INTERNATIONAL TROPICALTIMBER COUNCILCOMMITTEE ON
FINANCE AND ADMINISTRATION

THIRTY-FIFTH SESSION
9 -13 November 2020
Virtual Session

FINANCIAL REPORTS PREPARED IN ACCORDANCE WITH
ITTO FINANCIAL RULES AND PROCEDURES (ANNEX 4)(Item 8 of the Provisional Agenda)

This document contains the following separate reports:
Page
A.
B.

Executive Summary of ITTO’s Financial Statements for the year ended 31 December 2019prepared by the ITTO Management ...........................................................................................

i

ITTO’s Financial Statements for the year ended 31 December 2019
audited by the Independent Auditors ..........................................................................................

1

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Page i

Executive Summary of ITTO’s Financial Statements
for the year ended 31 December 2019prepared by the ITTO ManagementCFA(XXXV)/6
Page ii

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Page iii

Executive summary
1. The audited financial statements provide information on the financial position and performance of theInternational Tropical Timber Organization (ITTO) for the fiscal year ended 31 December 2019 (FY2019).
2. For ITTO’s Project accounts in FY2019, new voluntary contribution pledges of $5.1 million were announced
at the Council Session while total project cost expenses during this period were $5.6 million from projects
mostly funded prior to FY2019. Total Administrative Account assessed contribution revenues were $7.2 million,of which $1.7 million was not received during FY2019 and accounted for as assessed contributions receivable(arrears). Actual costs for the FY2019 Administrative Account budget were $6.1 million, therefore, creating acash deficit of $0.6 million for the Administrative Account budget for the year. The International Tropical
Timber Council (ITTC) adopted Decision 2(LV.1) “Management of the Administrative Budget for 2019-2020” inJune 2020 to address this issue, allowing ITTO to utilize the Working Capital Reserve to cover the deficit.
Furthermore, the same decision allows ITTO to utilize an additional $1 million from the Working Capital
Reserve in 2020 to enable Secretariat to continue functioning during the ongoing COVID-19 pandemic andanticipated economic downturn in many countries, which may result in delays in receipt of Administrative
Account assessed contributions.
3. The ITTC adopted Decision 5(LIV) at its 54th Session in November 2018 to enhance the financing
architecture and fundraising of the Organization. In accordance with operative paragraph 9, the Secretariat is
enclosing the revenue, direct and indirect costs associated with implementing the pilot (as indicated below) for“an additional fundraising approach focused on pro-active development of proposals with potential sources offunding and/or participate in tenders which address/contribute to the objectives of the International TropicalTiber Agreement (ITTA) and the strategic priorities of the Organization, taking into consideration the need fortransparency, and opportunities for member engagement”.
(United States dollars)(United States dollars)

Pledges associated with implementing the pilot

2019

Pledges in ITTC Decision 1(LV) associated with
implementing the pilot

2019

Costs charged to the Administrative Budget

Pledge by Germany for PP-A/55-334 "Building Legal andSustainable Forest Product Supply Chains (LSSC)"

2,390,000

Pledge by GIZ for PP-A/53-323A "Building Legal andSustainable Forest Product Supply Chains (LSSC)"

79,636

Total Pledges

Costs associated with implementing the pilot

2,469,636

Staff Time *Sub-total
Costs charged to the Working Capital Reserve in accordancewith Decision 9(LIII) and Decision5(LIV)
Consultancies
Ad hoc Finance Working Group
Side Events (TICAD VII)
Staff Travel
Translation

180,000
180,000

74,000Sub-total

31,529
8,383
7,865
1,300
123,076

Total Costs

303,076* Estimate based on time devoted to brainstorming, meetings and implementing
fundraising initiatives, as well as time put into implementing the resulting activities thatwas not explicitly budgeted for in those activities.

CFA(XXXVI)/6
Page iv
The ITTC adopted Decision 8(LV) “Implementing ITTO’s New Financing Architecture – Phase I” in December
2019, calling upon the Secretariat to play a more proactive role in seeking new funding avenues and partners forthe funding of ITTO’s work. Specific activities include, among others, piloting a programmatic approach as
proposed by Secretariat, engaging with the Global Environment Facility (GEF) and other potential partners,
exploring additional funding mechanisms and streamlining ITTO’s project cycle. Accordingly, it is anticipatedthat the amount of staff time associated with the pilot will be substantially larger in 2020 compared to what isreported in 2019.
4. The 2019 financial statements are for the fourth time prepared based on the International Public Sector
Accounting Standards (IPSAS) and in accordance with the Financial Rules and Procedures adopted by the ITTC,
disclosing additional information on actual assets and liabilities, enabling improved management of ITTO’s
resources and internal control. Highlights include, among others:
i. Deferred revenue decreased by $1.2 million between 2018 and 2019. This is mainly due to projects
pledged in prior years making progress in 2019.
ii. The surplus for the FY2019 Statement of Financial Performance was $0.5 million due to differencesin the timing of recognizing revenue and expenses (e.g. the entire Administrative Budget isrecognized as revenue in the year that the assessments are due. However, only expenses that are
incurred during the same year are recognized as expenses from that year’s budget.)iii. Additional disclosures for ITTO’s financial accounts as defined under the ITTA, 2006 (Administrative
Account, Special Account and Bali Partnership Account) have been added for increased transparencyof core and non-core accounts.
5. The ITTO is committed to enhancing its solid foundation for transparent and effective financial management
and reporting. In addition to the best practices for internal control previously implemented under the Financial
Rules adopted in 2016, the ITTC further revised the Financial Rules in 2019 to strengthen rules on audit firmrotation and delegation of internal financial controls. The ITTO will continue to implement and strengthen its
internal controls and accountability measures by proactively evaluating and improving its systems whereappropriate by adopting best practices from Organizations similar in nature. Simultaneously, the importance of
the ITTC’s role as the governing body should be emphasized through regular reporting from ITTO and adequate
oversight from ITTC members.

CFA(XXXV)/6
Page 1

ITTO’s Financial Statements
for the year ended 31 December 2019

audited by the Independent Auditors

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Page 2

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Page 3

Contents
ChapterI.

Page

Report of the Independent Auditors on the financial statements: audit opinion . . . . . . . . . . . .

5

II. Financial statements for the year ended 31 December 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

I.

Statement of financial position as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

II.

Statement of financial performance for the year ended 31 December . . . . . . . . . . . . . . . .

8III. Statement of changes in net assets for the year ended 31 December. . . . . . . . . . . . . . . . .

9

IV. Statement of cash flows for the year ended 31 December . . . . . . . . . . . . . . . . . . . . . . . . .

10V.

Statement of comparison of budget to actual amounts for the year ended 31 December . .

11

VI. Notes to the 2019 financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

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CFA(XXXV)/6
Page 5Chapter I

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Page 6

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Page 7

Chapter II
Financial statements for the year ended 31 December 2019
International Tropical Timber Organization
I. Statement of financial position as at 31 December(United States dollars)

AssetsCurrent assets
Cash and cash equivalents
Investments
Assessed and voluntary contributions receivable, net
Other accounts receivable
Advance transfers - Projects
Advance transfers - Others
Total current assets
Non-current assets
Property and equipment
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - Members
Voluntary contributions advance receipts - allocatedVoluntary contributions advance receipts - unallocated
Assessed contributions advance receipts
Other liabilities
Total current liabilities
Non-current liabilities
Voluntary contributions advance receipts - allocated
Other liabilities
Total non-current liabilities
Total liabilities
Net of total assets and total liabilities
Net assets
Accumulated surplus - Restricted
Accumulated surplus - Unrestricted
Reserves
Total net assets

Note

31 December 201931 December 2018

6, 28

16,405,795
6,257,753
39,218518,827
173,674
23,395,267

15,908,049
6,169,387
43,905
1,515,793
322,508
23,959,642

235,858
9,595
245,452
23,640,719

290,661
12,335302,996
24,262,638

157,528
400,880
414,546
326,398
784,4212,083,773

61,647876,842443,943433,682
715,387
2,531,501

11,018,880
984,036
12,002,916
14,086,689
9,554,030

11,764,348
923,533
12,687,881
15,219,382
9,043,256

5,857,336
1,196,694
2,500,000
9,554,030

5,795,068
748,188
2,500,000
9,043,256

7
8, 27, 28
8, 27, 28
9
10

11
12
13

14, 27, 28
15
16
17
18, 27, 28

15
18, 27, 28

19
19
19

The accompanying notes are an integral part of the financial statements.

CFA(XXXV)/6
Page 8International Tropical Timber Organization
II. Statement of financial performance for the year ended 31 December(United States dollars)

No te

2 0 192 0 18

Assessed contributions

20

7,170,242

7,123,539

Other voluntary contributions

20884,755

1,265,730

Financial revenue

21

12,014

14,656

Other income

22

890

971

Member States voluntary contributions

20

5,401,501

4,418,350

Other voluntary contributions

20

-

-

Programme support Revenue

20

496,990403,721

Expost evaluation Revenue

20

163,005

95,352Financial revenue

21

15,63146,01314,145,027

13,368,331

Re ve nue
Administrative AccountProject Accounts

Total re ve nue
Expe nse s
Administrative AccountEmployee benefits

23

4,889,230

4,488,806

Operating expenses

24

2,501,333

2,514,504

25

5,618,924

4,721,327

Project Accounts
Project expenses
Depreciation and amortization

11, 12

66,69961,015

Other expenses

26

558,068

458,710

13,634,253

12,244,361

510,774

1,123,970

Total e xpe nse s
Surplus/(de ficit) for the ye ar

The accompanying notes are an integral part of the financial statements.

CFA(XXXV)/6
Page 9International Tropical Timber Organization
III. Statement of changes in net assets for the year ended 31 December(United States dollars)

Restrictedaccumulated
surplus

Unrestrictedaccumulated
surplusReserves

Total

Net assets as at 31 December 2017

4,976,350

442,9372,500,000

7,919,286

Result of the accounting period

818,719

305,251-

1,123,970

Net assets as at 31 December 2018 (Note 19)

5,795,068

748,188

2,500,000

9,043,256

62,268448,506-

510,774

5,857,336

1,196,694

2,500,000

9,554,030

Result of the accounting period
Net assets as at 31 December 2019 (Note 19)

The accompanying notes are an integral part of the financial statements.

CFA(XXXV)/6
Page 10

International Tropical Timber Organization
IV. Statement of cash flows for the year ended 31 December(United States dollars)

C ash flows from ope rating activitie s
Surplus/(deficit) for the year

2019

2018

510,774

1,123,970

499,547

469,182

Adjustme nts to re concile de ficit/surplus to ne t cash flows
Increase/(decrease) in allowance for doubtful receivables
Depreciation and amortization

66,69961,015

Unrealized (gain)/loss on foreign exchange

18,797(4,411)(1,042,492)(945,877)

454,578

367,693(Increase)/decrease in Other accounts receivable

5,048

20,511(Increase)/decrease in Advance transfers - Projects

996,966

176,093(Increase)/decrease in Advance transfers - Others

148,834(64,821)

C hange s in asse ts(Increase)/decrease in Assessed contributions receivable(Increase)/decrease in Voluntary contributions receivable

C hange s in liabilitie s(Decrease)/increase in Accounts payable - Members

95,881

61,647(Decrease)/increase in Other liabilities

167,849(159,293)(1,221,431)(2,248,434)(Decrease)/increase in Voluntary contributions advance receipts -(29,397)

159,617(Decrease)/increase in Assessed contributions advance(107,284)

128,121

Ne t cash flows from ope rating activitie s
C ash flows from inve sting activitie s

564,369(854,989)

Purchases of property and equipment
Purchases of intangible assets(9,155)-(64,930)(13,709)

Ne t cash flows from inve sting activitie s(9,155)(78,638)

Net proceeds from/(payment of) finance lease liabilities(38,311)(37,798)

Ne t cash flows from financing activitie s(38,311)(37,798)

Effect of exchange rate changes on cash and cash equivalents
Ne t (De cre ase ) in cash and cash e quivale nts(19,157)681

497,746(970,744)

15,908,049
16,405,795

16,878,793
15,908,049(Decrease)/increase in Voluntary contributions advance receipts -C ash flows from financing activitie s

Cash and cash equivalents — beginning of year (Note 6)
C ash and cash e quivale nts — e nd of ye ar (Note 6)

The accompanying notes are an integral part of the financial statements.

CFA(XXXV)/6
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International Tropical Timber Organization
V. Statement of comparison of budget to actual amounts for the year ended 31 December 2019
(United States dollars)

Budget Heading

Original
BudgetActual oncomparable
basis (Note 5)

Final
BudgetDifference
between final
and actual

Basic administrative costs
Salaries and benefits
Installation costs

4,105,409

4,105,409

3,573,218

532,191

100,465

100,465-

100,465

Official travel

137,219

137,219

136,817402

Social security

1,023,691

1,023,691

897,880

125,81147,690Special activities

59,53859,538

11,848

Data processing

147,668

147,668

141,136

6,532

Other costs

401,700

401,700

347,125

54,575Council meetings

208,651

208,651

193,611

15,040Total

6,184,341

6,184,341

5,301,635

882,706

Budget Heading

Original
BudgetFinal
BudgetActual oncomparable
basis (Note 5)

Difference
between final
and actualCore operational costs
Communication andoutreach

435,000

435,000

354,692

80,308Expert meetings byCouncil

140,000

140,000

87,39452,606----

Statistics, studies &information

265,000

265,000

247,419

17,581

Annual report &biennial review

80,00080,00054,50925,491920,000

920,000

744,014

175,986

7,104,341

7,104,341

6,045,649

1,058,692

Policy work

Total

Grand Total

The accompanying notes are an integral part of the financial statements.

CFA(XXXV)/6
Page 12International Tropical Timber Organization
VI. Notes to the 2019 financial statements
Note 1
Reporting entity
1.
The International Tropical Timber Organization (ITTO) was establishedpursuant to the International Tropical Timber Agreement, 1983, as a non-profit
intergovernmental entity with its headquarters in Yokohama, Japan, and continues tooperate from this location. The Agreement was succeeded by the International
Tropical Timber Agreement, 1994 and 2006 (“the Agreement”).
2.
The objectives of the Organization are laid down in Article 1 of the Agreement
and include the provision of a consultative forum for producing and consuming
members on all aspects of the world timber economy; promotion of the expansion,
diversification, and structural improvement of the international tropical timber trade
together with more transparency and better distribution; the encouragement ofreforestation and other forest management activities; promotion of further
processing of tropical timber in the producing countries, with research anddevelopment as well as technology transfer to support both of these goals; andsupport for development of national policies in sustainable utilization andconservation of tropical forests, with special regard for ecological balance andgenetic resources.
3.
ITTO's governing body is the International Tropical Timber Council, which
comprises all the Organization's members. The Council adopts such rules andregulations as are necessary to carry out the provisions of the Agreement. The
Council is also responsible for the approval of ITTO’s financial statements.
4.
The financial statements include only the operations of ITTO. ITTO has no
subsidiaries or interests in associates or jointly controlled entities.
Note 2
Statement of approval of the Executive Director
ITTO’s financial statements have been prepared in accordance with the International
Public Sector Accounting Standards (IPSAS). The financial statements wereauthorised for issue by the Executive Director on 23 June 2020, and will be
submitted to the International Tropical Timber Council (ITTC) for approval at thenext annual Council Session.
Note 3Basis of preparation
A.

Basis of measurement

5.
The financial statements have been prepared on a full-accrual method of
accounting under International Public Sector Accounting Standards (IPSAS). The
accounting policies have been applied consistently throughout the reporting period.
ITTO applies the historical cost principle.
6.
These financial statements are expressed in United States dollars rounded to
the nearest whole number, unless otherwise indicated.

CFA(XXXV)/6
Page 13

B.

Foreign currency translation

Functional and presentation currency
7.
Items included in the financial statements are measured using the currency ofthe primary economic environment in which an entity operates (“the functional
currency”). The functional and presentation currency of ITTO is the United States
dollar.
Transactions and balances
8.
Foreign currency transactions are translated into United States dollars at theprevailing United Nations operational rate of exchange at the time of the transaction.
The United Nations rates approximate market rates. Monetary assets and liabilities
denominated in foreign currencies are revalued at the exchange rate in effect at thereporting date. Non-monetary items in foreign currencies that are measured athistorical cost are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising upon revaluation are recognized in thestatement of financial performance and included under gains and losses.
C.

Use of estimates and critical judgments

9.
The preparation of financial statements in accordance with IPSAS requires
ITTO management to make judgments, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets, liabilities,
revenue and expenses. Since uncertainty is inherent in the use of estimates andassumptions, actual results may differ significantly from management estimates.
10. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which theestimates are revised and in any future period affected. Examples of estimates
include: valuation and impairment of investments; collectability of receivables;
provisions and adjustments of advance receipts; accrued liabilities for employee
benefits; recognition of project expenses; and contingencies.
11. Information about critical judgments in applying accounting policies that havethe most significant effect on the amounts recognized in the financial statements andwhich could have a significant risk of resulting in a material adjustment is includedin the following notes:(a) Investments (Note 7) and receivables (Note 8) valuation：if there is
objective evidence that an impairment loss has been incurred, the amount of the loss
is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows. The amount of the loss is recognized in thestatement of financial performance.
(b) Note 8, Contributions receivable and other receivables, and note 20,
Revenue from contributions are defined in IPSAS 23: Revenue from non-exchangetransactions (taxes and transfers). Where non-exchange transactions are deemed toinclude conditions, IPSAS 23 requires that a liability be recognized until such timethat the condition is satisfied, at which time revenue may be recorded. The
determination of the existence of conditions for non-exchange transactions requires
reasonable professional judgment. Many ITTO contribution agreements with donors
include general stipulations; for those that include conditions, deferred revenue isrecognized (advance receipts);

CFA(XXXV)/6
Page 14(c) Project expenses (Note 25) incurred by the executing agencies arerecognized based on the audit reports of the projects. When those audit reports could
not be obtained for the reporting year, an estimation has been built based on theavailable reports. When no contradictory information is available, it is the best
estimate of the management that the costs are spend by the executing agencies on astraight line basis.
(d) Note 31, Contingencies: legal proceedings covering a wide range ofmatters are or may be pending or threatened in various jurisdictions against ITTO.
12. Provisions are recorded for pending matters when an entity has a present
obligation (legal or constructive) as a result of a past event; it is probable that an
outflow of resources embodying economic benefits or service potential will be
required to settle the obligation; and a reliable estimate can be made of the amountof the obligation. Owing to the inherently uncertain nature of the matters, theultimate outcome or actual cost of settlement may materially vary from estimates.
D.

Future accounting changes

13. The IPSAS Board has published IPSAS 41: Financial Instruments. IPSAS 41
sets out requirements for recognition and measurement of financial instruments,
including impairment, derecognition and general hedge accounting and will beeffective 1 January 2022. IPSAS 42: Social Benefits has also been published by the
IPSAS Board and will be effective 1 January 2022. IPSAS 42 aims to help users of
the financial statements and general purpose financial reports assess the nature ofsocial benefits provided by the entity, the features of the operation of social benefit
schemes; and the impact of social benefits on the entity’s financial performance,
financial position and cash flows. ITTO is currently in the process of assessing theimpact of these new IPSASs.
Note 4Significant accounting policies
Financial assets
14. The designation of financial assets depends on the purpose for which thefinancial assets are acquired and is determined at initial recognition. All financial
assets of ITTO that have a residual value are categorized as loans and receivables.
Major financial asset typeClassification

Contributions and other accounts receivable

Loans and receivables

Other assets

Loans and receivables

15. Contributions and other accounts receivables are recognized initially on thedate that they originated. All other financial assets are recognized initially on the
trade date, which is the date ITTO becomes a party to the contractual provisions of
the instrument. All financial assets are initially measured at fair value.

CFA(XXXV)/6
Page 15Loans and receivables
16. Loans and receivables are financial assets with fixed or determinable paymentsthat are not quoted in an active market. Subsequent to initial recognition, loans andreceivables are measured at amortized cost using the effective interest method, lessany impairment loss.
17. Loans and receivables are included in current assets, except for those withmaturities greater than 12 months after the end of the reporting period. Such loans
and receivables are classified as non-current assets.
18. Unused transfers of cash assistance due from executing agencies represent theclaims to the unused cash assistance funds remaining with executing agencies after
the completion or termination of a project. They are recorded as “other receivables”
and are recovered from executing agencies.
19. Cash generating assets and non-cash generating assets are distinguished basedon whether those assets bring revenue from exchange transactions or not. As ITTO
only generates non-exchange transactions revenue, all assets are considered noncash generating assets.
Impairment of financial assets — assets carried at amortized cost
20. At the end of each reporting period, ITTO assesses whether there is objective
evidence that a financial asset or a group of financial assets is impaired. ITTO
considers impairment of financial assets at a specific asset level.
21. A financial asset or a group of financial assets is impaired and impairment loss
is incurred only if there is objective evidence of impairment as a result of one ormore events that occurred after the initial recognition of the asset (a “loss event”)
and that loss event has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated. No collective
impairment is made.
22. The amount of the loss is measured as the difference between the carrying
amount of the asset and the estimated recoverable amount. The carrying amount of
the asset is reduced and the amount of the loss is recognized in the statement offinancial performance and reflected in an allowance account in the statement offinancial position.
23. If, in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairment wasrecognized (such as receipt of funds), the reversal of the previously recognizedimpairment loss is recognized in the statement of financial performance. Off-settingof the impairment is done when there is no legal possibility that the corresponding
asset would be recovered.
24. Receivables relate to contractual amounts agreed to be paid by governments
and intragovernmental organizations.
Advances to executing agencies
25. Projects prepaid expenses represent transfers of cash where executing agencies
have not yet met performance obligations as specified by ITTO. ITTO monitors theutilization of cash by executing agencies and recognizes expenses only when those
funds have been used by executing agencies as specified by ITTO.

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Page 16

26. Reporting by executing agencies of the utilization of advances is due usually
every six months. Where an executing agency fails to report on the utilization of theadvance, or breaches the performance obligation, those amounts, as well as any
unused funds, are followed up by ITTO with the executing agency.
Property and equipment
27. Property and equipment is stated at cost, less accumulated depreciation andaccumulated impairment losses. This includes costs that are directly attributable tothe acquisition of assets and the initial estimate of dismantling and site restoration
costs.
28. Subsequent costs are included in an asset’s carrying amount or recognized as aseparate asset only when it is probable that future economic benefits associated with
the item will flow to ITTO and the cost of the item can be measured reliably.
Repairs and maintenance, which do not qualify for capitalization, are charged tosurplus or deficit in the period during which they are incurred.
29. Estimated useful lives are as follows:
Property and equipment class

Useful life

Buildings

Shorter of term of arrangement and useful life of building

Furniture and fixtures

10 years

Vehicles6 years

Office equipment

5 years

Communications and information
technology (IT) equipment

4 years

30. The gain or loss arising from the disposal or retirement of an item of property or
equipment is the difference between the sale proceeds and the carrying amount of
the asset, and is recognized in other revenue or expenses within surplus or deficit.
31. Depreciation of property and equipment is recognized in surplus or deficit on astraight-line basis over the estimated useful lives of the related assets.
Intangible assets
32. Separately acquired intangible assets (e.g. software and rights) and internallydeveloped software are stated at cost, less accumulated amortization andaccumulated impairment losses. ITTO does not have any intangible assets withindefinite lives.
33. Amortization of intangible assets is recognized in surplus or deficit on a straightline basis over the estimated useful lives of the related assets. Software is amortizedover periods ranging from 3 to 10 years. Other rights and licences are amortizedover the shorter of the licence or rights period and 2 to 6 years.

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Leases
34. ITTO leases certain property and equipment. Leases of property andequipment where ITTO substantially assumes all the risks and rewards of ownershipare classified as finance leases. Initial recognition of a finance lease results in an
asset and liability being recognized at the lower of the fair value of the leased
property and the present value of the minimum lease payments.
35. Subsequent to initial recognition, leased assets are depreciated over the shorterof the lease term and their useful lives in accordance with the accounting policies forproperty and equipment.
36. Each finance lease payment is allocated between the finance lease liability andfinance charges. The interest portion of the finance lease obligations is recognized
as an expense in the statement of financial performance over the term of the lease inorder to produce a constant periodic rate of interest on the remaining balance of theliability for each period. The corresponding rental obligations, net of financecharges, are included in other liabilities.
37. Leases in which a significant portion of the risks and rewards of ownership are
retained by the lessor are classified as operating leases. Payments under operatingleases (net of incentives received from the lessor, if any) are recognized on astraight-line basis under other expenses in the statement of financial performanceover the period of the lease.
Impairment of non-cash generating assets
38. Property and equipment and intangible assets are reviewed for impairment at
each reporting date. Certain events or changes in circumstances may indicate thatthe recoverability of the carrying amount of such assets should be assessed,
including any significant decrease in market value. An impairment loss is recognizedin other expenses within the statement of financial performance when the carrying
amount of an asset exceeds its recoverable service amount. The recoverable service
amount of an asset is the higher of the asset’s fair value, less costs to sell, and its
value in use. In assessing value in use, ITTO uses a variety of methodologies inaccordance with IPSAS 21, depending on the availability of data and the nature of
impairment, including a depreciated replacement cost approach, a restoration cost
approach and a service units approach.
39. Impairment losses recognized in prior periods are assessed at each reporting date
for any indication that the impairment value has decreased or no longer exists. An
impairment deficit from previous years is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have existed, netof depreciation or amortization, if no impairment deficit had been recognized.
Financial liabilities
40. Other financial liabilities are initially recognized at fair value, less transaction
costs, and subsequently measured at amortized cost using the effective interest
method.

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Page 18

Major financial liability typeClassification

Accounts payable

Other financial liabilities

Other liabilities

Other financial liabilities

41. Accounts payable and accruals arising from the purchase of goods and services
are recognized when supplies are delivered or services consumed. Liabilities arestated at the invoice amounts, less the payment discounts if eligible at the reporting
date. Where invoices are not available at the reporting date, the liability is estimatedand recorded. Financial liabilities measured at amortized cost, due within 12 monthsof the date of the statement of financial position, are classified as current liabilities.
Otherwise, they are classified as non-current liabilities.
42. There was no discounting of advance receipts by donors as the impact isconsidered as not material. The amounts paid to executing agencies are always thecontribution amount received from the donors, hence the financial risks on theadvance receipts are considered remote.
Employee benefits
43.

ITTO recognizes the following categories of employee benefits:(a)Short-term employee benefits;(b)Post-employment benefits;(c)Other long-term employee benefits;(d)Termination benefits.

Short-term employee benefits
44. Short-term employee benefits are those that are due to be settled within
12 months after the end of the period during which employees have provided related
services. These benefits include wages and salaries, compensated absences (such as
paid leave and annual leave) and other benefits, including medical care and housing
subsidies. An expense is recognized when a staff member provides services inexchange for employee benefits. A liability is reported for any entitlement that has
not been settled as at the reporting date and represents the amount expected to be
paid to settle the liability. Owing to the short-term nature of such entitlements, theliability is not discounted for the time value of money.
Post-employment benefits
45. Post-employment benefits are those payable after completion of or separationfrom employment, excluding termination payments.
46. All staff of ITTO participate in a provident fund as their pension plan, which
was established by the Staff Regulations and Rules to provide retirement related
benefits to employees. Contributions to the provident fund which are payablemonthly are set at the percentage rates defined by the United Nations Joint Staff
Pension Fund (UNJSPF). Therefore, the provident fund is classified as a definedcontribution plan in line with the requirements of IPSAS 25: Employee benefits.

CFA(XXXV)/6
Page 19

ITTO’s contributions to the plan during the financial period are recognized as
expenses in the statement of financial performance.
Other long-term employee benefits
47. Other long-term employee benefits obligations are those that are not due to besettled within 12 months after the end of the period in which employees provide therelated service. These benefits comprise home leave, annual leave and repatriation
grant. The discounting of those obligations was considered not material considering
the amount of the current obligations.
Termination benefits
48. Termination benefits are recognized as an expense only when ITTO isdemonstrably committed, without realistic possibility of withdrawal, to a formal
detailed plan to either terminate the employment of a staff member before the normal
retirement date. No termination benefit was recognized at the beginning nor the endof the reporting period.
Provisions
49. A provision is recognized if, as a result of a past event, ITTO has a present
legal or constructive obligation that can be estimated reliably, and if it is probablethat an outflow of economic benefits will be required to settle the obligation.
Provisions are measured at the present value of the expenditures expected to berequired to settle the obligation using a rate that reflects current market assessmentsof the time value of money and the risks specific to the obligation. Where theprovision is expected to be settled beyond the next 12 months, the increase in theprovision due to the passage of time is recognized as interest expense. When an
outflow is dependent upon a future event that is not certain to occur, or cannot be
reliably estimated, a disclosure regarding the contingent liability is made in thenotes to the financial statements.
50. A provision for the return of unused funds to donors is reported for unusedbalances related to projects that have expired at year-end where the donor agreement
requires unused funds to be returned and where it is probable that funds will be
returned as opposed to being reallocated. Where the donor has not disbursed all the
cash to ITTO, the receivable balance is written down to the present value of
estimated future cash flows (excluding future credit losses that have not been
incurred). A provision for returns of unused funds is reported only if there are funds
to be returned after the receivable has been fully written down. The effects ofchanges resulting from revisions to the timing or the amount of the original estimateof the provision are reflected on a prospective basis. The expense arising from
reporting a provision (or reducing any receivable) for unused funds is presented in
the statement of financial performance.
Revenue recognition
Assessed contributions
51. Assessed contributions are non-exchange transactions, which means that
resources (such as cash, items of property and equipment or enforceable rights tosuch) are received by ITTO with no or nominal consideration provided directly in

CFA(XXXV)/6
Page 20

return to the donor. The resources are to be applied towards advancing theOrganization’s mission.
52. Assessed contributions are determined during the Council session of the year
preceding considering the budget of the Organization and the number of votes ofeach member.
53.

Assessed contributions are received from members.

54.

The fair value of assessed contributions is determined by the cash inflow.

55. Assessed contributions are recognized in the year of the budget it is meant tocover.
Voluntary contributions
56. Voluntary contributions are non-exchange transactions, which means that
resources (such as cash, items of property and equipment or enforceable rights tosuch) are received by ITTO with no or nominal consideration provided directly inreturn to the donor. The resources are to be applied towards advancing theOrganization’s mission.
57. Voluntary contributions are received from members, regional and international
financial institutions, the common fund for commodities, and other sources.
58.

The fair value of voluntary contributions is determined by the cash inflow.

59. Voluntary contributions may be subject to terms in a binding agreement
imposed upon the use of the resource (termed earmarked funds) or may be free of
specific terms allowing ITTO to direct such resources according to its mandate(termed unearmarked fund). Earmarked funds may be subject to conditions whereterms not only restrict the use of resources, but also require the return of resources,
if not used as specified.
60. With regard to unearmarked funds and earmarked funds with no conditions
attached, ITTO recognizes an asset (cash or receivable) and revenue at the earlier ofcash received or formal acknowledgement/agreement of the contribution to beprovided unless the agreement specifies a later contribution start date.
Examples of such funds with no conditions attached are:-Donors pledges to Thematic Programme funds-

Programme support recognized from donors pledges-

Donors pledges to Fellowship programme-

Projects’ ex-post budgets when the project is officially finished61.

For earmarked contributions:(a) Where the agreement has a legislative clause, the receivable and related
revenue is not recorded until ITTO is notified of the legislative approval;(b) Where the agreement has a performance clause, the receivable andrelated revenue is not recorded until the obligation is met.

CFA(XXXV)/6
Page 2162. For earmarked contributions with a condition attached, ITTO recognizes anasset (cash or receivable) and a liability (contributions advance receipts or deferred
revenue)attheearlierofcash
receivedorformalwrittenacknowledgement/agreement of the contribution to be provided (unless thecontribution specifies a later start date). The liability is reduced and revenue isrecognized only when conditions have been satisfied.
63. Revenue from voluntary contributions is shown net of realized gains and losses
on foreign exchange as ITTO does not assume the risk of foreign exchange on
contribution revenue.

Pledges
64. Pledges of contributions to ITTO may be received at any time but are most
likely to occur following donor meetings which are held annually. ITTO does notrecognize pledges as assets or revenue until they are enforceable at the earlier ofwritten confirmation of the pledge or receipt of funds. Once enforceable, the asset
and related revenue are recognized consistent with the revenue recognition policy
for voluntary contributions referred to above. Until that time, the pledges aredisclosed as contingent assets.
Contributions in kind
65. ITTO receives contributions of services and office space and other facilities
from the Host Government. These contributions, as well as in-kind contributions ofgoods, are initially measured and recorded at their fair value at the date of receipt. The
fair value of these non-monetary assets is determined by reference to observable
market values or by independent appraisal. The revenue and the corresponding
expense are recorded in the statement of financial performance as part of voluntary
contributions.
Recognition of expenses
66. Expenses are recognized in the statement of financial performance in the
period to which they relate.
Transfers of cash assistance and programme supplies
67. In fulfilling its mandate, ITTO transfers cash to governments, nongovernmental organizations and other third parties (“executing agencies”). Transfersof cash assistance are initially reported as an advance on the statement of financial
position where there are performance obligations imposed on the executing agency,
and are expensed when ITTO is satisfied that those performance obligations are met.
An accrual against advances is recorded at year-end for expenses incurred byexecuting agencies reported to but not processed by ITTO.
68. Project expenses incurred by the executing agencies are recognized based on theaudit reports of the projects. When those audit reports could not be obtained for thereporting year, an estimation has been built based on the available reports. When nocontradictory information is available, it is the best estimate of the management thatthe costs are spend by the executing agencies on a straight line basis.

CFA(XXXV)/6
Page 22

Commitments
69. Commitments are future expenses and liabilities to be incurred on contracts
outstanding at the reporting date for which ITTO has little, if any, discretion to avoid
in the ordinary course of operations, including:(a) Capital commitments represents the aggregate amount of capital
expenditures contracted for but not recognized as paid or provided for at theperiod-end;(b) Contracts for the supply of goods or services that ITTO is expecting to bedelivered in the ordinary course of operations;(c)Cash transfers;(d)Other non-cancellable commitments.

ITTO does not have any non-cancellable lease agreements.
Contingencies
Contingent assets
70. A contingent asset is a possible asset that is not wholly within the control of
the organization. Contingent assets are reviewed to ensure that developments areappropriately reflected in the financial statements. If it has become virtually certainthat an asset is no longer contingent and the asset’s value can be measured reliably,
the asset is recognized during the period in which the change occurs.
Contingent liabilities
71. A contingent liability is disclosed unless the possibility that it will be realized
is remote. If it becomes probable that a contingent liability will be realized, aprovision is recorded during the period in which the change of probability occurs. A
contingent liability will also arise in cases where there are liabilities that cannot bemeasured reliably.
Segment reporting
72. The ITTO governing body and management does not manage the organization
based on service segments or geographical segments.
Budget73. ITTO budgets, which are approved by the Council for each financial biennium,
permit expenditures to be incurred within the Administrative Account. ITTO hasclassified its budgets as: (a) basic administrative costs budgets; and (b) core
operational costs budgets.
74. The basic administrative costs budget includes costs such as salaries andbenefits, installation costs, and official travel. The core operational costs budget
includes costs such as those related to communication and outreach, expert meetings
convened by the Council and preparation and publication of studies and assessments
pursuant to articles 24, 27 and 28 of the Agreement.
75. An original budget is defined by IPSAS as “the initial approved budget for thebudget period”. The final budget is defined as:

CFA(XXXV)/6
Page 23(a)

The original budget as defined above;(b)

All subsequent changes to the budget approved by the Council.

76. While ITTO’s financial statements are prepared under the IPSAS full-accrualbasis, ITTO budgets are prepared and managed on a modified cash basis. The mostsignificant differences are as follows:(a) The budget does not include investing and financing activities. These arepresented under “basis differences” under the “investing” and “financing” categories
in the reconciliation between budget actuals and net cash flows. The amount of thebudget is based on estimated expenses;(b) Budget costs are recorded on a modified cash basis in contrast withexpenses in the financial statements that are prepared under the IPSAS full-accrualbasis. The difference is presented under “basis differences” under the “operating”
category in the reconciliation between budget actuals and net cash flows;(c) The actual budget does not include revenue. Expenses for projects andactivities funded by voluntary contributions in the Project Accounts and expenses
deriving from other voluntary contributions in the Administrative Account are also
not included in the budget of ITTO. The difference is presented under “presentationdifferences” in the reconciliation between budget actuals and net cash flows.
Note 5Comparison to budget
Statement V documents the various budgets to the actual amounts incurred against
them. Both budgets and actual amounts (cash and budgetary commitments) arecalculated on the same modified cash basis. Explanations of material differences
between the final budgets and actual amounts are as follows.
(a) Assessed contributions amounting to approximately $1.7 million were
not received overall during the reporting period, which had an influence onmanagement’s decision regarding budget spending.
(b) There were months where senior-level positions including the Director
and projects manager of division of forest management were vacant during thereporting period, which impacted salaries and benefits, and social security costs.
(c) There were no installation costs incurred in 2019 due to the staff hired
during this period being locally recruited.
The following table presents the reconciliation of actual budget amounts on acomparable basis in the statement of comparison of budget to actual amounts and theamounts presented in the statement of cash flows.

CFA(XXXV)/6
Page 24(United States dollars)

T otal actual amount on comparable
basis as present ed in t he budget and
act uals comparat ive stat ement
Basis differences

Exchange rate changes on cash andcash equivalent s
Present ation differences
Ne t cashfl ows from thestate me nt of cash fl ows

Operating

Investing

Financing

Exchange ratechanges2019(6,045,649)

-

-

-

(6,045,649)

134,098(9,155)(38,311)-86,632---(19,157)(19,157)

6,475,920---

6,475,920

564,369(9,155)(38,311)(19,157)

497,746

Note 6
Cash and cash equivalents
All cash in ITTO is at bank or on hand and convertible (freely exchanged to othercurrencies without licence or authorization).

Note 7
Investments
ITTO does not currently hold any investments. In accordance with CFA(XXXII)/8,
recommendation 9, investment of the Organization’s funds is suspended until at suchtime as the Council deems appropriate for ITTO to resume investing.

CFA(XXXV)/6
Page 25

Note 8
Accounts receivables
Assessed contributions: receivables from non-exchange transactions(United States dollars)
Mem ber States

Allowance for
doubtful assessed
contributions
receivable

Total assessed
contributions
receivable

Balance as of 31 December 2017

7,094,386(5,105,224)

1,989,162

Assessed Contribution for 2018

7,123,539-

7,123,539(5,572,241)-(5,572,241)(605,421)

Adm inistrative account

Receipt for 2018 Assessed Contributions
Receipt for prior year Assessed Contributions(605,421)-

Write-off---Increase of Allowance for doubtful assessed contributions receivable-(469,182)(469,182)

8,040,263(5,574,406)

2,465,858

Allowance for
doubtful assessed
contributions
receivable

Total assessed
contributions
receivable
2,465,858

Balance as of 31 De ce mbe r 2018

Adm inistrative accountMem ber States

Balance as of 31 December 2018

8,040,263(5,574,406)

Assessed Contribution for 20197,170,242-

7,170,242(5,465,184)-(5,465,184)(662,566)

Receipt for 2019 Assessed Contributions
Receipt for prior year Assessed Contributions(662,566)-

Write-off(44,195)

44,195--(499,547)(499,547)

9,038,560(6,029,757)

3,008,802

Allowance for
doubtful voluntary
contributions
receivable

Total voluntary
contributions
receivable

Increase of Allowance for doubtful assessed contributions receivable
Balance as of 31 De ce mbe r 2019

Voluntary contributions: receivables from non-exchange transactions(United States dollars)

Adm inistrative accountMem ber States

Balance as of 31 December 2017

59,566-59,566Claims640,029

640,029

Cash-in(509,995)
189,600(509,995)‐‐

Bal ance as of 31 De ce mbe r 2018

189,600-

Claims281,763-281,763

Cash-in(471,363)-(471,363)---

Allowance for
doubtful voluntary
contributions
receivable

Total voluntary
contributions
receivable

Bal ance as of 31 De ce mbe r 2019

Project accounts

DonorsBalance as of 31 December 2017

4,011,656

Increases in Volunt ary Cont ribut ions Receivalbes for 2018

3,229,796-

4,011,656
3,229,796(3,244,435)

3,513,929

Allocation from Int ernal Funds(483,088)‐‐‐

Bal ance as of 31 De ce mbe r 2018

3,513,929-

5,527,695‐‐‐‐

Cash received in 2018 for Volunt ary Cont ribtuions

Increases in Volunt ary Cont ribut ions Receivables for 2019
Cash received in 2019 for Volunt ary Cont ribut ions

(3,244,435)(5,139,971)

Allocation from Int ernal Funds(652,703)

Bal ance as of 31 De ce mbe r 2019

3,248,951(483,088)

5,527,695(5,139,971)(652,703)
3,248,951

CFA(XXXV)/6
Page 26(United States dollars)
Breakdown of Increases in Voluntary Contributions Receivables

2019

2018

China

200,000

100,000

European Union

328,416

68,942

2,469,636

1,236,250

Korea

511,733

900,597Japan

848,232

373,100

USA

588,265498,211

Pledges in ITTC Decision 1(LV) and (LIV) - Financing for Projects, PreProjects and Activities

Germany

CIT ES Secretariat-

557,693

IUCN

38,867

17,600

PPECF

43,869--40,00035,792

20,480-16,5105,064,810

3,829,383

Adjustments to pledges in Decision 1 not affecting Accounts Receivable(19,956)(548,102)

Adjustments for items not recorded in Decision 1

482,841(51,485)

5,527,695

3,229,796

World Bank
Unearmarked Fund
Bali Partnership Fund (Sub-account B)
Total of Pledges in ITTC Decision 1(LV) and (LIV)- Financing for Projects,
Pre-Projects and Activities

Total(United States dollars)
Breakdown of Voluntary Contributions Cash Receipts

2019

2018

-

46,000CBD-

45,000China

100,000-

CIT ES Secretariat

19,445393,936

European Union

1,094,469

967,338

Germany

2,620,310

215,000

APFNetIUCN

28,233

8,800

Japan

891,911287,764

Korea

341,733

740,597

PPECF

43,869-USA-

500,000

World Bank-

40,0005,139,971

3,244,435

2019

2018

Total
Breakdown of Allocation from Internal Funds
China's unallocat ed voluntary contribtuions advance receipts

100,000-

USA's unallocat ed voluntary contributions advance receipts

202,799447,211

Fellowship Pooled Fund (including refund to pool from cancelled Fellowship)

237,494(1,114)

Unearmarked Fund

35,792

20,480-16,510Adjust ment s to reclassification of internal funds

76,618-

Total

652,703

483,088

Bali Part nership Fund (Sub-account B)

CFA(XXXV)/6
Page 27

1.

Receivables are earmarked when agreements specify terms for the use ofcontributions, such as the purpose, geographical area and period of use,
and are unearmarked when contributions are free of specific terms,
allowing ITTO to direct such resources according to its mandate. Bothearmarked and unearmarked receivables are recorded when contributionagreements become enforceable, which occurs at the date when theagreement is signed, free of legislative/parliamentary approval clauses, orat the date when donor’s notification of the amount to be disbursed to
ITTO, when such a clause exists, is fulfilled. Ageing of receivables aswell as the exposure to credit and currency risks related to thosereceivables are disclosed in Note 28, Financial risk management.

2.

The exposure of ITTO to credit and currency risks related to receivables
are disclosed in Note 28, Financial risk management.

Other accounts receivable
Other accounts receivable are mainly composed by amounts related to cancelled
travel expenses pending reimbursement and accrued interest.

CFA(XXXV)/6
Page 28

Note 9Advance transfers - Projects(United States dollars)

Category
Reforestation and Forest Management

2019

2018

452,911936,659

Economics, Statistics and Market-

13,716

Forest Industry

63,061

121,687

Activities

2,855

443,731518,827

1,515,793

Total advance transfe r by type

Reconciliation of advance transfer balances(United States dollars)

Advance transfer as at 31 December 2017

1,691,886

Expenses recognized through reports from EAs(3,058,301)

Expenses paid in 2018

2,882,209

Advance transfe rs as at 31 De ce mbe r 2018

1,515,793

Expenses recognized through reports from EAs(2,962,028)

Expenses paid in 2019

1,965,063

Advance transfe rs as at 31 De ce mbe r 2019

518,827

Advance transfers - Projects represent transfers of cash where executing agencies
have not yet met performance obligations as specified by ITTO. ITTO monitors theutilization of cash by executing agencies and recognizes expenses only when those
funds have been used by executing agencies as specified by ITTO.
Note 10
Advance transfers – Others(United States dollars)

Breakdown of Advance transfers – Others

2019

2018

Prepaid expenses - staff

145,524

201,293

Prepaid expenses - others

28,151

121,215

Total

173,674

322,508

CFA(XXXV)/6
Page 29

Note 11
Property and equipment(United States dollars)
Furniture andfixture s

B uildings

Ve hic le s

C o m m unic atio ns
and info rm atio nte c hno lo gy (IT )e quipm e nt

Offic e e quipm e nt

T o tal 2018

C ost
Balance as at 1 January
Addit ions-

139,497

107,558

218,11332,250497,419

28,933

12,331-

195,553

14,179250,994

Disposals, t ransfers and adjust ment s
Bal an ce as at 31 De ce mbe r

-

-

-

(218,113)-(218,113)

28,933

151,827

107,558

195,553

46,429530,300

Accu m u l ate d de pre ci ati on
Balance as at 1 January-

71,275

107,558

207,243

12,035398,112

Depreciat ion

1,449

9,021

-

40,277

8,893

59,641

Impairment

-

-

-

-

-

-

Disposals, t ransfers and adjust ment s

-

-

-

(218,113)-(218,113)

1,449

80,296

107,558

29,407

20,928239,639

27,483

71,531-

166,146

25,501

290,661

Bal an ce as at 31 De ce mbe r
C arryi n g val u e as at 31 De ce mbe r

Furniture andfixture s

B uildings

Ve hic le s

C o m m unic atio ns
and info rm atio nte c hno lo gy (IT )e quipm e nt

Offic e e quipm e nt

T o tal 2019

C ost
Balance as at 1 January

28,933

151,827

107,558

195,553

46,429530,300

Addit ions

-

-

-

9,155

-

9,155

Disposals, t ransfers and adjust ment s

-

-

-

-

-

-

28,933

151,827

107,558

204,708

46,429539,456

Balance as at 1 January

1,449

80,296

107,558

29,407

20,928239,639

Depreciat ion

2,891

9,424

-

40,786

10,85863,959Impairment

-

-

-

-

-

-

Disposals, t ransfers and adjust ment s

-

-

-

-

-

-

4,340

89,720107,558

70,19331,786

303,598

24,592

62,107-

134,515

14,643

235,858

Bal an ce as at 31 De ce m be r
Accu m u l ate d de pre ci ati on

Bal an ce as at 31 De ce m be r
C arryi n g val u e as at 31 De ce m be r

CFA(XXXV)/6
Page 30

1.
ITTO does not currently hold any donated property or items of equipment thatare subject to conditions.
2.
The gross carrying amount of fully depreciated property and equipment is$185,980 for 2019 and $165,091 for 2018.
3.
The carrying value of property and equipment recognized under finance leases
is as follows:(United States dollars)
2019

2018

Office equipment

120,950

158,145

Total

120,950

158,145

4.
The ITTO leases copy machines, which the annual lease payments areallocated between the finance charges and the repayment of the finance leaseobligation to achieve a constant rate of interest on the remaining balance of theobligation.
5.
There is no significant difference between minimum lease payments and thepresent value of minimum lease payments.
6.

ITTO has not entered into any arrangements containing contingent rent.

Note 12Intangible assets(United States dollars)
S o ftware
ac quire de xte rnallyS o ftware
inte rnallyde v e lo pe d

Lic e nc e s andrightsC o pyrights

T o tal 2018

C ost
Balance as at 1 January

-

-

-

-

-

Additions

13,709---13,709T ransfers

-

-

-

-

-

Disposals

-

-

-

-

-

13,709---13,709

-

-

-

-

-

Balance as at 31 De ce mbe r
Amortiz ation
Balance as at 1 January
Amortization

1,374

-

-

-

1,374

-

-

-

-

-

Balance as at 31 De ce mbe r

1,374

-

-

-

1,374

C arrying value as at 31
De ce mbe r

12,335---

12,335

Disposals

CFA(XXXV)/6
Page 31(United States dollars)
S o ftware
ac quire de xte rnallyS o ftware
inte rnallyde v e lo pe d

Lic e nc e s andrightsC o pyrights

T o tal 2019

C ost
Balance as at 1 January

13,709---13,709Additions

-

-

-

-

-

T ransfers

-

-

-

-

-

Disposals

-

-

-

-

-

13,709---13,709Balance as at 1 January

1,374

-

-

-

1,374

Amortization

2,740

-

-

-

2,740

-

-

-

-

-

Balance as at 31 De ce mbe r

4,114

-

-

-

4,114

C arrying value as at 31
De ce mbe r

9,595

-

-

-

9,595

Balance as at 31 De ce mbe r
Amortiz ation

Disposals

Note 13
Other assets
Other assets are mainly comprised of prepaid expenses that cover a period longer
than 1 year.
Note 14
Accounts payable – Members
The amounts in Accounts payable – Members correspond to advance payments madeby Members to ITTO for reimbursement of income tax payments of staff members,in accordance with Regulation 2.11 of the ITTO Staff Regulations and Rules.

CFA(XXXV)/6
Page 32

Note 15
Voluntary contributions advance receipts – allocatedDeferred revenue(United States dollars)

Breakdown of deferred revenue

2019

2018

Deferred revenue for the Administrative Account

9,326

9,501

2,842,303

4,260,739

Economics, Statistics and Markets (M)653,080434,642

Forest Industry (I)442,884

630,498

Deferred revenue for projects
Reforestation and Forest Management (F)Activities (A)7,472,166

7,305,810

Deferred revenue for projects

11,410,434

12,631,689

Total de fe rre d re ve nue

11,419,759

12,641,190

Reconciliation of deferred revenue balances(United States dollars)

Deferred revenue for projects as at 31 December 2017

14,880,080

Liabilities recognized for obligations attached to pledges

2,169,959

Revenue recognized from ongoing projects(4,418,350)

Deferred revenue for projects as at 31 December 2018

12,631,689

Liabilities recognized for obligations attached to pledges

4,180,246

Revenue recognized from ongoing projects(5,401,501)

Deferred revenue for projects as at 31 December 201911,410,434

Deferred revenue consists of contributions receivable which are not yet due, and,based on the terms of agreements, are to be used by ITTO in future periods specified
by donors.

CFA(XXXV)/6
Page 33

Detail of projects with balance as of 31 December 2019
(United States dollars)
Project ID

Category

ITTO Budget

Program me
SupportExpenses

Deferred Revenue
for Projects

Voluntarycontributions:
receivables

Advance
Transfers

PD 452/07 Rev.5 (F) /C50

F

556,963

202,772

70,353283,838

100,612

PD 507/08 Rev.1 (F) /C44F

385,800

294,975

29,356

61,46941,819-PD 552/09 Rev.1 (F) /C45

F

621,578472,624

41,844

107,11035,182-

PD 599/11 Rev.1 (M) /C47

M

490,624

423,855

36,88429,885--

PD 646/12 Rev.3 (F) /C50

F

427,210

224,393

46,627

156,190

5,073-

PD 696/13 Rev.2 (F) /C49

F

294,444

97,37633,276

163,792

68,142-

PD 712/13 Rev.2 (F)/C54

F

250,000-

26,787223,213-150,000

PD 721/13 Rev.3 (F)/03'16

F

440,873

265,80347,236

127,834--

PD 723/13 R.2(F) Ph.I St.1/C52

F

140,000

96,58915,00028,411

28,411-

PD 732/14 Rev.2 (M)/03'16

M

321,138

106,461

34,408180,269--

PD 737/14 Rev.2 (I)/03'16

I

589,863

278,129

63,200248,534

30,976-

PD 740/14 Rev.2 (F) /C50

F450,542

343,91051,942

54,690500

PD 741/14 Rev.3 (F)/03'16

F

437,478

299,567

46,87391,03871,541-

PD 754/14 Rev.3 (F)/03'16

F

541,031431,989

57,96851,074539-

PD 764/14 Rev.3 (F)/04'16

F

606,313

16,14051,886538,287--

PD 765/14 R.2 (F) Ph.I/C52

F

250,000

133,915

26,78689,29932,05755,000PD 770/15 Rev.1 (I)/03'16

I

196,224

25,241

21,024

149,959

32,086-

PD 777/15 Rev.3 (F)/04'16

F

515,590

124,033

55,242

336,315

43,945-

PD 796/15 Rev.2 (M)/C53

M

80,000-8,573

71,427--

PD 815/16 Rev.2 (I)/C53(portion funded by voluntary contribution)I

96,00041,323

10,28644,391--

PD 832/16 Rev.2 (M)/C55

M

416,080-

44,580371,500-

200,000

PD 836/17 Rev.1 (F)/C54

F

350,000-

37,500312,500-

PD 849/18 Rev.2 (F)/C54

F

100,000-

10,71589,285--

PPD 189/17 Rev.1 (F)/C53

F

50,000-5,357

44,643--

PPD 191/18 Rev.1 (F)/C54

F

71,211

24,9107,630

38,67125,090-

PPD 196/19 Rev.1 (F)/C55(portion funded by Voluntary Contribution)F

50,000-5,357

44,643--

PP-A/47-266: IT T O/CBD-ACT O

A1,218,803

1,071,971

97,79449,0382,412

1,072,741

PP-A/49-291 BWP25b IMM(EU)A

4,642,970

2,197,480

190,7012,254,789-

PP-A/50-304 BWP18-19/19 T AG&CSAG

A

150,402120,680

26,0883,634-

20,000

PP-A/50-305 BWP27 CPF

A110,000

74,082

11,086

24,832-25,000

PP-A/52-320: CIT ES BWP Activities

A

1,323,980

59,73480,9601,183,287-

150,000

PP-A/52-320A: CIT ES T rees Programme(Asia)

A

179,920

152,473

27,447--35,984

PP-A/52-320C: CIT ES T rees Programme(Africa/Latin America)A

376,027

358,008

18,019--107,237-

PP-A/53-321 Korea Officer

A

1,019,577

615,548-

404,029-

PP-A/53-322 BWP18-19/1

A

50,00039,717

6,522

3,761

-

-

PP-A/53-323 BWP18-19/2

A

691,180

51,617

90,103

549,461-

32,201

PP-A/53-323A BWP18-19/2 GIZ

A

75,83569,573

6,262

-

-

18,368

PP-A/53-324 BWP18-19/3

A

120,000

9,527

15,653

94,820443

25,000

PP-A/53-325 BWP18-19/10(a)A

25,00010,864

3,261

10,875--

PP-A/54-326 Landscape RestoratA

98,77367,773

2,609

28,391-

20,000

PP-A/54-328 BWP18/6b C&I Mtgs

A

36,117

19,918-16,199--

PP-A/54-329 BWP18/10 Mangrove

A

4,826

-

-

4,826

-

-

PP-A/54-330 BWP18/19b Outreach

A

5,044

5,000

-

44

-

-

PP-A/54-331 BWP18-19/4 T eakA

1,236,250

236,014161,250

838,986-

848,407

PP-A/54-332 BWP18-19/9 StatsA

50,000-6,522

43,478--

PP-A/54-333 BWP18-19/12 FireA

20,00017,391

2,609

-

-

-

CFA(XXXV)/6
Page 34(United States dollars)
Project ID

Category

ITTO Budget

Program m e
SupportExpenses

Deferred Revenue
for Projects

Voluntarycontributions:
receivables

Advance
Transfers

PP-A/55-334 LSSC (BMEL)

A

2,390,000

867,186

121,877

1,400,937--

PP-A/55-335 BWP 18-19/11 Act ion P lan

A93,265-

12,165

81,100-43,265

PP-A/55-336 EU Grant to 6 BWPs

A

330,551--

330,551-

111,607

PP-A/55-337 Landscape_IUCN/KOR T ier 2

A

70,867--70,867-

19,434

PP-A/55-338 BWP18-19/15 C&I for SFM

A

20,000-2,609

17,391-

20,000

PP-A/55-339 BWP 18-19/16 Comm. Strat egy

A

70,000-9,130

60,870-70,000M

405,968

329,512

44,20232,254--T hematic programme projects
T FL-PD 044/13 Rev.2 (M)/03'14
Recognized as net assets(32,254)

Fellowship progmramme
PP-A/52-319 FFF/up to15AA

80,65842,737-37,921--

PP-A/52-319 FFF/16A

A

56,66851,040

-

5,628

-

-

PP-A/52-319 FFF/17A

A

120,829

97,951

10,01812,859--

PP-A/52-319 FFF/18A

A

139,564

120,277

2,022

17,265--

PP-A/52-319 FFF/19A

A

115,451-

17,78597,666

-

-

9,469

-

-

31,957--

518,827

3,024,244

Recognized as net assets(171,340)

Projects funded from Net Assets(BP F-B/Unearmarked Fund)
PD 815/16 Rev.2 (I)/C53(port ion funded by Unearmarked Fund)I

20,480

8,816

2,195

PP D 196/19 Rev.1 (F)/C55(port ion funded by Unearmarked Fund)F

35,792-

3,835

Recognized as net assets(41,426)

24,113,759

Total

10,598,892

1,859,413

11,410,434

Detail of projects financially closed during 2019
Project ID

Category

ITTO Budget

Expenses(cum ulative)

Balance at
project closure(*See note
below)

Program m e
SupportPD 456/07 Rev.4 (F)-JICA E/NF

3,297,355

2,969,170

244,249

PD 456/07 Rev.4 (F) Non-JICA

F

555,556

507,62143,95083,936
3,984

PD 470/07 Rev.1 (F) /C44

F

206,577

155,620

15,52435,43323,160PD 477/07 Rev.4 (F) /C48

F

332,477

284,261

25,056

PD 563/09 Rev.5 (F) /SP '14

F

460,000

410,71449,286-

PD 601/11 Rev.3 (F) /C49

F

473,602419,71236,762

17,128

PD 602/11 Rev.3 (F) /C49

F

333,067

297,151

25,956

9,960

PD 668/12 Rev.1 (F) /C48

F

611,132

540,362

47,52923,241

PD 692/13 Rev.1 (M) /C49

M

264,704

167,510

24,42772,767

PD 710/13 Rev.1 (F) /C49

F

447,936

390,192

51,426

6,318

PD 751/14 Rev.3 (M)/C52

M

130,000

116,071

13,929-

PP-A/53-323B BWP18-19/2 PPECF

A

43,86943,869--PP-A54-326A Landscape_IUCN/KOR T ier 1A27,25027,250--

PP-A/54-327 Cleanwood (JP NFA)A

331,443

294,006

37,438-

RED-PD 029/09 Rev.1 (F)/03'10

F

1,080,187

971,970

83,317

24,900T FL-PD 037/13 Rev.2 (M)/03'14

M

502,464

429,294

55,58917,581

9,097,619

8,024,772

754,438

318,409

T hematic programme projects

Total*Note: Balance includes funds t o be ret urned, t ransferred t o Pooled Sub-accounts for ex-post evaluat ions and/or otherwise reallocated depending on consult ations wit h donors in accordance wit hprevailing rules and procedures.

CFA(XXXV)/6
Page 35

Unearmarked funds and earmarked funds with no conditions attached, such as donor
pledges to the Thematic Programme funds or the Fellowship fund, recognize revenue
at the earlier of cash received or formal acknowledgement/agreement of thecontribution to be provided. Therefore, advance receipts from Thematic programme
projects and the Fellowship programmes are recorded in net assets and are excluded
from the reconciliation of deferred revenue balances shown above.
Note 16
Voluntary contributions advance receipts - unallocated
The amounts in Voluntary contributions advance receipts – unallocated are comprisedof (a) voluntary contributions that have been received from donors but have not been
allocated to specific projects and (b) unspent balance of completed projects
belonging to donors.
Note 17
Assessed contributions advance receipts
Those amounts correspond to assessed contributions, related to 2020 budget, thatwere received before the end of 2019.
Note 18
Other liabilities(United States dollars)
Breakdown of Other liabilities
Other accounts payable

2019

2018

119,057

171,640

1,281,621

1,128,059

Lease obligation

121,940

156,681

Other accrued liabilities

245,840

182,539

1,768,457

1,638,920

Employee benefits accrued liabilities

Total

Information on finance lease payments is contained in Note 11: Property andequipment.
Employee benefits liabilities breakdown(United States dollars)

2019

2018

C urre nt e mpl oye e be ne fi ts l iabi l iti e sHome leave

89,49549,234

Accrued salaries and allowances

174,738

182,044

Accrued social securit ies

118,276

93,779Total curre nt e mpl oye e be ne fi ts l i abi l i ti e s

382,509

325,057

19,23633,908Non-curre nt e mpl oye e be ne fi ts l i abil i ti e sHome leave
Repat riat ion benefit s

376,996335,704

Annual Leave

502,879

433,391

Total non-curre nt e mpl oye e be ne fi ts l i abi l i ti e s

899,111803,002

1,281,621

1,128,059

Total e mpl oye e be ne fits l i abi l i ti e sCFA(XXXV)/6
Page 36

Note 19
Net assets(United States dollars)
Breakdown of net assets

2019

2018

Restrictedaccum ulated
surplus

Unrestrictedaccum ulated
surplusReserves

Restrictedaccum ulated
surplus

Unrestrictedaccum ulated
surplusReserves

Admin i strative Accou n t
Working Capit al reserve

5,167,833--

5,111,202--

Reserve provided byint erest income-

231,744--219,730-

Special reserve--2,500,000--

2,500,000

Funds provided by int erest
income64,282--

100,438--

T hematic programme funds
allocat ed t o project s

17,643--

186,049--

Funds allocat ed to
Fellowship programme

194,262--

242,320--

Unearmarked funds
allocat ed t o project s

41,427

-

-

3,268

-

-

Funds allocat ed to expost
evaluat ion

371,889--

151,791--

T hematic programme funds
unallocat ed

-

4,935

-

-

4,935

-

P rogramme support funds-

960,016--

523,523-

5,857,336

1,196,694

2,500,000

5,795,068

748,188

2,500,000

Proje ct Accou n ts

Total

1.
Net assets represent the value of ITTO assets, less its outstanding liabilities at
the reporting date. ITTO net assets comprise accumulated surpluses and reserves.
2.
Accumulated surplus represent the accumulated surpluses and deficits from
ITTO operations over the years. Accumulated surplus is presented as restricted orunrestricted. Restricted accumulated surplus are linked to commitments or require a
Council decision to be utilized.
3.
Reserves represent the special reserve contained in the Administrative
Account. In accordance with the Financial Rules and Procedures of ITTO, thisreserve is set aside to meet obligations towards the staff members of theOrganization, arising in the event that ITTO ceases to exist, such as terminationindemnities, repatriation travel and removal costs, and repatriation grants.

CFA(XXXV)/6
Page 37

Note 20
Administrative account; Revenue from Assessed Contributions and the other contributions(United States dollars)

Breakdown of revenue

2019

2018

Asse sse d C ontributions
Member countries

7,170,242

7,123,539

7,170,242

7,123,539

Government of Japan

281,763

250,429

City of Yokohama

79,853

514,526

Total Asse sse d contributions

Voluntary cash contributions

Voluntary in-kind contributions
Government of Japan

203,526

200,968

City of Yokohama

319,612299,806

884,755

1,265,730

Total Asse sse d and Voluntary C ontributions

8,054,997

8,389,269

Asse sse d C ontribution re ce ivable

3,008,802

2,465,858

Voluntary C ontribution re ce ivable-

189,600

Total voluntary contributions

In-kind contributions
In-kind contributions comprise contributions received as goods or services. In-kind
contributions mainly include rights to use assets such as land and buildings.

CFA(XXXV)/6
Page 38

Project accounts; Revenue from Voluntary Contributions(United States dollars)

Breakdown of revenue

2019

2018

C ontributions
Donors5,401,501

4,418,350

Revenue from closed projects to the Pooled Fundfor Ex-Post Evaluation

163,005

95,352

Programme Support Revenue

496,990403,721

Total voluntary contributions

6,061,496

4,917,423

Voluntary Contribution receivable

3,248,951

3,513,929

518,827

1,515,793

11,410,434

12,631,689

Advance transfer - Project

Advance receipts

Ex-Post evaluation revenue from Thematic Programme projects are normallyrecognized at the start of the project. An amount of $57,092 was transferred in 2019
as Thematic Programme related Ex-post evaluation revenue. There were notransfers in 2018 for the same purpose.

Cash Receipts and Pledges from Donors
A detailed breakdown of cash receipts and pledges by donor can be found in Note 8:
Accounts receivables.

CFA(XXXV)/6
Page 39

Note 21
Financial revenue
ITTO generates interest revenue from bank accounts. Interest revenue for 2019 is$27,645 and 2018 is $60,669.
Note 22
Other income
Other income is mainly comprised of honorariums received by staff members wheninvited by external institutions to give lectures or speeches.
Note 23
Administrative account; Employee benefits expenses(United States dollars)
Breakdown of em ployee benefits expenses
Salaries and benefits
Social security
Total e mploye e be ne fits e xpe nse s

2019

2018

3,991,350

3,687,062

897,880

801,743

4,889,230

4,488,806

The total amount of defined contribution plan expenses for pension schemes amount
to $608,424 for 2019 and $553,267 for 2018.
Note 24
Operating expenses(United States dollars)

Breakdown of operating expenses

Installation costs

2019

2018

-

-

Official travel

136,817

128,875

Special activities

11,84815,600

Data processing

141,136

121,386

Other costs

346,774

292,430

Council meetings

393,611391,213

Expert meetings

87,39490,393

Communication and outreach354,692

414,532

Statistics, Studies and information

247,419

246,321

Annual Report and Biennial review

54,50966,074Services received through voluntary in-kind contributions

523,138

500,774

Services received through voluntary cash contributions

33,85877,436

Working capital reserve expenses in accordance with Council decisions

170,136

169,470

2,501,333

2,514,504

Total ope rating e xpe nse s

CFA(XXXV)/6
Page 40

Note 25
Project expenses(United States dollars)

Category

2019

2018

1,617,061

2,414,150

191,609358,817

T ransfers to executing agencies
Reforestation and Forest Management
Economics, Statistics and Markets
Forest Industry
Activities
Programme support expenses
Ex-post Expenses
Total by type

181,413120,8173,559,291

1,705,382

69,550122,160--

5,618,924

4,721,327

Transfers to executing agencies correspond to the expenses incurred during theaccounting period of 2019 and 2018 by those agencies.
Ex-post expenses are expenses incurred by ITTO for the evaluation of finishedprojects.
Note 26
Other expenses(United States dollars)

Breakdown of other expenses

2019

2018

Exchange loss / (gain)

56,818(12,040)

Allowance expense for debt

499,547

469,182

1,703

1,568

558,068

458,710

Unrealized

Realized

2018

Gains

28,35338,642

66,996

Losses23,94231,013

54,956

Total ne t losse s(4,411)(7,629)(12,040)

Unrealized

Realized

2019

Interest expense

Total othe r e xpe nse s

Net foreign exchange gains or losses(United States dollars)

Breakdown of foreign exchange gains or losses

Breakdown of foreign exchange gains or losses

Gains

24,703

1,401

26,104Losses43,501

39,42282,922

Total ne t losse s18,79738,021

56,818

CFA(XXXV)/6
Page 41

Note 27
Financial instruments
1.
ITTO has exposure to the following risks from its use of financial instruments:
credit risk, liquidity risk and market risk. The present note contains information
about the exposure to each of the above risks, its objectives, policies and processes
for measuring and managing risk and its management of capital. Further quantitative
disclosures are included throughout the financial statements.
Accounting classifications and fair values
2.
The following tables detail the value of financial assets and financial liabilities
by class of instrument and by category, as defined in the accounting policies.
Financial assets as at 31 December(United States dollars)
Fair v alue thro ugh s urplus o r de fic it
B re ak do wn o f financ ial as s e ts

Lo ans and re c e iv able s

Assessed and voluntary contributions receivable
Other accounts receivable
Total financial asse ts

T o tal fair v alue

De s ignate d as s uc h
upo n initial re c o gnitio n

A v ailable -fo r-s ale

T o tal c arrying v alue2018

6,169,387--

6,169,387

6,169,387

43,905--43,90543,905

6,213,292

6,213,292

6,213,292
Fair v alue thro ugh s urplus o r de fic it

B re ak do wn o f financ ial as s e ts

Lo ans and re c e iv able s

Assessed and voluntary contributions receivable

T o tal fair v alue

De s ignate d as s uc h
upo n initial re c o gnitio n

A v ailable -fo r-s ale

6,257,753--

Other accounts receivable

39,218--

Total financial asse ts

6,296,971

T o tal c arrying v alue2019

6,257,753

6,257,753

39,21839,2186,296,971

6,296,971

3.
The carrying value of financial assets is considered to be a reasonableapproximation of fair value.
Financial liabilities as at 31 December(United States dollars)

Other financial
liabilities(amortized cost)

Total carrying value

Breakdown of financial liabilities
Accounts payable - Members
Other liabilities
Total financial liabilities

2018
61,64761,64761,647

1,638,920

1,638,920

1,638,920

1,700,567

1,700,567

1,700,567

Other financial
liabilities(amortized cost)

Total carrying value

Total fair value

Breakdown of financial liabilities
Accounts payable - Members
Other liabilities
Total financial liabilities

Total fair value

2019
157,528

157,528

157,528

1,768,457

1,768,457

1,768,457

1,925,985

1,925,985

1,925,985

CFA(XXXV)/6
Page 42

4.
Most liabilities are short-term and are expected to be settled within the next 12months. Non-current liabilities are reported at amortized cost in the statement offinancial position, and it is assumed that the carrying amounts don’t materially deviate
from the fair values of the financial instruments.
Valuation method5.
The valuation method of the different levels of financial instruments carried atfair value has been defined as follows:(a) Level 1. Average quoted prices from two separate sources (unadjusted) in
active markets for identical assets or liabilities;(b) Level 2. Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (as price) or indirectly (derived
from prices);(c) Level 3. Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
6.
ITTO does not hold any financial liabilities that are recognized at fair value
through surplus or deficit. All ITTO’s financial assets and liabilities are of level 3.

CFA(XXXV)/6
Page 43

Note 28
Financial risk management
Exposure to credit risk
1.
Credit risk is the risk of financial loss to ITTO if a donor or other counterparty
to a financial instrument fails to meet its contractual obligations. Credit risk arises
principally from cash and cash equivalents, investments, receivables fromcontributions and other receivables.
2.

ITTO holds bank accounts only in Japan and United States.

3.
In the Financial Rules and Rules relating to Projects of the ITTO (Second
Edition), ITTO has a detailed investment policy along with a charter for aninvestment oversight panel with quarterly reporting requirements to Council
members.
4.
The significant receivables of ITTO are all towards member countries. ITTO
has established an allowance for impairment that represents its estimate of incurred
losses in respect of receivables from contributions and other receivables, based on
the following rules representing the management’s best estimate of the risk.
For all assessed contributions receivables that are overdue 4 years and more, 100%
allowance is recommended for financial reporting purposes. Write-off of receivables
is not addressed by this IPSAS policy framework, as the Council is the final
authority to determine the write-offs of balances of assessed receivables outstanding
from Member States.
Fair values of unpaid assessed contributions that are outstanding for periods up to 4
years are to be computed using allowance of 80% for receivables overdue by morethan 36 months, allowance of 60% for receivables overdue by more than 24 months,
and 20% for receivables overdue by more than 12 months.
5.
The carrying value of all financial instruments represents the maximum
exposure to credit risk.
Ageing of assessed and voluntary contributions receivables(United States dollars)
0 to 1 year

>1 to 2 years>2 to 3 years>3 up to 4 years

4 years and more2018

Assessed contributions receivables

1,551,298

689,210642,271

531,414

4,626,069

8,040,263

Voluntary contributions receivables

3,703,529

-

-

-

-

3,703,529

Allowance-(137,842)(385,363)(425,132)(4,626,069)(5,574,406)

Net Total

5,254,827

551,368

256,908

106,283-

6,169,387

0 to 1 year

>1 to 2 years>2 to 3 years>3 up to 4 years

4 years and more

Assessed contributions receivables

1,705,058

1,183,630

611,529

561,146

4,977,197

9,038,560

Voluntary contributions receivables

3,248,951

-

-

-

-

3,248,951

Allowance-(236,726)(366,917)(448,917)(4,977,197)(6,029,757)

Net Total

4,954,008

946,904

244,612112,229-

6,257,753

2019

CFA(XXXV)/6
Page 44

Exposure to liquidity risk
6.
Liquidity risk is the risk that ITTO will encounter difficulty in meeting its
obligations associated with its accounts payables, other liabilities and promisedtransfers of cash to programmes. ITTO holds sufficient financial assets to cover all
its obligations and contingent liabilities. ITTO does not have any borrowings.
7.
ITTO strictly monitors its budget to avoid engaging in commitments which
sufficient budget is unavailable from contributions received and liquidated by thedonors.
Contractual maturities of financial liabilities(United States dollars)Due

Overdue2018 total
carrying value

0-3 months

3-6 months

6-12 months

More than 1 year

0-3 months

3-6 months

6-12 months

More than 1
year

Lease payments

9,303

9,303

18,606

120,942

-

-

-

-

158,155

Total

9,303

9,303

18,606

120,942

-

-

-

-

158,155Due
0-3 months

3-6 months

Overdue
6-12 months

More than 1 year

0-3 months

3-6 months

6-12 months

More than 1
year2019 total
carrying value

Lease payments

9,303

9,303

18,606

83,729----120,942

Total

9,303

9,303

18,606

83,729----120,9428.

No other financial liabilities have contractual maturities.

9.
It is not expected that the cash flows included in the maturity analysis could
occur significantly earlier, or at significantly different amounts.
Exposure to market risk
10. ITTO financial instruments are only composed by loans, receivables and otherfinancial liabilities, consequently ITTO exposure to market risk is considered as not
significant.
Currency risk
11. Currency risk (or foreign exchange risk) arises with regard to financial
instruments that are denominated in a foreign currency. ITTO is exposed to currency
risk on expenses, assets and liabilities that are denominated in a currency other thanthe United States dollar. The currencies in which these transactions are primarily
denominated are as follows:(a) Regarding expenses for the year employee benefits are mainly made inJapanese yen;(b) Regarding assets and liabilities as at 31 December are mainly balanced in
the United States dollar.

CFA(XXXV)/6
Page 45

Summary of currency positions(United States dollars)
United States
dollarYen (converted)

Euro (converted)

2018

Cash and cash equivalents

15,114,207

793,842-

15,908,049

Assessed and volunt ary contributions
receivable

4,157,793-

2,011,594

6,169,387

10,49633,409-43,905

19,282,497

827,250

2,011,594

22,121,341-

61,647-61,647

1,218,835

420,085-

1,638,920

Other account s receivable
Total financi al asse ts

Account s payable - Members
Other liabilities
Total financi al liabi litie s

1,218,835

481,732-

1,700,567

Ne t e xposure

18,063,662

345,518

2,011,594

20,420,774

United States
dollarYen (converted)

Euro (converted)

2019

Cash and cash equivalents

15,529,883

875,911-

16,405,795

Assessed and volunt ary contributions
receivable

5,073,405-

1,184,348

6,257,753

6,448

32,770-39,21820,609,736

908,681

1,184,348

22,702,766-

157,528-

157,528

1,272,536

495,921-

1,768,457

Other account s receivable
Total financi al asse ts

Account s payable - Members
Other liabilities
Total financi al liabi litie s

1,272,536

653,449-

1,925,985

Ne t e xposure

19,337,200

255,232

1,184,348

20,776,781

CFA(XXXV)/6
Page 46

Sensitivity analysis: foreign currency
12. The following table shows the sensitivity of net assets and surplus/deficits tothe strengthening and weakening of key currencies used by ITTO. This analysis isbased on foreign currency exchange rate variances that ITTO considered to bereasonably possible as at the reporting date. This analysis assumes that all othervariables, in particular interest rates, remain constant and ignores any impact offorecasted contributions and expenditures.
(United States dollars)
Surplus/(deficit)
As at 31 Decem ber 2018

Strengthening of
United States dollar
by 10 per cent

Weakening of UnitedStates dollar
by 10 per centJapanese yen(68,500)

83,722

Total(68,500)

83,722

Surplus/(deficit)
As at 31 Decem ber 2019

Strengthening of
United States dollar
by 10 per cent

Weakening of UnitedStates dollar
by 10 per centJapanese yen(23,203)

28,359Total(23,203)

28,359

13. The information presented above is calculated by reference to carrying
amounts of assets and liabilities.
Sensitivity analysis: interest rates
14.

The exposure of ITTO to interest rates is not material.

Note 29
Capital management
1.
ITTO defines the capital as the aggregate of its net assets, which comprises
accumulated surpluses and reserve balances. ITTO does not have any long-termborrowings and its Financial Rules and Procedures prohibit ITTO from borrowing
funds for the Administrative Account.
2.
Except for unrestricted accumulated surplus, the utilization by ITTO of net
assets requires a Council decision or termination of commitments. Unrestrictedaccumulated surplus are composed by:(a) Interest earned on funds in the Administrative Account usable by the Executive
Director to hire on a temporary and intermittent basis, consultants andcontractors to support the Secretariat in carrying out its duties; and(b) Programme Support within the Project Accounts usable to defray the expenses
of administration of projects, pre-projects, and other activities of theOrganization approved by the Council. Such administrative expenses shallcomprise bank charges, project-related communication costs, the remunerationof project administration staff, and other expenses related to project
administration.

CFA(XXXV)/6
Page 47

3.
The Executive Director shall notify the Council if the amount of the Working
Capital Reserve falls below 15% or approximately two months of annual operating
expenses of the Administrative Budget. Working Capital Reserve is part of therestricted accumulated surplus and amount to $5,167,833 at the end of 2019 and$ 5,111,202 at the end of 2018.
Note 30
Commitments
ITTO had no open purchase orders at the end of the reporting period.
Long-term agreements
ITTO is not part of any long term agreement.
Ongoing projects and activities
Restricted accumulated surplus are partially composed by funds allocated to ongoingprojects. While no obligation is attached to the related assets recognized initially,
ITTO has commitments for both Thematic Programme (TP) ongoing projects and theFellowship Programme, as follows:(United States dollars)

Balance as of 31 December 2017
Amendment to commitments
Revenue from pledges

Them atic
Program m e

Fellowship
Program m e

307,482

287,016---

58,969T ransfer to the Ex-post pooled fund

(10,000)-

T ransfer to the T P pooled fund

(4,935)-(106,498)(103,665)

186,049

242,320-

75,098(57,092)---(111,314)(123,156)

17,643

194,262

Expenses of 2018
Balance as of 31 De ce mbe r 2018
Revenue from pledges
T ransfer to the Ex-post pooled fund
T ransfer to the T P pooled fundExpenses of 2019
Balance as of 31 De ce mbe r 2019

CFA(XXXV)/6
Page 48

Note 31
Contingencies
Contingent assets
ITTO has not received pledges prior to concluding contribution agreements, or
pledges subject to approval.
ITTO has consequently no contingent assets,corresponding to probable inflow of resources, to disclose.
Contingent liabilities
ITTO has no pending litigation representing a financial risk for the organization.
Note 32
Related parties
Key management personnel
1.
The leadership structure of ITTO consists of the Executive Director and the
Directors of each division, including those who substitute these positions as Officerin-charge.
2.
There are no close family members of key management personnel employed by
ITTO nor have there been any transactions made with them by ITTO during thereporting period.
Costs of Key management(United States dollars)

2019

2018

Remuneration

917,709795,603

Other Entitlements

116,484

104,865

Long-term Benefits

183,859

192,322

1,218,052

1,092,790

Total

3.
The remuneration paid to key management personnel includes salary, post
adjustment, dependency allowances, medical and social insurance and otherentitlements such as educations grants.
4.
Key management personnel are also eligible for post-employment employee
benefits such as pension defined contributions plan, repatriation and home leave
benefits and payment of unused annual leave. The total amount of defined
contribution plan expenses for pension schemes for key management personnel was$158,140 for 2019 and $138,812 for 2018.
5.
There were no loans or advances granted to key management personnel during
the reporting period.

CFA(XXXV)/6
Page 49

Note 33
Events after the reporting date
1.
In March 2020, the World Health Organization declared the outbreak of anovel coronavirus (COVID-19) as a pandemic which continues to spread throughout
ITTO’s Member countries. As a result, delays in the implementation of projects andreceipt of contributions from Member countries are expected. ITTO considers the
pandemic as a non-adjusting event as defined under IPSAS-14: Events after thereporting date.
2.
The extent of COVID-19’s effect on ITTO’s operational and financial
performance will depend on future developments, including the duration, spread andintensity of the pandemic, all of which are uncertain and difficult to predict
considering the rapidly evolving landscape. Therefore, while ITTO expects thismatter to negatively impact its results of operations, cash flows and financial
position, the related impact cannot be reasonably estimated at this time.
Note 34
Financial Accounts
1.
The ITTO governing body and management does not manage the organization
based on service segments or geographical segments. It, therefore, does not havesegments as defined under IPSAS-18: Segment reporting.
2.
However, Article 18 of the International Tropical Timber Agreement, 2006
establishes separate financial accounts to reflect the major funding sources of ITTO
as follows:(a)

The Administrative Account, which is an assessed contribution account where
expenses necessary for the administration of the Agreement are brought into
and are met by annual contributions paid by members;(b)

The Special Account, which is a voluntary contribution account comprising of
two sub-accounts: the Project Sub-Account and the Thematic Programmes SubAccount. The purpose of the Project Sub-Account is to facilitate earmarked
contributions for the financing of pre-projects, projects and activities approvedin accordance with criteria established by Council on policy work and project
activities of the Organization. The purpose of the Thematic Programmes SubAccount is to facilitate unearmarked contributions for the financing ofapproved pre-projects, projects and activities consistent with Thematic
Programmes established by the Council; and(c) The Bali Partnership Fund, which is a Fund for sustainable management of
tropical timber producing forests, established to assist producer members tomake the investments necessary to achieve the objective of enhancing thecapacity of members to implement strategies for achieving exports of tropicaltimber and timber products from sustainably managed sources.
3.
All financial accounts elimination includes revenue and expenses arising fromtransfers between funds which are accounted for at cost and are eliminated on
consolidation.

CFA(XXXV)/6
Page 50

International Tropical Timber Organization
I. Statement of financial position as at 31 December by financial account(United States dollars)

Project Accounts
Administrative Account

AssetsCurrent assets
Cash and cash equivalents
Investments
Assessed and voluntary contributions receivable, net
Other accounts receivable
Advance transfers - Projects
Advance transfers - Others
Total current assets
Non-current assets
Property and equipment
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - Members
Voluntary contributions advance receipts - allocatedVoluntary contributions advance receipts - unallocated
Assessed contributions advance receipts
Other liabilities
Total current liabilities
Non-current liabilities
Voluntary contributions advance receipts - allocated
Other liabilities
Total non-current liabilities
Total liabilities
Net of total assets and total liabilities
Net assets
Accumulated surplus - Restricted
Accumulated surplus - Unrestricted
Reserves
Total net assets

Special Account:
Project Sub-AccountSpecial Account:
Thematic Programme
Sub-Account

Eliminations
Bali Partnership Fund

Total

Sub-Total

31 December
2019

31 December
2018

31 December
2019

31 December
2018

31 December
2019

31 December
2018

31 December
2019

31 December
2018

31 December
2019

31 December
2018

31 December
2019

31 December
2018

31 December
2019

31 December
2018

6,648,655
3,008,802
2,681
136,638
9,796,776

6,561,519
2,655,457
4,444
278,626
9,500,046

9,709,375
3,248,951
34,651
518,827
37,037
13,548,841

9,045,050
3,513,929
37,201
1,515,793
43,883
14,155,856

22,422
22,422

284,378
284,378

25,343
1,886
27,22917,102
2,260
19,3639,757,140
3,248,951
36,537
518,827
37,037
13,598,491

9,346,530
3,513,929
39,462
1,515,793
43,883
14,459,597--

16,405,795
6,257,753
39,218518,827
173,674
23,395,267

15,908,049
6,169,387
43,905
1,515,793
322,508
23,959,642

235,858
9,595
245,452
10,042,228

290,661
12,335302,996
9,803,042

13,548,841

14,155,856

22,422

284,378

27,22919,363

13,598,491

14,459,597--

235,858
9,595
245,452
23,640,719

290,661
12,335302,996
24,262,638

157,528
9,326
326,398
665,364
1,158,616

61,647
9,501
433,682543,747
1,048,577

391,554414,546
119,057
925,157

867,341
443,943
78,0901,389,374-

93,55093,550--391,554414,546
119,057
925,157

867,341
443,943
171,640
1,482,924--

157,528
400,880
414,546
326,398
784,4212,083,773

61,647876,842443,943433,682
715,387
2,531,501

984,036
984,036
2,142,652
7,899,576

923,533
923,533
1,972,109
7,830,932

11,018,880
11,018,880
11,944,037
1,604,804

11,764,348
11,764,348
13,153,722
1,002,134

22,42293,550190,828

27,22919,363

11,018,880
11,018,880
11,944,037
1,654,454

11,764,348
11,764,348
13,247,273
1,212,324--

11,018,880
984,036
12,002,916
14,086,689
9,554,030

11,764,348
923,533
12,687,881
15,219,382
9,043,256

5,167,833
231,7442,500,000
7,899,576

5,111,202
219,730
2,500,000
7,830,932

646,870
957,934
1,604,804

480,692
521,441
1,002,134

17,633
4,789
22,422

186,039
4,789
190,828

25,001
2,228
27,22917,1352,228
19,363

689,503
964,951
1,654,454

683,866
528,458
1,212,324--

5,857,336
1,196,694
2,500,000
9,554,030

5,795,068
748,188
2,500,000
9,043,256

CFA(XXXV)/6
Page 51
International Tropical Timber Organization
II. Statement of financial performance for the year ended 31 December by financial account(United States dollars)

Project Accounts
Administrative Account

2019

2018

Eliminations

Special Account:
Project Sub-AccountSpecial Account:
Thematic Programme
Sub-AccountBali Partnership Fund

2019

2019

2019

2018

2018

Total

Sub-Total

2018

2019

2018

2019

2018

2019

2018

Revenue
Administrative Account
Assessed contributions

7,170,242

7,123,539

-

-

-

-

-

-

-

-

-

-

7,170,242

7,123,539

Other voluntary contributions

884,755

1,265,730

-

-

-

-

-

-

-

-

-

-

884,755

1,265,730

Financial revenue

12,014

14,656

-

-

-

-

-

-

-

-

-

-

12,014

14,656

890

971

-

-

-

-

-

-

-

-

-

-

890

971

Other income
Project Accounts
Member States voluntary contributions--

5,401,422

4,418,350

-

-

79

-

5,401,501

4,418,350

-

-

-

-

5,401,501

4,418,350

Other voluntary contributions

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Programme support Revenue--

496,990403,721

-

-

-

-

496,990403,721--496,990403,721

Expost evaluation Revenue--

163,005

95,352----

163,005

95,352--

163,005

95,352Financial revenue

-

-

7,844

23,029

-

-

7,787

22,984

15,63146,013--

15,63146,013

8,067,900

8,404,895

6,069,261

4,940,452

-

-

7,866

22,984

6,077,127

4,963,436--

14,145,027

13,368,331

Total revenue
Expenses
Administrative AccountEmployee benefits

4,889,230

4,488,806

-

-

-

-

-

-

-

-

-

-

4,889,230

4,488,806

Operating expenses

2,501,333

2,514,504

-

-

-

-

-

-

-

-

-

-

2,501,333

2,514,504

Project Accounts
Project expenses--

5,507,610

4,614,829

111,314

106,498--

5,618,924

4,721,327--

5,618,924

4,721,327

Other expenses

66,699541,994

61,015461,091

16,074(2,380)

-

(2)

-

-

16,074(2,382)--

66,699558,068

61,015
458,710

Total expenses

7,999,256

7,525,416

5,523,684

4,612,450

111,314

106,496--

5,634,997

4,718,946--

13,634,253

12,244,361

68,644879,480545,578

328,003(111,314)(106,496)

7,866

22,984442,130

244,490--

510,774

1,123,970

Depreciation and amortization

Surplus/(deficit) for the year