A/63/6
ORIGINAL: ENGLISH
DATE: MAY 24, 2022

Assemblies of the Member States of WIPO
Sixty-Third Series of Meetings
Geneva, July 14 to 22, 2022

REPORT BY THE EXTERNAL AUDITOR
prepared by the Secretariat

1.
The present document contains the “Report by the External Auditor” (document
WO/PBC/34/4), submitted to the WIPO Program and Budget Committee (PBC) at its
thirty-fourth session (June 27 to July 1, 2022).
2.
Any decision of the PBC in respect of those documents will appear in the “List ofDecisions Adopted by the Program and Budget Committee” (document A/63/7).

[Document WO/PBC/34/4 follows]

WO/PBC/34/4
ORIGINAL: ENGLISH
DATE: MAY 24, 2022

Program and Budget Committee
Thirty-Fourth Session
Geneva, June 27 to July 1, 2022

REPORT BY THE EXTERNAL AUDITOR
prepared by the Secretariat
1.

This document comprises the following items:(i)
The Independent Auditor’s report which contains the opinion of the External
Auditor on the financial statements of the World Intellectual Property Organization(WIPO) for the year ended December 31, 2021; and(ii) Report of the External Auditor for the financial year 2021 to the 63rd Series of
Meetings of the Assemblies of the Member States of WIPO (also known as the“long form report”). This report contains the External Auditor’s recommendations arisingfrom the audit work undertaken during the year 2021. This report also contains
Management’s responses to the External Auditor’s recommendations.

2.

The following decision paragraph is proposed.
3.
The Program and Budget
Committee (PBC) recommended to the
Assemblies of WIPO, each as far as it
is concerned, to take note of the“Report by the External Auditor”(document WO/PBC/34/4).
[Report by the External Auditor
follows]

WO/PBC/34/4
page 2
INDEPENDENT AUDITOR’S REPORT TO THE GENERAL ASSEMBLY OF THE WORLDINTELLECTUAL PROPERTY ORGANIZATION
Opinion on financial statements
I have audited the financial statements of the World Intellectual Property Organization for theyear ended 31 December 2021, which comprise the statement of financial position, statement offinancial performance, statement of changes in net assets, statement of cash flow, statement ofcomparison - budget and actual amounts revenue for 2021, statement of comparison - budget
and actual amounts expenses 2021, statement of comparison - budget and actual amounts
revenue for 2020/21, statement of comparison - budget and actual amounts expenses for
2020/21, and the related notes, including the significant accounting policies.
In my opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the World Intellectual Property Organization as at 31 December 2021 andits financial performance and its cash flows for the year then ended in accordance with
International Public Sector Accounting Standards.
Opinion on regularity
In my opinion, in all material respects, the revenue and expenses have been applied to the
purposes intended by the General Assembly of the World Intellectual Property Organization andthe financial transactions conform to the Organization’s Financial Regulations.
Basis for opinion
I conducted my audit in accordance with International Standards on Auditing (ISAs) and theOrganization’s Financial Regulations. My audit of regularity was undertaken using the principles
set out within the ISAs. My responsibilities under these standards are further described in the
Auditor’s responsibilities for the Audit of the Financial Statements section of my report.
I am independent of the World Intellectual Property Organisation in accordance with the ethicalrequirements that are relevant to my audit of the financial statements in the United Kingdom,
namely the Financial Reporting Council’s Ethical Standards 2019 as applicable to listed entities.
My staff and I have fulfilled our other ethical responsibilities in accordance with theserequirements. I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my opinions.
Other Information
Management is responsible for the other information. The other information comprises
information included in the Annual Financial Report and the Statement on Internal Control 2021.
My opinion on the financial statements does not cover the other information and I do not
express any form of assurance conclusion thereon. In connection with my audit of the financial
statements, my responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or my knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work I
have performed, I conclude that there is a material misstatement of this other information, I am
required to report that fact. I have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the financial
statements
Management is responsible for the preparation and fair presentation of the financial statementsin accordance with International Public Sector Accounting Standards, and for such internal

WO/PBC/34/4
page 3
control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the WorldIntellectual Property Organization’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the World Intellectual Property Organization or tocease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the World Intellectual Property
Organization’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
My responsibilities are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue acertificate that includes my opinion. Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, I exercise professional judgment and maintainprofessional scepticism throughout the audit. I also:•

identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis formy opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;•

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

evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management;•

conclude on the appropriateness of the World Intellectual Property Organization’s use of
the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the World Intellectual Property Organization’s ability to continue as agoing concern. If I conclude that a material uncertainty exists, I am required to draw
attention in my report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify my opinion. My conclusions are based on theaudit evidence obtained up to the date of my report. However, future events orconditions may cause the World Intellectual Property Organization to cease to continue
as a going concern; and•evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

WO/PBC/34/4
page 4
In addition, I am required to obtain evidence sufficient to give reasonable assurance thatrevenue and expenses reported in the financial statements have been applied to the purposes
intended by the General Assembly and the financial transactions confirm to the Financial
Regulations which govern them.
I communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal control that I identify during my audit.
ReportI have also issued a long-form audit report on the results of my audit.

(signed) Gareth Davies
Comptroller and Auditor General
National Audit Office157-197 Buckingham Palace Road
Victoria
London. SW1W 9SP
United Kingdom

Date: 19 May 2022

WO/PBC/34/4
page 5

MAY 2022

World Intellectual Property Organization

External Auditor's Report on the 2021 WIPO
Financial Statements

WO/PBC/34/4
page 6

The aim of the audit is to provide independent
assurance to member states; to add value to the
WIPO's financial management and governance; andto support your objectives through the external audit
process.

The Comptroller and Auditor General is the head of the National Audit Office (NAO), the United
Kingdom's Supreme Audit Institution. The Comptroller and Auditor General and the NAO are
independent of the United Kingdom Government and ensure the proper and efficient spendingof public funds and accountability to the United Kingdom's Parliament. The NAO provides
external audit services to a number of international organizations, working independently of itsrole as the Supreme Audit Institution of the United Kingdom.

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page 7

Contents
Introduction

8

Key observations

8

Part One

13

Financial management

13

Governance and internal control

20Part Two27

Management Issues

27

Forecasting filing activity

27

Human Resources Management Department (HRMD): follow-up of priorrecommendations

28

Part Three33

Other matters for the Governing Bodies

33

Prior recommendations

33

Acknowledgments

33

Appendix One

34

Follow-up of prior year recommendations

34

7

WO/PBC/34/4
page 8INTRODUCTION
1
The World Intellectual Property Organization (WIPO) was established in 1970 by
the 1967 WIPO Convention. The history of WIPO can be traced as far back as the 1883
Paris Convention for the Protection of Industrial Property. The purpose of WIPO is tolead the development of a balanced and effective international intellectual propertysystem. The organisation comprised some 193 Member States and is financed primarily
through fees charged for its services through its treaty unions, particularly the Patent
Cooperation Treaty (PCT), Madrid and Hague Unions. WIPO also receives assessedand voluntary contributions.
2
In addition to our opinions on WIPO’s financial statements, this report presents the
key findings and recommendations arising from our work, including our observations on
financial management and a tailored review of WIPO’s governance, in light of proposedchanges to Financial Regulations and the development of a new risk appetite statement.
In our performance reporting, we have reviewed the approach to the modelling of
expected filings and revenues from WIPO’s Intellectual Property (IP) activities, which
inform the overall approach to the expenditure budget of the Organization. We haveundertaken a more detailed review of the developments within Human Resources, in
response to our work in 2018. Our report also follows up the progress made
implementing our previous recommendations.
3
Our findings and recommendations have been discussed with management. Inline with good practice, the results of our financial audit were communicated to the
Independent Advisory Oversight Committee prior to finalising our work.
4
The original drafting language of this report is English. The English version is theauthoritative text.

KEY OBSERVATIONS
Audit opinions on the financial statements
5
Our audit comprised the examination of the 2021 financial statements andassociated transactions and events for that year. It was conducted in accordance with
International Standards on Auditing and the Financial Regulations. Those standards
require that the United Kingdom’s Comptroller and Auditor General (C&AG) and his staff
comply with ethical requirements and plan and perform the audit to obtain reasonableassurance as to whether the financial statements are free from material misstatement.
We provided unqualified audit opinions, without modification, on the financial
statements. The financial statements remain of high quality, supported by soundsystems of internal controls and reporting.

6
With the partial relaxation of COVID-19 pandemic restrictions, it was possible tocomplete aspects of the audit on site. The remaining restrictions still created additional
staffing pressures, requiring additional effort by both the Finance Division and the NAO
team. Despite this, the attainment of an unqualified audit opinion to an earlier governing
body timetable represents a significant achievement by both teams.

WO/PBC/34/4
page 9Financial management
Financial performance
7
WIPO delivered a further strong financial performance in 2021, achieving a
retained surplus of CHF 108.9 million (2020: CHF 135.9 million), representing some
22.9 per cent of revenue earned. Together with other movements within the financial
statements, net assets increased to CHF 408.5 million (2020: CHF 387.1 million).
Revenues increased by CHF 6.8 million to CHF 475.1 million. During the same period,
expenditures increased by CHF 23.1 million (6.3 per cent) to CHF 388.9 million
predominantly due to changes in the long-term employee benefits. While the expenses
increased, they remained lower than the pre-pandemic 2019 expenditure of CHF 401.4
million. The overall results for the year were further improved by net investment gainsof CHF 22.7 million (2020: CHF 33.4 million).
8
WIPO reported an actuarial loss of CHF 87.5 million (2020 loss: CHF 114.9 million)
due to further increases in the valuation of the Organization’s employee benefit
liabilities, resulting primarily from changes in the assumptions for health care costs.
Employee benefits continue to represent the greatest area of risk to WIPO’s financial
health. WIPO has increased the amount set aside to mitigate the financial risks arisingfrom these liabilities by CHF 26.0 million.
9
Both the initial fee estimates for revenue of CHF 448.8 million and the budget for
expenditure of CHF 387.3 million were increased to CHF 473.2 million (5.4 per cent)and CHF 415.5 million (7.3 per cent) respectively during the year. WIPO recognised
revenue and expenditure on the budget basis of CHF 469.1 million and CHF 348.1
million respectively.
10 With continued trends in the pipeline of applications remaining strong, a healthy
reserve position and relatively high levels of cash and other current investments, weconcluded that management’s assertion in respect of going concern of WIPO remained
appropriate. The Organization is well placed to respond to the continued global
economic uncertainty. The financial performance and position for each Union
demonstrate how reliant the Organization is on the PCT and Madrid Unions which,especially the PCT, compensate for the deficits reported by the Hague and Lisbon
Unions.
11 The 2021 Financial Statements recognise a significant increase in the employee
benefit liabilities, continuing the trends of previous years. These comprise primarily thestaff members’ after-service health insurance, their repatriation entitlements andaccumulated leave liabilities. During 2021, the overall liability for these staff benefits has
increased to CHF 615.8 million (2020: CHF 495.3 million). Assuming current
assumptions remain consistent, WIPO forecasts that the liability for the after-service
health insurance alone is projected to increase to CHF 715.5 million by 31 December
2025. As previously reported, these benefits will consume a growing proportion of
WIPO’s future revenues. Given the importance of these liabilities to WIPO our report
gives details of our assessment of the estimates used by management.
12 WIPO’s annual financial report provides a detailed financial commentary toaccompany its financial statements. It is important for all organisations to challenge
how they use the accompanying financial commentary on a regular basis, obtaining

WO/PBC/34/4
page 10feedback from the users of the statements. There is merit in considering the scope forgreater alignment between WIPO’s financial and performance reporting.

Governance and internal control
13 Our audit has continued to conclude that WIPO has sound systems of internal
control and no significant weaknesses have come to our attention during the audit
process, despite the continued challenges of the pandemic. The Organization has
always been proactive in its approach to internal control, and we have noted the
proposals to amend the Financial Regulations, the evolving nature of compliance, thedevelopment of a revised risk appetite statement and pending changes within theInternal Oversight Division (IOD).
14 We have provided detailed observations on an early draft of the proposed changes
to the Financial Regulations, to modernise and streamline them, reflecting current
practices and the organisational structure. The proposals also address important gaps
within the existing Regulations, in areas such as partnership working and the
management of liabilities. Our overall conclusion is that the revised structure provides
a more coherent framework. We highlight the benefits of a post implementation review
to allow for the adaptation of any Regulations which need further refinement following
their initial implementation.
15 WIPO has a well-developed approach to reviewing compliance with its identified
controls. We have reviewed the detailed processes undertaken and made observations
to help further mature the approach. We have highlighted the need to focus more on
the key controls. Greater assurance over the significant key controls will create
efficiencies, to inform management on their quality and effectiveness on the mostmaterial elements of the system of internal control. It remains important for WIPO toensure the completeness of the assessment; we have noted that over the last few years
new areas have been added to this review. Mindful of our observations, we continue to
see WIPO as having one of the better approaches to compliance within the UN system.
16 Since the start of our mandate in 2018, we have supported WIPO’s ambition to
adopt data analytics to provide a greater breadth of assurance over the operation of thecontrol environment. Such analytics provide cost effective and systematic tools toprovide feedback on the operation of controls, to inform management on areas of risk
and the scope for improvement. There have been delays in implementing the approacharising from how data is stored, but we strongly encourage management to move
forward in the delivery of at least some analytics to inform the way in which theOrganization may deploy its wider approach. We have also noted that IOD and Human
Resources Management Department (HRMD) have developed their own range of tools
for analytics, mindful of their usefulness in audit and HR management activities. It is
important that WIPO’s investment here is approached in a holistic manner, avoiding
duplication of effort, and ensuring expertise can be developed and shared acrosscommon platforms.
17 On risk management we have noted the positive development of a clear andconcise Risk Appetite Statement in consultation with Member States, focused on the
Expected Results of the Organization. In our view, the articulation of the risk tolerance
and appetite provides a platform against which WIPO can focus its resources, assess
the effectiveness of mitigation actions and demonstrate its management of risks. The
Statement is amongst the clearest we have seen, and we will consider how WIPO isWO/PBC/34/4
page 11
using this to inform and determine its approach to risk in future audits.
18 We have noted the work and operation of the Risk Management Group (RMG),
chaired by the Director General. It considers the most significant risks facing theOrganization, and how these are being managed. There is scope to review how theRMG obtains assurance over Sector level risks and on the level of challenge on theseand their associated mitigations. In line with best practice WIPO has provided the RMG
with an annual risk management report, providing an honest appraisal of its progress inembedding risk management. Progress has been made and WIPO remains on track tomove from being “Established” (Level 3) to a rating of being “Advanced” (Level 4)against the High-Level Committee on Management Maturity Model rating.
19 A key source of independent and objective assurance to support the Director
General is the work of the Internal Oversight Division (IOD). We have reflected on theinevitable changes which will arise from the term limit of the current Director of the IOD.
As the Organization evolves to become more data driven and refines its approach tocontrols, it will be important to ensure that both the mandate and shape of the IOD’s
activities is considered, alongside the skills and capabilities needed. We havehighlighted that the move towards an annual audit opinion will further increase theimportance of the risk-based work programme, to ensure it is focused on the areas ofgreatest importance and materiality.
20 We have reviewed the Statement on Internal Control and confirm that it isconsistent with our understanding of WIPO’s control environment. We continue to see
WIPO presenting its Member States with a logical, concise, and coherent articulation of
how the Director General operates an effective system of internal control. The
Statement reflects an appropriate balance of assurance in key risk and control areas,
together with a prospective approach to demonstrate commitment to improvement in
future periods. Overall, the Statement provides clear, reliable and positive assurance
for Member States.

Forecasting filing activity
21 In our 2020 audit report, we observed that WIPO regularly exceeded its fee
revenue target and consistently underspent against its expenses budget, leading tosurpluses higher than those originally anticipated. We therefore decided to review thebasis for the modelling of revenues as a key element of the assumptions under-pinningthe budget. The models were designed in-house to provide information on expected
future filing volumes and corresponding fees from the WIPO Global IP Systems. The
levels of filing activity are a key driver for certain variable cost elements of WIPO
programme budget expenditure.
22 We applied a survey-based review to assess the model, which included
consideration of: governance and assurance; concept and design; build anddevelopment; data and assumptions; and use of the outputs. Our analysis of the results,
and our wider considerations, confirm that the model achieves its purpose of providing
a reasonable basis for planning and budgeting. While further enhancements could bemade to areas such as model governance, these are unlikely to have any real costbenefits. Over time, the model has demonstrated its reliability.
23 Overall, our review highlights WIPO’s prudence in its financial planning which
minimises the risk to Member States but does increase the potential for consistently

WO/PBC/34/4
page 12exceeding forecast surplus. We continue to urge Member States to take a strategic
approach to how these surplus funds are best utilised by the Organization.

Human resource management
24 In 2018, we reviewed how WIPO reported its performance, with reference to thework of the Human Resources Management Department (HRMD). In the context of thisreview, we made a series of recommendations for the improvement within HR activities.
We deferred our review of progress pending the adoption of the new HR Strategy in
October 2021, which has refocused WIPO’s approach to HR issues and led tosignificant structural and strategic changes. Overall, we are pleased to report positive
progress in all the areas we previously reported.
25 HRMD has been restructured around the delivery of seven organisational
objectives, alongside being a contributor to several Expected Results. The restructure
provides greater emphasis on priority areas and supports a better framework for HRMD
to progress from a transactional to a more strategic function in the way it supports theOrganization and its staff. This will be underpinned by enhanced performance reportingand compliance activities, creating better information for decision making and efficiency.
26 The new HRMD strategy has placed considerable focus on issues of diversity andtalent management, addressing areas we identified as needing attention. The plansestablished in these areas should help deliver a better skilled workforce matching theneeds of WIPO with the aspirations of staff. This underpinned by a greater emphasis on
the effectiveness of training and its contribution to staff and the Organization. Specificattention is being given to strengthening training and skills in leadership andmanagement. These changes will support improved workforce planning and delivery ofa more agile workforce to meet future needs.
27 HRMD has strengthened its arrangements and approach to the management ofstaff absences, improving compliance monitoring and establishing parameters foractions and interventions when staff are absent. This is complemented by improved
support for both the returning employee and their managers to ensure the return to work
can be facilitated to meet the needs of both. These arrangements should deliver benefits
in reducing overall WIPO absence levels and providing enhanced support for a
successful return for individuals. Over time, further refinement can be made to theseprocesses by reviewing the timescales for intervention and by benchmarking levels ofabsence with other entities.
28 Finally, the overall culture of the Organization is being approached throughimproved staff engagement. Underpinning this is the use of new tools andcommunications with staff. Surveys will now be used to frequently track employee
experience and provide information to monitor the impact of changes and theeffectiveness of the new strategy. It will be important for management to monitor thelevels of response; experience shows that where actions are not taken this can impact
on engagement participation and scores and may put the achievement of the newstrategies at risk.
29 While it is too early to assess the impact of the changes, sound frameworks havebeen established to position the Organization to address the key areas we identified inour 2018 report. We are content that the recommendations we made have beenaddressed through the actions taken in formulating the new strategy. Given these are

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page 13
new initiatives, time will tell what impact they will have on the Organization and its
performance.

Previous recommendations
30 As of May 2022, of the 23 recommendations from 2020 and previous years thatremained open, we closed 14 having either been implemented or overtaken by events.
Nine recommendations remain in progress, these mostly relate to the recommendations
made last year.

PART ONEFINANCIAL MANAGEMENT
Overall audit results
1.1 The External Auditor has audited WIPO’s financial statements for the year ended
31 December 2021 which comprise the Statement of Financial Position, Statement of
Financial Performance, Statement of Cash Flow, Statement of Changes in Net Assets,
Statement of Comparison of Budget and Actual Amounts and the related notes. The
audit opinion confirms that the financial statements present fairly, in all material
respects, the financial position of the Organization as at 31 December 2021 and of its
financial performance and cash flows for the year then ended. It also confirms theirproper preparation in accordance with International Public Sector Accounting Standards
and that, in all material respects, the transactions underlying the financial statements
have been made in accordance with the Financial Regulations and applied to the
purposes intended by Member States.
1.2 With the partial relaxation of pandemic restrictions during the period, it waspossible to complete aspects of the audit on site. The remaining restrictions still createdstaffing pressures, requiring additional effort by both the Finance Division and the NAO
teams. Despite this, the attainment of an unqualified audit opinion to an earlier
governing body timetable, despite the impact of working through continued restrictions
represents a significant achievement by both teams. The audit progressed successfully,
enabling the audit to be completed in time to meet the earlier governing body timetable.
We look forward to regaining the efficiency of more on-site working during the next audit
cycle.

Financial performance
1.3 In 2021 WIPO reported an overall surplus for the year of CHF 108.9 million (2020:
CHF 135.9 million) which, together with actuarial losses on WIPO’s post-employment
liabilities of CHF 87.5 million, increased net assets to CHF 408.5 million at December
2021 (2020: CHF 387.1 million). This surplus represents some 22.9 per cent ofrevenues earned (2020: 29.0 per cent). Revenue in 2021 of CHF 475.1 million (2020:
CHF 468.3 million) represents an increase of 1.5 per cent from the previous year.
Despite the ongoing uncertainty following the pandemic and other global events,
applications received by the Organization’s primary unions have remained strong,
although the rate of revenue increase on the previous years has slowed, WIPO
achieved revenues of CHF 450.5 million in 2021 (2020: CHF 441.4 million). WIPO also
benefitted from the performance of its investment portfolio in 2021 reporting overall
unrealised investment gains for the year of CHF 22.7 million (2020: gains of CHF 33.4
million).

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page 14
1.4 WIPO incurred expenditures of CHF 388.9 million, an increase of CHF 23.1 million(6.3 per cent) on 2020 (CHF 365.8 million). As discussed in the accompanying Financial
Report, while expenses have increased in 2021 they remain lower than pre-pandemic
levels with restrictions over movement and mass gatherings continuing to impact travel
for missions and participation in conferences and meetings. We recommended in 2020,
that WIPO review its ways of working and identify lessons from the pandemic working
practices to minimise unnecessary travel. In response, WIPO has integrated Virtualand hybrid ways of working for meetings and technical assistance activities. WIPO
informed us that this has been baselined into the Program of Work and Budget for 202223, with a decrease in the travel budget of 21 per cent compared to the 2020-21 budget.

Financial position
1.5 The overall surplus has contributed to gross assets increasing by 13.4 per cent to
CHF 1,577.3 million as at 31 December 2021 (2020: CHF 1,390.9 million). This is
primarily due to the net increases in the value of the Organization’s investments of CHF
178.5 million.
1.6 During 2020, gross liabilities increased by 16.4 per cent to CHF 1,168.8 million(2020: CHF 1,003.8 million). This is primarily due to the increase in the Organization’s
employee benefits to CHF 615.8 million as at 31 December 2021 (2020: CHF 495.3
million). This increase is predominantly due to changes in assumptions underpinningthe post-employment liabilities which are further explained later in this report. The
significant impact on WIPO’s financial health of the changes in the ASHI liability havebeen mitigated by continuing significant surpluses contributing to the growth ininvestment assets. The combined effect of changes in assets and liabilities was toincrease net assets to CHF 408.5 million as at December 2021 (2020: CHF 387.1
million).

Financial health
1.7 We use ratio analysis of an organisation’s financial health on all our international
audits to show how financial positions change over time (Figure 1). They express therelationship of one item of account against another. For example, there are CHF 0.54
of current assets for every CHF 1 of current liabilities. This might normally be a cause
for concern, but this low level is mitigated by the significant pipeline of future work
evidenced by the high value of advance receipts (CHF 339.2 million). While unlikely,
should the need arise, WIPO could liquidate its longer-term investments for cash-flow
purposes.

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page 15
Figure 1: WIPO Key financial ratios 2018-2021
Ratio

2021

2020

2019

2018

Total assets: Total
liabilities

1.35

1.39

1.42

1.32

0.54

0.63

0.56

0.60

0.26

0.28

0.38

0.44

Assets: Liabilities
Current ratio
Current assets:
Current liabilities
Cash ratio
Cash and cash
equivalents: Current
liabilities

Notes
1

. A high current ratio indicates an entity’s ability to pay off its short-term liabilities.

2. A high asset to liability ratio is a good indicator of solvency.

3. The cash ratio is an indicator of an entity’s liquidity by measuring the amount of cash and cash equivalents there arein current assets to cover current liabilities.

Source: Audited Financial Statements of WIPO

1.8 Overall, WIPO continues to maintain a sound financial situation. The Organization
has healthy reserves which are significantly backed by cash and investments. It has
earmarked funds (Strategic Cash and Investments) of some CHF 237.2 million (2020:
CHF 211.2 million) for its accumulated employee benefit liabilities, most notably toprovide after-service health insurance to former staff members which currently total CHF
573.7 million. We have further explored the Organization’s post-employment benefits
later in the report. By funding a proportion of these liabilities, WIPO minimises long-termrisks to Member States in having to fund these liabilities through assessed contributions
if revenues fall.
1.9 As explored more in WIPO’s Financial Report, alongside the cash andinvestments, the financial statements report property, plant and equipment andintangible assets totalling CHF 375.4 million (2020: CHF 382.5 million) which are held
predominantly at their historic cost. WIPO has retained reserves of CHF 408.5 million
which include the special project reserves of CHF 34.8 million which we reported on lastyear and comment on in our follow-up to prior recommendations.
1.10 Overall, due to WIPO’s cash generating business model it has made substantial
investments in its property estate and holds significant retained reserves which are morethan sufficient to meet its total liabilities. It remains important that as WIPO changes its
operating arrangements post-pandemic, that the utilisation of these significant assets is
kept under review to seek opportunities to best utilise its estate. During 2021, WIPO
terminated the lease on the CAM building. This will save the Organization approximately
one million Swiss Francs per annum.

2020-2021 Program and Budget performance
1.11 The Program and Budget for WIPO is prepared each biennium on a modified
accrual basis. As the second year of the biennium, Statement V of the financial

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statements presents a separate comparison of the budget and actual amounts for 2021
and for the 2020-2021 biennium overall. A reconciliation of the 2021 budget
performance to the revenue and expenditure figures reported in the performancestatement is presented in Note 17 to the financial statements.
1.12 The original budget for the biennium 2020-2021 was approved by the General
Assembly with allocations for revenue and expenditure for 2021 of CHF 448.8 million
and CHF 387.3 million respectively 1. Including investment gains/losses, this provided
for a budgeted surplus of CHF 60.7 million. Budget revisions during the year led to a
final forecast budget surplus of CHF 56.8 million.
1.13 During 2021, WIPO earned revenue of CHF 469.1 million and reported net
investment gains of CHF 22.7 million. Expenditure reported on the budget basis was
CHF 348.1 million, resulting in a surplus of CHF 143.7 million. This budgeting surplus
compares with a surplus presented on an IPSAS basis of CHF 108.9 million. A
reconciliation between the IPSAS and budget surplus is presented in note 17 of thefinancial statements and, as in previous years, is predominantly due to depreciation, theincreases in the employee benefit liabilities and the expenditure on the projects fundedfrom reserves. WIPO present explanations for changes between the original and final
budget, and material variances within the WIPO Performance Report 2020/21 2.
1.14 Changes in the revenue budget relate to updated forecasts produced by WIPO’s
Statistics Division for the PCT, Madrid and Hague unions and we have reviewed theprocess for making these forecasts in Part 2. Expenditure against the biennium budget
was lower than anticipated, reflecting an overall saving of CHF 38.2 million on personnel
costs, arising from vacant posts, moves to part-time working and exchange rates
savings on pension contributions. The underspend was partially offset by additional
funding for post-employment benefits. Overall savings on non-personnel costs over thebiennium amounted to 54.2 million CHF, of which 30.7 million CHF related to savingson travel costs and 13 million CHF net reductions in contractual services. Further
explanations for variances to outturn can be found in the 2020/2021 WIPO Performance
Report. As highlighted in Figure 2, each year WIPO has exceeded its fee revenue target
and we have considered this in more detail in Part 2.

1 Program and Budget for 2020/21 – Annex VII
2 Document WO/PBC/34/7

WO/PBC/34/4
page 17
Figure 2: Outturn against budgets (CHF Millions)Feerevenue

2021

2020

2019

2018

Original
budget

427.6

412.7

399.6

386.6

Outturn

450.5

441.4

420.3

400.6

Variance

22.9 (5.4%)

28.7 (7.0%)

20.6 (5.2%)

14.0 (3.6%)

Original
budget

387.3

381.1

366.4

359.4

Outturn

348.1

327.9

366.9

339.4

Variance

39.2(10.1%)

53.2(14.0%)-0.5 (-0.1%)

20.0 (5.6%)

Planned

60.7m

52.0m

54.9

48.9m

Actual143.7m168.5m122.3m74.6m

Expenses

Budgetsurplus 3

Source: Audited Financial Statements of WIPO

1.15 Note 22 to the financial statements, provides a view of the financial performanceby each Union. This continues to demonstrate how reliant the Organization is on the
PCT and Madrid Unions which, especially the PCT, compensate for the continuing
deficits reported by the Hague and Lisbon Unions of CHF12.6 million (2020: CHF11.0
million) and CHF2.2 million (2020: CHF 1.3 million) respectively. Following a decisionat the 59th Series of Meetings in 2019, the PCT Union has assumed the financing ofthese deficits. The total accumulated deficits, reported as negative net assets, in theHague and Lisbon Unions were CHF 81.1 million and CHF 7.5 million respectively. In
2021 the level of fee revenue for Hague was CHF 6.2 million (2020: CHF 6.7 million)
and Lisbon CHF 71,000 (2020: CHF 7,000); it is unlikely that these Unions will be able
to address their cumulative deficits.

Employee benefits
1.16 In 2021, total personnel expenses reported in the financial statements were CHF
244.6 million (2020: CHF 233.7 million), these represent 62.9 per cent (2020: 63.9 percent) of all expenses during the period. WIPO's Staff Regulations set out the conditionsof service and the basic rights, duties, and obligations of WIPO staff. This includes thesalaries and related allowances and the social security benefits, including access to the
UN Joint Staff Pension Fund and After-Service Health Insurance.

Post-employment benefits
1.17 WIPO’s most significant liabilities are its employee benefits. As set out in Note 10
to the financial statements, these comprise most significantly the staff member's afterservice health insurance (ASHI), their repatriation entitlements and accumulated leave
3 This is based on total revenue as set out in Statement V.

table.

Only fee revenue is shown in the

WO/PBC/34/4
page 18
liabilities. During 2021, the overall liability for these staff benefits has increased to CHF
615.8 million (2020: CHF 495.3 million). Since 2014 WIPO has maintained a separate
account for its funds allocated for the future financing of after-service employee benefit
liabilities (including ASHI, repatriation grant and travel, and long-term accumulated
annual leave). These funds have primarily been generated by the Program and Budget
charge applied to the cost of posts, and this strategic cash and investments total CHF
237.2 million (2020: CHF 211.2 million), leaving an unfunded liability of CHF 378.6
million (2020: CHF 284.1 million).
1.18 We noted that after the year-end, the Director General retrospectively increased
the eight per cent charge to posts for the 2020-21 biennium as originally set out in the
Program Budget, by an additional set aside of CHF 7.6 million in 2021. In increasing its
charge, WIPO informed us that it does not exceed the overall personnel costs approved
by Member States and aims to maintain the overall 50 per cent funding level target
previously agreed with Member States. While understanding WIPO’s view that
increasing charges, in light of the significant additional surplus over that set out in the
Program Budget, is a prudent way to mitigate financial risk and in line with their practicesince the 2012/2013 biennium., such retrospective amendments after year-end are
unusual. WIPO should consider disclosing in each future biennium budget theassumptions that would underpin any additional funding to further offset the liabilities.
1.19 The after-service health insurance liabilities totalling CHF 573.7 million (2020:
452.8 million) are calculated by an independent actuary based on underlying data andassumptions. They reflect the value of the contractual obligations to staff and retirees,on 31 December 2021, for their underlying claims expected in the future. The year-onyear movement arises from changes in the actuarial assumptions including thoserelating to medical claims costs. As part of this year’s valuation the actuary has further
refined how the valuation reflects the ASHI claims costs of the members.
1.20 The most significant factors that have impacted the valuation of the liability are theactuarial assumptions, which increased the liability by CHF 87.5 million (Figure 3).
These comprise:• CHF 172.7 million loss on demographic assumption changes. These cover
updates to assumptions such as turnover, mortality and disability, retirement
and age-related adjustments to medical cost claims. The loss related
significantly to changes in the approach to assessing the expected claims
costs as outlined below.
• CHF 80.8 million gain on financial assumption changes. These cover
updates to assumptions such as discount rates, inflation, medical trends andsalary increases. The gains here related primarily to an 0.2 per cent increasein the discount rate in the calculation and a reduction in the medical costtrend rate from 2.9 to 2.5 per cent.
• CHF 4.4 million gain on experience changes. These cover adjustments
required due to the difference between assumptions made and actual results.

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page 19
Figure 3: Evolution of ASHI defined benefit obligation
2021

2020

452,755

313,694

Interest cost

1,351

1,559

Current service cost

36,15426,559Contribution paid

-4,017-3,928Actuarial assumption changes

87,480114,871

Defined benefit obligation 31
December

573,723452,755

Defined benefit obligation 1
January

Source: WIPO financial statements

1.21 During 2021, WIPO’s actuary performed further analysis on the claims arising over
2017-2020 and changed the expected claims costs per claim at each age in its
calculation. Previously, the actuary applied an age-grading factor to premiums to reflect
the underlying cost of claims. This year the actuary has removed these factors, instead
opting for a simpler approach with no adjustments to be made to the expected costs. In
deriving these new claims cost assumptions, the actuary has used data from the plan
provider, listing claims reimbursements for retirees and dependants over 2017-2020.
From this information, the actuary calculated the average per person claims
reimbursement by age.
1.22 The actuary has based the new assumptions on recent claims data from the plan,
which is a valid approach. Looking back over four years is reasonable, as older claims
data is less likely to be representative of current and future claims costs, while noting
more recent data may be influenced by temporary COVID-19 pressures. The actuary
explained that the 2020 claims data was very similar to 2017-19 data and therefore they
did not consider excluding it due to COVID-19. We believe this is a reasonableapproach. In the 2020 financial statements, WIPO noted the uncertain impact of thepandemic on current claims costs. With further information now available, thissensitivity is no longer deemed as significant to the valuation.
1.23 WIPO’s share of the liabilities has changed since 2020, because of the adjustment
to the premium based on age. The scheme rules require that WIPO contribute 65 percent to the monthly medical premium (35 per cent cost to the staff member). The actuary
had previously used this premium contribution rate to determine WIPO’s share of thetotal liability. For 2021, WIPO’s actuary has revised this to 73 per cent of the overall
defined benefit obligation. This change reflects the expectation that individuals coveredby the after-service liability will claim proportionally more than they will pay in premiums(with active members not covered by this liability doing the opposite). We believe this isa reasonable expectation and better reflects the realities of the future scheme costs. It
therefore represents an enhancement in the estimation techniques on which thissignificant liability is based.

Future impact of the liability
1.24 The value of the Organization’s liabilities evolves over time, based on changes inboth demographic and other economic factors. As part of the annual valuation
performed by the Organization’s expert, WIPO receives a projection for the value of
liabilities over the following four years, assuming current assumptions remain

WO/PBC/34/4
page 20
consistent. WIPO has presented the results of this assessment with the analysis of
liabilities in the Annual Financial Report. The forecast highlights that the impact of
current assumptions on the liability will result in a projected increase to CHF 715.5
million at 31 December 2025.
1.25 In our 2020 report, given the growth of this liability, we recommended, in
consultation with Member States, that WIPO establish a target level of earmarked funds
for its ASHI liabilities and consider the options for mitigating the potential future growthof such liabilities. In its response, WIPO has commissioned an “Asset and Liability
Management Study” which was ongoing at the date of writing this report. We understandthat management proposes to submit a Funding Plan for its After-Service Health
Insurance Liabilities to the Thirty-Fourth Session of the Program and Budget Committee(PBC).

UN Joint Staff Pension Fund
1.26 WIPO is affiliated as a member organisation to the United Nations Joint Staff
Pension Fund (UNJSPF) through its employees. However, as the pension scheme
cannot accurately determine a reliable estimate of the corresponding risk borne by eachparticipating organisation no actuarial liabilities for the pension scheme appear in
WIPO’s financial statements.
1.27 The characteristics of the UN pension scheme are outlined in Note 10 to thefinancial statements and this disclosure is consistent across many participatingorganisations. At the latest actuarial date, 31 December 2019, UNJSPF has concluded
that there was no requirement for deficiency payments to be made under Article 26 of
the Fund's Regulations. Should this situation change in the future, deficiency payments
would be required from WIPO. This situation represents a potential future financial risk
to the Organization which needs to be tracked and managed.

Annual Financial Report
1.28 We have noted previously that WIPO’s Annual Financial Report contains a moredetailed financial commentary to accompany its financial statements than many otherentities. It is important for all organisations to continue to challenge how they use theaccompanying financial commentary on a regular basis, obtaining feedback from theusers of the statements. WIPO continues to present its performance against objectives
in the separate performance report and there is limited detail to align the reporting offinancial results with the key outcomes of the Organization. We believe there is more
scope for the financial reporting and performance to be aligned in a single annual report.
In our 2020 report, we shared good practice guidance with the Secretariat and wecontinue to offer our assistance should they wish to further develop the financial report.
1.29 Following discussions with the Secretariat, enhancements were made to the
Financial Report to highlight aspects of WIPO’s Environmental, Social and Governanceinitiatives. This is an area of reporting that could be further enhanced to positively
demonstrate the Organization’s commitment to its responsibilities as part of the UN’s
wider leadership role in the climate agenda.

GOVERNANCE AND INTERNAL CONTROL
1.30 The Director General is responsible for ensuring effective financial administrationof the Organization in accordance with the Financial Regulations. The Director General

WO/PBC/34/4
page 21has established, and maintains, systems of internal control and delegation which areimportant in providing a framework of assurance for Member States to rely upon. WIPO
continues to be proactive in its development of the internal control environment and theStatement on Internal Control provides a good overview of the three lines of defence
that the Director General relies upon to demonstrate the effectiveness of the internal
control environment.

Internal control
1.31 WIPO operates a sound internal control environment. In common with the previous
three years of our mandate, our audit has not identified any significant control
weaknesses, nor have any been reported to us through the work of the Internal
Oversight Division (IOD). Maintenance of sound internal control has remained a featureof WIPO’s pandemic response, reflecting the quality of information systems.
1.32 Control environments can change, and it continues to be important that WIPO has
robust processes in place to provide assurance over management's review processes
and the sources of assurance which evidence their effectiveness. We have consideredseveral key areas in our report this year, reflecting on proposals to amend the frameworkof internal control through changes to Financial Regulations; the approach tocompliance as a second line of defence; and the potential to review the arrangements
within IOD, recognising that term limits will soon give rise to changes in the function.
We consider that there is scope to further enhance and evolve these arrangements tomeet the future needs of WIPO.

Financial Regulations
1.33 The financial activities of WIPO are governed by its Financial Regulations, which
are approved by the General Assembly. The Financial Regulations represent thecornerstone of the internal financial control environment and many internal controls are
established to ensure continued compliance with the requirements of the Regulations.
1.34 The most recent significant revision of the Financial Regulations was undertaken
in 2008. Since that time, the Organization has implemented a comprehensive Enterprise
Resource Planning system, industry best practices have evolved, and internal businessprocesses have matured. Most recently, WIPO’s new senior leadership has encouraged
a cultural change and a focus on efficiency and modernisation. Looking forward, theOrganization has a strategy to streamline processes including using data analytics.
Consequently, during 2021, WIPO commissioned a comprehensive review of its
Financial Regulations with the objective to:•have streamline and clear Financial Regulations and Rules that reflect thecurrent business model as represented in the Medium-Term Strategic Plan
2022 – 2026 and the Program of Work and Budget 2022/23;•

establish an enabling regulatory framework to drive key business strategiesof the Organization;•

incorporate data analytics as part of the mainstreamed regulatory content
for more effective and efficient controls to reduce the burden of high-volumetransaction controls while minimizing risk exposure; and•provide a regulatory framework for areas which currently are not addressed

WO/PBC/34/4
page 22in the Financial Regulations and to address bottlenecks, pain points andaccountability in the existing Regulations.
1.35 WIPO recruited a consultancy firm to provide support to review the existingprocesses described in the Financial Regulations; review and evaluate the existing
Regulations against those of other similar organizations; and recommend changes toprocesses and Regulations in the interests of good governance, best practice, efficiency
and effectiveness.
1.36 In April 2022, WIPO shared the proposed amendments to its Financial Regulations
for our comments. Overall, we are supportive of the principles underpinning the initiative
for revising the Financial Regulations and aligning them with current working practices.
The revised structure provides a more coherent framework for financial controls andaddresses some important omissions from the existing Regulations, such as,
partnership working, management of liabilities and aspects of the wider WIPO
accountability framework.
1.37 While this was a work-in-progress at the time of our review, we made several
important observations for the Secretariat to consider in finalising its revisions forconsideration by the Member States at the upcoming PBC. We understand that WIPO
has substantively addressed the comments we made. Subject to the Governing Bodies
approval of the revised Financial Regulations, our experience suggests there may be
merit in a critical review after the first year of subsequent operation to provide an
opportunity to address any important omissions or clarifications.

WIPO’s control environment
1.38 WIPO has continued to develop and enhance its internal control environment. We
have reported over time how the second line of defence, has continued to document,
assess and validate the process level controls that operate over WIPO’s businessprocesses. In 2021, WIPO had assessed 397 process level controls (2020: 381
controls) of which 91 per cent were deemed to be at a maturity level of three or above,i.e., deployed, and reliable with no inconsistency between the documented control andits actual operation. The additional controls recorded in 2021 related to property
management.
1.39 The Controller’s office continues to perform validation checks and tests around theassessments undertaken. WIPO has documented and mapped 112 identified risks tounderlying process level controls (2020: 106) and has evidence to support the proper
operation of 130 controlling activities across all process level controls (2020: 90). As
part of our work this year we considered how the controls were documented and how
the operation of the control was evidenced. Each control is recorded in a databasesystem with a unique identifier and a detailed description of the control and the control
owner. The control assessment records the type of control, its maturity and priority,
whether it is evidenced, how frequently it occurs and what form of control it is (manualor automated). This facilitates independent assessment and associated sign-off.
1.40 We noted that many of the documented controls were granular, based on arequirement established in policy documents such as the Financial or Staff Regulations
and associated rules. Generally, the controls documented were not established tomitigate against a specific identified risk and while there were priority “key” controls
identified, these were not controls focused on managing significant control risks.

WO/PBC/34/4
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Overall, 141 controls were assessed as “key” and in our discussions with management
it was agreed that it was important to refine the assessment of priority controls and havea more proportionate approach to the review of controlling activities, with greater focus
on the significance of a control to underlying activity.
1.41 Having established the database and built procedures to document, test andevaluate the operation of those identified controls, it is now opportune to consider
aligning the approach and focusing resources on those controls that are material to theOrganization. It is also important to ensure that key controls over all significant businessprocesses are appropriately documented and validated. Over the past two years
alongside property management, controls in the Information and Communication
Technology and HR Performance and Development areas were added to the process.
These enhancements will strengthen both the efficiency and effectiveness of WIPO’s
compliance processes.

Recommendation 1: WIPO should:a) review its approach to documenting, assessing and validating process level
controls to focus on those key controls of most significance and materiality to
the Organization; andb) assess the completeness of the process level control analysis and develop aroadmap to ensure all significant management and administrative processes are
documented.
1.42 In our 2018 report, we noted that WIPO had engaged an external consultant to
identify how the Organization may leverage data analytics opportunities offered by its
ERP system, through the automation of controls and data analysis. We considered that
this was an area where WIPO could develop some powerful tools to continually monitor
key business processes and identify unexpected results. In response to our previous
recommendation, WIPO developed a strategy and roadmap for strengthening andstreamlining internal controls using data analytics in four main business process areas.
The development and deployment of the detailed analytics has been delayed while anassociated project, to provide a data analytics environment allowing access to the variedinternal WIPO data sources (a data lake), is implemented. It is currently expected that
initial pilot analytics will be in place during 2022.
1.43 Since we highlighted the importance of data analytics in our first audit there has
been little substantive progress in an area where some quick wins and proof of concept
outcomes could provide the impetus for driving more cost-effective compliance andmeaningful assurance. We consider that it is important for WIPO to adopt data analytics
to drive efficiency informed by the assessment of the most significant controls to focus
its compliance activities. Such an environment will enhance the quality of the evidence
to support assertions within the Statement on Internal Control. It would also inform therisk assessment of the third line assurance providers such as IOD. IOD and HRMD
currently run their own separate suite of data analytic routines with IOD using assistanceof third-party contractors. However, a common platform across WIPO would provide
synergies and help develop the capacity and capability in their use across theOrganization.

WO/PBC/34/4
page 24
Recommendation 2: WIPO should:
Ensure that it develops a holistic approach and strategy to develop and deploy
data analytics that serves the needs of all users within the Organization andcreates synergies in training and support.

Risk management
1.44 In 2021, we considered in greater detail WIPO’s approach to risk management.
The assessment and mitigation of risk are key components of the systems of internal
control, and WIPO has further developed its approach over the last year, specifically byrevisiting its risk appetite, in consultation with Member States.

Risk appetite
1.45 In February 2022, we were asked to consider WIPO’s draft Risk Appetite
Statement. The revised statement more clearly defines WIPO’s risk appetite, reflecting
its tolerance for taking greater risk in areas considered important in the achievement of
its Expected Results. The framework articulates appetite and tolerance against each of
the Expected Results across the Organization.
1.46 In our view, the articulation of the risk tolerance and appetite provides a platform
against which WIPO can focus its resources, assess the effectiveness of its mitigations,and demonstrate its management of risks. It also provides clarity for WIPO staff to frame
their decisions and, importantly, provides Member States a clear framework against
which to judge management’s performance. As might be expected for a public body,
WIPO’s risk tolerances, especially those relevant to culture, internal control, oversightand performance, is low. However, it is important to reflect that even within those areas
proportionate risk decisions can be taken, as we have highlighted in our observations
on internal control.
1.47 Overall, WIPO’s clear articulation of its risk appetite is amongst the better and moremature examples we have seen. We will consider how this Statement has informedchanges to processes and resources over the remainder of our mandate, since theapplication of the principles of this statement will demonstrate its value to WIPO.

Risk mitigation
1.48 A key purpose of risk management is to systematically identify operational risks to
the delivery of an organisation’s objectives and establish effective mitigations in the
management of those risks. WIPO’s Risk Management Group, chaired by the Director
General, discusses the key identified risks on a quarterly basis. Each meeting it
considers the current position on each risk with an assessment of the impact on thedelivery of Expected Results. While the RMG reflects on emerging impacts from current
world events in the context of WIPO’s risks, the overall organisational assessment ofrisks is undertaken on an annual basis.
1.49 In its December 2021 meeting, the RMG was presented with a risk heat map
showing the results of an organisational risk review to inform annual work planning. It
was not clear from the discussions how far the group had critically challenged thecompleteness of risks presented and the effectiveness of the mitigations proposed by
Sector leads in between the annual assessment. To enhance the effectiveness of its
oversight, the RMG should consider having a greater focus on these areas at a Sector

WO/PBC/34/4
page 25level, especially in light of revisions to risk appetite. This will ensure that there is a focus
on the cost-effectiveness of mitigations in managing the impact and likelihood of risks
and provide greater assurance. Such a process, involving the Sector leads in a deepdive challenge would help to further embed a culture of risk management.
Recommendation 3: WIPO should:
Consider a review of the standing agenda of the RMG to dedicate consideration
to the completeness of risks and quality of mitigations in between the annual
assessment process, to ensure the risks remain appropriate and the mitigationsof lesser risks are cost effective.

Reporting on progress
1.50 In line with good practice, WIPO produces an annual risk management report to
the RMG. In this, management has reported that it has responded well to the Joint
Inspection Unit’s (JIU) wider observations on risk management across the UN systemand the subsequent risk management review by IOD. The annual report also highlighted
the need to continue the process of embedding risk management and in ensuring staff
involved in ERM are clear on their responsibilities and their performance in this area isassessed.
1.51 Overall, the various responses to recommendations show that WIPO is movingfrom an assessed level of being risk “established” (level 3) to risk “advanced” (level 4)against the UN’s HLCM Reference Maturity Model criteria. This evaluation is consistent
with our own assessment of WIPO’s ERM maturity. WIPO informed us that they plan tomove to an “advanced” level for all six risk dimensions, as recorded in the Program ofWork and Budget as a performance indicator for 2022/23.

Internal Oversight Division (IOD)
1.52 During our previous audits, we highlighted the importance of aligning IOD’s
workplan and annual report to the financial period covered by the Statement on Internal
Control which is now in place. As the position of Director of IOD is term limited, theDivision will experience key personnel changes over the coming year. In advance of
this, it is important that the Director General, with the advice of the Independent Advisory
Oversight Committee (IAOC) and Member States, considers the future focus of IOD’s
activities. As WIPO further refines its risk and internal control processes, it will be
important to ensure that IOD remains focused on the operational risks and key controls,and effectively supports the development of the second line. This, alongside the annual
opinion which we have previously recommended, will strengthen the assurances
available to the Director General.
1.53 As WIPO further develops its compliance and analytical processes the nature of
IOD’s work will evolve. It is important therefore to ensure IOD remains well placed toadapt to these, and that the IOD Charter reflects this. It is also important that the Director
General considers the skills and capabilities required in recruitment of a new Director of
IOD, reflecting the changing assurance needs of the Organization.

The Statement on Internal Control
1.54 The Statement on Internal Control is used as a key accountability document toprovide a transparent report of the control environment and risks faced by organisations.

WO/PBC/34/4
page 26
WIPO’s statement is aligned to the seven components of WIPO’s Accountability
Framework namely: results-based management; performance and risk management;
monitoring, oversight, complaints and response mechanisms; control activities;
information and communication; ethical standards; and control environment. As wehave commented before, WIPO have positioned this statement within a very clear andcomprehensive framework which we believe provides Member States with a good
degree of confidence in the control processes. The Statement clearly articulates theevidence base for the assertions made in a clear and logical manner.
1.55 The 2021 statement highlights the way in which WIPO has managed risks throughthe work of the RMG, focused on the risks of program delivery, managed cyber andsupply chain threats, and the risks faced by the overall political environment. The
Statement draws upon the coherent control framework of the three lines of defence,
identifying sources of assurance and the key findings, including those from our own
work, and draws attention to specific areas where improvements have been made. The
Statement also draws upon the specific assurances around ICT and data security, given
its importance to the integrity of WIPO’s operations.
1.56 In line with good practice, the Statement commits to prospective improvements inthe control environment, such as the use of analytics to support the control environment
from 2023, and to improvements being made in external office controls during 2022.
The Statement on Internal Control provides a critical discipline in bringing together thesuite of assurances to demonstrate the fulfilment of the Director General’s
responsibilities in respect of internal control. During our audit, we considered the various
sources of assurance and the results of our own work, and we consider that theStatement is consistent with this information. We believe the observations made for
improvement in the compliance, risk and IOD processes will provide further
enhancement to the assurance provided to Member States through this Statement.

WO/PBC/34/4
page 27

PART TWOMANAGEMENT ISSUESFORECASTING FILING ACTIVITY
2.1 In our 2020 audit report, we observed that WIPO historically exceeded its fee
revenue target and consistently underspent against its expenses budget. Consequently,
the overall budget surplus each year was considerably higher than original expectations.
At the time, WIPO informed us that they model the expected level of fee revenue anduse this to determine the expenditure budget. Considering this we identified themodelling of filings as an area for audit attention.
2.2 As set out in WIPO’s Program of Work and Budget for 2022/23, income in thebiennium was estimated at CHF 951.8 million, reflecting a 7.8 per cent increase
compared to the 2020/21 Program and Budget. Fee income from the PCT represents
77.4 per cent of total income and taken with the Madrid and the Hague registration
systems it represents 95.5 per cent. For the previous biennium these systems
represented 95.2 per cent of total projected income.
2.3 The performance forecasts supporting the income estimates for the PCT, Madrid
and the Hague Unions were prepared by the Chief Economist, taking account ofhistorical filing trends and the GDP forecasts as per the World Economic Outlook,published by the International Monetary Fund. As part of our audit, we considered how
the models were designed and used, including looking at the governance andassurance over the models themselves.
The models
2.4 The models are designed to provide information on expected future filing volumes
and corresponding fees from the WIPO Global IP Systems. WIPO designed theprocesses in house and has been reliably using them for many years. The model relies
on a seasonality-adjusted autoregressive integrated moving average, which is a statisticalanalysis model that uses time series data to predict future trends. The model provides upperand lower bound estimations falling within an 80 per cent confidence interval. While
such a confidence interval is broad, looking at the performance over time, this has notcreated a significant issue in using its results.
2.5 While the process and results are regularly presented to the management teamand other colleagues, the models are not formally reviewed. Certain aspects of themodel have evolved over time, though the core modelling approach has largely stayed
the same. The main output from the model is the quarterly PCT, Madrid and Hague
systems forecast, which is distributed internally. The forecast that provides the basis
for the Organization’s income planning is published as part of the biennial Program andBudget documentation. While the model description is available, the forecastingprocess is not documented. WIPO may wish to consider the need to document theprocess to ensure that institutional knowledge is appropriately documented in the eventof any personnel changes.

WO/PBC/34/4
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2.6 Our approach consisted of a survey based on advice from our modelling teamand its standard framework for review. This included consideration of the models:
governance and assurance; concept and design; build and development; data andassumptions; and use of the outputs. Our analysis of the results and our wider
considerations confirms that the model achieves it purpose of providing a reasonablebasis for planning and budgeting. While further enhancements could be made to areas
such as model governance, these are unlikely to have any real cost-benefits. Over time,the model has demonstrated its reliability.
2.7 While the current model serves the Organization well, as part of its risk
management, it will be important for management to remain alert to any significant
pending changes in the IP environment which may impact on the model’s sensitivities.
Using the model output
2.8 The Program Performance and Budget Division (PPBD) use both the income
prediction and the number of expected filings in developing the program budget
proposal for Member States. For income, PPBD use the most likely, or base case,scenario for each of the PCT, Madrid and Hague estimates and have applied a
prudence factor of five per cent in the 2022-23 program budget, due to continuing
uncertainties in the global economy, to reduce the income expectation. For the previous
biennium, WIPO applied a slightly lower adjustment of three per cent. There is no
substantive basis for this estimation, but it provides a margin of safety from the basecase scenario predicted.
2.9 For the expenditure budget, PPBD use the results to inform the variable costs
related to application examination processes, such as translation services. Many of
WIPO’s costs are fixed by their nature and influenced by inflationary factors such as
those imposed by the International Civil Service Commission and changes arising fromthe implementation of new initiatives, so filing activity changes impact on only a subsetof the overall budget.
2.10 Overall, the results of our review highlight WIPO’s prudence in its financial
planning, which minimises the risk to Member States. Consequently, as highlighted in
Figure 3 in our report, WIPO consistently exceeds its surplus forecast, and this has led
to the continuing increase in retained reserves. It is important for Member States tohave a strategic approach to the use of the Funds arising from the surpluses. We
reported last year on Special Projects and there is a continuing need to fund theemployee benefit liabilities, each of which have a relationship with the use of surplus
reserves.

HUMAN RESOURCES MANAGEMENT DEPARTMENT (HRMD): FOLLOWUP OF PRIOR RECOMMENDATIONS
Background2.11 In 2018, we reported on the use of WIPO’s results-based reporting, with aparticular focus on those results reflecting the activities of WIPO’s Human Resources
Management Department (HRMD) function. We considered how HRMD reported its
performance information and delivered on the priority themes in WIPO’s HR Strategy(2017-2021). Our work led to four recommendations on how information was reported
to Member States through the WIPO Program and Budget processes and a further eightrecommendations arising from our consideration of the existing HR Strategy.

WO/PBC/34/4
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2.12 Given the importance of HR to the effectiveness of WIPO and the Director
General’s plans to make the Organization more agile, we have undertaken a focusedfollow-up of our open recommendations, looking at how WIPO’s HRMD is developing
its response through the new 2022-2026 HR Strategy.

Changes within HMRD
2.13 A new HR Strategy was approved in 2021; its main purpose is to respond to thenew priorities of WIPO and to facilitate the delivery of the new Expected Results. The
objectives of WIPO’s new strategy will create a cultural shift in the way WIPO
approaches the management of HR, and includes seven objectives:•

Objective 1: contribute to the development of a vibrant organizational
culture that encourages open dialogue, collaboration, knowledge sharing
and teamwork;•

Objective 2: improve organizational agility, create adequate flexibility andincrease mobility to meet the evolving staffing needs of the business units
while also enhancing diversity and inclusion;•

Objective 3: ensure that management of people performance adds value by
improving organizational performance and developing staff skills;•

Objective 4: take a more strategic view of learning and career development
as integral parts of talent development;•

Objective 5: invest in leadership and management development;•

Objective 6: enhance staff engagement and wellbeing; and•Objective 7: develop a “one stop shop” service model for HRMD adapted to
the needs of the business units.

2.14 To enhance the effectiveness of HRMD’s delivery of the new Strategy, theDepartment was restructured in February 2022 into two main service areas:•

Human Resources (HR) Operations Service: with the existing Benefits andEntitlements Unit, the Pension and Insurance Unit including absence
management and a new HR Data and Technology Unit; and•Talent Management Service: the HR Talent Partners Unit and the Employee
Experience Unit.

2.15 The HR Operations Service provides for the delivery of services relating to theadministration of staff members’ entitlements and pension and insurance schemes. It
supports HRMD’s ability to support the effective achievement of WIPO’s program
results. Greater emphasis will be placed on technology and data and a key priority is tostrengthen the use of this technology and analytics to identify compliance, inform policy
and report performance.
2.16 The purpose of the Talent Management Service is to prepare a future-ready andskilled workforce. Through the effective recruitment, deployment, development andretention of WIPO’s workforce, the Talent Management Service should contribute to thedelivery of a more agile, innovative workforce. Performance will be aligned with WIPO’s
short and long-term goals, with the aim of delivering tangible results that positively affectWO/PBC/34/4
page 30
staff engagement. Implementation of learning activities in line with the learning
framework will be managed by the WIPO Academy, drawing on their skills as a training
provider in the wider IP environment. Responsibility for diversity and inclusion, culture
and engagement, mobility as well as talent acquisition will be transferred to the
Employee Experience Unit that will focus on delivering skilled expertise throughout HR
specialist domains to improve the Employee Experience.
2.17 These changes should support WIPO’s HRMD move from a traditionaltransactional based HR function to a more coherent, strategic and people focusedenabler. We have considered developments in the context of the recommendations wemade, which HRMD considered when creating the new approach. In our view, thechanges address many of the key principles which underpinned the key findings in our
2018 work. We will consider how these new arrangements have enhanced the provisionof HR in the final report of our mandate once the new structures have become
embedded.

HRMD and reporting performance
2.18 In 2018 (Recommendation 8), we reported on weaknesses in the way in which
HRMD reported its performance against the Strategy then in place. We identified thatthe performance measures adopted and reported neither mapped to the key objectives
at the time, nor did they track and measure incremental performance. At the time of
preparing the current (2022-23) Program and Budget, WIPO retained only the humanresource KPIs that were cross-functional or Organization wide under Expected Result
5.1, i.e., employee engagement; gender: percentage of women at P4 to D2 level; andgeographical diversity: percentage by region as per agreements. Other HRMD
objectives were to be measured via internal performance indicators. This is part of an
overall reduction in measures to streamline reporting and performance, focusing onreporting the more strategic measures of importance to Member States contributing to
the Expected Results, and using other performance data as internal measures of
performance and accountability.
2.19 The new HR Strategy’s seven objectives will be tracked using internal
performance monitoring. HRMD’s first objective is about evolving the culture of WIPO
and activities are planned to begin furtherance of this during 2022, as a follow up to theorganisational ‘thumbprint survey’ on culture. Objective 6 is focused on engagement
and linked to an organisational performance indicator identified in the Program &Budget
2022-23. Objective 7 concerns HR transformation, which led to the restructuring of thedepartment in early 2022.
2.20 Objectives 2,3,4 and 5 are all linked to the new integrated talent management
strategy, underpinned by workforce planning, and report against internal performanceindicators to measure maturity. Workstreams are in place to progress initiatives to build
on learning and development together with performance and talent management. Eachof these will be linked to internal measures to monitor and assess progress.
2.21 We plan to consider the emerging changes to WIPO’s approach in the final yearof our mandate to assess their impact on performance reporting. We have closed ourassociated prior recommendation (2018: Recommendation 6).

WO/PBC/34/4
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Diversity and inclusivity
2.22 The Director General has adapted the gender and diversity policies of WIPO andhas established a wider focus on Gender and IP. Developing and monitoring progresswithin WIPO is now the responsibility of the Employee Experience Unit to ensure that
Diversity and inclusion are embedded within HR talent programmes. Together with theretention of the diversity targets in Expected Result 5.1, the changes address therecommendations we made to focus attention on the reporting of these importantmeasures (2018: Recommendation 11). The new structures and other initiatives should
enable WIPO to better support its workforce to develop and fulfil its potential, drawing
upon the diversity and skills of its workforce.

Talent and absence management
2.23 A major feature of our 2018 review was consideration of WIPO’s approach totalent management. We then noted that the processes at the time did not focus learningand development on the specific needs of the business and lacked a strategic approach.
In our view the decisions taken to restructure HRMD ensure greater focus on the issuesof talent management. The Learning and Development strategy will come under thebroader Talent Management Strategy to reinforce the connections with Performanceand Mobility.
2.24 WIPO’s Learning and Development statement demonstrates a renewed
commitment to these areas as a core component of WIPO’s business strategy, with anemphasis on employees being supported to progress and grow their own careers. Thisis supported by new initiatives to pilot new evaluation mechanisms to assess theeffectiveness of training and its impact on individuals through an emphasis on feedback,including 360-degree. Overall, the emphasis is on growing talent through a focus onleadership and management skills. Additionally, the learning framework reflects an
integration with the employee career path, to ensure the right training is delivered at theright stage of their progression. WIPO plans to use the Strategic workforce planning
discussions to deploy this model across the Organization. We are content that this newemphasis and the measures put in place to address the weaknesses we identified in
the previous arrangements, if sufficiently enacted, will support the development of amore agile workforce to meet the future needs of WIPO.
2.25 We made a recommendation (2018: Recommendation 15) on the need to
improve the management of staff absences. In line with an associated IOD
recommendation, WIPO has introduced new reporting to identify and track cases
requiring attention, establishing certain thresholds for incremental action, such as
absence of more than: 20 days in a year; 60 per cent of an individual’s annual
entitlement or 15 days in the 30-day period. Cases identified through these mechanisms
are reviewed with the Medical Unit and involve the Business Partner in charge of the
Sector to ensure solutions are identified. Once these arrangements are embedded,
WIPO may wish to revisit and strengthen these new monitoring parameters andconsider benchmarking its levels of sickness absence with other appropriate entities.
2.26 HRMD has also established new proactive approaches to the management ofabsences, to better support employees in their return to work, and to support managers
in the case of managing absence and the adjustments that may need to be made tofacilitate an employee’s return. WIPO is also being more systematic in following up on
staff returning from long term (more than six weeks consecutive) sick leave to ensure

WO/PBC/34/4
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measures are being deployed appropriately to support staff and the business. We
consider that WIPO has suitably improved and enhanced its management of theseabsences.

Employee engagement
2.27 Our previous recommendation (2018: Recommendation 16) was for WIPO toundertake more regular engagement through staff surveys to both assess the needs
and concerns of the workforce and to assess the effectiveness of the impact of HR
policies. We also highlighted that this would provide useful measures to assess theperformance of the HR strategies of WIPO. The changes in WIPO’s organisational
culture and the impacts of pandemic working have helped to facilitate a new approachin this area. WIPO’s medium term strategic plan highlights the importance of placing theindividual at the centre of people management. As part of this commitment, WIPO has
engaged a third-party to establish a “voice of employee” platform to enable regulardialogue with staff. The tool is intended to provide WIPO with information andconstructive feedback on the work environment and workplace practices and will deliver
real-time reporting, allowing HRMD and sector managers at all levels to share results
quickly and efficiently. The Director General announced the new process in March 2022.
2.28 While it is too early to assess the impact of the survey and how it will inform the
HR strategy and management of staff, it represents a significant change in approach,which we consider addresses the issues we identified. Enhancing employee
engagement will provide richer data to inform decision making and its frequency will
mean that management can better monitor the impacts of the changes being introduced
within WIPO. Experience has shown that if there is a failure to address the issues
identified from the process, staff will lose confidence in the process and no longer
actively engage, and participation will reduce. WIPO should monitor this risk closely tosafeguard its commitment to staff members.
2.29 Overall, we have noted the significant enhancements made to HR processes
within WIPO. While many of these elements are yet to embed and be fully implemented,
critical foundations have been established to underpin the Director General’s ambitions
for WIPO.

WO/PBC/34/4
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PART THREE

OTHER MATTERS FOR THE GOVERNING BODIES
4.1 Under the Terms of reference for the External Audit, the Director General isrequired to report to us on any ex-gratia payments made or cases of proven fraud madeor identified during 2021. There were no cases of ex-gratia payments reported to us.
We identified no instances of fraud during our audit work, and no cases of fraud or writeoffs related to fraudulent activity were reported to us by the Director General.

PRIOR RECOMMENDATIONS
4.2 In this section we summarise the Organization's progress in implementing past
recommendations. Appendix One provides a more detailed review of progress for eachprior years’ recommendation based on data held in WIPO’s TeamCentral as of April
2022. It is the responsibility of management to consider the implementation, tracking
and reporting on progress against our recommendations. In our reporting we provide
our assessment of the effectiveness of these arrangements and on the status of theirimplementation.
4.3 Of the 23 recommendations from 2020 and previous years that remained open,
we closed 14 (61 per cent) having either been implemented or overtaken by events.
Nine recommendations (39 per cent) remain in progress, these mostly relate to therecommendations made last year Our predecessor’s recommendation on the fee
structure for the Madrid Union (2017 R#9): while on a roadmap for future consideration
by governing bodies, has not yet been considered.

ACKNOWLEDGMENTS
4.4 We would like to thank the Director General and his staff for their co-operation in
facilitating our audit engagement.

Gareth Davies
Comptroller and Auditor General, United Kingdom - External Auditor
19 May 2022

WO/PBC/34/4
page 34

Appendix One
FOLLOW-UP OF PRIOR YEAR RECOMMENDATIONS(Source: WIPO TEAMCENTRAL REPORT - May 2021)

Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

Status2017(WO/PBC/28/
4) R#9

Review the existing fees
structure with a view tomaking the Madrid Union
self–sustaining, after
carefully weighing its
impact on the accessionof new members and on
the usage of Madrid
System.

WIPO Management accepted the
Recommendation and stated that thereview of the fee structure of the Madrid
System is a topic for work in the midterm as per the revised Road Map for
the Working Group on the Legal
Developments of the Madrid
Union. Part of the Road Map for the
Madrid Working Group.

We note theadministration’scomments and note nodate for implementation
has been provided. We
will review the statusduring next year’s audit.

In progress –No estimateddate forimplementation
has been
provided.

Due to the sensitive nature of thisRecommendation, the right time toconsider changes to the fee schedule isyet to be determined.
2018(WO/PBC/30/
4) R#6

Ensure that the key
performance indicatorsfor each program containan appropriate balance ofmeasures to alignactivities to the strategic
goals.

The Program of Work and Budget of2022/23 has been established andapproved by Member States. This
recommendation has therefore been
considered in the preparation of theProgram of Work and Budget.

We also have referred tothe cumulative deficits in
the Lisbon and Hague
Unions in this year’s
report.
Following the adoption of
the new MTSP and thesubsequent changes to
WIPO’s Program of Workand Budget we haveclosed thisrecommendation and willreconsider results-based

Closed.

WO/PBC/34/4
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Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

Statusmanagement in the final
year of our mandate
when the changes have
had a chance to embed.
2018(WO/PBC/30/
4) R#8Reserve the category of“fully achieved” for futurereporting of performance
to Member States where
achievement is, at least,
100 per cent of target
values.

Implementation actions completed in
the WPR for 2021. WPR 2021 up to
100%. Instructions for preparation of
the WPR are clear that only those thatare 100% will be rated as fully
achieved.

We note the updated
response of theSecretariat, which
addresses the issue
raised.

Implemented
and closed.

2018(WO/PBC/30/
4) R#9Assess the extent towhich existing
performance indicators
adequately measureprogress in addressing
the four priorities set out
in the 2017-21 HR
Strategy, with a view todeveloping new or
replacement indicators
where significant gaps ora disproportionate
emphasis exist.

This recommendation was based on the
2017-21 HR Strategy “with a view todeveloping new or replacement
indicators where significant gaps or adisproportionate emphasis exist”. This
Strategy 2017-2021 is no longer valid
as it was replaced with the new HR
Strategy, aligned with the new Medium
Term Strategic Plan, was validated by
Member states in October 2021.

We have reviewed in
more detail the
Secretariat’s responses
to our previous HR
recommendations in Part
2 of this year’s report.
New performance
arrangements have been
implemented and will be
subject to our future
considerations in 2023.

Overtaken by
events.

2018(WO/PBC/30/
4) R#11

Monitor implementation ofactions from its 2018
Gender Parity Action Planand reports on theirprogress (and early

WIPO’s Policy on Gender Equality wasrevised and was ready to publish by
end of year following consultations withinternal stakeholders and management.
However, in the context of the decisionby the Director General to create a new

WIPO’s new Director
General has changed thefocus on gender issues,
and we believe this more
holistic approachaddresses the principles

Implemented
and closed.

Closed.

WO/PBC/34/4
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Previous
reference

2018(WO/PBC/30/
4) R#13

2018(WO/PBC/30/
4) R#15

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

indications of impact) in
future HR Reports.

area of work on IP and Gender, it wasagreed to delay this issuance to ensurealignment with a strategy on IP and
Gender that needs to be developed.
The new Senior Advisor, IP and Gender
started work in March, so we do not
expect any progress until June-July.

underpinning thisrecommendation.

Consider reviewing theeffectiveness of its
training offer, to ensure it
meets current businessneeds and the talentmanagement strategic
priorities

The new HR Strategy 2022-2026 has 7
objectives, and 4 of these relate tointegrated talent management, with aclear emphasis on Learning andDevelopment. The DG nominated in
November 2021 a task force to workwith HR and the Academy (now incharge of internal training) on thedevelopment of a strategic learning
framework. This has led to thedevelopment of an L&D strategy that
integrates elements of Learning but also
Performance and Mobility.

We have reviewed in
more detail the
Secretariat’s responses
to our previous HR
recommendations in Part
2 of this year’s report.

Consider ways in which
the level of average staff
absence can be reduced,
and to introduce goodpractice techniques which
require greater
accountability for taking
sickness absence,
including consideration of
return to work interviews.

The Medical Unit and other HRcolleagues have bi-monthly meetings to
discuss the best course of action foreach case of long-term sick leaveoutlined in a monthly report, and involve
additional stakeholders as required (thecorresponding supervisors andhierarchy, medical practitioner, etc.).
The Medical Unit and HR coordinate
and lead a multidisciplinary RTO plan

We have reviewed in
more detail the
Secretariat’s responses
to our previous HR
recommendations in Part
2 of this year’s report.

Status

Implemented
and closed.

New structures andpriorities haveestablished a foundation
to enhance theprioritisation and deliveryof talent management
programmes.

We consider thearrangements now
established by WIPO
provide a suitable set of

Implemented
and closed.

WO/PBC/34/4
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Previous
reference

2018(WO/PBC/30/
4) R#16

2019(WO/PBC/31/
3) R#2

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s viewaccording to the guidelines and with therelevant stakeholders.

mechanisms to better
manage staff absence.

Undertake an annual staff
survey to ascertain thebaseline for measuring
staff perceptions aroundthe wide range of HR
issues which underpin thestrategic aims and tomeasure theeffectiveness of HR policy
and implementation. The
survey could assessthemes such as
motivation, development,
well-being, workplaceharassment,
management andtransparency and tomeasure the staff
perceptions of the support
provided by enabling
functions like HR

WIPO is putting in place a “voice of
employee” platform (Glint) to establish
constant dialogue with staff. Well-being
was assessed through a UN widesurvey in July 2021.

We have reviewed in
more detail the
Secretariat’s responses
to our previous HR
recommendations in Part
2 of this year’s report.

Consider thedevelopment of a clearer
strategy for offices
outside of Geneva taking
full account of thebusiness and operational
priorities identified in its
next strategic plan andIn view of the ‘Guiding Principles
Regarding WIPO External Offices’, theSecretariat understands that thisrecommendation is directed to theMember States.

Status

Implemented
and closed.

A new set of employee
engagement tools arebeing launched in 2022,
and the arrangements
and creation of an
Employee Experience
Unit have establishedenhanced frameworks
for employee
engagement.

The draft terms ofreference for the evaluationof WIPO External Offices
are being considered at theupcoming Thirty-Fourth
Session of the PBC. The
decisions from that meeting
will guide the discussion
and further development of

Closed.

WO/PBC/34/4
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Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

establishing clearer
criteria to support thedecision-making process

2019(WO/PBC/31/
3) R#3

Following a more clearly
articulated strategy,
consider changes to thebalance of responsibilities
between Member States
and the Secretariat inrelation to external officedecision-making.

In view of the ‘Guiding Principles
Regarding WIPO External Offices’, theSecretariat understands that thisrecommendation is directed to theMember States

2019(WO/PBC/31/
3) R#4

Consider measures toenhance the activity
reports and plans

The Regional and National
Development Sector (RNDS) isdeveloping a template on the activity

External Auditor’s viewthe External Office network.
On this basis and given
aspects of our 2019 report
have been factored into the
document, we are closing
this recommendation as it
is now a matter for Member
States.

StatusThe draft terms ofreference for theevaluation of WIPO
External Offices arebeing considered at theupcoming Thirty-Fourth
Session of the PBC. The
decisions from thatmeeting will guide thediscussion and further
development of theExternal Office network.
On this basis and given
aspects of our 2019
report have beenfactored into the
document, we areclosing thisrecommendation as it is
now a matter for Member
States.

Closed.

We note WIPO’s
response and we will

In progress.

WO/PBC/34/4
page 39
Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

produced by external
offices by:reports and these will be rolled-out inthe second quarter of 2022

further consider as partof next year’s audit.

The Annual Oversight Plan includes thereview of 1-2 External Office for 2022
pending travel and sanitary conditions

We note the response of
IOD and the plan toreview External Offices

Status• ensuring these follow
closely the activities
agreed in Program andBudget work plans,
enabling a clearer
assessment of external
office progress.
• adopting a ‘plan on
page’ discipline tothese reports recording
key metrics, activities
and engagements andkey next steps in linewith the agreed workplan.
• reviewing thefrequency of the formal
reporting of external
office activities, if
supplemented by othermore regularcommunications.
2019(WO/PBC/31/
3) R#5

Consider the value in IOD
undertaking an audit ofexternal office operations
and the flow of

Implemented
and closed

WO/PBC/34/4
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Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

information between
offices and theheadquarters.
2019(WO/PBC/31/
3) R#62019(WO/PBC/31/
3) R#7

2020(WO/PBC/33/
5) R#1

Statusas part of its 2022
programme.

Alongside existing
indicators and measures,consider establishingspecific result areas andperformance indicators
relevant to each external
office, reflecting theunique circumstances of
their implementation
priorities and the local
context.

The Secretariat will take this duly into
account in the context of the
preparation of the Program and Budget
2022/2023

Consider regular
independent surveys ofhost country stakeholders
to measure their views on
the contributions from theexternal offices, to identify
trends and movements
and to ensure theyremain relevant andfocused on WIPO core
objectives.

The Secretariat accepts therecommendation within the context ofthe WIPO Performance Assessment
biennial exercise.

WIPO should undertake
an assessment of ways ofworking to identify how
lessons learned from thepandemic working

External Auditor’s view

The recommendation revised due datehas been set to 30 June 2022.

The Recommendation revised due datehas been set to 30 June 2022.

An Internal management assessment of thecontinuity of business operations during the
COVID-19 pandemic was completed during thecourse of 2021 through a comprehensive review
of WIPO’s COVID-19 Pandemic crisis
management response conducted by WIPO’s
Internal Oversight Division, and involving all

We note WIPO’s future
implementation date ofthis recommendation andwe will again review thestatus during next year’s
audit.

In progress –WIPO’s revised
implementation
date: 31/6/2022

We note WIPO’s future
implementation date ofthis recommendation andwe will again review thestatus during next year’s
audit.

In progress –WIPO’s revised
implementation
date: 31/6/2022

We note WIPO’s
response. Recognisingthat the impact of thepandemic is ongoing, we
will consider revised

Implemented
and closed.

WO/PBC/34/4
page 41
Previous
reference

2020(WO/PBC/33/
5) R#2

2020(WO/PBC/33/
5) R#3

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

practices can serve tominimise unnecessary
travel where in person
contact does not provide
a significant benefit to theoutcomes.

functional areas referred to in therecommendation. Lessons learned andrecommendations were identified for
implementation from 2022. The pandemic is
ongoing, however lessons learned have alreadybeen included in the Program of Work andBudget 2022/23 with reduction in travel budget toreflect the new normal of use of hybrid andvirtual meetings. WIPO will not return to travel as
normal after the pandemic, and we are pushinghard to ensure that much technical assistanceand capacity development is delivered virtually
where this does not lower impact.

ways of working over theremainder of ourmandate and commentin future reports asnecessary.

WIPO should: a) in
consultation with Member
States, establish a target
level of earmarked funds
for its ASHI liabilities; b)consider the risks andbenefits of formallydesignating earmarked
ASHI investments as plan
assets to enhancetransparency over the net
liability; c) consider andengage with Member
States on the options for
mitigating the potential
future growth in ASHI
liabilities.
WIPO should accelerate
the timetable for IOD toprovide an annual opinion
over WIPO’s governance,risk management and

The Asset and Liability Management
Study is scheduled to commence in Q1
2022, with a final report expected in Q2
2022. Based on this analysis and theassessment of the future funding of
WIPO's ASHI liability, management will
prepare a paper for the PBC
considering the points raised in therecommendation.

We note the response
and will review the study
when it’s finalised andavailable.

This recommendation will be
implemented in phases. Phase1, whichis to enhance the data analytics
capacities of IOD has been completed.
The implementation date of thisAs noted in our 2020
report, we do notconsider the timetable for
IOD to provide an annual
opinion to be particularly

StatusIn progress.

We further note theFunding Plan for AfterService Health Insurance(ASHI) Liabilities matteris scheduled to be
discussed at the thirtyfourth session of the
PBC (June 2022).

In progress.

WO/PBC/34/4
page 42Previous
reference

2020(WO/PBC/33/
5) R#4

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

Statuscontrol environment toprovide Member Stateswith additional assurance
over these key areas ofoversight and support the
Director General in
preparing his Statement
on Internal Control.

recommendation has also been moved
back to June 2025, as IOD plans to
implement this recommendation with
the issuance of SIC at 31.12.2024,
which will be presented to the PBC in
June 2025.

ambitious and would
urge Member States toseek this sooner.

WIPO should conduct acomprehensive andsystematic assessment of
the lessons learned fromits deployment of
preparedness plans in
response to the pandemic
to inform the developmentof business continuity
procedures.

Lessons learned through IOD's
assessment of the Organization's
Covid-19 pandemic response is being
finalised, and plans will be put in place
for those lessons that are actioned.

We note the Secretariat’s
response and the future
implementation date forthis recommendation.

In progress.

We note the Secretariat’s
response and the future
implementation date forthis recommendation.

In progress.

Each functional business plan, as it iscompleted, will have embedded within it
actions, gaps and exercises that reflectlessons learned from the Covid-19 crisis
response, and its implications on
business continuity.
Recommendation due date has been
set to 31 December 2022.

2020(WO/PBC/33/
5) R#5WIPO should consider
mapping the individual
projects against WIPO’s
core objectives andranking them to enable
Member States to better
understand the priority
areas for investment.

The recommendation is accepted.
Thresholds will be implemented infuture CMP and biennial budget cycles.
To be incorporated in the CMP
proposal, which will be presented to the
PBC in 2023

WO/PBC/34/4
page 43
Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

Status

2020(WO/PBC/33/
5) R#6WIPO should consider
greater integration of the
CMP with its mediumterm strategy.

The recommendation was implemented
by linking each CMP project to the
MTSP 2022-2026 in the CMP proposal
submitted to the 33rd session of the
PBC (WO/PBC/33/11).

We note WIPO’s
response and how they
have aligned CMP
proposals to Expected
Results and Mediumterm Strategic Plan.

Implemented
and closed.

2020(WO/PBC/33/
5) R#7

WIPO, in consultation
with Member States,
should reconsider thecriteria for the Special
Project investments tokeep focus on their
special and significant
nature and make budget
provision for wider
generic renewal
investments and smaller
initiatives through thenormal budgeting
process.

The recommendation is accepted andwill be implemented in future CMP andbiennial budget cycles. The Secretariat
will review the criteria in the Policy for
the Utilization of Reserves and update
those accordingly. The criteria will form
the basis for CMP proposals in future
cycles.

We note the Secretariat’s
response and the future
implementation date forthis recommendation.

In progress.

Member States may wish
to establish thresholds for
projects included in the
CMP to make the plan
efficient and focused on
the main strategic
investment initiatives andto establish different
assurance and reporting
requirements to mirror the

The recommendation is accepted. The
differentiation in reporting requirements
will be implemented for both ongoingand future projects in the context of the
WIPO Performance Reports.

We note the threshold
applied in the WIPO
Performance Report
2020/21. This approachaddresses the principles
of our recommendationand WIPO should ensure
it applies these principles
in future CMP proposals.

Implemented
and closed.

2020(WO/PBC/33/
5) R#8To be incorporated in the CMP
proposal, which will be presented to the
PBC in 2023.

Implementation actions to be completed
in the WPR for 2021, to be reviewed for
closure by external auditors during the
Final Audit.

WO/PBC/34/4
page 44
Previous
reference

Summary ofrecommendation

Administration’s comments on
status: May 2022

External Auditor’s view

StatusWe note the enhanced
business cases includedin the CMP presented to
the Thirty-third Sessionof the PBC.

Implemented
and closed.

proportionality and scaleof the project.
2020(WO/PBC/33/
5) R#9WIPO should consider
whether the content of PIDs
could be enhanced to provide:a) better option appraisal
analysis including, where
relevant, outsourcing options;b) clear articulation of thebaseline position and target
outcomes for subsequentevaluation and to help
measure the achievement ofvalue for money;c) greater articulation of thefull costs, including the lifecycle costs of the projects;
andd) appropriate risks to theachievement of the project’s
objectives together withrealistic mitigation actions todetermine the real level ofresidual risk.

The recommendation is accepted
and will be implemented for any
future CMP project approved by
the Member States.
The actions will be implemented for
CMP projects recommended forapproval in PBC 33(WO/PBC/33/11).

WO/PBC/34/4
page 45
MANAGEMENT’S RESPONSES TO THE RECOMMENDATIONS MADE BY THE EXTERNAL
AUDITOR
Recommendation no.1
WIPO should:a) review its approach to documenting, assessing and validating process level controls to focus
on those key controls of most significance and materiality to the Organization; andb) assess the completeness of the process level control analysis and develop a roadmap toensure all significant management and administrative processes are documented.
Response
The recommendation is accepted and will be implemented in 2022 and 2023. The Secretariat
has commenced a review of process level controls with a view to rationalizing the level of
granularity and in order to identify key controls. A future approach will be developed to validate
key controls on a more frequent basis than non key controls. A roadmap will be prepared toinclude any other relevant processes to ensure comprehensive analysis.
Recommendation no.2:
WIPO should:
Ensure that it develops a holistic approach and strategy to develop and deploy data analytics
that serves the needs of all users within the Organization and creates synergies in training andsupport.
Response
The recommendation is accepted and will be implemented in 2022 and 2023 during the
deployment of data analytics in accordance with the strategy and roadmap. The strategy
includes the development of analytics for use across the organization, including for,procurement activities (Procurement and Travel Division), human resources management(Human Resources Management Division) and finance (Department of Program Planning and
Finance). In addition there are ongoing discussion with the Internal Oversight Division (IOD) tocreate synergies. IOD also undertakes continuous auditing and shares the results withmanagement.
Recommendation no.3:
WIPO should:
Consider a review of the standing agenda of the RMG to dedicate consideration to thecompleteness of risks and quality of mitigations in between the annual assessment process, toensure the risks remain appropriate and the mitigations of lesser risks are cost effective.
Response
The recommendation is accepted and will be implemented in 2022. Risks and mitigations are
discussed during the RMG meetings. These discussions focus primarily on organizational risks.
The standing agenda of the RMG will be updated to include an item to consider effectiveness ofrisk mitigations. This will ensure a more systematic coverage of risk mitigations including at thesector level.