IPSAS IMPLEMENTATION - ISSUES AND IMPACTPBC 18th Session

GenevaSeptember 2011

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Presentation Outline

Definitions, concepts and dates

Overview of key differences UNSAS / IPSAS

Walk-through UNSAS to IPSAS: opening balances

Walk-through of UNSAS vs IPSAS: 2010 results

Walk-through UNSAS vs IPSAS: RWCF

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Definitions, Concepts, Dates (1)

UNSAS vs. IPSAS – what are these?

IPSAS key concepts:

Accrual basis of accounting

Going concern

Adoption by WIPO of IPSAS by 2010

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Accrual basis of accounting – a simplified example:

Income

vs

expenditure

for the year

=

IPSAS result

EXPENDITURE FOR THE FINANCIAL YEAR:

Materials purchased not usedCost of equipment, services used to deliver the service

Salaries for 12 months

Unused leave earned and carried over to next year

ASHI/termination benefits earned on the basis of the year worked

INCOME FOR THE FINANCIAL YEAR:

Fees for patent applications published in the year Cash received in advance

Definitions, Concepts, Dates (2)

Jan. 1 Dec. 31

Reporting Period

Process patent applications WIPO service

Cash due for services

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KEY DIFFERENCES UNSAS vs. IPSAS

Some terminology Statement of financial positionStatement of comprehensive incomeStatement of changes in net assetsStatement of cash flowsNotes

INCOME – revenue not “earned” must be deferred

EXPENDITURE – expenses are recognized when an obligation is incurred not when payment is made

Balance sheet – various differences in method of valuation and disclosure

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WALK-THROUGH: 2010 results

Adjustments to 2010 income and expenditure, summarized as follows:

IPSAS Adjustments to 2010 Income and Expenditure

(in millions of Swiss francs)

• A net increase in expenditure of 5.1 million Swiss francs:

Depreciation: +5.2 million Sfr

Equipment acquisition: -1.3 million Sfr

Capitalization of construction expense: -1.1 million Sfr

Capitalization of construction loan interest: -1.9 million Sfr

Repayment of loan principal: -1.4 million Sfr

Changes in employee benefit provisions: +5.9 million Sfr

Inventory recognition: -0.1 million Sfr

• Reduction of 5.7 million Swiss francs in income, to reflect income deferral of monies received but unearned

Budgetary result 3.1 - less Reserve expenditure (5.8)

Budgetary result after reserve expenditure (2.7)

- less IPSAS adjustment to income (5.7) - less increase on expenditure due to IPSAS adjustment (5.1)

IPSAS result (13.5)

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WALK-THROUGH: 2010 resultsResulting income and expenditure views:

Budgetary basisadjustments

IPSAS basis

Note: differences may be due to rounding

2010 Income 292.5

(289.4)

3.1

(5.8)

Result after Reserve expenditures (2.7)

2010 Expenditure

2010 Result

Reserve Special Projects expenditures 2010

2010 Income and Expenditure(in millions of Swiss francs)

REDUCTION (5.7)

Total adjustment on income and expenditure (10.8)

NOTE: all expenditure included under "Expenditure", no differentiation between regular budget vs RWCF

INCREASE IN TOTAL EXPENDITURE

(5.1)

IPSAS ADJUSTMENTS(in millions of Swiss francs)

Excluding FITs

2010 Income 286.8

Surplus/Deficit (13.5)

2010 Expenditure (300.3)

2010 Income and Expenditure(in millions of Swiss francs)

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WALK-THROUGH: opening balancesAdjustments to the opening balances of the Reserves and Working Capital Funds (RWCF) via the balance sheet, totaling 20 million Swiss francs (reduction), summarized as follows:

IPSAS Adjustments to RWCF Opening Balances

(in millions of Swiss francs)

Adjustment for the recognition of land and buildings +151.5 million Sfr

Adjustment for the revaluation of investment property + 0.9 million Sfr

Adjustment for the recognition of PCT receivables +11.5 million Sfr

Adjustment for deferral of unearned revenue -132.2 million Sfr

Adjustment for the recognition of intangible assets +28.2 million Sfr

Adjustment for the recognition of inventory +2.4 million Sfr

Adjustment for the recognition of provision for doubtful accounts -7.3 million Sfr

Adjustment for the recognition of post employment benefits -78.8 million Sfr

Adjustment for the recognition of equipment +3.8 million Sfr

RWCF Opening Balances on budgetary basis 228.3 - less IPSAS adjustments to opening balances (20.0)

RWCF Opening Balances on IPSAS basis 208.3

Land and Buildings

Total 180.6

Current liabilities

Total 132.2

Post employment benefits Total -78.8

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Opening Balances – Land and BuildingsLand and Buildings (in millions of Swiss francs)

UNSAS value as in FMR

08/09

IPSAS opening adjust

opening balance 2010

Total land & buildings 125.7 151.5 277.3

Building - Investment Property

Madrid Union Building (Note 5) 3.4 0.9 4.3

Land Surface Rights (Intangible assets)

Land surface rights (former WMO site) (Note 6) - 28.2 28.2

TOTAL IPSAS opening balance adjustment 129.1 180.6 309.8

Work-in-progress

New Building (note 1) 98.0 17.6 115.6

New Conference Hall (note 2) - 3.4 3.4

Occupied Buildings

A. Bogsch Building (Note 3 and 4) 22.5 25.2 47.6

G. Bodenhausen Building I (Note 4) 5.2 5.1 10.4

G. Bodenhausen Building II (Note 3 and 4) - 4.3 4.3

PCT Building (Note 4) - 67.3 67.3

New Building Site (Note 5) - 28.6 28.6

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Opening Balances – Current Liabilities

CURRENT LIABILITIES - Advance Receipts (in millions of Swiss francs)

UNSAS closing

balance 2009IPSAS opening

adjustmentsopening

balance 2010

Note

Madrid Union Deposits payable to 3rd parties 1 (21.2) - (21.2) Industrial design deposits 1 (0.1) - (0.1) PCT/IBRO deposits 1 (0.7) - (0.7) Publications creditors 1 (0.0) - (0.0) Advance payment of contributions 1 (1.4) - (1.4) PCT Revenue deferred 2 - (128.2) (128.2) Trademarks Revenue deferred 3 - (3.9) (3.9) Industrial design Revenue deferred 3 - (0.2) (0.2) Non exchange revenue deferred 4 (13.6) 0.1 (13.6) Other deferred revenue 1 (0.3) - (0.3)

Total Advance Receipts (37.4) (132.2) (169.6)

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Opening Balances – Post Employment Benefits

UNSAS 2009 Closing balance (provision) IPSAS adjustment

IPSAS 2010 Opening balance

Closed Pension Fund 0.4 2.6 3.0 VSP - 16.1 16.1 Separation from Service 16.4 6.7 23.1 ASHI 29.1 53.5 82.6

TOTAL 45.9 78.9 124.8 NOTE: In the statements these amounts are broken down into current and non-current figures

IPSAS ADJUSTMENTS TO OPENING BALANCES(in millions of Swiss francs)

IPSAS 2010 Opening balance 2010 ENTRIES

IPSAS 2010 Closing balance

Closed Pension Fund 3.0 0.8 3.8 VSP 16.1 (14.9) 1.2 Separation from Service 23.1 (1.3) 21.8 ASHI 82.6 13.3 95.9

TOTAL 124.8 (2.1) 122.7 NOTE: In the statements these amounts are broken down into current and non-current figures

POST-EMPLOYMENT BENEFITS UNDER IPSAS (in millions of Swiss francs)

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WALK-THROUGH: RWCFResulting RWCF levels:

Budgetary basisadjustments

IPSAS basis

Note: differences may be due to rounding

RWCF Opening 2010 228.2

PLUS:Surplus for 2010 3.1LESS:Reserve Special Projects expenditures 2010 (5.8)

RWCF Closing 2010 225.6

RWCF end 2010(in millions of Swiss francs)

opening balance adjustment: (20.0)

2010 adjustments:reduction in income (5.7)increase in expenditure (5.1)

IPSAS ADJUSTMENTS(in millions of Swiss francs)

RWCF Opening 2010 208.3

LESS:deficit for 2010 (13.5)

RWCF Closing 2010 194.7

RWCF end 2010(in millions of Swiss francs)