WO/PBC/18/22
page 142
/ EWO/PBC/18/22
ORIGINAL: ENGLISH
DATE: April 12, 2012
Program and Budget Committee
Eighteenth Session
Geneva, September 12 to 16, 2011
REPORT
adopted by the Program and Budget Committee
CONTENTS
ITEM PAGE
ITEM 1: OPENING OF THE SESSION 3
ITEM 2: ADOPTION OF THE AGENDA 5
ITEM 3: REPORT AND RECOMMENDATIONS BY THE WIPO INDEPENDENT ADVISORY OVERSIGHT COMMITTEE (IAOC) 11
ITEM 4: GOVERNANCE AT WIPO 15
ITEM 5: PRESENTATION BY THE DIRECTOR OF THE INTERNAL AUDIT AND OVERSIGH DIVISION (IAOD) 30
ITEM 6: REPORT BY THE EXTERNAL AUDITOR: HUMAN RESOURCES 34
ITEM 7: PROGRAM PERFORMANCE REPORT FOR 2010 37
ITEM 8 ANNUAL FINANCIAL STATEMENTS 2010; STATUS OF THE PAYMENT OF CONTRIBUTIONS AS AT JUNE30,2011 37
ITEM 9: IPSAS PRESENTATION: IPSAS IMPLEMENTATION - ISSUES AND IMPACT 42
ITEM 10 STATUS OF UTILIZATION OF RESERVES 44
ITEM 11 POLICY ON INVESTMENTS 46
ITEM 12 POLICY ON LANGUAGES 47
ITEM 13 PROPOSED PROGRAM AND BUDGET FOR THE 2012/13 BIENNIUM 60
ITEM 14 CAPITAL PLANNING AND MANAGEMENT FRAMEWORK 128
ITEM 15 CAPITAL INVESTMENT PROPOSAL FOR FUNDING OF CERTAIN INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ACTIVITIES 129
ITEM 16 STRATEGIC REALIGNEMNT PROGRAM (SRP) UPDATE 131
ITEM 17 PROGRESS REPORT ON THE NEW CONSTRUCTION PROJECT 134
ITEM 18 PROGRESS REPORT AND PROPOSAL ON THE NEW CONFERENCE HALL PROJECT 136
ITEM 19 PROGRESS REPORT ON THE PROJECT TO UPGRADE SAFETY AND SECURITY STANDARDS FOR THE EXISTING WIPO BUILDINGS 138
ITEM 20 PROGRESS REPORT ON THE IMPLEMENTATION OF IT MODULES TO ESTBALISH COMPLIANCE WITH THE NEW FINANCIAL REGULATIONS AND RULES (FRR) AND INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) 139
ITEM 21 PROGRESS REPORT ON THE PROJECT IMPLEMENTATION OF A COMPREHENSIVE INTEGRATED ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM IN WIPO 139
ITEM 22 ADOPTION OF THE REPORT 142
ITEM 23 CLOSING OF THE SESSION 142
ANNEX List of participants
1. The eighteenth session of the WIPO Program and Budget Committee (PBC) was held at the headquarters of WIPO from September 12 to 16, 2011.
2. The Committee is composed of the following Member States: Algeria, Angola, Bangladesh, Barbados, Belarus, Brazil, Bulgaria, Cameroon, Canada, China, Colombia, Croatia, Cuba, CzechRepublic, Djibouti, Egypt, France, Germany, Greece, Guatemala, Hungary, India, Iran (Islamic Republic of), Italy, Japan, Jordan, Kazakhstan, Mexico, Nigeria, Oman, Pakistan, Peru, Poland, Republic of Korea, Republic of Moldova, Romania, Russian Federation, Senegal, Singapore, South Africa, Spain, Sweden, Switzerland (exofficio), Tajikistan, Thailand, Tunisia, Turkey, Ukraine, United Kingdom, United States of America, Uruguay, Venezuela (Bolivarian Republic of) and Zambia (53). The members of the Committee which were represented at this session were the following:Algeria, Bangladesh, Barbados, Belarus, Brazil, Bulgaria, Cameroon, Canada, China, Colombia, Czech Republic, Djibouti, Egypt, France, Germany, Greece, Hungary, India, Italy, Iran (Islamic Republic of),Japan, Mexico, Nigeria, Oman, Pakistan, Peru, Poland, Republic of Korea, Republic of Moldova, Romania, Russian Federation, Senegal, South Africa, Spain, Sweden, Switzerland, Thailand, Ukraine, United Kingdom, United States of America, Venezuela (Bolivarian Republic of) and Zambia (42). In addition, the following States, members of WIPO but not members of the Committee, were represented as observers: Afghanistan, Andorra, Australia, Bahrain, Chile, ElSalvador, Ethiopia, Holy See, Iraq, Kuwait, Lithuania, Madagascar, Malaysia, Monaco, Nepal, (the)Netherlands, Panama, Philippines, Portugal, Saudi Arabia, Slovenia, Sri Lanka, Togo, Trinidad and Tobago (24). The list of participants appears in the Annex to the present document.
ITEM 1: OPENING OF THE SESSION
3. The Chair welcomed the Member States’ delegations and requested them to limit the length of their opening statements in view of the heavy agenda for the session. He added that the focus of the session was to build on the work carried out during the PBC 17th session (June27 to July1,2011). The Chair invited delegations to consult the Summary by the Chair (document WO/PBC/17/8) as well as a second Q&A paper on the Program and Budget that the Secretariat had compiled. The Chair apologized for the delay in the availability of the Chairpersons’ paper on governance that he had been preparing with the Ambassador of Barbados (the Chair of the Coordination Committee), which was due to the unfortunate conflicting schedules of the two Chairs and added that the paper would only be available later in the week. The Chair invited the Director General to deliver his opening remarks.
4. The Director General welcomed the delegations and recalled that numerous informal consultations had taken place between the informal PBC June meeting and the present session. He thanked Member States for their very intense and constructive involvement in the process of consultations. He also thanked his colleagues in the Secretariat for their hard work during the consultations and the preparation of the requested new documents. Referring to the agenda heading “Audit and Oversight”, the Director General was pleased to report that very good progress had been made in this area this year. The new Independent Advisory and Oversight Committee (IAOC) had been established. The Director General welcomed the Chair of the IAOC, Mrs. Sanz Redrado, who was present at the session. The Director General added that the new IAOC had adopted a risk based approach and had provided the Secretariat with extremely helpful guidance. The Director General said that the Secretariat was looking forward to continuing close cooperation with the IAOC. He added that a good number of the IAOC recommendations had been closed and the number of outstanding recommendations had been brought down. The Director General announced that the selection process for a new Director of the Internal Audit and Oversight Division (IAOD) had been concluded. In accordance with the procedure, the selected candidate would be proposed to the Coordination Committee at its September 2011 meeting. The Director General explained that under the heading “Policy Proposals”, two very important policy proposals were put before the PBC, i.e., Policy on Investments and Policy on Languages, both of which had been under preparation and in discussion with the Member States for over oneyear. The Director General hoped that conclusions would be reached on both of proposals. Regarding the Strategic Realignment Program (SRP), the Director General said that regular updates, both to the Member States and to the IAOC had been provided and, in great summary, the program was on track for completion at the end of 2012. Thereafter, the Organization would enter into the normal phase of continuous improvement. The Director General believed that one of the major achievements of the SRP in the course of this year was the obtention of much more understanding and involvement on the part of the staff in various SRP projects. Regarding the heading “Progress Made on Major Projects”, the Director General said that the Organization was involved in three such projects. Under the New Construction Project, the move to the new building housing some 500 staff had taken place. Extremely positive feedback on the quality of the working environment that it provided had been received. The inauguration of the new building would take place on September27,2011. The construction site, however, would remain for the next two years because the construction on the new conference hall had started following conclusion of the contract with the general contractor. He added that a great deal of work was going on in the forecourt of the building, which would continue for two years and would involve a certain amount of disruption to the AB building lobby, where there eventually would be a connection through the lobby to the new conference hall. The second inconvenience was the road works on the Route de Ferney, where WIPO had completed the renovation of the part of the road under its responsibility. What remained uncompleted was under the responsibility of the Geneva City Council. It was hoped that the work would be completed before the end of this year. The Director General then referred to yet another major project, i.e., the Enterprise Resource Planning (ERP), where work was well under way on further modules, in particular the modernization of the Human Resources systems and the development of business intelligence. The Director General stressed that the central point on the PBC agenda was the 2012/13Program and Budget. He believed that all the inputs received at the informal PBC session in June had been incorporated into the present proposal, with only one exception, i.e.,the level of the Program and Budget. The Director General thought that this was a complex issue. Because of the specifics of the WIPO budgeting process, which was slightly different from such processes in other international organizations, the budget proposal in WIPO was not so much a request for financing but rather a request for an authority to spend. The Director General explained that when the Secretariat had estimated that the income would rise by 4.7per cent, it was estimating it in terms of developments in the WIPO revenue generating registration systems in the ensuing period of two years. He added that there was no change in the Member States’ contributions, which were subject to zero nominal growth. The Secretariat had predicted a 4.7 per cent increase in revenue. However, there was a great deal of uncertainty, which was causing considerable anxiety in relation to the future outlook of the global economy. Uncertainty was very difficult to quantify, so the Secretariat believed that the best approach was to proceed on the basis of what WIPO forecast model and the data demonstrated, and to adjust when the data indicated that adjustment was called for. The first six months of the year had seen the number of PCT applications rise by 9.58 per cent. The Director General pointed out two enduring trends in the economy, which perhaps marked out WIPO from other areas: one of those was that the rate of investment in intangibles was increasing more rapidly than the rate of investment in tangibles, which had been the case for the past 15-20 years in the advanced economies. Indeed, in some economies the overall investments in intangibles were higher now than the overall investments in tangibles. The second enduring trend was multipolar growth. For example, this year applications from China (in the first sixmonths) were up by 42 per cent (on a base that was 7.5per cent of the PCT filings). The applications from the Republic of Korea were up by well over 20per cent, as well on a base that was 5.8 per cent of the PCT filings. The Director General believed that these two enduring trends provided a part of the explanation for the reason why the data might be seen as being not entirely consistent with the data that one saw everywhere else in the economy and why the Secretariat believed that the proper professional approach was to go on the basis of what the data demonstrated and to use the available mechanisms to adjust when the data suggested adjustment. WIPO’s internal Crisis Management Group, meeting regularly to review the latest financial results and trends in the level of applications received and the possibility of a revision of the Program and Budget should it be necessary, was one such mechanism. The “wild card” element was the exchange rate and the appreciation of the Swiss franc against the major currencies in which WIPO received its revenue. The Swiss franc had appreciated by more than 25 per cent in a very short period of time and had caused WIPO to forego income that it might otherwise have expected to receive. Although it was very hard to make any predictions about currency movements, the Secretariat thought that WIPO was not going to continue to forego large amounts of income as a result of currency appreciation. This was due to the adjustment mechanism in the PCT. That adjustment mechanism took about sixmonths to take effect, so the very rapid and steep rise in the Swiss franc value had left the Organization without the protection of the adjustment mechanism for a period. However, that protection would be coming in at the end of this year when the adjustments of the Swiss franc would take effect. The Director General also recalled that the Swiss National Bank (BNS) had committed to spending an unlimited amount of money to protect the Swiss franc at the level of 1.2 to the euro. For these reasons the Secretariat was disinclined to change what the model was suggesting. Regarding the Organization’s expenditure, the Director General said that the Secretariat recognized Member States’ repeated calls for some rigor in relation to the Organization’s expenditure. In this regard, and as a result of consultations with Member States, the Director General proposed that the expenditure should not be increased by the same amount as the Secretariat predicted the Organization’s income to increase (4.7percent) but that the expenditure would only be increased by 3 per cent, i.e.,a1.7per cent drop from the original proposal. The Director General believed that such a drop could be achieved mainly through efficiency measures and added that it would not affect the delivery of results or the Secretariat’s commitment to improve delivery of development assistance and capacity building. In closing, the Director General stressed that commitment to, and the delivery of results for development cooperation would not be affected. He added that this step would contribute to providing a needed measure of rigor that Member States had been requesting from the Organization.