Annual financial reportand financial statements

Year to December 31, 2017

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2017

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

CONTENTSANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

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INDEPENDENT AUDITOR’S REPORT23

FINANCIAL STATEMENTS
STATEMENT I – Statement of Financial Position
STATEMENT II – Statement of Financial Performance
STATEMENT III – Statement of Changes in Net Assets
STATEMENT IV – Statement of Cash Flow
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Revenue 2017
STATEMENT V – Statement of Comparison of Budget and Actual Amounts - Expenses 2017
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Revenue 2016/17
STATEMENT V – Statement of Comparison of Budget and Actual Amounts - Expenses 2016/17
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Objectives and Budget of the Organization
Note 2: Significant Accounting Policies
Note 3: Cash and Cash Equivalents
Note 4: Investments
Note 5: Derivative Financial Instruments
Note 6: Receivables
Note 7: Inventories
Note 8: Equipment
Note 9: Investment Property
Note 10: Intangible Assets
Note 11: Land and Buildings
Note 12: Other Non-Current Assets
Note 13: Payables and Accruals
Note 14: Employee Benefits
Note 15: Transfers Payable
Note 16: Advance Receipts
Note 17: Borrowings
Note 18: Provisions
Note 19: Other Current Liabilities
Note 20: Contingent Assets and Liabilities
Note 21: Leases
Note 22: Related Party Transactions
Note 23: Net Assets
Note 24: Reconciliation of Statement of Budgetary Comparison and Statement of Financial Performance
Note 25: Revenue
Note 26: Expenses
Note 27: Financial Instruments
Note 28: Exchange Gain and Loss
Note 29: Events After the Reporting Date
Note 30: Segment Reporting

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25
26
27
28
29
30
31
32
33
33
34
40
41
42
42
43
44
45
46
47
50
51
51
57
59
60
60
61
61
61
62
63
64
66
67
68
73
74
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ANNEXESANNEX I – Statement of Financial Position by Source of Funding [Unaudited]
ANNEX II – Statement of Financial Performance by Source of Funding [Unaudited]
ANNEX III – WIPO Ex Gratia Payments

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

ANNUAL FINANCIAL REPORTINTRODUCTION

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

The financial statements of the World Intellectual
Property Organization (WIPO) for the year to
December 31, 2017, are submitted to the Assembliesof the Member States of WIPO (“Assemblies”) as
required by Regulation 6.7 of the Financial
Regulations and Rules (FRR). The financial
statements have been prepared in accordance with
International Public Sector Accounting Standards(IPSAS), as developed and approved by theInternational Public Sector Accounting Standards
Board (IPSASB).
The report of the External Auditor on the audit of the2017 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 to ensure the delivery of results in line with
the Organization’s strategic goals and the Programand 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, 2017. 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.

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 2017,
fees from these activities represented 89.9 per cent of
the Organization’s total revenue, with PCT system
fees alone representing 71.7 per cent. The driver forrevenue from these fee-based services is theinternational demand for intellectual property titles.
This demand is influenced by the performance of the
global economy, although since 2010 global
intellectual property filing activity has continued to
grow despite uneven economic recovery from theglobal financial crisis that began in 2008. Latest
available statistics up to the end of 2016 show thatworldwide patent and trademark applications havegrown each year since 2010. Global patentapplications rose to 3.13 million in 2016, representing
an 8.3 per cent increase over 2015. An estimated 7.0
million trademark applications were filed worldwide in

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 191
Member States. The Organization’s mission is to leadthe development of a balanced and effective
international intellectual property system that enables
innovation and creativity for the economic, social andcultural development of all countries. The

3

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 20172016, 16.4 per cent more than in 2015. Global
industrial design activity also increased in 2016
(annual growth of 10.4 per cent in applications, and8.3 per cent in the number of designs contained inapplications). Overall, worldwide filings for patents,
trademarks and industrial designs reached recordheights in 2016.

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

Other external factors which may influence theOrganization’s revenue from its fee-based services
include research and development investment levels,
technological confidence levels, and exchange rate
fluctuations. For the PCT system in particular, otherimportant factors include the level of PCT fees ascompared to those offered by other filing routes, theattractiveness and value of PCT services as comparedto other filing routes, and individual corporate patent
strategies.

The Organization manages its investments inaccordance with its Policy on Investments, which was
also revised during 2015. Some further minor
revisions were made in 2017. The policy states thatthe primary objectives of the Organization’s
investment management, in order of importance, shallbe: (i) preservation of capital; (ii) liquidity and (iii)within the constraints of (i) and (ii), the rate of return.
The Organization aims to achieve a market rate of
return whenever appropriate and possible for both
operating and core cash.

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

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

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

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

The Organization uses a Results-Based Management
system to ensure that resources are budgeted andutilized in line with organizational results and priorities.
Organizational performance is measured andanalyzed on a regular basis through performanceindicators, targets and baselines. Under this system,
both the Program and Budget and the Medium-Term
Strategic Plan form part of WIPO’s planning
framework, along with annual work plans andindividual staff objectives.
The Organization manages the levels of its reserves inaccordance with its Policy on Reserves, which wasrevised in 2015. WIPO’s reserves are accounted for4

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Overview of the Financial Statements

Financial Statement Highlights

The financial statements prepared in accordance withIPSAS consist of:

The 2017 WIPO financial statements prepared inaccordance with IPSAS show a surplus for the year of
18.6 million Swiss francs. The net assets of theOrganization as at December 31, 2017, are 202.7
million Swiss francs.

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

During 2017, the Organization implemented IPSAS 39
Employee Benefits. As a result of this change inaccounting policy, the surplus for the prior year 2016has been retrospectively restated to 37.3 million Swiss
francs (previously 32.0 million Swiss francs). Most
significantly, the Organization’s net assets as at
December 31, 2016, were also restated to 149.4
million Swiss francs (previously 311.3 million Swiss
francs). This important reduction in net assets is
explained later in more detail, but is principally related
to a change in accounting treatment for WIPO’s AfterService Health Insurance (ASHI) liability, requiring therecognition of previously unrecognized actuarial
losses in the statement of financial position.

Statement of Financial Performance - measures thenet surplus or deficit (the difference between total
revenue and total expenses) for the year. This
statement provides information on the Organization’ssources of revenue, and the cost of its activities. The
annual surplus or deficit is presented on a full accrualbasis of accounting, recognizing revenue in the period
it is earned and expenses when incurred, regardlessof when the associated cash is received or paid;
Statement of Changes in Net Assets - identifies thechange in the net asset position during the year. This
statement highlights the sources of changes in the
Organization’s overall financial position, includingchanges due to the surplus or deficit for the period;

The 2017 surplus of 18.6 million Swiss francs
comprises total revenue of 413.5 million Swiss francs,
and total expenses of 394.9 million Swiss francs. Total
revenue in 2017 was up by 25.8 million Swiss francs
on the 2016 figure. Most significantly, revenue from
Madrid system fees increased by 10.4 million Swiss
francs compared to the prior year. PCT system fees
also increased compared to 2016, by 5.7 million Swiss
francs. The Organization generated investment
revenue of 4.3 million Swiss francs in 2017,
representing mainly gains on investments following
implementation of its revised Policy on Investments
during the year. Total expenses rose by 44.5 million
Swiss francs compared to the restated 2016 figure.
Most significantly, contractual services increased by
15.0 million Swiss francs, including rises in IT
commercial service providers and individual
contractual services (up by 5.7 million Swiss francs
and 3.6 million Swiss francs respectively compared tothe prior year). Finance costs were 9.7 million Swiss
francs higher than in 2016. This was mainly the resultof the Organization’s decision to repay in full its
remaining loan with the Banque Cantonale de Genève
and the Banque Cantonale Vaudoise (BCG/BCV),
which incurred a penalty charge of 11.6 million Swiss
francs (calculated by reference to the present value ofall outstanding interest due on the loan). Personnel
expenditure increased by 9.5 million Swiss francs in2017, largely due to movements in the Organization’s
liability for ASHI which were recognized as an
expense for the year.

Statement of Cash Flow - presents the movements ofcash during the year resulting from operating,investing and financing activities. This statement
provides information on how cash has been raised
and used during the year, including borrowing andrepayment of borrowing, and the acquisition anddisposal of fixed assets. In contrast to the Statementof Financial Performance, the Organization’s net cash
flow measures the difference between cash coming
into the Organization and cash going out;
Statement of Comparison of Budget and Actual
Amounts - presents a comparison of the budget
amounts under the Program and Budget, and theactual amounts for the year. This statement isprepared on the budgetary basis which is a modified
accrual basis. It provides information on the extent towhich resources were obtained and used inaccordance with the approved budget;
Notes to the Financial Statements - assist inunderstanding the principal financial statements. The
Notes comprise a summary of significant accounting
policies and other explanatory information. They also
disclose information required by IPSAS which is notpresented on the face of the principal financial
statements.

WIPO’s total assets decreased slightly from 1,027.2
million Swiss francs as at December 31, 2016, to
1,021.5 million Swiss francs as at December 31, 2017.
Cash, cash equivalents and investments totaled 543.8

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
million Swiss francs at the end of 2017 (53.2 per centof total assets). This represents a slight increase of
1.5 million Swiss francs compared to the prior year,
which was achieved despite the Organization repaying
in full the remaining balance of 70.5 million of its
BCG/BCV loan. As noted, this early loan repayment
incurred a penalty charge of 11.6 million Swiss francs,
resulting in a total cash outflow of 82.1 million Swiss
francs. Following the implementation of WIPO’s
revised Policy on Investments, the Organization’s coreand strategic cash is now mainly held in non-current
investments. At the end of 2017, WIPO continued tomaintain significant investment in fixed assets,
including land, buildings, investment property,
intangible assets and equipment with a total net bookvalue of 403.2 million Swiss francs (39.5 per cent of
total assets). Although additions of 5.0 million Swiss
francs were made to buildings, intangible assets andequipment during 2017, the net book value of fixed
assets was reduced by a depreciation andamortization charge of 11.3 million Swiss francs forthe year. It is also noted that following the 2017 year
end, on January 31, 2018 the Organization signed an
act of sale for its investment property, the Madrid
Union Building. The sale price was 7.0 million Swiss
francs, and the gain resulting from this will berecognized in the surplus or deficit of 2018.

million Swiss francs (41.2 per cent of total liabilities).
The largest employee benefit liability for theOrganization is the ASHI liability, which totaled 304.4
million Swiss francs at the end of 2017. During 2016
the IPSASB issued a new standard dealing with
employee benefits, with an implementation deadline ofJanuary 1, 2018. WIPO has implemented thisstandard during 2017. The standard has changed theway in which WIPO is able to account for its ASHI
liability, and requires previously unrecognizedaccumulated actuarial losses to be recognized as partof the liability in the statement of financial position.
Borrowings totaled 16.9 million Swiss francs at theend of 2017, compared to 88.7 million Swiss francs atthe end of 2016. As noted, WIPO repaid the remainingbalance of the BCG/BCV loan during 2017. Following
the year end, in January 2018 the Organization also
took the decision to repay in full the remaining balanceof 16.9 million Swiss francs of its loans with theFoundation
for
Buildings
forInternational
Organizations (FIPOI), bringing WIPO’s totalborrowings to zero.
The Organization’s net assets, consisting of its
Reserves and Working Capital Funds, totaled 202.7
million Swiss francs at the end of 2017. Following theimplementation of IPSAS 39, WIPO’s net assets also
include a balance for accumulated actuarial losses
totaling 138.7 million Swiss francs.

The principal liabilities of the Organization as at
December 31, 2017 are payables and advancereceipts of 397.7 million Swiss francs (48.6 per cent of
total liabilities) and employee benefit liabilities of 337.7

Financial Performance
The Organization’s results for 2017 showed a surplus
for the year of 18.6 million Swiss francs, with total
revenue of 413.5 million Swiss francs and total
expenses of 394.9 million Swiss francs. This can becompared to a restated surplus of 37.3 million Swiss
francs in 2016, with total revenue of 387.7 million
Swiss francs and total restated expenses of 350.4
million Swiss francs.

The Program and Budget result for 2017 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 56.3 million
Swiss francs. The 2017 result for the Organization
under IPSAS includes Special Accounts, Projects
financed from reserves, and the impact of adjustments
related to full accrual accounting in accordance withIPSAS:

Summary of financial performance by source of funding
Program andBudgetSpecial
Accounts

2017

2017

Projects
Financed from
Reserves
2017

IPSAS
Adjustm ents

Total

Total

2017

2017

2016
(restated)(in millions of Swiss francs)
Total revenue

422.9

10.3

-

-19.7

413.5

387.7

Total expenses

366.6

11.2

5.0

12.1

394.9

350.4

Net surplus/(deficit)

56.3

-0.9

-5.0

-31.8

18.6

37.3

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
The chart below summarizes the principal differences
between the Program and Budget surplus of 56.3
million Swiss francs, and the surplus for the whole
Organization prepared on an IPSAS basis of 18.6
million Swiss francs:
Movement from budget result to IPSAS result 2017
56.3
-0.9

millions of Swiss francs

-5.0

-20.2
+3.5

18.6

-11.3
-5.0

BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financedfromreserves

Deferral of Depreciation
revenue fromandfees
amortization

Entity differences

Changes in
employeebenefitliabilities

Capitalization
Other
and disposal adjustmentsof fixed
assets

Accounting basis differences

IPSAS RESULTPER
FINANCIALSTATEMENTS

Full accrualbasis

increased from 46.5 million Swiss francs to50.8 million Swiss francs.

The WIPO financial statements as prepared inaccordance with IPSAS include all areas andactivities of the whole Organization. The inclusionof the results before IPSAS adjustments for Special
Accounts (deficit of 0.9 million Swiss francs) and
Projects financed from reserves (deficit of 5.0
million Swiss francs) represent ‘entity differences’
between the budget result and the surplus per the
IPSAS financial statements. The application of fullaccrual basis accounting in accordance with IPSAS
leads to a number of ‘accounting basis differences’
which impact the result for the year. The net impactof these adjustments is a 31.8 million Swiss francs
reduction in the surplus:+1.2

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 isalso recognized where an application has been
filed but no fee has been received by theOrganization. The total net impact of theseadjustments is a reduction in revenue of 20.2
million Swiss francs. This is principally due toan increase in the balance of deferred revenue
from fees (PCT, Madrid and Hague systems),
which moved from 230.7 million Swiss francs
as at December 31, 2016 to 255.2 million
Swiss francs as at December 31, 2017. Overthe same period, receivables from PCT fees7The result for 2017 on an IPSAS basis includes
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets as the cost of these assets is
spread over their useful lives. The total cost ofdepreciation and amortization for the year was
11.3 million Swiss francs.



IPSAS requires that employee benefits earned
by staff but not yet paid be recognized asliabilities of the Organization. The IPSAS
adjustments bring the total liabilities recognizedin the financial statements into line with the
IPSAS compliant calculations of theseliabilities, including those prepared by external
actuaries. The net impact of these adjustments
in 2017 resulted in an increase in expenses(personnel expenditure) of 5.0 million Swiss
francs. It is noted that following theimplementation of IPSAS 39, actuarial gains orlosses impacting the ASHI liability arerecognized directly in net assets.



Under IPSAS, costs relating to theimprovement of buildings and the acquisition ofequipment are capitalized. The loss on disposal
or demolition of fixed assets also impacts theresult for the year. The net impact of theseadjustments is an increase of 3.5 million Swiss
francs in the 2017 surplus.

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Revenue Analysis
Composition of 2017 revenue on an IPSAS basis(in millions of Swiss francs)

Madrid system fees
70.0
(16.9%)

Assessedcontributions
17.8(4.3%)

Voluntarycontributions
12.1(2.9%)

Hague system fees
5.1
(1.3%)
PCT system fees
296.4
(71.7%)

Other revenue
12.1(2.9%)
2017 total revenue:
413.5m Swiss francs

381.9m Swiss francs
Total revenue of the Organization for 2017 was413.5 million Swiss francs, representing an increaseof 6.7 per cent compared to the 2016 total revenueof 387.7 million Swiss francs. The largest source ofrevenue during 2017 was PCT system fees,
accounting for 71.7 per cent of total revenue.
Revenue from PCT system fees rose by 2.0 per
cent compared to 2016.
Madrid system fees were the second largest sourceof revenue during the year 2017, representing 16.9
per cent of total revenue. Revenue from Madrid
system fees increased by 17.4 per cent compared
to 2016. Hague system fees, Lisbon system fees,
assessed contributions, voluntary contributions(including contributions by donors to Special
Accounts, and subventions to the Lisbon Union)and other revenue (investment, publications,arbitration and mediation and other/miscellaneous
revenue) comprise the remaining 11.4 per cent of
the Organization’s total revenue. The following tableprovides a summary of the changes by revenue
type compared to the prior year.

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WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Change in revenue 2016 – 2017
2017

2016

Net Change

Net Change(in millions of Swiss francs)%

Revenue
Assessed contributions

17.8

17.3

0.5

2.9

Voluntary contributions

12.1

10.2

1.9

18.6

Publications revenue

0.2

0.5

-0.3

-60.0

Investment revenue

4.3

-

4.3

N/A

PCT system

296.4

290.7

5.7

2.0

Madrid system

70.0

59.6

10.4

17.4

Fees

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

5.1

5.0

0.1

2.0

371.5

355.3

16.2

4.6

1.7

1.6

0.1

6.3

5.9

2.8

3.1

110.7

413.5

387.7

25.8

6.7

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 2012-2017
2017

2016

2015

2014

2013

2012

(in millions of Swiss francs)
International filing fees

293.6

281.8

263.6

275.0

262.3

Payment regularization 2004-2013

-

-

4.7

-

-

240.6
-

Other fees

3.6

3.8

4.1

3.9

3.9

3.9
7.5

Exchange gain/(loss) on fees received

0.4

5.2

-0.7

-1.7

-6.0

Other exchange gain/(loss)

-1.2

-0.1

3.7

1.4

-2.7

-

Total PCT system fees

296.4

290.7

275.4

278.6

257.5

252.0

Revenue from PCT system fees on an IPSAS basis
increased by 2.0 per cent compared to 2016. In the
IPSAS
financialstatements,
revenueforinternational filing fees from PCT applications is
recognized only on publication of the application. In
2017 there were 223,571 publications compared to210,454 in 2016.

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

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

9

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

240,000

300

230,000

290

220,000

280

210,000

270

200,000260

190,000250

180,000240

170,000

230

160,000

Revenue (millions of Swiss
francs)Number of publications

PCT - International filing fees and publications 2012-2017

220
2012

2013

2014

2015

Number of publications

2016

2017

International fees for published applications

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

gain or loss on fees arises as the difference
between the equivalent Swiss franc fee and theactual amount in Swiss francs at the date ofpayment. In the year 2017, the Organization madea net exchange gain of 0.4 million Swiss francs on
PCT fees received (international filing fees andhandling fees). Gains concerned principally fees inEuro and US dollar (1.1 million Swiss francs and 0.4
million Swiss francs respectively), while an
exchange loss of 1.2 million Swiss francs wasincurred on fees received in Japanese yen. This net
exchange gain follows a gain of 5.2 million Swiss
francs in 2016, although in 2015, 2014 and 2013
WIPO incurred a net exchange loss on fees
received:

Detail of exchange gain/(loss) on PCT fees received 2012-2017
2017

2016

2015

2014

2013

2012

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

0.4

0.7

2.6

0.1

-1.5

Japanese yen

-1.2

4.4

-1.6

-1.3

-4.9

1.8

Euro

1.1

0.4

-1.4

-0.4

0.7

-0.1

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

0.1

-0.3

-0.3

-0.1

-0.3

1.6

0.4

5.2

-0.7

-1.7

-6.0

7.5

10

4.2

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
USD – Comparison of PCT equivalent amount rate and UNORE 2012-2017

1.03
1.01
0.99
0.97
0.95

0.93
0.91
0.89
0.87
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14

Dec-14Jun-15USD Fee rates

Dec-15Jun-16

Dec-16Jun-17

Dec-17

USD UNORE rates

JPY – Comparison of PCT equivalent amount rate and UNORE 2012-2017

0.013
0.012
0.011

0.010
0.009
0.008
0.007
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14

Dec-14JPY Fee rates

Jun-15

Dec-15Jun-16

Dec-16Jun-17

Dec-17JPY UNORE rates

EUR – Comparison of PCT equivalent amount rate and UNORE 2012-2017

1.220
1.170

1.120
1.070
1.020
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14

Dec-14EUR Fee rates

Jun-15

Dec-15EUR UNORE rates

11

Jun-16

Dec-16Jun-17

Dec-17

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Madrid system fees principally comprise basic fees
received from applications for registrations orrenewals and fees for subsequent designations:
Detail of Madrid system fees 2012-2017
2017

2016

2015

2014

2013

2012

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

58.5

49.7

56.7

46.0

45.9

42.7

Subsequent designations

5.5

4.8

5.5

4.7

4.5

4.0

Other fees

6.0

5.1

5.7

4.4

5.0

4.9

Total Madrid system fees

70.0

59.6

67.9

55.1

55.4

51.6

In accordance with IPSAS, revenue from Madrid
fees for registrations, renewals and subsequent
designations is recognized in the financial
statements upon publication. Revenue fromregistrations and renewals (but not including otherfees) as recognized in accordance with IPSAS has
moved in line with the number of registrations andrenewals in the year. In the prior year 2016,
revenue from Madrid system fees fell by 12.2 percent compared to 2015, due largely to an increased
backlog in registrations linked in part to system
issues with the Madrid International Registration
Information System. In 2017 WIPO made asignificant effort to clear the backlog, and revenue
from Madrid system fees increased by 17.4 per centcompared to the prior year. Madrid system
registrations totaled 56,267 in 2017, against 44,726
in 2016.

100,000

60.0

90,00055.0

80,00050.0

70,00045.0

60,00040.0

50,00035.0

40,000

30.0
2012

2013

2014

2015

Registrations and renewals

2016

2017

Fees for published registrations and renewals

12

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

Madrid - basic fees and registrations/renewals 2012-2017

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Hague system fees totaled 5.1 million Swiss francs
for 2017. 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 were stablecompared to 2016, showing a small increase of 0.1
million Swiss francs (around 2.0 per cent). This
represents a slowdown for the Hague systemfollowing the significant rise in fees of 28.2 per centthat occurred in 2016, which was linked to theaccessions of the Republic of Korea in 2014 and ofJapan and the United States of America in 2015.
Hague registrations rose slightly from 5,233 in 2016
to 5,272 in 2017. Lisbon system fees totaled 39
thousand Swiss francs in 2017, compared to 25
thousand Swiss francs in 2016.

11.2 million Swiss francs of voluntary contributions
represents revenue received under Special
Accounts. This revenue is recognized as work is
performed and expense incurred in line with therelevant agreement.
Investment revenue totaled 4.3 million Swiss francs
in 2017, compared to 21 thousand Swiss francs in2016. During 2017, WIPO implemented its revised
Policy on Investments, entering into medium-termand long-term investments for its core and strategic
cash balances. As at December 31, 2017, theseinvestments had generated unrealized investment
gains of 4.3 million Swiss francs due to the net
movement in their fair values. Arbitration andmediation revenue of 1.7 million Swiss francs wasbroadly in line with the prior year, althoughpublications revenue of 0.2 million Swiss francs was
0.3 million Swiss francs lower than in 2016.
Other/miscellaneous revenue of 5.9 million Swiss
francs for the year 2017 was up by 3.1 million Swiss
francs compared to 2016, mainly due to the reversalof unused provisions for legal costs during 2017.

Revenue from assessed contributions of 17.8
million Swiss francs in 2017 represents 4.3 per centof total revenue, while revenue from voluntary
contributions of 12.1 million Swiss francs in 2017
represents 2.9 per cent of total revenue. In 2017
voluntary contributions included 0.9 million Swiss
francs of subventions received under Article
11(3)(iii) of the Lisbon Agreement. The remaining

Expense Analysis
Composition of 2017 expenses on an IPSAS basis(in millions of Swiss francs)

Contractual services
89.4(22.6%)

Operating expenses
26.3(6.7%)
Travel, training andgrants18.2(4.6%)

Personnel expenditure
228.6(57.9%)

Depreciation andamortization
11.3(2.9%)
Finance costs
12.0(3.0%)

2017 total expenses:
394.9m Swiss francs

Other expenses
9.1(2.3%)

13

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Detailed breakdown of 2017 expenses(in millions of Swiss francs)
Personnel
expenditure
228.6

Contractual
services
89.4

Operatingexpenses
26.3

Posts
Temporary staff
Other staff costs

216.5
12.2
-0.1

Conferences
Individual contractual services
Other contractual services

4.0
15.1
70.3

Premises and maintenanceCommunication
Representation & other operating expenses

22.1
2.2
1.1
0.9

United Nations joint services

Travel, training
and grants
18.2

Staff missions
Third-party travel
Training and related travel grant

5.9
10.2
2.1

Depreciation
Buildings depreciation
and amortization Equipment depreciation
11.3
Intangible assets amortization

9.4
0.5
1.4

Early loan repayment penalty
Bank charges

11.8
0.2

Finance costs
12.0

Internships and WIPO fellow ships
Other expenses
Supplies and materials
9.1
Furniture and equipment

3.9
3.5
1.7

Total expenses of the Organization for 2017 were394.9 million Swiss francs, representing an increaseof 12.7 per cent compared to 2016 restated total
expenses of 350.4 million Swiss francs. The largest
expense for the Organization was personnel
expenditure of 228.6 million Swiss francs,
representing 57.9 per cent of total expenses.
Contractual services of 89.4 million Swiss francs
were the second largest expense for theOrganization, followed by operating expenses of
26.3 million Swiss francs. The table below provides
a summary of the changes by expense typecompared to the prior year:
Change in expenses 2016 - 2017
2017

2016
(restated)

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

228.6

219.1

9.5

4.3

Internships and WIPO fellow ships

3.9

3.3

0.6

18.2

Travel, training and grants

18.2

15.8

2.4

15.2

Contractual services

89.4

74.4

15.0

20.2

Operating expenses

26.3

21.9

4.4

20.1

Supplies and materials

3.5

2.0

1.5

75.0

Furniture and equipment

1.7

0.2

1.5

750.0

Depreciation and amortization

11.3

11.4

-0.1

-0.9

Finance costs

12.0

2.3

9.7

421.7

Total expenses

394.9

350.4

44.5

12.7

14

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
141.4 million Swiss francs, 61.8 per cent of total
personnel expenditure for 2017. The next largest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which totaled
27.1 million Swiss francs in 2017. WIPO’s
mandated contribution to the UNJSPF is currently
15.8 per cent of a staff member’s pensionable
remuneration. After-service employee benefits of
24.2 million Swiss francs represent the cost to theOrganization of ASHI, repatriation grant and travel,
and accumulated annual leave. The expense for2017 is equivalent to the actual cash payments forthese benefits, plus the movement in the amount of
the total liability in the year, excluding actuarial
gains on the ASHI liability which are recognizeddirectly in net assets. Allowances of 20.2 million
Swiss francs represent 8.8 per cent of total staff
expenditure.
Allowances
includeprincipallydependency allowances for 7.4 million Swiss francs,
education grant for 5.5 million Swiss francs andhome leave for 1.8 million Swiss francs. The cost of
the Organization’s contribution to monthly collective
medical insurance premiums for active staff totaled
10.2 million Swiss francs for the year 2017. Other
personnel expenditure of 5.5 million Swiss francs
includes mainly the movements in the expected
cost of WIPO’s rewards and recognition program(3.1 million Swiss francs).

Composition of 2017 personnel expenditure on an IPSAS basis(in millions of Swiss francs)

UNJSPF
27.1(11.9%)

Post adjustment
40.8(17.8%)

After-service
employee benefits
24.2(10.6%)
Allowances
20.2(8.8%)Net base salary
100.6(44.0%)

Collective medical
insurance
10.2(4.5%)

Other
5.5(2.4%)

2017 total personnel expenditure:228.6m Swiss francs

15

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Total personnel expenditure in 2017 of 228.6 million
Swiss francs has increased by 4.3 per centcompared to total restated personnel expenditure of
219.1 million Swiss francs in 2016. The table below
provides a detailed breakdown of personnel
expenditure and the variance compared to 2016:
Change in personnel expenditure 2016 – 2017
2017

2016
(restated)

Net Change(in millions of Swiss francs)

Net Change%

Net base salary

94.5

94.0

0.5

0.5

Post adjustment

37.6

38.6

-1.0

-2.6

UNJSPF contribution

25.4

24.6

0.8

3.3

Allow ances

19.7

15.7

4.0

25.5

After-service employee benefits

24.2

16.3

7.9

48.5

Collective medical insurance

9.5

8.8

0.7

8.0

Other post staff expenditures

5.6

1.4

4.2

300.0

Staff in posts expenditure

216.5

199.4
-

17.1

8.6

Net base salary

6.1

6.9

-0.8

-11.6

Post adjustment

3.2

3.0

0.2

6.7

UNJSPF contribution

1.7

1.8

-0.1

-5.6

Allow ances

0.5

0.5

-

0.0

Collective medical insurance

0.7

0.7

-

0.0

Staff in tem porary positions expenditure

12.2

12.9
-

-0.7

-5.4

Other staff costs

-0.1

6.8

-6.9

-101.5

228.6

219.1

9.5

4.3

Total personnel expenditure

While the expense for staff in posts has increased
by 17.1 million Swiss francs compared to 2016, theexpense for staff in temporary positions has fallen
by 0.7 million Swiss francs. The increase in the
expense for staff in posts is principally due to theafter-service employee benefits cost. This has
increased by 7.9 million Swiss francs compared to2016. Although overall the ASHI liability decreased
between 2016 and 2017, this was due to actuarial
gains which were recognized directly in net assets
and did not impact personnel expenditure. Other
staff costs presented separately in the table above
represent costs common to both posts andtemporary
positions(professional
accident
insurance, Closed Pension Fund costs and litigation
costs). Other staff costs have fallen by 6.9 million
Swiss francs compared to 2016, and actually show
a negative balance of 0.1 million Swiss francs. Thisis due to the impact of the reduction in the
Organization’s liability for the Closed Pension Fund(CROMPI), which decreased by 0.5 million Swiss
francs in 2017. In 2016, there were also significant
expenses in other staff costs related to therecognition of legal provisions concerning WIPO
personnel.

The cost of interns and WIPO fellowships is shown
separately in the financial statements. Internships
and WIPO fellowships are not included as part ofpersonnel expenditure as they are not covered by
WIPO’s Staff Regulations and Rules. WIPO
fellowships aim to provide individuals withexperience to strengthen their knowledge andprofessional competence. The cost of internships
and WIPO fellowships in 2017 was 3.9 million Swiss
francs, compared to the prior year figure of 3.3
million Swiss francs.
Travel, training and grants total 18.2 million Swiss
francs for 2017, and account for 4.6 per cent of total
expenses. This represents an increase of 2.4 million
Swiss francs compared to 2016. Both third-party
travel (conference participants and lecturers)
expense and staff mission costs were higher than in2016 (by 1.4 million Swiss francs and 0.7 million
Swiss francs respectively).
Contractual services in 2017 total 89.4 million Swiss
francs. These expenses have increased by 20.2 percent compared to the figure of 74.4 million Swiss
francs for 2016. Contractual services in the year2017 concern primarily commercial translation
services (27.1 million Swiss francs), IT commercial
services (17.4 million Swiss francs), individual

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017contractual services (15.1 million Swiss francs), andInternational Computing Centre services (11.8
million Swiss francs).

As previously noted, expenses under IPSAS include
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets, as the cost of these assets is
spread over their useful lives. For 2017,
depreciation and amortization total 11.3 million
Swiss francs, compared to 11.4 million Swiss francs
for 2016.

Operating expenses in 2017 total 26.3 million Swiss
francs, representing an increase of 20.1 per centcompared to the 2016 total of 21.9 million Swiss
francs. Operating expenses in 2017 comprisemainly premises and maintenance costs (22.1
million Swiss francs) and communication expenses(2.2 million Swiss francs).

Finance costs totaled 12.0 million Swiss francs in2017, compared to 2.3 million Swiss francs in 2016.
In 2016, finance costs were principally interest
repayments on the BCG/BCV loan, totaling 2.1
million Swiss francs. In 2017 the Organization took
the decision to repay in full the balance of the loan,
which
incurredapenaltychargeof
11.6 million Swiss francs (calculated by reference tothe present value of all outstanding interest due on
the loan).

Expenses for supplies and materials haveincreased from 2.0 million Swiss francs in 2016 to
3.5 million Swiss francs in 2017. Furniture andequipment expenses are also higher, totaling 1.7
million Swiss francs in 2017 compared to 0.2 million
Swiss francs in 2016, largely due to increased IT
equipment purchases in 2017. Furniture andequipment expenses concern those items which do
not meet the Organization’s threshold of 5,000
Swiss francs for capitalization.

Financial Position

reduction in the 2016 net assets follows therecognition under IPSAS 39 of previously
unrecognized actuarial losses in the statement offinancial position, related to WIPO’s liability for
ASHI. The increase in net assets between 2016 and2017 is due to the surplus for 2017 of 18.6 million
Swiss francs, and also an actuarial gain of 34.7
million Swiss francs following the 2017 valuation of
WIPO’s ASHI liability:

As at December 31, 2017, the Organization has net
assets of 202.7 million Swiss francs, with total
assets of 1,021.5 million Swiss francs and total
liabilities of 818.8 million Swiss francs. Following
the implementation of IPSAS 39, the net assets of2015 and 2016 were restated for presentation in thefinancial statements. As a result, the restated 2016
net assets total 149.4 million Swiss francs(previously 311.3 million Swiss francs). This

Movement in net assets 2015 to 2017
+37.3

+2.2
-2.0
+34.7

204.5

202.7

millions of Swiss francs

+18.6

-92.6

Restated net
Restated
assetssurplus on an
Decem ber
IPSAS basis
31, 2015
2016

Land
revaluation
increase

Return ofWorking
Capital Funds

Actuarial
lossesthrough net
assets17

149.4

Restated net Surplus on an
ActuarialassetsIPSAS basis gains throughDecem ber2017
net assets
31, 2016

Net assets
Decem ber31, 2017

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
The following chart provides a summary of theStatement of Financial Position of WIPO as at
December 31, 2017. Total assets of 1,021.5 million
Swiss francs are composed primarily of cash, cash
equivalents, investments and fixed assets. Total

liabilities of 818.8 million Swiss francs are
principally payables and advance receipts, andemployee benefits:

Summary of assets and liabilities December 31, 2017

1,021.5
Net assets
202.7

millions of Swiss francs

Cash & cash
equivalents
and investments
543.8

818.8

Payables andadvance receipts
397.7

Fixed assets
403.2

Employee benefits
337.7

Other 74.5

Other 83.4

AssetsLiabilities

Swiss francs. During 2017, the Organization carriedout an extensive review of old and out-of-use
equipment. As a result, equipment with a total costof 6.2 million Swiss francs has been disposed of.
This equipment was almost entirely depreciated in
WIPO’s accounting records, with a net book valueof approximately 11 thousand Swiss francs. The
total depreciation and amortization charge against
all fixed assets was 11.3 million Swiss francs for
2017.

AssetsThe Organization has cash, cash equivalents andinvestment balances of 543.8 million Swiss francs,
representing 53.2 per cent of total assets. This
includes amounts totaling 174.1 million Swiss francs
which are classified as restricted, and amounts
totaling 124.4 million Swiss francs which represent
strategic cash. The total balance of 543.8 million
Swiss francs is 1.5 million Swiss francs higher thanthe balance of 542.3 million Swiss francs at the endof 2016. The balance of cash and equivalents has
increased despite the Organization repaying in full
the remaining balance of 70.5 million of its
BCG/BCV loan.

The following table summarizes the fixed assets
held by the Organization. Land and property isclassified differently under IPSAS depending on the
purpose for which it is used, or the nature of thecontractual right or agreement under which it isheld. Apart from the land and property included
below as fixed assets, the Organization leases
additional depots and storage facilities in Geneva,
and has leases for some of its external offices (seeNote 21). The Organization has also been granted
land surface rights on which certain headquarterbuildings are located. These rights, acquired at nocost, are not recognized in the financial statements
but are disclosed (see Note 10).

The Organization holds significant fixed assets(land, buildings, investment property, intangible
assets and equipment) with a total net book value of
403.2 million Swiss francs. During 2017, costs
totaling 4.6 million Swiss francs for additions andimprovements to existing buildings were capitalized.
Part of these improvements entailed the partial
demolition of components of existing buildings, withan estimated impact on net book value of 1.5 million

18

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Fixed assets as at December 31, 2017
Decem ber 31, 2017
Net Carrying
Am ount

Liabilities

Classification in
the Financial
Statem ents

As at December 31, 2017, payables and advancereceipts total 397.7 million Swiss francs, andprincipally include deferred revenue for theprocessing of international applications (under the
PCT, Madrid and Hague systems) for 255.2 million
Swiss francs. This deferred revenue balance mainly
concerns PCT system fees of 252.2 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,
2017, for applications with a 2016 or 2017 filing
date, it is estimated that approximately 184,601
applications were unpublished. At the end of theprior year 2016, approximately 171,719 applications
filed in 2015 or 2016 were unpublished and thedeferred revenue balance for PCT system fees was
228.0 million Swiss francs.

(in millions of Swiss
francs)New Building Site

30.8

Land (Note 11)

Security Perimeter

8.4

Buildings andConstructions in Use(Note 11)

New Conference Hall

63.7

Buildings andConstructions in Use(Note 11)

New Building

147.8

Buildings andConstructions in Use(Note 11)

A. Bogsch Building

45.9

Buildings andConstructions in Use(Note 11)

G. Bodenhausen Building I

10.3

Buildings andConstructions in Use(Note 11)

G. Bodenhausen Building II

3.6

Buildings andConstructions in Use(Note 11)

PCT Building

58.7

Buildings andConstructions in Use(Note 11)

Madrid Union Building

6.2

Investment Property(Note 9)Land surface rights

24.7

Intangible Assets(Note 10)

Softw are (acquired anddeveloped)

1.7

Intangible Assets(Note 10)Equipment

1.1

Equipment (Note 8)

Furniture and furnishings

0.3

Furniture andfurnishings (Note 8)

Total fixed assets

Employee benefit liabilities of 337.7 million Swiss
francs are mainly comprised of the ASHI liability of
304.4 million Swiss francs, which represents 90.1
per cent of the total employee benefits liability as at
December 31, 2017. The ASHI liability has however
decreased by 16.5 million Swiss francs compared to
the restated 2016 balance. The liability is calculatedby an independent actuary, and reflects theacquired future cost of WIPO’s share of collective
medical insurance premiums for both existing WIPO
retirees and the projected number of active WIPO
staff who will retire in the future.

403.2

Composition of employee benefits liabilities as
at December 31, 2017

Other assets of the Organization totaling 74.5
million Swiss francs include accounts receivable,
inventories and advance payments. Within this, themost significant balance is PCT debtors totaling
50.8 million Swiss francs. At any given time, asignificant number of PCT applications have been
filed with receiving offices and possibly received by
WIPO, for which no corresponding fee payment has
been received by the Organization. The balance of
PCT debtors has increased compared to the prioryear, when it totaled 46.4 million Swiss francs. This
increase is a result of higher PCT applications in
2017, with the percentage of unpaid applications atyear end remaining consistent between the twoyears at 15.7 per cent.

19

Decem ber 31,
2017(in millions of
Swiss francs)

Percentage of
Liability

After-Service Health Insurance(ASHI)

304.4

90.1

Repatriation grant and travel

16.4

4.9

Accumulated leave

8.7

2.6

Closed Pension Fund

2.1

0.6

Education grant

1.9

0.6

Accrued overtime

0.4

0.1

Home leave

0.3

0.1

Separation benefits

0.3

0.1

Performance rew ards
Total em ployee benefit
liabilities

3.2

0.9

337.7

100.0

%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
The ASHI liability is based on a calculation
performed by an independent actuary, which
incorporates a number of actuarial assumptions.
These include the discount rate, medical cost trend
rates, staff turnover rates and mortality rates.
Changes to these assumptions year on year lead toactuarial gains and losses. Previously under IPSAS,
WIPO applied the corridor approach to its
accounting treatment of these actuarial gains andlosses, meaning that they were not immediately
recognized in the financial statements. In July 2016
the IPSASB issued IPSAS 39, a new standard for
employee benefits, which WIPO has implemented
in 2017. Under IPSAS 39, the corridor approach forthe recognition of actuarial gains and losses isremoved, and therefore previously unrecognizedactuarial losses are now recognized in thestatement of financial position. Over the previous
years, WIPO had accumulated significant actuarial
losses related to its ASHI liability, related principally
to decreases in the discount rate and increases in
the medical cost trend rate. As a result of theimplementation of IPSAS 39, the 2016 restated
ASHI liability was 320.9 million Swiss francs,
compared to 154.3 million Swiss francs previously
recognized in the 2016 financial statements. The

graph below shows how both the ASHI liability(representing the benefit obligation including
accumulated actuarial losses) has developed since2009, and includes actuarial forecasts for 20182021 (applying the same assumptions as for the2017 calculation). The graph also shows how
discount rates and medical cost trend rates havechanged since 2009. It is noted that following sevenyears of increase in the liability, in 2017 the liability
fell by 16.5 million Swiss francs. This was largely
due to the impact of revised mortality tables,
following a project to apply consistent actuarial
assumptions across the United Nations system. The
liability was also reduced by experience
adjustments based on the pattern of staff turnoverat WIPO.
Other liabilities of the Organization are mainlycomprised of current accounts held on behalf ofapplicants and contracting parties, totaling 64.5
million Swiss francs. Total borrowings of 16.9
million Swiss francs represent the FIPOI loans only,
following early repayment of the BCG/BCV New
Building loan during 2017.

Movement in ASHI liability (benefit obligation) 2009 - 2021

5.00

400.0

3.00
200.0

2018 -2021 actuarial forecast
2.00

100.0
1.00

0.0

0.00

2009

2010

2011

2012

Benefit obligation

2013

2014

2015

2016

Discount rate

20

2017

2018

2019

2020

2021

Medical cost trend rate

per cent

millions of Swiss francs

4.00
300.0

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
million Swiss francs). These balances are includedin the Organization’s 2017 total cash, cash
equivalents and investments balance of 543.8
million Swiss francs, which means that as at
December 31, 2017, approximately 49.3 per cent of
the balance is held in non-current investments. This
represents a significant change in the profile of
WIPO’s cash, cash equivalents and investments
when compared to the prior year:

Cash Flow
The Organization’s cash, cash equivalents andinvestments balance as at December 31, 2017 is543.8 million Swiss francs, compared to 542.3
million Swiss francs as at December 31, 2016. Thisbalance has been increasing since 2011. The slightincrease of 1.5 million Swiss francs between 2016
and 2017 has been achieved despite the early
repayment of the BCG/BCV loan in January 2017,
which required a cash outflow of 82.1 million Swiss
francs (the loan balance of 70.5 million Swiss
francs, plus a penalty charge of 11.6 million Swiss
francs calculated by reference to the present valueof all outstanding interest due on the loan). As
already noted, in January 2018, the Organization
also took the decision to repay in full the remainingbalance of 16.9 million Swiss francs of its FIPOI
loans.

Cash vs Investments 2016-2017

600.0

Total
542.3
12.5

Total
543.8

millions of Swiss francs

500.0

These loan repayment decisions have been takenin accordance with the objective of capitalpreservation, as stipulated in WIPO’s revised Policy
on Investments. Given existing interest rate
conditions, including negative interest rates for
Swiss franc deposits, there is a cost avoidance
benefit from repaying the loans when compared toinvestment of the funds in a risk-free Swiss franc
asset of comparable tenor. In repaying the
BCG/BCV loan the Organization also achieved an
immediate saving of 0.3 million Swiss francs(calculated by comparing interest which would havebeen payable over the remaining life of the loan as
against the penalty charge paid in 2017).

268.3

400.0

300.0
10.0

529.8

200.0
265.5

100.0

0.0
2016

2017
Cash and cash equivalents
Current investments

Non-current investments

In the financial statements cash, cash equivalents
and investments are also presented separately
between restricted, unrestricted and strategic cash
balances. There are several elements of cash andcash 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. Strategic cash represents
the funds held by the Organization which have been
allocated for the future financing of after-service
employee benefit liabilities, including ASHI. Thebalance of strategic cash was 124.4 million Swiss
francs as at December 31, 2017. This includes thelong-term investment portfolio (including unrealized
gains) of 94.1 million Swiss francs, and cash
balances yet to be invested of 30.3 million Swiss
francs. This cash balance includes the additionalamounts generated in 2017 from the Program andBudget charge applied to the cost of posts for thefunding of after-service employee benefit liabilities.

The Organization generally holds its cash deposits
in instant access bank accounts. Previously theOrganization had held significant amounts indeposit accounts with the Swiss Federal Finance
Administration (AFF), however following theimplementation of new provisions by the AFF
relating to the opening and keeping of deposit
accounts, from December 15, 2017 WIPO was nolonger able to hold deposits with them. During 2017
the Organization continued to hold balances in term
deposit accounts (for periods up to 12 months). This
has allowed the Organization to avoid incurring
charges on certain instant access bank accounts
following the introduction of negative interest rates
during the previous year.
During 2017, the Organization made significant
investments as part of its revised Policy on
Investments. As at December 31, 2017, WIPO’s
medium-term investment portfolio (core cash
investments) had a fair value of 174.2 million Swiss
francs, and the long-term investment portfolio(strategic cash investments) had a fair value of 94.1

21

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Unrestricted, restricted and strategic cash 2010-2017

600.0

500.0

millions of Swiss francs

Total
489.5

Total
474.5
Total
383.5

400.0

300.0

Total
379.7

156.7

154.3

226.8

225.4

2010

2011

Total
408.1

Total
409.9

152.8

149.5

Total
542.3

Total
543.8

108.6

124.4

88.9

85.2

161.8

174.1

161.9

164.6

200.0

100.0

255.3

260.4

2012

2013

224.7

238.7

2014

2015

271.9

245.3

0.0

Unrestricted cash/investments

The principal cash inflows to the Organization are
payments of PCT system fees. Monthly cash
inflows from PCT system fees averaged 26.4 million
Swiss francs during the year 2017 compared to24.7 million Swiss francs during the year 2016. As
can be seen from the following table, there can be

Restricted cash

2016

2017

Strategic cash
(funds for after-service employee
benefits)

significant variations in the cash inflows between
months. Inflows from PCT system fees were notably
higher in April 2017 compared to other months inthe year due to catch-up payments from tworeceiving offices.

Monthly PCT system cash inflows 2014-2017
40.0
35.0

millions of Swiss francs

30.0
25.0

20.0
15.0
10.0
5.0
0.0
Jan

Feb

Mar

Apr

May

2017

2016

Jun

Jul
2015

22

Aug
2014

Sep
Average

Oct

Nov

Dec

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

OpinionWe have audited the financial statements of the World Intellectual Property Organization (WIPO), which comprise thestatement of financial position (statement I) as at 31 December 2017, the statement of financial performance(statement II), statement of changes in net assets (statement III), statement of cash flows (statement IV), statement ofcomparison of budget and actual amounts (statement V) for the year then ended, and notes to the financial statements
including significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of
WIPO as at 31 December 2017, and its financial performance and its cash flows for the year then ended inaccordance with International Public Sector Accounting Standards (IPSAS).

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

Information other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the information included in theannual financial report for the year ended 31 December 2017, but does not include the financial statements and our
auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, weconclude that there is a material misstatement of this other information, we are required to report that fact. We havenothing to report in this regard.

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

23

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatements, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

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

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

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

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



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

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

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

24

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

FINANCIAL STATEMENTS
STATEMENT I – STATEMENT OF FINANCIAL POSITION
as at December 31, 2017
(in thousands of Swiss francs)

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

Decem ber 31, 2017

Decem ber 31, 2016
(restated)

3
4
5
6
6
7

265,452
10,000921
965
62,434
1,349
341,121529,817
12,5001,483
59,064
1,520
604,384

4
8
9
10
11
6
6
12

268,319
1,455
6,210
26,414369,168225
8,553
680,344

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

1,021,465

1,027,229

Note

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

13
14
15
16
17

17,89628,121
93,075282,825
16,862

10,76328,321
84,874
269,582
5,258

Provisions
Other current liabilities

18
19

2,008
64,479505,266

6,989
62,519468,306

Non-current liabilities
Employee benefits
Borrowings

14
17

309,605-

321,980
83,462

Advance receipts

16

3,937
313,542

4,069
409,511

818,808

877,817305,953
11,79017,266-138,694
6,342

282,328
16,786
17,266-173,310
6,342

202,657

149,412TOTAL LIABILITIES
Accumulated Surpluses
Special Projects Reserve
Revaluation Reserve Surplus
Actuarial gains/(losses) through Net Assets
Working Capital Funds

23
23
23
23
23

NET ASSETS

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

25

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT II – STATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2017
(in thousands of Swiss francs)

20172016 (restated)

Assessed contributions

17,82917,337

Voluntary contributions

12,096

10,176

Publications revenue

242

426

Investment revenue

4,337

21

PCT system

296,356

290,719

Madrid system

69,95259,580

Hague system

5,076

4,956

Lisbon system

39

25

371,423355,280

Arbitration and Mediation

1,689

1,641

Other/miscellaneous revenue

5,860

2,832

413,476

387,713

Personnel expenditure
Internships and WIPO fellowships

228,594
3,853

219,093
3,261

Travel, training and grants

18,195

15,810Contractual services

89,422

74,398Operating expenses

26,30021,946

Supplies and materials

3,457

2,039

Furniture and equipment

1,669

172

Depreciation and amortization

11,35011,424

Finance costs

12,007

2,310

TOTAL EXPENSES

394,847

350,453

SURPLUS/(DEFICIT) FOR THE PERIOD

18,62937,260Note
REVENUE

25

Fees

Sub-total fees

TOTAL REVENUE
EXPENSES

26

26

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT III – STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2017
(in thousands of Swiss francs)

Actuarial
Revaluation
gains/(losses)
Working
Reservethrough Net Capital Funds
Surplus
Assets

Accum ulated
Surpluses

SpecialProjects
Reserve

238,124

23,73015,046

Surplus/(deficit) for the year 2016

40,855-3,595Adjustment to Special Projects Reserve

2,267

Transfer to Accumulated Surpluses

Note
Net Assets at January 1, 2016 (restated)

23

Net Assets
Total-80,694

8,342

204,548---

37,260-2,267

-

-

-

-

1,082

-1,082----

Actuarial gains/(losses)

-

-

-

-92,616--92,616

Return of Working Capital Funds

-

-

-

-

-2,000-2,000

Revaluation of land

-

-

2,220

-

-

2,220

Net Assets at Decem ber 31, 2016 (restated) 23

282,328

16,786

17,266-173,310

6,342

149,412

Surplus/(deficit) for the year 2017

22,617-3,988---18,629

-

-

-

-

-

-

1,008

-1,008

-

-

-

-

-

-

-

34,616-

34,616

305,953

11,79017,266-138,694

6,342

202,657

Adjustment to Special Projects Reserve
Transfer to Accumulated Surpluses
Actuarial gains/(losses)
Net Assets at Decem ber 31, 201723

27

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT IV – STATEMENT OF CASH FLOW
for the year ended December 31, 2017
(in thousands of Swiss francs)

Note

2017

2016
(restated)

26,411

39,988Cash flow s from operating activities
Surplus (deficit) for the period (1)Statement II

Interest earned

25

12

21

Interest paid on borrow ings

17

-11,760-2,119Depreciation and amortization8, 10 & 11

11,35011,424

Increase (decrease) in employee benefits

14-12,575

104,268(Increase) decrease in inventories

7

171

77

(Increase) decrease in receivables

6-96-4,406(Increase) decrease in other assets

12

190

191

Increase (decrease) in advance receipts

16

13,111

20,069

Increase (decrease) in payables and accruals

13

7,133

-11,339

Increase (decrease) in transfers payable

15

8,201

714

Increase (decrease) in provisions

18-4,981

6,172

Increase (decrease) in other liabilities

19

Net cash flow s from operating activities

1,960

6,748

39,127

171,808-2,195

Cash flow s from investing activities
Additions to buildings and equipment

8 & 11-4,984

Disposal of buildings and equipment

8

1,533

-

Increase in intangible assets

10

-25

-287

Increase in investments

4-265,819-12,500

Change in value of investments

4

4,326

-

Increase in derivative financial instruments

5

-921

-

-265,890-14,982-21,259

Net cash flow s from investing activities
Cash flow s from financing activities
Repayment of borrowings

17-71,858

Return of Working Capital Funds

23--2,000-71,858-23,259

Net cash flow s from financing activities
Effect of recognition of Actuarial gains/losses
through Net Assets

14

34,616-92,616

Effect of exchange rate changes on cash and cash
equivalents

28

-360

-630

-264,365

40,321

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3529,817

489,496

Cash and cash equivalents at end of year3

265,452

529,817(1) – Excluding interest earned and interest paid on borrowings, and the effect of exchange rate changes on cash and cash
equivalents, and gains/losses on investments. Interest earned is included in investment revenue, see Note 25. For detail of interest
paid on borrowings, see Note 17. For the effect of exchange rate changes on cash and cash equivalents, see Note 28.

28

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE 2017

for the year ended December 31, 2017
(in thousands of Swiss francs)

Original Budget
2017"Final" Budget
2017

Actual Revenue oncom parable basis
2017

Difference
2017

(1)

(1)

Assessed contributions

17,361

17,361

17,371

10

Voluntary contributions

-

-

932

932

PCT system

291,441

291,441

316,266

24,825Madrid system
Hague system

65,3995,494

65,3995,494

70,263
5,062

4,864
-432

Lisbon system

15

15

39

24

362,349

362,349

391,630

29,281

1,250

1,250

1,689

439

155

155

242

87

Investment revenue

-

-

4,337

4,337

Other/miscellaneous

1,900

1,900

6,663

4,763

383,015

383,015422,864

39,849(2)

Fees

Sub-total fees
Arbitration and Mediation
Publications

TOTAL(1) - columns Original Budget and “Final” Budget represent the second year of the approved 2016/17 biennial budget.
(2) - represents the difference between the “Final” Budget 2017 and actual revenue on a comparable basis for the year ended
December 31, 2017.

29

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS - EXPENSES 2017
for the year ended December 31, 2017
(in thousands of Swiss francs)
Original
Budget2017(1)"Final"Budget2017(1)

Actual Expense
on a com parable
basis 2017

Program Title
Patent Law

2,671

2,671

2,438

2

Trademarks, Industrial Designs & Geographical Indications

2,455

2,455

2,533

-78

3

Copyright and Related Rights

8,426

8,426

9,575

-1,1494

Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

3,081

3,081

3,293

-212

5

The PCT System

104,864

104,864

98,9095,955

6Madrid System

29,36229,362

29,690-328

7

WIPO Arbitration and Mediation Center

5,718

5,718

5,292

426

8

Development Agenda Coordination

1,862

1,862

1,534

328

9

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

16,176

16,176

15,558618

10Transition and Developed Countries

4,016

4,016

4,013

3

11

The WIPO Academy

6,602

6,602

6,671

-69

12

International Classifications and Standards

3,583

3,583

3,676

-93

13

Global Databases

2,927

2,927

4,016

-1,08914

Services for Access to Information and Know ledge

3,528

3,528

4,184

-656

15

Business Solutions for IP Offices

7,012

7,012

7,168

-156

16

Economics and Statistics

3,103

3,103

3,658

-555

17

Building Respect for IP

1,913

1,913

2,085

-172

18

IP and Global Challenges

3,193

3,193

3,298

-105

19

Communications

8,325

8,325

8,546

-221

20

External Relations, Partnerships and External Offices

6,271

6,271

6,233

38

21

Executive Management

10,487

10,487

10,577-90

22

Program and Resource Management

16,821

16,821

16,341

480

23

Human Resources Management and Development

12,381

12,381

15,554-3,17324

General Support Services

23,72323,72333,554-9,831

25

Information and Communication Technology

26,10026,10026,330-230

26Internal Oversight

2,717

2,717

2,732

-15

27

Conference and Language Services

19,71019,71017,6992,011

28

Information Assurance, Safety and Security

8,900

8,900

10,633-1,73330

SMEs and Entrepreneurship Support

3,084

3,084

3,190

-106

31

The Hague System

3,824

3,824

6,866

-3,042

32

Lisbon System

UN

UnallocatedProgram1

TOTAL
Net surplus/(deficit)

(2)
233

671

671

675

-4

3,159

3,159

-

3,159

356,665

356,665

366,521-9,856

26,35026,35056,34329,993

IPSAS adjustments to surplus (3)-31,809

Projects financed from reserves-4,996

Special Accounts financed from voluntary contributions

Difference
2017

-909

Adjusted net surplus per IPSAS

18,629(1) - columns Original Budget and “Final” Budget represent the second year of the approved 2016/17 biennial budget. As WIPO hasa biennial budget cycle, the budgetary transfers across programs, which have taken place during the 2016/17 biennium within thelimits described in the Financial Regulations and Rules (regulation 5.5), are reflected in the biennial budget figures for the 2016/17
biennium under the heading “Final Budget after Transfers 2016/17”. Please refer in this regard to Statement V for the 2016/17 for thecomparison of the 2016/17 Final Budget after Transfers with the 2016/17 original approved budget. The Original Budget is based on
the biennial budget of 707.0 million Swiss francs, which was approved by the Assemblies of the Member States of WIPO on October
14, 2015.
(2) - represents the difference between the “Final” Budget 2017 and actual expense on a comparable basis for the year ended
December 31, 2017.
(3) – the IPSAS adjustments to the surplus are detailed in Note 24 of these financial statements.

30

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE 2016/17

for the biennium ended December 31, 2017
(in thousands of Swiss francs)
Original Budget
2016/17

Final Budget after
Transfers 2016/17

Actual Revenue oncom parable basis
2016/17Difference
2016/17(1)(2)

Assessed contributions

34,722

34,722

34,728

6

Voluntary contributions

-

-

1,324

1,324

PCT system

575,864

575,864

612,635

36,771Madrid system
Hague system

128,758
10,313

128,758
10,313130,379
10,134

1,621-179

Lisbon system

30

30

64

34

714,965

714,965

753,212

38,247

2,500

2,500

3,330

830

310

310

668

358

Investment revenue

-

-

4,358

4,358

Other/miscellaneous

3,800

3,800

9,928

6,128

756,297756,297

807,548

51,251(3)

Fees

Sub-total fees
Arbitration and Mediation
Publications

TOTAL(1) - represents the approved 2016/17 biennial budget.
(2) - represents the 2016/17 Final Budget after Transfers.
(3) - represents the difference between the 2016/17 Final Budget after Transfers and actual revenue on a comparable basis for thebiennium ended December 31, 2017.

31

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS - EXPENSES 2016/17
for the biennium ended December 31, 2017
(in thousands of Swiss francs)
Original Final Budget
Budgetafter
2016/17
Transfers
2016/17(1)(2)
Program
1

Actual Expense
on a com parable
basis 2016/17

Difference
2016/17(3)

Program Title
Patent Law

5,291

5,044

5,019

2

Trademarks, Industrial Designs & Geographical Indications

4,854

4,883

4,826

57

3

Copyright and Related Rights

16,733

17,24016,923317

4Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

6,115

6,760

6,338

422

5

The PCT System

208,209

204,097

192,770

11,327

6

Madrid System

58,106

57,10256,429673

7WIPO Arbitration and Mediation Center

11,358

10,916

10,369547

8Development Agenda Coordination

3,671

3,420

3,179

241

9

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

31,90730,282

29,718564

10Transition and Developed Countries

7,919

8,073

7,703

370

11

The WIPO Academy

13,083

13,22012,436784

12International Classifications and Standards

7,070

7,048

6,794

254

13

Global Databases

5,758

8,000

7,172

828

14

Services for Access to Information and Know ledge

6,990

7,449

7,353

96

15

Business Solutions for IP Offices

13,806

14,117

13,926191

16

Economics and Statistics

6,072

6,453

6,399

54

17

Building Respect for IP

3,752

3,910

3,990

-80

18

IP and Global Challenges

6,323

6,059

6,169

-110

19

Communications

16,483

16,584

16,233351

20

External Relations, Partnerships and External Offices

12,395

12,26911,410859

21

Executive Management

20,675

19,68020,006-326

22

Program and Resource Management

33,27632,38730,852

1,535

23

Human Resources Management and Development

24,61728,85433,427-4,57324

General Support Services

47,21653,96654,138-172

25

Information and Communication Technology

52,032

49,25548,1991,056

26Internal Oversight

5,358

5,163

4,781

382

27

Conference and Language Services

38,92536,57635,308

1,268

28

Information Assurance, Safety and Security

17,73319,062

18,600462

30

SMEs and Entrepreneurship Support

6,083

6,206

6,047

159

31

The Hague System

7,572

11,466

10,872594

32

Lisbon System

1,335

1,331

1,311

20

UN

Unallocated

6,319

164

-

164

707,036

707,036

688,697

18,33949,26149,261

118,851

69,590TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (4)-52,932

Projects financed from reserves-9,669Special Accounts financed from voluntary contributions

25

-361

Adjusted net surplus per IPSAS

55,889(1) - represents the approved 2016/17 biennial budget of 707.0 million Swiss francs, which was approved by the Assemblies of theMember States of WIPO on October 14, 2015.
(2) - represents the 2016/17 Final Budget after Transfers.
(3) - represents the difference between the 2016/17 Final Budget after Transfers and actual expense on a comparable basis for thebiennium ended December 31, 2017.
(4) - the IPSAS adjustments to the surplus are detailed in Note 24 of these financial statements, and include the impact ofrestatement of the 2016 comparative numbers.

32

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTES TO THE FINANCIAL
STATEMENTSNOTE 1: OBJECTIVES AND BUDGET OF
THE ORGANIZATIONWIPO is governed by the following constituent bodies,
established by the WIPO Convention, which meet
every second year in ordinary session and traditionallymeet in extraordinary session in alternate years:

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



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



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



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

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

The Organization functions in accordance with the
WIPO Convention signed in Stockholm on July 14,
1967 and as amended on September 28, 1979.
WIPO currently has 191 Member States. WIPO isbased in Geneva, Switzerland with external offices in
Beijing, Moscow, Rio de Janeiro, Singapore andTokyo, and a coordination office in New York. The
Organization enjoys privileges and immunities as
granted under the 1947 Convention on Privileges and
Immunities of Specialized Agencies of the United
Nations and the 1970 Headquarters Agreement with
the Swiss Federal Council, notably being exempt frompaying most forms of direct and indirect taxation.

33

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 2: SIGNIFICANT ACCOUNTINGPOLICIES

construction phases (see Note 11). 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 10).

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 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.

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.
IPSAS 39 Employee Benefits has been applied in2017, which is prior to the required implementation
date of January 1, 2018. The effect of the resulting
change in accounting policy was recognized
retrospectively, requiring a restatement of the 2016
comparative numbers.

Revenue Recognition

Borrowing Costs

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

General and specific borrowing costs directly
attributable to the acquisition, construction or
production of qualifying assets, which are assets thatnecessarily take a substantial period of time to get
ready for their intended use, are added to the cost of
those assets until such time as the assets aresubstantially ready for their intended use. Borrowing
costs relating to the construction of the New Building(interest and fees) and the New Conference Hall
(commission on undrawn loan amounts) were
capitalized as work in progress during the respective

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 throughperformance of the specific conditions included in theagreement.

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.

Investments
Investments are classified as current or non-current
assets according to the time horizon of the investment
objectives. If the time horizon is less than or equal to
one year, they are classified as current assets, and if it
is more than one year, they are classified as noncurrent assets.

34

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

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

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

Receivables

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.

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

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

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

Class
Communications and IT
equipment
VehiclesFurniture and furnishings

Estimated useful life

5 years
5 years
10 years

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

An annual physical inventory is conducted of all stocksof publication supplies and items for sale in the 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 anticipatedthat there will be no further free distribution or

35

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 20172010, the date of transition to IPSAS, the value when
new was determined by reference to a deemed costcalculated by an external consultant and representing
the value of each component at construction plus
improvements existing at the initial recognition, lessaccumulated depreciation based upon the remaining
useful life of each component. Subsequent costs ofmajor renovations and improvements to buildings andconstructions that increase or extend the future
economic benefits or service potential are valued at
cost.

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

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

Estimated useful life

Software acquired externally
Software internally developed
Licenses and rights

5 years
5 years
Period of license/right

Depreciation is charged so as to write off the full costof buildings and constructions in use over theirestimated useful lives using the straight-line method.
Where buildings and constructions are only in use forpart of the year (due to acquisition, disposal orretirement during the year), depreciation is charged
only for the months during which the asset was in use.
The following ranges of useful lives are applied to thedifferent components of buildings and constructions:Component
Structure – concrete/metallic
Structure – concrete/wood
Structure – specialist access
FaçadePerimeter walls
Perimeter bollards
Land Improvements
Roof
Floors, walls, stairways
Flooring, wall coverings
Specialist fittings - fixed
equipment
Specialist fittings – kitchenequipment
Specialist fittings – fixed
conference equipment
Specialist fittings - turnstiles
Heating and ventilation
Sanitary facilities
Electrical installations
Elevators

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

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

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

Land and Buildings
Land is carried at fair value as determined by anindependent valuation in accordance with International
Valuation Standards. Changes in fair value arerecognized directly in net assets through the
Revaluation Reserve Surplus. Buildings andconstructions in use are valued at the cost of
construction when new plus the cost of subsequent
improvements, less accumulated depreciation. For the
initial recognition of buildings in use as at January 1,

36

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

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

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

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

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

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

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

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

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

Impairment of financial assets
The Organization assesses at each reporting datewhether there is objective evidence that a financial
asset or a group of financial assets is impaired. A
financial asset or a group of financial assets isdeemed to be impaired if, and only if, there is37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

are recognized as expenses in the statement offinancial performance.

Derivative Financial Instruments
WIPO uses derivative financial instruments such as
forward currency contracts to hedge its foreign
currency risks. These financial instruments are initiallyrecognized at fair value on the date on which thederivative contract is entered into and aresubsequently re-measured at fair value. Derivatives
are carried as financial assets when the fair value ispositive and financial liabilities when the fair value isnegative.

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.

Employee Benefits

Segment Reporting

Liabilities are established for After-Service Health
Insurance (ASHI), repatriation grants and travel, andlong-term accumulated annual leave as determined byan independent actuary on an annual basis utilizing
the projected unit credit methodology of valuation. For
the ASHI liability actuarial gains and losses arerecognized in net assets. In addition, liabilities are
established for the value of short-term accumulated
annual leave, home leave not taken, overtime earned
but unpaid, separation benefits and performance
rewards and for education grants payable at thereporting date that have not been included in current
expenditure.

Segment reporting is based upon the Unions that form
WIPO. Revenue and expenses incurred by theOrganization are allocated among the Unions inaccordance with an allocation methodology approvedby the WIPO Assembly [Program and Budget
2016/17, Annex III]. The methodology allocatesrevenue and expenses to each program and then toeach Union based on a combination of direct revenue
and expense, staff head count and each Union’s
ability to pay which is itself determined according to a
combination of current revenue and reserves. WIPO’s
assets and liabilities are not allocated to individual
segments, since ownership rests with theOrganization as a whole, however, each Union’sshare of the Organization’s net assets including
Reserves and Working Capital Funds is recognized bysegment (see Note 30).

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

Use of Estimates
The financial statements necessarily include amounts
basedonestimatesandassumptions
bymanagement. Estimates include, but are not limited to:
ASHI, repatriation grants and travel, and long-term
accumulated annual leave liabilities (the value of
which are calculated by an independent actuary),
other employee benefit liabilities, provisions forlitigation, valuation of publications inventory, financial
risk on accounts receivable, accrued charges and thedegree of impairment of fixed assets. Actual results
could differ from these estimates. Changes in
estimates are reflected in the period in which they
become known.

The Fund exposes participating organizations toactuarial risks associated with the current and former
employees of other organizations participating in theFund, with the result that there is no consistent andreliable basis for allocating the obligation, plan assets,
and costs to individual organizations participating in
the plan. WIPO and the UNJSPF, in line with the otherparticipating organizations in the Fund, are not in aposition to identify WIPO’s proportionate share of thedefined benefit obligation, the plan assets and thecosts associated with the plan with sufficient reliability
for accounting purposes. Hence WIPO has treatedthis plan as if it were a defined contribution plan in linewith the requirements of IPSAS 39. WIPO’s
contributions to the Fund during the financial period

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

38

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Change in Accounting Policy
Effective January 1, 2017, the Organization haschanged its accounting policy to recognize employee
benefits in accordance with IPSAS 39. As a result,actuarial gains and losses for the ASHI, which werepreviously unrecognized, were accounted directly to
net assets. Accumulated annual leave for fixed,
continuing and permanent posts has been reclassified
from short-term to other long-term employee benefits,requiring the remeasurement of this liability by anindependent actuary utilizing the projected unit credit
methodology of valuation.

The effect of this change in accounting policy wasrecognized retrospectively, requiring adjustment toprior years balances and restatement of the 2016
comparative numbers. The adjustment relating to priorperiods before those presented (prior to 2016) results
in a reduction in net assets of 78.9 million Swiss
francs. The restatement of the 2016 comparative
numbers is detailed below. Details of the impact of
IPSAS 39 implementation on the current year 2017
are not provided, as this would have required an
additional actuarial calculation for 2017 under thepreviously applied standard IPSAS 25, which was notconsidered practicable:

2016(as previously
stated)Restatement for
IPSAS 39 adoption

2016(restated)(in thousands of Swiss francs)
Statem ent of Financial Position
TOTAL ASSETS

1,027,229-

1,027,229

Employee benefits

188,430

161,871

350,301

TOTAL LIABILITIES

715,946

161,871877,817

Accumulated Surpluses

270,889

11,439282,328

Special Projects Reserve

16,786-

16,786

Revaluation Reserve Surplus

17,266-

17,266-(173,310)(173,310)

Actuarial gains/(losses) through Net Assets
Working Capital Funds

6,342

-

6,342

311,283(161,871)

149,412TOTAL REVENUE

387,713-387,713

Personnel expenditure

224,353(5,260)219,093

TOTAL EXPENSES

355,713(5,260)350,453

SURPLUS FOR THE YEAR

32,0005,260

37,260

NET ASSETSStatem ent of Financial Perform ance

39

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 3: CASH AND CASH EQUIVALENTS
Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Cash on hand30

12Deposits with banks - Swiss francs

32,646113,617

Deposits with banks - other currencies

13,937

6,788

Funds invested with AFF - Swiss francs-

139,418

10,000

361

-

7,170

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

4,466

4,574

Total unrestricted cash

61,079271,940

Current accounts held for third parties - Swiss francs

64,33661,802

143

717

Fees collected on behalf of contracting parties - Swiss francs

93,07584,874

Notice accounts Special Accounts - Swiss francs

16,495

14,428

Total restricted cash

174,049

161,821

Deposits w ith banks - Sw iss francs

30,324-

Funds invested with AFF - Swiss francs-

88,917

Term deposits less than 3 months - Swiss francs

-

7,139

Total strategic cash

30,324

96,056

Total cash and cash equivalents

265,452

529,817

Current accounts held for third parties - other currencies

Cash deposits are generally held in instant accessbank accounts. During 2017 the Organization
continued to hold balances in term deposit accounts(for periods up to 12 months). This has allowed theOrganization to avoid incurring charges on certain
instant access bank accounts following the
introduction of negative interest rates during theprevious year.

Previously the Organization has held significant
deposit accounts with the Swiss Federal Finance
Administration (AFF). Following the implementation of
new provisions by the AFF relating to the opening andkeeping of deposit accounts, from December 15, 2017
WIPO was no longer able to hold deposits with them.
The interest rate on deposits held with the AFF was
0.00 per cent during 2017.

The Organization holds funds allocated for the futurefinancing of after-service employee benefit liabilities,
including ASHI. Under WIPO’s Policy on Investments,
these funds are classified as strategic cash. As at
December 31, 2017, the total balance of these funds
was 124.4 million Swiss francs, split between cash
and cash equivalents (30.3 million Swiss francs) andinvestments (94.1 million Swiss francs, see Note 4).

The following categories of cash and cash equivalents
are classified as restricted:
certain contracting parties to transfer funds
collected on behalf of the Organization;
fees collected on behalf of contracting parties tothe Madrid Agreement and Protocol, Hague
Agreement and on behalf of PCT International
Searching Authorities (ISAs) by the WIPO
International Bureau Receiving Office;deposits received in connection with pending
procedures related to trademarks, other than the
portion estimated to represent advance receipts
for the Organization;
Special Accounts held on behalf of donors ofvoluntary contributions.

current accounts held for third parties. WIPO
provides facilities for applicants under the PCT,
Madrid and Hague systems to deposit funds to be
used for future applications and renewals, and for40

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 4: INVESTMENTS
Decem ber 31,
2017

As at December 31, 2017, WIPO’s investments
include the following:

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

Term deposits more than 3 months Sw iss francs

10,000-Total operating cash
investm ents

10,000-Term deposits more than 3 months Sw iss francs-

12,500Total strategic cash investm ents-

12,50010,00012,500109,895-

64,314-

174,209-

56,022-38,088-

Total strategic cash investm ents

94,110-Non-current investm ents

268,319-

Total investm ents

278,319

12,500Current investm ents
Medium term Investment porfolio Sw iss francs
Medium term Investment porfolio Other currencies
Total core cash investm ents
Long term Investment porfolio Sw iss francs
Long term Investment porfolio Other currenciesterm deposits with a remaining period of
more than 3 months but less than 12 months.
- these term deposits all relate to theOrganization’s operating cash balances,which are invested over the short-term(periods not exceeding twelve months tomaturity);
medium-term
investment
portfolio–
investment funds with no fixed maturity,
invested over a five year rolling period, which
are classified as core cash investments inaccordancewith WIPO’s
Policyon
Investments;
long-term investment portfolio – investment
funds with no fixed maturity, invested overthe long-term for the future financing of afterservice employee benefit liabilities, which areclassified as strategic cash investments inaccordancewith WIPO’s
Policyon
Investments.

The movement in the value of investments during theyear ended December 31, 2017 is as follows:

Operating cash
investm ents

Core cash
investm ents

Strategic cash
investm ents

Total

(in thousands of Swiss francs)
Investm ents fair value at January 1, 2016

-

-

-

-

Additional investments made--12,50012,500

Disposal of investments

-

-

-

-

Fair value increase/(decrease)

-

-

-

-

Investm ents fair value at Decem ber 31, 2016--

12,50012,500Additional investments made10,000202,758

102,186

314,944

Disposal of current investments---12,500-12,500

Disposal of non-current investments--30,600-9,400-40,000

Forex gains/(losses) on investments

-

-605

-346

-951

Fair value increase/(decrease)

-

2,656

1,670

4,326

10,000174,209

94,110278,319

Investm ents fair value at Decem ber 31, 201741

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS
Decem ber 31,
2017

The Organization has entered into forward foreignexchange contracts to minimize the risk arising fromexchange rate fluctuations to its US dollar core cash
and strategic cash investments. These contracts arerecognized at their fair value as at December 31,
2017, and are carried as assets when the fair value ispositive and liabilities when the fair value is negative.

Decem ber 31,
2016(in thousands of Swiss francs)
Forw ard foreign exchange contracts Operating cash investments--

Forw ard foreign exchange contracts Core cash investments

578-

Forw ard foreign exchange contracts Strategic cash investments

343

-

921

-

Total derivative financial
instrum ent assets

NOTE 6: RECEIVABLES
Decem ber 31,
2017

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

886

Voluntary contributions

79

1,256
227

Contributions receivables - current

965

1,483

PCT debtors

50,79646,368Madrid debtors

372

341

Hague debtors

2

2

Other debtors

2,301

1,638

Sw iss taxes reimbursable

15

12

USA taxes reimbursable

2,274

1,367

Concessionary advance for USA taxes-

252

Staff advances for education grants

4,924

4,962

Other funds advanced to staff

127

319

UPOV expenditure reimbursable

726

1,562

Funds advanced to UNDP

259

459

Advance for FCIG concessionary loan

127

125

Prepaid expenditure

322

1,468

FCIG loan amortization

189

189

Exchange transactions receivables - current

62,43459,064

Total current accounts receivable

63,39960,547

Paris Union

80

80

Berne Union

136

136

Nice Union

7

7

Locarno Union

2

2

225

225

USA taxes reimbursable

-

2,756

Exchange transactions receivables - non-current

-

2,756

225

2,981

63,62463,528Contributions receivables - non-current

Total non-current accounts receivable
Total receivables

42

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

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

An allowance has been established to offset both thevalue of receivables due from assessed contributions
and the Working Capital Fund contributions due from
Unions which relate to periods prior to the introductionof unitary contributions in 1994. The allowance covers
amounts due from Member States that have lost theright to vote under Article 11, paragraph 5 of the
WIPO Convention and contributions from least
developed countries which have been frozen by actionof the Assemblies. The total of the allowance as at
December 31, 2017 is 5.9 million Swiss francs (6.3
million Swiss francs as at December 31, 2016).

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

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

NOTE 7: INVENTORIESInternational staff, other than those living in their homecountry, are eligible to receive a grant covering
admissible costs of education for dependent children
until the fourth year of post-secondary school studies,but not beyond the end of the school year in which thechild reaches the age of 25. For the 2017-2018
scholastic year, reimbursement is based on a global
sliding scale, with declining reimbursement rates, anda fixed maximum amount of reimbursement.
International staff are eligible to receive an advanceequal to the estimated amount of the education grant
for each child at the beginning of the scholastic year.
Staff advances for education grants represent the total
grants advanced for the 2017-2018 scholastic year.

Decem ber 31,
2017

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

1,222

1,339

Paper supplies

56

80

Retail Shop

71

101

1,349

1,520

Total inventories

The write-down of finished publications inventories to
net realizable value amounted to 15 thousand Swiss
francs (35 thousand Swiss francs in 2016). There
have been no reversals of write-downs.

43

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 8: EQUIPMENT
Movem ent 2017

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2017
Gross carrying amount

11,411

2,535

13,946

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

1,222

387

1,609

Net carrying am ount
Movem ents in 2017:
Additions

400

-

400

Disposals-4,660-1,542-6,202

Disposals depreciation

4,660

1,531

6,191

Depreciation

-467

-76

-543

-67

-87

-154

Total m ovem ents in 2017
Decem ber 31, 2017
Gross carrying amount

7,151

993

8,144

Accumulated depreciation-5,996-693-6,689

1,155

300

1,455

Net carrying am ount

Movem ent 2016

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2016
Gross carrying amount

11,4152,659

14,074

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

1,670

464

2,134

Net carrying am ount
Movem ents in 2016:
Additions

89

-

89

Disposals

-93

-124

-217

Disposals depreciation
Depreciation
Total m ovem ents in 2016

93

124

217

-537

-77

-614

-448

-77

-525

Decem ber 31, 2016
Gross carrying amount

11,411

2,535

13,946

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

Net carrying am ount

1,222

387

1,609

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, 2017,

WIPO holds fully depreciated equipment which is stillin use for a gross carrying amount of 4.9 million Swiss
francs. Heritage assets including donated works of art
are not recognized as assets on the Statement of
Financial Position.

44

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 9: INVESTMENT PROPERTY
Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Opening balance
Fair value gains/(losses) on valuation
Closing balance

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

6,210

6,210

-

-

6,210

6,210

receives 3.90 per cent of the gross rental income ascompensation for its services. The value of noncancellable leases as at December 31, 2017 and 2016is as follows:
Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Not later than one year

31

353

Later than one year and not later
than five years-

626

Later than five years
Total non-cancellable
operating leases

-

-

31

979

In 2017 the income from rental of the building totaled
371 thousand Swiss francs, and the operating
expenditures of the building totaled 235 thousand
Swiss francs.
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.

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

On January 31, 2018 the Organization signed an act
of sale for the Madrid Union Building. The sale pricewas 7.0 million Swiss francs, and the gain resulting
from this will be recognized in the surplus or deficit of2018 (see Note 29 Events After the Reporting Date).

45

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 10: INTANGIBLE ASSETS

Movem ent 2017Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2017
Gross carrying amount
Accumulated amortization

34,290

1,115

3,919

475

39,799-9,159-736-2,091--11,986

25,131

379

1,828

475

27,813

Additions

-

-

-

25

25

Transfers

-

-

500

-500

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-439

-167

-818

-

-1,424

-439

-167

-318

-475

-1,399Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-9,598-903-2,909--13,410

24,692

212

1,510

-

26,414

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total

Net carrying am ount
Movem ents in 2017:

Amortization
Total m ovem ents in 2017
Decem ber 31, 2017

Net carrying am ount

Movem ent 2016

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

34,290

1,115

3,919

188

39,512-8,719-513-1,299--10,531

25,571

602

2,620

188

28,981

Additions

-

-

-

287

287

Transfers

-

-

-

-

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-440

-223

-792

-

-1,455

-440

-223

-792

287

-1,168Gross carrying amount

34,290

1,115

3,919

475

39,799

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

25,131

379

1,828

475

27,813

Net carrying am ount
Movem ents in 2016:

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

Net carrying am ount46

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

with an option exercisable solely by the Organizationof an extension for an additional period of 30 years.
These surface rights were acquired by theOrganization at no cost and no value has beenrecognized in the financial statements, as theOrganization does not have the right to dispose of therights which revert to the Republic and Canton of
Geneva unless renewed.
As from January 1, 2012, WIPO has been capitalizing
the cost of externally acquired and internallydeveloped software where this meets the recognition
criteria under IPSAS 31. Intangible assets underdevelopment relate to internally developed software
which has not yet been brought into use.

NOTE 11: LAND AND BUILDINGSThe Organization’s land and buildings comprise its
headquarters at Place des Nations, Geneva,
Switzerland and include land, buildings and a security
perimeter. Following the transition to IPSAS fromJanuary 1, 2010, buildings which were occupied atthat date were valued at an amount determined
independently by external consultants, which
represents the estimated value of the building whennew (deemed cost of construction) including theestimated value of renovations and major repairs
made since original occupancy less accumulated
depreciation and impairment. Buildings which arebrought into use after January 1, 2010 are initiallyvalued at cost. All buildings are depreciated according
to the straight-line method based upon the useful lifeof each major component of the building.

property. The potential income is based oncomparable rentals in the market and takes into
account the quality of the spaces as well as thelocation. The yield has been selected by reference tothe perceived quality and duration of the income andthe potential for further rental growth and is crossreferenced by the evidence provided by comparable
sales.
Three major construction projects have been
completed since the implementation of IPSAS in 2010.
The New Building was brought to use in 2011 and the
New Conference Hall in 2014. In 2015 WIPO
completed a major project to upgrade the safety andsecurity standards of its existing buildings, in line with
the implementation of the recommendations of theUnited Nations Security Management System. This
project comprised the New Access Centre (included
as part of the Árpád Bogsch building), the Security
Operations Centre (included as part of the Georg
Bodenhausen building I), and the Security Perimeter(held as a standalone construction).

The land upon which the New Building wasconstructed was acquired by the Organization at a
cost of 13.6 million Swiss francs in 1998 and wasrevalued to fair value based on International Valuation
Standards as determined by an independent appraiser
at December 31, 2009 at 28.6 million Swiss francs.
The net result of the revaluation of 15.0 million Swiss
francs is included in the Revaluation Reserve Surplus
which forms part of WIPO’s net assets. An updated
valuation of the land was performed by anindependent appraiser at December 31, 2016. Thisvaluation indicated an increase in the fair value of theland of 2.2 million Swiss francs. Market value wasestimated by capitalizing at an appropriate investment
yield the future potential income stream from theDuring the year end December 31, 2017,
improvement works totaling 4.6 million Swiss francs
were added to the cost of WIPO’s existing buildings.
These works also involved the partial demolition ofcomponents of existing buildings, with an estimatedimpact on net book value of 1.5 million Swiss francs.

47

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Movements for land and buildings in 2017

Movem ent 2017

Year in Service

Total Land andBuildings

Buildings and Constructions in Use

Land

New Building Site

Security
Perimeter

New ConferenceHall

New Building

A. Bogsch
Building

1998

2015

2014

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2017
Cost/valuation
Accumulated depreciation

30,820
-

8,996
-362

70,513-4,827

167,815-16,933

57,649-10,745

13,053-2,9204,527-827

68,147-9,417 -421,520-46,031

Net carrying am ount

30,8208,634

65,686150,882

46,904

10,1333,700

58,730375,489

Additions

-

-

92

19

1,699

1,464

-

1,310

4,584

Derecognition
Derecognition accumulated
depreciation
Depreciation

-

-

-

-

-1,392-870---2,262

-

-

-

-

481

259

-

-

740

-

-272

-2,098-3,142-1,737-655-121-1,358-9,383

Net m ovem ents in 2017

-

-272

-2,006-3,123

-949

198

-121

-48

-6,321

Accumulated depreciation

30,820
-

8,996
-634

70,605-6,925

167,834-20,075

57,956-12,001

13,647-3,316

4,527-948

69,457-10,775

423,842-54,674

Net carrying am ount

30,8208,362

63,680147,759

45,955

10,331

3,579

58,682

369,168

Movem ents in 2017

Decem ber 31, 2017
Cost/valuation

48

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Movements for land and buildings in the prior year 2016

Movem ent 2016

Year in Service

Total Land andBuildings

Buildings and Constructions in Use

Land

New Building Site

Security
Perimeter

New ConferenceHall

New Building

A. Bogsch
Building

1998

2015

2014

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

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

28,600
-

8,996
-91

70,456-2,732167,031-13,80956,979-9,00912,838-2,2694,523-705

67,771-8,061

417,194-36,676

Net carrying am ount

28,6008,905

67,724

153,22247,97010,5693,818

59,710380,518

Additions

-

-

57

784

670

215

4

376

2,106

Revaluation

2,220

-

-

-

-

-

-

-

2,220

Depreciation

-

-271

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

2,220

-271

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

-436

-118

-980

-5,029

Accumulated depreciation

30,820
-

8,996
-362

70,513-4,827

167,815-16,933

57,649-10,745

13,053-2,9204,527-827

68,147-9,417

421,520-46,031

Net carrying am ount

30,8208,634

65,686150,882

46,904

10,1333,700

58,730375,489

Movem ents in 2016

Net m ovem ents in 2016

Decem ber 31, 2016
Cost/valuation

49

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 12: OTHER NON-CURRENT ASSETS
Decem ber 31,
2017

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

8,553

8,428

Advance for FCIG concessionary loan-

126

FCIG loan amortization

-

189

8,553

8,743

Total other non-current assets

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

rental of parking spaces) until the end of the lease in2018 would be as follows:

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 2017 totaled
229,457 Swiss francs (231,020 Swiss francs during
2016). The current rate of interest, fixed through to
December 31, 2018, is 1.48 per cent. Since
January 1, 2012, WIPO has also recognized anannual amortization charge of 188,679 Swiss francs
against its advance to FCIG. Further, theOrganization also leases covered parking spaces, fora cost of 90,072 Swiss francs in 2017. In the absenceof a mutual termination of the lease agreement,
WIPO’s future payments (including the mortgage
repayments, the amortization of the advance and the

For presentation in the financial statements, the total
value of the amortization is treated as an advancepayment of rent, and is split into both its current
portion (see Note 6) and non-current portion. As at
December 31, 2017 the non-current portion is zero as
there is only one year remaining on the existing leaseagreement. The total value of this advance payment
as at December 31, 2017 is 0.2 million Swiss francs.
The remaining balance of WIPO’s advance to FCIG istreated as a concessionary loan in accordance withIPSAS, and is measured at amortized cost. Theinterest-free element of the concessionary loan is
also recognized as an advance payment, and is split
into both its current portion (see Note 6) and noncurrent portion. Again, as at December 31, 2017, thenon-current portion is zero. This advance payment isreduced over the period of rental agreement, and as
at December 31, 2017 has a total value of
0.1 million Swiss francs.

Decem ber 31,
2017

Decem ber 31,
2016(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

507

508

-

507

-

-

507

1,015

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.

50

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 13: PAYABLES AND ACCRUALS
Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Trade creditors - accounts payable

16,53010,215

Miscellaneous transitory liabilities

952

293

Other trade creditors

414

255

17,896

10,763

Total payables and accruals

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

NOTE 14: EMPLOYEE BENEFITS
Decem ber 31,
2017

Decem ber 31,
2016(restated)(in thousands of Swiss francs)
Accumulated leave (posts)

704

614

Accumulated leave (temporary staff)

250

482

Separation benefits

284

329

Closed Pension Fund

321

327

2,136

2,036

Home leave

329

409

Overtime and credit hours

382

524

1,932

1,943

Repatriation grant and travel

Education grant
Performance rew ards

3,224

240

After-Service Health Insurance

18,55921,417

Total current em ployee benefit liabilities

28,121

28,321

Closed Pension Fund

1,751

2,277

Accumulated leave (posts)

7,735

6,849

Repatriation grant and travel

14,302

13,383After-Service Health Insurance

285,817

299,471

Total non-current em ployee benefit liabilities

309,605

321,980

Total em ployee benefit liabilities

337,726

350,301

Under IPSAS, employee benefits comprise:
Short-term employee benefits which include salary,allowances, grant on initial assignment, grants for theeducation of dependent children, annual leave,
accident and life insurance, where these benefits are
expected to be settled within twelve months;

shipping of personal effects,
accumulated annual leave; andandlong-term

Termination benefits which include an indemnity
payable to staff members holding a permanent,
continuing or fixed term contract whose appointment
is terminated by 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 ASHI, and other long-term employee
benefits such as separation benefits consisting of
grants upon repatriation, repatriation travel and51

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Short-Term Employee Benefits

during the year, the total amount of performance
rewards payable to staff as at December 31, 2017,
totaled 3.2 million Swiss francs (0.2 million Swiss
francs at December 31, 2016).

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.

Long-Term Employee Benefits

Accumulated leave (temporary staff): accumulated
annual leave is classified as a short-term employee
benefit for staff members holding temporary contracts.
Temporary staff members may accrue up to 15 days
annual leave in a given year, and a maximum of 15days accrued leave may be paid at the end of an
appointment. The total outstanding liability at thereporting date is 0.3 million Swiss francs (0.5 million
Swiss francs at December 31, 2016).

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

Home Leave: certain internationally recruited staff
members are eligible for home leave for themselves
and their dependents to the country in which they
have their home every second year. The total
outstanding liability for home leave earned but nottaken at the reporting date is 0.3 million Swiss francs(0.4 million Swiss francs at December 31, 2016).

Overtime and credit hours: certain staff members
are eligible to be paid in cash for overtime accrued
after the expiry of a period established in the SRR.
Staff members following the flexible working timesystem may accumulate credit hours for time worked
beyond 40 hours a week. Staff members with
sufficient credit hours (up to a maximum of 16 hours)
may request to take credit leave. The total liability at
the reporting date for overtime and credit hours is
0.4 million Swiss francs (0.5 million Swiss francs at
December 31, 2016).



Education grant: certain internationally recruited staff
members, other than those living in their homecountry, are eligible to receive a grant covering
admissible costs of education for dependent children
until the fourth year of post-secondary school studies,but not beyond the end of the school year in which thechild reaches the age of 25. For the 2017-2018
scholastic year, reimbursement is based on a global
sliding scale, with declining reimbursement rates. The
liability for education grants payable relates to thenumber of months which have elapsed between thestart of the school year/university year and December
31, 2017, 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, 2016).

the obligation to cover the cost of pensions paid
to former staff participating in the Closed Pension
Fund before they reach the age of 65. Basedupon the latest actuarial valuation performed for
2017, there is no remaining liability as all
participants have now reached the age of 65;
the obligation, based upon a decision of the
ILOAT in 2006, to cover certain differences
between the pension receivable of Closed
Pension Fund members under the Closed
Pension Fund and that receivable from the
UNJSPF which, based upon the latest actuarial
valuations performed for 2017, is estimated at
2.1 million Swiss francs as at December 31, 2017(2.6 million Swiss francs in 2016).

Accumulated leave (posts): accumulated annual
leave is classified as a long-term employee benefit for
staff members holding permanent, continuing or fixed
term contracts, and the liability is calculated by an
external actuary. Staff in posts may accrue up to 15
days of 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, were entitled to retain them until
December 31, 2017. On separation from service, staff
in posts who have accumulated annual leave canreceive a payment in lieu of an amount equivalent totheir salary for the period of accumulated annual
leave. In exceptional circumstances, a staff member
may be granted advance annual leave up to a
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 8.4 million Swiss francs (restated
7.5 million Swiss francs at December 31, 2016).

Performance rewards: under the WIPO Rewards andRecognition Program staff may be considered for
payment of a cash reward based on their performance
during the year. In accordance with decisions taken

52

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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

Actuarial
Valuation

Decem ber 31,
2017

Decem ber 31,
2016

Total

Total

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

1,368

768

2,136

2,036

Non-current liability

14,302-

14,302

13,383

Total liability - repatriation grant and travel

15,670768

16,43815,419Contributions paid by the Organization for repatriation
grant and travel totaled 0.3 million Swiss francs for2017 (0.8 million Swiss francs in 2016). Expected
contributions to repatriation grant and travel in 2018
are 1.2 million Swiss francs.

Concerning the actuarial valuation of repatriation grant
and travel, the table below details the expense forrepatriation grant and travel recognized in theStatement of Financial Performance:
Decem ber 31,
2017

Decem ber 31,
2016

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the repatriation grant and travel liability for2017 and the previous four years:(in thousands of Swiss francs)

Interest cost
Current service cost
Actuarial (gain)/loss
Expense recognized in theStatem ent of Financial
Perform ance

43

71

1,276

1,281

-57

-632

1,262

720

2017

Defined benefit obligation

2015

2014

2013

15,670 14,702 14,702 13,279 12,097

Experience (gain)/loss
adjustments on plan liability

Actuarial gains and losses for repatriation grant andtravel are recognized immediately in the Statement of
Financial Performance. The table below details thechange in the repatriation grant and travel defined
benefit obligation:
Decem ber 31,
2017

2016

(in thousands of Swiss francs)

-793

224

1,135 -1,295-41

The principal assumptions used in determining therepatriation grant and travel liability and defined
benefit obligation are as follows:
Decem ber 31,
2017

Decem ber 31,
2016

Discount rate

0.30%

0.30%

Rate of salary increase

2.50%

2.43%

Discount rate

0.30%

0.50%

Rate of salary increase

2.43%

3.38%

Decem ber 31,
2016(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year
Interest cost

14,702

14,73943

71

Current service cost

1,276

1,281

Contribution paid

-294

-757

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

-57

-632

15,67014,702

Weighted-average assumptions
to determine benefit obligations

Weighted-average assumptions
to determine net cost

53

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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, 2018, monthly
medical premiums amount to 596 Swiss francs for
adults and 265 Swiss francs for children. The present
value of the defined benefit obligations for postemployment medical benefits is determined using the

projected unit credit method including discounting theestimated future cash outflows using a discount rate
based upon Swiss franc high grade corporate 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, andtherefore no plan assets are deducted from the liability
as recognized in the statement of financial position.
However, it should be noted that the Organization has
established separate funds for the future financing ofafter-service employee benefit liabilities, including
ASHI (see Notes 3 and 4). On the basis of an actuarial
valuation carried out in December 2017 by anindependent office, the Organization’s ASHI liability
was estimated as follows at the reporting date:

Decem ber 31,
2016(restated)

Decem ber 31,
2017
ASHI

(in thousands of Swiss francs)

Current liability

18,55921,417

Non-current liability

285,817

299,471

Total liability - ASHI

304,376

320,888

The table below details the expense for ASHI
recognized in the statement of financial performance:
Decem ber 31,
2017

The table below details the changes in the ASHI
defined benefit obligation, including the impact of
actuarial gains/(losses):

Decem ber 31,
2016(restated)

Decem ber 31,
2017(in thousands of Swiss francs)(in thousands of Swiss francs)

Interest cost

2,393

2,146

Current service cost
Expense recognized in theStatem ent of Financial
Perform ance

19,023

12,92021,416

15,066

Decem ber 31,
2016

Defined benefit obligation at
beginning of year

320,888

216,075

Interest cost

2,393

2,146

Current service cost

19,023

12,920Contribution paid

-3,312-2,869Actuarial (gain)/loss on obligation:

Prior to the implementation of IPSAS 39, WIPO
applied the corridor approach for the recognition of
actuarial gains and losses for ASHI. Under thisaccounting policy, a portion of net actuarial gains andlosses was recognized if the net cumulative
unrecognized gains and losses at the end of theprevious reporting period exceeded 10 per cent of thepresent value of the defined benefit obligation at that
date. Following the implementation of IPSAS 39 in
2017, actuarial gains and losses for ASHI arerecognized directly through net assets.

Experience (gain)/loss(Gain)/loss on change infinancial assumptions(Gain)/loss on change indemographic assumptions
Defined benefit obligation
recognized at end of year

-17,122

3,377

3,960

84,640-21,4544,599

304,376

320,888

Contributions paid by the Organization for ASHI
totaled 3.3 million Swiss francs for 2017(2.9 million Swiss francs in 2016). Expected
contributions to ASHI in 2018 are 3.6 million Swiss
francs. The weighted average duration of the defined
benefit obligation as at December 31, 2017, was 22.8
years.

54

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the ASHI liability for 2017 and the previous
four years:
2017

2016

2015

2014

2013

2012

(in thousands of Swiss francs)
Defined benefit obligation

304,376

320,888

216,075

154,449

137,670

131,320

Experience (gain)/loss adjustments on plan liability-17,122

3,377

190

-15,301

1,606-6,704The principal assumptions used in determining the
ASHI liability and defined benefit obligation are as
follows:
Decem ber 31, 2017

Decem ber 31, 2016

Discount rate

0.70%

0.75%

Medical cost trend rate

3.50%

3.50%

Discount rate

0.75%

1.00%

Medical cost trend rate

3.50%

2.75%

Weighted-average assumptions to determine benefit obligations

Weighted-average assumptions to determine net cost

Actuarial assumptions have a significant effect on theamounts calculated for the ASHI liability. A descriptionof the factors which impact the size of the ASHI
liability is included in the financial statement
discussion and analysis which precedes thesefinancial statements. The following sensitivity analysis
shows how the defined benefit obligation would havebeen affected by changes in significant actuarial
assumptions, the discount rate and the rate ofsickness premium increase. The per cent changes
used in the analysis are considered reasonable basedon historical movements:

0.25 per cent decreasein discount rate
0.45%

Discount rate as applied
0.70%

0.25 per cent increasein discount rate
0.95%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2017
Per cent variation

322,966

304,376

6.1%

1 per cent decrease inm edical cost trend rate
2.5%

287,201-5.6%

Medical cost trend rate
as applied
3.5%

1 per cent increase inm edical cost trend rate
4.5%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2017244,979

Per cent variation-19.5%

55

304,376

383,440
26.0%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

United Nations Joint Staff Pension Fund

payments under Article 26 of the Regulations of theFund as the actuarial value of assets exceeded theactuarial value of all accrued liabilities under the Fund.
In addition, the market value of assets also exceeded
the actuarial value of all accrued liabilities as of thevaluation date. At the time of this report, the General
Assembly has not invoked the provision of Article 26.

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

Should Article 26 be invoked due to an actuarial
deficiency, either during the ongoing operation or due
to the termination of the UNJSPF pension plan,
deficiency payments required from each member
organization would be based upon the proportion ofthat member organization’s contributions to the total
contributions paid to the Fund during the three years
preceding the valuation date. Total contributions paid
to UNJSPF during the preceding three years (2014,2015 and 2016) amounted to 6,751.0 million US
dollars, of which 1.9 per cent was contributed by
WIPO (including participants and Organization
contributions).

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

During2017,
WIPO
contributions(including
Organization contributions only) paid to UNJSPF
amounted to 27.1 million Swiss francs (26.4 million
Swiss francs in 2016). Expected contributions due in2018 are 26.5 million Swiss francs.
Membership of the Fund may be terminated bydecision of the United Nations General Assembly,
upon the affirmative recommendation of the Pension
Board. A proportionate share of the total assets of theFund at the date of termination shall be paid to theformer member organization for the exclusive benefitof its staff who were participants in the Fund at thatdate, pursuant to an arrangement mutually agreed
between the organization and the Pension Board. The
amount is determined by the Pension Board based onan actuarial valuation of the assets and liabilities of
the Fund on the date of termination; no part of theassets which are in excess of the liabilities areincluded in the amount.

During 2017, the Fund identified that there wereanomalies in the census data utilized in the actuarial
valuation performed as at December 31, 2015. As
such, as an exception to the normal biennial cycle, aroll forward of the participation data as at December
31, 2013, to December 31, 2016, was used by theFund for their 2016 financial statements. An actuarial
valuation as at December 31, 2017 is currently being
performed.
The roll forward of the participation data as at
December 31, 2013, to December 31, 2016, resulted
in a funded ratio of actuarial assets to actuarial
liabilities, assuming no future pension adjustments, of
150.1 per cent (127.5 per cent in the 2013 valuation).
The funded ratio was 101.4 per cent (91.2 per cent in
the 2013 valuation) when the current system ofpension adjustments was taken into account.

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

After assessing the actuarial sufficiency of the Fund,
the Consulting Actuary concluded that there was norequirement, as at December 31, 2016, for deficiency

56

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 15: TRANSFERS PAYABLE
Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Madrid Union complementary fees

37,31535,613Madrid Union supplementary fees

3,709

3,099

Madrid Union individual fees

15,41014,451Madrid Union handling fees
Madrid Union deposits
Hague Union distribution

15

17

27,82523,841

458

489

Madrid and Hague Union repartition fees

5,781

5,107

AMC deposits

1,079

914

PCT International Searching Authorities

1,302

1,339

181

4

93,07584,874

USPTO search fees due to EPO
Total transfers payable

Madrid 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 16).

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.

57

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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.

58

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 16: ADVANCE RECEIPTS
Decem ber 31,
2017

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

10,107

19,551

Industrial design deposits

832

944

PCT/IBRO deposits

724

451

2,225

3,188

PCT system deferred revenue

252,193

227,975

Madrid system deferred revenue

2,609

2,297

Hague system deferred revenue

448

463

Non-exchange deferred revenue

13,555

14,581

Advance payment of contributionsFIPOI deferred revenue

132

132

282,825

269,582FIPOI deferred revenue

3,937

4,069

Total non-current advance receipts

3,937

4,069

286,762

273,651

Total current advance receipts

Total advance receipts

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

Voluntary contributions from donors to Special
Accounts containing conditions requiring theOrganization to provide services to recipient
governments or other third parties are treated asdeferred income until the services covered by thevoluntary contributions are performed, whereupon
income is recognized.
The construction project to upgrade the safety andsecurity standards of existing WIPO buildings waspartly financed by the Foundation for Buildings forInternational Organizations (FIPOI). Construction work
financed by the FIPOI has been capitalized as part ofthe cost of the Security Perimeter, and acorresponding amount recognized as deferred
revenue. The balance of deferred revenue as at
December 31, 2017, was 4.1 million Swiss francs (4.2
million Swiss francs as at December 31, 2016). This
revenue is recognized gradually as the Security
Perimeter is depreciated over its useful life.

59

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 17: BORROWINGS
Decem ber 31,
2017

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

16,862

1,358

BCG/BCV New Building loan

-

3,900

Total current borrow ings

16,862

5,258

FIPOI loan-

16,862

BCG/BCV New Building loan-

66,600Total non-current borrow ings-

83,462

16,862

88,720Total borrow ings

NOTE 18: PROVISIONSThe Organization borrowed funds (50.8 million Swiss
francs and 8.4 million Swiss francs approved in 1977
and 1987 respectively) from the FIPOI for the purposeof constructing its headquarters buildings in Geneva,
Switzerland. These loans were originally subject tointerest payments. However, in 1996 the Swiss
Federal Department of External Relations agreed towaive any further payments of interest and the loans
currently require the reimbursement of principal only.
In January 2018 the Organization repaid in full theremaining balance of 16.9 million Swiss francs of its
loans with the FIPOI (see Note 29).

Decem ber 31,
2017

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

2,008

6,989

Total provisions

2,008

6,989

The movement in provisions during 2016 and 2017 isdetailed as follows:
Legal Costs(in thousands of Swiss francs)

In February 2008, the Organization entered into acontract with the Banque Cantonale de Genève (BCG)
and the Banque Cantonale Vaudoise (BCV) to borrow
114.0 million Swiss francs, plus a possible
supplementary amount of 16.0 million Swiss francs, tobe used to finance part of the cost of the constructionof the New Building, available for use until February
28, 2011. The supplementary amount of 16.0 million
Swiss francs was drawn down on January 27, 2011.
The interest rate was 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 lengthof the term as determined by the Organization. In
November 2015 the Organization made the first of its
scheduled lump sum repayments towards the loan for
the amount of 24.0 million Swiss francs. A second
lump sum repayment for 16.0 million Swiss francs wasmade in January 2016. In January 2017, theOrganization took the decision to repay in full theremaining balance of the loan of 70.5 million Swiss
francs, with final repayment taking place on January
26, 2017. For this early repayment, WIPO incurred apenalty charge of 11.6 million Swiss francs (calculated
by reference to the present value of all outstanding
interest due on the loan). WIPO also paid interest (153
thousand Swiss francs) on the loan up until the
repayment date.

Balance as at Decem ber 31, 2015

817

Movem ents in 2016:
Additional provisions made6,645

Amounts used-27

Unused amounts reversed-446

Balance as at Decem ber 31, 2016

6,989

Movem ents in 2017:
Additional provisions made498

Amounts used

-521

Unused amounts reversed-4,958

Balance as at Decem ber 31, 2017

2,008

As part of its normal activities, the Organization is
subject to litigation. Events occurring prior to
December 31, 2017, 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.

60

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 19: OTHER CURRENT LIABILITIES
Decem ber 31,
2017

Resolution 2741 (XXV) of the United Nations General
Assembly. ICC provides Information Technology andCommunications services to Partners and Users in the
United Nations System. As a Partner bound by the
Mandate of the ICC, WIPO would be proportionately
responsible for any third party claim or liability arisingfrom or related to service activities of the ICC as
specified in the ICC Mandate. At 31 December 2017,
there are no known claims that impact WIPO.
Ownership of assets is with ICC until dissolution. Upondissolution, the division of all assets and liabilities
amongst Partner Organizations shall be agreed by theManagement Committee by a formula defined at thattime.

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

64,47962,519Total other current liabilities

64,47962,519The Organization provides facilities for applicantsunder the PCT, Madrid and Hague systems to deposit
funds entitled “current accounts” for which theOrganization acts as custodian pending the use of thefunds to cover fees required to be paid in connection
with individual applications and renewals. These funds
are held until such time as specific applications are
filed. On receipt of the application and authorization,
the current account balance is reduced and the funds
are considered deposits until the application has beenregistered.

As at December 31, 2017, the Organization has noncancellable contracts for the delivery of goods andservices for a total value of 0.4 million Swiss francs.
WIPO has contractual commitments relating to noncancellable lease arrangements. These are detailed in
Note 21.

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

NOTE 21: LEASESWIPO as Lessee
The Organization leases additional depots andstorage facilities in the Geneva area, and space for its
external offices in Rio de Janeiro and Tokyo (paid witha voluntary contribution to a Special Account), and its
coordination office in New York. In addition, theOrganization leases printing and photocopying
equipment. The value of future minimum lease
payments under non-cancellable operating leases is
as follows:

NOTE 20: CONTINGENT ASSETS AND
LIABILITIES
Several members of WIPO personnel are in disputewith the Organization. Cases before the WIPO Appeal
Board (WAB) and the ILO Administrative Tribunal(ILOAT) for which provisions have been made arereflected in Note 18. No provision has been made forcertain other cases before the WAB or the ILOAT
where legal advice indicates it is not probable that aliability will arise. The estimated value of contingent
liabilities for possible payments by the Organizationforclaimsarising
from
these
cases
is
80,000 Swiss francs at the reporting date. Personnel
also have cases which have not yet reached theappeal stage (requests for review and workplace
related conflicts and grievances). For these cases theamount of any claim is yet to be confirmed, andtherefore no provision is recognized. There are no
contingent liabilities for possible settlement payments
by the Organization arising from these cases at thereporting date.

Decem ber 31,
2017

Decem ber 31,
2016(in thousands of Swiss francs)
Not later than one year
Later than one year and not later
than five years
Later than five years
Total non-cancellable
operating leases

333

356

494

54

-

-

827

410

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 12.
The Organization has no outstanding leases qualifying
as finance leases at the reporting date. The total
amount of lease payments for depots, storage
facilities and office space recognized as an expense
was 1.7 million Swiss francs in 2017 (1.7 million Swiss
francs in 2016).

The International Computing Centre (ICC) wasestablishedin
January
1971
pursuant
to61

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

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 0.7 million Swiss francs (0.6
million Swiss francs in 2016). 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 9.

NOTE 22: RELATED PARTY
TRANSACTIONSWIPO has no controlled entities and no interests inother entities which would require disclosure under
IPSAS 34-38. WIPO is a member of the UNJSPF andcertain of its former staff are members of WIPO’s
CROMPI. The relationship with these two funds is
explained in detail in Note 14.

The 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
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 tablebelow. 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.

The Organization has a relationship with theInternational Union for the Protection of New Varieties
of Plants (UPOV) whereby the Director General of theOrganization serves as Secretary General of UPOV.
The Council of UPOV which serves as UPOV’s
governing body consists of the representatives of thecontracting parties to the International Convention for
the Protection of New Varieties of Plants ofDecember 2, 1961, as revised. In accordance with theRules and Regulations of UPOV, the office of UPOV,
consisting of the UPOV Secretary General and staff,
exercises its functions in complete independence of
the Organization. The Organization is responsible forproviding space, personnel administration, financial
administration, procurement services and otheradministrative support to UPOV in accordance withthe terms of an agreement between the Organizationand UPOV dated November 26, 1982. UPOV
reimburses the Organization for the cost of suchservices in accordance with the terms of said
agreement. In 2017 the Organization received
618 thousand Swiss francs from UPOV to cover thecost of these services. In addition, WIPO receives full
reimbursement of all funds disbursed on behalf of
UPOV.
2017

Num ber of
Individuals(as an average)

2016
Aggregate
rem uneration(in thousands of
Swiss francs)

Num ber of
Individuals(as an average)

Aggregate
rem uneration(in thousands of
Swiss francs)

Director General, Deputies and Assistants

9.00

3,171

8.29

2,921

Senior Officers

13.00

3,769

12.21

3,739

62

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 23: NET ASSETS

Movem ent 2017

Decem ber31, 2016(restated)

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

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

Decem ber31, 2017(in thousands of Swiss francs)

Program and Budget 2017--

56,343----33,726-22,617

Special Accounts 2017

-

-

-

-909

-

-

909

-

-

Accumulated Surpluses
Actuarial gains/losses
through Net Assets

282,328

-

-

-

-

-

-

23,625305,953-173,310

34,616

-

-

-

-

-

-

-138,694

Special Projects Reserve

16,786----4,996-

1,008-1,008

11,790

Revaluation Reserve
Surplus17,266

-

-

-

-

-

-

-

17,266

Working Capital Funds
Net assets

-

6,342

-

-

-

-

-

-

-

6,342

149,41234,61656,343-909-4,996--31,809-

202,657

The Organization’s total net assets represent thebalance of its reserves, which include its Reserves(Accumulated Surpluses, Special Projects Reserve
and Revaluation Reserve Surplus) and Working
Capital Funds. Following the implementation of IPSAS
39 in 2017, the Organization also recognizes actuarial
gains and losses directly through net assets. The
Organization manages the level of its reserves inaccordance with its Policy on Reserves. In 2015 thepolicy was revised and adopted by the Fifty-Fifth
Series of Meetings of the Assemblies of the Member
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. Under WIPO Financial Regulation 4.7, for
any Union showing a surplus at the closure of thefinancial period, the surplus is retained in its reserves
unless otherwise decided by the General Assembly or
the Assembly of the Union concerned. As decided by
the Assembly of the Madrid Union, and under Article
8(4) of the Madrid Agreement, the surplus of the
Madrid Union is distributed to Member States, unlessthey otherwise decide.

Following approval by the Fifty-Fifth Series of
Meetings of the Assemblies of the Member States of
WIPO, the Working Capital Funds component of
2.0 million Swiss francs for the PCT Union has beenreturned to the Member States of the PCT Union,
through deductions from contribution invoices in 2016.
The Accumulated Surpluses of the Organization
represent the accumulated net result of operations in2017 and prior periods after the impact of IPSAS. The
Revaluation Reserve Surplus includes the cumulative
results of revaluations of the land owned by theOrganization on which the New Building has been
constructed (see Note 11). The fair value has been
determined by an independent valuation. This wasmost recently updated in 2016, following which the fairvalue of the land was increased by 2.2 million Swiss
francs.
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, 2017:

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.

63

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Total projectbudgetCum ulative
Cum ulative
Rem aining
expenditure to adjustm ents to balance as at
Decem ber 31, Decem ber 31, Decem ber 31,
2016
2016
2016
(in thousands of Swiss francs)

Expenditure
year ended
Decem ber 31,
2017

Adjustm ents
year ended
Decem ber 31,
2017

Rem ainingbalance as at
Decem ber 31,
2017

Special Projects
Madrid system database

1,200-1,117

-

83

-7

-

76

ERP project

25,341-18,108-

7,233-2,768-4,465

ICT capital investment

5,180-5,005

-

175

-

-

175

Security enhancement

700

-129

-

571

-91

-

480

ECM implementation

2,068

-524

-

1,544

-814

-

730

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

6,000

-437

-

5,563

-627

-

4,936

750

-263

-

487

-

-

487

960

-245

-

715

-547

-

168

300

-94

-

206

-

-

206

400

-191

-

209

-142

-

67

42,899-26,113-

16,786-4,996-

11,790-

Revenue in year 2017

-4,996

Net deficit in year 2017

NOTE 24: RECONCILIATION OF
STATEMENT OF BUDGETARYCOMPARISON AND STATEMENT OFFINANCIAL PERFORMANCE

accounts are prepared using two different bases. The
Statement of Financial Position, Statement of
Financial Performance, Statement of Changes in Net
Assets and Statement of Cash Flow are prepared on afull accrual basis, whereas the Statement ofComparison of Budget and Actual Amounts(Statement V) is prepared on a modified accrual basis.

The WIPO Program and Budget is established on amodified accrual basis in accordance with the
Financial Regulations and Rules, and is approved by
the Assemblies of the Member States. The Programand Budget for the 2016/17 Biennium established abudget for the biennium of expenditure of
707.0 million Swiss francs.

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

For 2017, the second year of the biennium, theoriginal and final budget estimate for income was383.0 million Swiss francs, and for expenditure356.7 million Swiss francs. Actual income on amodified accrual basis for the second year of thebiennium was 422.9 million Swiss francs, and actual
expenditure on the same basis was 366.6 million
Swiss francs. For the 2016/17 biennium, the original
and final budget after transfers for income were 756.3
million Swiss francs, and for expenditure 707.0 million
Swiss francs. Actual income on a modified accrualbasis for the biennium was 807.5 million Swiss francs,
and actual expenditure on the same basis was 688.7
million Swiss francs.
The WIPO Performance Report for 2016/17 provides
an explanation of both the changes between theoriginal and final budget after transfers, and thematerial differences between the budget and theactual amounts. WIPO’s budget and financial

64

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Reconciliation for the year 20172017
Operating

Investing

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

56,343

Depreciation and amortization--

56,343-11,350-11,350--

Equipment acquisition and disposal

-

389

-

389

Capitalization of construction expense

-

4,584

-

4,584

Demolition of buildings components--1,522--1,522

Capitalization of intangible assets

-

25

-

25

Changes in employee benefit liabilities-4,976---4,976

Deferral of revenue from fees

-20,207---20,207

Other revenue

288

-

-

288

Change in provision for doubtful debts

457

-

-

457

Inventory recognition

-171

-

-

-171

Special Accounts revenue recognition

909

-

-

Other expense

-235

-

Total Basis differences-35,2853,476--31,809

Projects financed from reserves
Special Accounts-4,996

-

-

-909

-

-

-4,996-909

Total Entity differences-5,905---5,905

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

15,153

3,476-

18,629Operating

Investing

Financing

Total

909
-235

Reconciliation for the biennium 2016/17
2016/17(in thousands of Swiss francs)
Actual am ount on com parable basis (Statem ent V)

118,851

Depreciation and amortization--

118,851-22,774-22,774--

Equipment acquisition and disposal

-

478

-

478

Capitalization of construction expense

-

6,690

-

6,690

Demolition of buildings components--1,522--1,522

Capitalization of intangible assets

-

312

-

312

Changes in employee benefit liabilities-10,345---10,345

Deferral of revenue from fees

-26,510---26,510

Other revenue

424

-

-

424

Change in provision for doubtful debts

437

-

-

437

Inventory recognition

-248

-

-

-248

Special Accounts revenue recognition

361

-

-

Other expense

-235

-

Total Basis differences-58,890

5,958--52,932

Projects financed from reserves
Special Accounts-9,669

-

-

-361

-

-

-9,669-361

Total Entity differences-10,030---10,030

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

49,931

5,958-

55,889

65

361
-235

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 25: REVENUE

Programand Budget

Special
Accounts

2017

2017

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2017

2017

Total

2017

2016

17,82917,337(in thousands of Swiss francs)

Assessed contributions

17,371--

458

Voluntary contributions
Contributions to Special Accounts-

10,327-837

11,164

Subventions to Lisbon Union

932

-

-

-

932

9,784
392

Sub-total voluntary contributions

932

10,327-837

12,096

10,176

Publications revenue

242

-

-

-

242

426

Investment revenue

4,337

-

-

-

4,337

21

PCT system

316,266---19,910296,356

290,719

Madrid system

70,263---311

69,95259,580

Hague system

5,062

-

-

14

5,076

4,956

Lisbon system

39

-

-

-

39

25

391,630---20,207371,423355,280

1,689

-

-

-

1,689

1,641

Exchange gain (loss)

-124

-1

-

-

-125

532

Program support charges

1,090

-

-

-1,090--

Other/miscellaneous revenue

5,697

-

-

288

5,985

2,300

422,864

10,326--19,714

413,476

387,713Fees

Sub-total fees
Arbitration and Mediation

Total revenue

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

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 2017, Madrid system fees
increased by 10.4 million Swiss francs compared to2016. In 2017 WIPO made a significant effort to clear
a backlog of registrations, linked in part to system
issues with the Madrid International Registration
Information System. The work performed to clear the
backlog is estimated to have generated additional
revenue of 9.4 million Swiss francs in 2017.

Voluntary contributions include revenue received inconnection with contributions made by donors toindividual projects under Special Accounts notincluded in the Program and Budget. During 2017 theOrganization received the payment of subventions
under Article 11(3)(iii) of the Lisbon Agreement. These
subventions are classified in the table above as
voluntary contributions to the Program and Budget.
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.

66

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 26: EXPENSES

Programand Budget

Special
Accounts

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2017

2017

2017

2017

Total

2017

2016
(restated)(in thousands of Swiss francs)
Posts

208,409

2,042

279

5,721

216,451

199,398

Temporary staff

11,671

355

532

-354

12,204

12,894

Other staff costs

471

-

-

-532

-61

6,801

220,551

2,397

811

4,835

228,594

219,093

Total Personnel expenditure
Internships

470

-

-

-

470

497

WIPO fellow ships

3,377

6

-

-

3,383

2,764

Total Interns and WIPO fellow ships

3,847

6

-

-

3,853

3,261

Staff missions

5,377

525

-

-

5,902

5,207

Third-party travel

7,597

2,568

-

-

10,165

8,761

Training and related travel grant

1,385

743

-

-

2,128

1,842

Total Travel, training and grants

14,359

3,836

-

-

18,195

15,810Conferences

3,652

316

-

-

3,968

4,029

Publishing

23

23

-

-

46

74

Individual contractual services

13,388

485

1,219

-15

15,077

11,515

Other contractual services

66,288

2,536

1,518

-11

70,33158,780Total Contractual services

83,351

3,360

2,737

-26

89,422

74,398Premises and maintenance

23,035312

1,448-2,694

22,101

18,278Communication
Representation and other operating
expenses

2,214

10

-

-

2,224

2,094

994

35

-

42

1,071

872

United Nations joint services

755

149

-

-

904

702

Total Operating expenses

26,998506

1,448-2,652

26,30021,946

Supplies and m aterials

3,367

23

-

67

3,457

2,039

Furniture and equipm ent

2,041

17

-

-389

1,669

172

Depreciation and am ortization

-

-

-

11,35011,35011,424

Investm ent losses

-

-

-

-

-

-

12,007---

12,007

2,310

-

1,090

-

-1,090--366,521

11,235

4,996

12,095394,847

350,453

Finance costs
Program support costs
Total expenses

Before the impact of IPSAS adjustments, expenses in
the Program and Budget, Special Accounts andProjects financed from reserves are reported on amodified accrual basis, whereby expenses arerecognized when goods are received and services are
rendered. IPSAS adjustments concern principally therecognition of depreciation and amortization against
the cost of fixed assets. Adjustments are also

recognized to capitalize expenses for the acquisitionof equipment, additions of buildings and constructions,or the acquisition and development of intangible
assets. Adjustments are made to personnel
expenditure as a result of bringing employee benefit
liabilities, including ASHI, into line with IPSAS
compliant calculations.

67

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 27: FINANCIAL INSTRUMENTS

Fair values

Financial Instruments Overview

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:

Financial instruments are categorized as follows:
Financial Assets andLiabilities
Cash and cash equivalents
Receivables
Loans
Borrow ings
Payables and accruals
Transfers payable
Current accounts

Derivative assets and liabilities
Held to maturity investments
arising from operating cash
Investments arising from coreand strategic cash

Category
Financial assets at fair value
through surplus and deficit
Loans and receivables (atamortized cost)
Loans and receivables (atamortized cost)
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial assets and liabilities atfair value through surplus anddeficitHeld to maturity investments at(amortized) cost
Financial assets at fair value
through surplus and deficitCash and short-term deposits, receivables fromexchange transactions, accounts payable andother current liabilities approximate their carrying
amounts largely due to the short-term maturitiesof these instruments;



Quoted investments (in investment funds which
are publicly traded) are based on price quotations
at the reporting date;

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

The Organization is exposed to certain foreign
currency exchange, credit, interest rate, price andliquidity 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.
The Organization manages its investments inaccordance with its Policy on Investments. In 2015 thepolicy was comprehensively revised and adopted by
the Fifty-Fifth Series of Meetings of the Assemblies ofthe Member States of WIPO. Some further
amendments to the Policy on Investments wereadopted at the Fifty-Seventh Series of Meetings in2017. The revised policy contains two specificinvestment 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.

The following tables provide a comparison by class ofthe carrying amounts and fair value of theOrganization’s financial instruments:
Carrying
am ount
Financial assets

Fair value(in thousands of Swiss francs)

2017
Receivables

57,676

Loans

8,553

8,553

Cash and cash equivalents

265,452

265,452

Investments

278,319

278,319

Derivative financial instruments

57,676921

921

610,921610,921

Receivables

55,75455,754

Loans

8,428

8,428

529,817529,8172016

Cash and cash equivalents
Investments

68

12,50012,500606,499

606,499

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Carrying
am ount
Financial liabilities

Credit risk

Fair value(in thousands of Swiss francs)

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,
cash and cash equivalents, and investments. The
carrying amount of financial assets represents the
maximum credit exposure. The maximum exposure tocredit risk as at December 31, 2017 and 2016, was asfollows:

2017
Borrow ings

16,862

16,862

Payables and accruals

17,896

17,896

Transfers payable

93,07593,075Current accounts

64,47964,479192,312

192,312

Borrow ings

88,72088,720

Payables and accruals

10,763

10,763

Transfers payable

84,87484,8742016

Current accounts

62,51962,519

246,876

246,876

Decem ber 31,
2017(in thousands of Swiss francs)

Fair Value Hierarchy
For those instruments categorized as fair value
through surplus or deficit, fair values are classified
according to the following hierarchy:Quoted prices (unadjusted) in active markets for
identical assets and liabilities (Level 1);

Inputs other than quoted prices included within
Level 1 that are observable for the asset or
liability, either directly or indirectly (Level 2);

Inputs for the asset or liability that are not basedon observable market data (Level 3).
Financial Assets and Liabilities

Level 1

Derivative assets and liabilities
Investments arising from core and strategic
cash

Level 2Credit Rating

57,676

Loans

8,553

8,428

Cash and cash equivalents

265,452

529,817

Investments

278,319

12,500921-

610,921606,499

Maxim um exposure to credit
risk

55,754The 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.
In accordance with the Organization’s Policy on
Investments, deposits may only be held withinstitutions with a minimum short-term credit rating of
A-2/P-2 or a minimum long-term credit rating of A/A2.
Money market investments, bonds, notes or otherobligations and other fixed income products
purchased directly by WIPO may only be held withinstitutions with a minimum short-term credit rating of
A-3/P-3 or a minimum long-term credit rating of BBB/Baa3. Where these are acquired as shares in pooledmarket traded funds, at least 65 per cent of theholdings must be in Investment Grade (AAA/Aaa to
BBB-/Baa3), while the balance of up to 35 per cent
may be held in high yield bonds (BB+/Ba1 to C/Ca).
The credit ratings attached to cash and cash
equivalents and investments as at December 31,
2017, is as follows:

Level 1

A-1+

Receivables

Derivative financial instruments

Fair Value Hierarchy

Cash and cash equivalents

Decem ber 31,
2016

A-1

A-2

Unrated(1)

Total

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

Decem ber 31, 2017
Cash and cash equivalents-

242,42123,00130

265,452

Investm ents--

10,000268,319

278,319-

242,42133,001

268,349

543,771

0.0%

44.6%

6.1%

49.3%

100.0%Per cent(1) Unrated balance includes cash on hand and non-current investments. Non-current investments held by WIPO are in investment funds which are notrated by credit rating agencies, but in which the underlying investments are made in accordance with WIPO’s Policy on Investments.

69

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Liquidity risk

little or no cost. Core cash balances are invested withthe objective of generating a positive return overrolling five year periods. Core cash balances areinvested ideally in such a way that occasional accessto a portion of the cash is possible. Strategic cash
balances are invested over the long term, andcurrently have 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 as at December 31, 2017 and2016. In January 2017 the Organization repaid in full
the remaining balance of the BCG/BCV loan. In
January 2018 the Organization repaid in full theremaining balance of its FIPOI loans (see Note 29
Events After the Reporting Date):

1 year or less
December 31, 2017

1-5 years

Later than 5 years

Total(in thousands of Swiss francs)

FIPOI loans
BCG/BCV New Building loan
Total borrow ing

16,862

-

-

-

-

-

-

16,862--

16,862

1-5 years

Later than 5 years

Total

1 year or less
December 31, 2016

16,862(in thousands of Swiss francs)

FIPOI loans

1,358

5,433

11,42918,220BCG/BCV New Building loan

3,900

15,60051,00070,500Total borrow ing

5,258

21,03362,42988,720The Organization’s contributions to the UNJSPF andits payments to ICC are made in US dollars. The
Organization has a further exposure to exchange risk
in connection with the cost of pensions for staff
previously enrolled in the Closed Pension Fund who
are now members of the UNJSPF. In addition, theOrganization has external offices in Brazil, China,
Japan, Russia and Singapore, and a coordination
office in the USA, with limited assets in local currency.

Currency risk
The Organization receives revenue from fees incurrencies and incurs expenses in currencies otherthan its functional currency, the Swiss franc, and is
exposed to foreign currency exchange risk arisingfrom fluctuations of currency exchange rates. The
mechanism for managing foreign currency exchange
risk in relation to PCT international filing fees isdiscussed in detail in the financial statement
discussion and analysis which precedes thesefinancial statements. 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 Cooperation 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 to financial assets
and financial liabilities held in currencies other thanthe Swiss franc to summarize the effect on surplus in
the statement of financial performance. A positive
movement in the exchange rate reflects anappreciation of the foreign currency against the Swiss
franc, a negative movement in the exchange rate
reflects a depreciation of the foreign currency against
the Swiss franc. The impact of these exchange rate
movements resulting from the Organization’s
derivative financial instruments (forward foreignexchange contracts) is shown separately:

Where investments are held in currencies other thanthe Swiss franc, the Organization may use derivative
financial instruments to minimize the risk arising fromthe fluctuation of the currency of the investment
against the Swiss franc. Investment in derivatives for
speculative purposes is not permitted.

70

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

December 31, 2017
Original currency:

USD

JPY

EUR

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

4,598

5,054

Investments

102,403

-

7,721
-

PCT debtors

26,289

5,448

7,872

USA taxes reimbursable

2,274

-

-

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

13,556

1,050

1,559

Total effect on surplus of -ve m ovem ents

-13,556-1,050-1,559Financial liabilities
PCT current accounts

-

-

143

Accounts payable

1,320

25

854

Transfer payable

1,280

-

341

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

-260

-3

-134

Total effect on surplus of -ve m ovem ents

260

3

134

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

-9,203

N/A

N/A

Total effect on surplus of -ve m ovem ents

9,203

N/A

N/A

Derivative financial instrum ents
Forw ard foreign exchange contracts

TOTAL NET IMPACT
Total effect on surplus of +ve m ovem ents

4,093

1,047

1,425

Total effect on surplus of -ve m ovem ents

-4,093-1,047-1,425Market risk

As previously noted, in January 2017 the Organization
paid in full the remaining balance of the BCG/BCV
loan. The Organization does not currently use
financial instruments to hedge interest rate risk. Theinterest rates and maturity profile on interest
generating financial instruments as at December 31,
2017, and December 31, 2016, are as follows:

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

Interest rate atreporting date
Decem ber 31, 2017%

Financial assets
Term deposits w ith Raiffeisen (including strategic cash)

0.018

71

1 year or
less

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

20,000--20,000WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Interest rate atreporting date
Decem ber 31, 2016

1 year or
less%

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

Financial assets
Term deposits w ith Raiffeisen

0.010

20,000--20,000

Notice accounts w ith Société Générale

0.600

4,574

-

-

4,574

2.943

3,900

15,60051,00070,500Financial liabilities
BCG/BCV New Building loan

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

Effect on surplus(in thousands of Swiss francs)

2017
Financial assets
Term deposits w ith Raiffeisen

+50

100

-50

-100

Market price sensitivity analysis
WIPO’s medium-term investment portfolio (core cash)
and long-term investment portfolio (strategic cash) are
subject to risk of movements in market prices of theunderlying investment funds. Based on historicalexperience for the investment strategies applied tothese portfolios, the expected volatility for core cash
and strategic cash is 4.80 per cent and 3.70 per cent.
The table below shows the impact on the
Organization’s surplus of a positive and negative
market price movement based on these expectedlevels of volatility:
Percentage m ovem ent inm arket priceEffect on surplus(in thousands of Swiss francs)

2017
Non-current investm ents
Medium-term investment porfolio (core cash)

Long-term investment portfolio (strategic cash)

72+4.80%

8,362-4.80%-8,362+3.70%

3,482-3.70%-3,482

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 28: EXCHANGE GAIN AND LOSS

Gain

Loss

Net Impact
2017

Net impact
2016(in thousands of Swiss francs)
PCT system fees gain/(loss)
Accounts receivable
PCT fees received
PCT International Searching Authority
Total PCT system fees realized gain/(loss)
PCT bank accounts
PCT current accounts and debtors
Total PCT system fees unrealized gain/(loss)
Total PCT system fees gain/(loss)

208
1,635
769
2,612
617
900
1,517
4,129

-161
-1,195-2,771-4,127
-594
-165
-759
-4,88647
440-2,002-1,515
23
735
758
-757

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

Investing activities gain/(loss)
Hedging instruments
Total Investing activities realized gain/(loss)
Hedging instruments
Investments
Total Investing activities unrealized gain/(loss)
Total Investing activities gain/(loss)

651
651
921
921
1,572

-1,114-1,114-951-951-2,065

-463
-463
921
-951
-30
-493

-

37
116
153

-38
-88
-126

-1
28
27

17
-23
-6

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

60
1,426
1,486
724
4,363
5,087
6,573

-838
-838
-1,106-4,694-5,800-6,638

60
588
648
-382
-331
-713
-65

168
168
-103
-1
469
365
533

Total exchange gain/(loss)

12,427-13,715-1,288

5,639

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

contracts and foreign exchange spot transactions. In
addition, unrealized exchange gains and losses
relating to the revaluation of bank accounts and othermonetary assets and liabilities into Swiss francs at theexchange rate in effect on the reporting date arerecognized on the financial statements. Unrealized
foreign exchange gains and losses are also
recognized from the valuation of open forward foreignexchange contracts at the reporting date. The net
effect of all exchange gains and losses of a 1.3 million
Swiss francs loss in 2017 (5.6 million Swiss francs
gain in 2016) is recognized within revenue in theStatement of Financial Performance.

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

73

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

NOTE 29: EVENTS AFTER THE
REPORTING DATEIPC 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 reporting date is December 31, 2017 and its
financial statements were authorized for issue on
May 4, 2018.
On January 15, 2018, the Organization repaid in full
the remaining balance of 16.9 million Swiss francs of
its loans with the Foundation for Buildings forInternational Organizations (FIPOI). The annual
repayments of the loans had been scheduled to becompleted in 2039. The decision to repay the loan
was taken in accordance with the objective of capitalpreservation, as stipulated in WIPO’s Policy on
Investments. Given existing interest rate conditions,
including negative interest rates for Swiss franc
deposits, there is a cost avoidance benefit fromrepaying the loan when compared to investment of thefunds in a risk-free Swiss franc asset of comparable
tenor. The FIPOI loans were interest-free following a
waiver from the Swiss Federal Department of External
Relations in 1996. WIPO incurred no penalty charge
as a result of the early repayment.

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 (note that this investment property was sold inJanuary 2018, see Note 29 Events After the ReportingDate). Therefore, individual assets and liabilities will
not be reflected in the disclosure of information for
individual segments or Unions. Only the net assets orreserves, including the Reserves and Working CapitalFunds are shown by individual segment.
Most revenue (contributions, fees, publications) is
accounted for by Union in WIPO’s accounts.
Investment revenue has been allocated among theUnions based upon the balance of Reserve andWorking
CapitalFunds
duringtheyear.
Other/miscellaneous revenue has been allocatedequally between the Unions, except for specificelements which can be directly attributed to therelevant Unions. Expenses are accounted for byprogram and then re-allocated to the various Unions
based upon a methodology accepted by the WIPO
General Assembly as part of the adoption of WIPO’s
2016/17 Program and Budget.

On January 31, 2018, the Organization signed an act
of sale for its investment property, the Madrid Union
Building. As at December 31, 2017, the Madrid Union
Building was recognized in the financial statements at
its fair value of 6.2 million Swiss francs, based on avaluation carried out by an independent expert. The
sale price was 7.0 million Swiss francs, and the gain
resulting from this will be recognized in the surplus ordeficit of 2018.
Following enhancement of the WIPO Rewards andRecognition Program (RRP), including a neworganizational performance reward, the total provision
recognized for the RRP in the financial statements at
the end of 2017 was 3.2 million Swiss francs. Of this,approximately 2.9 million Swiss francs related to theorganizational performance reward. In May and June
2018, the payment of the organizational performance
reward was effected for a total amount of 2.2 million
Swiss francs.

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.
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.

NOTE 30: 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 WIPO contribution-financed Unions have been
consolidated for presentation purposes.
These
include the Paris, Berne, Locarno, Nice, Vienna and74

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

LisbonTotal(in thousands of Swiss francs)
REVENUE
Contributions
Fees
Investment revenue
Publications
Other/miscellaneous
Arbitration and Mediation
Sub-total revenue on budgetary basis
Miscellaneous revenue projects financed from reserves
IPSAS adjustments to revenue
TOTAL REVENUE

17,371

-

-

-

932

10,32728,630-316,266

70,263

5,062

39

-

391,630

339

3,345

653

-

-

-

4,337

2

209

31

-

-

-

242

491

3,571

1,852

438

311

-1

6,662

88

1,071

507

20

3

-

1,689

18,291

324,46273,306

5,520

1,285

10,326433,190

-

-

-

-

462

-19,875

-65

17

-

-253

-19,71418,753

304,587

73,241

-

5,537

-

1,285

-

10,073

413,476

196

2,182

60

-

-

-

2,438

507

-

1,646

380

-

-

2,533

7,833

1,541

201

-

-

-

9,575

3,293

-

-

-

-

-

3,293

-

98,909----98,909EXPENSES
1
2
3
4

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

5

The PCT System

6

Madrid System--

28,840817

33-

29,690

7

WIPO Arbitration and Mediation Center

275

3,355

1,588

63

11

-

5,292

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

12

1,346

176

-

-

-

1,534

126

13,652

1,780

-

-

-

15,5588910Transition and Developed Countries

32

3,522

459

-

-

-

4,013

11

The WIPO Academy

54

5,854

763

-

-

-

6,671

12

International Classifications and Standards

257

3,235

147

37

-

-

3,676

13

Global Databases

-

3,036

932

48

-

-

4,016

14

Services for Access to Information and Know ledge

69

3,307

747

56

5

-

4,184

15

Business Solutions for IP Offices

58

6,290

820

-

-

-

7,168

16

Economics and Statistics

29

3,210

419

-

-

-

3,658

17

Building Respect for IP

17

1,829

239

-

-

-

2,085

18

IP and Global Challenges

27

2,894

377

-

-

-

3,298

19

Communications

69

7,499

978

-

-

-

8,546

20

External Relations, Partnerships and External Offices

51

5,469

713

-

-

-

6,233

21

Executive Management

456

7,657

2,075

354

35

-

10,57722

Program and Resource Management631

10,935

4,067

660

48

-

16,341

23

Human Resources Management and Development

670

11,259

3,052

521

52

-

15,55424

General Support Services

1,447

24,289

6,583

1,124

111

-

33,554

25

Information and Communication Technology

1,009

18,763

5,032

1,449

77

-

26,33026

Internal Oversight

118

1,978

536

91

9

-

2,732

27

Conference and Language Services

763

12,812

3,473

593

58

-

17,69928

Information Assurance, Safety and Security

459

7,697

2,086

356

35

-

10,63330

SMEs and Entrepreneurship Support

26

2,799

365

-

-

-

3,190

31

The Hague System

-

-

-

6,866

-

-

6,866

32

Lisbon System

-

-

-

-

675

-

675

18,484

265,319

68,154

13,415

1,149-

366,521

Sub-total expenses on budgetary basis
Expenses on projects financed from reserves
Sub-total expenses on budgetary basis including
reserve expenses
Special Accounts
IPSAS adjustments to budgetary expenses and special
accounts

321

4,013

658

-

4

-

4,996

18,805

269,332

68,812

13,415

1,153-

371,517

-

-

-

-

-

11,235

11,235708

10,156

2,844

513

44

-1,162

13,103

-60

-656

-292

-

-

-

-1,00819,453278,832

71,364

13,928

1,197

10,073394,847-700

25,755

1,877-8,391

88-

18,62926,157257,332

57,541-17,179-1,129-322,722

Actuarial gains/(losses) as at December 31, 2016

-8,994-128,519-30,776-4,369-652--173,310

Restated Net Assets as at Decem ber 31, 2016

17,163

128,81326,765-21,548-1,781-

149,412-700

25,755

1,877-8,391

88-

18,62925,457

283,087

59,418-25,570-1,041-

341,351

Actuarial gains/(losses) as at December 31, 2017-7,248-103,461-24,339-3,102-544--138,694

Net Assets as at Decem ber 31, 201718,209179,626

35,079-28,672-1,585-

202,657

IPSAS adjustments to projects financed from reserves
TOTAL EXPENSESSURPLUS/(DEFICIT) FOR THE YEAR
Restated Net Assets as at Decem ber 31, 2016 actuarial gains/(losses) excluded

2017 surplus/(deficit)
Net Assets as at Decem ber 31, 2017 - actuarial
gains/(losses) excluded

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. In accordance with the decision of the Assemblies of the Member States of WIPO at their 55 thSeries of Meetings in 2015, the Contribution-financed Unions have assumed the financing of the deficit of the Lisbon Union in the biennium 2016/17
amounting to 75,550 Swiss francs. The amount will be reimbursed by the Lisbon Union to the Contribution-financed Unions as soon as the level ofreserves of the Lisbon Union so allows.

75

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

ANNEXES76

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

ANNEX I – STATEMENT OF FINANCIAL POSITION BY SOURCE OF FUNDING [UNAUDITED]
as at December 31, 2017
(in thousands of Swiss francs)
Program and Budget(regular budget)
December 31,
2017
ASSETS
Current Assets
Cash and cash equivalents
Investments
Derivative financial instruments
Contributions receivables
Exchange transactions receivables
Inventories
Other current assets

December 31,
2016 (restated)

Special Accounts(voluntary contributions)
December 31,
2017

Projects financed fromreserves

December 31,
2016 (restated)

December 31,
2017

IPSAS Adjustm ents

December 31,
2016 (restated)

December 31,
2017

December 31,
2016 (restated)

Consolidated
December 31,
2017

December 31,
2016 (restated)

275,452921
1,626
11,250133,813423,062

520,7192,240
14,888
194,706
732,553150
13,841
13,991

21,59815-6,866
14,747-1-147,654-147,655

232-187,840-187,608-10,000
10,000-661
51,035
1,349
51,723-12,500
12,500-757
43,9291,520
44,692

265,452
10,000921
965
62,434
1,349
341,121529,817
12,5001,483
59,064
1,520
604,384

268,319
3,395
25,414
5,416
8,868
311,412

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

137,419
137,419

137,419
137,419

1,455
2,815
26,414
206,335-5,191-315
231,513

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

268,319
1,455
6,210
26,414369,168225
8,553
680,344

1,609
6,210
27,813
375,489
225
2,756
8,743
422,845734,474

776,008

13,991

14,747-10,236-50,189283,236

286,663

1,021,465

1,027,229

22,948-21,406
65,24941,713
16,8622,008
64,516
191,890

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

133
337
14,43014,90021
296
13,882
14,199-5,185-55-5,240-5,138-55-5,19349,24527,826
226,682-37
303,716

51,696
23,840207,725-157
283,104

17,89628,121
93,075282,825
16,8622,008
64,479505,266

10,76328,321
84,874
269,582
5,258
6,989
62,519468,306

123,778
123,778

108,891
83,462
192,353

-

-

-

-

185,827
3,937
189,764

213,089
4,069
217,158

309,605
3,937
313,542

321,980
83,462
4,069
409,511TOTAL LIABILITIES

315,668

368,549

14,90014,199-5,240-5,193

493,480

500,262

818,808

877,817

Accumulated Surpluses
Actuarial gains/losses through Net Assets
Special Projects Reserve
Revaluation Reserve Surplus
Working Capital Funds
NET ASSETS

412,464
6,342
418,806

401,117
6,342
407,459

-909
-909

548
548

-16,786
11,790-4,996-61,782
16,786-44,996-88,816-138,694
17,266-210,244-57,555-173,310
17,266-213,599

305,953-138,694
11,79017,266
6,342
202,657

282,328-173,310
16,786
17,266
6,342
149,412

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

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

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

77

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

ANNEX II – STATEMENT OF FINANCIAL PERFORMANCE BY SOURCE OF FUNDING [UNAUDITED]
for the year ended December 31, 2017
(in thousands of Swiss francs)
Program and Budget

2017

Special Accounts

2016 (restated)20172016 (restated)

Projects financed fromreserves

IPSAS Adjustm ents

2017

2017

2016 (restated)

Consolidated

2016 (restated)20172016 (restated)

REVENUE
Assessed contributions

17,371

17,357

-

-

-

-

458

-20

17,82917,337

10,176

Voluntary contributions
Contributions to Special Accounts-

392

10,327

10,332

-

-

837

-548

11,164

Subventions to Lisbon Union

932

-

-

-

-

-

-

-

932

-

Sub-total voluntary contributions

932

392

10,327

10,332

-

-

837

-548

12,096

10,176

Publications revenue

242

426

-

-

-

-

-

-

242

426

Investment revenue

4,337

21

-

-

-

-

-

-

4,337

21

PCT system fees

316,266

296,369

-

-

-

-

-19,910-5,650296,356

290,719

Madrid system fees

70,263

60,116

-

-

-

-

-311

-536

69,95259,580

Hague system fees

5,062

5,072

-

-

-

-

14

-116

5,076

4,956

Lisbon system fees

39

25

-

-

-

-

-

-

39

25

391,630

361,582

-

-

-

-

-20,207-6,302

371,423355,280

1,689

1,641

-

-

-

-

-

-

1,689

1,641

Exchange gains

-124

529

-1

-1

-

4

-

-

-125

532

Program support charges

1,090

951

-

-

-

-

-1,090-951--

Other/miscellaneous revenue

5,697

1,785

-

9

-

-

288

506

5,985

2,300

422,864

384,684

10,326

10,340-

4-19,714-7,315

413,476

387,713

219,093Fees-

Sub-total fees
Arbitration and Mediation

TOTAL REVENUE

-

-

-

EXPENSES
Personnel expenditure

220,551

211,022

2,397

2,351

811

624

4,835

5,096

228,594

Internships and WIPO fellow ships

3,847

3,261

6

-

-

-

-

-

3,853

3,261

Travel, training and grants

14,35912,413

3,836

3,395

-

1

-

1

18,195

15,810Contractual services

83,351

69,295

3,360

2,925

2,737

2,340

-26

-162

89,422

74,398Operating expenses

26,99821,596

506

154

1,448

1,710

-2,652-1,51426,30021,946

Supplies and materials

3,367

2,020

23

14

-

2

67

3

3,457

2,039

Furniture and equipment

2,041

261

17

-

-

-

-389

-89

1,669

172

-

-

-

-

-

-

11,35011,424

11,35011,42412,007

2,308

-

2

-

-

-

-

12,007

2,310

-

-

1,090

951

-

-

-1,090-951--

TOTAL EXPENSES

366,521322,176

11,235

9,792

4,996

4,677

12,09513,808394,847

350,453

SURPLUS/(DEFICIT) FOR THE YEAR

56,34362,508-909

548-4,996-4,673-31,809-21,123

18,62937,260Depreciation and amortization
Finance costs
Program support costs

78

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2017

ANNEX III – WIPO EX GRATIA PAYMENTS
Financial Regulation 5.10 states that a summary statement of ex gratia payments for the calendar year shall be included in
the annual financial statements of the Organization. There were no such payments made during 2017 and therefore nosummary statement is required.

79

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