCH) building was brought into use in September
2014, during 2015 some remaining outstanding areasof work in and around the NCH were completed. The
Security Construction project was also completed
during 2015, including the New Access Centre, theSecurity Operations Centre and the Security
Perimeter.

A Statement of Changes in Net Assets which identifies
the change 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;
A Statement of Cash Flow which presents the
movements of cash during the year resulting fromoperating, investing and financing activities. This
statement provides information on how cash has beenraised and used during the year, including borrowing
and repayment 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;
A Statement of Comparison of Budget and Actual
Amounts which 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;

The principal liabilities of the Organization as at
December 31, 2015 are payables and advancereceipts of 359.8 million Swiss francs (51.5 per cent of
total liabilities) and employee benefit liabilities of 171.5
million Swiss francs (24.6 per cent of total liabilities).
Borrowings totaled 110.0 million Swiss francs at theend of 2015, compared to 139.2 million Swiss francs
at the end of 2014. Along with the regular annual loan
repayments, as noted above in 2015 the Organization

Notes to the Financial Statements which 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

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

also made a lump sum loan repayment of 24.0 million
Swiss francs.

IPSAS adjustments) was a surplus of 63.2 million
Swiss francs. The 2015 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

The Organization’s net assets, consisting of its
Reserves and Working Capital Funds, totaled 279.1
million Swiss francs at the end of 2015. WIPO’s Policy
on Reserves was revised during 2015, and thechanges included the creation of a separate reserve
entitled Special Projects Reserve. This reserve is now
presented separately in the financial statements. The
Special Projects Reserve contains the appropriations
to projects financed from reserves, less accumulated
expenditure. Its balance of 23.7 million Swiss francs
as at December 31, 2015, reflects amounts to be used
for projects already approved.

Financial Performance
The Organization’s results for 2015 showed a surplus
for the year of 33.3 million Swiss francs, with total
revenue of 381.9 million Swiss francs and total
expenses of 348.6 million Swiss francs. This can becompared to a surplus of 37.0 million Swiss francs in2014, with total revenue of 370.2 million Swiss francs
and total expenses of 333.2 million Swiss francs.

Financial Performance
The Organization’s results for 2015 showed a surplus
for the year of 33.3 million Swiss francs, with total
revenue of 381.9 million Swiss francs and total
expenses of 348.6 million Swiss francs. This can becompared to a surplus of 37.0 million Swiss francs in2014, with total revenue of 370.2 million Swiss francs
and total expenses of 333.2 million Swiss francs.

The Program and Budget result for 2015 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 63.2 million
Swiss francs. The 2015 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:The Program and Budget result for 2015 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 63.2 million Swiss francs. The 2015 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 with IPSAS:

Summary of financial performance by source of funding
Program andBudgetSpecial
Accounts

2015

2015

Projects
Financed from
Reserves
2015

IPSAS
Adjustm ents

Total

Total

2015

2015

2014

(in millions of Swiss francs)
Total revenue

397.0

9.4

-

-24.5

381.9

370.2

Total expenses

333.8

10.3

5.1

-0.6

348.6

333.2

Net surplus/(deficit)

63.2

-0.9

-5.1

-23.9

33.3

37.0

6

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

The chart below summarizes the principal differences between the Program and Budget surplus of 63.2 million Swiss
francs, and the surplus for the whole Organization prepared on an IPSAS basis of 33.3 million Swiss francs:

Movement from budget result to IPSAS result 2015

63.2

+24.4
-0.9

+0.9

millions of Swiss francs

-5.1

+7.8

+1.7

33.3

-26.1
+2.9
-11.1

BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financed fromreserves

Revenuerecognition
underSpecial
Accounts

Deferral ofrevenue

Entity differences

Changes in Capitalization Other IPSAS
employeeofadjustments
benefitconstruction,
liabilities
equipment,
softw areAccounting basis differences



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 (deficit of 0.9 million Swiss francs) and
Projects financed from reserves (deficit of 5.1
million Swiss francs) represent ‘entity differences’
between the budget result and the surplus per the
IPSAS financial statements.
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 deficit of 23.9 million Swiss francs:


Depreciation
andamortization

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 anincrease in the result for the year of 0.9
million Swiss francs.

7

IPSAS
RESULT PER
FINANCIALSTATEMENTS

Full accrualbasis

In applying IPSAS, revenue from fees isdeferred until it is deemed to have been
earned, which in the case of international
applications is when final publication takes
place. For PCT applications, a receivable
is also recognized where an application
has been filed but no fee has been
received by the Organization. In addition,
WIPO also recognizes deferred revenue
relating to the financing of security
constructions by the Foundation for
Buildings for International Organizations(FIPOI). The total net impact of theseadjustments is a reduction in revenue of
26.1 million Swiss francs. This isprincipally due to an increase in thebalance of deferred revenue from fees
(PCT, Madrid and Hague systems), which
moved from 203.7 million Swiss francs as
at December 31, 2014 to 219.2 million
Swiss francs as at December 31, 2015.
Over the same period, receivables from
PCT fees fell from 46.7 million Swiss
francs to 40.9 million Swiss francs.

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

The result for 2015 on an IPSAS basis
includes the depreciation expense ofbuildings and equipment and theamortization expense of intangible assets,
as the cost of these assets is spread overtheir useful lives. The total cost ofdepreciation and amortization for the year
was 11.1 million Swiss francs.



IPSAS requires that employee benefits
earned by staff but not yet paid berecognizedasliabilities
oftheOrganization. The IPSAS adjustments
bring the total liabilities recognized in thefinancial statements into line with the
IPSAS compliant calculations of theseliabilities, including those prepared byexternal actuaries. Employee benefit
liabilities recognized under IPSAS (AfterService Health Insurance – ASHI,
repatriation grant and travel, accumulated
annual leave, home leave, overtime andthe Closed Pension Fund) increased by
10.3 million Swiss francs during 2015.
Under the Program and Budget, a 6.0 per
cent charge is applied to the cost of posts
for the funding of the provision for afterservice employee benefits. In 2015, thischarge generated a provision of 6.1 million
Swiss francs, following deductions forafter-service employee payments during
the period (principally the Organization’scontribution for the ASHI premiums ofretirees). At the end of 2015 a further
charge of 2.0 per cent was applied to thecost of posts for the biennium 2014/15,

generating an additional provision of 7.1
million Swiss francs. As a result, the
IPSAS adjustment required to bring
employee benefit liabilities into line withIPSAS compliant calculations was 2.9
million Swiss francs, resulting in acorresponding decrease in expense.

8Under IPSAS, costs relating to theconstruction and improvement of buildings
are capitalized. This reduces the expense
for the year 2015 by 6.2 million Swiss
francs. Similarly, the acquisition of certain
equipment and software is capitalized
under IPSAS, further reducing the expense
for the year by 1.6 million Swiss francs.



Other IPSAS adjustments concern anincrease in the fair value of investment
property (resulting in revenue of 1.4 million
Swiss francs), a decrease in the allowanceforreceivablesfromassessedcontributions (resulting in revenue of 0.4
million Swiss francs) and a decrease ininventories (resulting in an expense of 0.1
million Swiss francs). The net impact ofthese adjustments is an increase in the
result for the year of 1.7 million Swiss
francs.

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Revenue Analysis
Composition of revenue 2015 on an IPSAS basis(in millions of Swiss francs)

2015 total revenue:
381.9m Swiss francs

381.9m Swiss francs
Madrid system fees were the second largest sourceof revenue during the year 2015, representing 17.8
per cent of total revenue. Madrid system fees
increased significantly by 23.2 per cent compared to2014. Hague system fees, Lisbon system fees,
assessed contributions, voluntary contributions andother revenue (investment, publications, arbitrationand mediation and other/miscellaneous revenue)
comprise the remaining 10.1 per cent of theOrganization’s total revenue. The table below
provides a summary of the changes by revenue
type compared to the prior year.

Total revenue of the Organization for 2015 was
381.9 million Swiss francs, representing an increaseof 3.2 per cent compared to the 2014 total revenueof 370.2 million Swiss francs. The largest source ofrevenue during 2015 was PCT system fees,
accounting for 72.1 per cent of total revenue,
although revenue from PCT system fees fell by 1.1
per cent compared to 2014.

9

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Change in revenue 2014 – 2015
2015

2014

Net Change(in millions of Swiss francs)

Net Change%

Revenue
Assessed contributions
Voluntary contributions

17.8

17.9

-0.1

-0.6

10.3

8.9

1.4

15.7

Publications revenue

0.5

0.4

0.1

25.0

Investment revenue

1.5

1.6

-0.1

-6.3

PCT system fees

275.4

278.6

-3.2

-1.1

Madrid system fees

67.9

55.1

12.8

23.2

Hague system fees

3.9

3.2

0.7

21.9

347.2

336.9

10.3

3.1

1.5

1.5

-

-

Sub-total fees
Arbitration and Mediation
Other/miscellaneous revenue
Total revenue

3.1

3.0

0.1

3.3

381.9

370.2

11.7

3.2

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 2012-2015
2015

2014

2013

2012

(in millions of Swiss francs)
International filing fees

263.6

275.0

262.3

240.6

Payment regularization 2004-2013

4.7

-

-

-

Other fees

4.1

3.9

3.9

3.9

Exchange gain/(loss) on fees received

-0.7

-1.7

-6.0

7.5

Other exchange gain/(loss)

3.7

1.4

-2.7

-

Total PCT system fees

275.4

278.6

257.5

252.0

PCT revenue on an IPSAS basis fell by 1.1 per centcompared to 2014. In the IPSAS financial
statements, revenue for international filing fees from
PCT applications is recognized only on publicationof the application. Although the number of PCT
applications continued to increase in 2015 (with anestimated 217,600 applications in 2015 compared
to 214,314 in 2014), the number of publications ofapplications actually fell. In 2015 there were200,928 publications compared to 210,609 in 2014.
Two factors led to higher numbers of publications in2014. 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 of the
Leahy-Smith America Invents Act one year earlier.
As publication in most cases takes place six months
after the filing of a PCT international application,
this application surge in the first half of the year
resulted in a proportionally higher number ofpublications in 2014.
When looking at revenue from PCT international
filing fees as recognized in accordance with IPSAS,

10ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

the graph below demonstrates how annual revenue
has moved in line with the number of publishedapplications in the year. During 2015, WIPO also
recognized a payment regularization of 4.7 million
Swiss francs. As this relates to applications from as

far back as 2004 and does not concern applications
published during 2015, it is shown separately frominternational filing fees and has been excluded fromthe graphical analysis below so as not to distort the2015 revenue figure:

PCT - International filing fees and publications 2012-2015

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. 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 to the actual
amount in Swiss francs at the date of payment. In
the year 2015, the Organization incurred a net
exchange loss of 0.7 million Swiss francs on PCT
fees received (international filing fees and handlingfees). This loss concerned principally fees inJapanese yen (loss of 1.6 million Swiss francs) andeuro (loss of 1.4 million Swiss francs), offset by again of 2.6 million Swiss francs on fees received in
US dollar. In both 2014 and 2013, WIPO also
incurred a net exchange loss on fees received,

whereas in 2012 a net gain of 7.5 million Swiss was
registered:
Detail of exchange gain/(loss) on PCT fees
received 2012-2015
2015

2014

2013

2012

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

2.6

0.1

-1.5

Japanese yen

-1.6

-1.3

-4.9

4.2
1.8

Euro

-1.4

-0.4

0.7

-0.1

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

-0.3

-0.1

-0.3

1.6

-0.7

-1.7

-6.0

7.5

The equivalent amounts for fees in currencies otherthan the Swiss franc are established for each year
according to the exchange rates prevailing on thefirst Monday of October of the preceding year.
Equivalent amounts can be reset during the year if
the exchange rate between the other currency andthe Swiss franc is changed by 5.0 per cent or more
for more than four consecutive Fridays.

11

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

JPY – Comparison of equivalent amount rateand UNORE 2012-2015

Following the announcement on January 15, 2015
by the Swiss National Bank (SNB) that it was
discontinuing its policy of maintaining a minimum
exchange rate of 1.20 Swiss francs per euro, thevalue of the Swiss franc rose sharply, and all othercurrencies lost on average 15.0 per cent of theirvalue against the Swiss franc in the currency
markets. This led to initial exchange losses on PCT
fees received. However, following the establishmentof new equivalent amounts for a number ofcurrencies effective from April 1, 2015, and also thegradual appreciation of the US dollar and the euro
against the Swiss franc in the second half of theyear, the net exchange loss for 2015 on PCT fees
received was limited to 0.7 million Swiss francs.
The following tables show the difference between
the exchange rate used to establish the equivalentamounts and the UNORE over 2012-2015 for the
US dollar, Japanese yen and euro:

EUR – Comparison of equivalent amount rateand UNORE 2012-2015

USD – Comparison of equivalent amount rateand UNORE 2012-2015

Madrid system fees principally comprise basic fees received from applications for registrations or renewals andfees for subsequent designations:

Detail of Madrid system fees 2012-2015
2015

2014

2013

2012

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

56.7

46.0

45.9

42.7

5.5

4.7

4.5

4.0

Other fees

5.7

4.4

5.0

4.9

Total Madrid system fees

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:

12

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Madrid - basic fees and registrations/renewals 2012-2015

As noted, revenue from Madrid system fees
increased significantly by 23.2 per cent in 2015
compared to 2014. Madrid system registrations in2015 increased by 22.4 per cent, totaling 51,938
against 42,430 in 2014. Although Madrid
applications in 2015 grew by 2.9 per cent comparedto the prior year, the significant rise in registrations
was in large part a result of clearing up backlogs.
Renewals were also higher in 2015, totaling 28,501
as compared to 25,729 in the prior year.

Revenue from assessed contributions of 17.8
million Swiss francs in 2015 represents 4.7 per centof total revenue, while revenue from voluntary
contributions received under Special Accounts of
10.3 million Swiss francs in 2015 represents 2.7 percent of total revenue. Revenue from voluntary
contributions is recognized as work is performed
and expense incurred in line with the relevant
agreement.
Investment revenue totaled 1.5 million Swiss francs
in 2015. This figure is almost entirely comprised of a
1.4 million Swiss francs increase in valuation of theOrganization’s investment property, the Madrid
Union Building. Revenue from interest fell from 1.6
million Swiss francs in 2014 to 0.1 million Swiss
francs in 2015. The Organization continues to holdmost of its cash balances with the Swiss Federal
Finance Administration (AFF), and from February
2015 onwards the AFF introduced zero per centinterest rates to these deposit accounts. Arbitrationand mediation revenue of 1.5 million Swiss francs,
publications sales of 0.5 million Swiss francs andother/miscellaneous revenue of 3.1 million Swiss
francs for the year 2015 were broadly in line withthe prior year.

Hague system fees totaled 3.9 million Swiss francs
for 2015. 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
21.9 per cent compared to 2014. Hague
registrations rose from 2,703 in 2014 to 3,581 in
2015. 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 17 thousand Swiss
francs in 2015, compared to 40 thousand Swiss
francs in 2014. The number of requests received
under the Lisbon system fell from 64 in 2014 to 34
in 2015.

13

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Expense Analysis
Composition of expenses 2015 on an IPSAS basis(in millions of Swiss francs)

2015 total expenses:
348.6m Swiss francs

Total expenses of the Organization for 2015 were348.6 million Swiss francs, representing an increaseof 4.6 per cent compared to 2014 total expenses of
333.2 million Swiss francs. The largest expense for
the Organization is personnel expenditure of 216.3
million Swiss francs, representing 62.0 per cent of

total expenses. Contractual services of 72.1 million
Swiss francs are the second largest expense for theOrganization, followed by operating expenses of
21.2 million Swiss francs. The table below provides
a summary of the changes by expense typecompared to the prior year:

Change in expenses 2014 - 2015
2015

2014

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

216.3

216.4

-0.1

-

Interns and WIPO fellow ships

3.1

2.6

0.5

19.2

Travel and fellow ships

17.4

15.4

2.0

13.0

Contractual services

72.1

63.6

8.5

13.4

Operating expenses

21.2

20.8

0.4

1.9

Supplies and materials

3.5

1.8

1.7

94.4

Furniture and equipment

0.8

0.2

0.6

300.0

Depreciation and amortization

11.1

9.1

2.0

22.0

Finance costs

3.1

3.3

-0.2

-6.1

348.6

333.2

15.4

4.6

Total expenses

14

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
144.3 million Swiss francs, 66.7 per cent of total
personnel expenditure for 2015. The next biggest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which total
26.7 million Swiss francs in 2015. WIPO’s
mandated contribution to the UNJSPF is currently
15.8 per cent of a staff member’s pensionable
remuneration. Allowances of 16.6 million Swiss

francs represent 7.7 per cent of total staff
expenditure.
Allowances
includeprincipally
education grants for 5.5 million Swiss francs,
dependency allowances for 4.9 million Swiss francs
and home leave for 2.4 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
2015. Other personnel expenditure of 3.8 million
Swissfrancsincludesmainlyterminationagreements.

Composition of personnel expenditure 2015 on an IPSAS basis(in millions of Swiss francs)

Post adjustment
42.0(19.4%)UNJSPF
26.7(12.3%)

Allowances
16.6 (7.7%)

After-service
employeebenefits
15.4 (7.1%)

Collective medical
insurance
9.5 (4.4%)

Net base salary
102.3(47.3%)

Other
3.8 (1.8%)

2015 total personnel expenditure:
216.3m Swiss francs
After-service employee benefits of 15.4 million
Swiss francs represent the cost to the Organizationof ASHI, repatriation grant and travel, andaccumulated annual leave. The expense for 2015 isequivalent to the actual cash payments for thesebenefits, plus the movement in the amount of thetotal liability in the year.

Total personnel expenditure in 2015 of 216.3 million
Swiss francs has remained stable compared to total
personnel expenditure of 216.4 million Swiss francs
in 2014. The table below provides a detailed
breakdown of personnel expenditure and thevariance compared to 2014:15

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Detail of personnel expenditure 2014 – 2015
2015

2014

Net Change(in millions of Swiss francs)

Net Change%

Net base salary

93.6

89.8

3.8

4.2

Post adjustment

38.0

40.1

-2.1

-5.2

UNJSPF contribution

24.4

23.4

1.0

4.3

Allow ances

16.1

16.3

-0.2

-1.2

After-service employee benefits

15.4

13.7

1.7

12.4

Collective medical insurance

8.6

8.9

-0.3

-3.4

Other post staff expenditures

2.6
198.7

3.2
195.4

-0.6
3.3

-18.8

Net base salary

8.7

10.5

-1.8

-17.1

Post adjustment

4.0

4.9

-0.9

-18.4

UNJSPF contribution

2.3

2.6

-0.3

-11.5

Allow ances

0.5

1.0

-0.5

-50.0

Collective medical insurance

0.9

1.1

-0.2

-18.2

Other temporary staff expenditures

0.1

0.1

Staff in tem porary positions expenditure

16.5

20.2

-3.7

-18.3

Other staff costs

1.1

0.8

0.3

37.5

216.3

216.4

-0.1

0.0

Staff in posts expenditure

Total personnel expenditure

While the expense for staff in posts has increasedby 3.3 million Swiss francs compared to 2014, theexpense for staff in temporary positions has fallen
by 3.7 million Swiss francs. This is in part due to theregularization of long serving temporary employees
from temporary positions to posts. There is also a
1.7 million Swiss francs increase in the cost of after
service employee benefits compared to 2014, whichmainly reflects the fact that more repatriation grant
and travel benefits were paid out in 2015 than in
2014. Other staff costs presented separately in thetable above represent costs common to both posts
and temporary positions (professional accident
insurance, Closed Pension Fund costs and litigation
costs).

1.7

0.0

strengthening of exchange programs with national
intellectual property offices and the fellowship
program in the Arbitration and Mediation Centre.
Travel and fellowships (staff missions, third-party
travel and course fellowships) total 17.4 million
Swiss francs for 2015, and account for 5.0 per centof total expenses. The course fellowships costs
included in this expense line are the expenses
incurred in sending trainees (non-staff) to attend
courses and seminars. Travel and course
fellowships expenses have increased by 13.0 per
cent compared to the 2014 figure of 15.4 million
Swiss francs. Travel costs in 2015 comprise thirdparty travel (conference participants and lecturers)
for 9.6 million Swiss francs, and staff mission costs
for 5.9 million Swiss francs. While the cost of travelfor staff missions is relatively stable compared tothe prior year (5.7 million Swiss francs in 2014),
third-party travel costs have increased by 2.0 million
Swiss francs (7.6 million Swiss francs in 2014). The
cost of course fellowships in 2015 totals 1.9 million
Swiss francs, compared to 2.1 million Swiss francs
in the prior year.

The cost of interns and WIPO fellowships is shown
separately in the financial statements. Interns andWIPO 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 andprofessional competence. The cost of interns andfellowships increased from 2.6 million Swiss francs
in 2014 to 3.1 million Swiss francs in 2015. The
increase relates entirely to WIPO fellowships, andcan be linked to the Organization’s budgetedContractual services in 2015 total 72.1 million Swiss
francs. These expenses have increased by 13.4 percent compared to the figure of 63.6 million Swiss

16

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

francs for 2014. Contractual services in the year
2015 concern primarily commercial translation
services (24.1 million Swiss francs), IT commercial
services (12.6 million Swiss francs), individual
contractual services (11.7 million Swiss francs), andInternational Computing Centre services (10.9
million Swiss francs). Commercial translation
services increased by 1.6 million Swiss francs
compared to 2014, linked in part to an increase in
the average length of outsourced patentability
report translations. IT commercial services
increased by 2.5 million Swiss francs compared to2014, and the cost of individual contractual services
was also up by 1.2 million Swiss francs comparedto the prior year. However, the cost of International
Computing Centre services was down by 0.6 million
Swiss francs compared to 2014.

spread over their useful lives. For 2015,
depreciation and amortization total 11.1 million
Swiss francs, compared to 9.1 million Swiss francs
for 2014. This increase is linked to the New
Conference Hall, which generated a full year
depreciation expense of 2.1 million Swiss francs,
compared with 0.7 million Swiss francs for the last
four months of 2014 after it was brought to use in
September of that year. In addition, following thecompletion of the Security Construction project
during 2015, depreciation is now being charged on
the different elements that have been brought touse (the New Access Centre, the Security
Operations Centre and the Security Perimeter).
Finance costs have remained relatively stablecompared to the prior year, totaling 3.1 million
Swiss francs in 2015 and 3.3 million Swiss francs in2014. Finance costs are principally interest
repayments on the Banque Cantonale de Genève
and Banque Cantonale Vaudoise (BCG/BCV) New
Building loan, totaling 2.9 million Swiss francs in2015. These interest repayments are decreasing as
the loan balance is being reduced. The remaining
finance costs relate to bank charges.

Operating expenses in 2015 total 21.2 million Swiss
francs, representing a slight increase of 1.9 per centcompared to the 2014 total of 20.8 million Swiss
francs. Operating expenses in 2015 comprisemainly premises and maintenance costs (17.4
million Swiss francs), communication expenses (2.2
million Swiss francs) and administrative charges(0.5 million Swiss francs).

Financial Position
Expenses for supplies and materials of 3.5 million
Swiss francs have risen by 94.4 per cent compared
to 2014. Furniture and equipment expenses arealso higher, totaling 0.8 million Swiss francs in 2015
compared to 0.2 million Swiss francs in 2014.
Furniture and equipment expenses concern those
items which do not meet the Organization’s
threshold of 5,000 Swiss francs for capitalization,
and are therefore immediately recognized as an
expenseAs at December 31, 2015, the Organization has net
assets of 279.1 million Swiss francs, with total
assets of 977.0 million Swiss francs and total
liabilities of 697.9 million Swiss francs. As a result of
the surplus for 2015, net assets have increased by
33.3 million Swiss francs from the balance of 245.8
million at the end of 2014. In 2014 the Organization
also recorded a surplus of 37.0 million Swiss francs.
As a result, over the 2014/15 biennium net assets
have increased by 70.3 million Swiss francs fromthe balance of 208.8 million Swiss francs at the endof 2013:

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

17

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Movement in net assets 2013 to 2015
+33.3

279.1
+37.0

245.8

millions of Swiss francs

208.8

Net assets
Decem ber 31, 2013

Surplus on an IPSAS
basis 2014

Net assets
Decem ber 31, 2014

Surplus on an IPSAS
basis 2015

Net assets
Decem ber 31, 2015

The following chart provides a summary of the Statement of Financial Position of WIPO as at December 31,
2015. Total assets of 977.0 million Swiss francs are composed primarily of cash and cash equivalents and fixed
assets. Total liabilities of 697.9 million Swiss francs are principally payables and advance receipts, employee
benefits and borrowings:
Summary of assets and liabilities December 31, 2015

977.0

Net assets
279.1

millions of Swiss francs

Cash and cash
equivalents
489.5

697.9

Payables andadvance receipts
359.8

Fixed assets
417.8

Employee benefits
171.5
Borrow ings
110.0

Other 69.7

Other 56.6

AssetsLiabilities

18

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Fixed assets as at December 31, 2015

Assets

Decem ber 31, 2015
Net Carrying
ount(in millions Am
of Swiss

The Organization has cash balances of 489.5
million Swiss francs, representing 50.1 per cent of
total assets, although this includes amounts totaling
250.8 million Swiss francs which are classified as
restricted under IPSAS. Total cash balances haveincreased by 15.0 million Swiss francs compared tothe balance of 474.5 million Swiss francs as at
December 31, 2014, and are invested as applicablein line with WIPO’s Policy on Investments. Thebalance of cash and equivalents has increased
despite the Organization making a lump sum
repayment of 24.0 million Swiss francs in November
2015 against the BCG/BCV New Building loan.

Classification in
the Financial
Statem ents

francs)The Organization holds significant fixed assets(land, buildings, investment property, intangible
assets and equipment) with a total net book value of
417.8 million Swiss francs. During 2015, theSecurity Construction project was completed,including the New Access Centre, the Security
Operations Centre and the Security Perimeter.
Costs for additions and improvements to existingbuildings were also capitalized during the year,
including some remaining outstanding areas of workin and around the NCH building. In total, additionsof 6.2 million Swiss francs were made to buildings
and constructions during 2015. An updated
valuation of the Organization’s investment property,
the Madrid Union Building, was performed during
2015 by an independent expert. This resulted in an
increase in its fair value of 1.4 million Swiss francs.
The total depreciation and amortization charge
against all fixed assets was 11.1 million Swiss
francs.

New Building Site

28.6

Land (Note 9)

Security Perimeter

8.9

Buildings andConstructions in Use(Note 9)New Conference Hall

67.7

Buildings andConstructions in Use(Note 9)

New Building

153.2

Buildings andConstructions in Use(Note 9)

A. Bogsch Building

48.0

Buildings andConstructions in Use(Note 9)G. Bodenhausen Building I

10.6

Buildings andConstructions in Use(Note 9)G. Bodenhausen Building II

3.8

Buildings andConstructions in Use(Note 9)PCT Building

59.7

Buildings andConstructions in Use(Note 9)Madrid Union Buidling

6.2

Investment Property(Note 7)

Land surface rights

25.6

Intangible Assets(Note 8)

Softw are (acquired anddeveloped)

3.4

Intangible Assets(Note 8)Equipment

1.7

Equipment (Note 6)

Furniture and furnishings

0.4

Furniture andfurnishings (Note 6)

Total fixed assets

417.8

Other assets of the Organization totaling 69.7
million Swiss francs include accounts receivable,
inventories and advance payments. Within this, themost significant balance is PCT debtors totaling
40.9 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 decreased compared to the prioryear, when it totaled 46.7 million Swiss francs. At
the end of 2014, approximately 16.0 per cent ofapplications filed during the preceding twelve
months remained unpaid. At the end of 2015, thispercentage fell to approximately 12.8 per cent.

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 space, storage and facilities in Geneva,
and has leases for some of its external offices (seeNote 19). The Organization has also been granted
land surface rights on which certain headquarters
buildings are located. These rights, acquired at nocost, are not recognized in the financial statements
but are disclosed (see Note 8).

19

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Composition of employee benefits liabilities as
at December 31, 2015

Liabilities
As at December 31, 2015, payables and advancereceipts total 359.8 million Swiss francs, andprincipally include deferred revenue for theprocessing of international applications (under the
PCT, Madrid and Hague systems) for 219.2 million
Swiss francs. This deferred revenue balance mainly
concerns PCT system fees of 217.1 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,
2015, for applications with a 2014 or 2015 filingdate it is estimated that approximately 155,534
applications were unpublished. At the end of theprior year 2014, approximately 145,157 applications
filed in 2013 or 2014 were unpublished and thedeferred revenue balance for PCT system fees was
199.7 million Swiss francs.

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

Percentage
of Liability

After-Service Health Insurance (ASHI)

137.2

80.0

Repatriation grant and travel

15.4

9.0

Accumulated leave

12.6

7.3

Closed Pension Fund

2.7

1.6

Education grant

1.9

1.1

Accrued overtime

0.6

0.3

Home leave

0.3

0.2

Separation benefits

0.5

0.3

Performance rew ards

0.3

0.2

171.5

100.0

Total em ployee benefit liabilities%

The ASHI liability has been increasing steadily overthe last seven years, and based on actuarial
projections is expected to continue to increase
going forward. The liability is increased each year
by both the current service cost and the interest
cost, and is reduced each year by benefits paid out
by the Organization. The current service cost is thenet impact of employee service performed for theyear. The interest cost is the result of each memberof the active staff moving one year closer to the ageof eligibility for ASHI participation. The benefits paidout by the Organization each year are the monthly
contributions (currently 65.0 per cent of premiums)
that the Organization makes for retirees
participating in ASHI. The demographic profile of
WIPO’s staff and the ratio of current staff to retirees
therefore have a significant impact on the
movement in the liability.

Employee benefit liabilities of 171.5 million Swiss
francs are mainly comprised of the ASHI liability of
137.2 million Swiss francs, which represents 80.0
per cent of the total employee benefits liability as at
December 31, 2015. The ASHI liability has
increased by 9.3 million Swiss francs compared to2014. The liability is calculated by an independentactuary, and reflects the total future cost of WIPO’s
share of collective medical insurance premiums forboth existing WIPO retirees and the projected
number of active WIPO staff who will retire in the
future.

20

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Movement in ASHI liability 2009 - 2019

The calculation performed by the independentactuary also incorporates a number of actuarial
assumptions, including discount rate, medical costtrend rates, staff turnover rates and mortality rates.
Changes to these assumptions year on year lead toactuarial gains and losses. Under IPSAS, WIPO
applies the corridor method to its accounting
treatment of these actuarial gains and losses, whichmeans that they are not immediately recognized in
the financial statements. It should be noted that theInternational Financial Reporting Standards (IFRS)
have now eliminated the corridor method as ameans of deferring the recognition of these gains
and losses. In January 2016, the IPSASB issued an
Exposure Draft proposing amendments to IPSAS
25, Employee Benefits, including elimination of thecorridor method. If this amendment is finallyapproved, it would lead to much greater volatility in
the ASHI liability recognized in the Statement of

Financial Position. As at December 31, 2015, WIPO
had a total unrecognized cumulative actuarial lossof 78.8 million Swiss francs relating to ASHI.

Cash Flow

The Organization generally holds its cash deposits
in instant access bank accounts and interestbearing accounts. However, during 2015 significant
cash deposits were moved into short-term
investments in order to avoid incurring charges oncertain instant access bank accounts following the
introduction of negative interest rates during theyear.

Borrowings represent the Foundation for Buildings
for International Organizations (FIPOI) loan (19.6
million Swiss francs) and the BCG/BCV New
Building loan (90.4 million Swiss francs). Total
repayments of the principal on these loans were29.2 million Swiss francs in 2015. In November
2015 the Organization made the first of its
scheduled lump sum repayments towards thereimbursement of the BCG/BCV New Building loan,
for the amount of 24.0 million Swiss francs. The
Organization’s other liabilities totaling 56.6 million
Swiss francs include 55.8 million Swiss francs of
current accounts held on behalf of applicants andcontracting parties, and also 0.8 million Swiss
francs of provisions for legal costs.

The Organization’s cash balance as at December
31, 2015 is 489.5 million Swiss francs, compared to474.5 million Swiss francs as at December 31,
2014. Total cash balances have been increasing
since 2011. The increase of 15.0 million Swiss
francs between 2014 and 2015 has been achieved
despite a lump sum loan repayment of 24.0 million
Swiss francs in November 2015.

In the financial statements (see Note 3), cash ispresented separately between restricted andunrestricted balances:

21

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Unrestricted and restricted cash balances 2010-2015

There are several elements of cash and cash
equivalents 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.

reimbursement of the BCG/BCV New Building loan.
In November 2015 the Organization made the firstof its scheduled lump sum repayments towards theloan for the amount of 24.0 million Swiss francs. A
second lump sum repayment for 16.0 million Swiss
francs was made in January 2016.
The principal cash inflows to the Organization are
payments of PCT system fees. Monthly cash
inflows from PCT system fees averaged 25.2 million
Swiss francs during the year 2015 compared to24.6 million Swiss francs during the year 2014. 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 April and May 2014 due to catch-up
payments for applications filed in 2013, combinedwith increased filing levels in March 2014. Inflows in2015 have been more consistent from month tomonth. The highest inflow in the year 2015 was inDecember, which included a payment regularizationof 4.7 million Swiss francs.

Also classified as restricted are the funds held by
the Organization which have been allocated for the
future financing of after-service employee benefit
liabilities, including ASHI. These funds are held inseparate bank accounts, and the balance of theseaccounts was 88.9 million Swiss francs as at
December 31, 2015. During 2015 charges applied
to the cost of posts for the funding of after service
employee benefits generated additional funds of
13.2 million Swiss francs. These funds will betransferred to the separate bank accounts in 2016.
As already noted, in 2015 the Organization began
making lump sum repayments towards the22ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Monthly PCT system cash inflows 2014-2015

23

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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

Report on the Financial Statements
We have audited the accompanying financial statements of the World Intellectual Property Organisation (WIPO),
which comprise the statement of financial position as at 31

st

December 2015, the statement of financial

performance, statement of changes in net assets, statement of cash flows, statement of comparison of budgetstand actual amounts, and notes to the financial statements, for the financial period ended 31 December 2015.

Management’s Responsibility for the Financial Statements
As stated in the Notes to the Financial Statements, these financial statements and accompanying schedules andnotes are prepared on the accrual basis of accounting, in accordance with International Public Sector AccountingStandards (IPSAS). Management is responsible for the preparation and fair presentation of these financial
statements. This responsibility includes (a) designing, implementing and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material misstatement - whether
due to fraud or error; (b) selecting and applying appropriate accounting policies; and (c) making accounting
estimates that are reasonable in the circumstances.

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with the International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of therisks of material misstatement of the financial statements - whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of thefinancial statements 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 the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

24

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

OpinionIn our opinion, these financial statements present fairly, in all material respects, the financial position of
the World Intellectual Property Organisation as at 31st December 2015 and its financial performanceand of its cash flows for the period 1st January 2015 to 31st December 2015 in accordance with IPSAS.

Report on Other Legal and Regulatory Requirements
Further, in our opinion, the transactions of the World Intellectual Property Organisation that have come to ournotice or which we have tested as part of our audit have, in all significant respects, been in accordance with the
WIPO Financial Regulations and Rules.
In accordance with the Regulation 8.10 of the Financial Regulations and Rules, we have also issued a long-form
Report on our audit of the World Intellectual Property Organisation.

25

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT I – STATEMENT OF FINANCIAL POSITION
for the year ended December 31, 2015
(in thousands of Swiss francs)
Decem ber 31, 2015

Decem ber 31, 2014

3
4
4
5

489,496
1,226
52,5681,597
544,887474,508
2,005
58,556
1,747
536,816

6
7
8
9
4
4
10

2,134
6,210
28,981
380,518
298
5,030
8,934
432,105
976,992

1,746
4,785
29,749383,443
298
3,389
9,124
432,534
969,350

LIABILITIESCurrent liabilities
Accounts payable
Employee benefits
Transfers payable
Advance receipts
Borrow ings due w ithin one year
Provisions
Other current liabilities

11
12
13
14
15
16
17

22,102
23,031
84,160249,381
21,258817
55,771
456,52030,315
19,36383,559241,756
29,258913
63,570468,734

Non-current liabilities
Employee benefits
Borrow ings due after one year
Advance receipts

12
15
14

148,487
88,721
4,201
241,409697,929

141,866
109,979
2,978
254,823
723,557

21
21
21
21

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

195,196
27,20915,046
8,342
245,793

ASSETS
Current assets
Cash and cash equivalents
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Inventories
Non-current assets
Equipment
Investment property
Intangible assets
Land and buildings
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Other non-current assets

Note

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

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

26

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT II – STATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2015
(in thousands of Swiss francs)

2015

2014

Assessed contributions
Voluntary contributions

17,801

17,89910,255

8,896

Publications revenue

487

351

Investment revenue

1,500

1,619

PCT system fees

275,392

278,576

Madrid system fees

67,925

55,113

Hague system fees

3,931

3,186

Note
REVENUE

23

Lisbon system fees
Sub-total fees
Arbitration and Mediation
Other/miscellaneous revenue
TOTAL REVENUE
EXPENSES

17

40

347,265

336,915

1,508

1,487

3,127

3,013

381,943

370,180

216,266

216,39424

Personnel expenditure
Interns and WIPO fellow ships
Travel and fellow ships

3,151

2,653

17,394

15,360Contractual services

72,09063,586

Operating expenses

21,20020,851

Supplies and materials

3,583

1,803

Furniture and equipment

827

247

Depreciation and amortization

11,055

9,054

Finance costs

3,107

3,258

TOTAL EXPENSES

348,673333,206

SURPLUS/(DEFICIT) FOR THE YEAR

33,27036,97427

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT III – STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2015
(in thousands of Swiss francs)

Note

Accum ulated
Surpluses

SpecialProjects
Reserve

Revaluation
Working
Reserve
Capital Funds
SurplusNet Assets
Total

Net Assets at Decem ber 31, 2013

185,431-

15,046

8,342

208,819

Surplus/(deficit) for the year 2014

36,974---36,974

222,405-

15,046

8,342

245,793

Creation of Special Projects Reserve-27,20927,209---Net Assets at January 1, 2015

195,196

27,20915,046

8,342

245,793

Items recognized directly in net assets

-

-

-

-

-

Total of item s recognized directly in
Net Assets in 2015

-

-

-

-

-

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

Net Assets at Decem ber 31, 201421

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

21

28

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT IV – STATEMENT OF CASH FLOW
for the year ended December 31, 2015
(in thousands of Swiss francs)

Note

2015

2014

Statement II

37,48736,351

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

23

75

1,619

Interest paid on borrow ings

15

-2,918-3,137

Depreciation and amortization

6, 8 & 9

11,055

9,054

Increase (decrease) in employee benefits

12

10,28910,703(Increase) decrease in inventories

5

150

394

(Increase) decrease in receivables

4

5,126

18,598(Increase) decrease in other assets

10

190

191

Increase (decrease) in advance receipts

14

8,848

13,752

Increase (decrease) in accounts payable

11-8,213-970

Increase (decrease) in transfers payable

13

601

4,942

Increase (decrease) in provisions

16

-96

-96

Increase (decrease) in other liabilities

17-7,7998,708

54,795100,109-7,174-30,665

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

6&9

Disposal of equipment

6

-

9

Increase in intangible assets

8

-576

-1,744

Increase in investment property

7-1,425--9,175-32,400

Net cash flow s from investing activities
Cash flow s from financing activities
Proceeds from borrow ings

15

-

-

Repayment of borrow ings

15

-29,258-5,258-29,258-5,258-1,3742,141

14,98864,592

Net cash flow s from financing activities
Effect of exchange rate changes on cash and cash
equivalents

26

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3474,508

409,916

Cash and cash equivalents at end of the year3489,496474,508(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 23. For detail of interest paid on borrowings, see Note 15.
For the effect of exchange rate changes on cash and cash equivalents, see Note 26.

29

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE
for the year ended December 31, 2015
(in thousands of Swiss francs)

Original Budget
2015"Final" Budget
2015

(1)

(1)

17,584

17,584

17,359-225

PCT system

276,820

276,820

302,096

25,276

Madrid system
Hague system

58,2394,676

58,2394,676

65,873
4,043

7,634
-633

Lisbon system

4

4

17

13

Sub-total fees

339,739

339,739

372,029

32,290

1,400

1,400

1,508

108

600

600

487

-113

Assessed contributions

Actual Revenue oncom parable basis
2015

Difference
2015
(2)

Fees

Arbitration and Mediation
Publications
Interest
Other/miscellaneous
TOTAL

765

765

75

-690

1,900

1,900

5,584

3,684

361,988361,988

397,042

35,054(1) - columns Original Budget and “Final” Budget represent the second year of the approved 2014/15 biennial budget.
(2) - represents the difference between the “Final” Budget 2015 and actual revenue on a comparable basis for the year ended
December 31, 2015.

30

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSE
for the year ended December 31, 2015
(in thousands of Swiss francs)

Program1

Program Title
Patent Law

Original
Budget2015(1)"Final"Budget2015(1)

Actual Expense
on a com parable
basis 2015

Difference
2015
(2)

2,475

2,475

2,754

-279

2

Trademarks, Industrial Designs & Geographic
Indications

3,081

3,081

2,748

333

3

Copyright and Related Rights

8,215

8,215

8,465

-250

4

Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

3,932

3,932

2,286

1,646

5

The PCT System

98,98798,987

95,4663,521

6Madrid and Lisbon Systems

27,622

27,622

29,976-2,354

7

WIPO Arbitration and Mediation Center

5,588

5,588

5,142

446

8

Development Agenda Coordination

2,170

2,170

1,688

482

9

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

16,163

16,163

15,475688

10

Cooperation w ith Certain Countries in Europe and Asia

4,221

4,221

3,840

381

11

The WIPO Academy

5,942

5,942

6,161

-219

12

International Classifications and Standards

3,659

3,659

3,956

-297

13

Global Databases

2,346

2,346

2,830

-484

14

Services for Access to Information and Know ledge

3,769

3,769

3,611

158

15

Business Solutions for IP Offices

5,814

5,814

6,789

-975

16

Economics and Statistics

2,668

2,668

2,564

104

17

Building Respect for IP

1,995

1,995

1,939

56

18

IP and Global Challenges

3,469

3,469

3,622

-153

19

Communications

8,629

8,629

7,947

682

20

External Relations, Partnerships and External Offices

6,217

6,217

6,062

155

21

Executive Management

9,472

9,472

9,545

-73

22

Program and Resource Management

14,016

14,016

13,716300

23

Human Resources Management and Development

11,78011,78012,508-728

24

General Support Services

23,70023,70023,417283

25

Information and Communication Technology

22,635

22,63525,012-2,377

26

Internal Oversight

2,558

2,558

2,220

338

27

Conference and Language Services

20,55820,55817,9002,658

28

Safety and Security

5,394

5,394

5,912

-518

29

New Conference Hall

417

417

3,757

-3,34030

Small and Medium Sized Enterprises (SMEs) andInnovation

3,348

3,348

2,945

403

31

The Hague System

3,793

3,793

3,553

240

UN

Unallocated

2,364

2,364

-

2,364

336,997

336,997

333,806

3,191

24,991

24,991

63,23638,245TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (3)-23,954

Projects financed from reserves-5,115Special Accounts financed from voluntary contributions
Adjusted net surplus per IPSAS-897
33,270(1) - columns Original Budget and “Final” Budget represent the second year of the approved 2014/15 biennial budget. As WIPO hasa biennial budget cycle, the budgetary transfers across programs, which have taken place during the 2014/15 biennium within thelimits described in the Financial Regulations and Rules (regulation 5.5), are reflected in the biennial budget figures for the 2014/15
biennium under the heading “Final Budget after Transfers 2014/15”. Please refer in this regard to Statement V for 2014/15 for thecomparison of the 2014/15 Final Budget after Transfers with the 2014/15 original approved budget. The Original Budget is based on
the biennial budget of 674.0 million Swiss francs, which was approved by the Assemblies of the Member States of WIPO on
December 12, 2013.
(2) - represents the difference between the “Final” Budget 2015 and actual expense on a comparable basis for the year ended
December 31,2015.
(3) – the IPSAS adjustments to the surplus are detailed in Note 22 of these financial statements.

31

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE
for the biennium ended December 31, 2015
(in thousands of Swiss francs)

Original Budget Final Budget after
2014/15 Transfers 2014/15

Actual Revenue oncom parable basis
2014/15

Difference
2014/15(1)(2)

35,16835,16834,943-225

PCT system

545,603545,603597,224

51,621Madrid system
Hague system

114,615
8,573

114,615
8,573

121,455
7,239

6,840
-1,334

Assessed contributions

(3)

Fees

Lisbon system

8

8

57

49

Sub-total fees

668,799

668,799

725,975

57,176

Arbitration and Mediation

2,800

2,800

2,995

195

Publications

1,200

1,200

838

-362

Interest

1,530

1,530

1,692

162

Other/miscellaneous

3,800

3,800

9,280

5,480

713,297713,297775,723

62,426TOTAL(1) – represents the approved 2014/2015 biennial budget.
(2) – represents the 2014/15 Final Budget after Transfers.
(3) – represents the difference between the 2014/15 Final Budget after Transfers and actual revenue on a comparable basis for thebiennium ended December 31, 201532

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSE
for the biennium ended December 31, 2015
(in thousands of Swiss francs)
Original
Budget2014/15

Program1

Program Title
Patent Law

Actual Expense
on a com parable
basis 2014/15(1)

Budgetafter
Transfers
2014/15(2)

Difference
2014/15

4,950

5,390

5,355

35

(3)

2

Trademarks, Industrial Designs & Geographic
Indications

6,162

5,530

5,192

338

3

Copyright and Related Rights

16,43016,764

16,141623

4

Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

7,864

6,372

5,438

934

5

The PCT System

197,973

195,354

186,1549,200

6Madrid and Lisbon Systems

55,24557,42855,7091,719

7

WIPO Arbitration and Mediation Center

11,175

10,947

9,879

1,068

8

Development Agenda Coordination

4,341

3,519

3,138

381

9

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

32,32531,48529,067

2,418

10

Cooperation w ith Certain Countries in Europe and Asia

8,443

8,338

7,643

695

11

The WIPO Academy

11,883

11,714

11,845-131

12International Classifications and Standards

7,317

7,298

7,508

-210

13

Global Databases

4,692

5,065

4,954

111

14

Services for Access to Information and Know ledge

7,539

6,830

6,861

-31

15

Business Solutions for IP Offices

11,62812,045

11,941

104

16

Economics and Statistics

5,336

5,165

4,903

262

17

Building Respect for IP

3,989

4,160

3,811

349

18

IP and Global Challenges

6,938

7,056

6,707

349

19

Communications

17,257

16,506

15,960546

20External Relations, Partnerships and External Offices

12,435

12,515

11,036

1,479

21

Executive Management

18,94520,827

18,6422,185

22Program and Resource Management

28,032

28,162

27,397765

23

Human Resources Management and Development

23,561

25,18924,699490

24

General Support Services

47,40047,883

46,525

1,358

25

Information and Communication Technology

45,26948,67647,969707

26Internal Oversight

5,116

4,972

4,549

423

27

Conference and Language Services

41,11739,38335,782

3,601

28

Safety and Security

10,787

11,605

11,272

333

29

New Conference Hall

834

4,303

4,107

196

30

Small and Medium Sized Enterprises (SMEs) andInnovation

6,696

5,508

5,503

5

31

The Hague System

7,587

7,303

6,910

393

UN

Unallocated

4,727

701

-

701

673,993673,993642,597

31,39639,30439,304133,126

93,822TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (4)-22,478

Projects financed from reserves-40,324

Special Accounts financed from voluntary contributions
Adjusted net surplus per IPSAS-80
70,244(1) – represents the approved 2014/15 biennial budget. of 674.0 million Swiss francs, which was approved by the Assemblies of theMember States of WIPO on December 12, 2013.
(2) – represents the 2014/15 Final Budget after Transfers.
(3) - represents the difference between the 2014/15 Final Budget after Transfers and actual expense on a comparable basis for thebiennium ended December 31, 2015.
(4) – the IPSAS adjustments to the surplus are detailed in Note 22 of these financial statements.

33

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

for appointing the Director General for a fixed
term of not less than six years, for the
adoption of the budget for expenses common
to all Unions, adoption of the Financial
Regulations, inviting States to become
members and other functions specified by theConvention.

NOTES TO THE FINANCIAL
STATEMENTSNOTE 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 (BIRPI) which had
been established in 1893 (BIRPI in its Frenchacronym, meaning Bureaux Internationaux Réunis
pour la Protection de la Propriété Intellectuelle) toadminister the Paris Convention for the Protection ofIndustrial Property (1883) and the Berne Convention
for the Protection of Literary and Artistic Works (1886).
In 1974, WIPO was recognized as a specialized
agency of the United Nations.
WIPO carries out a wide variety of tasks related to theprotection of intellectual property (IP) rights including:assisting governments and organizations to develop
the policies, structures and skills needed to harness
the potential of IP for economic development; working
with Member States to develop international IP law;administering treaties; managing global registration
systems for trademarks, industrial designs andappellations of origin and a filing system for patents;
providing dispute resolution services; and acting as aforum for informed debate and for the exchange ofexpertise.
The Organization functions in accordance with the
WIPO Convention signed in Stockholm on July 14,
1967 and amended on September 28, 1979. WIPO
currently has 188 Member States. WIPO is based in
Geneva, Switzerland with external offices in Beijing,
Moscow, Rio de Janeiro, Singapore and Tokyo, and acoordination office in New York. The Organization
enjoys privileges and immunities as granted under the1947 Convention on Privileges and Immunities ofSpecialized Agencies of the United Nations and the1970 Headquarters Agreement with the Swiss Federal
Council, notably being exempt from paying most formsof direct and indirect taxation.

The Conference consists of all Member
States whether or not they are members of
any of the Unions. The Conference adopts
its budget, adopts amendments to theConvention
and
other
functionsasappropriate.



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



The Assemblies of the Berne, Hague, Nice,
Lisbon,Locarno,Vienna,Budapest
International Patent Classification and Paris
Unions meet under the authority of theindividual treaties creating each Union
administered by WIPO. They adopt thoseportions of the WIPO budget that relate torevenue and expense exclusively attributableto each of them and determine the level ofthe fees payable to WIPO for services
rendered pursuant to each treaty.

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
expenditure authorizations approved by the General
Assembly for each 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.

WIPO is governed by the following constituent bodies,
established by the WIPO Convention, that meet atleast every second year in ordinary session and may
meet in extraordinary session in alternate years:


The General Assembly, consisting of States
party to the WIPO Convention which are
members of any of the Unions, is responsible

34

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

(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 9). 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 8).

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.

Foreign Currency Transactions

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.

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 2015, which is prior to their required
implementation date. These Standards have had no
impact on the Organization’s financial statements.
In January 2016 the IPSAS Board released Exposure
Draft 59, Amendments to IPSAS 25, Employee
Benefits. The Exposure Draft proposes amendments
to IPSAS 25, including the removal of the corridor
approach for the recognition of actuarial gains andlosses. WIPO currently applies the corridor approachin relation to its liability for After-Service Health
Insurance (ASHI). If approved, the removal of thecorridor approach would potentially impact WIPO’s
financial statements as it would require the recognitionof currently unrecognized actuarial losses (see Note
12).

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 and Arbitrationand Mediation services is recognized upon fulldelivery of the goods or services.

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

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 specificperformance 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 throughGeneral 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 aresubstantially ready for their intended use. Borrowing
costs relating to the construction of the New Building

35

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

performance of the specific conditions included in theagreement.

that 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.

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

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.

Receivables

Equipment

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 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.

Expense Recognition

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 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. The total value offinished publications is determined by using an
average cost per printed page (excluding costs ofmarketing and distribution) multiplied by the number ofpages of publications held in the publications
inventory, adjusted to reflect the lower of cost or net
realizable value. The value of publications that arewithdrawn from sale or free distribution is written off
during the year in which they become obsolete.

Class

Estimated useful life

Communications and IT
equipment

5 years

Vehicles5 years

Furniture and fixtures

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 retailshop. 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 anticipated36

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Investment Property

Land and Buildings

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.

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.

Intangible Assets

Buildings and constructions in use are valued at thecost of construction when new plus the cost of
subsequent
improvements,
lessaccumulated
depreciation. For the initial recognition of buildings in
use as at January 1, 2010, the date of transition to
IPSAS, the value when new was determined byreference to a deemed cost calculated by an external
consultant and representing the value of eachcomponent at construction plus improvements existingat the initial recognition, less accumulated
depreciation based upon the remaining useful life ofeach component. Subsequent costs of majorrenovations and improvements to buildings andconstructions that increase or extend the future
economic benefits or service potential are valued at
cost.

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 ofmajor classes of intangible assets have been
estimated as follows:

Class

Software acquired
externally

Estimated useful life

5 years

Software internallydeveloped

5 years

Licenses and rights

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:

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. 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.
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.

37

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

include cash and short-term deposits, short-term
investments, loans, and receivables.

Structure – concrete/metallic

Estimated
useful life
100 years

Structure – concrete/wood

80 years

Structure – specialist access

50 yearsFaçade50 years

The subsequent measurement of financial assets
depends on their classification.

Perimeter walls

80 yearsFinancial assets at fair value through surplus or deficit

Perimeter bollards

20 years

Land Improvements

40-50 years

Roof

50-60 years

Component

Floors, walls, stairways

50 years

Flooring, wall coverings

20-40 years

Specialist fittings – fixed equipment
Specialist fittings – kitchenequipment
Specialist fittings – fixed conference
equipment
Specialist fittings – multimedia
monitoring equipment
Specialist fittings - turnstiles
Heating and ventilation
Sanitary facilities
Electrical installations
Elevators

Subsequent measurement

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.

40 years
20-40 years
15 years

Loans and receivables

5 years

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.

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.

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.

Financial Instruments

Impairment of financial assets

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 is
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.

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

38

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Financial Liabilities

Employee Benefits

Initial recognition and measurement

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.

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

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

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.

The plan 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 plan during the financial period arerecognized as expenses in the statement of financial
performance.

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
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.

39

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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.

Segment Reporting
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
2014/15, 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 28).

Changes in Presentation
In 2015 the Organization’s Policy on Reserves wasrevised and adopted by the Fifty-Fifth Series of
Meetings of the Assemblies of the Member States of
WIPO. The revised policy included the creation of aseparate reserve entitled Special Projects Reserve.
The Special Projects Reserve is now separately
disclosed in the financial statements (in the Statementof Financial Position, the Statement of Changes in Net
Assets, and Note 21 Net Assets). The 2014
comparative presentation has also been changed toseparately disclose the Special Projects Reserve.

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 in40

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 3: CASH AND CASH EQUIVALENTS

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Cash on hand

14

12

Deposits w ith banks - Sw iss francs

28,46542,492

Deposits w ith banks - other currencies

16,60325,459Funds invested w ith AFF - Sw iss francs

146,619

156,674

Other short-term investments - Sw iss francs

47,018110

Total unrestricted cash

238,719

224,747

Current accounts held for third parties - Sw iss francs

55,31555,982Current accounts held for third parties - other currencies

456

7,588

Fees collected on behalf of contracting parties - Sw iss francs

84,16083,559Funds held for after-service employee benefits

88,917

85,248108

16,730

Deposits w ith banks Special Accounts - other currencies

223

654

Short-term investments Special Accounts - Sw iss francs

21,598-

Total restricted cash

250,777

249,761

Total cash and cash equivalents

489,496474,508

Deposits w ith banks Special Accounts - Sw iss francs

Cash deposits are generally held in instant accessbank accounts and interest-bearing accounts. During
2015 the Organization moved significant cash
deposits into short-term investments with notice
periods of 31 or 35 days. This change was effected inorder to avoid incurring charges on certain instantaccess bank accounts following the introduction ofnegative interest rates during the year.

Restricted cash includes current accounts held forthird parties. The Organization provides facilities forapplicants under the PCT, Madrid and Hague systems
to deposit funds to be used for future applications andrenewals, and for certain contracting parties totransfer funds collected on behalf of the Organization.
Also classified as restricted are fees collected onbehalf of contracting parties to the Madrid Agreement
and Protocol, Hague Agreement and on behalf of PCT
International Searching Authorities (ISAs) by the
WIPO International Bureau Receiving Office. In
addition, the deposits received in connection withpending procedures related to trademarks, other thanthe portion estimated to represent advance receipts to
the Organization, represent funds collected on behalfof third parties and are considered restricted funds.

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, WIPO had been informed that from the endof 2015 it would no longer be able to hold deposits
with them. However, following a request from WIPO
this deadline was extended to December 15, 2017.
Under the conditions of this extension WIPO cannot
exceed the balance of its deposits held at the end of
September 2015. The interest rate on deposits heldwith the AFF was 0.15 per cent during January 2015,
and thereafter 0.00 per cent for the remainder of theyear.

The Organization holds funds allocated for the futurefinancing of after-service employee benefit liabilities,
including ASHI. These funds are held in separatebank accounts and are classified as restricted. Thebalance of these funds held in separate bankaccounts was 88.9 million Swiss francs as at
December 31, 2015. During 2015 charges applied tothe cost of posts for the funding of after-service

41

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

employee benefits generated additional funds of 13.2
million Swiss francs. These funds will be transferred tothe separate bank accounts in 2016.

Special Accounts held on behalf of donors of voluntary
contributions are classified as restricted and aredeposited in the currency in which expenditures will bereported, based upon agreements with donors.

42

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 4: ACCOUNTS RECEIVABLE, ADVANCES AND PREPAYMENTS

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Receivable non-exchange transactions - Contributions
Unitary contributions
Voluntary contributions

999

482

227

1,523

1,226

2,005

Receivable exchange transactions
Publication debtors-

120

PCT debtors

40,94946,653Madrid debtors

676

388

Hague debtors

1

1

Other debtors

1,707

1,793

Sw iss taxes reimbursable

29

24

USA taxes reimbursable

689

1,303

Concessionary advance for USA taxes

545

329

Staff advances for education grants

4,882

4,902

Other funds advanced to staff

341

704

UPOV expenditure reimbursable

1,213

931

Funds advanced to UNDP

356

509

Advance for FCIG concessionary loan

123

121

Prepaid expenditure

868

589

FCIG loan amortization

189

189

52,56858,556

53,79460,561

Paris Union

99

99

Berne Union

187

187

Nice Union

10

10

Locarno Union

2

2

298

298

5,030

3,389

5,030

3,389

Total non-current accounts receivable

5,328

3,687

Total accounts receivable

59,12264,248

Total current accounts receivable
Receivable non-exchange transactions - Contributions

Receivable exchange transactions
USA taxes reimbursable

43

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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.

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. UPOV expenditure reimbursable
represents payments made on behalf of theInternational Union for the Protection of New Varieties
of Plants by the Organization for which reimbursement
has not yet been received.
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. Swiss taxes reimbursable include payments
for VAT, stamp tax and Swiss Federal withholding tax
for which the Organization is eligible forreimbursement under its headquarters agreement with
the Government of Switzerland.

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, 2015 is 6.3 million Swiss francs (6.8
million Swiss francs as at December 31, 2014).
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 5: INVENTORIES

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)

International 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 2015-2016 scholastic year.

Finished publications

1,429

1,575

Paper supplies

56

54

Retail Shop

112

118

1,597

1,747

Total inventories

The write-down of finished publications inventories to
net realizable value amounted to 27 thousand Swiss
francs (59 thousand Swiss francs in 2014). There
have
been
no
reversalsofwrite-downs.

44

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 6: EQUIPMENT

Movem ent 2015

Furniture& Furnishings(in thousands of Swiss francs)

Equipm ent

Total

January 1, 2015
Gross carrying amount

10,4092,649

13,058

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

1,214

532

1,746

Additions

1,021

9

1,030

Disposals

-14

-

-14

Disposals depreciation

14

-

14

-564

-78

-642

457

-69

388

Gross carrying amount

11,416

2,658

14,074

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

1,671

463

2,134

Net carrying am ount
Movem ents in 2015:

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

Net carrying am ount

Movem ent 2014

Furniture& Furnishings(in thousands of Swiss francs)

Equipm ent

Total

January 1, 2014
Gross carrying amount

15,222

2,906

18,128

Accumulated depreciation-13,501-2,303-15,804

1,721

603

2,324

Net carrying am ount
Movem ents in 2014:
Additions

242

14

256

Disposals-5,055-271-5,326

Disposals depreciation

5,052

265

5,317

Depreciation

-746

-79

-825

-507

-71

-578

Gross carrying amount

10,4092,649

13,058

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

1,214

532

1,746

Total m ovem ents in 2014
Decem ber 31, 2014

Net carrying am ount

45

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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, 2015,

WIPO holds fully depreciated equipment which is stillin use for a gross carrying amount of 10.3 million
Swiss francs. Heritage assets including donated works
of art are not recognized as assets on the Statementof Financial Position.

NOTE 7: INVESTMENT PROPERTY

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Opening balance

4,785

4,785

Fair value gains/(losses) on valuation

1,425

-

Closing balance

6,210

4,785

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.

compensation for its services. The value of noncancellable leases as at December 31, 2015 is asfollows:
Decem ber 31,
2015
Non-cancellable leases

Decem ber 31,
2014(in thousands of Swiss francs)

Not later than one year

310

337

Later than one year and not later than
five years

612

866

Later than five years
Total non-cancellable operatingleases

3

13

925

1,216

In 2015 the income from rental of the building totaled
358 thousand Swiss francs, and the operating
expenditures of the building totaled 177 thousand
Swiss francs. 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. 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 3.9 per cent of the gross rental income as

46

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 8: INTANGIBLE ASSETS

Movem ent 2015

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

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

34,290

803

3,258

585

38,936-8,279

-347

-561

-

-9,18726,011

456

2,697

585

29,749Additions

-

312

-

264

576

Transfers

-

-

661

-661

-

Disposals

-

-

-

-

-

Net carrying am ount
Movem ents in 2015:

Disposals amortization
Amortization
Total m ovem ents in 2015

-

-

-

-

-

-440

-166

-738

-

-1,344

-440

146

-77

-397

-768

34,290

1,115

3,919

188

39,512

Decem ber 31, 2015
Gross carrying amount
Accumulated amortization
Net carrying am ount

Movem ent 2014

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

25,571

602

2,620

188

28,981

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2014
Gross carrying amount

34,290

709

-

2,193

37,192

Accumulated amortization-7,840-191---8,031

26,450

518

-

2,193

29,161

Additions

-

94

-

1,650

1,744

Transfers

-

-

3,258

-3,258-

Disposals

-

-

-

-

-

Net carrying am ount
Movem ents in 2014:

Disposals amortization
Amortization
Total m ovem ents in 2014

-

-

-

-

-

-439

-156

-561

-

-1,156

-439

-62

2,697

-1,608588

Decem ber 31, 2014
Gross carrying amount

34,290

803

3,258

585

38,936

Accumulated amortization-8,279

-347

-561

-

-9,18726,011

456

2,697

585

29,749Net carrying am ount

47

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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 thedate of purchase the original rights had a remaining
period of 78 years under Swiss law expiring in 2073,
unless renewed by the Canton. The historic cost 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.

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, 2013. Thisvaluation indicated no change in the fair value of theland from the 28.6 million Swiss francs previously
estimated. Market value was estimated by capitalizing
at an appropriate investment yield the future potential
income stream from the property. The potential
income is based on comparable rentals in the market
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.
The New Conference Hall (NCH) building was brought
into use in September 2014. During 2015 someremaining outstanding areas of work in and aroundthe NCH were completed. As a result, additions to thebuilding totaling 2.5 million Swiss francs were
capitalized during 2015.

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.

WIPO has undertaken a major project to upgrade thesafety and security standards of its existing buildings,
in
line
with
the
implementationoftherecommendations of the United Nations Security
Management System. Up to and including 2015, costs
relating to this construction project incurred by theOrganization have been capitalized as work-inprogress. The construction project has been partly
financed by the Foundation for Buildings forInternational Organizations (FIPOI). Construction work
financed by the FIPOI has also been capitalized within
work-in-progress, and a corresponding amountrecognized as deferred revenue (see Note 14). The
construction project was completed in 2015, andcomprised the New Access Centre (3.6 million Swiss
francs included as part of the Árpád Bogsch building),
the Security Operations Centre (2.0 million Swiss
francs included as part of the Georg Bodenhausenbuilding I), and the Security Perimeter (9.0 million
Swiss francs held as a standalone construction).

NOTE 9: LAND AND BUILDINGSThe Organization’s land and buildings comprise its
headquarters at Place des Nations, Geneva,
Switzerland and include land, buildings and security
constructions. 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.
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

48

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Movements for land and buildings in 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

49

4

16

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Movements for land and buildings in the prior year 2014

Movem ent 2014

Work in Progress

Land

Year in Service

Total Land andBuildings

Buildings and Constructions in Use

New Building Site

Security
Construction

New ConferenceHall

New Conference
Hall

1998

N/A

N/A

2014

New Building

A. Bogsch Building

G. Bodenhausen
Building I

G. Bodenhausen
Building II

PCT Building

2011

1978

1960

1987

2003

(in thousands of Swiss francs)
January 1, 2014
Cost/valuation

28,6006,360

51,308-

164,936

48,507

10,8094,523

67,408382,451

-

-

-

-

-7,627-7,579-1,307-462-5,369-22,344

28,6006,360

51,308-157,30940,928

9,502

4,061

62,039360,107

Additions

-

3,450

24,258

-

1,313

1,333

17

-

38

30,409Transfers

-

2,700

-75,566

67,926

-

4,940

-

-

-

-

Decrecognition impaired cost

-

-

-

-

-

-1,810----1,810Derecognition accumulated
impairment and depreciation

-

-

-

-

-

1,810

-

-

-

1,810

Impairment

-

-

-

-

-

-

-

-

-

-

Depreciation

-

-

-

-672

-3,077-1,521-338-121-1,344-7,073

Net m ovem ents in 2014

-

6,150

-51,308

67,254-1,764

4,752

-321

-121

-1,30623,33628,60012,510-67,926

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

13

13

13

13

13

13

13

Accumulated depreciation andimpairment charges
Net carrying am ount

Movem ents in 2014

Decem ber 31, 2014
Cost/valuation
Accumulated depreciation andimpairment charges
Net carrying am ount
Check

4

13

4

4

50

4 16

136

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 10: OTHER NON-CURRENT ASSETS

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Loan to FCIG
Advance for FCIG concessionary loan
FCIG loan amortization
Total other non-current assets

8,305

8,184

251

374

378

566

8,934

9,124

amortization of the advance and the rental of parking
spaces) until the end 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 the initialadvance, equaling a total advance of 11.0 million
Swiss francs. The balance of the construction cost
was covered by a mortgage between FCIG and theBanque Cantonale de Genève (BCG). The
Organization also entered into an agreement to lease
the building from FCIG. The lease agreement was
renewed for a period of seven years from January 1,
2012.

Decem ber 31,
2015

Decem ber 31,
2014(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

560

570

1,115

1,699

-

-

1,675

2,269

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 2015 totaled
232,596 Swiss francs (234,124 Swiss francs during2014). The current rate of interest, fixed through to
December 31, 2018, is 1.48 per cent. Since January
1, 2012, WIPO has also recognized an annual
amortization charge of 188,679 Swiss francs against
its advance to FCIG. Further, the Organization alsoleases covered parking spaces at an annual cost of
140,112 Swiss francs. In the absence of a mutual
termination of the lease agreement, WIPO’s future
payments (including the mortgage repayments, theFor 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 4) and non-current portion. The
total value of this advance payment as at December
31, 2015 is 0.6 million Swiss francs. The remainingbalance of WIPO’s advance to FCIG is treated as aconcessionary loan in accordance with IPSAS, and ismeasured at amortized cost. The interest-freeelement of the concessionary loan is also recognized
as an advance payment, and is split into both its
current portion (see Note 4) and non-current portion.
This advance payment is reduced over the period ofrental agreement, and as at December 31, 2015 has
a total value of 0.4 million Swiss francs.

51

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 11: ACCOUNTS PAYABLE

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Trade creditors - accounts payable

18,19722,084

Miscellaneous transitory liabilities

3,777

8,187

Other trade creditors
Total accounts payable

128

44

22,10230,315

Accounts payable includes invoices received from suppliers not yet settled including the revaluation of invoices
payable in currencies other than the Swiss franc.

NOTE 12: EMPLOYEE BENEFITS
Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Accumulated leave

2,021

2,426

Separation benefits

463

506

Closed Pension Fund

339

289

2,025

1,872

Home leave

303

529

Accrued overtime

608

528

Education grant

1,929

1,925

Repatriation grant and travel

Performance rew ards

277

213

After-Service Health Insurance

15,066

11,075

Total current em ployee benefit liabilities

23,031

19,363

Closed Pension Fund

2,403

2,542

Accumulated leave

10,534

10,496

Repatriation grant and travel

13,387

12,045After-Service Health Insurance

122,163

116,783

Total non-current em ployee benefit liabilities

148,487

141,866

Total em ployee benefit liabilities

171,518

161,229

Employee benefits comprise:(ASHI), and other long-term employee benefits suchas separation benefits consisting of grants upon
repatriation, repatriation travel and shipping of
personal effects; andShort-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;

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.

Long-term employee benefits (or after-service
employee benefits) which include post-employment
benefits such as After-Service Health Insurance

52

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Short-Term Employee Benefits

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, 2015
totaled 0.3 million Swiss francs (0.2 million Swiss
francs at December 31, 2014).

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.
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
January 1, 2018. 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 (12.9
million Swiss francs at December 31, 2014).

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:

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. Based upon the latest actuarial valuation
performed for 2015, the estimated liability as
at December 31, 2015 is 2 thousand Swiss
francs (13 thousand Swiss francs in 2014). It
is noted that 2016 will be the last year that
this cost will be incurred;

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, isestimated at 2.7 million Swiss francs as at
December 31, 2015 (2.8 million Swiss francs
in 2014).

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 0.3 million Swiss francs(0.5 million Swiss francs at December 31, 2014).
Overtime: certain staff members are eligible to be
paid in cash for overtime accrued after the expiry of aperiod established in the SRR. The total amountpayable at the reporting date is 0.6 million Swiss
francs (0.5 million Swiss francs at December 31,2014).
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 theschool year/university year and December 31, 2015
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, 2014).

53

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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:

Decem ber 31,
2015

Decem ber 31,
2014

Total

Total

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

1,352

673

2,025

1,872

Non-current liability

13,387-

13,387

12,045

Total liability

14,739673

15,412

13,917

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,
2015

Contributions paid by the Organization for repatriation
grant and travel totaled 1.3 million Swiss francs for2015 (0.2 million Swiss francs in 2014). Expected
contributions to repatriation grant and travel in 2016
are 1.3 million Swiss francs.

Decem ber 31,
2014

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the repatriation grant and travel liability for2015 and the previous four years:(in thousands of Swiss francs)

Interest cost

100

228

Current service cost

1,134

998

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

1,499

176

2,733

1,402

2015

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,
2015

12,097

100

228

2011

Experience (gain)/loss
adjustments on plan liability

1,135 -1,295

-41

2,122

8,909

3

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

Decem ber 31,
2014

13,2792012

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

Decem ber 31,
2015

Decem ber 31,
2014

0.50%

0.80%

3.38%

3.52%

Discount rate

0.80%

1.90%

Rate of salary increase

3.52%

3.36%

Current service cost

1,134

998

Weighted-average assumptions todetermine benefit obligations
Discount rate

Contribution paid

-1,273-220

Rate of salary increase

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

1,499

176

14,73913,279Weighted-average assumptions todetermine net cost

Interest cost2013

Defined benefit obligation(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year2014

(in thousands of Swiss francs)

54

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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, 2016, monthly
medical premiums amount to 552 Swiss francs for
adults and 246 Swiss francs for children (previously
538 Swiss francs and 240 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 aseparate bank account to hold funds for the futurefinancing of after-service employee benefit liabilities,
including ASHI (see Note 3). On the basis of an
actuarial valuation carried out in December 2015 by
an independent office, the Organization’s ASHI liability
was estimated as follows at the reporting date:

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Current liability

15,066

11,075

Non-current liability

122,163

116,783

Total liability

137,229

127,858

The table below details the expense for ASHI
recognized in the statement of financial performance:
Decem ber 31,
2015

date. The table below details the changes in the ASHI
defined benefit obligation, and reconciles the defined
benefit obligation to the liability recognized in theStatement of Financial Position:

Decem ber 31,
2014(in thousands of Swiss francs)

Interest cost

1,837

3,410

Current service cost

9,238

7,036

939

354

12,014

10,800

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

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year

WIPO 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 that55

154,449

137,670

Interest cost

1,837

3,410

Current service cost

9,238

7,036

Contribution paid

-2,643-2,512

Actuarial (gain)/loss on obligation

53,194

8,845

Defined benefit obligation at endof year216,075

154,449

Net actuarial gain/(loss)
unrecognized-78,846-26,591

Liability recognized in theStatem ent of Financial Position

137,229

127,858

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Contributions paid by the Organization for ASHI totaled 2.6 million Swiss francs for 2015 (2.5 million Swiss francs in2014). Expected contributions to ASHI in 2016 are 2.9 million Swiss francs.The following table details the present
value of the defined benefit obligation and experience adjustments arising on the ASHI liability for 2015 and theprevious four years:
2014

2015

2013

2012

2011

(in thousands of Swiss francs)
Defined benefit obligation

Experience (gain)/loss adjustments on plan liability

216,075

154,449

137,670

131,320

113,439190-15,301

1,606-6,704-5,707

The principal assumptions used in determining the ASHI liability and defined benefit obligation were as follows:
Decem ber 31,
2015

Decem ber 31,
2014

Discount rate

1.00%

1.20%

Rate of salary increase

3.38%

3.52%

Rate of sickness premium increase

2.75%

3.00% as of 2012

Weighted-average assumptions to determine benefit
obligations

then linear decrease to2.50% as of 2017
then constant
Weighted-average assumptions to determine net cost
Discount rate

1.20%

Rate of salary increase

2.50%

3.52%

3.36%

3.00% as of 2012

3.00% as of 2012

then linear decrease tothen linear decrease to2.50% as of 20172.50% as of 2017

then constantthen constant

Rate of sickness premium increase

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 centdecrease inassum ed healthcare trend rate

Assum ed healthcare trend rate as
applied1 per centincrease inassum ed healthcare trend rate

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2015

174,289

Per cent variation-19.3%

Service and interest cost for the year to
December 31, 2015

8,755

Per cent variation-20.9%

56

216,075

271,71025.7%

11,075

14,17128.0%

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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 Pension Fund’s Regulations state that thePension Board shall have an actuarial valuation madeof the Fund at least once every three years by theConsulting 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.

In December 2012 and April 2013, the General
Assembly authorized an increase to age 65 in thenormal retirement age and in the mandatory age ofseparation respectively for new participants of theFund, with effect not later than from January 1, 2014.
The related change to the Pension Fund’s Regulations
was approved by the General Assembly in December
2013. The increase in the normal retirement age isreflected in the actuarial valuation of the Fund as at
December 31, 2013.

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 Pension Fund. Such deficiency
payments are only payable if and when the United
Nations General Assembly has invoked the provisionof Article 26, following determination that there is arequirement for deficiency payments based on anassessment of the actuarial sufficiency of the Pension
Fund as of the valuation date. Each member
organization shall contribute to this deficiency anamount proportionate to the total contributions which
each paid during the three years preceding thevaluation date.

During 2015, WIPO contributions paid to UNJSPF
amounted to 26.7 million Swiss francs (2014 26.0
million Swiss francs). Expected contributions due in2016 are 26.4 million Swiss francs. The United
Nations Board of Auditors carries out an annual auditof 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 beviewed by visiting the UNJSPF at www.unjspf.org.

The actuarial valuation performed as at December 31,
2013 revealed an actuarial deficit of 0.72 per cent(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, 2015, and is not available at the time of
preparation of these financial statements.
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 2011 valuation) when
the current system of pension adjustments was taken
into account.

57

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 13: TRANSFERS PAYABLE

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Madrid Union complementary fees

38,63037,436

Madrid Union supplementary fees

3,491
16,874

3,136
13,681

18

15

Madrid Union deposits

17,95922,396

Hague Union distribution

553

243

4,322

4,047

Madrid Union individual fees
Madrid Union holding fees

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

695

681

1,599

1,682

19

242

84,16083,559Madrid 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 14).

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.

58

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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.

59

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 14: ADVANCE RECEIPTS

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
Madrid Union deposits

12,92016,587

Industrial design deposits

687

259

PCT/IBRO deposits

468

533

1,899

4,266

PCT system deferred revenue

217,071

199,682

Madrid system deferred revenue

1,761

3,813

Hague system deferred revenue

346

235

Non-exchange deferred revenue

14,097

16,134

Advance payment of contributionsFIPOI deferred revenue

132-

Other deferred revenue-

247

249,381

241,756FIPOI deferred revenue

4,201

2,978

Total non-current advance receipts

4,201

2,978

253,582244,734

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 has
been partly financed by the Foundation for Buildings
for International Organizations (FIPOI). Construction
work financed by the FIPOI has been capitalized aspart of the cost of the Security Perimeter, and acorresponding amount recognized as deferred
revenue. The balance of deferred revenue as at
December 31, 2015 was 4.3 million Swiss francs (3.0
million Swiss francs as at December 31, 2014). This
revenue is recognized gradually as the security
constructions are depreciated over their useful lives.

60

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 15: BORROWINGS

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)
FIPOI loan

1,358

1,358

BCG/BCV New Building loan

19,90027,900Total current borrow ings

21,25829,258FIPOI loan

18,221

19,579BCG/BCV New Building loan

70,50090,400Total non-current borrow ings

88,721

109,979

Total borrow ings

109,979

139,237

The Organization has borrowed funds (50.8 million
Swiss francs and 8.4 million Swiss francs approved in1977 and 1987 respectively) from the FIPOI for the
purpose of constructing its headquarters buildings in
Geneva, Switzerland. These loans were originallysubject to interest payments. However, in 1996 theSwiss Federal Department of External Relations
agreed to waive any further payments of interest andthe loans currently require the reimbursement ofprincipal only.

the loan for the amount of 24.0 million Swiss francs. A
second lump sum repayment for 16.0 million Swiss
francs was made in January 2016.

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 2015 totaled 2.9
million Swiss francs, with a weighted average interest
rate of 2.60 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. In November 2015 the Organization made thefirst of its scheduled lump sum repayments towards

61

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 16: PROVISIONSNOTE 17: OTHER LIABILITIES

Decem ber 31,
2015

Decem ber 31,
2015

Decem ber 31,
2014(in thousands of Swiss francs)(in thousands of Swiss francs)
Legal costs

817

913

Total provisions

817

913

PCT current accounts - Italy andJapan

As part of its normal activities, the Organization is
subject to litigation. Events occurring prior to
December 31, 2015 have created certain legal
obligations at the reporting date. As it is probable thatthese 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.
Legal Costs

Movem ents in 2014:
678

Amounts used

-267

Unused amounts reversed-507

Total m ovem ents in 2014-96

Balance as at Decem ber 31, 2014

913

Movem ents in 2015:
Additional provisions made642

Amounts used-250

Unused amounts reversed-488

Total m ovem ents in 2015

-96

Balance as at Decem ber 31, 2015

817

7,588

Other current accounts

55,31555,982

Total other current liabilities

55,771

63,570In 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.

1,009

Additional provisions made456

The 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.

(in thousands of Swiss francs)
Balance as at Decem ber 31, 2013

Decem ber 31,
2014

62

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 18: CONTINGENT ASSETS AND
LIABILITIESNOTE 19: LEASESWIPO as Lessee
The Organization has a number of leases providing
additional space, storage and specialized facilities in
Geneva. In addition, the Organization leases space forits external offices in Rio de Janeiro and Tokyo, andits coordination office in New York. The value of future
minimum lease payments under non-cancellable
operating leases is as follows:

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 16. 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 Organization
for claims arising from these cases is 85,000 Swiss
francs at the reporting date. Personnel also havecases which have the status of Requests for Review.
For these cases the amount of any claim is yet to be
confirmed, and therefore no provision is recognized.
There are no contingent liabilities for possible
settlement payments by the Organization arising fromthese cases at the reporting date.

Decem ber 31,
2015

Decem ber 31,
2014(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 operatingleases

391

400

232

453

-

-

623

853

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 10.

As at December 31, 2015, the Organization has noncancellable contracts for the delivery of goods andservices for a total value of 1.7 million Swiss francs.
WIPO is a Partner Organization in the International
Computing Centre (ICC), the inter organization facility
created to provide information technology services.
Under the terms of the ICC Mandate, Partner
Organizations shall be responsible for their share ofcertain liabilities arising from ICC’s operations.

The Organization has no outstanding leases qualifying
as finance leases at the reporting date. The total
amount of lease payments recognized as an expensein the reporting period was 1.9 million Swiss francs(1.9 million Swiss francs in 2014).

WIPO has contractual commitments relating to noncancellable lease arrangements. These are detailed in
Note 19.

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 2014). 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 7.

63

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 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 20: 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
2015
Num ber of
Individuals(as an average)

2014
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 andAssistants

8.92

3,352

8.08

2,993

Senior Officers

11.08

3,564

13.08

3,912

The Organization has no ownership interest in
associates or joint ventures and no controlled entities.
WIPO is a member of the UNJSPF and certain of its
former staff are members of WIPO’s CROMPI. The
relationship with these two funds is explained in detailin Note 12.

of the UPOV Secretary General and staff, exercises its
functions in complete independence of theOrganization. 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 2015 the Organization received 618
thousand Swiss francs from UPOV to cover the cost ofthese services. In addition, WIPO receives full
reimbursement of all funds disbursed on behalf of
UPOV.

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 of December
2, 1961, as revised. In accordance with the Rules andRegulations of UPOV, the office of UPOV, consisting64

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 21:

NET ASSETS

January 1,
2015

Program and Budget
surplus/(deficit) for theperiodProgram andSpecialProjects
BudgetAccounts
Financed
Adjustm ents
IPSAS
Transfer toSurplus for
Surplus forfromto Special
Decem ber 31,
adjustm ents Accum ulated
the Yearthe Year
Reserves
Projects
2015
for the year
Surpluses(before(before(beforeReserve
IPSAS
IPSAS
IPSAS
adjustm ents) adjustm ents) adjustm ents)(in thousands of Swiss francs)-

63,236----24,800-38,436

-

-

-

897

-

-

Special Accounts
surplus/(deficit) for theperiodAccumulated Surpluses

-

-

-897

195,196----1,654-38,403

231,945

Special Projects Reserve

27,209---5,115

1,654

-51

33

23,730

Revaluation Reserve
Surplus15,046

-

-

-

-

-

-

15,046

-

-

-

-

8,342

-897

-5,115--23,954-

279,063

Working Capital Funds
Net assets

8,342

-

245,793

63,236The 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.

deductions from contribution invoices in the 2016/17
biennium.
The Accumulated Surpluses of the Organization
represent the accumulated net result of operations in2015 and prior periods after the impact of IPSAS. The
Revaluation Reserve Surplus includes the results of arevaluation (from historic cost to fair value) of the land
owned by the Organization on which the New Building
has been constructed (see Note 9). The fair value has
been determined by an independent valuation.
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, 2015:

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
million Swiss francs for the PCT Union will be returnedto the Member States of the PCT Union, through65

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Total projectbudgetCum ulative
expenditure to
Decem ber 31,
2014

Cum ulative
Rem aining
Expenditureadjustm ents tobalance as atyear ended
Decem ber 31,
Decem ber 31,
Decem ber 31,
2014
2014
2015
(in thousands of Swiss francs)

Adjustm ents
year ended
Decem ber 31,
2015

Rem ainingbalance as at
Decem ber 31,
2015

Special Projects
Security

7,600-7,149

141

592

-491

-

101

Maps modernization

13,804-12,656

-

1,148

-406

-

742

Madrid system database

1,200-1,092

-

108

-1

-

107

ERP project

25,341-13,900-

11,441-2,356-

9,085

ICT capital investment

5,180-3,808

-

1,372

-811

-

561

Security enhancement

700

-

-

700

-

-

700

ECM implementation

2,068

-35

-

2,033

-40

-

1,993

PCT building renovation
Geneva lake w ater coolingsystem

6,000

-

-

6,000

-84

-

5,916

750

-89

-

661

-174

-

487

960

-

-

960

-5

-

955

300

-

-

300

-47

-

253

400

-97

-

303

-26

-

277

64,303-38,826

141

25,618-4,441-

21,177

7,182-6,148

-

1,034

-154

-

880

157,643-158,560

1,224

307

-204

188

291

75,200-75,293

343

250

-334

1,466

1,382

232,843-233,853

1,567

557

-538

1,654

1,673

304,328-278,827

1,708

27,209-5,133

1,654

23,730AB building basement renovation
AB building w indow s
replacement
Safety and fire protection

Developm ent agenda
New Construction and New
Conference HallNew Construction (1)New Conference Hall (includingarchitectural and technicalproject) (2)Total reserve funded
projects

18

Revenue in year 2015

-5,115Net deficit in year 2015

(1) The New Construction project was financed by borrowings, see Note 15.
(2) An additional allocation of up to 3.5 million Swiss francs under the 2014/15 Regular budget was exceptionally approved by the
Assemblies of Member States of WIPO in October 2015 for the expenses related to the completion and closure of the New
Conference Hall project (document A/55/13). Any unspent balance from this allocation is not subject to carry-over in the next
budgetary period.

accrual basis for the second year of the biennium was
333.8 million Swiss francs.

NOTE 22: RECONCILIATION OF
STATEMENT OF BUDGETARYCOMPARISON AND STATEMENT OFFINANCIAL PERFORMANCEFor the 2014/15 biennium, the original and final
budget after transfers for income was 713.3 million
Swiss francs, and for expenditure 674.0 million Swiss
francs. Actual income on a modified accrual basis forthe biennium was 775.7 million Swiss francs. Actual
expenditure on a modified accrual basis for thebiennium was 642.6 million Swiss francs.

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 2014/15 Biennium established abudget estimate for the biennium of expenditure of
674.0 million Swiss francs.

The Program Performance Report for 2014/15
provides an explanation of both the changes between
the original 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 a

For 2015, the second year of the biennium, theoriginal and final budget for income was 362.0 million
Swiss francs, and for expenditure 337.0 million Swiss
francs. Actual income on a modified accrual basis forthe second year of the biennium was 397.0 million
Swiss francs. Actual expenditure on a modified

66

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

full accrual basis, whereas the Statement ofComparison of Budget and Actual Amounts(Statement V) is prepared on a modified accrual basis.

approved budget is prepared on a basis other than thefull accrual accounting basis.
Basis differences
include the depreciation of assets, full recognition ofprovisions and deferral of unearned revenue. Entity
differences represent the inclusion in WIPO’s financial
accounts of Special Accounts and projects financed
from reserves, which are not included in WIPO’s
published Program and Budget. Presentationdifferences represent the treatment of additions tobuildings, equipment and intangible assets, and gains
on investment property as investing activities inStatement IV.

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. WIPO’s budget isadopted by the Assemblies on a biennial basis,
however, separate estimates are prepared for each of
the two annual periods. Therefore, there are no timing
differences to report. Basis differences occur when the

Reconciliation for 2015
2015
Operating

Investing

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

63,236

Depreciation and amortization--

63,236-11,055---11,055

Equipment acquisition and disposal

-

1,030

-

1,030

Capitalization of construction expense

-

6,144

-

6,144

Capitalization of intangible assets

-

576

-

576
1,425

Revaluation investment property

-

1,425

-

2,855

-

-

2,855

Deferral of revenue from fees

-24,763---24,763

Other deferred revenue-1,355

Changes in employee benefit liabilities-1,355--

Change in provision for doubtful debts

442

-

-

442

Inventory recognition

-150

-

-

-150

Special Accounts revenue recognition

897

-

-

897

Total Basis differences-33,129

9,175--23,954

Projects financed from reserves
Special Accounts-5,115-897---5,115-897

Total Entity differences-6,012---6,012

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

24,095

9,175-

33,27067

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Reconciliation for the biennium 2014/15:
2014/15
Operating

Investing

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

133,126

Depreciation and amortization--

133,126-20,109-20,109--

Equipment acquisition and disposal

-

1,277

-

1,277

Capitalization of construction expense-

36,553-36,553

Capitalization of intangible assets

-

2,320

-

2,320

Revaluation investment property

-

1,425

-

1,425

Changes in employee benefit liabilities

9

-

-

9

Deferral of revenue from fees

-41,794---41,794

Other deferred revenue-2,452---2,452

757

-

-

757

-

-

-

-

-544

-

-

-544

Change in provision for doubtful debts
Accruals
Inventory recognition
Special Accounts revenue recognition

80

-

-

80

Total Basis differences-64,053

41,575--22,478

Projects financed from reserves
Special Accounts-40,324-80---40,324-80

Total Entity differences-40,404---40,404

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

28,66941,575-70,24468

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 23: REVENUE

Programand Budget

Special
Accounts

2015

2015

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2015

2015

Total

2015

2014

(in thousands of Swiss francs)
Assessed contributions

17,359--442

17,801

17,899Voluntary contributions

-

9,427

-

828

10,255

8,896

Publications revenue

487

-

-

-

487

351

Investment revenue

75

-

-

1,425

1,500

1,619

PCT system fees

302,096---26,704

275,392

278,576

Madrid system fees

-

-

2,052

67,925

55,113

Hague system fees

65,873
4,043

-

-

-112

3,931

3,186

Lisbon system fees

17

-

-

-

17

40

Sub-total fees

372,029---24,764

347,265

336,915

1,508

-

-

-

1,508

1,487

Exchange gain (loss)

847

-49

18

-

816

1,277

Program support charges

993

-

-

-993

-

-

3,744

-

-

-1,433

2,311

1,736

397,0429,378

18-24,495

381,943

370,180

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.
Voluntary contributions represent revenue received inconnection with contributions made by donors toindividual projects under Special Accounts notincluded in the Program and Budget.

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.
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. In 2015 WIPO also recognizedin PCT system fees revenue a payment regularizationof 4.7 million Swiss francs concerning the filing years
2004-2013.

69

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 24: EXPENSES

Programand Budget

Special
Accounts

2015

2015

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2015

2015

Total

2015

2014

(in thousands of Swiss francs)
Posts expenditure

198,612

2,007

440

-2,408

198,651

195,365

Temporary positions expenditure

15,568

559

713

-363

16,477

20,172Other staff costs
Total Personnel expenditure

1,220

-

-

-82

1,138

857

215,400

2,566

1,153

-2,853

216,266

216,394

502

-

-

-

502

569

WIPO fellow ships

2,649

-

-

-

2,649

2,084

Total Interns and WIPO fellow ships

3,151

-

-

-

3,151

2,653

Staff Missions

5,370

484

13

-

5,867

5,688

Third-party travel

7,191

2,332

65

-

9,588

7,555

Interns

Course fellow ships

1,214

725

-

-

1,939

2,117

Total Travel and fellow ships

13,775

3,541

78

-

17,394

15,360Conferences

3,976

317

5

-

4,298

3,670

Publishing

27

14

-

-

41

29

Individual contractual services

10,982

378

367

-37

11,69010,474

Other contractual services

52,414

2,268

1,441

-62

56,061

49,413

Total Contractual services

67,399

2,977

1,813

-99

72,09063,586Premises and maintenance

21,730118

1,696-6,18017,364

16,834

Communication

2,191

4

-

-

2,195

2,271

Representation

336

3

-

-

339

173

Administrative charges

568

7

-

-107

468

810

United Nations joint services

814

20

-

-

834

763

Total Operating expenses

25,639152

1,696-6,287

21,20020,851

Supplies and m aterials

3,527

42

61

-47

3,583

1,803

Furniture and equipm ent

1,812

-

332

-1,317

827

247

-

-

-

11,055

11,055

9,054

3,103

4

-

-

3,107

3,258

-

993

-

-993

-

-

333,806

10,275

5,133

-541

348,673333,206

Depreciation and am ortization
Finance costs
Program support costs
Total expenses

70

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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.

Carrying
am ount
Financial assets

Fair value(in thousands of Swiss francs)

2015
Receivables

51,804

Loans

8,305

8,305

489,496

489,496

549,605

549,605

Receivables

56,90556,905

Loans

8,184

8,184

474,508

474,508

539,597

539,597

Carrying
am ount

Fair value

Cash and cash equivalents

IPSAS adjustments concern principally the recognitionof depreciation and amortization against the cost of
fixed assets. Adjustments are also recognized tocapitalize expenses for the acquisition of equipment,
additions of buildings and constructions, or theacquisition and development of intangible assets.
Adjustments are made to personnel expenditure as aresult of bringing employee benefit liabilities, including
ASHI, into line with IPSAS compliant calculations.

51,804

2014

Cash and cash equivalents

Financial liabilities(in thousands of Swiss francs)

2015

NOTE 25: 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.

Borrow ings

109,979

109,979

Accounts payable

22,102

22,102

Transfers payable

84,16084,160Current accounts

55,771

55,771

272,012272,012

Borrow ings

139,237

139,237

Accounts payable

30,31530,315

Transfers payable

83,55983,559Current accounts

63,57063,570316,681316,6812014

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:

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.

Cash and short-term deposits, receivables fromexchange transactions, accounts payable and othercurrent liabilities approximate their carrying amounts
largely due to the short-term maturities of these
instruments;
Long-term loans, receivables and borrowings areevaluated by the Organization based on parameterssuch as interest rates and risk characteristics.
Allowances have been established for receivablesfrom non-exchange transactions which cover amounts
due from Member States that have lost the right tovote under Article 11, paragraph 5 of the WIPO
Convention and for contributions from least developed
countries which have been frozen by action of theAssemblies. The concessionary loan to FCIG isrecognized at amortized cost with values based on
cash flows discounted using a discount rate of 1.48
per cent. USA taxes reimbursable are recognized atamortized cost with values based on cash flows
discounted using a discount rate of 2.09 per cent.

Fair values
Set out below, is a comparison by class of the carrying
amounts and fair value of the Organization’s financial
instruments:

71

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

The 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.

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, 2015 was as follows:
Decem ber 31,
2015

In accordance with the Organization’s Policy on
Investments, cash and cash equivalents may only beheld with institutions with a minimum short-term credit
rating of A-2/P-2 or a minimum long-term credit ratingof A-/A3. Accordingly, the credit ratings attached to
cash and cash equivalents as at December 31, 2015is as follows:

Decem ber 31,
2014(in thousands of Swiss francs)
Receivables

51,804

Loans

8,305

8,184

Cash and cash equivalents

489,496474,508

Maxim um exposure to credit
risk

549,605

539,597

AAA

56,905AA

Per cent

A

A-

Unrated(cash on
hand)

Total

(in thousands of Swiss francs)

Decem ber 31, 2015
Cash and cash
equivalents

A+

375,011644

435

113,202191

13

489,496

76.6%

0.1%

0.1%

23.1%

0.1%

0.0%

100.0%

Under the Policy on Investments, money market
investments, bonds, notes or other obligations andother fixed income products 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.
The only exception to this relates to corporate
issuances (corporate bonds and commercial paper)
which may have a short-term rating of A-3/P-3 or along-term rating of BBB-/Baa3.

Liquidity risk

little 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
low-risk asset classes which are easily liquidated at

The following table provides a maturity analysis of
WIPO’s borrowings. The BCG/BCV New Building loan
maturity analysis as at December 31, 2015, includes
annual repayments of 3.9 million Swiss francs(representing 3.0 per cent of the total loan value), andthe scheduled lump sum repayment of 16.0 million in
January 2016:72

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

1 year or less

Later than 5years

1-5 years

Decem ber 31, 2015

Total

(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

1 year or less

1-5 years

Later than 5
years

Total

Decem ber 31, 2014

19,579(in thousands of Swiss francs)

FIPOI loan

1,358

5,433

14,146

20,937

BCG/BCV New Building loan

27,90031,60058,800118,300

Total borrow ing

29,25837,03372,946139,237

Organization has external offices in Brazil, China,
Japan, Russia, Singapore and the USA with limited
assets in local currency. There are no hedging
contracts in place as at the reporting 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 Organization is also
exposed to exchange risk arising from the currency
differences between amounts payable to International
Searching Authorities pursuant to the Regulations
under the Patent Co-operation Treaty and amounts
received by national patent offices for international
search fees from applicants 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, based on the fall invalue of other currencies against the Swiss franc in
the months following the announcement of the Swiss
National Bank on January 15, 2015 that it was
discontinuing its policy of maintaining a minimum
exchange rate of 1.20 Swiss francs per euro. This isapplied to financial assets and financial liabilities heldin currencies other than the Swiss franc to summarize
the effect on surplus in the tables below:

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, theDecember 31, 2015
Original currency:

USD

JPY

EUR

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

4,904

5,409

5,920

PCT debtors

16,989

8,609

7,642

USA taxes reimbursable

5,719

-

-

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

2,761

1,402

1,356

Total effect on surplus of -ve m ovem ents

-2,761-1,402-1,356

-

360

96

738

29

596

Financial liabilities
PCT current accounts
Accounts payable
Transfers payable
Reasonable shift

-

-

1,590

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

74

39

228

Total effect on surplus of -ve m ovem ents

-74

-39

-228

73

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Market risk

rates applicable to the BCG/BCV New Building loan
are fixed for the periods of the loan draw downs. 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, 2015 and December 31, 2014 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. The Organization is to a limited extent
exposed to the risk of falling interest rates, since only
0.21 per cent of its operating budget is financed fromrevenue derived from investment income. The interest

Interest rate atreporting date
Decem ber 31, 2015

1 year or less%

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

Financial assets
Funds invested w ith AFF (including
restricted balances)

0.000

375,011--375,011

Short-term investments w ith Credit
Suisse0.000

47,000--47,000

Short-term investments w ith UBS(including restricted balances)

0.000

21,598--21,5982.802

19,90015,60054,90090,4001 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, 2014%

(in thousands of Swiss francs)

Financial assets
Funds invested w ith AFF (including
restricted balances)

0.150

381,463--

381,463

2.595

27,90031,60058,800118,300

Financial liabilities
BCG/BCV New Building loan

Increase (+) /decrease (-) inbasis points

Interest rate sensitivity analysis

Effect on surplus(in thousands of Swiss francs)

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:2015
Financial assets
Funds invested w ith AFF

+50
-50

1,884
-1,884

Funds invested w ith Credit Suisse

+50
-50

168
-168

Funds invested w ith UBS

+50
-50

65
-65

+50
-50

1,777
-1,7772014
Financial assets
Funds invested w ith AFF

74

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

NOTE 26: EXCHANGE GAIN AND LOSS

Gain

Loss

Net Im pact2015

Net im pact
2014

(in thousands of Swiss francs)
PCT system fees gain/(loss)
Accounts receivable

310

-279

31

4

PCT fees received

2,740-3,426-686-1,732PCT International Searching Authority

4,709

-282

4,427

-685

Total PCT system fees realized gain/(loss)

7,759-3,987

3,772-2,413

PCT bank accounts

1,633-3,398-1,765

1,385

PCT current accounts and debtors

1,214

-225

989

635

Total PCT system fees unrealized gain/(loss)

2,847-3,623

-776

2,020

Total PCT system fees gain/(loss)

10,606-7,610

2,996

-393

Arbitration and Mediation bank accounts

251

-275

-24

99

Arbitration and Mediation other assets and liabilities

142

-119

23

-62

Total Arbitration and Mediation unrealized gain/(loss)

393

-394

-1

37

Accounts payable

2,967-2,472

495-157

Total other realized gain/(loss)

2,967-2,472

495-157

Bank accounts

1,810-1,353

457

669

59

-101

-42

-12

Other assets and liabilities

6,574-6,668-94

777

Total other unrealized gain/(loss)

8,443-8,122321

1,434

Total other gain/(loss)

11,410-10,594

816

1,277

Total exchange gain/(loss)

22,409-18,598

3,811

921

Arbitration and Mediation gain/(loss)

Other gain/(loss)

Special Account bank accounts

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 International Searching
Authorities (ISA) 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, unrealized exchange gains

and losses relating to the revaluation of bank accounts
and other monetary assets and liabilities into Swiss
francs at the exchange rate in effect on the reporting
date are recognized on the financial statements. The
net effect of all exchange gains and losses of 3.8
million Swiss francs in 2015 (0.9 million Swiss francs
in 2014) is recognized within revenue in the Statementof Financial Performance, principally within the line
PCT system fees.

75

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Most revenue is accounted for by Union in WIPO’s
accounts. Revenue from interest earnings has been
allocated among the Unions based upon total cash
reserves and current revenue in 2015. Expenses areaccounted for by program and then re-allocated to thevarious Unions based upon a methodology acceptedby the WIPO General Assembly as part of the
adoption of WIPO’s 2014/15 Program and Budget.

NOTE 27: EVENTS AFTER THE
REPORTING DATEWIPO’s reporting date is December 31, 2015 and its
financial statements were authorized for issue on April
28, 2016. No material events, favorable orunfavorable, which would have impacted upon thefinancial statements have occurred between thereporting date and the date on which the financial
statements were authorized for issue.

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 28: SEGMENT REPORTING

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.

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.

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.
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.

76

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

LisbonTotal(in thousands of Swiss francs)
REVENUE
Contributions

17,359

-

-

-

-

9,427

26,786-

302,096

65,873

4,043

17

-

372,029

Fees
Interest

4

44

27

-

-

-

75

Publications

39

444

3

1

-

-

487

1,080

1,080

1,262

1,081

1,081

-49

5,535

79

956

452

18

3

-

1,508

18,561

304,620

67,617

5,143

1,101

9,378

406,420

Other Income+UPOV
Arbitration
Sub-total revenue on budgetary basis
Miscellaneous revenue projects financed from reserves

4

4

4

3

3

-

18

238

-27,843

3,389

-112

-2

-165

-24,495

18,803276,781

71,010

5,034

1,102

9,213

381,943

EXPENSES
Patent Law

207

2,460

87

-

-

-

2,754

Trademarks, Industrial Design & Geographic Indications

550

-

1,786

412

-

-

2,748

IPSAS adjustments to revenue
TOTAL REVENUE

1
2
3

Copyright and Related Rights

6,657

1,637

171

-

-

-

8,465

4

Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

2,286

-

-

-

-

-

2,286

5

The PCT System-

95,466----

95,466

6

Madrid and Lisbon Systems--

28,731

91

1,154

-

29,976

7

Arbitration, Mediation and Domain Names

267

3,260

1,543

62

10

-

5,142

8

Development Agenda Coordination

46

1,487

155

-

-

-

1,688

9

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

418

13,635

1,422

-

-

-

15,475

10

Cooperation w ith Certain Countries in Europe and Asia

104

3,384

352

-

-

-

3,840

11

The WIPO Academy

166

5,429

566

-

-

-

6,161

12

International Classifications and Standards

277

3,481

158

40

-

-

3,956

13

Global Databases

-

2,547

283

-

-

-

2,830

14

Services for Access to Information and Know ledge

45

2,876

638

49

3

-

3,611

15

Business Solutions for IP Offices

183

5,982

624

-

-

-

6,789

16

Economics and Statistics

69

2,259

236

-

-

17

Building Respect for IP

52

1,709

178

-

-

-

1,939

18

IP and Global Challenges

98

3,191

333

-

-

-

3,622

19

Communications

214

7,003

730

-

-

-

7,947

20

External Relations, Partnerships and External Offices

164

5,341

557

-

-

-

6,062

21

Executive Management

429

7,051

1,821

209

35

-

9,545

22

Program and Resource Management

547

9,312

3,394

418

45

-

13,71623

Human Resource Management and Development

24

General Support Services

25

2,564

562

9,240

2,386

274

46

-

12,5081,051

17,300

4,468

511

87

-

23,417

Information and Communication Technology

986

18,324

5,030

591

81

-

25,012

26

Internal Oversight

99

1,640

424

49

8

-

2,220

27

Conference and Language Services

804

13,224

3,415

391

66

-

17,90028

Safety and Security

265

4,367

1,128

129

23

-

5,912

29

Construction Projects

169

2,775

717

82

14

-

3,757

30

Small and Medium Size Enterprises and Innovation

79

2,595

271

-

-

-

2,945

31

The Hague System

-

-

-

3,553

-

-

3,553

16,794

246,975

61,604

6,861

1,572

-

333,806

373

3,562

1,085

108

5

-

5,133

-167

-1,163

-270

-2

-1

-

-1,603
10,275Sub-total expenses on budgetary basis
Financed from reserves:
Projects financed from reserves
IPSAS adjustments to projects financed fromreserves
Special Accounts

-

-

-

-

-

10,275

107

1,571

392

44

10

-1,062

1,062

TOTAL EXPENSES

17,107250,945

62,811

7,011

1,586

9,213

348,673

Reserves and Working Capital Funds as at
Decem ber 31, 2014

23,222

186,856

46,968-10,722-531-

245,7932015 result on budgetary basis

1,398

54,087

4,932-1,823-473-897

57,224298-28,251

3,267

-154

-11

897

-23,954

24,918

212,692

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

279,063

IPSAS adjustments to expense

IPSAS adjustments to result
Reserves and Working Capital Funds as at
Decem ber 31, 2015

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.

77

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

ANNEX I - STATEMENT OF FINANCIAL POSITION BY SOURCE OF FUNDING [UNAUDITED]
as at December 31, 2015
(in thousands of Swiss francs)
Program and Budget(regular budget)
December 31,
2015

December 31,
2014

Special Accounts(voluntary contributions)
December 31,
2015

Projects financed fromreserves

December 31,
2014

December 31,
2015

IPSAS Adjustm ents

December 31,
2014

December 31,
2015

Consolidated

December 31,
2014

December 31,
2015

December 31,
2014

ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Inventories
Other current assets
Total Current Assets

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

457,124
1,392
14,539164,099
637,154

21,929136-7,71814,347

17,38425-2,273
15,136

26-181,928-181,902

418-161,826-161,408-56-666
36,2301,597
37,105613
43,574
1,747
45,934489,496
1,226
52,5681,597
544,887474,508
2,005
58,556
1,747
536,816

Non-Current Assets
Equipment
Investment property
Intangible assets
Land and buildings
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Other non-current assets
Total Non-Current Assets

3,395
25,415
5,733
9,245
43,7883,395
25,4156,160
9,434
44,404--137,419
137,419

137,419
137,419

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

1,746
1,390
29,749220,609-5,862
3,389-310
250,711

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

1,746
4,785
29,749383,443
298
3,389
9,124
432,534

TOTAL ASSETS

719,125

681,558

14,347

15,136-44,483-23,989

288,003296,645976,992

969,350

Current Liabilities
Accounts payable
Employee benefits
Transfers payable
Advance receipts
Borrow ings due w ithin one year
Provisions
Other current liabilities

26,190-22,062
66,20133,933
21,258817
56,093

18,944-20,105
61,16344,28929,258913
67,50373
328
14,843-96
282
13,941--4,105-55-

11,275-55--56
44,82017,959200,605-322

39,241
22,396
183,526-3,933

22,102
23,031
84,160249,381
21,258817
55,77130,315
19,36383,559241,756
29,258913
63,570Total Current Liabilities

182,430

201,965

15,244

14,319-4,160

11,220263,006

241,230

456,520

468,734

Non-Current Liabilities
Employee benefits
Borrow ings due after one year
Advance receipts
Total Non-Current Liabilities

101,023
88,721
189,744

85,898109,979
195,877

-

-

-

-

47,464
4,201
51,66555,9682,978
58,946

148,487
88,721
4,201
241,409141,866
109,979
2,978
254,823

TOTAL LIABILITIES

372,174

397,842

15,244

14,319-4,160

11,220314,671

300,176

697,929

723,557

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

338,609
8,342
346,951

275,374
8,342
283,716

-897
-897

817
817

-64,053
23,730-40,323-62,418
27,209-35,209-41,714
15,046-26,668-18,577
15,046-3,531

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

195,196
27,20915,046
8,342
245,793

LIABILITIES

78

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

ANNEX II - STATEMENT OF FINANCIAL PERFORMANCE BY SOURCE OF FUNDING [UNAUDITED]For the year ended December 31, 2015
(in thousands of Swiss francs)
Program and Budget(regular budget)
2015

Special Accounts(voluntary contributions)

2014

2015

2014

Projects financed fromreserves

IPSAS Adjustm ents

2015

2015

2014

Consolidated

2014

2015

2014

REVENUE
Assessed contributions

17,35917,584

-

-

-

-

442

315

17,801

17,899Voluntary contributions

-

-

9,427

9,681

-

-

828

-785

10,255

8,896

Publications revenue

487

351

-

-

-

-

-

-

487

351

Investment revenue

75

1,617

-

2

-

-

1,425

-

1,500

1,619

PCT system fees

302,096

295,128

-

-

-

-

-26,704-16,552

275,392

278,576

Madrid system fees

65,87355,582

-

-

-

-

2,052

-469

67,925

55,113

Hague system fees

4,043

3,196

-

-

-

-

-112

-10

3,931

3,186

Lisbon system fees

17

40

-

-

-

-

-

-

17

40

Sub-total fees

372,029

353,946

-

-

-

-

-24,764-17,031347,265

336,915

Arbitration and Mediation

1,508

1,487

-

-

-

-

-

-

1,508

1,487

Exchange gains

847

1,253

-49

9

18

15

-

-

816

1,277

Program support charges

993

838

-

-

-

-

-993

-838

-

-

Other/miscellaneous revenue

3,744

1,605

-

-

-

-

-1,433

131

2,311

1,736

Sub-total miscellaneous

5,584

3,696

-49

9

18

15

-2,426

-707

3,127

3,013

397,042

378,681

9,378

9,692

18

15

-24,495-18,208

381,943

370,180

216,394

TOTAL REVENUE
EXPENSES
Personnel expenditure

215,400

208,474

2,566

2,187

1,153

3,683

-2,8532,050

216,266

Interns and WIPO fellow ships

3,151

2,494

-

-

-

159

-

-

3,151

2,653

Travel and fellow ships

13,775

12,284

3,541

3,063

78

38

-

-25

17,394

15,360Contractual services

67,39959,340

2,977

2,587

1,813

2,768

-99

-1,10972,09063,586

Operating expenses

25,63921,002

152

132

1,696

28,217-6,287-28,500

21,20020,851

Supplies and materials

3,527

1,522

42

65

61

236

-47

-20

3,583

1,803

Furniture and equipment

1,812

372

-

-

332

123

-1,317

-248

827

247

Construction

-

-

-

-

-

-

-

-

-

-

Depreciation and amortization

-

-

-

-

-

-

11,055

9,054

11,055

9,054

3,103

3,303

4

3

-

-

-

-48

3,107

3,258

-

-

993

838

-

-

-993

-838

-

-

TOTAL EXPENSES

333,806

308,791

10,275

8,875

5,133

35,224-541-19,684

348,673333,206

SURPLUS/(DEFICIT) FOR THE YEAR

63,23669,890-897

817-5,115-35,209-23,954

1,476

33,27036,974

Finance costs
Program support costs

79

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

ANNEX III
SPECIAL ACCOUNTS BY DONOR CONTRIBUTIONS(in Swiss francs)
Incom e 2015

Fund-in-Trust
Donor

Expenditure 2015

Foreign exchange

Fund
code

Balance as ofDecem ber 31, 2014 Funds received

Accredited indigenous and local communities

W_IGC

743.20

-

-

-

-

-

80.00

-

80.00

-

-

663.20AustraliaWAUS

493,374.28--

726.65726.65-339,802.39

44,079.90

383,882.29--

110,218.64

Australia TK

WAU15

-

74,129.75--

74,129.75-

63,514.02

8,256.80

71,770.82

2,358.93--

Brazil (CHF)

WBRES

333,211.18---27.22-27.22-

97,951.43

4,899.00

102,850.43--

230,333.53

Brazil South

WBRST
WBR15

384,809.49---16.80-16.80-129,624.69

16,853.35

146,478.04--

238,314.65

Brazil UNDP-

39,488.78--

39,488.78-

39,336.00

152.7839,488.78---

Costa Rica

WCORI

34,560.61

-

11.74

138.73150.47-

4,842.84-

4,842.84--

29,868.24

El Salvador

WELSA

55,189.19

-

18.79

222.63241.42

-

81.74

-

81.74

-

-

55,348.87

European Union (Pakistan Project)

WPAKI

383,114.88---41,520.35-41,520.35-

176,875.02

12,381.25

189,256.27

99,868.42-

52,469.84

Finland (CHF)

WFINCH

66,019.68

-

-

-

-

-

45,716.44

5,943.15

51,659.59--

14,360.09

France/Industrial Property

1,027,640.24
351,388.31

292,805.00
286,930.00--143.45-

292,661.55
286,930.00

199,445.88

318,394.39
6,266.16

41,410.00
24,685.50

359,804.39
230,397.54

49.40

-

960,497.40

Germany/ Junior Professional Officers

WFRIP
WDEJP

Ibero-American Program of Industrial Property

WIBER

232,961.26

13,273.24--170.00

13,103.24-

5,699.01

410.85

6,109.86--

239,954.64

Italy/Intellectual Property

WITIP

1,233,536.14

-

-

-

-

-

386,670.72

50,267.20

436,937.92--

796,598.22

Italy/Junior Professional Officers

WITJP

118,009.76

-

-

-

-

91,579.60

5,804.00

11,686.00

109,069.60--

8,940.16

Japan/Africa - LDCs

WJPAF

1,435,090.08

1,600,000.00-

2,616.79

1,602,616.79

233,117.35

994,872.04

158,077.90

1,386,067.29--

1,651,639.58

Japan/Copyright

WJPCR

339,510.69

468,646.00-

815.87469,461.87

214,448.50

197,381.12

52,208.00

464,037.62--

344,934.94

Japan/Industrial Property

WJPIP

4,912,334.54

3,830,000.00--1,530.64

3,828,469.36

819,942.57

2,522,469.72

428,392.35

3,770,804.64--

4,969,999.26

Japan/Junior Professional Officers

WJPOJ

-

432,969.48--

432,969.48

139,795.05

80.00

16,784.95

156,660.00--

276,309.48

MexicoWMEX

163,130.68

-

-

53.40

53.40

-

17,534.77

1,223.70

18,758.47--

144,425.61

Portugal

WPORT71,719.99---7,045.52-7,045.52

-

81.35

10.50

91.85

-

-

64,582.62

Republic of Korea/Copyright

WKRCR

579,780.25

310,808.59--40.71

310,767.88

63,001.90

297,894.47-

360,896.37--

529,651.76

Republic of Korea/Copyright/Professional Officers

WKRPO

141,006.68

363,145.00-

363,145.00

168,628.97

130.9020,251.25

189,011.12--

315,140.56

Republic of Korea/Intellectual Property

WKIPO

1,180,774.13

659,021.98-

126.44

659,148.42

179,231.25

607,299.84-

786,531.09--

1,053,391.46

Republic of Korea/Professional Officers

WKRJP

526,557.88

715,585.00--

715,585.00

456,566.17

184.2054,810.00

511,560.37--

730,582.51

Republic of Korea/Education

WKRED

276,726.20

164,735.11--

164,735.11-

118,231.25

5,911.60

124,142.85--

317,318.46

Republic of Korea/Building Respect IP

WKRBRIP42,310.41

123,011.32--51.51

122,959.81-

109,326.27

5,468.90

114,795.17--

50,475.05

Spain (CHF)

WESCH

120,152.92

169,143.23

-

2.81

169,146.04-

161,131.58

20,946.75

182,078.33--

107,220.63

Sw itzerland

WCH15

-

60,000.00-

60,000.00-

44,543.05

5,790.60

50,333.65

9,666.35--

Trusted Intermediary Global Accessible Resources
pilot project

WTIGA

4,302.72

-

-

-

-

1,305.65

169.70--

United States of America/Copyright
America/Enforcement of Intellectual W_USA
WUSEN
Property
RightsUnited Statesof America/Small- and Medium-sized
WUSSM
Enterprises-2,679.82

-

-

-

-

-

-

-

-

-

-

-

-

-

-

97,804.07

-

14.96

-3,039.33-3,024.37-

13,867.60

1,802.80

15,670.40

64,853.67

2,679.82-14,255.63

Uruguay (CHF)
Miscellaneous closed trust funds

157,931.61-2,442.29---143.90-30.81-143.90-30.81-

9,163.89--

9,163.89--

2,473.10

148,623.82-

14,758,568.96

9,603,692.48

45.49-49,056.92

9,554,681.05

2,565,757.24

6,716,156.55

992,874.78

10,274,788.57

176,796.77-9,102.71

13,852,561.96

Interest

Exch. rate

Total

diff.

TOTAL

WUYCH
WFITZZ

Staff

incomeexpenditure-

Other direct

Administrative

expenditure

support costs

Reim bursem ents todonorsTotal
expenditure

1,475.35

Balance as ofDecem ber 31, 2015

(gain)/loss
absorbedby WIPO

407,871.37

2,827.37-

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 31,2015) are not included in this schedule but are included in the figures shown in Note 14 Advance Receipts (see line ‘Non-exchange deferred revenue’).

80ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2015

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 theOrganization.

In January 2015 a payment for the amount of 12,500
Swiss francs was made to a former Deputy Director
General of the Organization as reimbursement for twomonths of rental costs incurred after the expiration of his
mandate. The corresponding expense for this payment
had already been recognized during the year ended
December 31, 2014.

81

World Intellectual Property Organization34, chemin des Colombettes
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