Annual financial reportand financial statements

Year to December 31, 2019

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2019

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

CONTENTSANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

33
3

STATEMENT ON INTERNAL CONTROL FOR 201915

INDEPENDENT AUDITOR’S REPORT19

FINANCIAL STATEMENTS
STATEMENT I – Statement of Financial Position
STATEMENT II – Statement of Financial Performance
STATEMENT III – Statement of Changes in Net Assets
STATEMENT IV – Statement of Cash Flow
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Revenue 2019
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Expenses 2019
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Revenue 2018/19
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Expenses 2018/19
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Objectives and Budget of the Organization
Note 2: Significant Accounting Policies
Note 3: Cash and Cash Equivalents
Note 4: Investments
Note 5: Receivables
Note 6: Intangible Assets
Note 7: Property, Plant, and Equipment
Note 8: Other Non-Current Assets
Note 9: Payables and Accruals
Note 10: Employee Benefits
Note 11: Transfers Payable
Note 12: Advance Receipts
Note 13: Provisions
Note 14: Contingent Assets and Liabilities
Note 15: Leases
Note 16: Related Party Transactions
Note 17: Net Assets
Note 18: Reconciliation of Statement of Budgetary Comparison and Statement of Financial Performance
Note 19: Expenses
Note 20: Investment Gains/(Losses)
Note 21: Financial Instruments
Note 22: Events After the Reporting Date
Note 23: Segment Reporting

21
21
22
23
24
25
26
27
28
29
29
29
34
34
35
35
36
38
38
39
43
43
44
44
44
45
45
46
47
48
48
51
51

ANNEX – WIPO EX GRATIA PAYMENTS

53

1

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 20192

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

procedures are set out in the WIPO Convention of
1967, which established WIPO.

ANNUAL FINANCIAL REPORTINTRODUCTION

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

The financial statements of the World Intellectual
Property Organization (WIPO) for the year ended
December 31, 2019, are submitted to the Assembliesof the Member States of WIPO (“WIPO Assemblies”)
as required by Regulation 6.7 of the WIPO Financial
Regulations and Rules (FRR). The financial
statements have been prepared in accordance with
International Public Sector Accounting Standards(IPSAS), as developed and approved by theInternational Public Sector Accounting Standards
Board (IPSASB).
The report of the External Auditor on the audit of the2019 financial statements, together with his opinion on
the financial statements, are also submitted to the
WIPO Assemblies as prescribed under Regulation
8.11 and Annex II of the FRR.

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

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

FINANCIAL STATEMENT
AND ANALYSISDISCUSSION

The following financial statement discussion andanalysis includes an overview of the Organization’s
operations and environment, financial objectives andstrategies, risk management strategy, financial
performance and financial position during the year
ended December 31, 2019. It has been prepared inaccordance with IPSASB Recommended Practice
Guideline 2, and is intended to provide an explanationof the significant items, transactions, and events
presented in the financial statements and the factorsthat influenced them. This discussion and analysis is
not part of WIPO’s financial statements; however, it
should be read together with WIPO’s financial
statements.

WIPO generates most of its revenue from fees thatare paid by users of its intellectual property services
for patents, trademarks and industrial designs. These
services are provided through the Patent Cooperation
Treaty (PCT), Madrid and Hague systems. In 2019,
fees from these activities represented 91.9 per cent of
the Organization’s total revenue, with PCT system
fees alone representing 74.0 per cent. The driver forrevenue from these fee-based services is theinternational demand for intellectual property titles.
This demand is influenced by the performance of the
global economy, although since 2010 global
intellectual property filing activity has continued to
grow despite uneven economic recovery from theglobal financial crisis that began in 2008. Latest
published statistics up to the end of 2018 show thatworldwide patent and trademark applications havegrown each year since 2010. Global patentapplications rose to 3.3 million in 2018, representing a
5.2 per cent increase over 2017. An estimated 10.9
million trademark applications were filed worldwide in

Overview of WIPO’s Operations andEnvironment
WIPO is the global forum for intellectual property
services, policy, information and cooperation. It is a
specialized agency of the United Nations, with 193
Member States. The Organization’s mission is to leadthe development of a balanced and effective
international intellectual property system that enables
innovation and creativity for the economic, social andcultural development of all countries. The
Organization’s mandate, governing bodies and3

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 20192018, 19.2 per cent more than in 2017. Global
industrial design activity also grew in 2018, with 1.0
million industrial design applications containing 1.3
million designs representing a 5.7% increase on theprior year. Overall, global intellectual property filing
activity reached record heights in 2018.

reserves are accounted for as the net assets of theOrganization, and serve to minimize the impact ofincome shortfalls and maximize the probability that theOrganization can meet its obligations in the short term
and maintain financial stability. One core element of
the policy is the mechanism for establishing therequired level of reserves as a percentage of theestimated biennial expenditure of the Unions
administered by the Organization. The policy alsoestablishes the principles and approval mechanism forthe use of reserves for one-time projects for capital
improvements and exceptional circumstances.

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

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.
The Organization aims to achieve a market rate of
return whenever appropriate and possible for both
operating and core cash. Strategic cash is to beinvested over the long-term in order to achieve capital
growth and thus an overall positive return over time.

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

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

Every two years, the Director General presents a
Program and Budget to Member States for approval. It
details expected results, performance measures andbudgetary planning for all proposed activities. The
Program and Budget for the 2018/19 biennium wasapproved by the Assemblies of the Member States of
WIPO on October 11, 2017. The Program and Budget
provides the planning for the biennium within theoverall strategic context of the Medium-Term Strategic
Plan.

Under the guiding principles of WIPO’s Risk
Management Policy, risk management is considered
an organization-wide responsibility. All staff areresponsible for managing risks and the ultimate
accountability for risk management lies with the Senior
Management Team. Organizational level risks are
identified and reviewed by WIPO’s Risk Management
Group, which is chaired by the Director General. Risk
management is performed as an integral part of theOrganization’s Results-Based Management cycle.
WIPO’s Risk Management Framework is guided by
the risk appetite noted by its Member States in
WIPO’s Risk Appetite Statement.

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

4

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Financial Performance
The Organization’s results for 2019 showed a surplus
for the year of 97.7 million Swiss francs, with total
revenue of 457.0 million Swiss francs, total expenses
of 401.4 million Swiss francs, and investment gains of
42.1 million Swiss francs. This can be compared to asurplus of 42.5 million Swiss francs in 2018, with total
revenue of 433.6 million Swiss francs, total expenses
of 375.8 million Swiss francs, and investment losses of
15.3 million Swiss francs.

The Program and Budget result for 2019 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 122.3 million
Swiss francs. The 2019 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

2019

2019

Projects
Financed from
Reserves
2019

IPSAS
Adjustm ents

Total

Total

2019

2019

2018

(in millions of Swiss francs)
Total revenue

447.1

10.2

-

-0.3

457.0

433.6

Total expenses-366.9

-10.9

-11.0

-12.6

-401.4-375.8Investment gains/(losses)

42.1

-

-

-

42.1

-15.3

Net surplus/(deficit)

122.3

-0.7

-11.0

-12.9

97.7

42.5

The chart below summarizes the principal differences
between the Program and Budget surplus of 122.3
million Swiss francs, and the surplus for the whole
Organization prepared on an IPSAS basis of 97.7
million Swiss francs:
Movement from budget result to IPSAS result 2019
122.3
-0.7
-11.0
+9.6

millions of Swiss francs-10.2

BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financedfromreserves

Depreciation
andamortization

-11.8

-1.2

Changes in
employeebenefitliabilities

Inventory
movement

Entity differences

Capitalization
Otherof fixed
adjustments
assets

Accounting basis differences

5

+0.7

97.7

IPSAS RESULTPER
FINANCIALSTATEMENTS
Full accrualbasis

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Revenue Analysis
Composition of 2019 revenue on an IPSAS basis(in millions of Swiss francs)

Madrid system fees
76.8
(16.8%)

Assessedcontributions
17.3
Voluntary(3.8%)
contributions
10.9(2.4%)
Hague system fees
5.3
(1.1%)

PCT system fees
338.1
(74.0%)

Other revenue
8.6(1.9%)

2019 total revenue:
457.0m Swiss francs
Total revenue of the Organization for 2019 was
457.0 million Swiss francs, representing an increaseof 5.4 per cent compared to the 2018 total revenueof 433.6 million Swiss francs. The largest source ofrevenue during 2019 was PCT system fees,
accounting for 74.0 per cent of total revenue.
Revenue from PCT system fees rose by 5.2 percent compared to 2018.

per cent of total revenue. Revenue from Madrid
system fees increased by381.9m
3.4 perSwiss
centfrancs
compared to
2018. Hague system fees, Lisbon system fees,
assessed contributions, voluntary contributions(contributions by donors to Special Accounts) andother revenue (publications, arbitration andmediation and other/miscellaneous revenue)
comprise the remaining 9.2 per cent of theOrganization’s total revenue. The following tableprovides a summary of the changes by revenue
type compared to the prior year.

Madrid system fees were the second largest sourceof revenue during the year 2019, representing 16.8

Change in revenue 2018 – 2019
2019

2018

Net Change(in millions of Swiss francs)

Net Change%

Revenue
Assessed contributions

-0.1

17.3

17.4

-0.1

Voluntary contributions

-0.7

10.9

11.6

-0.7

-0.6
-6.0

Publications revenue

-0.2

0.3

0.5

-0.2

-40.0

Fees

-

PCT system

16.7

338.1

321.4

16.7

5.2

Madrid system

2.5

76.8

74.3

2.5

3.4

Hague system

0.4

5.3

4.9

0.4

8.2

19.6

420.2

400.6

19.6

4.9

2.0

1.8

0.2

11.1

Sub-total fees

Arbitration and Mediation

0.2-

Other/miscellaneous revenue

4.6

6.3

1.7

4.6

270.6

Total revenue

23.4

457.0

433.6

23.4

5.4

6

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
PCT revenue is principally comprised ofinternational filing fees (the basic fee, plus
supplementary page fees, less reductions for efilings and least developed countries). The total
PCT system fees revenue figure also comprises
other fees (including handling and transfer fees)
and foreign exchange gains and losses:
Detail of PCT system fees 2012-2019
2019

2018

2017

2016

2015

2014

2013

2012

240.6

(in millions of Swiss francs)
International filing fees

335.6

315.4

293.6

281.8

263.6

275.0

262.3

Payment regularization 2004-2013

-

-

-

-

4.7

-

-

-

Other fees

3.4

3.6

3.6

3.8

4.1

3.9

3.9

3.9

Exchange gain/(loss) on fees received

-2.6

1.7

0.4

5.2

-0.7

-1.7

-6.0

7.5

Other exchange gain/(loss)

1.7

0.7

-1.2

-0.1

3.7

1.4

-2.7

-

Total PCT system fees

338.1

321.4

296.4

290.7

275.4

278.6

257.5

252.0

Revenue from PCT system fees on an IPSAS basis
increased by 5.2 per cent compared to 2018. In the
IPSAS
financialstatements,
revenueforinternational filing fees from PCT applications is
recognized only on publication of the application. In
2019 there were 246,636 publications compared to237,378 in 2018.

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

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

PCT - International filing fees and publications 2012-2019

270,000

340
320

250,000
240,000

300

230,000
220,000

280

210,000
260

200,000
190,000240

180,000
170,000

220
2012

2013

2014

2015

2016

Number of publications

2017

2018

2019

International fees for published applications

7

Revenue (millions of Swiss
francs)Number of publications

260,000

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Madrid system fees principally comprise basic fees
received from applications for registrations orrenewals and fees for subsequent designations:
Detail of Madrid system fees 2012-2019
2019

2018

2017

2016

2015

2014

2013

2012

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

64.2

62.4

58.5

49.7

56.7

46.0

45.9

42.7

Subsequent designations

6.4

5.8

5.5

4.8

5.5

4.7

4.5

4.0

Other fees

6.2

6.1

5.9

5.1

5.7

4.4

5.0

4.9

Total Madrid system fees

76.8

74.3

69.9

59.6

67.9

55.1

55.4

51.6

In accordance with IPSAS, revenue from Madrid
fees for registrations, renewals and subsequent
designations is recognized in the financial
statements upon publication. Revenue fromregistrations and renewals (but not including otherfees) as recognized in accordance with IPSAS has
moved in line with the number of registrations andrenewals in the year. Registrations have grown overthe last three years, totalling 64,118 in 2019 against

60,071 in 2018, and 56,267 in 2017. In 2016,
revenue from Madrid system fees fell by 12.2 percent compared to 2015, due largely to an increased
backlog in registrations linked in part to system
issues with the Madrid International Registration
Information System. In 2017 WIPO made asignificant effort to clear the backlog, and revenue
from Madrid system fees increased by 17.3 per centcompared to the prior year.

100,000

65.0

95,00060.0

90,00085,00055.0

80,00050.0

75,00070,00045.0

65,00040.0

60,000

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

Madrid - basic fees and registrations/renewals 2012-2019

35.0

55,00050,000

30.0
2012

2013

2014

2015

Registrations and renewals

2016

2017

2018

2019

Fees for published registrations and renewals

Revenue from Hague system fees totaled 5.3
million Swiss francs for 2019, representing an
increase of 8.2 per cent compared to the 2018
figure of 4.9 million Swiss francs. Lisbon system
fees totaled 14 thousand Swiss francs in 2019,
compared to 31 thousand Swiss francs in 2018.

Accounts, for which revenue is recognized as work
is performed and expense incurred in line with therelevant agreement.
Arbitration and mediation revenue of 2.0 million
Swiss francs was up by 0.2 million Swiss francs on
the prior year, while publications revenue of 0.3
million Swiss francs was 0.2 million Swiss francs
lower than in 2018. Other/miscellaneous revenue
had a total of 6.3 million Swiss francs in 2019,
compared to 1.7 million Swiss francs in 2018. The
increase in 2019 is mainly the result of the reversalofunusedprovisions
for
legal
costs.

Revenue from assessed contributions of 17.3
million Swiss francs in 2019 represents 3.8 per centof total revenue, while revenue from voluntary
contributions of 10.9 million Swiss francs in 2019represents 2.4 per cent of total revenue. Voluntary
contributions in 2019 were received under Special

8

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Expense Analysis
Composition of 2019 expenses on an IPSAS basis(in millions of Swiss francs)

Contractual services
96.1(24.0%)
Personnel expenditure
242.5(60.4%)

Operating expenses
22.5(5.6%)
Travel, training andgrants
17.5(4.4%)
Depreciation andamortization
10.2(2.5%)
Other expenses
12.6(3.1%)

2019 total expenses:
401.4m Swiss francs

Detailed breakdown of 2019 expenses(in millions of Swiss francs)
Personnel
expenditure
242.5

Posts
Temporary staff
Other staff costs

231.2
10.0
1.3

Travel, training
and grants
17.5

Contractual
services
96.1

Conferences
Individual contractual services
Other contractual services

4.4
14.5
77.2

Depreciation
Buildings depreciation
and amortization Equipment depreciation
10.2
Intangible assets amortization

9.1
0.3
0.8

Premises and maintenanceCommunication
Representation & other operating expenses

19.0
2.1
0.7
0.7

Internships and WIPO fellow ships
Other expenses Supplies and materials
12.6
Furniture and equipment
Finance costs

5.2
5.0
1.4
1.0

Operatingexpenses
22.5

United Nations joint services

Total expenses of the Organization for 2019 were401.4 million Swiss francs, representing an increaseof 6.8 per cent compared to 2018 total expenses of375.8 million Swiss francs. The largest expense for
the Organization was personnel expenditure of
242.5 million Swiss francs, representing 60.4 per

Staff missions
Third-party travel
Training and related travel grants

5.6
10.5
1.4

cent of total expenses. Contractual services of 96.1
million Swiss francs were the second largest
expense for the Organization, followed by operating
expenses of 22.5 million Swiss francs. The following
table provides a summary of the changes byexpense type compared to the prior year:

9

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Change in expenses 2018 - 2019
2019

2018

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

21.9

242.5

220.6

21.9

9.9

Internships and WIPO fellow ships

0.8

5.2

4.4

0.8

18.2

Travel, training and grants

0.7

17.5

16.8

0.7

4.2

Contractual services

2.3

96.1

93.8

2.3

2.5

Operating expenses

-4.2

22.5

26.7

-4.2

-15.7
220.0

Equipment and supplies

4.4

6.4

2.0

4.4

Depreciation and amortization

-1.1

10.2

11.3

-1.1

-9.7

Finance costs

0.8

1.0

0.2

0.8

400.0

Total expenses

25.6

401.4

375.8

25.6

6.8

Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
147.9 million Swiss francs, 61.0 per cent of total
personnel expenditure for 2019. The next largest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which totaled
29.2 million Swiss francs in 2019. Total personnel
expenditure in 2019 of 242.5 million Swiss francs
has increased by 9.9 per cent compared to total
personnel expenditure of 220.6 million Swiss francs
in 2018. Several factors have contributed to thisincrease. The liability for accrued leave for staff inposts rose by 7.1 million Swiss francs compared tothe prior year, largely due to an update in theassumptions applied to the actuarial calculation of
the liability. In July 2019 the Administrative Tribunalof the International Labour Organization (ILOAT)
issued its judgment setting aside the decision to
implement a revised post adjustment for WIPO staff
in the Professional and higher categories. As aresult, in July and August 2019 the Organization
paid concerned staff members retroactive
adjustments from March 2018 onwards, along with
5 per cent annual interest as ordered by the ILOAT
in its judgment. Also in 2019, the cost of staff
termination agreements increased by 3.4 million
Swiss francs compared to the prior year.

of 0.7 million Swiss francs compared to 2018, withthird-party travel costs (conference participants andlecturers) up against the prior year.
Contractual services in 2019 totaled 96.1 million
Swiss francs. These expenses have increased by
2.3 million Swiss francs compared to the 2018
figure. Contractual services in the year 2019
concern primarily commercial translation services(31.4 million Swiss francs), IT commercial services(20.3 million Swiss francs), individual contractual
services (14.5 million Swiss francs), andInternational Computing Centre services (11.8
million Swiss francs).
Operating expenses in 2019 totaled 22.5 million
Swiss francs, a decrease of 15.7 per cent comparedto the 2018 total of 26.7 million Swiss francs. Thisdecrease was largely the result of higher
capitalization of premises related expenditure,whilst the prior year also reflected the cost ofdemolitions related to buildings renovation projects.
Expenses for equipment and supplies haveincreased from 2.0 million Swiss francs in 2018 to
6.4 million Swiss francs in 2019. During 2019 theOrganization has opted to derecognize inventory of
publications and paper, resulting in a charge of 1.3
million Swiss francs. Expenditure on non-capitalized
equipment was notably 1.0 million Swiss francs
higher than the prior year.

The cost of interns and WIPO fellowships is shown
separately in the financial statements. Internships
and WIPO fellowships are not included as part ofpersonnel expenditure as they are not covered by
WIPO’s Staff Regulations and Rules (SRR). The
cost of internships and WIPO fellowships in 2019was 5.2 million Swiss francs, compared to the prioryear figure of 4.4 million Swiss francs.

As previously noted, expenses under IPSAS include
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets, as the cost of these assets is
spread over their useful lives. For 2019,depreciation and amortization total 10.2 million
Swiss francs, compared to a charge of 11.3 million
Swiss francs in 2018.

Travel, training and grants totaled 17.5 million
Swiss francs for 2019, and account for 4.4 per centof total expenses. This represents a slight increase

10

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Financial Position
mainly due to the surplus in both 2018 and 2019,
totalling 140.2 million Swiss francs. In addition,
actuarial gains, related to WIPO’s liability for ASHI,
and revaluation gains on land owned by theOrganization, have been recognized through net
assets for a total of 21.3 million Swiss francs:

As at December 31, 2019, the Organization had net
assets of 364.2 million Swiss francs, with total
assets of 1,225.9 million Swiss francs and total
liabilities of 861.7 million Swiss francs. During the
2018/19 Biennium, the Organization’s net assets
increased by 161.5 million Swiss francs. This is

Movement in net assets 2017 to 2019

+97.7

+5.1

millions of Swiss francs

364.2

+16.2
+42.5

261.4

202.7

Net assets
Decem ber 31,
2017

Surplus on an
IPSAS basis
2018

Actuarial gains
through net
assetsNet assets
Decem ber 31,
2018

11

Surplus on an
IPSAS basis
2019

Actuarial gains
and adjustment
to Revaluation
Reserve
Surplus

Net assets
Decem ber 31,
2019

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
The following chart provides a summary of theStatement of Financial Position of WIPO as at
December 31, 2019. Total assets of 1,225.9 million
Swiss francs are composed primarily of cash, cash
equivalents, investments and fixed assets. Total

liabilities of 861.7 million Swiss francs are
principally payables and advance receipts, andemployee benefits:

Summary of assets and liabilities December 31, 2019

1,225.9

millions of Swiss francs

Net assets
364.2

Cash & cash
equivalents
and investments
754.1

861.7

Payables andadvance receipts
436.0

Fixed assets
388.0

Employee benefits
356.2

Other 83.8

Other 69.5

AssetsLiabilities

AssetsOther assets of the Organization totaling 83.8
million Swiss francs include accounts receivable
and advance payments. Within this, the mostsignificant balance is PCT debtors totaling 59.1
million Swiss francs. At any given time, a significant
number of PCT applications have been filed withreceiving Offices and possibly received by WIPO,
for which no corresponding fee payment has been
received by the Organization. The balance of PCT
debtors has increased compared to the prior year,
when it totaled 55.6 million Swiss francs. This
increase is a result of higher PCT applications in
2019, with the percentage of unpaid applications atyear end remaining consistent between the twoyears at between 15 to 16 per cent of filings in theyear.

The Organization has cash, cash equivalents andinvestment balances of 754.1 million Swiss francs,
representing 61.5 per cent of total assets. This
includes amounts totaling 179.7 million Swiss francs
which are classified as restricted, and amounts
totaling 190.2 million Swiss francs which represent
strategic cash and investments. The total balance of
754.1 million Swiss francs is 138.1 million Swiss
francs higher than the balance of 616.0 million
Swiss francs at the end of 2018.
The Organization holds significant fixed assets(land, buildings, intangible assets and equipment)with a total net book value of 388.0 million Swiss
francs. During 2019, costs totaling 8.2 million Swiss
francs for additions and improvements to existingbuildings were capitalized, and equipment
purchases of 1.1 million Swiss francs were
capitalized. The total depreciation and amortization
charge against all fixed assets was 10.2 million
Swiss francs for 2019.

12

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Liabilities
As at December 31, 2019, payables and advancereceipts total 436.0 million Swiss francs, andprincipally include deferred revenue for theprocessing of international applications (under the
PCT, Madrid and Hague systems) for 284.8 million
Swiss francs. This deferred revenue balance mainly
concerns PCT system fees of 281.8 million Swiss
francs. Revenue from fees relating to theprocessing of international applications is deferred
until the related application is published. At any
given time, a number of PCT applications will havebeen filed with either receiving Offices or WIPO
which have yet to be published. As at December 31,
2019, for applications with a 2018 or 2019 filing
date, it is estimated that approximately 202,932
applications were unpublished. At the end of theprior year 2018, approximately 191,286 applications
filed in 2017 or 2018 were unpublished and thedeferred revenue balance for PCT system fees was
264.9 million Swiss francs.

mortality rates. Changes to these assumptions year
on year lead to actuarial gains and losses which arerecognized as part of the liability in the Statement of
Financial Position. The graph below shows how the
ASHI liability has developed since 2009, andincludes actuarial forecasts for 2020-2023 (applying
the same assumptions as for the 2019 calculation).
The graph also shows how discount rates andmedical cost trend rates have changed since 2009.
The discount rate for the ASHI valuation isdetermined by reference to high quality Corporate
Bond Yield Curves. For ASHI liability valuations inprevious years, WIPO determined a discount rate
for the Swiss franc only, based on the currency inwhich its medical insurance premiums are paid.
However, for the 2019 valuation, the discount rate isa weighted average rate based on the major
currencies in which underlying medical costs wereincurred (Swiss franc, euro and US dollar).
Other liabilities of the Organization are mainlycomprised of current accounts held on behalf ofapplicants and contracting parties, totaling 67.7
million Swiss francs. The Organization has also
recognized provisions totalling 1.8 million Swiss
francs at the end of 2019, which mainly concern
legal provisions for disputes with WIPO personnel.

Employee benefit liabilities of 356.2 million Swiss
francs are mainly comprised of the ASHI liability of
313.7 million Swiss francs, which represents 88.1
per cent of the total employee benefits liability as at
December 31, 2019. The ASHI liability has
increased by 10.6 million Swiss francs compared to
the 2018 balance. The ASHI liability is based on a
calculation performed by an independent actuary,which incorporates a number of actuarial
assumptions. These include the discount rate,
medical cost trend rates, retirement rates andMovement in ASHI liability (benefit obligation) 2009 - 2023
5.00

400.0

3.00
200.0

2020 -2023 a ctuarial forecast

2.00

100.0
1.00

0.0

0.00

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Benefit obligation

Discount rate

13

Medical cost trend rate

per cent

millions of Swiss francs

4.00
300.0

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Cash Flow
reflect short term market volatility. Core cash
balances are invested with the objective ofgenerating a positive return over rolling five year
periods, and strategic cash balances are invested
over the long term. WIPO’s investments generated
dividends of 5.2 million Swiss francs during 2019.

The Organization’s cash, cash equivalents andinvestments balance has been increasing since2011. A significant increase of 138.1 million Swiss
francs was achieved in 2019. This includes
unrealized gains of 42.2 million Swiss francs in2019 on the Organization’s investment portfolio.
The principal cash inflows to the Organization are
payments of PCT system fees. Monthly cash
inflows from PCT system fees averaged 29.3 million
Swiss francs during the year 2019 compared to27.9 million Swiss francs during the year 2018. The
Organization generally holds its cash deposits ininstant access bank accounts. During 2019 theOrganization continued to hold balances in term
deposit accounts (for periods up to 12 months). This
has allowed the Organization to avoid incurring
charges on certain instant access bank accounts
following the introduction of negative interest rates
during 2016.

In the financial statements cash, cash equivalents
and investments are also presented separately
between restricted, unrestricted and strategic cash
balances. There are several elements of cash andcash equivalents which are classified as restricted.
Restricted cash includes current accounts held forthird parties (applicants under the PCT, Madrid andHague systems, and also certain contracting
parties), fees collected on behalf of contracting
parties, deposits received in connection withpending procedures related to trademarks, andSpecial Accounts held on behalf of donors ofvoluntary contributions. Strategic cash represents
the funds held by the Organization which have been
allocated for the future financing of after-service
employee benefit liabilities, including ASHI. Thebalance of strategic cash was 190.2 million Swiss
francs as at December 31, 2019. This includes thelong-term investment portfolio (including unrealized
gains) of 175.2 million Swiss francs, and cash
balances yet to be invested of 15.0 million Swiss
francs. These balances include the additionalamounts generated in 2019 from the Program andBudget charge applied to the cost of posts for thefunding of after-service employee benefit liabilities.

As at December 31, 2019, WIPO’s medium-term
investment portfolio (core cash investments) had afair value of 354.5 million Swiss francs, and thelong-term investment portfolio (strategic cash
investments) had a fair value of 175.2 million Swiss
francs). WIPO’s non-current investments are held atfair value in the Statement of Financial Position.
During 2019, these investments generated
unrealized gains of 42.2 million Swiss francs due toan increase in the valuation of WIPO’s strategic
cash and core cash investment portfolio assets at
the reporting date. These changes in valuation

Unrestricted, restricted and strategic cash 2010-2019
Total
754.1

800.0
700.0

mi l lions of Swiss francs

600.0
500.0
400.0
300.0

Total
383.5
156.7

Total
379.7

154.3

Total
408.1

Total
409.9

Total
474.5
88.9

Total
489.5

Total
616.0

Total
542.3

Total
544.7

108.6

124.4

125.8
179.7

102.1
182.8

152.8

149.5

161.8
164.6

161.9

174.9

200.0

100.0

190.2

384.2
226.8

225.4

255.3

260.4

2010

2011

2012

2013

221.0

225.5

2014

2015

271.9

245.4

2016

2017

307.4

0.0
Unrestricted cash/investments

Restricted cash

14

2018

Strategic cash/investments(funds for after-service employee
benefits, including balances
generated during the year)

2019

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT ON INTERNAL CONTROL FOR 2019
I.

Scope of Responsibility

As Director General of the World Intellectual Property Organization (WIPO), I am accountable, in accordance with the
responsibility assigned to me, in particular, by Regulation 5.8 (d) of the Financial Regulations and Rules (FRRs), formaintaining a system of internal financial control that ensures:

(i)
(ii)
(iii)
II.

the regularity of the receipt, custody and disposal of all funds and other financial resources of theOrganization;
the conformity of obligations and expenditures with appropriations or other financial provisions approved by
the General Assembly or with the purposes and rules relating to specific trust funds;
the effective, efficient and economic use of the resources of the Organization.
Purpose of the system of internal control

The system of internal control is designed to reduce and manage, rather than eliminate, the risk of failure to achieve
the Organization’s aims, objectives and related policies. Therefore, it can only provide reasonable and not absoluteassurance of effectiveness. It is based on an ongoing process designed to identify the principal risks, to evaluate thenature and extent of those risks, and to manage them efficiently, effectively and economically.
Internal control is a process, effected by the Governing Bodies, the Director General, senior management and otherpersonnel, and designed to provide reasonable assurance on the achievement of the following internal control
objectives:Effectiveness and efficiency of operations and safeguarding of assets;
Reliability of financial reporting; andCompliance with applicable rules and regulations.

Thus, on an operational level, WIPO’s internal control system is not solely a policy or procedure that is performed atcertain points in time, but rather continually operated at all levels within the Organization through internal control
processes to ensure the above objectives.
The Program and Budget Committee took note of WIPO’s Accountability Framework, presented to Member States at
its 29th session in May 2019. This Statement is presented in line with the components of WIPO’s Accountability
Framework, following the COSO framework and Three Lines of Defense model.
My current statement on WIPO’s internal control processes, as described above, applies for the year ended December
31, 2019, and up to the date of the approval of the Organization’s 2019 financial statements.
COMPONENT 1 - Results based planning
Member States approved the biennial Program and Budget for 2018/19 that set out how resources were allocated toPrograms for the achievement of Expected Results. Organizational processes are designed to ensure that that WIPO
Programs are implemented in accordance with Member State approvals. Risk assessments were clearly identified
and articulated in the Program and Budget for every Program, and the risks further analyzed during annual work
planning.
COMPONENT 2 - Performance and risk management
I conduct mid-year and mid-biennium reviews of the implementation of workplans ensuring that work is being
undertaken in accordance with approved plans. WIPO’s Risk Management Group (RMG), chaired by me, oversees
the Organization’s overall risk portfolio in consideration of the WIPO Risk Appetite, as well as analyzing the global risk
environment. Critical risks and their risk responses are reviewed on a quarterly basis and include the following key
pervasive risks:

Cyber Risk
WIPO is exposed to the risk of cyber-attacks and the risk of malicious or accidental breach of data leading tounauthorized disclosure or misuse of WIPO’s confidential information, or disruption of business operations.
Such an event can potentially impact WIPO’s reputation as a trusted advisor and service provider to its
membership and clients.

15

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Control and mitigation: WIPO continues to implement a number of phased fit-for-purpose Information
Assurance (IA) strategies across governance, people, processes and technologies, to strengthen its
information security posture and its resilience against evolving cyber security threats. This includes among
others regular independent assessments of its information security controls through penetration tests andannual certification audits to the ISO/IEC 27001 information security standard.


Data and Information Risk
WIPO is accountable to protect the information assets entrusted to it, as well as its own assets. Malicious orunintentional disclosure of confidential information would have severe reputational and operational impact.
Control and mitigation: In 2019, WIPO published a revised policy and standard on Information Security
Classification and Handling, supported by technical controls, and training to staff on how to classify andappropriately handle sensitive data. Additionally, WIPO maintains oversight of its external service providers
that process WIPO data, through continual assessment of information risks from procurement throughtermination of the service.



Investment Risk
There is a risk that the value of some or all of the investments made under the investment strategies thatwere approved by Member States for operating, core and strategic cash pools could decrease, either
temporarily or permanently, which could result in a reduction in net assets (reserves). The potential for agreater loss will be higher as the cash holdings in each of these cash pools increase over time.
Control and mitigation: In 2019, additional cash was invested in line with the investment strategies
determined in accordance with the Policy on Investments that was approved by the Assemblies in 2017. This
work has been reviewed and supervised by the Advisory Committee on Investments (ACI) with the assistanceof independent investment advisors throughout the year. Furthermore, the IAOC provided additionaloversight to the investment process through monthly reporting. WIPO’s cash position remained soundthroughout 2019.
 Security Risk
The risk of a deliberate attack against WIPO at its headquarters or external offices.
Control and mitigation: WIPO offices operate in a secure environment aligned with policies of the UN
Security Management System (UNSMS). All WIPO offices are assessed annually for security risks andmitigation measures are applied to reduce our risk exposure.
Additionally, WIPO continually analyzes regular, timely and accurate operational security and risk intelligencereports in regard to relevant country locations or threat types. WIPO’s security service continually provides
security threat information briefings and mitigation measures on developing global, regional, national or local
threats, which could affect or impact WIPO personnel, delegates, visitors, operations, facilities, travel andassets.

Strategic Risk
Risk that WIPO’s Global IP services fail to keep pace and remain the best value option for IP protection, inthe context of a rapidly changed global economic, political and technological landscape.
Control and mitigation: regularly seek input from stakeholders. Develop capabilities and analyze implications
and opportunities of technologies such as artificial intelligence, block chain, digital time stamping and digital
media.

COMPONENT 3 - Monitoring, Oversight, Complaints and Response Mechanisms
My review of effectiveness of the system of internal controls is mainly supported and informed by the following
monitoring and oversight bodies and staff:My senior managers, in particular Deputy Directors General and Assistant Directors General who play
important roles, and who are accountable for expected results, performance, their area’s activities and theresources entrusted to them. The information channels mainly rely on periodic meetings held by the Senior
Management Team;The Management Representation Letters (MRL) signed by key WIPO officers (SMT), from which I derive
assurance. These letters recognize their responsibility for having and maintaining, in the programs, wellfunctioning systems and a mechanism for internal control aimed at preventing and/or detecting instances of16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019fraud and major errors; The RMG, whose purpose is to promote a culture of responsible and effective financial and risk management
in WIPO and approve its risk management strategy and oversee its implementation. The RMG reviews andmonitors WIPO’s financial situation and the key risks to the achievement of the Organization’s expected
results;

 The Chief Ethics Officer, who provides confidential advice and counsel to the Organization and its staff on
ethics and standards of conduct or conflicts of interest, and promotes overall ethical awareness andresponsible behavior. The Chief Ethics Officer is also responsible for the implementation of the policies on
financial disclosure and declaration of interests, and on protection against retaliation for reporting misconduct
and for cooperating with duly authorized audits of investigations; The Internal Oversight Division (IOD), on whose assurance and advisory services I rely, through reports ofinternal audit and evaluation as well as management implication reports resulting from investigations, which
are also available to each Program Manager, the Independent Advisory Oversight Committee (IAOC) and theExternal Auditor. These reports include recommendations, independent and objective observations on theefficiency and effectiveness of the Organization’s system of internal controls and risk management
processes, as well as program performance, and other related activities of oversight;

 The IAOC, which oversees audit performance by monitoring of timely, effective and appropriate responses
from management with regard to audit recommendations and implementation of the same. As a result ofsuch oversight the IAOC elucidates to Member States the implications of audit recommendations andobservations, if any, and also highlights, where it considers necessary, particular matters. Finally, the IAOC
keeps Member States informed of its work on a regular basis and reports annually to the Program andBudget Committee (PBC) and to the General Assembly; The Joint Inspection Unit (JIU) of the United Nations System; The External Auditor, whose Report, containing his/her opinion, observations and comments, is submitted to
the PBC and the Assemblies; and The Governing Bodies’ observations.
 I further ensure that Feedback Mechanisms are in place for Member States, Customer Complaint Resolution
Services are in place for clients and that Informal and Formal Conflict Resolution Mechanisms are in place forstaff.
COMPONENT 4 - Control Activities
The RMG is responsible for keeping under review the effectiveness of the Organization’s internal financial controls andinternal controls, and for reviewing and approving the content of the present Statement concerning internal controls
and risk management. A facilitated self-assessment and internal validation has been performed on the entity level
controls and process level controls identified on the basis of the requirements of the Financial as well as the Staff
Regulations and Rules (FRRs and SRRs respectively). These processes contribute to underpinning andstrengthening the assurance provided by key WIPO officers in signing their respective Management Representation
Letters. During 2019, improvements have been made to the system of assurance including the increased use of data
analytics for internal controls and a focused fraud risk assessment.
The Chief Compliance Officer has the specific responsibility of ensuring that any technical assistance or other project
activities carried out by WIPO, within any of the countries under UN sanctions, do not violate any applicable UN
sanctions.
COMPONENT 5 - Information and Communication
Information and Data Governance has undergone significant strengthening to reflect its importance to WIPO. A
Master Data Management Policy provides a directive control for managing critical data and provides an authoritative
point of reference that can be integrated into the enterprise architecture. An information classification and handlingpolicy provides a preventive control raising understanding and application of levels of information confidentiality.
The portfolio of Enterprise Resource Planning (ERP) solutions provide a high level of control, including transactional
level system controls and data analytics. The Enterprise Risk Management solution ensures controls are
systematically owned, assessed and as appropriate linked to risks. The annual WIPO Performance Report presented
to Member States includes a review of the evolution and impact of risks on the delivery of Expected Results for each17

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
Program.
COMPONENT 6 - Ethical Standards and Integrity
An Ethics Office has been in place since 2010, and the conduct and actions of WIPO staff must always adhere to thehighest ethical standards, as set out in the WIPO Code of Ethics. Ethics training is provided to all staff as well as fraud
awareness training.
WIPO has in place organization-wide anti-fraud controls, in accordance with good practices and applicableinternational standards, based on risk assessments. Appropriate fraud prevention, detection, response and datacollection procedures and processes exist in the Organization, reflecting WIPO’s comprehensive anti-fraud
governance framework.
WIPO’s Policy on Financial Disclosure and Declaration of Interests aims to: (i) promote transparency andaccountability; (ii) enhance internal and external public trust in the integrity of the Organization; and (iii) assist theOrganization to manage the risk of actual and perceived conflicts of interest through disclosure, mitigation andprevention.
COMPONENT 7 - Control Environment
Ongoing review and appropriate follow-up to ensure that the regulatory framework of the Organization is fully up todate and addresses the needs of the Organization has resulted in revisions to the Organization’s FRRs and SRRs as
appropriate. A comprehensive review of WIPO’s procurement policy and procedures was undertaken in 2017, which
resulted in a strengthened delegation model for procurement authority as well as additional controls and reporting withregards to alternatives to the competitive process. Confidentiality of the vendor selection process has beenstrengthened; a Vendor Sanction policy was put in place, and the procurement process has been streamlined.
Furthermore, in 2019 a strengthened Code of Conduct for Staff Involved in Procurement actions was enforced, withadditional controls bearing on non-conflict of interest in engaging external consultants (ICS). Financial reporting has
also been streamlined to minimize duplications and overlaps and enhance coherence, clarity and transparency without
any loss or reduction of information or disclosure.
WIPO’s Core Values are expressed as “Shaping the Future”, “Acting Responsibly”, “Delivering Excellence” and“Working as One”, and all contribute to fostering a culture of accountability.
III.

Conclusion

Effective internal control, no matter how well designed, has inherent limitations – including the possibility ofcircumvention – and therefore can provide only reasonable assurance.
Furthermore, because of changes of conditions, the effectiveness of internal control may vary over time.
As Director General, I ensure that the “tone at the top” is a clear message that rigorous internal control is critical to theOrganization and I am committed to addressing any weaknesses in internal controls noted during the year and toensure that continuous improvement of the system of internal controls is in place.
Based on the above, I conclude that, to the best of my knowledge and information, there are no material weaknesses
with regard to the Organization’s financial statements, nor are there significant matters arising which would need to beraised in the present document for the year ending December 31, 2019.
In conclusion, I am confident that the Organization’s system of internal control was effective throughout the financial
reporting period January 1, 2019 through December 31, 2019, and remains so on the date I sign this statement.

Francis Gurry
Director General

18

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

INDEPENDENT AUDITOR’S REPORTTo
THE WORLD INTELLECTUAL PROPERTY ORGANIZATION GENERALASSEMBLY
Opinion on financial statements
I have audited the financial statements of the World Intellectual Property Organization for the year ended 31 December
2019, which comprise the statement of financial position, the statement of financial performance, statement of changes in
net assets, statement of cash flow, the statement of comparison of budget and actual amounts – revenue for the year thenended, the statement of comparison of budget and actual amounts – expenses for the year then ended, the statement ofcomparison of budget and actual amounts – revenue for the biennium then ended, the statement of comparison of budget
and actual amounts – expenses for the biennium then ended, and the related notes, including the significant accounting
policies.
In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of theWorld Intellectual Property Organization as at 31 December 2019 and of its financial performance and its cash flows for theyear then ended in accordance with International Public Sector Accounting Standards.
Opinion on regularity
In my opinion, in all material respects, the revenue and expenses have been applied to the purposes intended by the General
Assembly and the financial transactions conform to the Organization’s Financial Regulations.
Basis for opinion(s)I conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of myreport. Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard
2016. I am independent of the World Intellectual Property Organization in accordance with the ethical requirements that are
relevant to my audit of the financial statements. My staff and I have fulfilled our other ethical responsibilities in accordancewith these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis formy opinion.
Responsibilities of Management and Those Charged with Governance for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
International Public Sector Accounting Standards, and for such internal control as management determines is necessary toenable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the World Intellectual Property Organization
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the World Intellectual Property Organization or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the World Intellectual Property Organization’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
My responsibilities are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, I exercise professional judgment and maintain professional scepticism throughout
the audit. I also:•

identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
19

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.

•

obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the World Intellectual Property
Organization’s internal control.

•

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

•

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

•

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

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
Other Information
Management is responsible for the other information. The other information comprises information included in the Annual
Financial Report, the Statement on Internal Control and Annexes. My opinion on the financial statements does not cover theother information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial
statements, my responsibility is to read the other information and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to bematerially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this otherinformation, I am required to report that fact. I have nothing to report in this regard.

(signed) Gareth Davies
Comptroller and Auditor General
National Audit OfficeLondon, United Kingdom

20

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

FINANCIAL STATEMENTS
STATEMENT I – STATEMENT OF FINANCIAL POSITION
as at December 31, 2019(in thousands of Swiss francs)
Decem ber 31, 2019

Decem ber 31, 2018

3
4
5
5

206,031
18,304
2,369
73,258299,962

222,920
11,686
1,720
70,136
1,298
307,7604
6
7
8529,725
24,461
363,5398,185
925,910

381,418
24,994362,388
8,367
777,167

1,225,872

1,084,927

9
10
11
12
13

24,03635,52994,492
313,787
1,811
67,623537,278

16,53624,98796,646296,238
5,588
70,578510,57310
12

320,695
3,672
324,367

309,138
3,804
312,942861,645823,515

418,41339,49018,532-118,550
6,342

328,732
31,497
17,266-122,425
6,342

364,227

261,412Note
ASSETS
Current assets
Cash and cash equivalents
Investments
Contributions receivables
Exchange transactions receivables
Inventories
Non-current assets
Investments
Intangible assets
Property, plant, and equipment
Other non-current assets

TOTAL ASSETSLIABILITIESCurrent liabilities
Payables and accruals
Employee benefits
Transfers payable
Advance receipts
Provisions
Current accounts
Non-current liabilities
Employee benefits
Advance receipts

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

17
17
17
17
17

NET ASSETS

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

21

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT II – STATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2019(in thousands of Swiss francs)

2019

2018

Assessed contributions

17,31317,361

Voluntary contributions

10,863

11,605

Publications revenue

353

542

PCT system

338,108

321,348

Madrid system

76,84074,297

Hague system

5,288

4,919

Lisbon system

1431420,250

400,595

Arbitration and Mediation

1,963

1,810

Other/miscellaneous revenue

6,291

1,696

457,033

433,609242,511

220,597

Note
REVENUEFees

Sub-total fees

TOTAL REVENUE
EXPENSES

19

Personnel expenditure
Internships and WIPO fellow ships

5,183

4,440

Travel, training and grants

17,50916,764Contractual services

96,123

93,838Operating expenses

22,51826,643Equipment and supplies

6,392

2,045

Depreciation and amortization

10,205

11,302Finance costs

1,020

209

401,461

375,838

42,102-15,285

97,674

42,486TOTAL EXPENSES
Investment gains/(losses)

20

SURPLUS/(DEFICIT) FOR THE PERIOD

22

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT III – STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2019(in thousands of Swiss francs)

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

Accum ulated
Surpluses

SpecialProjects
Reserve

Net Assets at Decem ber 31, 2017

305,953

11,79017,266-138,694

6,342

202,657

Surplus/(deficit) for the year 2018

47,082-4,596---42,486

Adjustment to Special Projects Reserve-27,549

27,549

-

-

-

-

3,246

-3,246

-

-

-

-

-

-

-

16,269-16,269328,732

31,497

17,266-122,425

6,342

261,412

Surplus/(deficit) for the year 2019

103,001-5,327---

97,674

Adjustment to Special Projects Reserve-18,973

18,973

-

-

-

-

5,653

-5,653----Adjustment to Revaluation Reserve Surplus

-

-

1,266

-

-

1,266

Actuarial gains/(losses)

-

-

-

3,875

-

3,875

418,41339,49018,532

6,342

364,227

Note

Transfer to Accumulated Surpluses
Actuarial gains/(losses)
Net Assets at Decem ber 31, 201817

Transfer to Accumulated Surpluses

Net Assets at Decem ber 31, 201917

23

-118,550

Net Assets
Total

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT IV – STATEMENT OF CASH FLOW
for the year ended December 31, 2019(in thousands of Swiss francs)

Note

2019

2018

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

Statement II

97,674

42,486

Depreciation and amortization

6&7

10,205

11,302(Increase) decrease in inventories(Increase) decrease in receivables

5

1,298

51

-3,771-8,232(Increase) decrease in other assets

8

182

186

Increase (decrease) in advance receipts

12

17,417

14,106

Increase (decrease) in payables and accruals

9

7,500

-1,360

Increase (decrease) in transfers payable11-2,154

2,745

Increase (decrease) in provisions

13-3,777

3,580

Increase (decrease) in current accounts-2,955

6,099

Movement in employee benefits (1)25,975

12,668Interest, dividends, investment and exchange gains/losses (2)-47,543

12,803

Net cash flow s from operating activities

100,051

96,434

Cash flow s from investing activities
Additions to property, plant, and equipment

7-9,297-5,384

Disposals of property, plant, and equipment

7

-

3,737

(Increase) decrease in intangible assets

6

-261

-

-

6,210

Disposal of investment property(Increase) decrease in investments

4-154,925-113,864

Increase (decrease) in fair value of investments

442,191-16,994

Dividends and interest on investments

20

5,222

4,204

-117,070-122,091

Repayment of borrow ings-

-16,862

Net cash flow s from financing activities--16,862130-13-16,889-42,532

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

Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3

222,920

265,452

Cash and cash equivalents at end of year3

206,031

222,920(1) Includes the effect of recognition of actuarial gains/losses through net assets;(2) Interest earned, dividends received, interest paid on borrowings, the effect of exchange rate changes on cash and cash
equivalents, and gains/losses on investments.

24

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE 2019

for the year ended December 31, 2019(in thousands of Swiss francs)

Original Budget
2019

Updated Budget
2019

(1)

(2)

17,376

17,376

17,369-7

PCT system

321,907

333,470

338,108

4,638

Madrid system
Hague system

71,796
5,922

77,5105,050

76,840
5,288

-670
238

Assessed contributions

Actual Revenue oncom parable basis 2019

Difference
2019
(3)

Fees

Lisbon system
Sub-total fees
Arbitration and Mediation

20

20

14

-6

399,645

416,050

420,250

4,200
413

1,550

1,550

1,963

Publications

205

205

353

148

Investment revenue

23

23

42,102

42,079Other/miscellaneous

2,536

2,536

7,213

4,677

421,335

437,740489,250

51,510TOTAL(1) Original Budget represents the second year of the approved Program and Budget for the 2018/19 biennium.
(2) Updated Budget includes updated revenue estimates for the PCT, Madrid and Hague systems as per the January 2020 Forecast
from the WIPO Economics and Statistics Division.
(3) Represents the difference between the Updated Budget 2019 and actual revenue on a comparable basis for the year ended
December 31, 2019.

25

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSES 2019
for the year ended December 31, 2019(in thousands of Swiss francs)
Original Final Budget
Budgetafter
2019
Transfers
2019(1)
Program
1

Actual Expense
on a com parable
basis 2019

Difference
2019

(2)

Program Title
Patent Law

2,522

2,936

2,729

207

2

Trademarks, Industrial Designs & Geographical Indications

2,500

2,711

2,517

194

3

Copyright and Related Rights

8,419

10,000

9,175

825

4

Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

3,552

3,515

3,251

264

5

The PCT System

107,517

108,553

103,4175,136

6Madrid System

29,73030,472

28,869

1,603

7

WIPO Arbitration and Mediation Center

5,734

6,038

5,672

366

8

Development Agenda Coordination

1,749

2,153

1,664

489

9

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

15,60615,025

14,640385

10Transition and Developed Countries

4,386

4,666

4,362

304

11

The WIPO Academy

6,896

6,968

6,974

-6

12

International Classifications and Standards

3,662

4,366

4,305

61

13

Global Databases

4,480

6,511

6,367

144

14

Services for Access to Information and Know ledge

3,938

4,853

4,916

-63

15

Business Solutions for IP Offices

7,438

7,532

7,563

-31

16

Economics and Statistics

3,567

3,981

3,864

117

17

Building Respect for IP

2,074

2,367

2,360

7

18

IP and Global Challenges

2,857

2,642

2,495

147

19

Communications

8,305

8,395

7,960

435

20

External Relations, Partnerships and External Offices

6,702

8,014

6,876

1,138

21

Executive Management

10,14912,978

12,84813022Program and Resource Management

19,29220,805

19,503

1,302

23

Human Resources Management and Development

12,36314,142

13,793

349

24

General Support Services

19,43521,01820,550468

25

Information and Communication Technology

26,13927,30825,9061,402

26Internal Oversight

2,833

2,691

2,727

-36

27

Conference and Language Services

19,754

18,44818,334

114

28

Information Assurance, Safety and Security

11,57813,242

12,665577

30

SMEs and Entrepreneurship Support

3,213

3,186

2,860

326

31

The Hague System

5,656

7,031

7,053

-22

32

Lisbon System

684

704

724

-20

UN

Unallocated

3,678

3,170

-

3,170

366,408

386,421366,939

19,482

54,92751,319122,31170,992TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (3)-13,008

Projects financed from reserves-10,978

Special Accounts financed from voluntary contributions-651

Adjusted net surplus per IPSAS

97,674(1) Original Budget represents the budget of the second year of the approved Program and Budget for the 2018/19 biennium. The
biennial budget amounts to 725.9 million Swiss francs, and was approved by the Assemblies of the Member States of WIPO on
October 11, 2017.
(2) Represents the difference between the Final Budget after Transfers 2019 and Actual Expense on a comparable basis for the year
ended December 31, 2019.
(3) The IPSAS adjustments to the surplus are detailed in Note 18 of these financial statements.

26

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE 2018/19

for the biennium ended December 31, 2019(in thousands of Swiss francs)

Original Budget
2018/19

Updated Budget
2018/19(1)(2)

34,75134,751

34,746

PCT system

634,063654,680

659,456

4,776

Madrid system
Hague system

140,822
11,340154,330
9,760

151,137
10,207-3,193447

Assessed contributions

Actual Revenue on
comparable basis 2018/19

Difference
2018/19
(3)

-5

Fees

Lisbon system
Sub-total fees
Arbitration and Mediation

40

40

45

5

786,265

818,810820,845

2,035
673

3,100

3,100

3,773

Publications

410

410

895

485

Investment revenue

46

46

33,02732,981Other/miscellaneous

5,073

5,073

9,974

4,901

829,645862,190903,260

41,070TOTAL(1) Original Budget represents the approved Program and Budget for the 2018/19 biennium.
(2) Updated Budget includes updated revenue estimates for the PCT, Madrid and Hague systems as per the January 2020 Forecast
from the WIPO Economics and Statistics Division.
(3) Represents the difference between the Updated Budget 2018/19 and actual revenue on a comparable basis for the biennium
ended December 31, 2019.

27

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – EXPENSES 2018/19
for the biennium ended December 31, 2019(in thousands of Swiss francs)
Original Final Budget
Budgetafter
2018/19
Transfers
2018/19(1)
Program
1

Actual Expense
on a com parable
basis 2018/19

Difference
2018/19(2)

Program Title
Patent Law

4,965

5,481

5,332

2

Trademarks, Industrial Designs & Geographical Indications

4,925

4,986

4,785

201

3

Copyright and Related Rights

16,68017,743

16,684

1,059

4Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

7,057

6,927

6,557

370

5

The PCT System

213,107

207,985

200,932

7,053

6Madrid System

58,83958,33956,443

1,896

7

WIPO Arbitration and Mediation Center

11,322

11,535

10,941594

8Development Agenda Coordination

3,455

3,687

3,161

526

9

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

30,78528,78628,475311

10Transition and Developed Countries

8,679

8,417

7,860

557

11

The WIPO Academy

13,614

13,25013,21634

12International Classifications and Standards

7,215

7,544

7,396

148

13

Global Databases

8,840

11,133

10,752381

14Services for Access to Information and Know ledge

7,850

8,901

8,948

-47

15

Business Solutions for IP Offices

14,574

13,914

13,945-31

16

Economics and Statistics

6,918

7,081

7,194

-113

17

Building Respect for IP

4,102

4,565

4,551

14

18

IP and Global Challenges

5,648

4,997

4,601

396

19

Communications

16,412

15,913

15,445468

20

External Relations, Partnerships and External Offices

13,255

14,343

13,306

1,037

21

Executive Management

20,04724,361

24,128233

22Program and Resource Management

38,20338,01236,554

1,458

23

Human Resources Management and Development

24,63026,531

29,835-3,30424

General Support Services

38,63439,70339,224

479

25

Information and Communication Technology

52,08851,21449,7851,429

26Internal Oversight

5,550

5,056

5,068

-12

27

Conference and Language Services

39,13635,74035,387

353

28

Information Assurance, Safety and Security

23,10423,25322,808445

30

SMEs and Entrepreneurship Support

6,326

6,119

5,721

398

31

The Hague System

11,193

15,813

15,958-145

32

Lisbon System

1,347

1,358

1,383

-25

UN

Unallocated

7,357

3,170

-

3,170

725,857

725,857

706,375

19,482

103,788

136,333

196,885

60,552TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (3)-35,334

Projects financed from reserves-18,815

Special Accounts financed from voluntary contributions

149-2,576

Adjusted net surplus per IPSAS

140,160(1) Original Budget represents the Program and Budget for the 2018/19 biennium of 725.9 million Swiss francs, which was approvedby the Assemblies of the Member States of WIPO on October 11, 2017.
(2) Represents the difference between the Final Budget after Transfers 2018/19 and Actual Expense on a comparable basis for thebiennium ended December 31, 2019.
(3) The IPSAS adjustments to the surplus are detailed in Note 18 of these financial statements

28

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTES TO THE FINANCIAL
STATEMENTSNOTE 2: SIGNIFICANT ACCOUNTINGPOLICIESNOTE 1: OBJECTIVES AND BUDGET OF
THE ORGANIZATION

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

WIPO functions in accordance with the WIPO
Convention signed in Stockholm on July 14, 1967 andas amended on September 28, 1979. WIPO wasrecognized as a specialized agency of the United
Nations in 1974. WIPO is based in Geneva,
Switzerland, and 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.
WIPO also has external offices in Algiers, Beijing,
Moscow, Rio de Janeiro, Singapore and Tokyo, alongwith a coordination office in New York. The WIPO
external office in Nigeria was established in January
2020.

The financial statements have been prepared on thebasis of historical cost, unless stated otherwise. The
Statement of Cash Flow is prepared using the indirect
method. The financial statements are prepared on an
accrual and going-concern basis.
IPSAS 41 Financial Instruments has been applied in
2019, which is prior to the required implementation
date of January 1, 2022.
IPSAS 42 Social Benefits, was published in January
2019 with an implementation date of January 1, 2022.
It is not expected that this standard will impact theOrganization’s financial statements.

WIPO’s mission is the promotion of innovation andcreativity for the economic, social and culturaldevelopment of all countries, through a balanced andeffective international intellectual property system.
WIPO’s broad-ranging activities include the following
main areas of work: providing intellectual property
services through the Organization’s Global IP
systems; developing and maintaining the technicalinfrastructure that not only supports the international
IP system, but also provides access to its outputs,
enhances data flows, and enables global cooperation;
serving as a multilateral forum for discussions on thenormative development of intellectual property policy;
and facilitating the use of IP for social, cultural andeconomicdevelopment,bymainstreaming
development
considerations
anddeliveringdevelopment cooperation activities horizontally acrossall of the Organization’s programs.

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

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

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

29

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Foreign Currency Transactions

Receivables

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

Receivables from exchange transactions include fees
which are charged to users of WIPO’s intellectual
property services through the PCT, Madrid and Hague
systems. These are measured at the fair value of theconsideration receivable for PCT, Madrid and Hague
system fees once the international application has
been filed.
Receivables from non-exchange transactions include
uncollected assessed contributions. These aremeasured at the fair value of the consideration
receivable. An allowance for non-recoverable
receivables is recorded equal to the assessed
contributions frozen by action of the General
Assembly in 1989 and 1991, plus contributions
receivable from Member States that have lost the rightto vote in accordance with Article 11, paragraph 5 of
the WIPO Convention.

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

Property, Plant, and Equipment
Equipment is valued at cost less accumulated
depreciation and impairment. Equipment is recognized
as an asset if it has a cost of 5,000 Swiss francs ormore per unit. Gains and losses on disposal are
determined by comparing the proceeds with thecarrying amount of the asset and are included in theStatement of Financial Performance. Heritage assets
including donated works of art are not valued in thefinancial statements.
Land is carried at fair value as determined by anindependent valuation in accordance with International
Valuation Standards. Changes in fair value arerecognized directly in net assets through the
Revaluation Reserve Surplus. Buildings andconstructions in use are valued at the cost of
construction when new plus the cost of subsequent
improvements, less accumulated depreciation. For the
initial recognition of buildings in use as at January 1,
2010, the date of transition to IPSAS, the value when
new was determined by reference to a deemed costcalculated by an external consultant and representing
the value of each component at construction plus
improvements existing at the initial recognition, lessaccumulated depreciation based upon the remaining
useful life of each component. Subsequent costs ofmajor renovations and improvements to buildings andconstructions that increase or extend the future
economic benefits or service potential are valued at
cost.

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

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

Depreciation is charged so as to write off the full costof property, plant, and equipment over its estimateduseful life using the straight-line method. Where

30

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

property, plant, and equipment is only in use for partof the year (due to acquisition, disposal or retirement
during the year), depreciation is charged only for themonths during which the asset was in use. The
following ranges of useful lives are applied to thedifferent classes and components of property, plant,
and equipment:
Class/Component
Equipment
Communications and IT
equipment
VehiclesFurniture and furnishings
Buildings
StructureFaçadePerimeter bollards/walls
Land Improvements
Roof
Floors, walls, stairways
Flooring, wall coverings
Specialist fittings
Heating and ventilation
Sanitary facilities
Electrical installations
Elevators

the specific software. Software or software licenses
purchased externally are recognized as an asset if
they have a cost of 20,000 Swiss francs or more perunit. Costs that are directly associated with theinternal development of software for use by WIPO arecapitalized as intangible assets only if the recognition
criteria under IPSAS 31 are met. Direct costs include
the software development employee costs.

Estimated useful life

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

5-10 years
15 years
10 years
50-100 years
50 years
20-80 years
40-50 years
50-60 years
50 years
20-40 years
15-40 years
25-30 years
40 years
25-50 years
40 yearsFinancial Assets
Financial assets are recognized initially at fair value,
normally being the transaction price. The subsequent
measurement of financial assets depends on theirclassification. WIPO classifies its financial assets aseither measured at amortized cost or measured at fairvalue through surplus or deficit. The classification
depends on WIPO’s management model for thefinancial assets and the contractual cash flow
characteristics of the financial assets. WIPO assesses
on a forward looking basis the expected credit losses
associated with its financial assets classified asmeasured at amortized cost.

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

Financial Liabilities
WIPO initially recognizes its financial liabilities at fairvalue. After initial recognition, financial liabilities aresubsequently measured at amortized cost.

Intangible Assets

Derivative Financial Instruments

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

WIPO uses derivative financial instruments such as
forward currency contracts to hedge its foreign
currency risks. These financial instruments are initiallyrecognized at fair value on the date on which thederivative contract is entered into and aresubsequently re-measured at fair value.

Employee Benefits
Class

Estimated useful life

Software acquired externally
Software internally developed
Licenses and rights

5 years
5 years
Period of license/rightLiabilities are established for After-Service Health
Insurance (ASHI), repatriation grants and travel, andlong-term accumulated annual leave as determined byan independent actuary on an annual basis utilizing
the projected unit credit methodology of valuation. For
the ASHI liability, actuarial gains and losses arerecognized in net assets. In addition, liabilities are

Acquired computer software licenses are capitalizedbased on costs incurred to acquire and bring to use

31

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

established for the value of short-term accumulated
annual leave, home leave not taken, overtime earned
but unpaid, separation benefits, performance rewards,
and for education grants payable at the reporting datethat have not been included in current expenditure.

The Accumulated Surpluses of the Organization
represent the accumulated net result of operations in
the reporting year and prior periods after the impact of
IPSAS.
WIPO’s Policy on Reserves establishes the principles
and approval mechanism for the use of reserves for
one-time projects for capital improvements andexceptional circumstances. The Special Projects
Reserve contains the appropriations to these projects
financedfromreserves,
lessaccumulated
expenditure.

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

The Revaluation Reserve Surplus includes the
cumulative results of revaluations of the land ownedby the Organization on which the New Building has
been constructed.
The Working Capital Funds are established forproviding advance financing of appropriations should
there be a temporary liquidity shortfall, and for suchother purposes as the Assemblies of Member Statesand of the Unions shall decide. The Working CapitalFunds are financed by contributions and are held in
trust by WIPO for the Member States of the respective
Unions.

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

Segment Reporting
Segment reporting is based upon the Unions that form
WIPO. Revenue and expenses incurred by theOrganization are allocated among the Unions inaccordance with an allocation methodology approvedby the WIPO Assembly (Program and Budget
2018/19, Annex III). The methodology allocatesrevenue and expenses to each program and then toeach Union based on a combination of direct revenue
and expense, staff head count and each Union’s
ability to pay which is itself determined according to a
combination of current revenue over its direct
expenditure and reserves. The only inter-segment
charge represents the costs of program support
incurred by the Unions in support of Special Accounts.
Program support costs are charged to the Special
Accounts based on a percentage of total direct
expenditure specified in the agreement with the donor
making the voluntary contribution. WIPO’s assets andliabilities are not allocated to individual segments,
since ownership rests with the Organization as awhole, however, each Union’s share of theOrganization’s net assets including Reserves andWorking Capital Funds is recognized by segment.

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.

Net Assets
The Organization’s net assets represent the balanceof its reserves, which include its Reserves(Accumulated Surpluses, Special Projects Reserve
and Revaluation Reserve Surplus) and Working
Capital Funds. The Organization also recognizes
actuarial gains and losses directly through net assets.
The Organization manages the level of its reserves inaccordance with its Policy on Reserves.

32

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Impact of new International Public Sector
Accounting Standards

Changes in Presentation
A number of presentation changes have been made to
the financial statements in order to provide moreconcise disclosures, while maintaining compliancewith the requirements of IPSAS.

IPSAS 41 Financial Instruments was published inAugust 2018 and replaces IPSAS 29 Financial
Instruments: Recognition and Measurement. WIPO
has adopted IPSAS 41 and the related consequential
amendments to other IPSASs in the financial reporting
period commencing January 1, 2019. The
Organization’s revised accounting policies in relation
to financial instruments are provided above. The newstandard had no effect on the Organization’s net
assets as at January 1, 2019.

In the Statement of Financial Performance, foreignexchange gains and losses related to investment andhedging activities have been reallocated to investment
gains/(losses). These were previously included inother/miscellaneous revenue. This change inpresentation has been reflected in the 2018
comparative numbers, with an amount of 3.0 million
Swiss francs reallocated.

IPSAS 41 provides a single classification andmeasurement approach for financial assets thatreflects the management model for managing theassets and their contractual cash flow characteristics.
For financial liabilities, the existing classification andmeasurement requirements of IPSAS 29 are largely
retained. The table below illustrates the classificationof financial assets under IPSAS 41 and IPSAS 29 atthe date of initial application, January 1, 2019. There
were no differences in carrying amounts for financial
assets or financial liabilities.

In the Statement of Financial Position, equipment,
land and buildings have been consolidated into asingle line called property, plant, and equipment.
Derivative financial instruments are now included withinvestments. These changes have also been reflectedin the 2018 comparative numbers.

Use of Estimates
The financial statements necessarily include amounts
basedonestimatesandassumptions
bymanagement. Estimates include, but are not limited to:
ASHI, repatriation grants and travel, and long-term
accumulated annual leave liabilities (the value of
which are calculated by an independent actuary),
other employee benefit liabilities, provisions forlitigation, financial risk on accounts receivable,
accrued charges and the degree of impairment of
fixed assets. Actual results could differ from theseestimates. Changes in estimates are reflected in the
period in which they become known.
All balances are presented in thousands of Swiss
francs, as a result small rounding differences may
occur.

Financial Assets
Cash and cash equivalents
Receivables

Category IPSAS 29
Financial assets at fair value through surplus
and deficit
Loans and receivables (at amortized cost)

Loans

Loans and receivables (at amortized cost)
Financial assets at fair value through surplus
Derivatives
and deficit
Short-term investments arising from
Financial assets at fair value through surplus
operating cash
and deficit
Held to maturity investments arising from
Held to maturity investments at (amortized)
operating cash
cost
Investments arising from core and strategic Financial assets at fair value through surplus
cashand deficit

33

Category IPSAS 41
Amortized cost
Amortized cost
Amortized cost
Fair value through surplus or deficit
Fair value through surplus or deficit
Amortized cost
Fair value through surplus or deficit

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 3: CASH AND CASH EQUIVALENTS
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Cash on hand25

22

Deposits w ith banks

8,293

24,043

Term deposits less than 3 months

3,000

8,000

Notice accounts

19

2,509

Total unrestricted cash

11,337

34,574Current accounts held for third parties

67,62370,578Fees collected on behalf of contracting parties

94,49196,646

Notice accounts Special Accounts

17,583

15,661

Total restricted cash

179,697

182,885

Deposits w ith banks

14,997

5,461

Total strategic cash

14,997

5,461

Total cash and cash equivalents

206,031

222,920

Decem ber 31, 2019

Decem ber 31, 2018

NOTE 4: INVESTMENTS(in thousands of Swiss francs)
17,000Term deposits more than 3 months (operating cash)

12,000Derivative financial instruments

1,304

-314

Current investm ents

18,304

11,686

Medium term Investment portfolio (core cash)

354,493

261,107

Long term Investment portfolio (strategic cash)

175,232

120,311

Non-current investm ents

529,725

381,418

Total investm ents

548,029

393,104

Derivative financial instruments are forward foreign exchange contracts. The movement in the value of operating
cash, core cash, and strategic cash investments during the year ended December 31, 2019 is as follows:
Operating cash
investm ents

Core cash
investm ents

Strategic cash
investm ents

Investm ents fair value at January 1, 201912,000261,107

120,311Additional investments made

5,000

65,08739,978Dividends on non-current investments invested

-

2,469

1,011

Rebates on non-current investments invested

-

49

29

Forex gains/(losses) on investments--1,520-987

Fair value increase/(decrease)
Investm ents fair value at Decem ber 31, 201934-

27,301

14,89017,000354,493

175,232

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 5: RECEIVABLES
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Assessed contributions

2,266

1,580

Voluntary contributions

63

100

WCF arrears

40

40

Contributions receivables

2,369

1,720

PCT debtors

59,121

55,629Madrid debtors

654

636

Other receivables

7,241

7,144

Advances and prepayments

6,242

6,727

Exchange transactions receivables

73,25870,136

Total accounts receivable

75,627

71,856

Other receivables include USA taxes reimbursable, Swiss taxes reimbursable, UPOV expenditure reimbursable, credit
card debtors and other debtors. Advances and prepayments include staff advances for education grants, funds
advanced to the United Nations Development Program and other prepaid expenditure.

NOTE 6: INTANGIBLE ASSETS

Movem ent 2019Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2019
Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-10,038-990-3,802--14,830

24,252

125

617

-

24,994

Additions

-

-

-

261

261

Transfers

-

-

-

-

-

Disposals

-

-355

-

-

-355

Net carrying am ount
Movem ents in 2019:

Disposals amortization
Amortization
Total m ovem ents in 2019

-

355

-

-

355

-439

-68

-287

-

-794

-439

-68

-287

261

-533

Decem ber 31, 2019
Gross carrying amount

34,290

760

4,419

261

39,730

Accumulated amortization-10,477-703-4,089--15,269

23,813

57

330

261

24,461

Net carrying am ount

35

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Movem ent 2018

Softw areexternallyacquiredLand surface
rightsSoftw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2018
Gross carrying amount

34,290

1,115

4,419

-

39,824

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

24,692

212

1,510

-

26,414

Additions

-

-

-

-

-

Transfers

-

-

-

-

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-440

-87

-893

-

-1,420

-440

-87

-893

-

-1,420Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-10,038-990-3,802--14,830

24,252

125

617

-

24,994

Net carrying am ount
Movem ents in 2018:

Amortization
Total m ovem ents in 2018
Decem ber 31, 2018

Net carrying am ount

Land surface rights to parcel 4008 in Petit-Saconnex in the City of Geneva were acquired from the World
Meteorological Organization (WMO) in 1996. These had been granted to WMO by the Republic and Canton of
Geneva. At the date of purchase the original rights had a remaining period of 78 years expiring in 2073, unlessrenewed by the Canton. WIPO has been granted surface rights by the Republic and Canton of Geneva to the land on
which the Árpád Bogsch and Georg Bodenhausen buildings are located. These surface rights were acquired by theOrganization at no cost and no value has been recognized in the financial statements as the Organization does nothave the right to dispose of the rights.

NOTE 7: PROPERTY, PLANT, AND EQUIPMENT
Movem ent 2019

Buildings

Land

Equipm ent

Total(in thousands of Swiss francs)

January 1, 2019
Gross carrying amount

393,192

30,820

7,412

Accumulated depreciation-62,678--6,358-69,036

330,51430,8201,054

362,388

Net carrying am ount

431,424

Movem ents in 2019:
Additions

8,158

-

1,139

9,297

Revaluation

-

1,266

-

1,266

Disposals

-69

-

-775

-844

Disposals depreciation

69

-

775

844

-9,106--306-9,412

-948

1,266

833

1,151

Gross carrying amount

401,28132,086

7,776

441,143

Accumulated depreciation-71,715--5,889-77,604

329,566

32,086

1,887

363,539

Depreciation
Total m ovem ents in 2019
Decem ber 31, 2019

Net carrying am ount

36

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Movem ent 2018

Buildings

Land

Equipm ent

Total(in thousands of Swiss francs)

January 1, 2018
Gross carrying amount

393,02230,8208,144

Accumulated depreciation-54,674--6,689-61,363

338,348

30,8201,455

370,623

Additions

5,172

-

212

5,384

Disposals-5,002--944-5,946

Disposals depreciation

1,295

-

914

2,209

Depreciation-9,299--583-9,882-7,834--401-8,235393,192

30,8207,412

431,424-62,678--6,358-69,036

330,51430,8201,054

362,388

Net carrying am ount

431,986

Movem ents in 2018:

Total m ovem ents in 2018
Decem ber 31, 2018
Gross carrying amount
Accumulated depreciation
Net carrying am ount

WIPO holds fully depreciated equipment which is still in use for a gross carrying amount of 4.2 million Swiss francs.
The land upon which the New Building was constructed was initially acquired by the Organization at a cost of 13.6
million Swiss francs in 1998, but is held at fair value based on International Valuation Standards as determined by anindependent appraiser. An updated valuation of the land was performed by an independent appraiser at December
31, 2019. This valuation indicated a further increase in the fair value of the land of 1.3 million Swiss francs, comparedto the previous valuation performed in 2016. The net result of all periodic revaluations totalling 18.5 million Swiss
francs is included in the Revaluation Reserve Surplus which forms part of WIPO’s net assets. Market value wasestimated 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 as wellas the location. The yield has been selected by reference to the perceived quality and duration of the income and thepotential for further rental growth and is cross-referenced by the evidence provided by comparable sales.
WIPO holds heritage assets, referred to as works of art, representing items donated or loaned to the Organization byrepresentatives or officials of Member States or other public or private entities or individuals. The works of art held by
WIPO include paintings, sculptures, decorative objects, historical documents and other items. As at December 31,
2019, the Organization held a total of 567 items classified as works of art. WIPO has elected not to recognize works ofart as assets in the Statement of Financial Position, in accordance with IPSAS 17. The 567 items are classified asfollows:
Framed artw ork

164

Sculptures75

Decorative objects

71

Furniture38

Tapestries/carpets

33

Other commemorative objects

26

Primitive arts

21

Ceramic/porcelain

20

Silverw are

18

Other w orks of art

101

Total

567

Under the WIPO Policy on Property Management and the related Property Management Manual, the Organization
has established processes and procedures for the management of works of art, including the final determination as to37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

whether an item is deemed to be a work of art. Works of art are held in controlled access storage until such time as adecision is taken in relation to the placement of an item. Most of the small and fragile works of art are stored in closed
cabinets. The dedicated storage is currently being improved to enhance protection from dust and possible water
damage. In addition, works of art placed in lobbies, offices and on office floors in WIPO’s buildings benefit fromexisting security measures. All works of art are recorded in the Asset Management Module of WIPO’s ERP system,
and are included in the Organization’s annual physical inventory process. Formal confirmations that works of art areheld by WIPO are provided to donors upon request.

NOTE 8: OTHER NON-CURRENT ASSETS
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Loan to FIPOI

7,878

8,367

Advance for FIPOI concessionary loan

118-

FIPOI loan amortization

189

-

8,185

8,367

Total other non-current assets

In 1991 the Organization entered into an agreement with the International Centre of Geneva Foundation (FCIG)
related to the construction of a building on rue des Morillons in Geneva, Switzerland. The agreement provided for theOrganization 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 initial advance, equaling a total advance of 11.0 million Swiss francs. In 2016 the FCIG
was absorbed by law into the Foundation for Buildings for International Organizations (FIPOI).
WIPO also entered into an agreement to lease the building from FCIG (subsequently amended to FIPOI). The current
lease agreement, which was updated and signed by WIPO in 2019, includes an annual amortization charge of
188,679 Swiss francs against WIPO’s advance to FIPOI. On termination of the lease, upon vacating the premises
WIPO is to be repaid the balance of the 11.0 million Swiss francs advance after amortization. FIPOI will also retain 1.0
million Swiss francs from the advance for restoration of the building to its original condition.

NOTE 9: PAYABLES AND ACCRUALS
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Trade creditors - accounts payable

22,805

14,964

Miscellaneous transitory liabilities

837

953

Other trade creditors

394

619

24,036

16,536

Total payables and accruals

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

38

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 10: EMPLOYEE BENEFITS
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Accumulated leave (posts)

1,030

618

Accumulated leave (temporary staff)

398

261

Separation benefits

564

291

Closed Pension Fund

292

294

1,986

1,944

Home leave

373

487

Overtime and credit hours

199

157

1,901

1,970

Repatriation grant and travel

Education grant
Performance rew ards

667

794

After-Service Health Insurance

28,11918,171

Total current em ployee benefit liabilities

35,52924,987

Closed Pension Fund

2,099

1,704

Accumulated leave (posts)

14,036

7,350

Repatriation grant and travel

18,985

15,127After-Service Health Insurance

285,575

284,957

Total non-current em ployee benefit liabilities

320,695

309,138

Total em ployee benefit liabilities

356,224

334,125

Long-term employee benefits include After-Service Health Insurance (ASHI), repatriation grant and travel, andaccumulated leave (posts):
ASHI: Staff members (and their spouses, dependent children and survivors) retiring from service are eligible for AfterService Health Insurance (ASHI) coverage if they continue to participate in the collective medical insurance plan after
separation from service. In accordance with WIPO’s SRR, a share of 65 per cent of the monthly medical insurance
premium is paid by the Organization. From January 1, 2020, monthly medical premiums amount to 596 Swiss francs
for adults and 265 Swiss francs for children.
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 fromservice.
Accumulated leave (posts): Accumulated annual leave is classified as a long-term employee benefit for staff
members holding permanent, continuing or fixed term contracts. Staff in posts may accrue up to 15 days of annual
leave in a given year, and a total accumulated balance of 60 days. On separation from service, staff in posts who
have accumulated annual leave can receive a payment in lieu of an amount equivalent to their salary for the period ofaccumulated annual leave.

39

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Employee benefit liabilities for ASHI, repatriation grant and travel, and accumulated leave (posts) are calculated by anindependent actuary. The principal actuarial assumptions applied in determining these liabilities are detailed below.
Discount rates were determined using AA Corporate Bond Yield Curves:
Decem ber 31, 2019

Decem ber 31, 2018

0.50%

0.90%

After-Service Health Insurance
Discount rate
Discount rate currency

CHF, EUR, USD (w eighted)

CHF

Medical cost trend rate

3.00%

3.50%

3.00%

0.45%

Repatriation Grant and Travel
Discount rate
Discount rate currency

USD

CHF

Rate of salary increase

2.54%

2.53%

0.10%

0.45%

Accumulated leave (posts)
Discount rate
Discount rate currency

CHF

CHF

Rate of salary increase

UNJSPF rates

UNJSPF rates

Actuarial assumptions have a significant effect on the amounts calculated for employee benefit liabilities. For the 2019
actuarial calculations, WIPO has modified certain actuarial assumptions and methodologies to align more closely tothe relevant provisions of each employee benefit. The 2019 discount rates were established with reference to theunderlying currency of the respective employee benefit. In addition, the attribution of costs for each benefit has been
modified to reflect the qualifying period of service and accrued benefit at the valuation date, as opposed to a linear
attribution over the period of employment. These changes, combined with other movements in actuarial assumptions
during 2019, have resulted in an increase of 89.1 per cent and 22.8 per cent in the liability for accumulated leave(posts) and repatriation grant and travel respectively, when compared to the prior year. The ASHI liability has also
increased by a lower figure of 3.5 per cent. A further description of the factors which impact the size of the ASHI
liability is included in the financial statement discussion and analysis which precedes these financial statements.
The present value of the defined benefit obligations for ASHI is determined using the projected unit credit method
including discounting the estimated future cash outflows. In accordance with IPSAS the Organization’s ASHI liability is
considered as unfunded as no plan assets are held in a legally separate entity or fund, and therefore no plan assets
are deducted from the liability as recognized in the Statement of Financial Position. However, it should be noted that
the Organization has established separate funds (strategic cash) for the future financing of after-service employee
benefit liabilities. The table below details the expense for ASHI recognized in the Statement of Financial Performance:
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Interest cost

2,711

2,118

Current service cost
Expense recognized in the Statem ent of Financial Perform ance

15,461

16,441

18,172

18,55940

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

The table below details the changes in the ASHI defined benefit obligation, including the impact of actuarial
gains/(losses):
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Defined benefit obligation at beginning of year

303,128

304,376

Interest cost

2,711

2,118

Current service cost

15,461

16,441

Contribution paid

-3,731-3,538Actuarial (gain)/loss on obligation:
Experience (gain)/loss-37,983-3,092(Gain)/loss on change in financial assumptions-2,432-14,204(Gain)/loss on change in demographic assumptions

36,540

1,027

Defined benefit obligation recognized at end of year

313,694

303,128

Contributions paid by the Organization for ASHI totaled 3.7 million Swiss francs for 2019 (3.5 million Swiss francs in2018). Expected contributions to ASHI in 2020 are 3.8 million Swiss francs. The weighted average duration of thedefined benefit obligation as at December 31, 2019, was 22 years. The following table details the present value of thedefined benefit obligation and experience adjustments arising on the ASHI liability for 2019 and the previous four
years:
2019

2018

2017

2016

2015

(in thousands of Swiss francs)
Defined benefit obligation

313,694

303,128

304,376

320,888

216,075

Experience (gain)/loss adjustments on plan liability-37,983-3,092-17,122

3,377

190

Actuarial assumptions have a significant effect on the amounts calculated for the ASHI liability. A description of thefactors which impact the size of the ASHI liability is included in the financial statement discussion and analysis which
precedes these financial statements. The following sensitivity analysis shows how the defined benefit obligation would
have been affected by changes in significant actuarial assumptions, the discount rate and the rate of sickness
premium increase. The per cent changes used in the analysis are considered reasonable based on historicalmovements:
0.25 per cent decreasein discount rate
0.25%

Discount rate as applied
0.50%

0.25 per cent increasein discount rate
0.75%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2019
Per cent variation

331,526

313,694

5.7%

1 per cent decrease inm edical cost trend rate
2.0%

297,132-5.3%

Medical cost trend rate
as applied
3.0%

1 per cent increase inm edical cost trend rate
4.0%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2019

256,066

Per cent variation-18.4%

41

313,694

388,888
24.0%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

United Nations Joint Staff Pension Fund
The Fund’s Regulations state that the Pension Board shall have an actuarial valuation made of the Fund at least once
every three years by the Consulting Actuary. The practice of the Pension Board has been to carry out an actuarial
valuation every two years using the Open Group Aggregate Method. The primary purpose of the actuarial valuation isto determine whether the current and estimated future assets of the Pension Fund will be sufficient to meet its
liabilities.
WIPO’s financial obligation to the Fund 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 the Regulations of the Fund. Such
deficiency payments are only payable if and when the United Nations General Assembly has invoked the provision of
Article 26, following determination that there is a requirement for deficiency payments based on an assessment of theactuarial sufficiency of the Fund as of the valuation date. Each member organization shall contribute to this deficiency
an amount proportionate to the total contributions which each paid during the three years preceding the valuation
date.
The latest actuarial valuation for the Fund was completed as at December 31, 2017, and the valuation as at
December 31, 2019 is currently being performed. A roll forward of the participation data as at December 31, 2017 to
December 31, 2018 was used by the Fund for its 2018 financial statements.
The actuarial valuation as at December 31, 2017, resulted in a funded ratio of actuarial assets to actuarial liabilities,
assuming no future pension adjustments, of 139.2 per cent. The funded ratio was 102.7 per cent when the current
system of pension adjustments was taken into account.
After assessing the actuarial sufficiency of the Fund, the Consulting Actuary concluded that there was no requirement,
as at December 31, 2017, for deficiency payments under Article 26 of the Regulations of the Fund as the actuarial
value of assets exceeded the actuarial value of all accrued liabilities under the plan. In addition, the market value of
assets also exceeded the actuarial value of all accrued liabilities as of the valuation date. At the time of this report, theGeneral Assembly has not invoked the provision of Article 26.
Should Article 26 be invoked due to an actuarial deficiency, either during the ongoing operation or due to thetermination of the Fund, deficiency payments required from each member organization would be based upon the
proportion of that member organization’s contributions to the total contributions paid to the Fund during the three
years preceding the valuation date. Total contributions paid to the Fund during the preceding three years (2016, 2017and 2018) amounted to 7,131.6 million US dollars, of which 1.75 per cent was contributed by WIPO (including
participants and Organization contributions).
During 2019, WIPO contributions (including Organization contributions only) paid to the Fund amounted to 29.2 million
Swiss francs (27.2 million Swiss francs in 2018). Expected contributions due in 2020 are approximately 29.2 million
Swiss francs.
Membership of the Fund may be terminated by decision of the United Nations General Assembly, upon the affirmative
recommendation of the Pension Board. A proportionate share of the total assets of the Fund at the date of termination
shall be paid to the former member organization for the exclusive benefit of its staff who were participants in the Fundat that date, pursuant to an arrangement mutually agreed between the organization and the Fund. The amount isdetermined by the Pension Board based on an actuarial valuation of the assets and liabilities of the Fund on the dateof termination; no part of the assets which are in excess of the liabilities is included in the amount.
The United Nations Board of Auditors carries out an annual audit of the Fund and reports to the Pension Board and to
the United Nations General Assembly on the audit every year. The Fund publishes quarterly reports on its
investments and these can be viewed by visiting the Fund at www.unjspf.org.

42

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 11: TRANSFERS PAYABLE

Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Madrid Union fees

59,49860,061Madrid Union deposits

26,15626,487

Hague Union distribution

967

1

Madrid and Hague Union repartition fees

5,099

7,592

AMC deposits

1,467

1,136

PCT International Searching Authorities

1,163

1,274

RO search fees due to International Searching Authorities
Total transfers payable

142

95

94,49296,646The Organization collects fees on behalf of the contracting parties of the Madrid Agreement and Protocol and theCommon Regulations of the Hague Agreement. The Organization’s PCT International Bureau collects funds fromapplicants to cover the cost of payments of International Searching Authorities. In addition, the Organization collects
fees to be paid directly to mediators, arbitrators or panelists for cases treated through the Arbitration and Mediation
Centre. The Organization holds these funds on a temporary basis until they are transferred to the final beneficiary inaccordance with the various treaties and agreements administered by the Organization.

NOTE 12: ADVANCE RECEIPTS
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Madrid Union deposits

8,145

8,661

Industrial design deposits

4,757

2,535

PCT/IBRO deposits

755

635

4,207

4,305

PCT system deferred revenue

281,820

264,891

Madrid system deferred revenue

2,752

3,047

Hague system deferred revenue

215

341

Non-exchange deferred revenue

11,004

11,691

Advance payment of contributionsFIPOI deferred revenue

132

132

313,787

296,238FIPOI deferred revenue

3,672

3,804

Total non-current advance receipts

3,672

3,804

317,459

300,042

Total current advance receipts

Total advance receipts

43

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 13: PROVISIONS(in thousands of Swiss francs)
Balance as at Decem ber 31, 2017

2,008

Movem ents in 2018:
Additional provisions made

4,381

Amounts used

-386

Unused amounts reversed-415

Balance as at Decem ber 31, 2018

5,588

Movem ents in 2019:
Additional provisions made

1,621

Amounts used

-115

Unused amounts reversed-5,283

Balance as at Decem ber 31, 2019

1,811

Provisions include cases where WIPO personnel are in dispute with the Organization, before the WIPO Appeal Board(WAB) and the ILO Administrative Tribunal (ILOAT). They also include amounts related to ongoing tax declarations
concerning the sale of WIPO’s investment property in 2018.

NOTE 14: CONTINGENT ASSETS AND LIABILITIESThe estimated value of contingent liabilities for possible payments by the Organization for claims arising from cases
before the WIPO Appeal Board (WAB) and the ILO Administrative Tribunal (ILOAT) is 61,000 Swiss francs at thereporting date.
The International Computing Centre (ICC) was established in January 1971 pursuant to Resolution 2741 (XXV) of theUnited Nations General Assembly. ICC provides Information Technology and Communications services to Partners
and Users in the United Nations System. As a Partner bound by the Mandate of the ICC, WIPO would be
proportionately responsible for any third party claim or liability arising from or related to service activities of the ICC as
specified in the ICC Mandate. At 31 December 2019, there are no known claims that impact WIPO. Ownership ofassets is with ICC until dissolution. Upon dissolution, the division of all assets and liabilities amongst Partner
Organizations shall be agreed by the Management Committee by a formula defined at that time.
As at December 31, 2019, the Organization has non-cancellable contracts for the delivery of goods and services for a
total value of 0.1 million Swiss francs. WIPO has contractual commitments relating to non-cancellable leasearrangements.

NOTE 15: LEASESWIPO as Lessee
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
531

Not later than one year

150

Later than one year and not later than five years
Later than five years
Total non-cancellable operating leases

775
225

-

-

681

1,000

The Organization leases depots and storage facilities, office space, and printing and photocopying equipment. The
value of future minimum lease payments under non-cancellable operating leases is shown in the table above. The
Organization has no outstanding leases qualifying as finance leases at the reporting date. The total amount of lease
payments for depots, storage facilities and office space recognized as an expense was 1.6 million Swiss francs in2019 (1.7 million Swiss francs in 2018).

44

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

WIPO as Lessor
The Organization has entered into a number of agreements 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 of rental income from these arrangements was 0.6 million Swiss francs in 2019 (0.6 million Swiss
francs in 2018).

NOTE 16: RELATED PARTY TRANSACTIONS
2019

2018

Num ber of
Individuals(full-time
equivalent basis)

Aggregate
rem uneration(in thousands of
Swiss francs)

Director General, Deputies and Assistants

9.00

Senior Officers

13.58

Num ber of
Individuals(full-time
equivalent basis)

Aggregate
rem uneration(in thousands of
Swiss francs)

3,329

9.00

3,059

4,285

13.38

3,728

WIPO is governed by the WIPO General Assembly composed of representatives of Member States party to the WIPO
Convention which are members of any of the Unions. These representatives do not receive remuneration from WIPO.
WIPO is managed by a Director General and by Deputy and Assistant Directors General and officers (keymanagement 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 Regulations and Rules, and applicable to all staff. In addition, the Director General, Deputy Directors Generaland Assistant Directors General receive representation allowances. Key management personnel are members of the
UNJSPF to which the personnel and WIPO contribute and are also eligible for participation in the collective medical
insurance plan. Key management personnel and their aggregate remuneration are detailed in the table above. There
were no loans to key management personnel or to their close family members which were not available to othercategories of staff. There was no other remuneration or compensation to key management personnel or to their closefamily members.
WIPO has no controlled entities and no interests in other entities which would require disclosure under IPSAS 34-38.
WIPO is a member of the UNJSPF and certain of its former staff are members of WIPO’s CROMPI. WIPO has arelationship with the International Union for the Protection of New Varieties of Plants (UPOV) whereby the Director
General of WIPO serves as Secretary General of UPOV. The office of UPOV exercises its functions in complete
independence of WIPO. WIPO is responsible for providing space, personnel administration, financial administration,
procurement services and other administrative support to UPOV in accordance with the terms of an agreement
between WIPO and UPOV dated November 26, 1982. UPOV reimburses WIPO for the cost of such services inaccordance with the terms of said agreement. In 2019 WIPO received 618 thousand Swiss francs from UPOV tocover the cost of these services. In addition, WIPO receives reimbursement of funds disbursed on behalf of UPOV.

NOTE 17: NET ASSETS

Movem ent 2019

Decem ber31, 2018

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

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

Decem ber31, 2019(in thousands of Swiss francs)
Accumulated Surpluses
Actuarial gains/losses
through Net Assets
Special Projects Reserve
Revaluation Reserve
Surplus
Working Capital Funds
Net assets

328,732-

122,311-651--18,973-18,659

5,653

418,413-122,425

3,875

-

-

-

-

-

-

-118,550

31,497----10,978

18,973

5,651-5,65339,49017,266

1,266

-

-

-

-

-

-

18,532

6,342

-

-

-

-

-

-

-

6,342

261,4125,141

122,311-651-10,978--13,008-364,22745

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 18: RECONCILIATION OF STATEMENT OF BUDGETARY COMPARISON AND
STATEMENT OF FINANCIAL PERFORMANCEThe WIPO Program and Budget is established on a modified accrual basis in accordance with the Financial
Regulations and Rules, and is approved by the Assemblies of the Member States. WIPO’s budget is adopted by the
Assemblies on a biennial basis, however, separate estimates are prepared for each of the two annual periods. The
Program and Budget for the 2018/19 Biennium established a budget for the biennium of expenditure of
725.9 million Swiss francs. The WIPO Performance Report for 2018/19 provides an explanation of both the changes
between the original and final budget after transfers, and the material differences between the budget and the actual
amounts. WIPO’s budget and financial accounts are prepared using two different bases. The Statement of Financial
Position, Statement of Financial Performance, Statement of Changes in Net Assets and Statement of Cash Flow are
prepared on a full accrual basis, whereas the Statement of Comparison of Budget and Actual Amounts (Statement V)
is prepared on a modified accrual basis. As required by IPSAS 24, reconciliation is provided between the actual
amounts on a comparable basis as presented in Statement V and the actual amounts in the financial accounts
identifying separately any basis, timing and entity differences.
Reconciliation for the year 2019
Operating

Investing

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

122,311

Depreciation and amortization--

122,311-10,205---10,205

-

9,558

-

9,558

-11,802---11,802

Revenue adjustments

739

-

-

739

Inventory movement-1,298---1,298

Total Basis differences-22,566

9,558--13,008

Projects financed from reserves
Special Accounts-10,978

-

-

-651

-

-

-10,978-651

Total Entity differences-11,629---11,629

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

88,116

9,558-

97,674

Investing

Financing

Total

Capitalization/disposal PPE and intangible assets
Changes in employee benefit liabilities

Reconciliation for the biennium 2018/19
Operating(in thousands of Swiss francs)
Actual am ount on com parable basis (Statem ent V)

196,885

Depreciation and amortization--

196,885-21,507---21,507

Capitalization/disposal PPE and intangible assets-

11,205-

11,205Investment property gains--6,210--6,210-20,259

Changes in employee benefit liabilities-20,259--

Revenue adjustments

2,752

-

-

2,752

Inventory movement-1,278---1,278Other expense-37-

Total Basis differences-40,329

4,995--35,334

Projects financed from reserves
Special Accounts-18,815---2,576---18,815-2,576

Total Entity differences-21,391---21,391

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

135,165

4,995-

140,160

46-37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 19: EXPENSES

2019

2018

(in thousands of Swiss francs)
Posts

231,258

206,783

Temporary staff

9,969

9,113

Other staff costs

1,284

4,701

242,511

220,597

Total Personnel expenditure
Internships

564

540

WIPO fellow ships

4,619

3,900

Total Interns and WIPO fellow ships

5,183

4,440

Staff missions

5,652

5,664

Third-party travel

10,485

9,070

Training and related travel grant

1,372

2,030

Total Travel, training and grants

17,50916,764

Conferences

4,414

4,835

Publishing

20

20

Individual contractual services

14,532

15,237

Other contractual services

77,15773,746

Total Contractual services

96,123

93,838Premises and maintenance

18,99623,198Communication
Representation and other operating expenses

2,123
688

2,213
462

United Nations joint services

711

770

Total Operating expenses

22,51826,643

Supplies and materials

5,017

1,663

Furniture and equipment

1,375

382

Equipm ent and supplies

6,392

2,045

Depreciation and am ortization

10,205

11,302Finance costs

1,020

209

Total expenses

401,461

375,83847

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

NOTE 20: INVESTMENT GAINS/(LOSSES)

2019

2018

(in thousands of Swiss francs)
Fair value increase/(decrease) on investments

42,192-16,994

Dividends

5,220

4,183

2

789
-

2

21
-239

Investment property disposal
Interest on current accounts and deposits
Interest on investments-396

Investment management and administration cost
Exchange gain (loss) on investments-2,509

1,888

Exchange gain (loss) on derivative financial instruments-2,409-4,933

Total investm ent gains/(losses)

42,102-15,285

The fair value increase on investments of 42.2 million Swiss francs represents movements in the valuation of theOrganization’s core cash and strategic cash portfolio assets at the reporting dates.

NOTE 21: FINANCIAL INSTRUMENTS
Financial Instruments Overview
Financial instruments are categorized as follows:
Financial Assets and Liabilities

Category

Cash and cash equivalents

Amortized cost

Receivables

Amortized cost

Loans

Amortized cost

Payables and accruals

Amortized cost

Transfers payable

Amortized cost

Current accounts

Amortized cost

Derivative assets and liabilities

Fair value through surplus and deficit

Short-term investments arising from operating cash

Fair value through surplus and deficit

Held to maturity investments arising from operating cash

Amortized cost

Investments arising from core and strategic cash

Fair value through surplus and deficit

The carrying amounts of the categories of financial assets and liabilities are as follows:
Decem ber 31,
2019

Decem ber 31,
2018(in thousands of Swiss francs)
Financial assets
Amortized cost

300,294

308,416

Fair value through surplus and deficit

531,029

381,104

Total carrying value

831,323

689,520

Amortized cost

186,151

183,760

Total carrying value

186,151

183,760

Financial liabilities

48

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019The Organization is exposed to certain foreign currency exchange, credit, interest rate, price and liquidity risks whicharise in the normal course of its operations. This note presents information about the Organization’s exposure to eachof the above risks and the policies and processes for measuring and managing risk.
The Organization manages its investments in accordance with its Policy on Investments. The policy contains two
specific investment policies, one covering operating and core cash and a second one covering strategic cash.
Operating cash is the cash required by the Organization to meet daily payment requirements and to ensure that an
amount equivalent to the target reserves is available in liquid assets. Core cash is the balance of cash remaining once
operating and strategic cash have been deducted. Strategic cash is the cash which has been set aside to financeafter-service employee benefit liabilities, including ASHI.
Fair values
The fair value of the financial assets and liabilities are included at the amount at which the instrument could beexchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The following
methods and assumptions were used to estimate the fair values:Cash and short-term deposits, receivables from exchange transactions, accounts payable and other current
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments;
Quoted investments (in investment funds which are publicly traded) are based on price quotations at the reportingdate;
Derivative financial instruments are based on quoted prices, adjusted for the UNORE at reporting date;
Loans and receivables are evaluated by the Organization based on parameters such as interest rates and risk
characteristics.

For WIPO’s financial assets and liabilities at the reporting date, the carrying amount is equivalent to the fair value.
Fair Value Hierarchy
For those instruments categorized as fair value through surplus or deficit, fair values are classified according to thefollowing hierarchy:

Quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1);
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly (Level 2);
Inputs for the asset or liability that are not based on observable market data (Level 3).
Financial Assets and Liabilities

Fair Value Hierarchy

Cash and cash equivalents

Level 1

Derivative assets and liabilities

Level 2

Investments arising from core and strategic cash

Level 1Credit risk
Credit risk is the risk of financial loss to the Organization if counterparties to financial instruments fail to meet theircontractual obligations, and it arises principally from the Organization’s loans, receivables, cash and cash equivalents,
and investments. The carrying amount of financial assets represents the maximum credit exposure. For the purposesof financial reporting, WIPO calculates expected credit losses allowances associated with its financial assets.
The Organization’s receivables from non-exchange transactions are almost exclusively from its Member States
representing sovereign governments, and therefore risks related to credit are considered minor. An allowance has
been established against the asset value of accounts receivable to reflect receivables for which payment is not
anticipated in the short-term. The allowance covers amounts due from Member States that have lost the right to voteunder Article 11, paragraph 5 of the WIPO Convention and contributions from least developed countries which havebeen frozen by action of the Assemblies in 1989 and 1991.

49

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

In accordance with the Organization’s Policy on Investments, deposits may only be held with institutions with aminimum short-term credit rating of A-2/P-2 or a minimum long-term credit rating of A/A2. Money market investments,
bonds, notes or other obligations and other fixed income products purchased directly by WIPO may only be held withinstitutions with a minimum short-term credit rating of A-3/P-3 or a minimum long-term credit rating of BBB-/Baa3.
Where these are acquired as shares in pooled market traded funds, at least 65 per cent of the holdings must be in
Investment Grade (AAA/Aaa to BBB-/Baa3), while the balance of up to 35 per cent may be held in high yield bonds(BB+/Ba1 to C/Ca). The credit ratings attached to cash and cash equivalents and investments as at December 31,
2019, is as follows:
Credit Rating

A-1+

Investm ents
Per cent

A-2

Unrated(1)

Total

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

Decem ber 31, 2019
Cash and cash equivalents

A-1

2,555

171,576

31,87525

206,031-

17,000-529,725

546,725

2,555

188,576

31,875

529,750

752,756

0.3%

25.1%

4.2%

70.4%

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

Liquidity risk
Liquidity risk is the risk of the Organization not being able to meet its obligations as they fall due.
The Organization does not have significant exposure to liquidity risk as it has substantial unrestricted cash resources
which are replenished from the results of its operations. The Organization’s Policy on Investments requires that
operating and core cash are invested in such a way to ensure the liquidity necessary to meet the Organization’s cash
flow requirements. Operating cash balances are invested over the short term (periods not exceeding twelve months tomaturity) in low-risk asset classes which are easily liquidated at little or no cost. Core cash balances are invested withthe objective of generating a positive return over rolling five year periods. Core cash balances are invested ideally insuch a way that occasional access to a portion of the cash is possible. Strategic cash balances are invested over thelong term, and currently have no short or medium term liquidity requirements.
Currency risk
The Organization receives revenue from fees 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 of currency
exchange rates. For PCT international filing fees, WIPO establishes equivalent amounts in currencies other than the
Swiss franc, which can be reset during the year if the exchange rate between the other currency and Swiss franc is
5.0 per cent or more for more than four consecutive Fridays. The Organization is also exposed to exchange risk
arising from the currency differences between amounts payable to International Searching Authorities (ISAs) pursuant
to the Regulations under the Patent Cooperation Treaty and amounts received by national patent offices forinternational search fees from applicants for international patents. Following a pilot project, in 2019 the Organization
established the WIPO Fee Transfer Service. This enables the Organization to operate a netting structure to reduce
the exposure of PCT fee income to movements in currency exchange rates with regard to search fees.
Where investments are held in currencies other than the Swiss franc, the Organization may use derivative financial
instruments to minimize the risk arising from the fluctuation of the currency of the investment against the Swiss franc.
Investment in derivatives for speculative purposes is not permitted. As at December 31, 2019, the Organization held
US dollar investments totalling 174.3 million Swiss francs. The sensitivity of these investments to exchange rate
fluctuations is monitored, and derivative financial instruments are used to minimize this risk.
The Organization’s contributions to the UNJSPF and its payments to ICC are made in US dollars. The Organization
has a further exposure to exchange risk in connection with the cost of pensions for staff previously enrolled in the
Closed Pension Fund who are now members of the UNJSPF. In addition, during 2019 the Organization had external
offices in Algeria, Brazil, China, Japan, Russia and Singapore, and a coordination office in the USA, with limited
assets in local currency.

50

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019Market risk
Market risk is the risk of changes in market prices, including interest rates, affecting the Organization’s income or thevalue of its financial instrument holdings. Given prevailing interest rates at the time, the Organization included limited
investment revenue in its budget for 2018/19 Program and Budget. The Organization does not currently use financial
instruments to hedge interest rate risk. WIPO’s medium-term investment portfolio (core cash) and long-term
investment portfolio (strategic cash) are subject to the risk of movements in market prices of the underlying investment
funds. Based on historical experience for the investment strategies applied to these portfolios, the expected volatility
for core cash and strategic cash is 3.80 per cent and 4.90 per cent respectively.

NOTE 22: EVENTS AFTER THE REPORTING DATEWIPO’s reporting date is December 31, 2019 and its financial statements were authorized for issue on the same dateas the External Auditor’s opinion.
On January 30, 2020, the Director-General of the World Health Organization declared the outbreak of the COVID-19
coronavirus a public health emergency of international concern (PHEIC). This is a non-adjusting event for the 2019financial statements, however, given the global effects of this pandemic, there will be significant impacts on the
Organization’s operations in 2020, the extent of which cannot be reliably estimated at this time. WIPO continues toclosely monitor indicators of impacts to its global intellectual property services. Although the Organization anticipatesa negative impact on revenue from its fee-based services, this is currently not possible to quantify. Volatility infinancial markets resulting from the COVID-19 outbreak will also impact valuations of WIPO’s investment portfolio.
However, WIPO’s investment strategy for its core cash and strategic cash portfolios is based on long-term
fundamentals and is designed to resist periods of financial turbulence.
There have been no other material events, favourable or unfavourable, that occurred between the reporting date andthe date when the financial statements were authorized for issue that would have had a material impact on thesefinancial statements.

NOTE 23: SEGMENT REPORTING
Segment reporting is presented in a format which represents the various Unions as the segments that make up WIPO.
The Unions were created by the various treaties administered by WIPO.

51

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

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

17,369----10,212

27,581-

338,108

76,840

5,288

14

-

420,250

2

351

-

-

-

-

353

601

3,816

1,854

541

401

7

7,220

102

1,244

589

24

4

-

1,963

18,074

343,519

79,283

5,853

419

10,219457,367

-

1

1

-

-

-

2

-49

117

16

3

3

-426

-336

18,025

343,637

79,300

5,856

422

9,793

457,033

205

2,428

96

-

-

-

2,729

503

-

1,636

378

-

-

2,517

7,460

1,513

202

-

-

-

9,175

3,251

-

-

-

-

-

3,251

-

103,417

-

-

-

-

103,417

EXPENSES
1
2
3
4

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

5

The PCT System

6

Madrid System--

28,572239

58-

28,869

7

WIPO Arbitration and Mediation Center

295

3,596

1,702

68

11

-

5,672

8

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

29

1,442

193

-

-

-

1,664

254

12,691

1,695

-

-

-

14,640910Transition and Developed Countries

76

3,781

505

-

-

-

4,362

11

The WIPO Academy

121

6,045

808

-

-

-

6,974

12

International Classifications and Standards

301

3,789

172

43

-

-

4,305

13

Global Databases

-

4,813

1,477

77

-

-

6,367

14

Services for Access to Information and Know ledge

67

3,904

883

61

1

-

4,916

15

Business Solutions for IP Offices

131

6,556

876

-

-

-

7,563

16

Economics and Statistics

67

3,349

448

-

-

-

3,864

17

Building Respect for IP

41

2,046

273

-

-

-

2,360

18

IP and Global Challenges

43

2,163

289

-

-

-

2,495

19

Communications

138

6,900

922

-

-

-

20

External Relations, Partnerships and External Offices

120

5,960

796

-

-

-

6,876

21

Executive Management

579

8,928

2,808

486

47

-

12,84822

Program and Resource Management

798

12,696

5,086

858

65

-

19,50323

Human Resources Management and Development

621

9,585

3,015

521

51

-

13,79324

General Support Services

926

14,280

4,491

777

76

-

20,55025

Information and Communication Technology

1,037

18,034

5,514

1,236

85

-

25,90626

Internal Oversight

123

1,895

596

103

10

-

2,727

27

Conference and Language Services

826

12,740

4,007

693

68

-

18,334

28

Information Assurance, Safety and Security

570

8,801

2,768

479

47

-

12,66530

SMEs and Entrepreneurship Support

49

2,480

331

-

-

-

2,860

31

The Hague System

-

-

-

7,053

-

-

32

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

7,960

7,053

-

-

-

-

724

-

724

18,631

263,832

70,161

13,072

1,243-

366,939125

10,053

741

61

-

-

10,98018,756

273,885

70,902

13,133

1,243-

377,919

-

-

-

-

-

10,87010,870980

13,988

3,686

681

65

-1,07718,323-77-5,329

-245

-

-

-

-5,651TOTAL EXPENSES

19,659282,544

74,343

13,814

1,308

9,793

401,461

Investment gains/(losses)

2,869

33,266

5,967

-

-

-

42,102

SURPLUS/(DEFICIT) FOR THE YEAR

1,235

94,35910,924-7,958-886-

97,674

Net Assets as at Decem ber 31, 2018 - actuarial
gains/(losses) excluded

25,071331,964

64,365-35,746-1,817-

383,837

Actuarial gains/(losses) as at December 31, 2018

-4,448-92,832-21,473-3,261-411--122,425

Net Assets as at Decem ber 31, 2018

20,623

239,132

42,892-39,007-2,228-261,4122019 surplus/(deficit)

1,235

94,35910,924-7,958-886-

97,674

64

910

242

45

5

-

1,266

26,370427,233

75,531-43,659-2,698-482,777

IPSAS adjustments to projects financed from reserves

Adjustment to Revaluation Reserve Surplus
Net Assets as at Decem ber 31, 2019 - actuarial
gains/(losses) excluded
Actuarial gains/(losses) as at December 31, 2019

-4,726-86,189-23,634-3,646-355--118,550

Net Assets as at Decem ber 31, 2019

21,644

341,044

51,897-47,305-3,053-364,227

Note 1: 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 of reserves of the Hague Union Reserve Fund so
allows.
Note 2: In accordance with the decision of the Assemblies of the Member States of WIPO at their 55 th Series of Meetings in 2015, the Contribution-financed Unions haveassumed the financing of the deficit of the Lisbon Union in the biennium 2016/17 amounting to 56,157 Swiss francs. The amount will be reimbursed by the Lisbon Union to theContribution-financed Unions as soon as the level of reserves of the Lisbon Union so allows.
Note 3: In accordance with the decision of the Assemblies of the Member States of WIPO at their 57th Series of Meetings in 2017: a) the Contribution-financed Unions haveassumed the financing of the deficit of the Lisbon Union in the biennium 2018/19 amounting to 1,662,315 Swiss francs; and b) the PCT Union has assumed the financing of the
deficit of the Hague Union amounting to 18,135,044 Swiss francs. The amounts will be reimbursed by the Lisbon Union and the Hague Union, respectively, as soon as the levelof reserves of the Unions so allow.
Note 4: Net Assets and Actuarial Gains/(Losses) as at December 31, 2018 have been reallocated following the reclassification of foreign exchange gains and losses related toinvestments and derivative financial instruments from other/miscellaneous revenue to investment gains/(losses).
Note 5: Actuarial gains/(losses) as at December 31, 2019 have been allocated based on the relative share of headcounts for 2019.

52

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2019

ANNEX – WIPO EX GRATIA PAYMENTS
Financial Regulation 5.10 states that a summary statement of ex gratia payments for the calendar year shall be included in
the annual financial statements of the Organization. There were no such payments made during 2019 and therefore nosummary statement is required.

53

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WIPO Reference RN2020/8E