Annual financial reportand financial statements

Year to December 31, 2014

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2014

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

CONTENTS
Page
Number
ANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

3
3
3

INDEPENDENT AUDITOR’S REPORT24

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

26
26
27
28
29
30
32
32
33
38
39
40
41
42
43
44
47
48
48
54
56
57
58
58
59
59
60
61

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

74
74
75
76
77

1

63
64
65
66
70
71
72

2

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

ANNUAL FINANCIAL REPORTINTRODUCTION
The financial statements of the World Intellectual
Property Organization (WIPO) for the year ended
December 31, 2014 are submitted to the Assembliesof the Member States of WIPO in accordance with
Regulation 6.7 of the Financial Regulations and Rules.
The financial statements have been prepared inaccordance with the International Public Sector
Accounting Standards (IPSAS). This is the fifth set offinancial statements that have been prepared under
IPSAS, following their implementation at WIPO fromJanuary 1, 2010.

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 four Deputy Directors General and the four
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 theirrespective Sectors and Programs to ensure thedelivery of results in line with the Program andBudget.

The report of the External Auditor on the audit of the2014 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
Financial Regulations and Rules (FRR).
The financial statements, along with financial
statement discussion and analysis, are presented inthis annual financial report.

FINANCIAL STATEMENT
AND ANALYSISDISCUSSIONWIPO generates most of its revenue from fee-paid
services which are provided to users of theinternational registration systems through the Patent
Cooperation Treaty (PCT), Madrid and Hague
Systems. In 2014, fees from these activities
represented 91.0 per cent of the Organization’s total
revenue, with PCT system fees alone representing
75.2 per cent.

This section of WIPO’s annual financial reportpresents discussion and analysis of the Organization’s
operations and environment, financial objectives andstrategies, financial performance and financial position
during the year ended December 31, 2014. This
discussion and analysis is not part of WIPO’s financial
statements; however, it should be read together with
WIPO’s financial statements on pages 26 to 73.

The driver for revenue from these fee-paid services is
the international demand for intellectual property titles.
This demand is influenced by the performance of the
global economy, although since 2010 global
intellectual property filing activity has continued to
grow despite uneven economic recovery from theglobal financial crisis that began in 2008. Other
externalfactorswhich
may
influencetheOrganization’s revenue from these 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.

Overview of WIPO’s Operations andEnvironment
WIPO is the global forum for intellectual property
services, policy, information and cooperation. It is a
specialized agency of the United Nations, with 188
Member States.
The Organization’s mission is to lead the developmentof a balanced and effective international intellectual
property system that enables innovation and creativity
for the economic, social and cultural development of
all countries. The Organization’s mandate, governing
bodies and procedures are set out in the WIPO
Convention, which established WIPO in 1967.

3

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Overview of WIPO’s Financial Objectives
and Strategies

Overview of the Financial Statements
The financial statements prepared in accordance withIPSAS consist of:

The financial activities of WIPO are governed by its
Financial Regulations, which are approved by theGeneral Assembly. Financial Rules are established by
the Director General in accordance with the provisionsof the Financial Regulations. WIPO’s Program andBudget Committee is informed of any modification of
the Financial Rules. The Financial Rules govern all
the financial management activities of theOrganization. Authority and responsibility for the
implementation of the Financial Regulations andRules is delegated by the Director General to theController.

A Statement of Financial Position which details the net
assets (the difference between total assets and total
liabilities) of the Organization. This statement provides
information about the financial strength of theOrganization, and the resources which are available tosupport its future objectives;
A Statement of Financial Performance whichmeasures the net surplus or deficit (the difference
between total revenue and total expenses) for theyear. This statement provides information on the
Organization’s sources of revenue, and the cost of its
activities. The annual surplus or deficit is presented ona full accrual basis of accounting, recognizing revenue
in the period it is earned and expenses when incurred,regardless of when the associated cash is received or
paid;

Every two years, the Director General presents a
Program and Budget to Member States for approval. It
details objectives, performance measures andbudgetary planning for all proposed activities. The
Program and Budget for the 2014/15 biennium wasapproved by the Assemblies of the Member States of
WIPO on December 12, 2013. The Program andBudget provides the planning for the biennium within
the overall strategic context of the Medium Term
Strategic Plan.

A Statement of Changes in Net Assets which identifies
the change in the net asset position during the year.
This statement highlights the sources of changes in
the Organization’s overall financial position, includingchanges due to the surplus or deficit for the period;

The Organization uses a Results Based Management
system to ensure that resources are budgeted andutilized in line with Organizational results andpriorities. Organizational performance is measured
and analyzed 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.

A Statement of Cash Flow which presents the
movements of cash during the year resulting fromoperating, investing and financing activities. This
statement provides information on how cash has beenraised and used during the year, including borrowing
and repayment of borrowing, and the acquisition anddisposal of fixed assets. In contrast to the Statementof Financial Performance, the Organization’s net cash
flow measures the difference between cash coming
into the Organization and cash going out;

The Organization manages the levels of its reserves inaccordance with its Policy on Reserves. One coreelement of the policy is the mechanism forestablishing the required level of reserves as apercentage of the estimated biennial expenditure of
the Unions administered by the Organization. The
policy also establishes the principles and approvalmechanism for the use of reserves for capital
expenditures and strategic initiatives.

A Statement of Comparison of Budget and Actual
Amounts which presents a comparison of the budget
amounts under the Program and Budget, and theactual amounts for the year. This statement isprepared on the budgetary basis which is a modified
accrual basis. It provides information on the extent towhich resources were obtained and used inaccordance with the approved budget;

The Organization manages its investments inaccordance with its Policy on Investments. The policy
states that the 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.

Notes to the Financial Statements which assist inunderstanding the principal financial statements. The
Notes comprise a summary of significant accounting
policies and other explanatory information. They also
disclose information required by IPSAS which is notpresented on the face of the principal financial
statements.

4

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

million Swiss francs compared to the end of 2013.
During the year the construction project of the New
Conference Hall and improvements to the A. Bogschbuilding were completed. The New Conference Hall
has now been brought into use and is being
depreciated over its useful life. The Security
Construction project, including the new access centre
and security perimeter, is expected to be completed in
the first half of 2015.

Financial Statement Highlights
The 2014 WIPO financial statements prepared inaccordance with IPSAS show a surplus for the year of
37.0 million Swiss francs, and a corresponding
increase in net assets from 208.8 million Swiss francs
in 2013 to 245.8 million Swiss francs as at December
31, 2014.
The 2014 surplus of 37.0 million Swiss francs can becompared to a surplus of 15.1 million Swiss francs in2013. Total revenue in 2014 was up by 18.6 million
Swiss francs on the 2013 figure, due principally to anincrease of 21.1 million Swiss francs in PCT system
fees revenue, partly off-set by a 3.2 million decreasein other/miscellaneous revenue. Total expenses fell by
3.3 million Swiss francs compared to 2013. Althoughpersonnel expenditure rose by 2.4 million Swiss
francs, the cost of travel and fellowships, supplies andmaterials, contractual services and operating
expenses were all lower than in the prior year.

The principal liabilities of the Organization as at
December 31, 2014 are payables and advancereceipts of 358.7 million Swiss francs (49.6 per cent of
total liabilities), employee benefit liabilities of 161.2
million Swiss francs (22.3 per cent of total liabilities)
and borrowings of 139.2 million Swiss francs (19.2 percent).

Financial Performance
The Organization’s results for 2014 showed a surplus
for the year of 37.0 million Swiss francs, with total
revenue of 370.2 million Swiss francs and total
expenses of 333.2 million Swiss francs. This can becompared to a surplus of 15.1 million Swiss francs in2013, with total revenue of 351.6 million Swiss francs
and total expenses of 336.5 million Swiss francs.

WIPO’s total assets increased from 900.6 million
Swiss francs as at December 2013, to 969.4 million
Swiss francs as at December 31, 2014. Most notably,
cash and cash equivalents totaled 474.5 million Swiss
francs as at December 31, 2014 (48.9 per cent of total
assets), an increase of 64.6 million Swiss francs
compared to the prior year. The Organization
maintains significant investment in fixed assets,
including land, buildings, investment property,
intangible assets and equipment with a total net bookvalue of 419.7 million Swiss francs (43.3 per cent of
total assets). 2014 saw continued investment in fixed
assets, increasing their total net book value by 23.3

The Program and Budget result for 2014 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 69.9 million
Swiss francs. The 2014 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

2014

2014

Projects
Financed from
Reserves
2014

IPSAS
Adjustm ents

Total

Total

2014

2014

2013

(in millions of Swiss francs)
Total revenue

378.7

9.7

-

-18.2

370.2

351.6

Total expenses

308.8

8.9

35.2

-19.7

333.2

336.5

Net surplus/(deficit)

69.9

0.8

-35.2

1.5

37.0

15.1

5

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

The chart below summarizes the principal differences between the Program and Budget surplus of 69.9 million Swiss
francs, and the surplus for the whole Organization prepared on an IPSAS basis of 37.0 million Swiss francs:

Movement from budget result to IPSAS result 2014

69.9

+0.8

millions of Swiss francs

+24.4

+32.4
-35.2

37.0

-0.8
-6.2

-0.2

-1.1

-18.1
-9.1

-2.8
BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financed fromreserves

Revenuerecognition
underSpecial
Accounts

Deferral ofrevenue

Entity differences

Changes in
employeebenefitliabilities

Accounting basis differences

The WIPO financial statements as prepared inaccordance with IPSAS include all areas andactivities of the whole Organization. The inclusionof the results before IPSAS adjustments for Special
Accounts (surplus of 0.8 million Swiss francs) and
Projects financed from reserves (deficit of 35.2
million Swiss francs) represent ‘entity differences’
between the budget result and the surplus per the
IPSAS financial statements.

-0.1
Other
Capitalization(inventory
andconstruction,
receivableequipment,
allow ance)
softw areIPSAS
RESULT PER
FINANCIALSTATEMENTS

Full accrual
basis

resulting in a reduction in the result for theyear of 0.8 million Swiss francs.


The application of full accrual basis accounting inaccordance with IPSAS leads to a number of‘accounting basis differences’ which impact theresult for the year. The net impact of theseadjustments is a surplus of 1.5 million Swiss francs:


Depreciation
andamortization

In applying IPSAS, revenue from fees isdeferred until it is deemed to have been
earned, which in the case of international
applications is when final publication takes
place. For PCT applications, a receivable
is also recognized where an application
has been filed but no fee has been
received by the Organization.
The balance of deferred revenue from fees
(PCT, Trademarks, Industrial Designs)
increased from 198.5 million Swiss francs
as at December 31, 2013 to 203.7 million
Swiss francs as at December 31, 2014.
Over the same period, receivables from
PCT fees fell from 62.4 million Swiss
francs to 46.7 million Swiss francs. Part ofthis decrease in receivables was due tothe offset of a portion of PCT current
accounts for the amount of 3.9 million
Swiss francs as at December 31, 2014,
where part of the current account balances

Under IPSAS, revenue from voluntary
contributions under Special Accounts is
recognized as the conditions in the donor
agreements are fulfilled and expense isincurred in line with the program of work.
Where contributions received exceed thecost of work performed, the contributions
are treated as deferred revenue liabilities,

6

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

were identified as relating to filed
applications. The net impact is a decrease
in revenue of 17.0 million Swiss francs.

liabilities, including those prepared byexternal actuaries.
Employee benefit
liabilities recognized under IPSAS (After
Service Health Insurance – ASHI,
repatriation grant and travel, accumulated
annual leave, home leave, overtime andthe closed pension fund) increased by 10.2
million Swiss francs during 2014. Under
the Program and Budget, a 6.0 per centcharge is applied to the cost of posts forthe funding of the provision for after
service employee benefits. In 2014, thischarge generated a provision of 7.4 million
Swiss francs, following deductions for after
service employee payments during theperiod (principally the Organization’scontribution for the ASHI premiums ofretirees). As a result, the IPSAS
adjustment required to cover theremainder of the 10.2 million Swiss francincrease in employee benefit liabilities was
2.8 million Swiss francs.

During 2014, deferred revenue of 1.1
million Swiss francs has also beenrecognized relating to the financing of
security constructions by the Foundation
for
Buildings
forInternational
Organizations (FIPOI). In summary, the18.1 million Swiss francs adjustment forthe deferral of revenue is made up as
follows:
Summary of IPSAS adjustment for revenue
deferral 2014
2014
(in millions of Swiss
francs)Decrease in PCT debtors
PCT current account offset
Increase in deferred revenue
from fees
Increase in FIPOI deferred
revenue
Total adjustm ent for revenue
deferral

-15.7
3.9
-5.2



Other IPSAS adjustments concern thedecrease in inventories (resulting in an
expense of 0.4 million Swiss francs) and adecrease in the allowance for receivablesfrom assessed contributions (resulting inrevenue of 0.3 million Swiss francs).



Under IPSAS, costs relating to theconstruction and improvement of buildings
are capitalized. This reduces the expense
for the year 2014 by 30.4 million Swiss
francs. Similarly, the acquisition of certain
equipment and software is capitalized
under IPSAS, further reducing the expense
for the year by 2.0 million Swiss francs.

-1.1
-18.1



The result for 2014 on an IPSAS basis
includes the depreciation expense ofbuildings and equipment and theamortization expense of intangible assets,
as the cost of these assets is spread overtheir useful lives.
The total cost ofdepreciation and amortization for the year
was 9.1 million Swiss francs.



IPSAS requires that employee benefits
earned by staff but not yet paid berecognizedasliabilities
oftheOrganization.
The IPSAS adjustments
bring the total liabilities recognized in thefinancial statements into line with the
IPSAS compliant calculations of these7

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Revenue Analysis
Composition of revenue 2014 on an IPSAS basis(in millions of Swiss francs)

Madrid system
fees
55.1
(14.9%)

Assessedcontributions
17.9(4.8%)

Voluntarycontributions
8.9(2.4%)

Hague system fees
3.2
(0.9%)

PCT system fees
278.6
(75.2%)

Other revenue
6.5(1.8%)

Total revenue of the Organization for 2014 was370.2 million Swiss francs, representing an increaseof 5.3 per cent compared to the 2013 total revenueof 351.6 million Swiss francs. The largest source ofrevenue during 2014 was PCT system fees,
accounting for 75.2 per cent of total revenue.
Revenue from PCT system fees increased by 8.2
per cent from 2013.

Madrid system fees were the second largest sourceof revenue during the year 2014, representing 14.9
per cent of total revenue, although these fees fell by
0.3 million Swiss francs compared to 2013. Hague
system fees, assessed contributions, voluntary
contributions and other revenue (investment,
publication,
arbitration
andmediation,
miscellaneous revenue and other fees) comprisethe remaining 9.9 per cent of the Organization’s
total revenue. The table below provides a summaryof the changes by revenue type compared to theprior year.

8

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Change in revenue 2013 – 2014
2014

2013

Net Change(in millions of Swiss francs)

Net Change%

Revenue
Assessed contributions
Voluntary contributions

17.9

17.7

0.2

1.1

8.9

7.5

1.4

18.7

Publications revenue

0.4

0.4

-

-

Investment revenue

1.6

2.1

-0.5

-23.8

PCT system fees

278.6

257.5

21.1

8.2

Madrid system fees

55.1

55.4

-0.3

-0.5

Hague system fees

3.2

3.2

-

-

336.9

316.1

20.8

6.6

Arbitration and Mediation

1.5

1.6

-0.1

-6.3

Other/miscellaneous revenue

3.0

6.2

-3.2

-51.6

370.2

351.6

18.6

5.3

Sub-total fees

Total revenue

PCT activity continued to increase in 2014, with thenumber of applications filed in the year 2014
totaling 214,900 (based on estimates prepared in
February 2015). PCT application levels are a directindicator of revenue levels from PCT system fees,
and have grown year on year since 2010. Based on
forecasts prepared in January 2015, applications
are expected to continue to increase over the next
three years:

PCT applications by year of filing 2010-2017

240,000
220,000
205,270

228,800
222,800 (forecast)
216,100
214,900(forecast)(estimate) (forecast)

195,334

200,000
182,437

180,000
164,341

160,000

140,000
120,000

100,000
2010

2011

2012

2013

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

2014

2015

2016

2017

PCT system fees revenue figure also comprises
other fees (including handling and transfer fees)
and foreign exchange gains and losses:

9

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Detail of PCT system fees 2012-2014
2014

2013

2012

(in millions of Swiss francs)
International filing fees
Other fees
Exchange gain/(loss) on fees received

275.0

262.3

240.6

3.9

3.9

3.9

-1.7

-6.0

7.5

Other exchange gain/(loss)

1.4

-2.7

-

Total PCT system fees

278.6

257.5

252.0

In the IPSAS financial statements, revenue forinternational filing fees from PCT applications is
recognized only on publication of the application. In
most cases, publication takes place six months after
the filing of a PCT international application. At thetime of filing, a receivable balance is recognizeduntil the Organization has received fee payment.

A deferred revenue liability is recognized for eachfiling until publication. This is different to the budget
result for the Program and Budget, under whichrevenue is recognized as the cash payment of fees
is received. When looking at revenue from PCTinternational filing fees as recognized in accordancewith IPSAS, it can be seen that this has grown as
annual publications have increased:

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 2012-2014

220
2012
Number of publications

2013

2014

International filing 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. 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 difference between
the equivalent Swiss franc fee to the actual amountin Swiss francs at the date of payment. In the year
2014, the Organization incurred a net exchange
loss of 1.7 million Swiss francs on PCT fees

10

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

USD – Comparison of equivalent amount rateand UNORE 2012-2014

received (international filing fees and handlingfees). This loss concerned principally fees inJapanese yen (loss of 1.3 million Swiss francs). In
2013, the Organization incurred a net exchange
loss of 6.0 million Swiss francs on PCT fees
received, whereas in 2012 the Organization made a
net gain of 7.5 million Swiss francs:

0.99
0.97
0.95
0.93

Detail of exchange gain/(loss) on PCT fees
received 2012-2014
2014

2013

0.91
0.89

0.87

2012

Jan-12

Jun-12(in millions of Swiss francs)

Nov-12

Apr-13USD Fee rates

Sep-13

Feb-14Jul-14

Dec-14

USD UNORE rates

Currency of fee paym ent:
US dollar
Japanese yen

0.1

-1.5

-1.3

-4.9

4.2
1.8

Euro

-0.4

0.7

-0.1

Other currency

-0.1

-0.3

1.6

Total exchange gain/(loss)
on fees received

-1.7

-6.0

7.5

JPY - Comparison of equivalent amount rateand UNORE 2012-2014
0.013
0.012

The equivalent amounts for fees in currencies otherthan the Swiss franc are established for each year
according to the exchange rates prevailing on thefirst Monday of October of the preceding year.
Equivalent amounts can be reset during the year if
the exchange rate between the other currency andthe Swiss franc is changed by 5.0 per cent or more
for more than four consecutive Fridays. The
following tables show the difference between theexchange rate used to establish the equivalentamounts and the UNORE over 2012-2014 for the
US dollar, Japanese yen and euro:

0.011
0.010
0.009

0.008
Jan-12

Jun-12

Nov-12

Apr-13

JPY Fee rates

Sep-13

Feb-14Jul-14

Dec-14JPY UNORE rates

EUR - Comparison of equivalent amount rateand UNORE 2012-2014
1.260

1.250
1.240
1.230
1.220
1.210
1.200

1.190
Jan-12

Jun-12

Nov-12

Apr-13

EUR Fee rates

11

Sep-13

Feb-14

EUR UNORE rates

Jul-14

Dec-14

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

In September 2011 the Swiss National Bank (SNB)
announced a policy to maintain a minimum
exchange rate of 1.20 Swiss francs per euro. This
policy effectively limited the Organization’s
exposure to exchange losses on fees received ineuro. However, on January 15, 2015 the SNB
announced that it was discontinuing this policy.
Subsequently, the value of the Swiss franc rose

sharply, and all other currencies lost on average
15.0 per cent of their value against the Swiss francin the currency markets. The table below
summarizes the difference between the exchange
rate used to establish the equivalent amounts forfilings at the end of 2014 and the start of 2015 for
the US dollar, Japanese yen and euro, and the
UNORE following the SNB announcement:

Comparison: Equivalent Amount Rate and 2015 UNORE
UNORE
published Percentage
January 29, difference to2015
EAR(per cent)Equivalent
Amount Rate
(EAR)

UNORE
published Percentage
February 26, difference to2015
EAR(per cent)UNORE
published Percentage
March 11, difference to2015
EAR(per cent)2014 Filings (1)US dollar/Swiss franc
Japanese yen/Swiss franc
Euro/Swiss franc

0.90390.00861.22710.92000.00781.0431

1.8
-9.3
-15.0

0.95400.00801.0707

5.5
-7.0
-12.7

1.00400.00831.0647

11.1
-3.5
-13.2

2015 Filings (2)US dollar/Swiss franc
Japanese yen/Swiss franc
Japanese yen/Swiss franc
Euro/Swiss franc

0.96080.00880.00811.21270.92000.0078N/A
1.0431

-4.2
-11.4
N/A
-14.0

0.95400.00800.00801.0707

-0.7
-9.1
-1.2
-11.7

1.00400.00830.00831.0647

4.5
-5.7
2.5
-12.2

(1) Equivalent Amount Rates for 2014 filings are based on rates in force at the end of 2014;(2) Equivalent Amount Rates for 2015 filings are based on rates in force at the start of 2015. Note that the rate for filings in Japanese yen changed
from 0.0088 to 0.0081 from March 1, 2015.

WIPO is expected to incur exchange losses both on
2014 filings that were unpaid prior to the SNB
announcement, and 2015 filings made during thefirst three months of the year prior to theimplementation of new equivalent amounts from
April 1, 2015. Fees from these filings would be
expected to be received during the first five monthsof 2015, and therefore the extent of losses isdependent on the pattern of cash inflows and futureexchange rates. It is noted that the new equivalentamounts announced with effect from April 1, 2015,

included the euro but not the US dollar andJapanese yen which, due to the recovery of a largepart of their value against the Swiss franc, did notmeet the conditions for the setting of a newequivalent amount. It is estimated that following the
SNB announcement, WIPO will incur an exchange
loss of between 2.0 and 5.0 million Swiss francs on
PCT international filing fees received during the first
five months of 2015.
Madrid system fees principally comprise basic fees
received from applications for registrations orrenewals and fees for subsequent designations:

Detail of Madrid system fees 2012-2014
2014

2013

2012

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

46.0

45.9

42.7

4.7

4.5

4.0

Other fees

4.4

5.0

4.9

Total Madrid system fees

55.1

55.4

51.6

12

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

In accordance with IPSAS, revenue from Madrid
fees for registrations, renewals and subsequent
designations is recognized in the financial
statements upon publication. Revenue fromregistrations and renewals (but not including otherfees) as recognized in accordance with IPSAS hasgrown as the number of registrations and renewals
have increased year on year:

Madrid - basic fees and registrations/renewals 2012-2014

47.0
46.0
45.0
44.0
43.0
42.0
41.0
40.0
39.0
38.0
37.0

68,00066,00064,00062,00060,00058,00020122013

Registrations and renewals

Revenue (millions of Swiss francs)

Number of registrations and renewals

70,0002014
Fees for published registrations and renewals

Hague system fees totalled 3.2 million Swiss francs
for 2014. 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 remain stable,
and are materially unchanged compared to the prioryear.

Investment revenue totaled 1.6 million Swiss francs
in 2014, a decrease of 23.8 per cent compared to2013. Interest income fell as the average rate ofinterest earned on interest bearing accounts andinvestments held with the Swiss Federal Finance
Administration (AFF) was 0.421 per cent in 2014
compared to 0.558 per cent in 2013. Arbitration andmediation revenue of 1.5 million Swiss francs andpublications sales of 0.4 million Swiss francs for theyear 2014 were broadly in line with the prior year.
Other/miscellaneous revenue fell from 6.2 million
Swiss francs in 2013 to 3.0 million Swiss francs in2014. The 2013 figure is higher due to the receipt inthat year of 4.3 million Swiss francs of credit notes,
nearly entirely from the International Computing
Centre (ICC).

Revenue from assessed contributions of 17.9
million Swiss francs represents 4.8 per cent of total
revenue, while revenue from voluntary contributions
received under Special Accounts of 8.9 million
Swiss francs represents 2.4 per cent of total
revenue. Revenue from voluntary contributions is
recognized as work is performed and expense
incurred in line with the relevant agreement.

13

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Expense Analysis
Composition of expenses 2014 on an IPSAS basis(in millions of Swiss francs)

Operating expenses
20.8(6.3%)
Contractual services
63.6(19.1%)

Travel and fellowships
15.4(4.6%)
Depreciation andamortization
9.1 (2.7%)

Other expenses
7.9 (2.4%)

Personnel expenditure
216.4(64.9%)

Total expenses of the Organization for 2014 were333.2 million Swiss francs, representing a decreaseof 1.0 per cent compared to 2013 total expenses of
336.5 million Swiss francs. The largest expense for
the Organization is personnel expenditure of 216.4
million Swiss francs, representing 64.9 per cent of

total expenses. Contractual services of 63.6 million
Swiss francs are the second largest expense for theOrganization, followed by operating expenses of
20.8 million Swiss francs. The table below provides
a summary of the changes by expense typecompared to the prior year.

Change in expenses 2013 - 2014
2014

2013

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

216.4

214.0

2.4

1.1

Interns and WIPO fellow ships

2.6

1.7

0.9

52.9

Travel and fellow ships

15.4

19.2

-3.8

-19.8

Contractual services

63.6

65.0

-1.4

-2.2

Operating expenses

20.8

21.1

-0.3

-1.4

Supplies and materials

1.8

3.3

-1.5

-45.5

Furniture and equipment

0.2

0.9

-0.7

-77.8

Depreciation and amortization

9.1

7.9

1.2

15.2

Finance costs

3.3

3.4

-0.1

-2.9

333.2

336.5

-3.3

-1.0

Total expenses

14

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
145.3 million Swiss francs, 67.2 per cent of total
personnel expenditure for 2014. The next biggest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which total
26.0 million Swiss francs in 2014. WIPO’s
mandated contribution to the UNJSPF is currently
15.8 per cent of a staff member’s pensionable
remuneration. Allowances of 16.3 million Swiss

francs represent 7.5 per cent of total staff
expenditure.
Allowances
includeprincipallydependency allowances for 4.8 million Swiss francs,
education grants for 5.4 million Swiss francs, andhome leave for 3.0 million Swiss francs. The cost of
the Organization’s contribution to monthly medical
insurance premiums for active staff totaled 10.0
million Swiss francs for the year 2014. Other
personnel expenditure of 5.1 million Swiss francs
includes other staff insurance contributions andtermination agreements.

Composition of personnel expenditure 2014 on an IPSAS basis(in millions of Swiss francs)

Post adjustment
45.0(20.8%)UNJSPF
26.0(12.0%)

Allowances
16.3 (7.5%)

After service
employeebenefits
13.7 (6.3%)

Medicalinsurance
contribution
10.0 (4.6%)
Other
5.1 (2.4%)

Net base salary
100.3(46.4%)

After service employee benefits of 13.7 million
Swiss francs represent the cost to the Organizationof After Service Health Insurance (ASHI),
repatriation grant and travel, and accumulated

annual leave. The expense for 2014 is equivalent tothe actual cash payments for these benefits, plus
the movement in the amount of the total liability
compared to December 31, 2013.

Expense for after service employee benefits 2014
After Service
HealthInsurance

Repatriation
Grant andTravel

Accum ulated
Annual leave

Total(in millions of Swiss francs)
Balance as at December 31, 2013

119.6

12.3

12.2

144.1

less:
Benefits paid during the period

-2.5

-0.2

-0.4

-3.1

Balance as at December 31, 2014

127.9

13.9

12.9

154.7

Total expense for the Organization

10.8

1.8

1.1

13.7

15

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Total personnel expenditure of 216.4 million Swiss
francs has increased by 1.1 per cent compared tototal personnel expenditure of 214.0 million Swiss

francs in 2013. The table below provides a detailed
breakdown of personnel expenditure and thevariance compared to 2013.

Detail of personnel expenditure 2013 – 2014
2014

2013

Net Change(in millions of Swiss francs)

Net Change%

Net base salary

89.8

88.2

1.6

1.8

Post adjustment

40.1

38.7

1.4

3.6

UNJSPF contribution

23.4

23.1

0.3

1.3

Allow ances

16.3

16.3

-

-

After service employee benefits

13.7

11.6

2.1

18.1

Medical Insurance contribution

8.9

8.7

0.2

2.3

Other post staff expenditures

1.9
188.5

1.3
6.9

68.4

Staff in posts expenditure

3.2
195.4

Net base salary

10.5

14.5

-4.0

-27.6

Post adjustment

4.9

4.7

0.2

4.3

UNJSPF contribution

2.6

3.0

-0.4

-13.3

Medical Insurance contribution

1.1

1.3

-0.2

-15.4

Other temporary staff expenditures

1.1

1.2

Staff in tem porary positions expenditure

20.2

24.7

-0.1
-4.5

-18.2

Other staff costs

0.8

0.8

-

-

216.4

214.0

2.4

1.1

Total personnel expenditure

While the expense for staff in posts has increased
by 6.9 million Swiss francs compared to 2013, theexpense for staff in temporary positions has fallen
by 4.5 million Swiss francs. This is in large part due
to the regularization of long serving temporary
employees from temporary positions to posts. The
increase in the expense for after service employee
benefits of 2.1 million Swiss francs is linked to theoverall movement in the liability for after service
employee benefits, which is greater between theyears 2013 and 2014 than the years 2012 and2013. Other staff costs presented separately in thetable above represent costs common to both posts
and temporary positions (professional accident
insurance, the Closed Pension Fund and litigation
costs).

3.7-8.3

which were previously included within the expenseline travel and fellowships. WIPO fellowships aim toprovide individuals with experience to strengthen
their knowledge and professional competence.
These costs are presented separately from course
fellowships, which are the expenses incurred insending trainees (non-staff) to attend courses andseminars and which are included within the
expense line travel and fellowships. The cost of
WIPO fellowships has increased by 0.8 million
Swiss francs compared to 2013, which can belinked to the Organization’s budgeted strengtheningof exchange programs with national IP offices andthe fellowship program in the Arbitration andMediation Centre.
Travel and fellowships total 15.4 million Swiss
francs for 2014, and account for 4.6 per cent of total
expenses. These expenses have fallen by 19.8 percent compared to the 2013 figure of 19.2 million
Swiss francs. Travel costs comprise third-party
travel (conference participants and lecturers) for 7.6
million Swiss francs, and staff and consultant
mission costs for 5.7 million Swiss francs. Travel

In the 2014 financial statements, the cost of interns
is no longer included as part of personnel
expenditure. This is considered a more appropriate
reflection of the nature of the relationship of these
individuals with the Organization since they are notcovered by the Staff Regulations and Rules. Intern
expenses are grouped with WIPO fellowships,

16

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

costs are 3.5 million Swiss francs lower than in
2013, which is broadly in line with budgeted
reductions in this cost area. During 2013 an
important conference (the Diplomatic Conference toconclude a Treaty to facilitate Access to PublishedWorks by Visually Impaired Persons and Persons
with Print Disabilities) was held in Marrakesh. In
2014, a new online travel booking tool was
launched, which will also help reduce travel costs
for the Organization. The cost of course fellowships
in 2014 totals 2.1 million Swiss francs, compared to
2.4 million Swiss francs in the prior year.

and are therefore immediately recognized as an
expense. Notably expenditure on IT equipment of
this nature fell from 0.6 million Swiss francs in 2013
to 0.1 million Swiss francs in 2014.
As noted above, expenses under IPSAS include thedepreciation expense of buildings and equipment
and the amortization expense of intangible assets,
as the cost of these assets is spread over theiruseful lives. For 2014, these total 9.1 million Swiss
francs, compared to 7.9 million Swiss francs for2013. This increase is linked to the completion of
the New Conference Hall, which generated adepreciation expense of 0.7 million Swiss francs
after it was brought to use in September 2014, andthe completion of an internally developed software
project in early 2014, which generated additionalamortization of 0.6 million Swiss francs during theyear.

Contractual services in 2014 total 63.6 million Swiss
francs. These expenses have decreased by 2.2 percent compared to the figure of 65.0 million Swiss
francs for 2013. Contractual services in the year
2014 concern primarily commercial translation
services (22.5 million Swiss francs), International
Computing Centre services (11.5 million Swiss
francs), IT commercial services (10.1 million Swiss
francs) and individual contractual services (10.5
million Swiss francs). Commercial translation
services increased by 2.1 million Swiss francs
compared to 2013, linked in part to an increase in
the average length of outsourced patentability
report translations (from 612 words in 2013 to 687
words in 2014). However, the cost of individual
contractual services was down by 2.1 million Swiss
francs compared to 2013, and the cost ofconferences was also down by 0.9 million Swiss
francs compared to the prior year.

For the first time in the 2014 financial statements,
finance costs are separately disclosed on the faceof the statement of financial performance.
Previously these were included within operating
expenses. Finance costs have remained relatively
stable compared to the prior year, totaling 3.3
million Swiss francs in 2014 and 3.4 million Swiss
francs in 2013. Finance costs are principally interest
repayments on the BCG/BCV New Building loan,
totaling 3.1 million Swiss francs in 2014. The
remaining finance costs relate to bank charges.

Financial Position
Operating expenses in 2014 total 20.8 million Swiss
francs, representing a slight decrease of 1.4 percent compared to the 2013 total of 21.1 million
Swiss francs.
Operating expenses in 2014
comprise mainly premises and maintenance costs(16.8 million Swiss francs), communication
expenses (2.3 million Swiss francs) andadministrative charges (0.8 million Swiss francs). A
reduction of 0.3 million Swiss francs incommunication expenses compared to 2013 can belinked to a decrease in physical mailings.

As at December 31, 2014, the Organization has net
assets of 245.8 million Swiss francs, with total
assets of 969.4 million Swiss francs and total
liabilities of 723.6 million Swiss francs. Net assets
have increased to 245.8 million Swiss francs at theend of 2014 from the balance of 208.8 million at theend of 2013 as a result of the surplus for 2014 of
37.0 million Swiss francs.
Note that following a change in accounting policy
concerning the recognition of revenue frominternational patent applications, WIPO was
required to restate its net assets at December 31,
2012. At the end of 2012, restated net assets were
193.7 million Swiss francs (compared to thepreviously stated 178.2 million Swiss francs). In
2013 the Organization recorded a surplus of 15.1
million Swiss francs.

Expenses for supplies and materials of 1.8 million
Swiss francs have fallen by 45.5 per cent compared
to 2013. Furniture and equipment expenses arealso lower, totaling 0.2 million Swiss francs in 2014
compared to 0.9 million Swiss francs in 2013.
Furniture and equipment expenses concern those
items which do not meet the Organization’s
threshold of 5,000 Swiss francs for capitalization,

17

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Movement in net assets 2012 to 2014
+37.0

245.8
+ 15.1

millions of Swiss francs

208.8
193.7

Restated Net
assets
Decem ber 31,
2012

Surplus on an
IPSAS basis 2013

Net assets
Decem ber 31,
2013

Surplus on an
IPSAS basis 2014

Net assets
Decem ber 31,
2014

The chart below provides a summary of the Statement of Financial Position of WIPO as at December 31, 2014.

Summary of assets and liabilities December 31, 2014

969.4
Net assets
245.8

millions of Swiss francs

Cash and cash
equivalents
474.5

723.6

Payables andadvance receipts
358.7

Fixed assets
419.7

Employee benefits
161.2
Borrow ings
139.2

Other 75.2

Other 64.5

AssetsLiabilities

18

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Fixed assets as at December 31, 2014

Assets

Decem ber 31, 2014
Net Carrying
Am ount(in millions of Swiss
francs)The Organization has cash balances of 474.5
million Swiss francs, representing 48.9 per cent of
total assets, although this includes amounts totaling
249.8 million Swiss francs which are classified as
restricted under IPSAS. Total cash balances haveincreased significantly compared to the balance of
409.9 million Swiss francs as at December 31,
2013, and are invested as applicable in line with
WIPO’s Policy on Investments.
The Organization holds significant fixed assets(land, buildings, investment property, intangible
assets and equipment) with a total net book value of
419.7 million Swiss francs, compared to 396.4
million Swiss francs as at December 31, 2013.
During 2014, the Organization capitalized costs forthe construction of the New Conference Hall andthe Security Construction project (including theaccess centre and the security perimeter), and also
costs for additions and improvements to existing
occupied buildings, most notably the A. Bogschbuilding. The New Conference Hall was brought into
use in September 2014, and the Security
Construction project is expected to be completed in
the first half of 2015. Costs totaling 30.4 million
Swiss francs were capitalized and added to the costof the Organization’s buildings during 2014. Thiswas partly offset by a depreciation charge of 7.1
million Swiss francs against buildings in the year.

Classification in
the Financial
Statem ents

New Building Site

28.6

Security Construction

12.5

New Conference Hall

67.3

New Building

155.5

A. Bogsch Building

45.7

G. Bodenhausen Building I

9.2

G. Bodenhausen Building II

3.9

PCT Building

60.7

Madrid Union Buidling

4.8

Land surface rights

26.0

Softw are (acquired anddeveloped)

3.8

Equipment

1.2

Equipment (Note 6)

Furniture and furnishings

0.5

Furniture andfurnishings (Note 6)

Total fixed assets

Land (Note 9)Work in Progress(Note 9)
Occupied Building(Note 9)
Occupied Building(Note 9)
Occupied Building(Note 9)
Occupied Building(Note 9)
Occupied Building(Note 9)
Occupied Building(Note 9)Investment Property(Note 7)
Intangible Asset(Note 8)Intangible Asset(Note 8)419.7

The net book value of equipment held by theOrganization fell by 0.6 million Swiss francs, from
2.3 million Swiss francs at the end of 2013 to 1.7
million Swiss francs at the end of 2014. Thisdecrease was due to depreciation of 0.8 million
Swiss francs, partly off-set by equipment additions.
During the year there were significant disposals of
mainly obsolete IT equipment. Although the grosscarrying amount of disposals was 5.3 million Swiss
francs, the net book value was just 8,771 Swiss
francs as this equipment was almost entirely
depreciated. The net book value of theOrganization’s intangible assets increased by 0.6
million Swiss francs during 2014 due to capitalized
software additions.

The table below summarizes the fixed assets heldby the Organization. Land and property is classified
differently under IPSAS depending on the purpose
for which it is used, or the nature of the contractual
right or agreement under which it is held. Apart fromthe land and property included below as fixed
assets, the Organization leases additional space,storage and facilities in Geneva, and has leases forsome of its external offices (see Note 19). The
Organization has also been granted land surface
rights on which certain headquarters buildings arelocated. These rights, acquired at no cost, are notrecognized in the financial statements but are
disclosed (see Note 8).

Other assets of the Organization totaling 75.2
million Swiss francs include accounts receivable,
inventories and advance payments. Within this, themost significant balance is PCT debtors totaling
46.7 million Swiss francs. At any given time, asignificant number of PCT applications have been
filed with receiving offices and possibly received by
WIPO, for which no corresponding fee payment has
been received by the Organization. The balance of
PCT debtors has decreased considerably comparedto the prior year, when it totaled 62.4 million Swiss
francs. At the end of 2013, approximately 23.8 per

19

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

PCT deferred revenue 2013-201

cent of applications filed during the preceding
twelve months remained unpaid. At the end of
2014, this percentage fell to approximately 16.0 per
cent. Alongside this decrease in the proportion of
unpaid applications at year end, 2014 also saw acatch up on outstanding payments for 2013
applications. These two factors explain thedecrease in the balance of PCT debtors.

PCT deferred revenue
2014
2013
number of applications

Total filings in current and prior year
Estimated number unpublished at year
end
Unpublished as a percentage of total
filings

PCT debtors 2013-2014

420,170

400,604

145,157

145,702

34.5%

36.4%

PCT debtors
millions of Swiss francs

2014
2013
number of applications
Total filings in year

214,900

205,270

Estimated number unpaid at year end

34,30048,800

Unpaid as a percentage of total filings

16.0%

23.8%

PCT deferred revenue - unpublishedapplications
PCT deferred revenue - translation
costs
Total PCT deferred revenue

188.0

184.8

11.7

10.1

199.7

194.9

millions of Swiss francs
Total PCT debtor

46.7

62.4

Employee benefit liabilities of 161.2 million Swiss
francs are mainly comprised of the After Service
Health Insurance (ASHI) liability of 127.9 million
Swiss francs, which represents 79.4 per cent of thetotal employee benefits liability as at December 31,
2014. The ASHI liability has increased by 8.3 million
Swiss francs compared to 2013. The liability is
calculated by an independent actuary, and reflects
the total future cost of WIPO’s share of healthinsurance premiums for both existing WIPO retirees
and the projected number of active WIPO staff who
will retire in the future.

Liabilities
Payables and advance receipts total 358.7 million
Swiss francs, and principally include deferred
revenue for the processing of international
applications (trademark, industrial design, patents)for 203.7 million Swiss francs. This deferred
revenue balance mainly concerns PCT fees of
199.7 million Swiss francs. Revenue from fees
relating to the processing of international
applications is deferred until the related application
is published. At any given time, a number of PCT
applications will have been filed with either
receiving offices or WIPO which have yet to be
published. As at December 31, 2014, forapplications with a 2013 or 2014 filing date it isestimated that approximately 145,157 applications
had been filed which are awaiting publication.
Although this is a lower number than at the end of
2013, total amount of deferred revenue has
increased due to the strengthening of the US dollar
against the Swiss franc in the second half of 2014,
and also due to the increased average cost oftranslating patentability reports.

Composition of employee benefits liabilities as
at December 31, 2014
Decem ber 31,
2014

Percentage
of Liability(in millions of
Swiss francs)%

After Service Health Insurance (ASHI)

127.9

79.4

Repatriation grant and travel

13.9

8.6

Accumulated leave

12.9

8.0

Closed pension fund

2.9

1.8

Education grant

1.9

1.2

Accrued overtime

0.5

0.3

Home leave not taken

0.5

0.3

Separation benefits

0.5

0.3

Performance rew ards

0.2

0.1

161.2

100.0

Total em ployee benefit liabilities

20

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

The ASHI liability has been increasing steadily overthe last six years, and based on actuarial
projections is expected to continue to increase
going forward. The liability is increased each year
by both the current service cost and the interest
cost, and is reduced each year by benefits paid out
by the Organization. The current service cost is thenet impact resulting from employee service
performed for the year. The interest cost is theimpact resulting from the fact that each member of
the active staff is one year closer to reaching theage of eligibility for ASHI participation. The benefits
paid out by the Organization each year are themonthly contributions (currently 65.0 per cent ofpremiums) that the Organization makes for retirees
participating in ASHI. The demographic profile of
WIPO’s staff, and the ratio of current staff toretirees, therefore have a significant impact on the
movement in the liability. In this context, it is also
important to note the recent change in theretirement age for staff members whose
appointments took effect on or after January 1,
2014. For these staff, the retirement age has been
increased to 65, compared to 62 for staff whose
appointments took effect on or after November 1,
1990 but prior to January 1, 2014.

Movement in ASHI liability 2009 - 2018

180.0
160.0

millions of Swiss francs

140.0
119.6

120.0

127.9

159.6
153.0 (forecast)145.5 (forecast)137.2 (forecast)(forecast)

110.9

103.4
95.9

100.0
82.6

80.0
60.0
40.0
20.0
0.0
2009

2010

2011

2012

2013

The calculation performed by the independentactuary also incorporates a number of actuarial
assumptions, including discount rate, medical costtrend rates, staff turnover rates and mortality rates.
Changes to these assumptions year on year lead toactuarial gains and losses. Under IPSAS, WIPO
applies the corridor method to its accounting
treatment of these actuarial gains and losses, whichmeans that they are not immediately recognized in
the financial statements. It should be noted that theInternational Financial Reporting Standards (IFRS)
have now eliminated the corridor method as ameans of deferring the recognition of these gains
and losses. If the IPSAS standards were to follow
this change in IFRS, it would potentially lead tomuch greater volatility in the ASHI liability
recognized in the statement of financial position. As
at December 31, 2014, WIPO had a total
unrecognized cumulative actuarial loss of 26.6
million Swiss francs relating to ASHI.

2014

2015

2016

2017

2018

Borrowings represent the Foundation for Buildings
for International Organizations (FIPOI) loan (20.9
million Swiss francs) and the Banque Cantonale deGenève and Banque Cantonale Vaudoise(BCG/BCV) New Building loan (118.3 million Swiss
francs). Total annual repayments of the principal onthese loans were 5.3 million Swiss francs in 2014.
In November 2015 the Organization is due to makethe first of its scheduled lump sum repayments
towards the reimbursement of the BCG/BCV New
Building loan, for the amount of 24.0 million Swiss
francs. Other liabilities totaling 64.5 million Swiss
francs include mainly 63.6 million Swiss francs of
current accounts held on behalf of applicants andcontracting parties, and also 0.9 million Swiss
francs of provisions for legal costs.

21

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

behalf of third parties for the registration of
trademarks or industrial designs, and fees collected
on behalf of contracting parties to the Madrid
Agreement and Protocol, Hague Agreement and on
behalf of PCT International Searching Authorities(ISAs). Deposits received in connection withpending procedures related to trademarks, otherthan the portion estimated to represent advancereceipts to the Organization, are also considered
restricted funds, as are accounts held on behalf ofdonors of voluntary contributions.

Cash Flow
The Organization’s cash balance as at December
31, 2014 is 474.5 million Swiss francs, compared to409.9 million Swiss francs as at December 31,
2013. Total cash balances have been increasing
since 2011. The increase of 64.6 million Swiss
francs between 2013 and 2014 is largely due to thelevel of cash receipts from PCT system fees during
the year. There has also been an increase of 8.7
million Swiss francs in the balance of current
accounts held for third parties, and an increase of
8.4 million Swiss francs in Madrid Union deposits(classified as either transfers payable or advancereceipts).

During 2014, the Organization made a transfer of
85.2 million Swiss francs to a separate bankaccount established to hold funds allocated for the
future financing of after service employee benefit
liabilities. The balance on this account as at
December 31, 2014 is also classified as restricted.

In the financial statements (see Note 3), cash ispresented separately between restricted andunrestricted. Restricted funds include funds held on

Unrestricted and restricted cash balances 2010-2014
Total cash
474.5

500.0
450.0

millions of Swiss francs

400.0

Total cash
383.5

Total cash
379.7

350.0

300.0

156.7

154.3

226.8

225.4

2010

2011

Total cash
408.1

Total cash
409.9

152.8

149.5

255.3

260.4

2012

2013

249.8

250.0
200.0
150.0
100.0

224.7

50.0
-

Unrestricted cash

As noted above in the analysis of borrowings, in2015 the Organization is scheduled to begin making
lump sum repayments towards the reimbursementof the BCG/BCV New Building loan. The firstpayment for the amount of 24.0 million Swiss francs
in November 2015 will obviously significantly impact
the Organization’s cash balance at the end of 2015.

2014

Restricted cash

The principal cash inflows to the Organization are
payments related to PCT activities. Monthly cash
inflows from PCT activities averaged 24.6 million
Swiss francs during the year 2014 compared to21.1 million Swiss francs during the year 2013,
whereas monthly cash inflows from other sources
averaged 7.0 million Swiss francs during the year
2014 compared to 7.3 million Swiss francs during

22

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

the year 2013. As can be seen in the tables on thefollowing page, there can be significant variations in
the cash inflows between months. Inflows from PCT
activities were notably higher in April and May 2014
due to catch-up payments for applications filed in2013, combined with increased filing levels in March
2014. Inflows in July 2014 were lower than averageas payments were not received during the monthfrom two receiving offices.

Monthly cash inflows 2014
50.0

Total
44.4

45.0

6.2

millions of Swiss francs

40.0
35.0

Total
33.5

30.0
11.3

25.0

Total
Total 29.2
25.1

5.5

10.8

5.5

15.0
10.0

19.2

34.4

30.1

Total
31.8
7.9

29.7

26.9

23.9

20.2

19.2

18.4

Total
26.5

5.2

6.3

Total
19.1
5.8

Total
34.9

Total
33.3
6.4

Total
24.7
38.2

22.2

Total
35.6

6.6

5.9

20.0

Total
41.0

13.3

5.0
Jan

Feb

Mar

Apr

May

Jun

Jul

PCT

Other

Aug

Sep

Oct

Nov

Dec

Monthly cash inflows 2013
50.0
45.0

millions of Swiss francs

40.0
35.0
30.0

Total
35.5
10.2

Total
29.3
7.8

25.0

Total
25.5

Total
29.7
5.4

8.1

20.0

Total
26.1

Total
26.5

Total
27.6

6.3

5.6

7.0

19.8

20.9

May

Total
27.3

Total
26.2

Total
26.6

7.3

6.5

7.4

20.6

20.0

19.7

19.2

Jun

Jul

Aug

Sep

Oct

PCT

Other

Total
28.9
7.4

Total
30.8
8.1

15.0
25.3

10.0

21.5

24.3
17.4

21.5

22.7

Nov

Dec

5.0
-

Jan

Feb

Mar

Apr

23

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

Report on the Financial Statements
We have audited the accompanying financial statements of the World Intellectual Property Organisation (WIPO),
stwhich comprise the statement of financial position as at 31 December 2014, the statement of financial
performance for the year ended 2014, statement of changes in net assets, statement of cash flows, statement ofcomparison of budget and actual amounts, and notes to the financial statements, for the financial period endedst
31 December 2014.
Management’s Responsibility for the Financial Statements
As stated in the Notes to the Financial Statements, these financial statements and accompanying schedules andnotes are prepared on the accrual basis of accounting, in accordance with International Public Sector AccountingStandards (IPSAS). Management is responsible for the preparation and fair presentation of these financial
statements. This responsibility includes (a) designing, implementing and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material misstatement - whether
due to fraud or error; (b) selecting and applying appropriate accounting policies; and (c) making accounting
estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with the International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of therisks of material misstatement of the financial statements - whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, these financial statements present fairly, in all material respects, the financial position of the WorldstIntellectual Property Organisation as at 31 December 2014 and its financial performance and of its cash flowsstst
for the period 1 January 2014 to 31 December 2014 in accordance with IPSAS.

24

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

25

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT I
STATEMENT OF FINANCIAL POSITION
as at December 31, 2014
(in thousands of Swiss francs)

Decem ber 31, 2014

Decem ber 31, 2013

3
4
4
5

474,508
2,005
58,556
1,747
536,816

409,916
2,677
76,7182,141
491,452

6
7
8
9
4
4
10

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

2,324
4,785
29,161360,107
359
3,092
9,315
409,143
900,595

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

11
12
13
14
15
16
17

30,315
19,36383,559241,756
29,258913
63,570468,734

31,285
17,59978,617229,101
5,258
1,009
54,862417,731

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

12
15
14

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

132,927
139,237
1,881
274,045
691,776

21
21
21

222,405
8,342
15,046
245,793

185,431
8,342
15,046
208,819ASSETS
Current assets
Cash and cash equivalents
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Inventories
Non-current assets
Equipment
Investment property
Intangible Assets
Land and buildings
Accounts receivable (non-exchange transactions)
Accounts receivable (exchange transactions)
Other non-current assets

Note

TOTAL ASSETSTOTAL LIABILITIES
Accumulated surplus
Working Capital Funds
Revaluation surplus
NET ASSETS

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

26

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT IISTATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2014
(in thousands of Swiss francs)

2014

2013

Assessed contributions
Voluntary contributions

17,89917,714

8,896

7,550

Publications revenue

351

405

Investment revenue

1,619

2,080

PCT system fees

278,576

257,462

Madrid system fees

55,11355,401

Hague system fees

3,186

3,202

Note
REVENUE

23

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

40

8

336,915

316,073

1,487

1,629

3,013

6,160

370,180

351,611

216,394

213,995

24

Personnel expenditure
Interns and WIPO fellow ships
Travel and fellow ships

2,653

1,747

15,36019,215Contractual services

63,58665,017

Operating expenses

20,851

21,121

Supplies and materials

1,803

3,265

Furniture and equipment

247

859

Depreciation, amortization and impairment

9,054

7,893

Finance costs

3,258

3,367

TOTAL EXPENSES

333,206

336,479

SURPLUS/(DEFICIT) FOR THE YEAR

36,974

15,132

27

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT III
STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2014
(in thousands of Swiss francs)

Accum ulated

Working

Revaluation

Net Assets

SurplusCapitalSurplus

Total

Net Assets at Decem ber 31, 2012 (restated)

170,299

8,342

15,046

193,687

Surplus/(deficit) for the year 201315,132--

15,132

185,431

8,342

15,046

208,819

Items recognized directly in net assets

-

-

-

-

Total of item s recognized directly in Net
Assets in 2014

-

-

-

-

36,974--36,974

222,405

8,342

15,046

245,793

Note

Net Assets at Decem ber 31, 201321

Surplus for the year 2014
Net Assets at Decem ber 31, 2014

21

28

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT IV
STATEMENT OF CASH FLOW
for the year ended December 31, 2014
(in thousands of Swiss francs)

Note

2014

2013

Statement II

36,351

16,860Cash flow s from operating activities
Surplus (deficit) for the period (1)Interest earned

1,619

2,080

Interest paid on borrow ings

-3,137-3,349Depreciation, amortization and impairment

6, 8 & 9

9,054

7,893

Increase (decrease) in employee benefits

12

10,703

7,402(Increase) decrease in inventories

5

394

157

(Increase) decrease in receivables

4

18,598-6,284(Increase) decrease in other assets

10

191

190

Increase (decrease) in advance receipts

14

13,752

9,148

Increase (decrease) in accounts payable

11

-970

10,196

Increase (decrease) in transfers payable

13

4,942

-4,817

Increase (decrease) in provisions

16

-96

-23

Increase (decrease) in other liabilities

17

8,708

-710

100,10938,743-30,665-28,885

Net cash flow s from operating activities
Cash flow s from investing activities
Acquisition of plant, property and equipment

6&9

Disposal of plant, property and equipment

6

9

-

Increase in intangible assets

8-1,744-2,342

Increase in investment property

7

Net cash flow s from investing activities---32,400-31,227

Cash flow s from financing activities
Proceeds from borrow ings

15

-

-

Repayment of borrow ings

15

-5,258-5,258-5,258-5,258

2,141

-459

64,592

1,799

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

26

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3409,916

408,117

Cash and cash equivalents at end of the year3474,508

409,916(1) – Excluding interest earned and interest paid on borrowings, and the effect of exchange rate changes on cash and cash
equivalents. Interest earned is included in investment revenue, see Note 23. For detail of interest paid on borrowings, see Note 15.
For the effect of exchange rate changes on cash and cash equivalents, see Note 26.

29

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE
for the year ended December 31, 2014
(in thousands of Swiss francs)

Original Budget
2014"Final" Budget
2014

(1)

(1)

17,584

17,584

17,584-

PCT system

268,783

268,783

295,128

26,345Madrid system
Hague system

56,376
3,897

56,376
3,897

55,582
3,196

-794
-701

4

4

40

36

329,060

329,060

353,946

24,886

1,400

1,400

1,487

87

600

600

351

-249

Contributions

Actual Revenue oncom parable basis
2014

Difference
2014
(2)

Fees

Other fees
Sub-total fees
Arbitration and Mediation
Publications
Interest
Other/miscellaneous
TOTAL

765

765

1,617

852

1,900

1,900

3,696

1,796

351,309351,309378,681

27,372(1) - columns Original Budget and “Final” Budget represent the first year of the approved 2014/15 biennial budget.
(2) - represents the difference between the “Final” Budget 2014 and actual revenue on a comparable basis for the year ended
December 31, 2014.

30

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

STATEMENT V
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSE
for the year ended December 31, 2014
(in thousands of Swiss francs)

Program1

Program Title
Patent Law

Original
Budget2014"Final"Budget
2014

(1)

(1)

Actual Expense
on a com parable
basis 2014

Difference
2014

(2)

2,475

2,475

2,601

-126

2

Trademarks, Industrial Designs & Geographic
Indications

3,081

3,081

2,444

637

3

Copyright and Related Rights

8,215

8,215

7,676

539

4

Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

3,932

3,932

3,152

780

5

The PCT System

98,986

98,986

90,6888,298

6Madrid and Lisbon Systems

27,62327,62325,733

1,890

7

WIPO Arbitration and Mediation Center

5,587

5,587

4,737

850

8

Development Agenda Coordination

2,171

2,171

1,450

721

9

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

16,162

16,162

13,592

2,570

10

Cooperation w ith Certain Countries in Europe and Asia

4,222

4,222

3,803

419

11

The WIPO Academy

5,941

5,941

5,684

257

12

International Classifications and Standards

3,658

3,658

3,552

106

13

Global Databases

2,346

2,346

2,124

222

14

Services for Access to Information and Know ledge

3,770

3,770

3,250

520

15

Business Solutions for IP Offices

5,814

5,814

5,152

662

16

Economics and Statistics

2,668

2,668

2,339

329

17

Building Respect for IP

1,994

1,994

1,872

122

18

IP and Global Challenges

3,469

3,469

3,085

384

19

Communications

8,628

8,628

8,013

615

20

External Relations, Partnerships and External Offices

6,218

6,218

4,974

1,244

21

Executive Management

9,473

9,473

9,097

376

22

Program and Resource Management

14,016

14,016

13,681335

23

Human Resources Management and Development

11,781

11,781

12,191-410

24

General Support Services

23,70023,70023,108592

25

Information and Communication Technology

22,634

22,634

22,957-323

26

Internal Oversight

2,558

2,558

2,329

229

27

Conference and Language Services

20,55920,55917,882

2,677

28

Safety and Security

5,393

5,393

5,360

33

29

New Conference Hall

417

417

350

67

30

Small and Medium Sized Enterprises (SMEs) andInnovation

3,348

3,348

2,558

790

31

The Hague System

3,794

3,794

3,357

437

2,363

2,363

-

2,363

336,996336,996308,791

28,205

14,313

14,31369,89055,577UN
TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (3)1,476Projects financed from reserves-35,209

Special Accounts financed from donor contributions

817

Adjusted net surplus per IPSAS

36,974(1) - columns Original Budget and “Final” Budget represent the first year of the approved 2014/15 biennial budget. The Original
Budget is based on the biennial budget of 674.0 million Swiss francs, which was approved by the Assemblies of the Member Statesof WIPO on December 12, 2013.
(2) - represents the difference between the “Final” Budget 2014 and actual expense on a comparable basis for the year ended
December 31, 2014.
(3) – the IPSAS adjustments to the surplus are detailed in Note 22 of these financial statements.

31

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

NOTES TO THE FINANCIAL
STATEMENTSNOTE 1: OBJECTIVES AND BUDGET OF
THE ORGANIZATION
The World Intellectual Property Organization (WIPO)
was established in 1967, replacing the Bureau for theProtection of Intellectual Property (BIRPI) which had
been established in 1893 (BIRPI in its Frenchacronym, meaning Bureaux Internationaux Réunis
pour la Protection de la Propriété Intellectuelle) toadminister the Paris Convention for the Protection ofIndustrial Property (1883) and the Berne Convention
for the Protection of Literary and Artistic Works (1886).
In 1974, WIPO was recognized as a specialized
agency of the United Nations.
WIPO carries out a wide variety of tasks related to theprotection of IP rights including: assisting
governments and organizations to develop thepolicies, structures and skills needed to harness thepotential of IP for economic development; working
with Member States to develop international IP law;administering treaties; managing global registration
systems for trademarks, industrial designs andappellations of origin and a filing system for patents;
providing dispute resolution services; and acting as aforum for informed debate and for the exchange ofexpertise.
The Organization functions in accordance with the
WIPO convention signed in Stockholm on July 14,
1967 and amended on September 28, 1979. WIPO
currently has 188 member countries. WIPO is basedin Geneva, Switzerland with representation offices in
Beijing, Moscow (both opened in 2014), New York,Rio de Janeiro, Singapore and Tokyo. 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.

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



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



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

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

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

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

32

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

NOTE 2: SIGNIFICANT ACCOUNTINGPOLICIES
Basis of Preparation
These financial statements have been prepared on an
accrual and going-concern basis and the accounting
policies have been applied consistently throughout theperiod. The statements comply with the requirementsof IPSAS.

Borrowing Costs
All of the costs incurred in connection with borrowing
are treated as expenses in the period in which they
are incurred. Borrowing costs (interest and fees)
relating to the construction of the New Building were
capitalized as work in progress during the construction
phase (see Note 9). Borrowing costs (commission on
undrawn loan amounts) relating to the construction of
the New Conference Hall were capitalized as work inprogress during the construction phase (see Note 9).
Borrowing costs (interest and fees) which relate to theacquisition
from
the
World
MeteorologicalOrganization of the land rights (droits de superficie) tothe site on which the PCT building has been
constructed have been capitalized as part of the asset
value and amortized over the remaining life of the land
rights (see Note 8).

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

Cash, Investments and Other Financial
AssetsExpense Recognition

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.

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

Financial Instruments
Financial Assets

Employee Benefits

Initial recognition and measurement

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

Financial 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, loans, andreceivables.

33

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Subsequent measurement

Financial Liabilities

The subsequent measurement of financial assets
depends on their classification.

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

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 insurplus or deficit.

Subsequent measurement
The measurement of financial liabilities depends ontheir classification.

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.

Financial liabilities at fair value through surplus ordeficitDerecognition

Loans and borrowings

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.

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
interestmethod amortization process. Amortized costis 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.

Financial 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.

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

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.

34

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Foreign Currency Transactions

Class

Component

Communications
and IT
equipment
VehiclesFurniture andfixtures

The functional currency of WIPO is the Swiss franc
and these financial statements are presented in thatcurrency.
All transactions occurring in othercurrencies are translated into Swiss francs using theUnited Nations Operational Rates of Exchange(UNORE) which represent those prevailing at the dateof the transactions. Both realized and unrealized
gains and losses 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.

Buildings:

Fixed Assets
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. Land and investment property are
shown at fair value as determined by an independentvaluation in accordance with International Valuation
Standards. Occupied buildings are valued at the costof construction when new plus the cost of subsequent
improvements, as determined by an independent
expert, less accumulated depreciation. For the initialrecognition of buildings occupied at January 1, 2010,
the date of transition to IPSAS, the value when new isdetermined by reference to a deemed cost calculatedby an external consultant and representing the valueof each component at construction plus improvements
existing at the initial recognition, less accumulated
depreciation based upon the remaining useful life ofeach component. Subsequent costs of majorrenovations and improvements to fixed assets that
increase or extend the future economic benefits orservice potential are valued at cost. Gains and losses
on disposal are determined by comparing theproceeds with the carrying amount of the asset andare included in the Statement of Financial
Performance. Heritage assets including donatedworks of art are not valued in the financial statements.

Estimated
useful life
5 years
5 years
10 years

Structure andfoundations
FaçadeLand
Improvements
Roof
Floors, walls,
stairways
Flooring, wallcoverings
Kitchenequipment
Conference
fittings
Heating,
ventilation
Sanitary facilities
Electricalinstallation
Elevators
Exterior cleaning
equipment

80-100 years
50 years
40-50 years
50-60 years
50 years
30-40 years
20-40 years
5-40 years
30 years
40 years
30-50 years
40 years
45 years

The carrying values of fixed assets 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.

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

Depreciation is charged so as to write off the full costof fixed assets, other than land and properties underconstruction, over their estimated useful lives using
the straight-line method. Where fixed assets are onlyin use for part of the year (due to acquisition, disposal
or retirement 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 fixed assets:

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 are35

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

undertaken throughout the year to verify inventory
balances. At the end of each year items removed
from the catalogue of publications for sale or free
distribution, along with items for which it is anticipatedthat there will be no further free distribution or
anticipated sales, are taken out of the inventory andtheir value is written down to zero.

acquired without cost, that revert back to the Canton
at the end of the grant, are not valued in the financial
statements.

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.

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

Receivables
Receivables from exchange transactions, which
include the fees charged for international patents,
international registration of trademarks and industrial
designs and other services and publications, aremeasured at the fair value of the consideration
received or receivable for trademarks, industrial
design and PCT fees once registration of theinternational application has taken place and whencash is received for other revenue.

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 ofmajor classes of intangible assets have been
estimated as follows:Class

Assessed contributions are recognized as revenue atthe beginning of the financial year. An allowance for
non-recoverable receivables is recorded equal to theassessed contributions frozen by action of the General
Assembly plus contributions receivable from Member
States that have lost the right to vote in accordancewith Article 11 of the Convention establishing theWorld Intellectual Property Organization.

Estimated useful life

Software acquired
externally

5 years

Software internallydeveloped

5 years

Licenses and rights

Period of license/right

For all other receivables, an allowance for nonrecovery is established based on a review of theoutstanding amounts at the reporting date.

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

Revenue from exchange transactions comprising thefees charged for applications for international patents,
including fees for additional pages, the international
registration of trademarks and the international
registration of industrial designs is recognized at thedate of publication. Revenue from fees received for
applications not published at the reporting date isdeferred until publication has been completed. The
portion of the patent 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 related topatent, trademark and industrial design applications,
including renewals, are recognized when the services
covered by the fee have been provided. Revenue
from publications and Arbitration and Mediation

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

36

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014services is recognized upon full delivery of the goods
or services.

Performance. This concerns the cost ofinterns, which are no longer included as partof
personnel
expenditureto
moreappropriately reflect the nature of therelationship of these individuals with theOrganization;

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.



1.3 million Swiss francs has been reclassified
from travel and fellowships to interns andWIPO fellowships, which are now presented
separately in the Statement of Financial
Performance. Previously a single fellowshipcategory was included within travel andfellowships,
howeverfollowingtheimplementationoftheOrganization’scontractual reform there are two fellowshipcategories requiring separate recognition,
WIPO fellowships and course fellowships.
Course fellowships remain as part of traveland fellowships;

In the Statement of Financial Position, 3.1
million Swiss francs relating to USA taxes
reimbursable has been reclassified fromcurrent to non-current accounts receivable(exchange transactions);In the Statement of Financial Position, 0.1
million Swiss francs relating to separation
benefits has been reclassified from accounts
receivable (exchange transactions) toemployee benefits).

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

Segment Reporting
Segment reporting is based upon the Unions that form
the World Intellectual Property Organization.
Revenue and expense incurred by the Organization isallocated among the Unions in accordance with anallocation methodology approved by the WIPO
Assembly [Program and Budget 2014/15, Annex III].
The methodology allocates revenue and expense toeach program and then to each Union based on a
combination of direct revenue and expense, staff headcount 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, sinceownership rests with the Organization as a whole,
however, each Union’s share of the Organization’s net
assets including accumulated fund balances,
revaluation surplus and working capital funds isrecognized by segment (see Note 28).

Use of Estimates
The financial statements necessarily include amounts
basedonestimatesandassumptions
bymanagement. Estimates include, but are not limited to:defined benefit medical insurance and other postemployment benefit obligations (the value of which is
calculated by an independent actuary), amounts 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.

Changes in Presentation
The following presentation changes have been madeto the 2013 comparative numbers in order to alignthese with the classification of items in the 2014
financial statements:

3.4 million Swiss francs has been reclassified
from operating expenses to finance costs,
which are now presented separately in theStatement of Financial Performance;

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

0.5 million Swiss francs has been reclassified
from personnel expenditure to interns andWIPO fellowships, which are now presented
separately in the Statement of Financial

37

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 3: CASH AND CASH EQUIVALENTS

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Cash on hand
Deposits w ith banks - Sw iss francs

121942,492

22,157

Deposits w ith banks - other currencies

25,4594,896

Funds invested w ith FDF - Sw iss francs

156,674

233,081

Other short-term investments - Sw iss francs

110

227

Total unrestricted cash

224,747

260,380

Current accounts held for third parties - Sw iss francs

55,982

48,265Current accounts held for third parties - other currencies

7,588

6,597

Fees collected on behalf of contracting parties - Sw iss francs

83,55978,617

Funds held for after service employee benefits

85,248-Deposits w ith banks restricted Special Accounts - Sw iss francs

16,73014,845

Deposits w ith banks restricted Special Accounts - other currencies

654

1,212

Total restricted cash

249,761

149,536

Total cash and cash equivalents

474,508

409,916

Cash deposits are generally held in instant accessbank accounts and interest-bearing accounts. The
average rate of interest earned on interest bearing
accounts and investments held with the Swiss Federal
Finance Administration (AFF) was 0.421 per cent in2014 [0.558 per cent in 2013]. Following theimplementation of new provisions by the AFF relating
to the opening and keeping of deposit accounts, fromthe end of 2015 WIPO will no longer be able to holddeposits with them.

In 2014 the Organization made a transfer of 85.2
million Swiss francs to a separate bank accountestablished to hold funds allocated for the futurefinancing of after service employee benefit liabilities.
These funds are also classified as restricted.
Special Accounts held on behalf of donors of voluntary
contributions are deposited in the currency in which
expenditures will be reported, based upon agreementswith donors.

Restricted funds include funds held on behalf of third
parties for the registration of trademarks or industrial
designs, subscriptions to WIPO periodicals, etc. Also
included are fees collected on behalf of contracting
parties to the Madrid Agreement and Protocol, Hague
Agreement and on behalf of PCT International
Searching Authorities (ISAs) by the WIPO
International Bureau Receiving Office. In addition, thedeposits received in connection with pending
procedures related to trademarks, other than the
portion estimated to represent advance receipts to theOrganization, represent funds collected on behalf ofthird parties and are considered restricted funds.

38

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 4: ACCOUNTS RECEIVABLE, ADVANCES AND PREPAYMENTS

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Receivable non-exchange transactions - Contributions
Unitary contributions

482

1,339

Voluntary contributions

1,523

1,338

2,005

2,677

Receivable exchange transactions
Publication debtors

120

151

PCT debtors

46,65362,398Madrid debtors

388

1,033

Hague debtors

1

2

Other debtors

1,793

1,223

Sw iss taxes reimbursable

24

38

USA taxes reimbursable

1,303

281

Concessionary advance for USA taxes

329

295

Staff advances for education grants

4,902

4,488

Other funds advanced to staff

704

553

UPOV expenditure reimbursable

931

542

Funds advanced to UNDP

509

504

Advance for FCIG concessionary loan

121

119

Prepaid expenditure

589

4,902

FCIG loan amortization

189

189

58,55676,71860,561

79,395

Paris Union

99

118

Berne Union

187

227

Nice Union

10

12

Locarno Union

2

2

298

359

3,389

3,092

3,389

3,092

Total non-current accounts receivable

3,687

3,451

Total accounts receivable

64,24882,846

Total current accounts receivable
Receivable non-exchange transactions - Contributions

Receivable exchange transactions
USA taxes reimbursable

39

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

Funds advanced to the United Nations Development
Program (UNDP) are utilized to make payments onbehalf of the Organization. The total debtor amountshown includes amounts for requests made to UNDP
for payments for which confirmation has not yet been
received or for which the confirmation is in the processof being verified. UPOV expenditure reimbursable
represents payments made on behalf of theInternational Union for the Protection of New Varieties
of Plants by the Organization for which reimbursement
has not yet been received.
The USA taxes receivable represents amounts
advanced to members of staff to reimburse them forthe payment of income taxes to the United States ofAmerica.
Under agreements between the
Organization and the USA, these amounts are
reimbursable to the Organization. USA taxes
reimbursable are measured at amortized cost, whichis calculated based on historical payment patterns.
Swiss taxes reimbursable include payments for VAT,
stamp tax and Swiss Federal withholding tax for which
the Organization is eligible for reimbursement under
its headquarters agreement with the Government of
Switzerland.

An allowance has been established to offset both thevalue of receivables due from assessed contributions
and the working capital fund contributions due from
Unions which relate to periods prior to the introductionof unitary contributions in 1994. The allowance covers
amounts due from Member States that have lost theright to vote under Article 11, paragraph 5 of the
WIPO Convention and contributions from least
developed countries which have been frozen by actionof the Assemblies. The total of the allowance as at
December 31, 2014 is 6.8 million Swiss francs [7.1
million Swiss francs as at December 31, 2013].
PCT debtors represent unpaid international filing feesfor PCT applications filed prior to the reporting date.
This includes an estimate of those international patentapplications received by national receiving offices
prior to the reporting date but not transferred to theOrganization’s PCT International Bureau by thereporting date.

NOTE 5: INVENTORIES

Decem ber 31,
Decem ber 31,
2014
2013
(in thousands of Swiss francs)
Finished publications

International staff, other than those living in their homecountry, are eligible to receive a grant covering 75.0
per cent of the costs of education for dependent
children until the fourth year of post-secondary schoolstudies, but not beyond the end of the school year inwhich the child reaches the age of 25. Maximum
grants are established for each country. International
staff are eligible to receive an advance equal to theestimated amount of the education grant for each childat the beginning of the scholastic year. Staff advancesfor education grants represent the total grants
advanced for the 2014-2015 scholastic year.

1,575

1,938

Paper supplies

54

128

Retail Shop

118

75

1,747

2,141

Total inventory

The write-down of finished publications inventories to
net realizable value amounted to 0.1 million Swiss
francs (0.2 million Swiss francs in 2013). There havebeen no reversals of write-downs.

40

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 6: EQUIPMENT

Movem ent 2014

Furniture &Furnishings(in thousands of Swiss francs)

Equipm ent

Total

January 1, 2014
Gross carrying amount

15,222

2,906

18,128

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

1,721

603

2,324

Additions

242

14

256

Disposals-5,055-271-5,326

Disposals depreciation

5,052

265

5,317

Depreciation

-746

-79

-825

-507

-71

-578

Net carrying am ount
Movem ents in 2014:

Total m ovem ents in 2014
Decem ber 31, 2014
Gross carrying amount

10,4092,649

13,058

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

1,214

532

1,746

Net carrying am ount

Movem ent 2013

Furniture &Furnishings(in thousands of Swiss francs)

Equipm ent

Total

January 1, 2013
Gross carrying amount

14,9202,836

17,756

Accumulated depreciation-13,015-2,224-15,239

1,905

612

2,517

Additions

743

79

822

Disposals

-441

-9

-450

Net carrying am ount
Movem ents in 2013:

Disposals depreciation

441

9

450

Depreciation

-927

-88

-1,015

-184

-9

-193

Total m ovem ents in 2013
Decem ber 31, 2013
Gross carrying amount

15,222

2,906

18,128

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

1,721

603

2,324

Net carrying am ount

41

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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. Equipment disposed ofduring 2014 principally concerned obsolete equipmentwith a gross carrying amount of 5.3 million Swiss
francs and, after accumulated depreciation, a net

carrying amount of 8,771 Swiss francs. This disposals
figure includes the write-off of equipment which could
not be located, with a gross carrying amount of 0.8
million Swiss francs and a net carrying amount of
5,657 Swiss francs. Heritage assets including donatedworks of art are not recognized as assets on theStatement of Financial Position.

NOTE 7: INVESTMENT PROPERTY

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Opening balance
Fair value gains/(losses) on valuation
Closing balance

4,785

4,785

-

-

4,785

4,785

The Organization acquired in 1974 the Madrid Union
Building, an investment property in Meyrin, Canton of
Geneva, Switzerland. The building had first beenbrought into service in 1964. The property is held atfair value based on a valuation at December 31, 2012carried 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 future
income stream from the property is capitalized at an
appropriate investment yield. The yield was selectedby reference to the perceived quality and duration of
the income and the potential for further rental growth
and was cross-referenced by the evidence provided
by comparable sales. The valuation as at December
31, 2012 resulted in an increase in the fair value of thebuilding of 0.5 million Swiss francs. This increase wasrecognized in 2012 as investment revenue in thestatement of financial performance.

compensation for its services. The value of noncancellable leases at December 31, 2014 is asfollows:

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 two
years and are based on the form of lease approved by
the Canton of Geneva. All leases are non-cancellable
during the period of the lease. The managing agent
receives 3.9 per cent of the gross rental income as

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.

Decem ber 31,
2014
Non-cancellable leases

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

Not later than one year

337

337

Later than one year and not later than
five years

866

302

Later than five years

13

7

1,216

646

Total non-cancellable operatingleasesIn 2014 the income from rental of the building totaled
377 thousand Swiss francs, and the operating
expenditures of the building totaled 211 thousand
Swiss francs. The Organization is not aware of any
restrictions on the realizability or remittance ofrevenue from the investment property.

42

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 8: INTANGIBLE ASSETS

Movem ent 2014Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

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

34,290

709

-

2,193

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

26,450

518

-

2,193

29,161

Additions

-

94

-

1,650

1,744

Transfers

-

-

3,258

-3,258-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-439

-156

-561

-

-1,156

-439

-62

2,697

-1,608588

Net carrying am ount

37,192

Movem ents in 2014:

Amortization
Total m ovem ents in 2014
Decem ber 31, 2014
Gross carrying amount

34,290

803

3,258

585

38,936

Accumulated amortization-8,279

-347

-561

-

-9,18726,011

456

2,697

585

29,749Intangible
assets underdevelopm ent

Total

Net carrying am ount

Movem ent 2013Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped(in thousands of Swiss francs)
January 1, 2013
Gross carrying amount

34,290516-

4434,850

Accumulated amortization-7,400-56---7,456

26,890460-

4427,394

Additions

-

193

-

2,149

2,342

Disposals

-

-

-

-

-

Net carrying am ount
Movem ents in 2013:

Disposals amortization
Amortization
Total m ovem ents in 2013

-

-

-

-

-

-440

-135

-

-

-575

-440

58

-

2,149

1,767

34,290

709

-

2,193

37,192-7,840-191---8,031

26,450

518

-

2,193

29,161

Decem ber 31, 2013
Gross carrying amount
Accumulated amortization
Net carrying am ount

43

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

In 1996, the Organization acquired from the World
Meteorological Organization (WMO) the land surface
rights to parcel 4008 in Petit-Saconnex in the City ofGeneva that had been granted to WMO by the
Republic and Canton of Geneva at a cost of 34.3
million Swiss francs including interest and fees. At thedate of purchase the original rights had a remaining
period of 78 years under Swiss law expiring in 2073,
unless renewed by the Canton. The historic cost is
being amortized over the remaining useful life. The
land on which the A. Bogsch and G. Bodenhausenbuildings are located is the property of the Republic
and Canton of Geneva which has granted theOrganization surface rights including the right toconstruct buildings for a period of 60 years with an
option exercisable solely by the Organization of an
extension for an additional period of 30 years. Thesesurface rights were acquired by the Organization at no
cost and no value has been recognized, as theOrganization does not have the right to dispose of therights which revert to the Republic and Canton of
Geneva unless renewed.

Standards as determined by an independent appraiser
at December 31, 2009 at 28.6 million Swiss francs.
The net result of the revaluation of 15.0 million Swiss
francs is included in the revaluation surplus whichforms part of WIPO’s net assets. An updated valuationof the land was performed by an independent
appraiser at December 31, 2013. This valuation
indicated no change in the fair value of the land fromthe 28.6 million Swiss francs previously estimated.
Market value was estimated by capitalizing at an
appropriate investment yield the future potential
income stream from the property. The potential
income is based on comparable rentals in the market
and takes into account the quality of the spaces aswell as the location. The yield has been selected byreference to the perceived quality and duration of theincome and the potential for further rental growth andis cross-referenced by the evidence provided bycomparable sales.
In October 2009, the General Assembly approved theconstruction of a New Conference Hall (NCH) building,
to be physically connected to the A. Bogsch (AB)building. The project was completed in 2014, and theNCH was brought into use in September 2014. This
project also involved the part demolition andsubsequent rebuild and improvement of areas of the
AB building. The demolished areas were recorded as
impairments during the construction phase. The
impaired areas have now been derecognized from thefinancial statements due to their replacement by thecompleted rebuilds and improvements. WIPO is also
undertaking a 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
involves
upgradingtotheUnitedNations
Headquarters Minimum Operating Security Standards(H-MOSS). The project includes construction of asecurity perimeter, a new access centre and internal
security measures. Costs relating to this construction
project incurred by the Organization have been
capitalized as work-in-progress during 2014, and the
project is expected to be completed in the first half of2015. The construction project has been partly
financed by the Foundation for Buildings forInternational Organizations (FIPOI). Construction work
financed by the FIPOI has been capitalized within
work-in-progress, and a corresponding amountrecognized as deferred revenue (see Note 14).

As from January 1, 2012, WIPO has been capitalizing
the cost of externally acquired and internallydeveloped software. Intangible assets underdevelopment relate to internally developed software
which has not yet been brought into use.

NOTE 9: LAND AND BUILDINGSThe Organization’s land and buildings comprise its
headquarters at Place des Nations, Geneva,
Switzerland and include land, buildings underconstruction and occupied buildings. Following thetransition to International Public Sector AccountingStandards from January 1, 2010, buildings which were
occupied at that date were valued at an amountdetermined independently by external consultants,
which represents the estimated value of the building
when new (deemed cost of construction) including theestimated value of renovations and major repairs
made since original occupancy less accumulated
depreciation and impairment. Buildings which arebrought into use after January 1, 2010 are initiallyvalued at cost. All buildings are depreciated according
to the straight-line method based upon the useful lifeof each major component of the building.
The land upon which the New Building wasconstructed was acquired by the Organization at a
cost of 13.6 million Swiss francs in 1998 and wasrevalued to fair value based on International Valuation

44

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Movements for land and buildings in 2014

Movem ent 2014

Year in Service

Work in ProgressLand

Total Land andBuildings

Occupied Buildings

New Building Site

Security
Construction

New ConferenceHall

New Conference
Hall

1998

N/A

N/A

2014

New Building

A. Bogsch
Building

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2014
Cost/valuation
Accumulated depreciation andimpairment charges

28,6006,360

51,308-

164,936

48,507

10,8094,523

67,408382,451

-

-

-

-

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

Net carrying am ount

28,6006,360

51,308-157,30940,928

9,502

4,061

62,039360,107

Additions

-

3,450

24,258

-

1,313

1,333

17

-

38

30,409Transfers

-

2,700

-75,566

67,926

-

4,940

-

-

-

-

Decrecognition impaired cost
Derecognition accumulated
impairment and depreciation
Impairment

-

-

-

-

-

-1,810----1,810

-

-

-

-

-

1,810

-

-

-

1,810

-

-

-

-

-

-

-

-

-

-

Depreciation

-

-

-

-672

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

Total m ovem ents in 2014

-

6,150

-51,308

67,254-1,764

4,752

-321

-121

-1,30623,336

Cost/valuation
Accumulated depreciation andimpairment charges

28,60012,510-67,926

166,249

52,97010,826

4,523

67,446

411,050

-

-

-

-672

-10,704-7,290-1,645-583-6,713-27,607

Net carrying am ount

28,60012,510-67,254

155,545

45,680

9,181

3,940

60,733

383,443

Movem ents in 2014

Decem ber 31, 201445

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Movements for land and buildings in the prior year 2013

Movem ent 2013

Year in Service

Work in ProgressLand

Total Land andBuildings

Occupied Buildings

New Building Site

Security
Construction

New ConferenceHall

New Building

A. Bogsch Building

G. Bodenhausen
Building I

G. Bodenhausen
Building II

PCT Building

1998

N/A

N/A

2011

1978

1960

1987

2003

(in thousands of Swiss francs)
January 1, 2013
Cost/valuation
Accumulated depreciation andimpairment charges

28,6002,269

29,739163,778

47,81010,553

4,302

67,337354,388----4,573-6,126-973-343-4,026-16,041

Net carrying am ount

28,6002,269

29,739159,205

41,684

9,580

3,959

63,311

338,347

Additions

-

4,091

21,569

1,158

697

256

221

71

28,063

Transfers

-

-

-

-

-

-

-

-

-

Impairment

-

-

-

-

-

-

-

-

-

Depreciation

-

-

-

-3,054-1,453-334-119-1,343-6,303

Total m ovem ents in 2013

-

4,091

21,569-1,896

-756

-78

102

-1,272

21,760

Cost/valuation
Accumulated depreciation andimpairment charges

28,6006,360

51,308

164,936

48,507

10,8094,523

67,408382,451----7,627-7,579-1,307-462-5,369-22,344

Net carrying am ount

28,6006,360

51,308157,30940,928

9,502

4,061

62,039360,107

Movem ents in 2013

Decem ber 31, 201346

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 10: OTHER NON-CURRENT ASSETS

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Loan to FCIG
Advance for FCIG concessionary loan
FCIG loan amortization
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 the initialadvance, equaling a total advance of 11.0 million
Swiss francs. The balance of the construction cost
was covered by a mortgage between FCIG and theBanque Cantonale de Genève. The Organization also
entered into an agreement to lease the building from
FCIG. The lease agreement was renewed for aperiod of seven years from January 1, 2012.

8,184

8,065

374

495

566

755

9,124

9,315

mortgage repayments, the amortization of theadvance and the rental of parking spaces) until theend of the lease in 2018 would be as follows:
Decem ber 31,
2014

Decem ber 31,
2013(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

570

423

1,699

2,269

-

-

2,269

2,692

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

Under the current lease agreement between the
Organization and FCIG, both parties have the right toterminate the agreement at any point through mutual
consent formalized in writing. The annual amount ofrent payable by WIPO is equivalent to the annual
repayments (interest plus repayments of the principal)
on the mortgage between FCIG and the BanqueCantonale de Genève. The rent paid by WIPO on thisbasis during 2014 totaled 234,124 Swiss francs(235,709 Swiss francs during 2013). The current rateof interest, fixed through to December 31, 2018, is
1.48 per cent. From January 1, 2012, WIPO also
recognizes an annual amortization charge of 188,679
Swiss francs against its advance to FCIG. Further,
the Organization also leases covered parking spaces
at an annual cost of 148,452 Swiss francs. In theabsence of a mutual termination of the leaseagreement, WIPO’s future payments (including the

For presentation in the financial statements, the total
value of the amortization is treated as an advancepayment of rent, and is split into both its current
portion (see Note 4) and non-current portion. The
total value of this advance payment as at December
31, 2014 is 0.8 million Swiss francs. The remainingbalance of WIPO’s advance to FCIG is treated as aconcessionary loan in accordance with IPSAS, and ismeasured at amortized cost. The interest-freeelement of the concessionary loan is also recognized
as an advance payment, and is split into both its
current portion (see Note 4) and non-current portion.
This advance payment is reduced over the period ofrental agreement, and as at December 31, 2014 has
a total value of 0.5 million Swiss francs.

47

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 11: ACCOUNTS PAYABLE

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Trade creditors - Accounts payable

22,08424,856

Miscellaneous transitory liabilities

8,187

4,342

Other trade creditors
Total accounts payable

44

2,087

30,31531,285

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

NOTE 12: EMPLOYEE BENEFITS

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Accumulated leave

2,426

2,009

Separation benefits

506

301

Closed pension fund

289

328

1,872

1,374

529

479

Repatriation grant and travel
Home leave not taken
Accrued overtime

528

755

Education grant

1,925

1,783

Performance rew ards

213

125

After Service Health Insurance

11,075

10,445

Total current em ployee benefit liabilities

19,363

17,599Closed pension fund

2,542

2,758

Accumulated leave

10,496

10,167

Repatriation grant and travel

12,045

10,877After Service Health Insurance

116,783

109,125

Total non-current em ployee benefit liabilities

141,866

132,927

Total em ployee benefit liabilities

161,229

150,526

Employee benefits comprise:
Short-term employee benefits that include salary,allowances, grant on initial assignment, grants for theeducation of dependent children, paid annual leave,
paid sick leave, accident and life insurance;

repatriation travel and shipping of personal effects andAfter Service Health Insurance (ASHI);
Termination benefits which include an indemnity
payable to staff members holding a permanent or
fixed term contract whose appointment is terminatedby the Organization prior to the end of their contract.

Post-employment benefits which include separation
benefits consisting of grants upon repatriation,48

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Short-Term Employee Benefits

Performance rewards: In 2013 WIPO launched arewards and recognition program under which staff
achieving a performance rating of outstanding may beconsidered for payment of a lump sum cash reward ofeither 2,500 Swiss francs or 5,000 Swiss francs.
Based on decisions taken during the year, the total
amount of performance rewards payable to staff as at
December 31, 2014 totaled 0.2 million Swiss francs[0.1 million Swiss francs at December 31, 2013].

The Organization has recognized liabilities for thefollowing short-term benefits, the value of which isbased on the amount payable to each staff member at
the reporting date.
Accumulated leave: Staff members are eligible for 30days annual leave. Under the Staff Regulations andRules (SRR) staff members may accrue up to 15 daysof annual leave in a given year, and a total
accumulated balance of 60 days. However, those staff
members who accumulated more than 60 days prior
to January 1, 2013, are entitled to retain them until
January 1, 2018. Although annual leave is a shortterm employee benefit, as staff have the right toaccumulate unused annual leave and receive
payment in lieu thereof on separation from service, aportion of accumulated leave is classed as a noncurrent liability. The total outstanding liability at thereporting date is 12.9 million Swiss francs [12.2 million
Swiss francs at December 31, 2013].

Post-Employment Benefits
Closed Pension Fund (CROMPI): Prior to becoming
a participating organization in the UNJSPF, the
WIPO’s predecessor organization had its own pension
fund established in 1955. This pension fund wasclosed to new members on 30 September 1975 andcontinues for those who were members at the time ofclosure 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, WIPO is
responsible for financing costs incurred by the Closed
Pension Fund related to foreign exchange differences
and to differences in the retirement age as stipulatedby the Closed Pension Fund and that of the UNJSPF.
The Organization has several obligations related toparticipants in the closed pension fund including:Home Leave: Internationally recruited staff members
are eligible for home leave for themselves and theirdependents to the country from which they wererecruited every second year. The total outstanding
liability for home leave earned but not taken at thereporting date is 0.5 million Swiss francs [0.5 million
Swiss francs at December 31, 2013].

the obligation to cover the cost of pensions
paid to former staff participating in the closed
pension fund before they reach the age of
65. Based upon the latest actuarial valuation
performed for 2014, the estimated liability as
at December 31, 2014 is 13 thousand Swiss
francs [47 thousand Swiss francs in 2013].

the obligation, based upon a decision of the
Administrative Tribunal of the International
Labour Organization in 2006, to cover certain
differences between the pension receivableof closed pension fund members under theclosed pension fund and that receivable fromthe UNJSPF which, based upon the latest
actuarial valuations performed for 2014, isestimated at 2.8 million Swiss francs as at
December 31, 2014 [3.0 million Swiss francs
in 2013].

Overtime: Certain staff members are eligible to be
paid in cash for overtime accrued after the expiry of aperiod established in the Staff Regulations and Rules.
The total amount payable at the reporting date is 0.5
million Swiss francs [0.8 million Swiss francs at
December 31, 2013].
Education grant: International staff, other than thoseliving in their home country, are eligible to receive a
grant covering 75.0 per cent of the costs of education
for dependent children until the fourth year of postsecondary school studies, but not beyond the end of
the school year in which the child reaches the age of
25. The liability for education grants payable relates
to the number of months which have elapsed between
the start of the school year/university year andDecember 31, 2014 for which fees are therefore due.
The total liability at the reporting date is 1.9 million
Swiss francs [1.8 million Swiss francs at December
31, 2013].

49

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Repatriation grant and travel: The Organization has
a contractual obligation to provide benefits such as
repatriation grants, travel and removal for certain
internationally recruited staff members at the time of
their separation from service. For professional staff in
temporary positions, the cost of repatriation travel andremoval on separation from service is estimated by

WIPO and is treated as a current liability. Forinternationally recruited professional staff in posts, theliability for repatriation grant, travel and removal iscalculated by an independent actuary. The total
liability was estimated as follows at the reporting date:

Decem ber 31,
2014
Actuarial
WIPO Estim ate
Valuation

Decem ber 31,
2013

Total

Total

(in thousands of Swiss francs)
Current liability

1,234

638

1,872

1,374

Non-current liability

12,045-

12,045

10,877

Total liability for repatriation grant and travel

13,279638

13,917

12,251

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,
2014

Contributions paid by the Organization for repatriation
grant and travel totaled 0.2 million Swiss francs for2014 (0.8 million Swiss francs in 2013). Expected
contributions to repatriation grant and travel in 2015
are 1.5 million Swiss francs.

Decem ber 31,
2013

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the repatriation grant and travel liability for2014 and the previous four years:(in thousands of Swiss francs)

Interest cost

228

Current service cost

998

971

Actuarial (gain)/loss
Expense recognized in thestatem ent of financial
perform ance

176

-498

1,402

188

2014

661

Actuarial gains and losses for repatriation grant andtravel are recognized immediately in the statement offinancial performance. The table below details thechanges in the repatriation grant and travel defined
benefit obligation:
Decem ber 31,
2014

13,279 12,097 12,215

Experience (gain)/loss
adjustments on plan liability-1,295Interest cost

12,215

228

188

Current service cost

998

971

Contribution paid

-220

-779

Actuarial (gain)/loss on obligation
Defined benefit obligation at endof year176-498

13,27912,097

2011

2010

-41

2,122

8,909

8,791

3 -1,768

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

Decem ber 31,
2013

12,0972012

Defined benefit obligation

Decem ber 31,
2014

Decem ber 31,
2013

Weighted-average assumptions todetermine benefit obligations
Discount rate

0.80%

1.90%

Rate of salary increase

3.52%

3.36%

Weighted-average assumptions todetermine net cost
Discount rate

1.90%

1.60%

Rate of salary increase

3.36%

3.44%

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

2013

(in thousands of Swiss francs)

50

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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 the
medical and accident insurance plan. Staff members(and their spouses, dependent children and survivors)
retiring from service are eligible for ASHI coverage ifthey continue to participate in the ASHI scheme after
separation from service. In accordance with WIPO’s
Staff Regulations and Rules, a share of 65 per cent of
the monthly medical insurance premium is paid by theorganization. From January 1, 2015, monthly medical
premiums amount to 538 Swiss francs for adults and

240 Swiss francs for children (previously 552 Swiss
francs and 245 Swiss francs for adults and children
respectively). The present value of the defined benefit
obligations for post-employment medical benefits isdetermined using the projected unit credit method
including discounting the estimated future cash
outflows using a discount rate based upon both Swiss
franc high grade corporate bonds and Swissgovernment bonds. The plan is unfunded and no plan
assets are held in a long-term employee benefit fund.
On the basis of an actuarial valuation carried out in
December 2014 by an independent office, this liability
was estimated as follows at the reporting date:

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Current liability

11,075

10,445

Non-current liability

116,783

109,125

Total liability for After Service Health Insurance

127,858

119,570

The table below details the expense for ASHI
recognized in the statement of financial performance:
Decem ber 31,
2014

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

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

Interest cost

3,410

2,864

Current service cost
Amortization of net actuarial(gain)/loss
Expense recognized in thestatem ent of financial
perform ance

7,036

7,556

354

554

10,80010,974
Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year

51

137,670

131,320

Interest cost

3,410

2,864

Current service cost

7,036

7,556

Contribution paid

-2,512-2,341

Actuarial (gain)/loss on obligation
Defined benefit obligation at endof year
Net actuarial gain/(loss)
unrecognizedLiability recognized in thestatem ent of financial position

8,845-1,729154,449

137,670-26,591-18,100

127,858

119,570

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Contributions paid by the Organization for ASHI totaled 2.5 million Swiss francs for 2014 (2.3 million Swiss francs in2013). Expected contributions to ASHI in 2015 are 2.7 million Swiss francs. The following table details the present
value of the defined benefit obligation and experience adjustments arising on the ASHI liability for 2014 and theprevious four years:

2014

2013
2012
2011
(in thousands of Swiss francs)

2010

Defined benefit obligation

154,449

137,670

131,320

113,439

106,603

Experience (gain)/loss adjustments on plan liability-15,301

1,606-6,704-5,707-487

The principal assumptions used in determining the ASHI liability and defined benefit obligation were as follows:
Decem ber 31,
2014

Decem ber 31,
2013

Discount rate

1.20%

2.50%

Rate of salary increase

3.52%

3.36%

3.00% as of 2012

3.00% as of 2012

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

then constantthen constantDiscount rate

2.50%

2.20%

Rate of salary increase

3.36%

3.44%

Weighted-average assumptions to determine benefit obligations

Rate of sickness premium increase

Weighted-average assumptions to determine net cost

Rate of sickness premium increase

3.00% as of 2012

3.00% as of 2012

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

then constantthen linear decrease to
2.00% as of 2027
then constant

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

Assum ed healthcare trend rate as
applied1 per cent increasein assum ed healthcare trend rate

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2014

127,692

Per cent variation-17.3%

Service and interest cost for the year to
December 31, 2014

8,401

Per cent variation-19.6%

52

154,449

189,034
22.4%

10,44613,137
25.8%

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

United Nations Joint Staff Pension Fund

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

The Pension Fund’s Regulations state that thePension Board shall have an actuarial valuation madeof the Fund at least once every three years by theConsulting Actuary. The practice of the Pension
Board has been to carry out an actuarial valuation
every two years using the Open Group Aggregate
Method. The primary purpose of the actuarial
valuation is to determine whether the current andestimated future assets of the Pension Fund will be
sufficient to meet its liabilities.

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

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

During the 2014, WIPO contributions paid to UNJSPF
amounted to 26.0 million Swiss francs [2013 26.1
million Swiss francs]. Expected contributions due in2015 are 26.6 million Swiss francs. The United
Nations Board of Auditors carries out an annual auditof the UNJSPF and reports to the UNJSPF Pension
Board on the audit every year. The UNJSPF publishes
quarterly reports on its investments and these can beviewed by visiting the UNJSPF at www.unjspf.org.

The actuarial valuation performed as at December 31,
2013 revealed an actuarial deficit of 0.72 per cent(1.87 per cent in the 2011 valuation) of pensionable
remuneration, implying that the theoretical contribution
rate required to achieve balance as at December 31,
2013 was 24.42 per cent of pensionable
remuneration, compared to the actual contribution rateof 23.70 per cent. The next actuarial valuation will be
conducted as at December 31, 2015.
At December 31, 2013, the funded ratio of actuarialassets to actuarial liabilities, assuming no future
pension adjustments, was 127.5 per cent (130.0 per
cent in the 2011 valuation). The funded ratio was 91.2
per cent (86.2 per cent in the 2011 valuation) when
the current system of pension adjustments was taken
into account.

53

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 13: TRANSFERS PAYABLE

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Madrid Union Complementary Fees

37,436

38,842Madrid Union Supplementary Fees

3,136
13,681

2,997
11,44315

5Madrid Union deposits

22,396

17,938

Hague Union Distribution

243

194
4,468

Madrid Union Individual Fees
Madrid Union Holding Fees

4,047

Madrid and Hague Union Repartition Fees

681

AMC deposits

1,682

PCT International Searching Authorities
USPTO search fees due to EPO
Total transfers payable

1,088
1,642

242

-

83,55978,617

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. The total fees collected by theOrganization for the biennium and an explanation ofeach are as follows:

Madrid Union deposits: The Organization receives
payments from applicants under the Madrid system
which represent deposits in connection with pending
procedures related to trademarks. The portion ofthese deposits which is estimated to represent funds
collected by WIPO on behalf of third parties to betransferred later in accordance with the treaty is
included within transfers payable in the financial
statements. The portion of these deposits which isestimated to represent fees of the Organization
received in advance is included within advancereceipts in the financial statements (see Note 14).

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

54

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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 Patent
Cooperation Treaty (PCT). The amount shown in theprior table represents the amount to be transferred toInternational Searching Authorities at the reportingdate.

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.

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.

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
the prior table represents the net amount paid byparticipants but not paid to the arbitrator as of thereporting date.

55

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 14: ADVANCE RECEIPTS

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Madrid Union deposits

16,587

12,614

Industrial design deposits

259

167

PCT/IBRO deposits

533

489

4,266

1,933

199,682

194,943

3,813

3,344

Advance payment of contributions
PCT revenue deferred
Trademarks revenue deferred
Industrial design revenue deferred

235

224

Non exchange revenue deferred

16,134

15,144

Other deferred revenue

247

243

241,756

229,101FIPOI deferred revenue

2,978

1,881

Total non-current advance receipts

2,978

1,881

244,734

230,982

Total current advance receipts

Total advance receipts

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.

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 (Trademark, Industrial
Design, Patents) is recognized when the application
has been published. Revenue for additional page fees
related to international patent applications is deferred
until the related application is published. In addition,
the part of the fees for international patent applications
which covers the cost of translation 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 is recognized when the service has been
performed.

The construction project to upgrade the safety andsecurity standards of existing WIPO buildings has
been partly financed by the Foundation for Buildings
for International Organizations (FIPOI). Construction
work financed by the FIPOI has been capitalized
within work-in-progress, and a corresponding amountrecognized as deferred revenue. The balance ofdeferred revenue as at December 31, 2014 was 3.0
million Swiss francs (1.9 million Swiss francs as at
December 31, 2013). This revenue is recognizedgradually as the security constructions are
depreciated over their useful lives.

56

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 15: BORROWINGS

Decem ber 31,

2014

Decem ber 31,
2013(in thousands of Swiss francs)
FIPOI Loan Payable

1,358

1,358

BCG/BCV New Building Loan Payable

27,9003,900

Total current borrow ings

29,258

5,258

FIPOI Loan Payable

19,57920,937

BCG/BCV New Building Loan Payable

90,400118,300

Total non-current borrow ings

109,979

139,237

Total borrow ings

139,237

144,495

The Organization has borrowed funds (50.8 million
Swiss francs and 8.41 million Swiss francs approvedin 1977 and 1987 respectively) from the Foundationfor Buildings for International Organizations (FIPOI) forthe purpose of constructing its headquarters buildingsin Geneva, Switzerland. These loans were originallysubject to interest payments. However, in 1996 theSwiss Federal Department of External Relations
agreed to waive any further payments of interest andthe loans currently require the reimbursement ofprincipal only.

and the supplementary loan of 16.0 million Swiss
francs. In November 2015 the Organization is due tomake the first of its scheduled lump sum repayments
towards the loan for the amount of 24.0 million Swiss
francs. The second lump sum repayment for 16.0
million Swiss francs is currently scheduled for January
2016.
In October 2010, an amendment to the loan
agreement was approved by the Banque Cantonalede Genève, the Banque Cantonale Vaudoise andWIPO providing an additional amount of 40.0 million
Swiss francs to be used to finance part of the cost of
the construction of the New Conference Hall andavailable for use during the period March 31, 2011 toMarch 31, 2014. During 2014 the Organization opted
not to draw down this additional amount of 40.0 million
Swiss francs. It is noted that the Organization paid anannual commission of 0.15 per cent on these undrawn
loan amounts during the period of availability.

In February 2008, the Organization entered into acontract with the Banque Cantonale de Genève (BCG)
and the Banque Cantonale Vaudoise (BCV) to borrow
114.0 million Swiss francs, plus a possible
supplementary amount of 16.0 million Swiss francs, tobe used to finance part of the cost of the constructionof the New Building available for use until February
28, 2011. The supplementary amount of 16.0 million
Swiss francs was drawn down on January 27, 2011.
The interest rate has been fixed at the Swiss franc
Swap LIBOR for up to 15 years, plus a margin of
between 0.30 per cent to 0.70 per cent dependent on
the length of the term as determined by theOrganization. Interest payments in 2014 totaled 3.1
million Swiss francs, with a weighted average interest
rate of 2.60 per cent during the year. In addition to thepayment of interest, the contract provides for anannual repayment of principal equal to 3.0 per cent of
the total amount borrowed beginning on February 28,
2012 for the original loan of 114.0 million Swiss francs

57

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 16: PROVISIONSNOTE 17: OTHER LIABILITIES

Decem ber 31,
2014

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)(in thousands of Swiss francs)
Legal costs

913

1,009

Total provisions

913

1,009

As part of its normal activities, the Organization is
subject to litigation. Events occurring prior to
December 31, 2014 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
amount of the provision has been estimated as closely
as possible on the basis of information available.
Legal Costs

702

Amounts used

-23

Unused amounts reversed-702

Total m ovem ents in 2013-23

Balance as at Decem ber 31, 2013

1,009

Movem ents in 2014:
Additional provisions made678

Amounts used

-267

Unused amounts reversed-507

Total m ovem ents in 2014-96

Balance as at Decem ber 31, 2014

913

7,588

6,597

Other current accounts

55,982

48,265

Total Other Current Liabilities

63,57054,862

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 income.

1,032

Movem ents in 2013:
Additional provisions madePCT current accounts - Italy andJapan

The Organization provides facilities for applicants for
PCT, Trademarks and Industrial Designs 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 andauthorization, the current account balance is reduced
and the funds are considered deposits until theapplication has been registered.

(in thousands of Swiss francs)
Balance as at Decem ber 31, 2012

Decem ber 31,
2013

58

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

Several members of WIPO personnel are in disputewith the Organization. Cases before the WIPO Appeal
Board (WAB) and the ILO Administrative Tribunal(ILOAT) for which provisions have been made arereflected in Note 16. No provision has been made forcertain other cases before the WAB or the ILOAT
where legal advice indicates it is not probable that aliability will arise. The estimated value of contingent
liabilities for possible payments by the Organization
for claims arising from these cases is 605,500 Swiss
francs at the reporting date. Personnel also havecases which have the status of Requests for Review.
For these cases the amount of any claim is yet to be
confirmed, and therefore no provision is recognized.
The estimated value of contingent liabilities forpossible settlement payments by the Organization
arising from these cases is 1,000 Swiss francs at thereporting date.

Decem ber 31,
2014

Decem ber 31,
2013(in thousands of Swiss francs)
Not later than one year
Later than one year and not later than
five years
Later than five years
Total non-cancellable operatingleases

400

426

453

723

-

-

853

1,149

The Organization has also entered into an agreement
to lease a building from the International Centre of
Geneva Foundation (FCIG). The details of thisagreement, including future lease payments, areprovided separately in Note 10.

As at December 31, 2014, outstanding contracts forthe construction of the New Conference Hall totaled
0.2 million Swiss francs, and outstanding contracts for
the Security Construction totaled 0.6 million Swiss
francs. The Organization also has non-cancellable
contracts for the delivery of services for a total value of
1.5 million Swiss francs.

The Organization has no outstanding leases qualifying
as finance leases at the reporting date. The total
amount of lease payments recognized as an expensein the reporting period was 1.9 million Swiss francs[2.0 million Swiss francs in 2013].

WIPO is a Partner Organization in the International
Computing Centre (ICC), the inter-organization facility
created to provide information technology services.
Under the terms of the ICC Mandate, Partner
Organizations shall be responsible for their share ofcertain liabilities arising from ICC’s operations.

WIPO as Lessor
The Organization has entered into a number ofagreements whereby it leases space in or on its
headquarters buildings to third parties. These leases
are all cancellable subject to notification periods
specified in the agreements. The total amount ofrental income from these arrangements in thereporting period was 0.6 million Swiss francs [0.6million Swiss francs in 2013]. The Organization alsoleases apartments, parking and other facilities in the
Madrid Union Building. The value of non-cancellable
leases and rental income for the Madrid Union
Building is provided in Note 7.

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

59

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

to UPOV in accordance with the terms of anagreement between the Organization and UPOV
dated November 26, 1982. UPOV reimburses theOrganization for the cost of such services inaccordance with the terms of said agreement. The
Council of UPOV which serves as UPOV’s governing
body consists of the representatives of the contracting
parties to the International Convention for theProtection of New Varieties of Plants of December 2,
1961, as revised. In accordance with the Rules andRegulations of UPOV, the office of UPOV, consistingof the UPOV Secretary General and staff, exercises its
functions in complete independence of theOrganization.

NOTE 20: RELATED PARTY
TRANSACTIONSThe Organization is governed by the WIPO Assemblycomposed of representatives of all member countries.
They do not receive remuneration from theOrganization. The Organization is managed by a
Director General and by Deputy and Assistant
Directors General and officers (key management
personnel) who are remunerated by the Organization.
The aggregate remuneration paid to key management
personnel includes salaries, allowances, statutory
travel and other entitlements paid in accordance with
the Staff Rules and Regulations 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 staff healthinsurance scheme including the ASHI if they meet theeligibility requirements. The Organization has noownership interest in associates or joint ventures andno controlled entities. WIPO is a member of the
UNJSPF and certain of its former staff are members of
WIPO’s CROMPI. The relationship with these twofunds is explained in detail in Note 12.

In addition to full reimbursement of all funds disbursedby the Organization on behalf of UPOV, theOrganization receives 618 thousand Swiss francs per
year from UPOV to cover the costs of services
provided under the agreement between the twoorganizations. There were no other materialtransactions with related parties during 2014.
Key management personnel and their aggregate
remuneration are detailed in the following table. There
were no loans to key management personnel or totheir close family members which were not available toother categories of staff.
There was no other
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 Organization is responsible for providing space,personnel administration, financial administration,
procurement services and other administrative support
2014

2013

Num ber of
Individuals

Aggregate
rem uneration

Num ber of
Individuals

Aggregate
rem uneration(as an average)(in Swiss francs)(as an average)(in Swiss francs)

Director-General, deputies andassistants

8.08

2,992,850

8.00

3,054,395

Senior Officers

13.08

3,912,228

13.25

3,905,569

60

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 21:

RESERVES AND FUND BALANCE

Program andSpecialProjects
BudgetAccounts
Financed
IPSAS
Transfer toSurplus for
Surplus forfromadjustm ents Accum ulated
the Yearthe Year
Reserves
for the year
surpluses(before(before(before
IPSAS
IPSAS
IPSAS
adjustm ents) adjustm ents) adjustm ents)(in thousands of Swiss francs)

Decem ber31, 2013

Decem ber31, 2014

Program and Budget
surplus/(deficit) for theperiod-69,890---26,844-43,046-

Special Accounts
surplus/(deficit) for theperiod

-

-

817

-

-817

-

-

185,431---35,209

29,13743,046

222,405

Working capital funds

8,342

-

-

-

-

-

8,342

Revaluation surplus

15,046----

15,046

Net Assets

208,819

69,890-35,209

1,476-

245,793

Accumulated
surpluses/(deficits)

817

The fund balance of the Organization represents theaccumulated net result of operations in 2014 and priorperiods.

agreements of the respective Unions establishes alevel for the working capital funds. Funds equal to thetarget level for accumulated surplus and the working
capital funds are set aside to maintain sufficient levelsof liquidity and to cover operational deficits should
they occur. Accumulated surplus funds in excess ofthe target may be made available by the Assemblies
to finance capital improvements or other priorities inaccordance with the Policy on Reserves established
by WIPO’s Assemblies.

The revaluation surplus reserves include the results ofa revaluation (from historic cost to fair value) of theland owned by the Organization on which the newbuilding has been constructed. The fair value has
been determined by an independent valuation.
Reserves include the Working Capital Funds
established by the Assemblies of Member States ofeach of the Unions to provide advance financing ofappropriation should there be a temporary liquidity
shortfall.

As at December 31, 2014, the balance of accumulated
surpluses includes funds which have been approved
for use for projects in compliance with this policy. The
remaining balance on approved Special Projects at
the reporting date is 25.6 million Swiss francs. The
remaining balance on the reserve-funded part of theDevelopment Agenda at the reporting date is 1.0
million Swiss francs. It is also noted that a balance of
0.6 million Swiss francs remains on building
construction projects as at December 31, 2014. These
construction projects do not affect the level of net
assets during construction phases, as expenditure
incurred is capitalized as work in progress. The
following table details the projects which are financed
by reserves, and the net expenditure during the year:

WIPO’s capital consists of its accumulated surplus
and working capital funds which form part of its net
assets. The capital is managed in accordance with
the Policy on Reserves and principles applied in
respect of the use of reserves adopted by thethAssemblies of the Member States of WIPO at its 48
series of meetings in 2010 [A/48/9]. The policy
establishes a target level for accumulated surplus
equal to a percentage of estimated biennial
expenditures for each of the Unions forming theOrganization.
In addition, each of the treaty

61

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Total projectbudgetCum ulative
expenditure to
Decem ber 31,
2013

Cum ulative
Rem aining
Expenditureadjustm ents tobalance as atyear ended
Decem ber 31,
Decem ber 31,
Decem ber 31,
2013
2013
2014
(in thousands of Swiss francs)

Adjustm ents
year ended
Decem ber 31,
2014

Rem ainingbalance as at
Decem ber 31,
2014

Special Projects
Security

7,600-5,336141

2,405-1,813-592

Maps modernization

13,804-9,850-3,954-2,805-

1,149

Madrid system database

1,200-1,080

-

120

-12

-

108

ERP project

25,341-10,370-

14,971-3,530-11,441

ICT capital investment

5,180-2,919

-

2,261

-889

-

1,372

Security enhancement

700

-

-

700

-

-

700

ECM implementation

2,068

-

-

2,068

-35

-

2,033

PCT building renovation
Geneva lake w ater coolingsystem

6,000

-

-

6,000

-

-

6,000

750

-

-

750

-89

-

661

960

-

-

960

-

-

300

-

-

300

400

-

-

400

64,303-29,555

141

7,182

-5,932

157,643

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

Developm ent agenda
New construction and new
conference hall
New construction (1)New conference hall (includingarchitectural and technicalproject)

Total reserve funded
projects

960
300

-

-

34,889-97-9,270-303
25,619

-

1,250

-216

-

1,034

-156,689

1,224

2,178

-1,871-

307

75,200-51,426200

23,974-23,867

143

250

232,843-208,115

1,424

26,152-25,738143

557

304,328-243,602

1,565

62,291-35,224

143

27,210

Revenue in year 201415

Net deficit in year 2014-35,209(1) The new construction project w as financed by borrow ings, see Note 15.

62

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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.

NOTE 22: RECONCILIATION OF
STATEMENT OF BUDGETARYCOMPARISON AND STATEMENT OFFINANCIAL PERFORMANCEThe WIPO Program and Budget is established on amodified accrual basis in accordance with the
Financial Regulations and Rules, and is approved by
the Assemblies of the Member States. The Programand Budget for the 2014/15 Biennium established abudget estimate for the biennium of 674.0 million
Swiss francs. For 2014, the first year of the biennium,
the original and final budget estimate for income was351.3 million Swiss francs, and for expense 337.0
million Swiss francs. Actual income on a modified
accrual basis for the first year of the biennium was
378.7 million Swiss francs. Actual expense on amodified accrual basis for the first year of thebiennium was 308.8 million Swiss francs.

As required by IPSAS-24, a 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. WIPO’s budget isadopted by the Assemblies on a biennial basis,
however, separate estimates are prepared for each of
the two annual periods. Therefore, there are no timing
differences to report. Basis differences occur when theapproved budget is prepared on a basis other than thefull accrual accounting basis.
Basis differences
include the depreciation of assets, full recognition ofprovisions and deferral of unearned revenue. Entity
differences represent the inclusion in WIPO’s financial
accounts of Special Accounts and projects financed
from reserves, which are not included in WIPO’s
published Program and Budget. Presentationdifferences represent the treatment of gains on
investment property as investing activities inStatement IV.

The Program Performance Report for 2014 provides
an explanation of both the changes between theoriginal and final budget after transfers, and thematerial differences between the budget and theactual amounts. WIPO’s budget and financial
accounts are prepared using two different bases. The

2014
Operating

Investing

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

69,890--69,890Depreciation, amortization and impairment-9,054---9,054Equipment acquisition and disposal

247

-

-

247

30,409--30,409

Capitalization of intangible assets

1,744

-

-

1,744

Changes in employee benefit liabilities-2,846---2,846

Deferral of revenue from fees

-17,031---17,031

Other deferred revenue-1,097---1,097

Change in provision for doubtful debts

315

-

-

315

Inventory recognition

-394

-

-

-394

Special Accounts revenue recognition

-817

-

-

-817

Capitalization of construction expense

Total Basis differences

1,476

-

-

1,476

Projects financed from reserves
Special Accounts-35,209817---35,209817

Total Entity differences-34,392---34,392

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

36,974--36,97463

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 23: REVENUE

Programand Budget

Special
Accounts

2014

2014

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2014

2014

Total

2014

2013

(in thousands of Swiss francs)
Assessed contributions

17,584--315

17,89917,714

Voluntary contributions

-

9,681

-

-785

8,896

7,550

Publications revenue

351

-

-

-

351

405

Investment revenue

1,617

2

-

-

1,619

2,080

PCT System fees

295,128---16,552

278,576

257,462

Madrid System fees

55,582
3,196

-

-

-469

55,11355,401

-

-

-10

3,186

3,202

40

-

-

-

40

8

353,946---17,031

336,915

316,073

Arbitration and Mediation

1,487

-

-

-

1,487

1,629

Exchange gain (loss)

1,253

9

15

-

1,277

-932

838

-

-

-838

-

-

Hague System fees
Other fees
Sub-total fees

Program support charges
Other/miscellaneous revenue
Total revenue

1,605

-

-

131

1,736

7,092

378,6819,692

15-18,208

370,180

351,611Amounts shown for the Program and Budget
represent actual revenue received related to theOrganization’s budget as adopted by the Assemblies.
Voluntary contributions represent revenue received inconnection with contributions made by donors toindividual projects under Special Accounts notincluded in the Program and Budget.

IPSAS adjustments are principally related to thedeferral of unearned revenue. Revenue from voluntary
contributions is deferred until earned through thedelivery of the specific services provided in the plan ofwork agreed with the donor.
Revenue from PCT, Madrid and Hague fees isdeferred until earned through the publication of theinternational application in accordance with the rulesof each of the Unions.

64

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 24: EXPENSES

Programand Budget

Special
Accounts

2014

2014

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2014

2014

Total

2014

2013

(in thousands of Swiss francs)
Posts expenditure

190,096

1,414

1,265

2,590

195,365

188,523

Temporary positions expenditure

17,300

773

2,418

-319

20,172

24,635

Other staff costs

1,078

-

-

-221

857

837

208,474

2,187

3,683

2,050

216,394

213,995

569

-

-

-

569

462
1,285
1,747

Total Personnel expenditure
Interns
WIPO fellow ships

1,925

-

159

-

2,084

Total interns and WIPO fellow ships

2,494

-

159

-

2,653

Staff Missions

5,163

520

6

-1

5,688

6,549

Third-party travel

5,813

1,733

32

-23

7,555

10,239Course fellow ships

1,308

810

-

-1

2,117

2,427

Total Travel and fellow ships

12,284

3,063

38

-25

15,36019,215

Conferences

3,487

167

18

-2

3,670

4,609

Publishing

26

3

-

-

29

89

Individual contractual services

10,012

402

131

-71

10,474

12,619Other contractual services

45,815

2,015

2,619

-1,03649,41347,700Total Contractual services

59,340

2,587

2,768

-1,10963,58665,017

Premises and maintenance

17,170126

28,211-28,673

16,834

17,219Communication

2,268

3

-

-

2,271

2,541

Representation

170

3

-

-

173

91

Administrative charges

631

-

6

173

810

603

United Nations joint services

763

-

-

-

763

667

Total Operating expenses

21,002

132

28,217-28,500

20,851

21,121

Supplies and m aterials

1,522

65

236

-20

1,803

3,265

Furniture and equipm ent

372

-

123

-248

247

859

-

-

-

9,054

9,054

7,893

3,303

3

-

-48

3,258

3,367

-

838

-

-838

-

-

308,791

8,875

35,224-19,684

333,206

336,479

Depreciation and am ortization
Finance costs
Program support costs
Total expenses

65

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Expenses in the Program and Budget, Special
Accounts and Projects financed from reserves arereported on a modified accrual basis, recognizing
expense when goods are received and services are
rendered. However, before the impact of IPSAS
adjustments, costs of the acquisition of equipment,
expenses related to production of inventory andexpenses related to construction are recorded as
expensed when paid and provisions for post
employment benefits are recognized only to the extent
funded. During 2014, in accordance with paragraph 39of the WIPO Program and Budget for the 2014/15
biennium, an additional charge of 6 per cent against
post costs was recognized to increase the provision
for after service employee benefits.

Carrying
am ount
Financial liabilities

Fair values
Set out below, is a comparison by class of the carrying
amounts and fair value of the Organization’s financial
instruments.
Fair value(in thousands of Swiss francs)

2014
56,905

Loans

8,184

8,184

474,508

474,508

539,597

539,597

Receivables

76,69876,698

Loans

8,065

8,065

409,916

409,916494,679

494,679

Cash and cash equivalents

56,9052013

Cash and cash equivalents

139,237

139,237

Accounts payable

30,31530,315

Transfers payable

83,55983,559Current accounts

63,57063,570316,681316,681

Borrow ings

144,495

144,495

Accounts payable

31,28531,285

Transfers payable

78,61778,617

Current accounts

54,862

54,862309,259309,259

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

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

Receivables

Borrow ings

2013

NOTE 25: FINANCIAL INSTRUMENTS

Financial assets(in thousands of Swiss francs)

2014

In addition, changes to the provision for doubtful
debts, depreciation of equipment and buildings andequipment disposal are not recognized as expense
under the modified accrual basis. As such, the costsof depreciation of buildings (7.1 million Swiss francs),
intangible assets (1.2 million Swiss francs) andequipment (0.8 million Swiss francs) are treated as
IPSAS adjustments. The transfer to fixed assets ofconstruction costs and additions to buildings (30.4
million Swiss francs) are also included within IPSAS
adjustments.

Carrying
am ount

Fair value

66

Cash and short-term deposits, receivablesfrom exchange transactions, accounts
payable and other current liabilities
approximate their carrying amounts largely
due to the short-term maturities of these
instruments.

Long-term loans, receivables and borrowings
are evaluated by the Organization based onparameters such as interest rates and risk
characteristics. Allowances have been
established for receivables from nonexchange transactions which cover amounts
due from Member States that have lost theright to vote under Article 11, paragraph 5 of
the WIPO Convention and for contributions
from least developed countries which havebeen frozen by action of the Assemblies. The
concessionary loan to FCIG is recognized atamortized cost with values based on cash
flows discounted using a discount rate of
1.48 per cent. USA taxes receivable arerecognized at amortized cost with values
based on cash flows discounted using a
discount rate of 1.81 per cent.

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

Credit risk
Credit risk is the risk of financial loss to theOrganization if counterparties to financial instruments
fail to meet their contractual obligations, and it arises
principally from the Organization’s loans, receivables,
and cash and cash equivalents. The carrying amountof financial assets represents the maximum credit
exposure. The maximum exposure to credit risk as at
December 31, 2014 was:Decem ber 31,
2014

Investments are held in banks with sovereign risk orwith credit ratings of AA- or higher. The Organization
minimizes the credit risk to its cash and cash
equivalents by holding the vast majority of its funds inbanks with high or upper medium grade credit ratings.
However in certain cases funds are held in lower
medium grade rated banks for specific operational
purposes. Accordingly, the credit ratings attached to
cash and cash equivalents is as follows:

Decem ber 31,
2013(in thousands of Swiss francs)
Receivables

56,905

Loans

8,184

8,065

474,508

409,916

539,597494,679

Cash and cash equivalents
Maxim um exposure to credit
risk

AAA

76,698AA+

Decem ber 31, 2014
Cash and Cash
Equivalents
Per cent

A+

A

A-

BBB

Unrated(cash on
hand)

Total

(in thousands of Swiss francs)
381,463494

63,121

28,395

713

310

12

474,508

80.4%

0.1%

13.3%

5.9%

0.2%

0.1%

0.0%

100.0%

Liquidity risk

held primarily in liquid short-term deposits. The
following table provides a maturity analysis of WIPO’s
borrowings. The BCG/BCV New Building loan maturity
analysis as at December 31, 2014, includes annual
repayments of 3.9 million Swiss francs (representing
3.0 per cent of the total loan value), and scheduled
lump sum repayments of 24.0 million Swiss francs inNovember 2015, and 16.0 million in January 2016:

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 toliquidity risk as it has substantial unrestricted cash
resources which are replenished from the results of its
operations. The Organization’s investment policy has
been developed to ensure that its investments are
1 year or less
Decem ber 31, 2014

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

FIPOI loan

1,358

5,433

14,146

20,937

BCG/BCV New Building loan

27,90031,60058,800118,300

Total borrow ing

29,25837,03372,946139,237

1 year or less
Decem ber 31, 2013

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

FIPOI loan

1,358

5,433

15,504

22,295

BCG/BCV New Building loan

3,900

15,600102,700

122,200

Total borrow ing

5,258

21,033

118,204

144,495

67

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Currency risk

Japan, Russia, Singapore and the USA with limited
assets in local currency. The Organization makes only
limited use of financial instruments to hedge exchangerisks, specifically for short term investments underwhich Swiss francs are converted to euros for a periodof up to two months. There are no hedging contracts
in place as at the reporting date.

The Organization receives revenue from fees andvoluntary contributions in currencies and incurs
expenses in currencies other than its functional
currency, the Swiss franc, and is exposed to foreign
currency exchange risk arising from fluctuations ofcurrency exchange rates. The Organization is also
exposed to exchange risk arising from the currency
differences between amounts payable to International
Searching Authorities pursuant to the Regulations
under the Patent Co-operation Treaty and amounts
received by national patent offices for international
search fees from applicants for international patents.

Currency exchange rate sensitivity analysis
The currency exchange rate sensitivity analysis isbased on reasonable shifts in exchange rates. A rateof 10.0 per cent has been applied, based on the fall invalue of other currencies against the Swiss franc in
the months following the announcement of the Swiss
National Bank on January 15, 2015 (see Note 27
Events After the Reporting Date). This is applied tofinancial assets and financial liabilities held in
currencies other than the Swiss franc to summarize
the effect on surplus in the tables below:

The Organization has a further exposure to exchange
risk in connection with the cost of pensions for staff
previously enrolled in the Closed Pension Fund who
are now members of the UNJSPF. In addition, theOrganization has external offices in Brazil, China,

Decem ber 31, 2014
Original currency:

USD

JPY

EUR

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

19,915

4,963

7,128

PCT debtors

23,220

9,028

7,658

USA taxes reimbursable

4,692

-

-

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

4,783

1,399

1,479

Total effect on surplus of -ve m ovem ents

-4,783-1,399-1,479

-

7,395

193
10.0%

Financial liabilities
PCT current accounts
Reasonable shift

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

-

740

19

Total effect on surplus of -ve m ovem ents

-

-740

-19

68

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Market risk

revenue derived from investment income. The interest
rates applicable to the BCG/BCV New Building loan
are fixed for the periods of the loan draw downs. The
Organization does not use financial instruments tohedge interest rate risk. The interest rates andmaturity profile on financial instruments as at
December 31, 2014 and December 31, 2013 are as
follows:

Market risk is the risk of changes in market prices,such as interest rates, affecting the Organization’s
income or the value of its financial instrument
holdings. The Organization is to a limited extent
exposed to the risk of falling interest rates, since only
0.22 per cent of its operating budget is financed fromInterest rate
at reporting
date
Decem ber 31, 2014

1 year or less%

Later than 5years

1-5 years

Total(in thousands of Swiss francs)

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

0.150

381,463--

381,463

2.595

27,90031,60058,800118,300

Financial liabilities
BCG/BCV New Building loan

Interest rate
at reporting
date
Decem ber 31, 2013

1 year or less%

Later than 5years

1-5 years

Total(in thousands of Swiss francs)

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

0.850

359,963--359,963

2.611

3,900

15,600102,700

122,200

Financial liabilities
BCG/BCV New Building loan

Interest rate sensitivity analysis

Increase (+) /decrease (-) inbasis points

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:

Effect on surplus(in thousands of
Swiss francs)

2014
Financial assets
Funds invested w ith AFF

+50

1,777

-50

-1,7772013
Financial assets
Funds invested w ith AFF

69

+50

1,694

-50

-1,694

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

NOTE 26: EXCHANGE GAIN AND LOSS

Gain

Loss

Net Im pact2014

Net im pact2013

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

153

-149

4

-58

287

-2,019-1,732-6,009PCT International Searching Authority

1,245-1,930-685-2,578

Total PCT system fees realized gain/(loss)

1,685-4,098-2,413-8,645

PCT bank accounts

1,385

-

1,385

-68

PCT current accounts and debtors

789

-154

635

2

Total PCT system fees unrealized gain/(loss)

2,174

-154

2,020

-66

Total PCT system fees gain/(loss)

3,859-4,252-393-8,711

117

-18

99

-15

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

33

-95

-62

28

Total Arbitration and Mediation unrealized gain/(loss)

150

-113

37

13

Accounts payable

1,537-1,694-157-14

Total other realized gain/(loss)

Other gain/(loss)

1,537-1,694-157-14Bank accounts

840

-171

669

-390

Special Account bank accounts

29

-41

-12

-120

Other assets and liabilities

4,416-3,639777-408

Total other unrealized gain/(loss)

5,285-3,851

1,434

-918

Total other gain/(loss)

6,822-5,545

1,277

-932

Total exchange gain/(loss)

10,831-9,910921-9,630The 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 Patent Cooperation Treaty where these
are received by the Organization in currencies otherthan Swiss francs, and on payments made toInternational Searching Authorities (ISA) under the
PCT which are valued in the currency of the ISA but

collected by WIPO in Swiss francs or by the national
receiving office in its local currency. In addition,
unrealized exchange gains and losses relating to therevaluation of bank accounts and other monetary
assets and liabilities into Swiss francs at the exchange
rate in effect on the reporting date are recognized on
the financial statements. The net effect of all
exchange gains and losses of 0.9 million Swiss francs
is recognized within revenue on the Statement of
Financial Performance, principally within the line PCT
system fees.

70

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

currencies lost on average 15.0 per cent of their value
against the Swiss franc in the currency markets. The
United Nations Operational Rates of Exchange(UNORE) effective from January 15, 2015 had alreadybeen published two days previously, and therefore did
not incorporate the effect of the SNB announcement.
However, new UNORE were subsequently publishedon January 29, February 26 and March 11, 2015. For
the three currencies, other than the Swiss franc, inwhich the Organization receives the most significant
portion of its fees, the table below shows thepercentage decrease in the value of these currencies
against the Swiss franc, based on the published
UNORE before and after the SNB announcement:

NOTE 27: EVENTS AFTER THE
REPORTING DATEWIPO’s reporting date is December 31, 2014 and its
financial statements were authorized for issuance on
May 1, 2015.
On January 15, 2015, the Swiss National Bank (SNB)
announced that it was discontinuing its policy ofmaintaining a minimum exchange rate of 1.20 Swiss
francs per euro. The policy had been in place since
September 6, 2011. Following the announcement, theSwiss franc strengthened significantly, and all other

UNORE
Rate
published
January 13,
2015

US dollar/Swiss franc
Japanese yen/Swiss franc
Euro/Swiss franc

1.02100.00861.2012Rate Percentage
published change fromJanuary 29, January 13,
2015
2015
(per cent)
0.92000.00781.0431

-9.9
-9.3
-13.2

As can be seen from the table above, following theinitial average loss of 15.0 per cent, all threecurrencies recovered to differing extents over thefollowing two months, although the euro remained at
11.4 per cent below its value prior to the SNB
announcement. Although it is difficult to calculate acomplete estimate of the financial effect for WIPO in2015 of the appreciation of the Swiss franc, it is clearthat it will negatively impact WIPO’s fees from PCT
applications paid in currencies other than the Swiss
franc during at least the first quarter of the year. As aresult of the appreciation of the Swiss franc, newequivalent amounts for PCT international filing fees
and handling fees were announced for a number ofcurrencies, with effect from April 1, 2015. This

Rate Percentage
published change fromFebruary 26, January 13,
2015
2015
(per cent)
0.95400.00801.0707

-6.6
-7.0
-10.9

Rate Percentage
published change fromMarch 11, January 13,
2015
2015
(per cent)1.00400.00831.0647

-1.7
-3.5
-11.4

included the euro, but not the US dollar and Japanese
yen which did not meet the conditions for the setting ofa new equivalent amount due to the recovery of alarge part of their value against the Swiss franc.
Based on an analysis of equivalent amounts for 2014
and 2015 filings and the UNORE following the SNB
announcement, the estimated exchange loss on thereceipt of international filing fees for PCT applications
is between 2.0 and 5.0 million Swiss francs (see page
12 Financial Statement Discussion and Analysis). Thisestimate is dependent on the pattern of future cash
inflows of PCT international filings fees, and also
movements in exchange rates subsequent to the
UNORE published on March 11, 2015.

71

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

NOTE 28: SEGMENT REPORTING

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

A separate segment has been established forvoluntarycontributions
representing
amounts
administered by WIPO on behalf of individual donors
to carry out programs related to WIPO’s mandate.
Revenue and expense related to Voluntary
Contributions (Special Accounts) are accounted forseparately in the financial accounting system.

The WIPO contribution-financed Unions have been
consolidated for presentation purposes.
These
include the Paris, Berne, Locarno, Nice, Vienna and
IPC unions along with the functions covered by the
WIPO Convention. The Patent Cooperation Treaty(PCT) Union, Madrid Union (Trademarks), Hague
Union (Industrial Designs) and Lisbon Union(Appellations of Origin) are each governed by an
Assembly which meets annually to adopt a budget
and take such other actions as may be appropriate
under the relevant treaties.

All expenses are allocated among the Unions making
up the segments based upon the approved allocation
methodology. Expenses for the Special Accounts
segment relating to voluntary contributions to theOrganization are recorded as actual cost. The onlyinter-segment charge represents the costs of programsupport incurred by the Unions in support of Special
Accounts. Program support costs are charged to theSpecial Accounts based on a percentage of total
direct expenditure specified in the agreement with thedonor making the voluntary contribution.

WIPO’s assets and liabilities, other than the reserves
representing net assets, are owned by or are theresponsibility of the entire Organization and not assets
or liabilities of individual Unions or segments. The
assets and liabilities generally support a wide range ofservice delivery activities across multiple Unions(segments). The only exception is the investment
property in Meyrin which is owned by the Madrid
Union. Therefore, individual assets and liabilities will
not be reflected in the disclosure of information for
individual segments or Unions. Only the net
assets/equity including the working capital funds andreserves are shown by individual segment.

72

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

LisbonTotal(in thousands of Sw iss francs)
REVENUE
17,584

-

-

-

-

9,681

27,265Fees-

295,128

55,582

3,196

40

-

353,946

Interest

95

903

619

-

-

2

1,619

Publications

42

275

32

2

-

-

351

Other Income+UPOV

709

709

875

709

709

9

3,720
388,388

Contributions

Arbitration
Sub-total revenue on budgetary basis
IPSAS Adjustments to revenue
TOTAL REVENUE

1

EXPENSES
Patent Law

77

943

446

18

3

18,507

297,958

57,554

3,925

752

9,692

1,487

310

-16,640

-269

2

12

-1,623-18,208

18,817

281,318

57,285

3,927

764

8,069

370,180

197

2,349

55

-

-

-

2,601

489

-

1,589

366

-

-

2,444

1,391

102

-

-

-

7,676

2

Trademarks, Industrial Designs & Geographic
Indications

3

Copyright and Related Rights

6,183

4

Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

3,152

-

-

-

-

-

3,152

5

The PCT System-

90,688----90,6886

Madrid and Lisbon Systems--

25,20467

462-

25,733

7

WIPO Arbitration and Mediation Center

246

3,003

1,421

57

10

-

4,737

8

Development Agenda Coordination

34

1,320

96

-

-

-

1,450

9

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

322

12,368

902

-

-

-

13,592

10

Cooperation w ith Certain Countries in Europe and Asia

90

3,461

252

-

-

-

3,803

11

The WIPO Academy

135

5,172

377

-

-

-

5,684

12

International Classifications and Standards

249

3,126

142

35

-

-

3,552

13

Global Databases

-

1,911

213

-

-

-

2,124

14

Services for Access to Information and Know ledge

46

2,654

513

35

2

15

Business Solutions for IP Offices

122

4,688

342

-

-

16

Economics and Statistics

56

2,128

155

-

-

17

Building Respect for IP

44

1,704

124

-

-

-

1,872

18

IP and Global Challenges

73

2,807

205

-

-

-

3,085

19

Communications

189

7,292

532

-

-

-

8,013

20

External Relations, Partnerships and External Offices

118

4,526

330

-

-

-

4,974

21

Executive Management

444

6,815

1,617

196

25

-

9,097

22

Program and Resource Management

594

9,422

3,219

412

34

-

13,681

23

Human Resources Management and Development

24

General Support Services

25

3,250
-

5,152
2,339

595

9,133

2,166

263

34

-

12,191

1,128

17,311

4,106

498

65

-

23,108

Information and Communication Technology

963

17,092

4,313

533

56

-

22,957

26

Internal Oversight

113

1,745

414

50

7

-

2,329

27

Conference and Language Services

873

13,396

3,177

385

51

-

17,88228

Safety and Security

262

4,016

952

115

15

-

5,360

29

New Conference Hall

17

262

62

8

1

-

350

30

Small and Medium Sized Enterprises (SMEs) andInnovation

60

2,328

170

-

-

-

2,558

31

The Hague System
Sub-total expenses on budgetary basis

-

-

-

3,357

-

-

3,357

16,794

232,108

52,750

6,377

762

-

308,791

Financed from Reserves:
New Building and New Conference Hall

3,217

18,222

4,247

26

26

-

25,738IPSAS Adjustments to New Building and New
Conference Hall

-3,146-17,816-4,152

-25

-25

-

-25,164

Other Projects

551

5,190

2,998

740

7

-

9,486

IPSAS Adjustments to Other Projects-402-3,124

-441

-3

-3

-

-3,973
8,875

-

-

-

-

-

8,875

546

7,553

1,928

207

25

-806

9,453

TOTAL EXPENSES

17,560242,133

57,330

7,322

792

8,069

333,206

Reserves and w orking capital funds at
Decem ber 31, 2013

21,965

147,671

47,013-7,327-503-

208,8192014 result on budgetary basis-2,05542,438-2,441-3,218-43

817

35,498IPSAS adjustments to result

3,312-3,253

2,396

-177

15

-817

1,476

Reserves and w orking capital funds at
Decem ber 31, 2014

23,222

186,856

46,968-10,722-531-

245,793

Special Accounts
IPSAS Adjustments to expense

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.

73

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

ANNEX ISTATEMENT OF FINANCIAL POSITION BY SOURCE OF FUNDING [UNAUDITED]
as at December 31, 2014
(in thousands of Swiss francs)
WIPO - Program and Budget(regular budget)
December 31,
2014

December 31,
2013

FITSW - Special Accounts(voluntary contributions)

WISP - Projects financed fromreserves

December 31,
2013

December 31,
2014

December 31,
2013

December 31,
2014

IPSAS Adjustm ents
December 31,
2014

Consolidated

December 31,
2013

December 31,
2014

December 31,
2013

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

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

393,859
2,266
9,719
170,531576,375

17,38425-2,273
15,136

16,0572-1,828
14,231

418-161,826-161,408

7,382-168,703-161,321

613
43,574
1,747
45,934411
59,6152,141
62,167474,508
2,005
58,556
1,747
536,816

409,916
2,677
76,7182,141
491,452

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

3,395
25,4156,160
9,434
44,404

3,395
25,415
6,518
9,623
44,951--

137,419
137,419

137,419
137,419

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

2,324
1,390
29,161
197,273-6,1593,092-308
226,773

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

2,324
4,785
29,161360,107
359
3,092
9,315
409,143

TOTAL ASSETS

681,558

621,326

15,136

14,231-23,989-23,902296,645288,940969,350

900,595

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

18,944-20,105
61,16344,28929,258913
67,503201,965

20,678-19,774
60,67933,383
5,258
1,009
54,862
156,095

96
282
13,941
14,31988
222
12,60012,91011,275-55
11,220

10,482-54
10,42839,241
22,396
183,526-3,933
241,230

37
37,205
17,938183,118
238,298

30,315
19,36383,559241,756
29,258913
63,570468,734

31,285
17,59978,617229,101
5,258
1,009
54,862417,731

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

85,898109,979
195,877

77,838139,237
217,075

-

-

-

-

55,9682,978
58,94655,0891,881
56,970141,866
109,979
2,978
254,823

132,927
139,237
1,881
274,045TOTAL LIABILITIES

397,842

373,170

14,31912,910

11,22010,428300,176295,268

723,557

691,776

Accumulated surpluses/(deficits) b/f
Working capital funds
Revaluation surplus
Surplus/(deficit) current period
NET ASSETS

205,484
8,342
69,890283,716

221,878
8,342
17,936248,156

817
817

1,321
1,321

-35,209-35,209-34,330-34,330-20,053
15,046
1,476-3,531-51,579
15,04630,205-6,328

185,431
8,342
15,04636,974
245,793

170,299
8,342
15,04615,132
208,819

LIABILITIES74

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

ANNEX IISTATEMENT OF FINANCIAL PERFORMANCE BY SOURCE OF FUNDING [UNAUDITED]For the year ended December 31, 2014
(in thousands of Swiss francs)
WIPO - Program and Budget(regular budget)
December 31,
2014

FITSW - Special Accounts(voluntary contributions)

December 31,
2013

December 31,
2014

WISP - Projects financed fromreserves

December 31,
2013

December 31,
2014

December 31,
2013

IPSAS Adjustm ents
December 31,
2014

Consolidated

December 31,
2013

December 31,
2014

December 31,
2013

REVENUE
Assessed contributions

17,584

17,551

-

-

-

-

315

163

17,89917,714

Voluntary contributions

-

-

9,681

8,910

-

-

-785

-1,360

8,896

7,550

Publications revenue

351

405

-

-

-

-

-

-

351

405

Investment revenue

1,617

2,075

2

5

-

-

-

-

1,619

2,080

PCT System fees

295,128

252,936

-

-

-

-

-16,5524,526

278,576

257,462

Madrid System fees

55,58255,200

-

-

-

-

-469

201

55,11355,401

Hague System fees

3,196

3,215

-

-

-

-

-10

-13

3,186

3,202

40

8

-

-

-

-

-

-

40

8

Sub-total fees

353,946

311,359

-

-

-

-

-17,0314,714

336,915

316,073

Arbitration and Mediation

1,487

1,629

-

-

-

-

-

-

1,487

1,629

Exchange gains

1,253

-956

9

24

15

-

-

-

1,277

-932

838

722

-

-

-

-

-838

-722

-

-

Other/miscellaneous revenue

1,605

6,884

-

-

-

-

131

208

1,736

7,092

Sub-total miscellaneous

3,696

6,650

9

24

15

-

-707

-514

3,013

6,160

378,681339,669

9,692

8,939

15

-

-18,208

3,003

370,180

351,611

213,995

Other fees

Program support charges

TOTAL REVENUE
EXPENSES
Personnel expenditure

208,474

213,766

2,187

2,064

3,683

4,132

2,050

-5,967

216,394

Interns and WIPO fellow ships

2,494

1,313

-

-

159

434

-

-

2,653

1,747

Travel and fellow ships

12,284

15,970

3,063

3,131

38

121

-25

-7

15,36019,215Contractual services

59,34061,441

2,587

1,453

2,768

4,004

-1,109-1,881

63,58665,017

Operating expenses

21,002

22,422

132

137

28,217

19,851-28,500-21,289

20,851

21,121

Supplies and materials

1,522

2,455

65

45

236

856

-20

-91

1,803

3,265

Furniture and equipment

372

871

-

63

123

712

-248

-787

247

859

Construction

-

11

-

-

-

4,220

-

-4,231--

Depreciation, amortization and impairment

-

-

-

-

-

-

9,054

7,893

9,054

7,893

3,303

3,484

3

3

-

-

-48

-120

3,258

3,367

-

-

838

722

-

-

-838

-722

-

-

TOTAL EXPENSES

308,791

321,733

8,875

7,618

35,22434,330-19,684-27,202333,206

336,479

SURPLUS/(DEFICIT) FOR THE YEAR

69,89017,936817

1,321-35,209-34,330

1,476

30,20536,974

15,132Finance costs
Program support costs

75

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

ANNEX III
SPECIAL ACCOUNTS BY DONOR CONTRIBUTIONS(in Swiss francs)
Fund-in-Trust
Donor

Fund
code

Incom e 2014

Balance as ofDecem ber 31, 2013

Funds received

InterestExpenditure 2014

Exch. rate

Total

Staff

Other direct

Administrative

Total

diff.

incomeexpenditure

expenditure

support costs

expenditure

Reim bursem ents todonorsForeign exchange

Balance as ofDecem ber 31, 2014

losses absorbed
by WIPO

Accredited indigenous and local communities

W_IGC

4,583.05

-

-

-

-

-

3,839.85-

3,839.85--

743.20Australia

WAUS

1,133,310.15-

144.45-333.57-189.12-566,109.20

73,637.55

639,746.75--

493,374.28

Brazil (CHF)

WBRES

490,729.51

-

67.90

-664.29-596.39-

149,417.89

7,504.05

156,921.94--

333,211.18

Brazil South

WBRST

75,048.21

372,768.27

17.70

-

372,785.97-

55,774.04

7,250.65

63,024.69--

384,809.49

Costa Rica

WCORI

31,128.67

-

22.49

3,489.81

3,512.30

-

80.36

-

80.36

-

-

34,560.61

El Salvador

WELSA

49,653.45

-

35.81

5,580.29

5,616.10

-

80.36

-

80.36

-

-

55,189.19

European Union (Pakistan Project)

WPAKI

605,533.14-

123.97-8,724.83-8,600.86-

199,829.35

13,988.05

213,817.40--

383,114.88

Finland/Copyright I

WFICR

15,318.56-

2.19-87.15-84.96

-

61.28

7.95

69.23

15,164.42

0.05-

Finland (CHF)

WFINCH

-

105,109.58

6.55

-

105,116.13-

34,598.60

4,497.85

39,096.45--

66,019.68

Finland/Copyright II

WFINL

8,670.86-

1.10-51.48-50.38

-

61.28

-

61.28

8,559.20--

Finland/Copyright III

WFIMO

170,138.05

-

27.83

-761.83-734.00-

109,940.79

14,295.10

124,235.89

45,169.42

1.26-

France/Industrial Property
Germany/ Junior Professional Officers

WFRIP
WDEJP

752,473.96
380,403.84

303,163.00
137,652.00

117.40
49.40

-1.48
-

303,278.92
137,701.40

137,356.28

24,878.29
5,898.33

3,234.35
17,190.55

28,112.64
160,445.16

6,271.77-

1,027,640.24
351,388.31

Ibero-American Program of Industrial Property

WIBER

108,828.10

167,187.17

24.80

-

167,211.97-

40,261.51

2,817.30

43,078.81--

232,961.26

Italy/Intellectual Property

WITIP

624,679.88

609,090.00

128.15-609,218.15-

320.2441.65

361.89--1,233,536.14

Italy/Junior Professional Officers

WITJP

88,269.15

135,793.00

14.35

-

135,807.35

94,622.29

80.20

11,364.25

106,066.74--

118,009.76

Japan/Africa - LDCs

WJPAF

1,391,782.76

1,100,000.00

182.15361.71

1,100,543.86

251,294.85

685,612.79

120,328.90

1,057,236.54--

1,435,090.08

Japan/Copyright

WJPCR

277,401.98

468,646.00

35.90

9.55

468,691.45

229,229.44

131,812.80

45,540.50

406,582.74--

339,510.69

Japan/Industrial Property

WJPIP

4,287,471.40

4,330,000.00

698.40381.544,331,079.94

757,230.09

2,526,691.46

422,295.25

3,706,216.80--

4,912,334.54

Japan/Junior Professional Officers

WJPJP

15,250.80

-

-

-

-

4,614.80

40.00

558.605,213.40

10,037.40--

MexicoWMEX

163,193.78

-

22.50

-

22.50

-

80.00

5.60

85.60

-

-

163,130.68

Portugal

WPORT72,977.46

-

15.42

-1,180.49-1,165.07

-

81.75

10.65

92.40

-

-

71,719.99

Republic of Korea/CopyrightRepublic of Korea/Copyright/Professional
Officers

WKRCR

565,824.05

350,035.87

80.45

52.21

350,168.53

65,394.65

270,817.68-

336,212.33--

579,780.25

WKRPO

206,641.24

86,255.60

23.90

-

86,279.50

135,557.56

80.00

16,276.50

151,914.06--

141,006.68

Republic of Korea/Intellectual Property

WKIPO

1,272,754.36

696,689.72

177.8031.70

696,899.22

189,254.47

599,624.98-

788,879.45--

1,180,774.13

Republic of Korea/Professional Officers

WKRJP

515,484.03

373,008.40

68.95

-

373,077.35

323,137.45

80.00

38,786.05

362,003.50--

526,557.88

Republic of Korea/Education

WKRED

247,488.53

174,150.88

41.85

0.02

174,192.75-

138,052.43

6,902.65

144,955.08--

276,726.20

Republic of Korea/Building Respect IP

WKRBRIP-

131,263.45

6.35

-2.40

131,267.40-

84,720.84

4,236.15

88,956.99--

42,310.41

Spain (CHF)
Trusted Intermediary Global Accessible
Resources pilot project

WESCH

165,592.21

158,526.57

24.10-31.92

158,518.75-

180,490.14

23,467.90

203,958.04--

120,152.92

WTIGA

4,392.52

-

0.60

-

0.60

-

80.00

10.40

90.40

-

-

4,302.72

United States of America/Copyright
United States of America/Enforcement ofIntellectual Property Rights
United States of America/Small- and Mediumsized Enterprises

W_USA

2,708.54-

18.60

5,022.82

5,041.42-

24,054.52

3,046.70

27,101.22

1,583.33

20,934.59

WUSEN-2,679.82

-

-

-

-

-

-

-

-

-

WUSSM

92,730.82

-

55.74

8,532.77

8,588.51-

3,110.81

404.453,515.26--

97,804.07

Uruguay (CHF)
Miscellaneous closed trust funds

WUYCH
WFITZZ

102,335.54

68,459.02

17.55

206.23

68,682.80-

13,086.73-

13,086.73--

157,931.61

TOTAL

-

-2,679.82

601.22---3,043.51-3,043.51

-

-

-

-

-

-

-2,442.29

13,920,720.00

9,767,798.53

2,254.35

8,785.70

9,778,838.58

2,187,691.88

5,849,748.50

837,699.60

8,875,139.98

86,785.54

20,935.90

14,758,568.96

This schedule is prepared in accordance with the requirements of donor reporting under UNSAS which does not include expenditure accruals. IPSAS adjustments to the closing balances (December 31,2014) are not included in this schedule but are included in the figures shown in Note 14 Advance Receipts (see line ‘Non exchange revenue deferred’).

76

ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2014

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

During the year ended December 31, 2014, theOrganization recognized an expense for one ex gratia
payment. This payment was for the amount of 12,500
Swiss francs, and was made in early 2015 to a former
Deputy Director General of the Organization asreimbursement for two months of rental costs incurred
after the expiration of his mandate.

77

78

79

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Fax: + 4122 733 54 28

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