7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 1/30
Financial Audit of WIPO
Financial Position, Financial
Performance and Audit Findings
8/11/2013 1
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 2/30
Our focus was on
• Whether there were acceptable financial andinformation systems in place, along witharrangements to provide annual assurance on the
reliability of such systems – 16 interfaces
– AIMS, Bibadmin, SIGAGIP
– Year-end procedures
• Whether WIPO had arrangements in place toproduce reliable Financial Statements, along withadequate supporting working papers
8/11/2013 2
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 3/30
Six components of Accounts
1. A Statement of Financial Position
– Depicts net assets -the difference between totalassets and total liabilities
• provides information about the financial strength of WIPO,and the resources which are available to support its futureobjectives.
2. A Statement of Financial Performance
– net surplus or deficit - the difference between total
revenue and total expenses• provides information on WIPO’s sources of revenue, and the
cost of its activities
8/11/2013 3
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 4/30
Six components of Accounts
3. A Statement of Changes in Net Assets – identifies the change in the net asset position during
the year• highlights the sources of changes in the Organization’s
overall financial position, including changes due to thesurplus or deficit for the period.
4. A Statement of Cash flow – movements of cash during the year resulting from
operating, investing and financing activities• provides information on how cash has been raised and used
during the year, including borrowing and repayment of borrowing, and the acquisition and disposal of fixed assets
8/11/2013 4
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 5/30
Six components of Accounts
5. A Statement of Comparison of Budget and – presents a comparison of the budget amounts under
the Program and Budget, and the actual amounts forthe year
• provides information on the extent to which resources wereobtained and used in accordance with the approved budget.
6. Notes to the Financial Statements – assist in understanding the principal financial
statements• comprise a summary of significant accounting policies and
other explanatory information. They also discloseinformation required by IPSAS which is not presented on theface of the principal financial statements
8/11/2013 5
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 6/30
Financial Position
830.7m
i n m i l l i o n s o f S w i s s
f r a n c s
Other 58.4m
Borrowings
149.7m
Other 49.6m
Employee benefits
141.4m
Payables and
advance receipts
303.0m
Fixed assets
373.0m
Net assets
178.2m
Cash and cash
equivalents
408.1m
Assets Liabilities
8/11/2013 6
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 7/30
Composition of employee benefits
liabilities
December 31, 2012
(in millions of Swiss
francs)
After Service Health Insurance (ASHI) 110.9 78.4
Accumulated leave 13.5 9.6
Repatriation and separation benefits 12.5 8.8
Closed pension fund 3.3 2.3
Accrued overtime 0.7 0.5
Home leave not taken 0.5 0.4
Total Employment Benefit liabilities 141.4 100.0
Percentage of
Liability
8/11/2013 7
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 8/30
Summary of Revenue
Investment
1.8m
Hague system fees
3.0m (0.9%)
Madrid system fees
51.6m
(15.3%)
Other 8.9m (2.6%)
Assessed conts.
17.6m (5.2%)
Voluntary conts.
7.7m (2.3%)
PCT system fees
248.2m
(73.7%) Arb. & Med.
1.7m
Other
4.8m
Pubs. 0.6m
8/11/2013 8
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 9/30
Expenditure
Supplies andmaterials 2.6m
Other 11.3m (3.5%)
Depreciation, amortization
and impairment 8.1m
Contractual serv ices
55.0m
(17.1%)
Operating ex.24.6m (7.6%)
Personnel expenditure
212.8m
(66.2%)
Travel/fellow s.
17.6m (5.5%)
Equip. 0.6m
8/11/2013 9
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 10/30
Financial Performance
• The Organization’s results for 2012 showed asurplus for the year of 15.7 million Swissfrancs, with total revenue of 337.0 million
Swiss francs and total expenses of 321.3million Swiss francs.
• This can be compared to a deficit of 32.2million Swiss francs in 2011, with totalrevenue of 293.2 million Swiss francs and totalexpenses of 325.4 million Swiss francs.
8/11/2013 10
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 11/30
Summary of Financial Performance
2012 2012 2012 2012 2012 2011
Total revenue 341.1 10.2 3.8 -18.0 337.0 293.1
Total expenses 290.1 7.8 14.8 8.6 321.3 325.3
Net surplus/(deficit) 51.0 2.4 -11.0 -26.6 15.7 -32.2
(in millions of Swiss francs)
Program
and Budget
Special
AccountsTotal
IPSAS
Adjustments
Projects
Financed
from
Reserves
8/11/2013 11
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 12/30
Audit approach and Methodology
8/11/2013 12
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 13/30
Audit Findings
8/11/2013 13
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 14/30
Enterprise Risk Management
• WIPO is in the path of institutionalizing an EnterpriseRisk Management Programme as a part of their SRP.Our review revealed inadequacies in the existing riskmanagement and internal control framework of the
Financial Services.• Though the external Consultants are at work towards
this end, considering the expected time for completionof this task, we recommend that Financial Servicesshould review the existing framework in place to make
it up-to-date and develop suitable risk registers and internal controls, particularly in case of those unitswhere such framework does not exist or exists partially.
8/11/2013 14
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 15/30
AIMS- Integration among various
modules
• Full integration does not exist between Asset
Management and General Ledger of AIMS.
• Review the AIMS system with reference to the
integration that exists among various modules
and also carry out necessary reclassification of
assets in line with the declared accounting
policies
8/11/2013 15
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 16/30
Treasury and Cash Management
• WIPO does not have a formal Treasury and CashManagement policy. We noted instances of payment of avoidable bank and commission charges coupled withweak (non-forward looking) cash flow forecasting
system.• This needs a review of the system in place to consider
adopting an appropriate Treasury and CashManagement policy to address the issues pointed inthis regard. Management accepted various suggestions
in this regard. We recommend that Management may set a time frame for implementing these and closely monitor the progress.
8/11/2013 16
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 17/30
Bank Reconciliation
• Only nine out of 68 accounts are subject to
independent verification of bank reconciliation
statements. Institutionalize a system of
independent verification of bank reconciliationstatements.
8/11/2013 17
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 18/30
Funds In Trust
• Accounts maintained with regard to Funds in
Trust were fraught with the risk of avoidable
exchange losses and more reimbursements
than due.
8/11/2013 18
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 19/30
Cash Flow Statement
• In the event of WIPO going in for any
borrowings for creation of an asset, the cash
flows on interest which would be capitalized
need to be classified as investing activity.Necessary modification to this effect may be
carried out in the WIPO IPSAS guidance
manual.
8/11/2013 19
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 20/30
Revenue Management
• We noted differences in the PCT revenue recognizedand deferred in the data maintained in AIMS and theconcerned interface (BibAdmin). Though the quantumof differences varied between the results of audit
analysis and the results of analysis carried out atManagement level consequent on audit query,unexplained differences persists.
• To ensure conformity with the declared accounting policy and IPSAS requirements, the Management
should identify the sources of the differences in deferral and recognition. As agreed to, the approachrecommended by audit should be tested during 2013.
8/11/2013 20
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 21/30
Revenue Management contd.,
• WIPO does not book any accruals into AIMS
on a monthly basis and they are booked into
AIMS at the year-end which defeats the very
spirit of accrual concept. Set a system of entering accruals into AIMS as they accrue.
8/11/2013 21
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 22/30
Revenue Management contd.,
• Revenue from assessed contributions was not beingrecognized as soon as WIPO gains control of resources(date of invoices sent in the beginning of the year to allthe Member States) in line with IPSAS 23 and rather
the revenue was being spread proportionately overthroughout the year.
• We recommend that assessed contributions arerecognized in accordance with the Accounting policy espoused in the financial statements or IPSAS 23 (para
29) or the policy adopted by WIPO to recognize revenueon the due date of invoices sent to Member States for each year of the financial period.
8/11/2013 22
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 23/30
Re-evaluation of accounts
• Re-evaluation of accounts and attendant
controls need a re-look to set a mechanism for
reviewing these re-evaluations independently
from time to time, particularly during the yearend procedures.
8/11/2013 23
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 24/30
Assets Management
• Assets each with value over CHF 5000,
constitute only 14.46% of the total number of
items valuing 59% of the total assets.
Nevertheless, they are verified once in twoyears. These being low in volume, but high in
value, for a better control, classify the
inventory to switch over to annual stock takingof high value assets.
8/11/2013 24
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 25/30
Repatriation and Travel Grant
• IPSAS stipulate separate presentation for
current-and non-current assets, and current
and non-current liabilities. The current portion
of the Repatriation Grant and Travel wasmisclassified in the financial statements. Set a
system of verification of these calculations
independently by setting appropriatethreshold limits.
8/11/2013 25
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 26/30
Financial Management
• Borrowings
• Provision for Commitment Charges
•
Funds in Trust – Dormant accounts
– Management of Funds
8/11/2013 26
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 27/30
Accounting Issues
• Statement IV- Cash flow Statement
• Significant Accounting Policies – Capitalization of software as Intangible Asset
– Fixed Assets-policy for assets held for a part of the year
– Revenue• Recognition and deferral of Patent Co-operation Treaty Revenue
• Interest Revenue (Investment-EURO revenue)
• Assessed Contributions – Deferment of revenue despite meeting revenue recognition criteria
–
Recognition of revenue despite repeated default – Prior Period Errors
– Reconciliation/re-evaluation of Bank Balances in ForeignCurrency Accounts
8/11/2013 27
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 28/30
Disclosure Issues
• Disclosure of Complementary and
Supplementary Fee
• Surface rights acquired at no cost
• Investment Property
• Amortization of Non-Current Asset
•
Leases-disclosure in Contingent Assets and Liabilities
8/11/2013 28
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 29/30
Other issues
• Physical verification of assets
• Accounts receivable
•
Revaluation of land on which New Building issituated
• Employee benefits
8/11/2013 29
7/27/2019 Audit Findings
http://slidepdf.com/reader/full/audit-findings 30/30
Thank you
8/11/2013 30
Top Related