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Bureau of Financial ManagementUnited Nations Educational,

Scientific and Cultural Organization 7, place de Fontenoy,

75352 Paris 07 SP, France

FINANCIAL STATEMENTS

2018

Contents

FINANCIAL REPORT OF THE DIRECTOR-GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

STATEMENT ON INTERNAL CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

OPINION OF THE EXTERNAL AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

I . CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

II . CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

III . CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

IV . CONSOLIDATED STATEMENT OF CASH FLOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

V. CONSOLIDATEDSTATEMENTOFCOMPARISONOFBUDGETAND ACTUALAMOUNTS–GENERALFUND . . . . . . . . . . . . .39

VI . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

NOTE1–REPORTINGENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

NOTE2–SIGNIFICANTACCOUNTINGPOLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

NOTE3–ACCOUNTINGESTIMATES,ASSUMPTIONSANDJUDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

NOTE4–ACCOUNTINGSTANDARDSISSUED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

NOTE5–CHANGESINACCOUNTINGPOLICIESANDNOTEDISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

NOTE6–CASHANDCASHEQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

NOTE7–INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

NOTE8–ACCOUNTSRECEIVABLEFROMNON-EXCHANGETRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

NOTE9–ADVANCEPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

NOTE10–OTHERRECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

NOTE11–PROPERTY,PLANTANDEQUIPMENT(PP&E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

NOTE12–INTANGIBLEASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

NOTE13–EMPLOYEEBENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

NOTE14–TRANSFERSPAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

NOTE15–VOLUNTARYCONTRIBUTIONSWITHCONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

NOTE16–ADVANCERECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

NOTE17–BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

NOTE18–OTHERLIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

NOTE19–NETASSETS/EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

NOTE20–REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

NOTE21–EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

NOTE22–CONTINGENTLIABILITIES,COMMITMENTSANDCONTRACTUALRIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

NOTE23–APPROVEDBUDGET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

NOTE24–FINANCIALRISKMANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

NOTE25–RELATEDPARTYDISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

NOTE26–SEGMENTINFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

FINANCIAL REPORT OF THE DIRECTOR-GENERAL1

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INTRODUCTIONIn accordance with Article 11.1 of the Financial Regulations, I have the honour to submit the financial statements and financial report of the Organization for the year ended 31 December 2018.

The External Auditor has expressed an unqualified (clean) opinion on the financial statements. His report is submitted to the Executive Board in accordance with Article 12 of the Financial Regulations.

This section, the financial report, presents the Director-General’s discussion and analysis of UNESCO’s consolidated financial position and financial performance for the financial year ended 31 December 2018.

OVERVIEW OF THE FINANCIAL STATEMENTSThe financial statements have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) as required under Article 11.1 of the Financial Regulations of the Organization. Consolidated financial statements are prepared for all UNESCO operations and entities including the nine category 1 institutes. The financial statements cover all four business segments, namely;

The General Fund (GEF)This segment, financed from the assessed contributions of Member States, covers the main operations of the Organization. The programme appropriations for the financial period are voted by the General Conference of Member States.

Other Proprietary Funds (OPF)Includes revenue-generating activities, programme support costs for special accounts and trust funds, the Staff Compensation Fund, the Terminal Payment Fund and Headquarters-related special accounts.

Programme Fiduciary Fund (PFF)This segment relates to programmes and activities financed from funding provided by donors through agreements or other legal authority. The UNESCO category 1 institutes which are set up as separate entities are accounted for under this segment.

Staff Fiduciary Funds (SFF)Activities/funds under this segment have been established for the benefit of UNESCO’s staff members through the Medical Benefits Fund, the Restaurant Services and the Day Nursery and Children’s Club.

The financial statements consist of:

A Statement of Financial PositionThis provides information about the net assets/equity at the reporting year-end date – the difference between UNESCO’s total assets and liabilities. It gives information about the extent to which resources are available to support future operations and the unfunded liabilities.

A Statement of Financial PerformanceThis measures the net surplus or deficit of the reporting year – the difference between revenues and expenses. It provides information about the Organization’s cost of programme delivery and the sources of revenue.

A Statement of Changes in Net Assets/EquityWhich highlights the sources of changes in the overall financial position.

FINANCIAL REPORT OF THE DIRECTOR-GENERAL

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A Cash Flow Statement This provides information about UNESCO’s liquidity and solvency including how the organization raised and used cash during the period and the repayment of borrowing. It measures the difference between the actual cash coming in and cash going out.

A Comparison of Budget and Actual AmountsThis highlights whether resources where used in accordance with the approved budget. It shows differences between the actual expenditure and the approved budget appropriation.

Notes to the Financial StatementsWhich assist in understanding the financial statements. Notes comprise of a summary of significant accounting policies and other explanatory information. It provides additional information on the financial statements as required under IPSAS.

ORGANIZATIONAL BACKGROUND, OBJECTIVES, STRATEGY AND PROGRAMMESUNESCO was created in 1945 with an aim of contributing to peace and security by promoting collaboration among the nations through education, science and culture in order to further universal respect for justice, for the rule of law, human rights and fundamental freedoms which are affirmed for the peoples of the world, without distinction of race, sex, language or religion, by the Charter of the United Nations Organization. Membership of the Organization comprises of 193 Member States and 11 Associate Members as at 31 December 2018.

The current Medium-Term Strategy (37 C/4), approved by the General Conference in November 2013, sets out the strategic vision and programmatic framework for UNESCO’s actions over the period 2014-2021 built around the following mission statement: “As a specialized agency of the United Nations, UNESCO – pursuant to its Constitution - contributes to the building of peace, the eradication of poverty and sustainable development and intercultural dialogue through education, the sciences, culture, communication and information”. The strategy defines two overarching objectives – peace and equitable and sustainable development – as well as two global priorities – Africa and gender equality. The Strategy further defines nine strategic objectives.

These strategic objectives are translated into programmatic priorities through main lines of action and expected results in the C/5 Programme and Budget document adopted by the General Conference. Programmes are defined for four years while the budget allocation is approved every two years.

The following section provides a summary of key achievements of the implementation of UNESCO’s Major Programmes during 2018.

MAJOR PROGRAMME I – EDUCATION

Throughout 2018, UNESCO’s leading role in coordinating SDG 4 – Education 2030 – has contributed to ensuring that education remained high on the global development agenda. Following a series of regional consultations and the first-ever G20 Education Ministers meeting to which UNESCO contributed, the year culminated in the Global Education Meeting (Brussels, December 2018), which set key education recommendations to guide the global implementation of SDG 4.

In November, UNESCO released the 2019 Global Education Monitoring Report, which focused on migration and displacement, and provided concrete recommendations on how to address education barriers for refugees and migrants. The #RightToEducation campaign, which ran from October to December 2018 and marked the 70th anniversary of the Universal Declaration of Human Rights, raised awareness on this crucial human right and the bottlenecks impeding its realization. At the end of the campaign, UNESCO convened the International Expert Meeting on Public Policies Supporting the Right to Education of Refugees (Barcelona, December 2018), resulting in policy recommendations for providing quality education for refugees in a lifelong learning perspective.


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Noteworthy progress was made on the recognition of higher education qualifications and academic mobility. At the global level, the first intergovernmental consultation meeting was convened (Paris, December 2018) to review the Global Convention on the Recognition of Higher Education Qualifications. In LAC, participants at III Regional Conference on Higher Education (Cordoba, Argentina, June 2018), adopted a plan of action (2018-2028) to guide the strengthening of higher education systems.

UNESCO supported over 40 Member States to strengthen their teacher policies and provided a series of teacher trainings in different regions: More than 15,000 teachers, teacher educators and non-formal literacy providers from over 25 countries were trained in gender-responsive pedagogy, skills development in the delivery of content that promotes gender equality, healthy relationships and skills for life and work. UNESCO also continued to advocate for increasing the supply of and support to qualified teachers, notably through the Joint ILO/UNESCO Committee of Experts on the Application of the 1966 and 1977 Recommendations on Teachers (CEART), (Geneva, April 2018), World Teachers Day (Paris, 8 October) and the International Task Force on Teachers’ 11th Policy Dialogue Forum (Montego Bay, November 2018).

MAJOR PROGRAMME II – NATURAL SCIENCES

Programme implementation in the Natural Sciences Sector (SC) is generally on track, despite the challenge of decreasing operational budget. Overall priority continued to be given to Africa, with particular focus on initiatives that promote scientific research and innovation capacity on the continent, in particular under the “Afrimpulse” initiative.

Gender equality in the sciences was also at the centre of Major Programme II’s work: five outstanding women scientists received the 2018 UNESCO-L’Oréal for “Women in Science” Awards in life sciences, marking the 20th anniversary of this strategic partnership. This important achievement was flagged during the UNESCO’s Partners Forum: Structured Financing Dialogue (September 2018), where partners gave evidence of the impact of UNESCO’s work in gender mainstreaming in STI, among others. Moreover, the online Global Observatory of STI Policy Instruments (GO-SPIN) with a specific focus on gender in STI was launched, and allows for countries to monitor all SDGs notably Targets 9.5 and 17.6.

Major achievements over the period also included the launching of the BIOPALT project, a multisectoral flagship project addressing SDGs 6, 11 and 15, and aimed at safeguarding and sustainably managing the hydrological, biological and cultural resources of the Lake Chad Basin utilizing an inclusive, demand-driven and community-based approach. The Synthesis Report of SDG 6 presented at the United Nations High-level Political Forum on Sustainable Development (HLPF) was coordinated by the UNESCO World Water Assessment Programme (UNESCO WWAP) on behalf of UN Water. UNESCO and United Nations Economic Commission for Europe (ECE) also prepared a global report dedicated to SDG 6 Indicator 6.5.2.

INTERGOVERNMENTAL OCEANOGRAPHIC COMMISSION (IOC)

The end of the year 2017 was very special for the Intergovernmental Oceanographic Commission (IOC) with the endorsement by the 72nd session of United Nations General Assembly of the IOC’s proposal to proclaim the years 2021-2030 as the United Nations Decade of Ocean Science for Sustainable Development (the Decade). IOC is working with Members States, United Nations, all partners and stakeholders to develop an implementation plan for the Decade. This is a once-in-a-life-time opportunity for all to achieve a breakthrough in the capacity of oceanography to serve people and the planet.

Significant progress was made in the development of the methodology to support Member States’ implementation of and reporting on SDG targets 14.3.1 and 14.a, for which the IOC has been assigned the custodian’s role. Both indicators have been upgraded to Tier 2 status, meaning that the indicator is now conceptually clear, has an internationally established methodology, and standards are available, but data are not yet regularly produced by countries. After more than four years of international collaboration coordinated by IOC, the South China Sea region now has its own dedicated Tsunami Advisory Centre. The IOC showcased its experience in supporting countries in the implementation of maritime spatial planning through three flagship events at the Sustainable Blue Economy conference organized by Kenya and Canada, 26-28 November 2018 in Nairobi. As part of its awareness raising strategy with regard to gender equality, the side event “Making waves: Women in Ocean Science” was organized with the support of Canada at the High-Level Scientific Conference “From COP21 towards the United


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Nations Decade of Ocean Science for Sustainable Development”. The event focused on the role of women in ocean science, in improving global ocean knowledge, and in supporting informed and inclusive decision-making.

Overall, the main challenge for the Commission’s Secretariat is to succeed in raising extra budgetary resources necessary to maintain its core operational programmes, as well as to lead and coordinate the Decade’s preparation phase. A new approach to fund-raising and outreach, based on highlighting the societal benefits of IOC’s work and demonstrating the return on investment in ocean science and observation is being developed.

MAJOR PROGRAMME III – SOCIAL AND HUMAN SCIENCES

Overall, programme implementation under MP III is on track with a high likelihood of achievement of the 39 C/5 expected results by the end of 2019.

Concerted efforts focused on the social dimensions of Agenda 2030, which resonate with UNESCO’s mandate to support Member States in managing contemporary social transformations. Anchored in fundamental human rights’ values and norms, aspiring to social justice and inclusion for all, at the core of the SDGs is the need for social inclusion; the eradication of extreme poverty; the reduction of inequalities; inclusive policies for cities; as well as inclusive and participatory decision-making. UNESCO’s work has focused on policy advice and capacity-building, supporting Member States directly in the achievement of the SDGs.

Key achievements of MP III include: provision of upstream policy advice on youth in a number of countries; advancement of the research-policy nexus in social policies at regional level – in particular in Latin America and Africa – as well as at national level; capacity-building and institutional development; establishment of advanced Futures Literacy capabilities in Member States, including in Africa, and achieving near-universal ratification of the International Convention against Doping in Sport. Recognizing that UNESCO’s work on youth must better integrate the engagement of young people in all of its programmes, the concept of youth spaces as a flagship initiative was launched.

MAJOR PROGRAMME IV – CULTURE

During the first year of this new biennium, the Culture Sector has put into practice a more integrated approach to programme design and implementation that cuts across all the culture conventions and programmes. As reflected in the report on progress in the achievement of expected result 8, strategic focus was put on the development of measuring frameworks to assess the impact of culture on sustainable development that are now ready to be tested. This will eventually help bridge the data gap that exists in this area.

The monitoring and benchmarking capacities of several cultural conventions were improved through the finalization of new or revised monitoring frameworks and periodic reporting systems, which will also help collect and analyse, over time, data on how the normative work contributes to the implementation of relevant SDGs and targets where culture is mainstreamed or explicitly included.

The Culture Sector has strengthened its leadership and convening power in the area of conflicts with the launch of the “Revive the spirit of Mosul” initiative and other large-scale operational projects, as well as the conclusion of important partnerships.

Overall, however, the budgetary situation remains fragile and the Culture Sector continues to struggle with the weight of the statutory costs of the conventions and uneven resource mobilization. Important instruments, notably the 1954 and 1970 Conventions and the Heritage Emergency Fund, are still severely under-resourced. These difficulties affect the Secretariat’s capacity to deliver in areas of strategic importance to the Organization. The Sector is fully mobilized to address these challenges, including through the Structured Financing Dialogues, which are however likely to persist, and prioritization remains more necessary than ever.


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MAJOR PROGRAMME V – COMMUNICATION AND INFORMATION

In 2018, the relevance of freedom of expression and media development to achieve the 2030 Agenda was increasingly recognized, supporting UNESCO’s lead role in monitoring and reporting on SDG target 16.10, particularly on safety of journalists and guaranteed access to information. Work on the safety of journalists strengthened with the United Nations system and media actors playing a greater role. Media and Information Literacy (MIL) has also been attracting more attention from several actors, as the extent of disinformation has grown. Internet issues have expanded to encompass artificial intelligence (AI). UNESCO’s concept of Internet Universality and the related indicators serve as a suitable framework for assessing such developments, which heavily impact freedom of expression and privacy. Major Programme V work under Main Line of Action 1 continues to give high attention to Africa, including through the International Programme for the Development of Communication (IPDC) project prioritization. During 2018, 12 out of the 26 Member States that strengthened their policies or practices for media diversity and pluralism were African countries. Activities followed an overall gender-responsive, and, where possible, gender-transformative approach, involving women journalists, women-led CSOs and female policy- and decision-makers. All publications and training materials were developed through a gender lens paying attention to women journalists.

UNESCO continued to promote universal access to information, the innovative use of ICTs for sustainable development, and the preservation and accessibility of documentary heritage, with a view to building inclusive knowledge societies. The Information for All Programme provided support to Member States in its six priority areas. UNESCO pursued its work promoting access for people with disabilities, and fostering multilingualism online and offline, acting as the lead United Nations agency for the organization of the 2019 International Year of Indigenous Languages. A draft text of a recommendation on open educational resources (OER) was circulated to Member States, and UNESCO launched version 3 of its ICT Competencies Framework for Teachers. Main Line of Action 2 also focused on UNESCO’s global priorities, as exemplified by the Youth Mobile initiative, which supported young people to create mobile apps for sustainable development. Together with partners, UNESCO opened the Software Heritage archive, which collects and preserves software source code. The Memory of the World Programme launched a series of consultations for the implementation of the 2015 Recommendation concerning the preservation of, and access to, documentary heritage, including in digital form, linking this to the 2030 Agenda. UNESCO also launched a cross-cutting reflection on the impact of Artificial Intelligence, and on the ways to harness its potential to achieve the Sustainable Development Goals.

The way forward for Major Programme V includes strengthening partnerships and increasing the use of international days as platforms to raise awareness, build capacity and contribute to policy improvement in the interests of Member States.

SIGNIFICANT EVENTSIsrael and the United States of America have formally withdrawn on 31 December 2018 as Member States of the Organization. Prior to their withdrawals, these two Member States, since 2011, have suspended their contributions to the Organization. Consequently, the biennial budgets of the Organization were adjusted to take account of the non-payment of contributions by these two Member States.

At the time of their withdrawal, the United States of America and Israel owe $611.8 million and $10 million respectively to the Organization. The Organization will continue to engage them for the payment of these arrears.

Though their withdrawal would not have an immediate financial impact, it is regrettable that UNESCO will have two Member States less. The Organization’s membership now stands at 193 Member States and 11 Associate Members.


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FINANCIAL STATEMENT HIGHLIGHTSThe consolidated surplus for the year is $1.8 million compared to a deficit of $39.7 million in the previous year. The regular programme operations generated a deficit of $25.5 million (a deficit of $36.2 million in 2017), whereas the other combined operations generated a surplus of $27.3 million (a deficit of $3.5 million in 2017).

Total revenue of $683.8 million increased by 5.5% (or $35.4 million) compared to the previous period. Assessed and voluntary contributions revenue increased by 6% ($19.8 million) and 13.6% ($35.5 million) respectively. Whereas the voluntary contributions increase is attributable to additional funding received from donors, the increase in assessed contributions is due to exchange rate variations between the euro and the US dollars. On other revenues, there were significant movements in exchange gains and losses- a loss of $3.7 million in 2018 compared to a gain of $23.6 million in 2017.

Expenditure slightly decreased by 0.9% ($6.2 million) to $682.0 million for the year ended 31 December 2018.

Overall, the net assets position increased by $17.6 million to $275.2 million as at 31 December 2018.

Total current assets of $759.9 million decreased by 1.5 % ($11.2 million) compared to the previous year. Short-term investments, cash and cash equivalents of $ 690.7 million represent 90.9% of the total current assets.

Current liabilities decreased by 11.3% ($30.4 million) to $238.1 million. This is mainly due to a decrease in advance receipts and accounts payable.

Gross outstanding assessed contribution from Member States has increased significantly over the last years to $654.6 million due to the suspension of payments, since 2011, by the two Member States who have now left the Organization on 31 December 2018.

FINANCIAL PERFORMANCE

BUSINESS SEGMENT ANALYSIS

As shown in Table 1 below, the deficit of $25.5 million recorded under the regular programme segment (GEF) decreased by $10.7 million. In 2018, the Proprietary Fiduciary Fund (PFF) improved significantly, showing a surplus of $22.6 million compared to a deficit of $25.2 million in 2017. The Other Proprietary Fund (OPF) segment surplus of $14.3 million in 2017 has decreased by $12.9 million and the Staff Fiduciary Fund (SFF) recorded in 2018 a surplus of $3.3 million, a significant decrease of $4.1 million compared to the prior year.

TABLE 1. SUMMARY FINANCIAL PERFORMANCE BY FUND

Expressed in million US dollars GEF OPF PFF SFF Inter-fund transactions

TOTAL UNESCO

Total Revenue 364 .0 75 .2 306 .1 30 .9 (92.4) 683 .8

Total Expenses (389.5) (73.8) (283.5) (27.6) 92.4 (682.0)

(Deficit)/Surplus – 2018 (25.5) 1.4 22.6 3.3 – 1.8

(Deficit)/Surplus – 2017 (36.2) 14.3 (25.2) 7.4 – (39.7)


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REVENUE ANALYSIS

Gross assessed contributions amounting to $336.2 million represent 49.2% of the total revenue (2017: 48.8%) with voluntary contributions accounting for 43.4% (2017: 40.3%).

FIGURE 1

REVENUE BY SOURCE (AMOUNTS IN USD MILLIONS): TOTAL $683.8 MILLION

Other revenue producing activitiesM$22.83.3%

Other revenueM$28.14.1%

Voluntary contributionsM$296.743.4%

Assessed contributionsM$336.249.2%

An allowance for unpaid contributions of $68.1 million was made for the year and this mainly reflects the decision of the two withdrawing Member States to suspend their regular contributions, thus bringing the net assessed contributions revenue to $268.1 million.

FIGURE 2

REVENUE SOURCES: 5-YEAR COMPARISON (IN USD MILLIONS)

0

50

100

150

200

250

300

350

400 2018

2017

2016

2015

2014

Other revenue

Other revenue producing acivities

Voluntary contributions

Assessed contributions

As shown under Figure 2 above, assessed contributions over the past five years have remained relatively stable reflecting the zero nominal growth budget in place. The variations are due to currency exchange movements between the US dollar and the euro as part of Member States contributions are assessed in euros.

After a significant decrease in 2016, mainly attributable to less revenue received from donors and the discontinuation of the IHE Delft Institute as a UNESCO category 1 institute, revenue from voluntary contributions has been on the increase reaching $296.7 million in 2018.


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EXPENSE ANALYSIS

TABLE 2. EXPENSE VARIATION

(Expressed in millions of USD)

Nature of expenses 2018 2017 Net Change (USD)

Net Change(%)

Employeebenefitsexpenses 335 .6 318 .5 17 .1 5 .4%Consultants,externalexpertsandmissioncosts 52 .6 52 .8 (0.2) (0.4%)Externaltraining,grantsandothertransfers 45 .3 40 .7 4 .6 11 .3%Supplies,consumablesandotherrunningcosts 49 .3 54 .7 (5.4) (9.9%)Contractedservices 104 .1 120 .2 (16.1) (13.4%)AllowanceforunpaidMemberStatescontributions 68 .0 77 .4 (9.4) (12.1%)Otherexpenses 27 .1 23 .9 3 .2 13 .4%

Total expenses 682.0 688.2 (6.2) (0.9%)

Employee benefits expenses increased by 5.4% ($17.1 million) to $335.6 million. Salaries of international and national staff based at Headquarters, in more than 50 field and liaison offices worldwide, and in the nine category 1 institutes amounting to $234.3 million, represent 69.8% of employee benefit. A further $33.3 million (9.9% of employee benefits) was spent on temporary personnel to support the delivery of programmes and activities. Medical benefit expenses and accrual of After-Service Health Insurance costs for current and retired staff amounted to $68.0 million.

Contracted services of $104.1 million have decreased by 13.4% ($16.1 million). These represent expenses where a third party entity is engaged to perform work on behalf of the Organization. This could be a contract with a commercial organization, not-for-profit organizations and government ministries for the implementation of activities/programmes under UNESCO’s mission and mandate.

The allowance for assessed contribution of $68.0 million represents mainly the unpaid contributions of the current year from the two withdrawing Member States who have suspended the payment of their contributions to the Organization.

FIGURE 3

COMPOSITION OF 2018 EXPENSES BY NATURE

49%

15%

7%

7%8%

10%4%

Other expenses

Contracted services

Allowance for unpaid Member States contributions

Supplies, consumables and other running costs

External training, grants and transfers

Consultants, external experts and mission costs

Employee benefit expenses


13

BUDGETARY PERFORMANCEThe General Conference approved a regular programme expenditure plan of $518 million for the 2018-2019 budgetary period in order to ensure that Organization operates within the expected cash flow.

The 2018 budget expenditure amounted to $257.6 million ($256.4 million in 2017). As figure 4 shows, the expenditure on Programmes was $162.5 million representing 63.1% of the total budget expenditure.

FIGURE 4

2018 BUDGETARY EXPENDITURE BY APPROPRIATION LINE (IN USD MILLIONS)

0 20 40 60 80 100 120 140 160 180

162.5

7.0

1.6

36.6

4.9

22.4

22.6

Part IV: Loan Repayment

Reserve fir After Service Health Insurance (ASHI)

Part III: Corporate Services

Part II.C: PP and Fellowships

Part II.B: Programme Related Services

Part II.A: Programmes

Part I: General Policy and Direction

FINANCIAL POSITIONThe net assets/equity of the main segment GEF is still negative at $179.3 million in 2018 (2017: $180.4 million). Even though the PFF net assets/equity decreased by $26.9 million in 2017, its overall position remained strong with net assets of $316.2 million in 2018.

TABLE 3. SUMMARY FINANCIAL POSITION BY FUND

Expressed in ‘000s US dollars GEF OPF PFF SFF Inter-fund transactions

TOTAL UNESCO

Total Assets 635 .0 114 .0 515 .8 46 .9 (10.8) 1 300 .9TotalLiabilities (814.3) (14.5) (199.6) (8.1) 10.8 (1025.7)

Net assets/Equity – 2018 (179.3) 99.5 316.2 38.8 – 275.2

Net assets/Equity – 2017 (180.4) 97.8 303.9 35.4 0.9 257.6

The net working capital (current assets less current liabilities) amounted to $521.8 million (2017: $502.6 million). This high level of working capital is attributable to the significant amount of cash and short-term investments held for the execution of extra-budgetary projects. The regular programme segment (GEF) working capital of $64.8 million (2017: $45.5 million) represents 12.4 % of the overall working capital of the Organization (2017: 9.1%).


14

CONTRIBUTIONS

As compared to 30 June 2016, the collection rate as at 30 June 2018 increased thanks to earlier payments from some of the top contributors. Overall, the rate of collection of assessed contributions in the year of assessment remained stable since 2012.

FIGURE 5

ASSESSED CONTRIBUTIONS TO THE REGULAR BUDGET: COLLECTION RATE (IN % IN THE YEAR OF ASSESSMENT)

As of 31 December As of 30 June

40

50

60

70

80

90

100

2018201720162015201420132012

66

59 61

64

46 47

51

73 73 72 70 71 7374

Gross outstanding assessed contributions amounted to $654.6 million, an increase of 9.9% over the previous year’s level. Outstanding contributions to the Regular Budget are due from 63 Member States, six Associate Members and two States that have withdrawn from the Organization.

The gross assessed contributions are due and payable to the Organization in accordance with the Constitution and Financial Regulations of the Organization and none of the balance is written-off. However, as required under IPSAS, an allowance is made for the non-payment of contributions and the cumulative amount is $627.7 million thus bringing the net assessed contributions in the statement of financial position to $26.9 million.

FIGURE 6

GROSS OUTSTANDING CONTRIBUTIONS VS. ALLOWANCE (IN USD MILLIONS)

Gross

Allowance

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

20182017201620152014

353

447411

521482

560595

654.6627.7

335


15

AFTER-SERVICE HEALTH INSURANCE (ASHI) LIABILITY

Since 2015, the ASHI liability remained stable, 2014 being an exceptional situation due to the change in discount rate.

In 2018, the funds being set aside for the ASHI liability were invested in diversified fixed income and equity ETFs as per its Investment Policy Statement. As at 31 December 2018, total long-term investments amount to $13.9 million.

FIGURE 7

ASHI LIABILITY (IN USD MILLIONS)

0

200

400

600

800

1000

1200

1400

20182017201620152014

1265.1

780 767 759 765.1

13.91

AssetsLiability

INVESTMENT PORTFOLIO

The investment portfolio of UNESCO (including cash and cash equivalent) amounted to $692 million as at 31 December 2018 (excluding the above-mentioned ASHI funds). The portfolio is mainly composed of investments in saving accounts, money market deposits and other short-term investments with major banking institutions with strong credit ratings (minimum single “A”).

The functional currency of UNESCO Brasilia (UBO) is the Brazilian Real (BRL) and consequently its investments were made in short-term Brazilian Government Treasury Bills in BRL that were rated BB- as at the year-end.


16

FIGURE 8

RATING BREAKDOWN OF UNESCO’S INVESTMENT PORTFOLIO (IN USD MILLION)

0

50

100

150

200

250

300

350

400

BBB - UBOBBBAAAAAA

1215

5

116

5550

281

59

Other investments

Cash equivalents

The primary objective of UNESCO’s Investment Policy is the preservation of the value of resources of the Organization. Within this general objective, the principal considerations for investment management are in order of priority: security of principal, liquidity and rate of return. UNESCO’s euro investments outperformed their benchmarks, while USD investments performed in line with their benchmarks. The performance of the BRL investment portfolio was also in line with that of its respective benchmark.

Audrey AzoulayDirector-General

STATEMENT ON INTERNAL CONTROL 2

19

Statement on Internal Control

20


21


22


OPINION OF THE EXTERNAL AUDITOR3

OPINION OF THE EXTERNAL AUDITOR

25

207 EX/29.I – page 22

INDEPENDENT AUDITOR’S REPORT

To the General Conference of the United Nations Educational, Scientific and Cultural Organization

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of the United Nations Educational, Scientific and Cultural Organization and its controlled entities (the Group), which comprise the consolidated statement of financial position as at 31 December 2018, and the consolidated statement of financial performance, consolidated statement of changes in net assets/equity, consolidated statement of cash flow, and consolidated statement of comparison of budget and actual amounts for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2018, and its consolidated financial performance and its consolidated cash flows, for the year then ended in accordance with International Public Sector Accounting Standards (IPSASs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The consolidated financial statements of the Group for the year ended 31 December 2017 were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on 25 July 2018.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Financial Report, but does not include the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


26

207 EX/29.I – page 23

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IPSASs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our 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 considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher 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 Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’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 cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements


27

207 EX/29.I – page 24

represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Compliance with Specified Authorities

Opinion

In conjunction with the audit of the consolidated financial statements, we have audited transactions of the United Nations Educational, Scientific and Cultural Organization coming to our notice for compliance with specified authorities. The specified authorities against which compliance was audited are the UNESCO Financial Regulations.

In our opinion, the transactions of the United Nations Educational, Scientific and Cultural Organization that came to our notice during the audit of the consolidated financial statements have complied, in all material respects, with the specified authorities referred to above.

Responsibilities of Management for Compliance with Specified Authorities

Management is responsible for the United Nations Educational, Scientific and Cultural Organization’s compliance with the specified authorities named above, and for such internal control as management determines is necessary to enable the United Nations Educational, Scientific and Cultural Organization to comply with the specified authorities.

Auditor’s Responsibilities for the Audit of Compliance with Specified Authorities

Our audit responsibilities include planning and performing procedures to provide an audit opinion and reporting on whether the transactions coming to our notice during the audit of the consolidated financial statements are in compliance with the specified authorities referred to above.

Sylvain Ricard, CPA, CA Interim Auditor General of Canada

Ottawa, Canada 29 May 2019

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

4

APPROVAL OF THE Consolidated FINANCIAL STATEMENTS

31

207 EX/29.I – page 25

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

In accordance with Financial Regulation 11.1 of the United Nations Educational, Scientific and Cultural Organization attached are the consolidated financial statements and accompanying notes for the year ended 31 December 2018.

The consolidated financial statements are the responsibility of Management and have been prepared in accordance with International Public Sector Accounting Standards and comply with the Financial Regulations of the United Nations Educational, Scientific and Cultural Organization. They include certain amounts that are based on Management’s best estimates and judgements.

Accounting procedures and related systems of internal control, developed by Management, provide reasonable assurance that assets are safeguarded, that the books and records properly reflect all transactions.

The External Auditor, in line with Article 12 of the Financial Regulations, also provides an opinion on the consolidated financial statements.

The consolidated financial statements numbered I to V and the accompanying notes are hereby approved and submitted to the Governing Bodies of the United Nations Educational, Scientific and Cultural Organization.

Established by: Approved by:

___________________ ___________________

Nutan Wozencroft Audrey Azoulay Chief Financial Officer Director-General

29 May 2019 29 May 2019

CONSOLIDATED FINANCIAL STATEMENTS5

35

I. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

Expressed in ‘000 US dollars Note 31/12/2018 31/12/2017 (Restated Note 5)

ASSETS

CurrentAssetsCashandcashequivalents 6 180 922 214 604Short-terminvestments 7 509 795 473 195Accountsreceivablefromnon-exchangetransactions 8 28 519 35 394Receivablesfromexchangetransactions 1 681 1 553Inventories 367 371Advancepayments 9 30 969 34 843Otherreceivables 10 7 655 11 133

Total current assets 759 908 771 093

Non-current assets Accountsreceivablefromnon-exchangetransactions 1 634 1 989Long-terminvestments 7 15 785 1 607Property,plantandequipment 11 523 091 537 711Intangibleassets 12 479 271

Total non-current assets 540 989 541 578

TOTAL ASSETS 1 300 897 1 312 671

LIABILITIES Current Liabilities Accountspayableandaccruals(exchangetransactions) 18 238 23 149Employeebenefits 13 47 301 48 641Transferspayable 14 15 102 16 765Voluntarycontributionswithconditions 15 96 237 72 275Advancereceipts 16 44 874 87 859Borrowingscurrentportion 17 5 056 7 202Othercurrentliabilities 18 11 273 12 601

Total current liabilities 238 081 268 492

Non-currentLiabilities Employeebenefits 13 778 429 772 099Voluntarycontributionswithconditions 15 52 182Borrowingslong-termportion 17 3 243 8 502Othernon-currentliabilities 18 5 891 5 841Total non-current liabilities 787 615 786 624

TOTAL LIABILITIES 1 025 696 1 055 116

NET ASSETS/EQUITY 19 275 201 257 555

Theaccompanyingnotesformanintegralpartoftheseconsolidatedfinancialstatements.

36

II. CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2018

Expressed in ‘000 US dollars Note 31/12/2018 31/12/2017

REVENUEAssessedcontributions 336 171 316 327

Voluntarycontributions 296 735 261 278

Otherrevenueproducingactivities 22 830 19 776

Other/miscellaneousrevenue 13 598 13 651

Foreignexchangegains – 23 579

Financerevenue 14 497 13 811

Total revenue 20 683 831 648 422

EXPENSESEmployeebenefitexpenses 335 586 318 467

Consultants,externalexpertsandmissioncosts 52 580 52 782

Externaltraining,grantsandothertransfers 45 294 40 757

Supplies,consumablesandotherrunningcosts 49 332 54 684

Contractedservices 104 139 120 170

Depreciationandamortization 17 882 17 645

Allowanceforassessedcontributions 68 051 77 393

Otherexpenses 825 1 479

Foreignexchangelosses 3 655 –

Financecosts 4 669 4 793

Total expenses 21 682 013 688 170

SURPLUS/(DEFICIT) FOR THE YEAR 1 818 (39 748)


37

III. CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018

Expressed in ‘000 US dollars Note 31/12/201831/12/2017(Restated Note 5)

Net Assets/Equity at the beginning of the year 257 555 255 359

Exchangedifferencesonforeignoperations 19 (9899) (284)

DecreaseinWorkingCapitalFund 19 (6600) –

Actuarialgainonpost-employmentbenefits 19 36 217 48 216

Otheradjustments 19 (567) (701)

Returnoffundstodonors 19 (3323) (5287)

Total of item recognized directly in Net Assets/Equity 15 828 41 944

Surplus/(Deficit)fortheyear 19 1 818 (39748)

Total recognized revenue and expense for the year 17 646 2 196

Net Assets/Equity at the end of the year 275 201 257 555


38

IV. CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2018

Expressed in ‘000 US dollars Note 20182017

(RestatedNote 5)

Cash flows from operating activities

Surplus/(Deficit)fortheyear 1 818 (39748)

Depreciation&amortization 17 882 17 645

(Increase)/decreaseinaccountsreceivable (167) 4 489

Decrease/(Increase)ininventories 2 (6)

Decrease/(Increase)inadvancepayments 2 608 (4003)

Decrease/(Increase)inotherreceivables 4 386 (10375)

(Decrease)/Increaseinaccountspayableandaccruals (4730) 5 125

Increaseinemployeebenefits 41 793 37 247

(Decrease)/Increaseintransferspayable (896) 1 789

Increaseinvoluntarycontributionswithconditions 24 151 14 108

(Decrease)inadvancereceipts (42880) (683)

(Decrease)/Increaseinotherliabilities (4975) 1 863

Lossondisposalofproperty,plantandequipment 104 339

Effectofexchangeratesonoperatingactivities 4 918 (6093)

Net cash flows from operating activities 44 014 21 697

Cash flows from investing activitiesPurchaseofproperty,plantandequipment (3921) (5486)Decrease/(Increase)inshort-terminvestments (47153) 38 760Decrease/(Increase)inlongterminvestment (14178) 5

Net cash flows from investing activities (65 252) 33 279

Cash flows from financing activitiesRepaymentofloans (7158) (6971)

Net cash flows from financing activities (7 158) (6 971)

Net Increase / (Decrease)in cash and cash equivalents (28 396) 48 005

Cash and cash equivalents, beginning of the year 6 214 604 154 508

Effectofforeignexchangegain/lossonforeign-denominatedcash& cashequivalents

(5286) 12 091

Cash and cash equivalents, end of the year 6 180 922 214 604


39

V. CONSOLIDATED STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018 – GENERAL FUND

Main appropriation line2018

Original allotment

Authorized transfers1

Additional appro-

priations3

2018 Allotment

as adjusted

Ac-tual expen-

diture

Final budget less

actual ex pen-ditture

Expressed in ‘000 US dollarsPART I – GENERAL POLICY AND DIRECTION A. Governing bodies (Including General Conference and Executive Board) 3 956 3 – 3 959 2 725 1 234B. Direction 6 636 (4) – 6 632 6 632 –1.DirectorateandExecutiveofficeoftheDirector-General 2 667 (22) – 2 645 2 654 (9)2. InternalOversight 2 202 11 – 2 213 2 208 53. InternationalStandardsandLegalAffairs 1 410 6 – 1 416 1 412 44. EthicsOffice 357 1 – 358 358 –

C. Participation in the Joint Machinery of the United Nations System 11 076 4 655 – 15 731 13 236 2 495

TOTAL, PART I 21 668 4 654 – 26 322 22 593 3 729PART II – PROGRAMMES AND PROGRAMME- RELATED SERVICES A. Programmes MajorProgrammeI–Education 42 333 99 3 982 46 414 43 649 2 765MajorProgrammeII–Naturalsciences 19 835 170 1 904 21 909 18 961 2 948IntergovernmentalOceanographicCommission 5 333 163 61 5 557 5 168 389MajorProgrammeIII–Socialandhumansciences 13 373 299 648 14 320 13 270 1 050MajorProgrammeIV–Culture 23 612 334 2 315 26 261 23 788 2 473MajorProgrammeV–Communicationandinformation 12 297 (244) 1 125 13 178 12 727 451UNESCOInstituteforStatistics 4 061 – – 4 061 4 061 –ManagementofFieldOffices 42 794 879 669 44 342 40 862 3 480Total, Part II.A 163 638 1 700 10 704 176 042 162 486 13 556B. Programme-Related Services 1. CoordinationandmonitoringofactiontobenefitAfrica 2 053 233 20 2 306 1 883 4232.CoordinationandmonitoringofactiontobenefitGenderEquality 950 3 3 956 911 45

3.Strategicplanning,programmemonitoringandbudgetpreparation 3 699 213 70 3 982 3 942 40

4.Organization-wideknowledgemanagement 4 867 225 – 5 092 5 066 265.Externalrelationsandpublicinformation 9 808 (507) 352 9 653 9 575 786. FieldSupportandCoordination 1 025 31 – 1 056 985 71Total, Part II.B 22 402 198 445 23 045 22 362 683C. Participation Programme and Fellowships 6 605 3 257 – 9 862 4 892 4 970Total, Part II.C 6 605 3 257 – 9 862 4 892 4 970TOTAL PART II 192 645 5 155 11 149 208 949 189 740 19 209PARTIII–CORPORATESERVICES A. Humanresourcesmanagement 11 826 (6) 15 11 835 11 219 616B.Financialmanagement 5 355 15 – 5 370 5 363 7C.Managementofsupportservices 14 079 (341) – 13 738 13 019 719D.ICTinfrastructureandoperations 2 313 11 – 2 324 2 320 4E. Managementofsecurityandsafety 4 924 30 – 4 954 4 605 349F. Administrationandmanagement – 646 – 646 92 554TOTAL, PART III 38 497 355 15 38 867 36 618 2 249TOTAL, PARTS I-III 252 810 10 164 11 164 274 138 248 951 25 187Reserve for After-Service Health Insurance long-term liability (ASHI) 1 641 – – 1 641 1 641 –PART IV – LOAN REPAYMENTS FOR THE RENOVATION OF THE HEADQUARTERS PREMISES & THE IBE BUILDING 6 093 937 – 7 030 7 026 4PART V – ANTICIPATED COST INCREASES 2 356 (1787) – 569 – 569TOTAL APPROPRIATION 262 900 9 314 11 164 283 378 257 618 25 760

Note:thebudgetandaccountingbasisisdifferent.ThisStatementofComparisonofBudgetandActualamountsispreparedonthebudgetbasis.1. BetweenyeartransfersdonotrequireapprovalfromtheGoverningBodiesastheydonotmodifythebiennialappropriationlines.

40

VI. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE1– REPORTING ENTITYThe United Nations Educational, Scientific and Cultural Organization (UNESCO) was created in London on 16 November 1945 by governments of the States Parties to contribute to peace and security by promoting collaboration among the nations through education, science and culture in order to further universal respect for justice, for the rule of law and for human rights and fundamental freedoms which are affirmed for the peoples of the world, without distinction of race, sex, language or religion, by the Charter of the United Nations Organization. As one of the specialized agencies referred to in Article 57 of the Charter of the United Nations Organization, the provisions of Articles 104 and 105 of that Charter concerning the legal status of that Organization, its privileges and immunities, apply in the same way to UNESCO.

UNESCO is governed by a General Conference, consisting of the representatives of its Member States, which determines the policies and main lines of work of the Organization. The Executive Board, which consists of 58 Member States elected by the General Conference, takes, in accordance with the decisions of the General Conference, all necessary measures to ensure the effective and rational execution of the programme of work by the Director-General.

The Organization has its Headquarters located in Paris, France. It is also composed of 49 field offices located around the world, four liaison offices in Geneva, New York, Addis Ababa and Brussels, and nine category 1 institutes, one centre and one Maison de la paix (Bujumbura) spread worldwide which specialize in the fields of competency of UNESCO.

UNESCO enjoys privileged tax-exemption; as such the Organization’s assets, income and other property are exempt from all direct taxation.

NOTE2– SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION AND PRESENTATION

Basis of preparationThe consolidated financial statements have been prepared on an accrual and going concern basis in accordance with the requirements of International Public Sector Accounting Standards (IPSAS) and comply with the UNESCO Financial Regulations.

The accounting policies set out below have been applied consistently in the preparation and presentation of these financial statements.

Financial periodIn accordance with Article 2 of the Financial Regulations, the financial period for budget estimates consist of two consecutive calendar years beginning with an even-numbered year. The consolidated financial statements are prepared on an annual basis.

Presentation and Functional Currency The presentation currency of the consolidated reporting entity is in United States (US) dollars which is also the functional currency of UNESCO, parent of the group. Further information on functional currency of the consolidated components of the group can be found in note 2.2 below.

2.2 CONSOLIDATION

UNESCOIncluded within the scope of consolidation for the preparation of the UNESCO financial statements are UNESCO headquarters, field offices, liaison offices, a centre, one Maison de la paix and category 1 institutes.

InstitutesCategory 1

UNESCO’s category 1 institutes are an integral part of UNESCO. The institutes build scientific capacity in Member States, essentially in developing countries. UNESCO has the power to govern their financial and operating policies. They are considered to constitute standalone entities. Category 1 institutes meet the definition of a controlled entity under IPSAS and therefore are consolidated in the UNESCO financial statements.

Category 1 institutes consolidated in the financial statements along with their locations and functional currencies are as follows:

Institute LocationFunc-tional

Currency

UNESCOInternationalInstituteforEducationalPlanning(IIEP)

Paris(France),BuenosAires(Argentina)andDakar(Senegal)

USD

UNESCOInternationalBureauofEducation(IBE)

Geneva (Switzerland)

USD

UNESCOInstituteforLifelongLearning(UIL)

Hamburg(Germany)

EUR

UNESCOInstituteforInformationTechnologiesinEducation(IITE)

Moscow(RussianFederation)

USD

UNESCOInternationalInstituteforCapacity-BuildinginAfrica(IICBA)

AddisAbaba(Ethiopia)

USD

CONSOLIDATED FINANCIAL STATEMENTS

41

Institute LocationFunc-tional

Currency

UNESCOInternationalInstituteforHigherEducationinLatinAmericaandtheCaribbean(IESALC)

Caracas(Venezuela)

USD

InternationalCentreforTheoreticalPhysics(ICTP)

Trieste(Italy) EUR

UNESCOInstituteforStatistics(UIS)

Montreal(Canada)

USD

MahatmaGandhiInstituteofEducationforPeaceandSustainableDevelopment(MGIEP)

NewDelhi(India)

USD

The controlled entities are fully consolidated from the date which control is transferred to UNESCO. They are de-consolidated from the date that control ceases. Inter-UNESCO transactions, balances and unrealized gains and losses on transactions between members of the UNESCO are eliminated in full. The accounting policies of the controlled entities are consistent with the policies adopted by UNESCO.

Category 2

Category 2 institutes and centres are not legally part of the Organization. These institutes and centres are associated with UNESCO through formal arrangements approved by the General Conference (171 EX/18, page 17). They are selected upon proposal by Member State(s), based on the strength of their specialization in one of UNESCO’s fields of competence. Through capacity-building knowledge sharing and research, they provide a valuable and unique contribution to the implementation of UNESCO’s strategic programme objectives for the benefits of Member States. Category II Institutes do not meet the definition of a controlled entity under IPSAS and therefore they are not consolidated in the UNESCO financial statements.

Other Organizations

UNESCO Staff Savings And Loan Service (USLS)

The USLS was created in 1954 as the UNESCO credit union. The object of USLS is to provide the possibility to its members on a mutualist basis of investing their savings and of borrowing money for suitable purposes. The UNESCO Staff Savings and Loan Service Fund, is established as a trust fund, under Financial Regulation 6.5.

USLS is operated for the benefit of its members. The net profit remaining after providing for the reserve is allotted to the payment of interest to the depositors. A statutory reserve is established for the purpose of compensating for any loss sustained in the operations of USLS. UNESCO is considered to exercise significant influence in relation to USLS, notably through its representation on the Board of Management, and its right of veto over decisions of the Board of Management. UNESCO does not control USLS and is not responsible to

compensate any losses encountered by the Fund. UNESCO has not used its right of veto in 2018 or 2017. No interest in USLS is recorded in the UNESCO consolidated financial statements.

2.3 FOREIGN CURRENCY TRANSACTIONSForeign currency transactions carried out during the financial year are converted into US dollars using the United Nations Operational Rate of Exchange (UNORE) prevailing at the date of the transaction. The UNORE approximate market rates. Non-monetary items that are measured in terms of historical cost or fair value in a foreign currency are translated using the UNORE prevailing at the date of the initial transaction or when the fair value was determined. Monetary assets and liabilities that are denominated in foreign currencies are translated into US dollars at the exchange rate prevailing on the date of the statement of financial position. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the Statement of Financial Performance.

Foreign exchange gains and losses resulting from the consolidation of controlled entities with a different functional currency are recognized as a separate component of net assets/equity.

On the statement of comparison of budget and actual amounts for the regular budget (Statement V), expenses incurred in euros are presented using a fixed budget rate to the US dollar set for the budgetary period.

2.4 SEGMENT REPORTINGA segment is a distinguishable activity of UNESCO for which it is appropriate to separately report financial information. At UNESCO, segment information is based on the principal activities and sources of financing of the Organization. As such, UNESCO reports separate financial information for four segments: the General Fund (GEF), Other Proprietary Funds (OPF), Programme Fiduciary Funds (PFF) and Staff Fiduciary Funds (SFF). Each segment is defined as follows:

• General Fund (GEF) includes both the General and Working Capital Funds set up in accordance with Financial Regulations 6.1 and 6.2. This segment has been established for the purpose of accounting for the expenditure of the regular programme appropriation voted by the General Conference of UNESCO for a given financial period.

• Other Proprietary Funds (OPF) include revenue-generating activities, management costs for special accounts and trust funds, the Staff Compensation Fund, the Terminal Payments Fund, and Headquarters-related special accounts. The funds have been established in accordance with Financial Regulation 6.5 and normally have individual special financial regulations.


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• Programme Fiduciary Funds (PFF) includes Institutes, special accounts and trust funds set up in accordance with Financial Regulation 6.5. This segment carries out extra-budgetary programme activities in accordance with the respective agreements signed between UNESCO and donors or other legal authority. The resources of each fund in this segment can only be used for the purposes for which the respective fund has been established.

• Staff Fiduciary Funds (SFF) is the segment that has been established for the benefit of UNESCO’s staff members, namely through the Medical Benefits Fund (MBF), the UNESCO Restaurant Service (URS) and the UNESCO Day Nursery and Children’s Club (UNC). The resources of each fund in this segment can only be used for the purposes for which the respective fund has been established.

2.5 FINANCIAL ASSETSUNESCO’s financial assets include: cash and cash equivalents, short term investments; long term investments, accounts receivable from exchange and non-exchange transactions and other receivables.

Financial assets within the scope of IPSAS 29 Financial Instruments: Recognition and Measurement are classified as financial assets at fair value through surplus or deficit, loans and receivables, held-to-maturity investments or available-for-sale financial assets, as appropriate. UNESCO determined the classification of its financial assets at initial recognition.

The subsequent measurement of financial assets depends on their classification. The classification depends on the purpose for which the financial assets are acquired, and is determined at initial recognition and re-evaluated at each reporting date.

(a) financial assets classified as loans and receivables (L&R) are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially measured at fair value plus transaction costs and subsequently recorded at amortized cost using the effective interest rate method.

(b) Fair value through surplus or deficit financial assets (FVTSD) are so designated on initial recognition by management or are held for trading. At initial recognition, they are measured at fair value and any transaction costs are expensed. Subsequently, they are measured at their fair values at each reporting date and the resulting gains or losses on re-measurement are recognized in the Statement of Financial Performance.

(c) Held-to-maturity financial assets (HTM) consist of financial assets with fixed or determinable payments and fixed maturity that UNESCO has the intention and ability to hold to maturity. After their initial recognition at fair value plus transaction costs, they

are measured at amortized cost using the effective interest rate method.

The following table presents the classification and measurement of UNESCO’s financial assets:

Financial assets Classification Subsequent Measurement

Cashandcashequivalents

L&R Amortizedcost

Shortterminvestments L&R,FVTSD FairvalueorAmortizedcost

LongTerminvestments HTM,FVTSD Amortizedcost

Accountsreceivablefromexchangetransactions

L&R Amortizedcost

Accountsreceivablefromnon-exchangetransactions

L&R Amortizedcost

Otherreceivables L&R Amortizedcost

Impairment of financial assetsUNESCO assesses at each reporting date whether there is objective evidence that a financial asset is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include the following indicators:

• The debtors or a group of debtors are experiencing significant financial difficulty

• Default or delinquency in interest or principal payments

• The probability that debtors will enter bankruptcy or other financial reorganization

• Observable data indicates a measurable decrease in estimated future cash flows (e.g. presence of arrears, economic conditions that correlate with defaults)

Financial assets carried at amortized costFor financial assets carried at amortized cost, UNESCO first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If UNESCO determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.


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If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in surplus or deficit. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or transferred to UNESCO. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance revenue in surplus or deficit.

2.6 FINANCIAL LIABILITIESUNESCO’s financial liabilities include Accounts payable, transfer payable, borrowings and other liabilities.

The measurement of financial liabilities depends on their classification.

(a) Financial liabilities at fair value through surplus or deficit include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through surplus or deficit.

(b) Financial liabilities classified as amortized cost are, after initial recognition, measured at amortized cost using the effective interest method. Gains and losses are recognized in surplus or deficit when the liabilities are derecognized as well as through the effective interest method amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate.

UNESCO has classified all its financial liabilities as amortized cost and are therefore, measured at amortized cost.

2.7 CASH AND CASH EQUIVALENTSCash and cash equivalents include cash in hand and short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. Cash and cash equivalents held in a fiduciary capacity (Programme Fiduciary Funds and Staff Fiduciary Funds) that can only be used for a specific purpose are considered as restricted. Financial instruments classified as cash equivalents include saving accounts and short-term deposits with a maturity of three months or less from the date of investment.

2.8 ACCOUNTS RECEIVABLE FROM NON-EXCHANGE TRANSACTIONS, RECEIVABLES FROM EXCHANGE TRANSACTIONS AND OTHER RECEIVABLES

Receivables are initially measured at fair value and then, their carrying value adjusted for any allowance for estimated irrecoverable amounts. An allowance is established when there is objective evidence, based on a review of outstanding amounts at the reporting date, that UNESCO will not be able to collect all amounts due according to the original terms of the receivables. In establishing the allowance for assessed contributions, the fair value of receivables is calculated as the estimated discounted cash flows arising from receivables to be collected in the future. The level of account receivable related to voluntary contribution do not require a discounting.

Receivables are classified into current and non-current on the basis of the expected amounts to be received. In the case of assessed contributions receivables, they are classified as current unless the Member States enters into an arrangement to defer the payment of the receivable amount.

2.9 ADVANCE PAYMENTS AND ADVANCE RECEIPTS

Advance paymentsUNESCO advances funds to third parties under non-exchange contracts for the delivery of UNESCO’s programmes and activities. Such transfers to third parties are treated as Advance Payments if the conditions on the transferred assets are not fulfilled at the reporting date.

Advance receiptsA liability is recognized for amounts received from donors where no binding agreement is in place at the time of the receipt of the asset from the donor. This is mainly common under Framework Agreements and other voluntary contributions where funds can be received before agreement is reached on the allocation of the contribution received from the donor. Assessed contributions received prior to the commencement of the relevant specified budget year are recorded as an asset and a corresponding advance receipt liability is recognized.

2.10 PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment (PP&E) is carried at cost less accumulated depreciation and impairment. Heritage assets are not recognized in the financial statements, but appropriate disclosure is made in the notes to the accounts.

AdditionsThe cost of an item of PP&E is recognized as an asset if it is probable that future economic benefits or service potential associated with the item will flow to UNESCO and the cost of the item can be measured reliably. In most instances, an item of PP&E is recognized at its cost. When an asset is donated, it is recognized at fair value as at the date of acquisition.


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DisposalsGains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset, and are included in the Statement of Financial Performance.

Subsequent costsCosts incurred subsequent to initial acquisition are capitalized only when it is probable that future economic benefits or service potential associated with the item will flow to UNESCO and the cost of the item can be measured reliably.

DepreciationDepreciation is provided on a straight-line basis on all PP&E other than land, at rates that will write off the cost of the assets over their useful lives. The useful lives of major classes of assets have been estimated as follows:

DEPRECIATION PERIOD – PROPERTY, PLANT & EQUIPMENT

Land

4 years

5 years

5 years

5 years

15-50 yearsBuildings

Other equipment

Furniture and fixtures

Vehicles

Communications and IT equipment

N/A

Buildings are analysed by components and different depreciation periods are applied as follows: foundations and walls – 50 years; other structural components – 30 years; fittings – 15 years; technical installations – 25 years. The residual values and useful lives of assets are reviewed and adjusted, if applicable, at each financial year-end.

ImpairmentThe carrying values of fixed assets are reviewed for impairment if events or changes in circumstances indicate that the book value of the asset may not be recoverable. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss if any. Any provision for impairment is included in the Statement of Financial Performance.

2.11 INTANGIBLE ASSETSUNESCO currently only recognizes software as intangible assets, as it is not considered probable that significant future economic benefits from copyrights and intellectual property will flow to UNESCO.

Intangible assets are carried at cost less accumulated amortization and impairment. Intangible assets are capitalized in the financial statements.

Software acquisition and developmentAcquired computer software licenses are capitalized based on costs incurred to acquire and bring to use the specific software. Costs that are directly associated with the development of software for use by UNESCO are capitalized as an intangible asset. Direct costs include the software development employee costs and overhead which can be directly attributed to preparing the asset for use.

Amortization

Amortization is provided on a straight-line basis on all intangible assets of finite life, at rates that will write off the cost or value of the assets over their useful lives. The useful lives of major classes of intangible assets have been estimated as follows:

2-6 years (or period of license or right if shorter)

Software acquired separately

Software internally developed

Licenses and rights

AMORTIZATION PERIOD – CLASS OF INTANGIBLE ASSET

5 years

5 years

2.12 EMPLOYEE BENEFITSUNESCO recognizes the following categories of employee benefits:

• short-term employee benefits; • post-employment benefits; • other long-term employee benefits; and • termination benefits.

Short-term employee benefitsShort-term employee benefits are expected to be settled within 12 months of the reporting date and are measured at their nominal values based on accrued entitlements at current rates of pay. Short-term employee benefits comprise first-time employment benefits (assignment grants), regular monthly benefits (wages, salaries, allowances) compensated absences and other short-term benefits (education grant, home leave, etc.).

An expense is recognized when employees render service to the Organization and a liability is recognized for any entitlement that has not been settled at the reporting date.

Post-employment benefitsThe UNESCO’s post-employment benefits are comprised of the after-service health insurance (ASHI). This is considered a defined benefit plan. The liability recognized for these plans is the present value of the defined benefit obligations at the reporting date. The ASHI liability is calculated by an independent actuary using the Projected Unit Credit Method.


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Interest cost and current service costs are recognized on the consolidated statement of financial performance as a component of employee benefit expenses. Actuarial gains or losses arising from changes in actuarial assumptions or experience adjustments are directly recognized in net assets.

The current portion of this post employment benefit is presented in the current liabilities portion of the consolidated statement of financial position.

United Nations Joint Staff Pension Fund (UNJSPF)UNESCO is a member organization participating in the United Nations Joint Staff Pension Fund (UNJSPF), which was established by the United Nations General Assembly to provide retirement, death, disability and related benefits to employees. The Pension Fund is a funded, multi-employer defined benefit plan. As specified in Article 3(b) of the Regulations of the Fund, membership in the Fund shall be open to the specialized agencies and to any other international, intergovernmental organization which participates in the common system of salaries, allowances and other conditions of service of the United Nations and the specialized agencies.

The plan exposes participating organizations to actuarial risks associated with the current and former employees of other organizations participating in the Fund, with the result that there is no consistent and reliable basis for allocating the obligation, plan assets and costs to individual organizations participating in the plan. UNESCO and the UNJSPF, in line with the other participating organizations in the Fund, are not in a position to identify UNESCO’s proportionate share of the defined benefit obligation, the plan assets and the costs associated with the plan with sufficient reliability for accounting purposes. Hence, UNESCO has treated this plan as if it were a defined contribution plan in line with the requirements of IPSAS 39 Employee Benefits. UNESCO’s contributions to the plan during the financial year are recognized as employee benefit expenses in the Statement of Financial Performance.

Other long-term employee benefitsOther long-term employee benefits are benefits which are expected to be settled more than 12 months after the end of the reporting period. This is comprised of accumulated leave, repatriation grants and Italian end of service entitlements.

The liability recognized for these plans is the present value of the defined benefit obligations at the reporting date. The liability are calculated by an independent actuary using the Projected Unit Credit Method.

Interest cost, current service costs and actuarial gains or losses arising from changes in actuarial assumptions or experience adjustments are recognized on the consolidated statement of financial performance.

The current portion of these other long term benefits are presented in the current liabilities portion of the consolidated statement of financial position. The current portion is determined as the largest amount between the amounts

due to be settled within twelve months after the reporting date or the amount for which UNESCO does not have an unconditional right to defer settlement of the liability for at least 12 months.

Termination benefitsTermination benefits generally include indemnities for voluntary redundancy, and are expected to be settled within 12 months of the reporting date.

2.13 PROVISIONS AND CONTINGENT LIABILITY

Provisions are recognized for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditure will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not made for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in the provision due to the passage of time is recognized as interest expense.

Contingent liabilities are disclosed where a possible obligation is uncertain but can be measured, or where UNESCO has a present obligation but cannot reliably measure the possible outflow of resources.

2.14 REVENUE RECOGNITION

Non-exchange revenueRevenue from non-exchange transactions is measured based on the increase in net assets recognized. Where the full criteria for recognition of an asset under a non-exchange agreement are not fulfilled, a contractual right may be disclosed.

Revenue from non-exchange transactions• Assessed contributions

Assessed contributions are assessed and approved for a two year budget period. The amount of these contributions is then apportioned between the two years for invoicing and payment. Assessed contributions are recognized as revenue at the beginning of the apportioned year in the relevant two year budget period.

• Voluntary contributionsVoluntary contributions and other transfers which are supported by enforceable agreements are recognized as revenue at the time the agreement becomes binding and when control over the underlying asset is obtained, unless the agreement establishes a condition on transferred assets that requires recognition of a liability. Conditions are imposed by donors on the use of contributions, and include both a performance obligation to use the donation in a specified manner, and an enforceable return obligation to return the donation if it is not used in the specified manner. The amount recognized as a


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liability is the best estimate of the amount that would be required to settle the obligation at the reporting date. As UNESCO satisfies the conditions on voluntary contributions through performance in the specified manner, the carrying amount of the liability is reduced and an amount of revenue equal to that reduction is recognized.

Voluntary contributions such as pledges and other promised donations which are not supported by binding agreements are recognized as revenue when received.

• In-kind contributionsIn-kind contributions of goods that directly support approved operations and activities and can be reliably measured, are recognized and valued at fair value. These contributions include the use of premises and utilities. In the case of the use of premises, the contribution value is based on the commercial rate for renting the building.

In-kind contributions of services, such as the services of volunteers, are not recognized.

Exchange RevenueOther sources of revenue from exchange transactions are measured at the fair value of the consideration received or receivable and are recognized as goods and services are delivered.

2.15 EXPENSESUnder accrual accounting, expenses are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or incurrences of liabilities that result in decreases in net assets/equity. Expenses are recognized when the transaction or event causing the expense occurs, and the recognition of the expense is therefore not linked to when cash or its equivalent is received or paid.

Expenses from non-exchange funding agreements are recognized when the funding is legally in force, except where the agreement establishes a condition on transferred assets. In such cases, expenses are recognized as services are performed and the condition on transferred assets fulfilled consistent with the terms of the agreement. Advance payments are amortized based on objective evidence to reflect the risk of non-recovery. Where revenue is recognized from in-kind contributions, a corresponding expense is also recognized in the financial statements.

2.16 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable are financial liabilities for goods and services that have been received by UNESCO and invoiced but not yet paid by the reporting date.

Accrued liabilities are financial liabilities for goods and services that have been received by UNESCO and which have neither been paid for nor invoiced to UNESCO at the reporting date.

2.17 LEASESLease agreements entered into for equipment or office premises are classified as operating leases as these arrangements do not transfer substantially all of the risk and reward of ownership.

2.18 BUDGET COMPARISON UNESCO’s budget and accounting basis differ. Though UNESCO presents an integrated budget framework, the regular budget component under the General Fund is considered as the Approved Budget within the definition of IPSAS 24.

The General Fund is established for the purpose of accounting for the expenditure of the regular programme appropriation voted by the General Conference of UNESCO for a biennium of two consecutive calendar years beginning with an even-numbered year. It is financed from assessed contributions from Member States. Appropriations are available for obligation during the budget financial period to which they relate and for a further twelve months.

The General Fund budget is approved on a modified cash basis, whereby receipts are budgeted when it is planned that cash will be received and expenditures are budgeted when it is planned that payments will be made.

NOTE3– ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTSThe preparation of financial statements in accordance with IPSAS requires to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the year. However, uncertainty about these assumptions and estimates could results in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in future periods.

The areas where estimates, assumptions or judgement are significant to UNESCO’s consolidated financial statements include, but are not limited to: employee benefits, provisions for litigation, fair value of financial instruments, and the useful lives of Property, plant and equipment. Changes in estimates are reflected in the year in which they become known.

JudgementsUNESCO Staff Savings and Loan Services (USLS) is excluded from the UNESCO consolidated financial statements. Management’s judgement is that USLS is not considered to be a controlled entity, as UNESCO does not govern the financial and operating policies of USLS, and does not benefit from its activities.


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UNESCO leases the land for its headquarters sites at Place de Fontenoy and Rue Miollis from the host government. Under the lease agreements, the lease terms are for 99 years, and can be renewed for unlimited subsequent periods of 99 years. UNESCO pays a nominal amount in rent for the use of the land. Given that the agreements effectively grant UNESCO the right to use the land at the two sites in perpetuity for a nominal rent, it is considered appropriate to recognize the land as an asset in the UNESCO’s consolidated financial statements – see Note 11 Property, Plant & Equipment. The land was accounted for as a non-exchange transaction. The lease is subject to restriction which we consider unlikely to occur as the UNESCO has no plans to change locations. This Management judgement has a significant impact on the consolidated financial statements.

Estimates and assumptionsUNESCO based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of UNESCO.

Below is a list of key assumptions:

(a) Fair value estimations – Financial instruments

Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, judgment is required in establishing fair values. Judgment includes the consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. More details on fair values of financial instruments are disclosed at Note 24.

(b) Useful lives of Property, plant and equipment

The useful lives of Property, plant and equipment are assessed using the following indicators to inform potential future use, value from disposal and impairment:

• The condition of the asset based on the assessment of experts employed by UNESCO;

• The nature of the asset, its susceptibility and adaptability to changes in technology and processes;

• The nature of the processes in which the asset is deployed;

• Availability of funding to replace the asset; and• Changes in the market in relation to the asset

Note 2.10 provides information on the determined current useful lives.

(c) Provisions for litigation

Provisions were raised and management determined an estimate based on the information available. Provisions

are measured at the management’s best estimate of the expenditure required to settle the obligation at the reporting date, and are discounted to present value where the effect is material. Additional disclosure of these estimates of provisions is included in Note 22.

(d) Employee benefits

The cost of employee benefits are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future cost increases. Due to the complexities involved in the valuation and its long-term nature, an employee benefit liability is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details about employee benefits are provided in Note 13.

NOTE4– ACCOUNTING STANDARDS ISSUED

Accounting standards adopted during the year• IPSAS 39 Employee Benefits: the standard which replaces

IPSAS 25-Employee Benefits was issued in July 2016 with effective date of 1 January 2018. The standard prescribes the accounting and disclosure requirements for employee benefits. It requires an entity to recognize a liability when an employee has provided service in exchange for employee benefits to be paid in the future and an expense when the entity consumes the economic benefits or service potential arising from service provided by the employee. This new accounting standard had no impact on the consolidated financial statements other than modified disclosures.

• IPSAS 21: the standard addresses the impairment of non-cash generating assets and the recognition of impairment losses and criteria for reversing impairment losses on these assets. This amendments to the standard did not have an impact on UNESCO consolidated financial statements.

• IPSAS 26: the standard defines the procedures to be applied to determine whether a cash-generating asset has been impaired, to recognize the corresponding losses and to recover depreciation charges. However, the scope of IPSAS 26 excludes the financial instruments covered by IPSAS 29 (Financial Instruments, Recognition and Measurement). This amendments to the standard did not have an impact on UNESCO consolidated financial statements.

Accounting standards issued and to be adopted at a later date• IPSAS 40 Public Sector Combinations: the standard,

issued in January 2017, prescribes the principles, accounting and disclosure requirements of a public sector combination and its effects. A public sector combination is the bringing together of separate operations into one


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public sector entity. The standard is effective for annual reporting period beginning on or after 1 January 2019. UNESCO believes that the adoption of this standard will not have an impact on the consolidated financial statements.

• IPSAS 41 Financial Instruments: the standard, issued in August 2018, establishes the principles for financial reporting of financial assets and financial liabilities for the assessment of the amounts, timing and uncertainty of an entity’s future cash flows. The standard is effective for annual reporting year beginning on or after 1 January 2022. UNESCO has not yet assessed the impact of the adoption of the standard.

NOTE5– CHANGES IN ACCOUNTING POLICIES AND NOTE DISCLOSURESIn order to comply with IPSAS requirements, adjustments have been made to UNESCO’s accounting policies as well as the presentation and disclosure of the 2018 consolidated financial statements. As a result, certain 2017 figures have been restated to conform to the current year presentation. The main adjustments to the financial statements and accompanying notes are as follows:

(a) Change in accounting policy

UNESCO’s accounting policy prior to the current financial year stated that it was using a cost model for its Property, plant and equipment. In practice, land and buildings were carried at fair value using a revaluation model and a revaluation was to be performed every five years. During the year, Management has made the choice to change its accounting policy from using the revaluation model to the cost model for its land and buildings. Management believes that the cost model will produce more reliable information for the users of the financial statements.

The application of this new accounting policy has been applied retrospectively which entails to reverse the revaluations amounts accounted for to date. This change in accounting policy has no impact on the consolidated financial statement as past revaluation of land and building has not produce any change in the carrying amount of lands and buildings since the adoption of IPSAS in 2010.

(b) Presentation and disclosure adjustments

Employee benefits: The classification of employee benefits into current and non-current has been reviewed and adjusted. As a result, comparative amounts have also been reclassified to ensure comparability. For 2017, an amount of $41.4 million was moved from employee benefits non-current to current.

Cash flow: The presentation of the cash flow has been changed to better reflect the effect of foreign exchange rates on operating activities in the consolidated statement of cash flow. As a result, comparative amounts have also been reclassified to ensure comparability. For 2017, an amount of

$6.1 million was reclassified within the operating activities to adjust for the non-cash nature of end of year revaluations.

Notes to the financial statements: Compared to the previous year, the presentation of the Notes to the financial statements have been re-arranged to enhance the readability of the consolidated financial statements. In addition, comparative information is now provided for multiple notes (Segment information – Note 26, Employee future benefits – Note 13 and various other). The most significant changes are as follow:

• Accounting estimates, assumptions and judgements: Information on UNESCO’s estimates has been added detailing the source of estimates and the assumptions that management has to make to complete the consolidated financial statements (Note 3).

• Financial assets and financial liabilities: Required disclosures for all types of financial assets and financial liabilities have been added (Note 2.5).

• Financial instruments: The fair value, the carrying amount and the fair value hierarchy as well as results of sensitivity analysis and additional disclosure regarding risk and capital management are now disclosed. (Note 24).

• Accounting standards issued: The notes to the financial statements now provide information on the new standards adopted or to be adopted. They also provide management’s progress in evaluating the new standards applicability and the potential impact of these standards on UNESCO’s consolidated financial statements, see Note 4.

NOTE6– CASH AND CASH EQUIVALENTS

Expressed in ‘000 US dollars 31/12/2018 31/12/2017

Cash 30 255 44 999Cashinhand 27 12Currentaccounts 30 228 44 987

Cash Equivalents 150 667 169 605Sight/Savingaccounts 75 667 119 605Short-termdeposits 75 000 50 000

Total cash and cash equivalents 180 922 214 604

As at 31 December 2018, $105.6 million (2017 – $133.6 million) of cash and cash equivalents is considered restricted cash.


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NOTE7– INVESTMENTS


Current portionLoans and receivablesTermdeposits 422 002 331 419Termaccounts 31 530 75 185

Fair value through surplus or deficitBrazilianGovernmentTreasuryBills(upto365days)

55 262 66 591

Held to maturityBonds 1 001 –

Total current portion 509 795 473 195

Non-current portionHeld to maturityBonds 1 880 1 607

Fair value through surplus or deficit

FixedincomeETFs 7 127 –

EquityETFs 6 778 –

Total non-current portion 15 785 1 607

Total investments 525 580 474 802

Investments classified under loans and receivables are mainly term deposits with an initial maturity of more than three months but less than one year and term accounts which are investments that may be realized within 12 months. These financial instruments are held with international banking groups which are assigned deposit ceilings in accordance with the Investment Policy of UNESCO.

The UNESCO Brasilia Office (UBO) invests in floating-yield Brazilian Government Treasury Bills (“Letra Financeiro do Tesouro”) with a maturity up to 365 days through a dedicated fund in accordance with the Investment Policy of UNESCO. This investment vehicle is classified at fair value through surplus or deficit and amounts to $55.3 million as at 31 December 2018.

The investment portfolio of the Nessim Habif Trust Fund consists of held-to-maturity bonds that are categorized under the current and non-current portions depending on the residual maturity of each bond. In accordance with the Financial Regulation concerning the Nessim Habif Fund (61 EX/38), the capital of the fund should be invested in industrial securities either in Switzerland or in the United States of America.

The investment portfolio of the After-Service Health Insurance (ASHI) Programme is invested in accordance with the UNESCO ASHI Fund Investment Policy Statement.

Investments are made in Exchange Traded Funds classified at fair value through surplus or deficit. Although these investments are designated for this purpose, and are not available for funding current operations, the investments are not subject to separate legal restrictions and do not qualify as Plan Assets as defined in IPSAS 39, Employee Benefits.

NOTE8– ACCOUNTS RECEIVABLE FROM NON-EXCHANGE TRANSACTIONS


Assessedcontributions(current) 652 482 592 857

Assessedcontributions (non-current) 2 124 2 554

Gross assessed contributions 654 606 595 411

Allowanceforassessedcontributions(current) (627263) (559138)

Allowanceforassessedcontributions(non-current) (490) (565)

Net assessed contributions 26 853 35 708

Voluntarycontributions(current) 3 300 1 675

Voluntarycontributions (non-current) – –

Total accounts receivable (non-exchange transactions)

30 153 37 383

Currentportion 28 519 35 394

Non-currentportion 1 634 1 989

Net accounts receivable (non-exchange transactions)

30 153 37 383

Assessed contributions receivable represent uncollected revenues committed to UNESCO by Member States and Associate Members for completion of the programme of work. Non-current assessed contributions are those contributions which are due more than 12 months after the reporting date. This relates to payment plans agreed. The allowance for assessed contributions is calculated by providing against the entire balance of unpaid instalments due under payment plans.

Outstanding assessed contributions from current and past years as well as deferred amounts under payment plans are discounted to their present value based on the year in which they are expected to be received.


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Arrears not under payment plans:

1988-2009 3 179 3 1802010-2011 79 192 79 1922012-2013 162 793 163 496

2014-2015 162 887 163 926

2016-2017 158 139 –

2018 67 829 –

634 019 409 794

Othercurrentassessedcontributions 18 463 183 063

Gross assessed contributions (current) 652 482 592 857

Allowanceforarrears (627263) (559138)

Net assessed contributions (current) 25 219 33 719

Grossassessedcontributions(non-current) 2 124 2 554

Discountfornon-currentassessedcontributions (490) (565)

Net assessed contributions (non-current) 1 634 1 989

Total net assessed contributions 26 853 35 708

Specific allowance for an amount of $621.7 million (2017: $553.8 million) has been made against contributions due from two States (Israel and the United States of America) who have withdrawn as Member States of UNESCO effective 31 December 2018.

The allowance for arrears increased by $68.1 million mainly due to unpaid assessed contributions from the United States of America ($71.8 million) and Israel ($1.4 million) and a working capital fund refund to the United States of America and Israel (-$6.7 million). A Member State’s outstanding assessed contributions are never written off even if the Member State withdraws from the Organization.

NOTE9– ADVANCE PAYMENTS


Advancestostaff 3 631 3 857Activityfinancingadvancepayments

419 591

Implementingpartneradvances

15 644 14 716

ParticipationProgrammeadvancepayments

4 915 9 465

Otheradvancepayments 6 360 6 214

Total advance payments 30 969 34 843

Advance payments on non-exchange contracts (Financing Activity Contracts, Implementation Partnership Agreements/Intergovernmental Body Allocation contracts and Participation Programme) relate to transfers made to third parties where the conditions on the transferred assets are yet to be accepted by UNESCO as fulfilled as at 31 December 2018.

NOTE10– OTHER RECEIVABLES


VATreceivables 2 534 3 151Accruedinterests 3 928 3 682Other 4 085 7 192

Gross other receivables 10 547 14 025

Allowancefordoubtfulaccounts (2892) (2892)

Net other receivables 7 655 11 133

The VAT receivables relate to value-added tax (VAT) recoverable from fiscal authorities. Other is principally reimbursable income taxes from Governments amounting to $3.2 million (2017: $4.3 million) and UNDP accounts balance of $0.7 million (2017: $2.4 million).

Accrued interests are earnings from investments and cash equivalents that have been recognized but not yet received by UNESCO at the reporting date and are expected to be realized within 12 months.


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NOTE11– PROPERTY, PLANT AND EQUIPMENT (PP&E)

Expressed in ‘000 US dollars Land BuildingsComms

& IT equipment

VehiclesFurniture

and fixtures

Other equipment 2018

1 January 2018 Cost 254 713 383 156 27 023 8 177 3 928 7 994 684 991 Accumulateddepreciation – (109748) (21267) (6612) (2918) (6735) (147280)

Carrying amount 254 713 273 408 5 756 1 565 1 010 1 259 537 711

Movements 12 months to 31 December 2018

Additions – – 2 164 856 198 404 3 622 Disposals – – (2128) (468) (57) (697) (3350)Disposalsdepreciation – – 2 042 455 57 692 3 246 Depreciation – (13722) (2535) (723) (304) (534) (17818)Exchangeadjustmentscost – – (203) (12) (36) (132) (383)Exchangeadjustmentsdepn – – 170 9 29 127 335 Adjustmentscost – – (272) 100 (749) 757 (164)Adjustmentsdepn – – (7) (99) 682 (684) (108)Movements 12 months to 31st December 2018 – (13 722) (769) 118 (180) (67) (14 620)

31 December 2018 Cost 254 713 383 156 26 584 8 653 3 284 8 326 684 716 Accumulateddepreciation – (123470) (21597) (6970) (2454) (7134) (161625)

Carrying amount 254 713 259 686 4 987 1 683 830 1 192 523 091

Expressed in ‘000 US dollars Land BuildingsComms

& IT equipment

VehiclesFurniture

and fixtures

Other equipment 2017

1 January 2017 Cost 254 713 383 156 24 710 8 422 3 657 8 067 682 725 Accumulateddepreciation – (96025) (20321) (6696) (2975) (6824) (132841)

Carrying amount 254 713 287 131 4 389 1 726 682 1 243 549 884

Movements 12 months to 31 December 2017

Additions – – 3 417 476 782 523 5 198 Disposals – – (1985) (861) (575) (897) (4318)Disposalsdepreciation – – 1 861 820 432 866 3 979 Depreciation – (13723) (2339) (656) (336) (511) (17565)Exchangeadjustmentscost – – 416 23 53 287 779 Exchangeadjustmentsdepn – – (336) (20) (28) (255) (639)Adjustmentscost – – 465 117 11 14 607 Adjustmentsdepn – – (132) (60) (11) (11) (214)Movements 12 months to 31st December 2017 – (13 723) 1 367 (161) 328 16 (12 173)

31 December 2017 Cost 254 713 383 156 27 023 8 177 3 928 7 994 684 991 Accumulateddepreciation – (109748) (21267) (6612) (2918) (6735) (147280)

Carrying amount 254 713 273 408 5 756 1 565 1 010 1 259 537 711


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As at 31 December 2018, UNESCO holds fully depreciated PP&E which is still in use for a gross value of $26.3 million (2017: $26.6 million).

The carrying value of UNESCO buildings is detailed in the following table:

Description Opening carry value

Depreciation for period

Additions for period

Closing carry value


7PlaceFontenoy 151 820 (7660) – 144 1601RueMiollis 108 969 (5645) – 103 324ApartmentplaceVauban 4 892 (117) – 4 775IBEbuidlingGeneva 6 467 (270) – 6 197OcampoVillaBuenosAires 1 260 (30) – 1 230

Total 273 408 (13 722) – 259 686

Heritage assetsUNESCO also has a significant number of “Works of Art” (also referred to as heritage assets), including paintings, statues and various other objects, which have been mainly donated by governments, artists and other partners. An internal fund has been set up to cover accidental damage to these works, which have a considerable intrinsic value.

NOTE12– INTANGIBLE ASSETS

Expressed in ‘000 US dollars

Software Internally developed

Software Externally developed

Software Work in Progress

2018

As at 1 January 2018 Cost 19 632 903 30 20 565Accumulateddepreciation (19539) (755) - (20294)Carrying amount 93 148 30 271Movements 12 months to 31 December 2018Additions – 161 138 299Disposals – – – –Disposalsdepreciation – – – –Depreciation – (64) – (64)Adjustmentscost (100) 100 (26) (26)Adjustmentsdepreciation 7 (8) – (1)Total movements 12 months (93) 189 112 208As at 31 December 2018Cost 19 532 1 164 142 20 838Accumulateddepreciation (19532) (827) – (20359)Carrying amount – 337 142 479

As at 31 December 2018, UNESCO holds fully depreciated intangibles assets which are still in use for a gross value of $20.3 million (2017: $20.1 million).


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Software Internally developed

Software Externally developed

Software Work in Progress

2017

As at 1 January 2017 Cost 19 532 745 – 20 277Accumulateddepreciation (19532) (682) – (20214)Carrying amount – 63 – 63Movements 12 months to 31 December 2017Additions 100 158 30 288Disposals – – – –Disposalsdepreciation – – – –Impairment – – – –Depreciation (7) (73) – (80)Total movements 12 months 93 85 30 208As at 31 December 2017Cost 19 632 903 30 20 565Accumulateddepreciation (19539) (755) – (20294)Carrying amount 93 148 30 271

NOTE13– EMPLOYEE BENEFITS

Expressed in ‘000 US dollars31/12/2018 31/12/2017

(Restated Note 5

Actuarial valuation

UNESCO valuation Total

Payrollandreimbursements – 7 063 7 063 7 191AfterServiceHealthInsurance 12 831 – 12 831 11 922Accumulatedannualleave 19 194 11 19 205 19 424Repatriationbenefits 460 – 460 1 380Italianendofservicebenefit 7 742 – 7 742 8 724

Employee benefits (current) 40 227 7 074 47 301 48 641

AfterServiceHealthInsurance 752 273 – 752 273 747 006

Repatriationbenefits 26 156 – 26 156 25 093

Employee benefits (non-current) 778 429 – 778 429 772 099

Total employee benefits 818 656 7 074 825 730 820 740

Employee benefits – currentCurrent or short-term employee benefits include payroll and allowances, education grant, home leave, accumulated annual leave (AAL), Italian end-of service benefit (SPS), as well as the current term portion of the after-service health insurance and repatriation grants.

Notwithstanding that AAL and SPS are fully included in short term as required by the standards since UNESCO does not have an unconditional right to defer settlement of the liability for a least 12 months, expected payments in the next year are anticipated to be K$319 for AAL, and K$704 for SPS.

Accumulated annual leave (AAL) – UNESCO staff can accumulate unused annual leave up to a maximum of 60 working days. On separation from UNESCO, staff members

are entitled to receive a sum of money for AAL that they hold at the date of separation.

Italian end-of-service benefit (SPS) – The Italian end-of-service benefit (known as “liquidazione”) is a separation lump sum payable to local General Service staff working for UNESCO in Italy. The amount of the payment is based on the number of completed years of service at the time of separation from UNESCO.

Employee benefits – non-currentNon-current employee benefits relate to post-employment and other long-term employee benefits. These include After-Service Health Insurance and the long-term portion of repatriation benefits.


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After-Service Health Insurance (ASHI) – UNESCO operates the ASHI scheme, which is a defined employee benefit plan. Under the scheme, staff retiring from UNESCO, who have reached their fifty-fifth birthday and who have completed at least ten years of participation in the Medical Benefits Fund as at the date of their separation, may opt to remain (indefinitely) in that Fund as an associate participant with UNESCO continuing to participate in the funding of their contributions. UNESCO performs annually both a long-term projection and an actuarial valuation of the ASHI scheme to measure its employee benefits obligation.

Repatriation benefits – A staff member who has completed one year of continuous service outside the country of his/her recognized home is entitled upon separation from UNESCO

to a repatriation grant payable on the basis of completed years and months of qualifying service outside the country of his/her recognized home. For eligible staff members hired after 1 July, 2016 the grant is payable starting on five years of expatriate service according to the current scale. Staff members are also entitled to travel and removal costs for repatriation on separation from UNESCO.

Actuarial valuationsAn actuarial valuation was carried out to calculate the UNESCO’s estimated liability related to AAL, SPS, ASHI and repatriation grants. The following assumptions and methods have been used to determine the value of these benefits as at 31 December 2018:

Assumptions Used for ASHI Plans:

Discount rate 3.15% – for the ASHI under the Medical Benefit Fund – the rate used is based on the Mercer Yield Curve as of 31/12/2018 (2.90% at 31/12/2017)2.20% – for the ASHI under the ICTP Plan – the rate used is based on the Mercer Yield Curve as of 31/12/18 (2.10% at 31/12/2017).In addition, to be in accordance to the Mercer Yield Curve, the discount rate is based on the plan duration and benefit currencies. The discount rate for ASHI has been determined for each major currency in which UNESCO incurs liabilities (USD and euros). The final rate was then determined by averaging the different discount rates, weighted by the benefit payments in the different currencies.

Medical Healthcare trend 4.55% – for the ASHI under the Medical Benefits Fund – the rate is a weighted average based on claim costs (4.35% at 31/12/2017).2.75% – for the ASHI under the ICTP Plan (2.65% at 31/12/2017).

Inflation rate 1.75% (1.75% at 31/12/2017).

Mortality Tables 2017 United Nations generational and in-service mortality tables (2017 United Nations generational and in-service mortality tables).

Pension and salary increase 2% (2% at 31/12/2017).

Retirement Age Age 65 for all employees.

Percentage of eligible staff who benefit from the ASHI after service

It is assumed that 100% of staff eligible to benefit from the ASHI after service actually claim their entitlement (100% at 31/12/2017).

Turnover Based on a study of UNESCO’s turnover rates from 2015 to 2017.

ASHI Plan duration (for discount rate justification purposes)

21 years – for the ASHI under the Medical Benefit Fund – (26 years at 31/12/2017)20 years – for the ASHI under the ICTP Plan – (20 years at 31/12/2017).


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Assumptions Used for Annual Leave, Repatriation Grant and Italian end of service benefit:

Discount rate 1.75% – the rate used is based on the Mercer Yield Curve as of 31/12/2018 with a maturity around 10 years (1.60% at 31/12/2017).

Inflation rate 1.75% (1.75% at 31/12/2017).

Pre-retirement Mortality Tables 2017 United Nations in-service mortality table for annual leave and repatriation grant; and A62D ISTAT table for Italian end-of-service benefit (2017 United Nations in-service mortality table for annual leave and repatriation grant; and A62D ISTAT table for Italian end-of-service benefit in 2017).

Salary increase rate 2% for annual leave and Italian end-of-service benefit; and for repatriation grant a linear increase from 1% to 1.75% from 2017 to 2027 and 1.75% per year in 2028 and beyond (1.75% at 31/12/2017).

Retirement Age Age 65 for all employees for all benefits except for SPS. For SPS the retirement age is as follow:60 years old for people hired before 01/01/199062 years old for people hired between 01/01/1990 and 31/12/201365 years old for people hired after 01/01/2014

Turnover Based on a study of UNESCO’s turnover rates from 2015 to 2017.

Repatriation benefits It is assumed that 80% of staff eligible for repatriation benefits on leaving actually claim their entitlement (80% at 31/12/2017).Repatriation Travel and Removal are estimated at US $6,605 for staff members without dependent and $8,014 for staff members with at least one dependent ($6,605 and $8,014 respectively at 31/12/2017).

Accumulated annual leave As the accumulation of annual leave by employee historically remains stable year on year, it is assumed that the total accumulated balance is a long-term employee benefit taken by staff members on separation from UNESCO.

The following tables and text provide additional information and analysis on employee benefit liabilities calculated by actuaries:

Expressed in ‘000 US dollars ASHI AAL Repatriation benefits

Italian end of service benefit

Total2018

Defined benefit obligation beginning of the year

758 928 19 421 26 455 8 724 813 528

Movement for period ended 31/12/2018Servicecost 30 953 1 058 985 591 33 587 Interestcost 21 709 304 411 130 22 554 (Actualgrossbenefitspayments) (9627) (735) (900) (1625) (12887)Actuarial(gain)/loss (36217) (411) (302) 311 (36619)Foreignexchangedifference (642) (443) (33) (389) (1507)

Defined benefit obligation 31/12/2018 765 104 19 194 26 616 7 742 818 656


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Total2017

Defined benefit obligation at 31/12/2016

767 046 18 845 26 235 8 740 820 866

Movement for period ended 31/12/2017Servicecost 24 045 960 1 233 672 26 910Interestcost 23 452 261 369 119 24 201

(Actualgrossbenefitspayments) (9852) (1668) (1535) (1084) (14139)Actuarial(gain)/loss (47843) 586 43 (964) (48178)Foreignexchangedifference 2 080 437 110 1 241 3 868

Defined benefit obligation 31/12/2017 758 928 19 421 26 455 8 724 813 528

The actuarial gain of $36.2 million relating to ASHI were recognized through net assets/equity in the Statement of Financial Position and in the Statement of Changes in Net Assets/Equity. The other actuarial gain of $402 thousands were recognized through the Statement of Financial Performance.

The annual expense amounts recognized in the Statement of Financial Performance are as follows:



2018 2017

Servicecost 30 953 1 058 985 591 33 587 26 910Interestcost 21 709 304 411 130 22 554 24 201

Total expenses recognized for year ended 31/12/2018 52 662 1 362 1 396 721 56 141 51 111

Sensitivity analysisAssumed healthcare cost trends and discount rate have a significant effect on the amounts calculated for the ASHI liability and expenses. A one percentage point change would have the following effects:

After-Service Health Insurance – healthcare cost trends (excluding ICTP)

Medical cost trend rate 3.55%



Expressed in ‘000 US dollars Definedbenefitobligationasat31/12/2018 571 693 753 423 997 694

% Variation (24.1%) – 32.4%

Normalcost 18 816 28 219 42 190

% Variation (33.3%) – 49.5%

After-Service Health Insurance – Discount rate (excluding ICTP)

Discount rate 2.65%

Discount rate 3.15%

Discount rate 3.65%

Expressed in ‘000 US dollars Definedbenefitobligationasat31/12/2018 832 621 753 423 682 088

% Variation 10.5% – (9.5%)

Normalcost 32 732 28 219 24 346

% Variation 16.0% – (13.7%)


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After Medical Insurance Plan – healthcare cost trends – ICTP




Expressed in ‘000 euros Definedbenefitobligationasat31/12/2018 7 996 9 214 10 700

% Variation (13.2%) – 16.1%

After Medical Insurance Plan – Discount rate – ICTP Discount rate 1.70% Discount rate 2.20% Discount rate 2.70%

Expressed in ‘000 euros Definedbenefitobligationasat31/12/2018 10 120 9 214 8 393

% Variation 9.8% – (8.9%)

The expected contribution of UNESCO in 2019 to the ASHI plan is $12.8 million which represents expected gross benefit payments for the year.

The expected contribution of UNESCO in 2019 to the accumulated annual leave, repatriation defined benefit and SPS plans is respectively $0.3 million; $0.5 million and $0.7 million, which represents expected benefit payments for the year.

United Nations Joint Staff Pension Fund (UNJSPF)The Fund’s Regulations state that the Pension Board shall have an actuarial valuation made of the Fund at least once every three years by the Consulting Actuary. The practice of the Pension Board has been to carry out an actuarial valuation every two years using the Open Aggregate Method. The primary purpose of the actuarial valuation is to determine whether the current and estimated future assets of the Pension Fund will be sufficient to meet its liabilities.

The UNESCO’s financial obligation to the UNJSPF consists of its mandated contribution, at the rate established by the United Nations General Assembly (currently at 7.9% for participants and 15.8% for member organizations) together with any share of any actuarial deficiency payments under Article 26 of the Regulations of the Pension Fund. Such deficiency payments are only payable if and when the United Nations General Assembly has invoked the provision of Article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of the Fund as of the valuation date. Each member organization shall contribute to this deficiency an amount proportionate to the total contributions which each paid during the three years preceding the valuation date.

During 2017, the Fund identified that there were anomalies in the census data utilized in the actuarial valuation performed as of 31 December 2015. As such, as an exception to the normal biennial cycle, a roll forward of the participation data as of 31 December 2013 to 31 December 2016 was used by the Fund for its 2016 financial statements.

The actuarial valuation as of 31 December 2017 resulted in a funded ratio of actuarial assets to actuarial liabilities, assuming no future pension adjustments, of 139.2% (150.1% in the 2016 roll forward). The funded ratio was 102.7% (101.4% in the 2016 roll forward) when the current system of pension adjustments was taken into account.

After assessing the actuarial sufficiency of the Fund, the Consulting Actuary concluded that there was no requirement, as of 31 December 2017, for deficiency payments under Article 26 of the Regulations of the Fund as the actuarial value of assets exceeded the actuarial value of all accrued liabilities under the plan. In addition, the market value of assets also exceeded the actuarial value of all accrued liabilities as of the valuation date. At the time of this report, the General Assembly has not invoked the provision of Article 26.

Should Article 26 be invoked due to an actuarial deficiency, either during the ongoing operation or due to the termination of the UNJSPF pension plan, deficiency payments required from each member organization would be based upon the proportion of that member organization’s contributions to the total contributions paid to the Fund during the three years preceding the valuation date. Total contributions paid to the UNJSPF during the preceding three years (2015, 2016 and 2017) amounted to $6,931.39 million, of which 2,26% was contributed by UNESCO.

During 2018, contributions paid to UNJSPF amounted to $37 million (2017: $35.4 million). Expected contributions due in 2019 are approximately $39 million.

Membership of the Fund may be terminated by decision of the United Nations General Assembly, upon the affirmative recommendation of the Pension Board. A proportionate share of the total assets of the Fund at the date of termination shall be paid to the former member organization for the exclusive benefit of its staff who were participants in the Fund at that date, pursuant to an arrangement mutually agreed between the organization and the Fund. The amount is determined by the United Nations Joint Staff Pension Board based on an actuarial valuation of the assets and liabilities of the Fund on the date of termination; no part of the assets which are in excess of the liabilities are included in the amount.


58

The United Nations Board of Auditors carries out an annual audit of the UNJSPF and reports to the UNJSPF Pension Board and to the United Nations General Assembly on the audit every year. The UNJSPF publishes quarterly reports on its investments and these can be viewed by visiting the UNJSPF website.

NOTE14– TRANSFERS PAYABLE


Interestpayabletodonors 14 007 14 497Othertransferspayable 1 095 2 268

Total transfers payable 15 102 16 765

NOTE15– VOLUNTARY CONTRIBUTIONS WITH CONDITIONS


Monetaryvoluntarycontributionswithconditions(current)

96 114 72 015

In-kindvoluntarycontributionswithconditions(current) 123 260

Voluntary contributions with conditions (current) 96 237 72 275

In-kindvoluntarycontributionswithconditions(non-current) 52 182

Voluntary contributions with conditions (non-current) 52 182

Total voluntary contributions with conditions

96 289 72 457

Monetary voluntary contributions with conditions arises when funds are received from a donor and UNESCO is yet to meet the condition stipulated in the agreement. The in-kind relates to a loan given to UNESCO where the donor pays the interest associated with the loan.

NOTE16– ADVANCE RECEIPTS


Frameworkagreements 22 311 26 973Othervoluntarycontributionsreceivedinadvance

18 587 25 870

Assessedcontributionsreceivedinadvance

3 253 33 635

Otheradvancereceipts 723 1 381

Total advance receipts 44 874 87 859

UNESCO recognizes as a liability amounts received under non-exchange contracts where a binding agreement is not considered to be in place yet. This is relevant to Framework Agreements, where funds can be received before an agreement is reached on the allocation of the contribution, and on voluntary contributions received with restrictions.

NOTE17– BORROWINGS


IBEbuildingloan 131 132PhaseIIBelmontplanloan 4 925 7 070

Current portion of borrowings 5 056 7 202

IBEbuildingloan 269 393PhaseIIBelmontplanloan 2 974 8 109

Long-term portion of borrowings 3 243 8 502

Total borrowings 8 299 15 704

Borrowings are recognized in the financial statements at amortized cost with values based on cash flows discounted using a discount rate of 1.95% (Phase II Belmont plan loan) and 3.00% (IBE building loan).

The maturity analysis of the IBE building and Phase II Belmont plan loans is as follows:

31/12/2018IBE

building loan

Phase II Belmont plan loan

TOTAL


Withinthreemonths – 1 527 1 527

Laterthanthreemonthsandnotlaterthanone year

131 3 398 3 529

Laterthanoneyearandnotlaterthanfiveyears

269 2 974 3 243

Total borrowings 400 7 899 8 299


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IBE BuildingUNESCO received loans from the Property Foundation for International Organizations (FIPOI) of Switzerland for the balance of CHF (Swiss francs) 4.4 million to partly finance the purchase of buildings for the UNESCO International Bureau of Education (IBE). Following a renegotiation of the payment schedule in December 1997, it was agreed to fix the amount of the loan outstanding as of 1 January 1998 at CHF3.2 million ($2.3 million) repayable in equal annual instalments of CHF0.1 million from 1998 until 2021, with a final payment of CHF0.02 million in 2022.

Phase II Belmont PlanBy 32 C/Resolution 74, the General Conference had “authorized the Director-General to contract an interest-free loan of €79.9 million with a lender chosen by him in cooperation with the Government of France and to take into account the necessity of making provision in future budgets for the funds required for reimbursement of the sums borrowed”.

An agreement was signed on 23 March 2004 between UNESCO, the Caisse des Dépôts et Consignations (CDC) and the Government of France for the interest-free loan which would be drawn in five yearly instalments from 2004 to 2008 and repaid over eight biennia starting in 2006.

The loan repayments are fully guaranteed by the Government of France.

NOTE18– OTHER LIABILITIES


Unredeemedcoupons – 78Provisionforlitigation 1 133 1 252

Other current liabilities 11 271

UnpaidclaimsfromMBF 3 613 4 006Outstandinginvoicesduetoclaimadministrator 1 943 1 907

Payabletodonors 3 239 3 285Deferredincome 930 708UNinvoice 148 297Others 267 1 068

Other current liabilities 11 273 12 601

Unredeemedcoupons 5 891 5 841

Other non-current liabilities 5 891 5 841

Total other liabilities 17 164 18 442

The UNESCO coupons programme provides private individuals, institutions or Member States with the possibility of buying, with their local non-convertible currencies, coupons denominated in US dollars and guaranteed by UNESCO. Coupons are used for the purchase of books, publications and material for educational, scientific or

cultural purposes, and for paying subscriptions to institutions and university registration fees. UNESCO undertakes to reimburse suppliers accepting these coupons in payment of their invoices. If the recipient of the coupons does not use them, they can send them back for a cash reimbursement or for exchange with coupons bearing a new validity date.

The current coupon validity period is 15 years, however if expired unused coupons are sent to UNESCO, replacement coupons will be issued. Unredeemed coupons are classified between current and non-current based on amounts expected to be redeemed within the next 12 months.

Provision for litigation movements

Expressed in ‘000 US dollars 31/12/2018

As at 1 January 2018Currentportion 1 252

Non-currentportion –

Total 1 252

Movements during the year (119)

As at 31 December 2018Currentportion 1 133Non-currentportion –

Total 1 133


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NOTE19– NET ASSETS/EQUITY

Expressed in ‘000 US dollars 01/01/2018 Opening balance

Surplus/ (Deficit) for the period

Other adjustments to reserves

Distribution of exchange difference

Distribution of actuarial

gains / losses through reserves

31/12/2018

GeneralFundReserves (211681) (25526) (140) – 33 436 (203911)WorkingCapitalFund 31 223 – (6600) – – 24 623 RestrictedReserves 438 013 27 344 (3750) (9899) 2 781 454 489 CurrencyExchangeReserves – – (9899) 9 899 – –Actuarialgains/lossesthroughreserves – – 36 217 – (36217) –

Total reserves and fund balances 257 555 1 818 15 828 – – 275 201

Reserves under the main operations of the Organization financed from Member States assessed contributions are classified as General Fund reserves.

Working capital Fund corresponds to advances from Member States as determined by the General Conference.

Restricted reserves refer to results from operations under Programme Fiduciary Funds, Other Proprietary Funds and Staff Fiduciary Funds. The use of such reserves is either determined by specific financial regulations or agreements signed with donors.

Currency exchange reserves are exchange differences arising from the presentation into USD of the financial statements of consolidated entities whose functional currencies are different from USD.

Actuarial gains and losses reserves arise from the valuation of long term employee benefits such as after-service health insurance. Since 2017, these two reserves are been distributed between the Restricted and General Fund reserve, which constitute the Organisation’s main reserves.

NOTE20– REVENUE

Expressed in ‘000s US dollars 31/12/2018 31/12/2017

Total assessed contributions 336 171 316 327

Voluntary contributionsMonetaryvoluntarycontributions 261 477 235 570Inter-organizationfunds 23 533 12 640In-kindvoluntarycontributions 11 725 13 068

Total voluntary contributions 296 735 261 278

Other revenue producing activitiesRevenueproducingactivities 7 154 6 667Incomefromservicesrendered 15 676 13 109

Total other revenue-producing activities 22 830 19 776

Other/miscellaneous revenueOtheroperatinggains 1 504 1 959ContributionstoMBF 12 094 11 692Total other/miscellaneous revenue 13 598 13 651

Foreignexchangegains – 23 579

Total finance revenue 14,497 13 811Total revenue 683 831 648 422

In-kind contributions include the use of field office and institutes premises for no or nominal rent, and free utilities, maintenance and communications. In the case of the use of premises, the contributions value is based on the commercial rate for renting the building. In-kind contributions for premises are estimated at $11.5 million (2017: $12.2 million).

Revenue producing activities for $7.1 million include principally sales income from the UNESCO Restaurant Service for $6.1 million (2017: $5.2 million).

Income from services rendered of $15.7 million relates principally to rental services of UNESCO’s and Institutes’ premises and facilities for $15.5 million (2017: $12.8 million).


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NOTE21– EXPENSES


Employee benefit expensesInternational&Nationalstaff 234 290 223 699Temporarystaff 33 294 33 136Otherpersonnelcosts 68 002 61 632

Total employee benefit expenses 335 586 318 467

Consultants, external experts and mission costsConsultants 35 329 35 750Staffmissioncosts 13 387 12 690Delegates&externalindividualsmissions 1 401 1 017Othercontracts 2 463 3 325

Total consultants, external experts and mission costs 52 580 52 782

External training, grants and other transfersFinancialcontributions 14 315 9 135Grantsandfellowships 10 467 10 339Externaltrainingandseminars 20 512 21 283

Total external training, grants and other transfers 45 294 40 757

Supplies, consumables and other running costsCommunications 3 620 3 628Equipment 8 908 11 719Leases 16 593 17 937Utilities 5 383 5 538Maintenanceandrepairs 8 367 8 526Othersupplies 6 461 7 336

Total supplies, consumables and other running costs 49 332 54 684

Contracted servicesContractedresearch 1 086 2 859Contractedseminarsandmeetings 3 512 4 603Contracteddocumentproduction 404 469Othercontractedservices 99 137 112 239

Total contracted services 104 139 120 170

Depreciation and amortizationDepreciation 17 818 17 565Amortization 64 80

Total depreciation and amortization 17 882 17 645

Allowance for assessed contribution 68 051 77 393

Total other expenses 825 1 479

Total foreign exchange losses 3 655 –

Total finance costs 4 669 4 793

Total expenses 682 013 688 170


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21.1 EMPLOYEE BENEFITS EXPENSESInternational & National staff expenses include salaries, post adjustments, entitlements and pensions and health plan contributions for Professional and General Service category staff. This line also includes movements in the actuarial liability for Accumulated Annual Leave and Repatriation Benefits. Temporary staff expenses include all costs relating to the employment of temporaries and supernumeraries. Other personnel costs include reimbursement of medical claims and the movement in the ASHI actuarial liability where this is recognized in the Statement of Financial Performance. This line also includes staff travel expenses which are not related to mission costs (home leave, family visit, education grant, interview, separation).

21.2 CONSULTANTS, EXTERNAL EXPERTS AND MISSION COSTS

Consultants expenses represent the cost of contracting consultants, including insurance and travel expenses. Staff mission costs are the mission and training costs for UNESCO staff, temporaries and supernumeraries. These concern principally travel and per diem expenses. Delegates & external individuals missions are expenses for travel and per diem of representatives, delegates, individuals and others (i.e. non-staff). Other contracts concern principally interpreter fees.

21.3 EXTERNAL TRAINING, GRANTS AND OTHER TRANSFERS

Financial contributions include contributions made to United Nations joint activities, publications, conferences and programme activities. Grants and fellowships include study grants, fellowships, subventions, sponsorships and grant-in-aid. Expenses for external training and seminars are mainly travel and per diem costs for participants.

21.4 SUPPLIES, CONSUMABLES AND OTHER RUNNING COSTS

Communications expenses concern mainly telephone and postal/freight costs. Equipment expenses represent equipment purchases and costs during the year, which do not meet the criteria for capitalization as PP&E or Intangible Assets. Leases represents primarily premises rental cost. This line includes the expense which corresponds to the in-kind voluntary contribution for premises provided to UNESCO at no or nominal cost. Maintenance and repairs expenses are mainly those incurred in relation to UNESCO premises. Other supplies include office supplies and notably supplies for the UNESCO Restaurant Service.

21.5 CONTRACTED SERVICESContracted services represent expenses where UNESCO has engaged a third party to perform work on behalf of UNESCO. Major categories of these types of arrangements include research, seminars and meetings and document

production. Significant amounts fall within the category other contracted services. It should be noted that under certain arrangements, especially non-exchange contracts with not-for-profit organizations and government ministries for the implementation of activities under UNESCO’s mission and mandate, contracts are established which cover several types of services and work which cannot be easily allocated to a single category of contracted services.

21.6 DEPRECIATION AND AMORTIZATIONDepreciation is the expense resulting from the systematic allocation of the depreciable amounts of property, plant and equipment (PP&E) over their useful lives (see Note 11). This relates principally to UNESCO buildings. Amortization is the expense resulting from the systematic allocation of the amortizable amount of intangible assets over their useful lives (see Note 12).

21.7 ALLOWANCE FOR ASSESSED CONTRIBUTIONS

This amount corresponds to the allowance for unpaid Member States contributions.

21.8 OTHER EXPENSES, FOREIGN EXCHANGE AND FINANCE COSTS

Finance costs of $4.7 million principally include the calculated interest cost of $0.3 million which corresponds to the in-kind revenue recognized for the value to UNESCO of not paying loan interest on the Phase II Belmont plan loan and the IBE building loan (see Note 20 Revenue) as well as the payment of investment interest to donors for $3.5 million.

NOTE22– CONTINGENT LIABILITIES, COMMITMENTS AND CONTRACTUAL RIGHTS

22.1 CONTINGENT LIABILITIES22.1.1 As at 31 December 2018, 49 employment cases

were pending before the Labour Courts in Brazil. The total amount claimed in the pending cases is approximately $0.5 million (2017 – $0.9 million). The Organization, at this time, cannot provide an estimate as to the outcome of the above lawsuits nor can it determine the likelihood or the amount of loss or legal costs associated with the outcome.

22.1.2 Discussions between UNESCO, IESS and the Ecuadorian Ministry of Foreign Affairs are ongoing to address two service contract holders who brought up case against UNESCO with the Institutto Ecuadoriano Seguridad Social (IESS) of Ecuador. This case concerns social security contributions for service contract holders. Outcomes are not determinable at this time.


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22.1.3 Staff members have also lodged complaints which are pending before the UNESCO Appeal Board or the International Labour Organization Administrative Tribunal. It is highly unlikely that UNESCO would incur financial liabilities for these outstanding cases estimated at $2.1 million (2017: $2.3 million).

The amounts above have not been recognized in the consolidated financial statements

22.2 COMMITMENTSUNESCO enters into operating lease arrangements for the use of field office and Institute premises, and for the use of photocopying and printing equipment. Future minimum lease rental payments for the following years are:


Withinoneyear 1 254 1 449Laterthanoneyearandnotlaterthanfiveyears

1 421 2 129

Laterthanfiveyears – –

Total operating lease commitments 2 675 3 578

Operating lease arrangements for field office premises can generally be cancelled by providing notice of up to 90 days. Individual operating lease agreements for photocopiers at headquarters generally made under the auspices of the overall long term supply agreements.

22.3 CONTRACTUAL RIGHTSUnder a number of existing voluntary contribution agreements, UNESCO will gain control of the voluntary contribution asset (contributions receivable) if certain stipulations set out in the agreement are met. Until the stipulations are met, these contractual rights are not recognized in the Statement of Financial Position. As at 31 December 2018, there are voluntary contributions with an approximate value of $268.8 million (2017 – $127.8 million) under existing agreements where it is considered probable that UNESCO will meet the stipulations set out in the agreement.

NOTE23– APPROVED BUDGET The General Conference set $653 million as the level for assessed contributions from the 195 Member States for the 2018-2019 biennium. However, as a result of the decision of two Member States to suspend the payment of their contributions, the General Conference approved a budget expenditure plan of $518 million, thus aiming to reduce the approved biennial budget by 20.7% (or $135 million).

For the year ended 31 December 2018, the allotment including authorized transfers and additional appropriations amounted to $285.3 million (see Statement V).

The original budget of $262.9 million for the year is adjusted for authorized transfers, additional appropriations and carry over funds from the previous year, to arrive at the final budget for the year. The authorized transfers of $11.3 million represent the transfer of funds between the two years of the budget. The additional appropriations of $11.2 million are voluntary contributions received to support directly the programmes and activities of the regular programme.

23.1 BUDGET RECONCILIATIONUNESCO reports bi-annually to the Executive Board on the status of the budget implementation through the Management Chart.

The budget and the accounting bases differ. The financial statements include all controlled entities for the financial year from 1 January 2018 to 31 December 2018 and a classification based on the nature of expenses is used in the Statement of Financial Performance. The financial statements differ from the budget, which deals with receipts and expenditures relating to General Fund assessments only and classifies expenses by programmes. The budget is prepared on the modified cash basis and the financial statements on the accrual basis. Under the budget, assessed contributions to be received in Euros and the corresponding expenditure are translated into US dollars at the Constant Dollar Rate (CDR). In the financial statements assessed contributions received in Euros and their corresponding expenditure are translated into US dollars using the United Nations Operational Rate of Exchange prevailing at the date of the transaction.

A Statement of Comparison of Budget and Actual Amounts for the General Fund is provided in these financial statements (see Statement V). Reconciliations between the actual amounts on a comparable basis as presented in the Statement of Comparison of Budget and Actual Amounts and the actual amounts in the financial statements for the twelve months ended 31 December 2018 are presented in this Note.

In order to reconcile the budget actual amounts to the financial statements (Cash Flow Statement and Statement of Financial Performance), differences between the budget scope and financial statements scope and budget reporting and financial statements presentation have to be taken into account.

(a) Reporting scope (entity) differences

The budget concerns receipts and expenditures relating to General Fund assessments only. The Financial Statements include all UNESCO controlled entities, and as such include results for all Funds and the non-budgetary result for the General Fund. Details of the results of the Other Proprietary Funds, Programme Fiduciary Funds


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and Staff Fiduciary Funds are shown in Note 26 Segment Information.

(b) Basis adjustments

The budget is prepared on the modified cash basis. The financial statements are prepared on a full accrual basis in compliance with IPSAS requirements. In order to reconcile the budgetary result to the Cash Flow Statement, the non-cash elements such as unliquidated obligations and non-received assessed contributions are removed as basis differences. The principal adjustments impacting the reconciliation between the budget and the Statement of Financial Performance are as follows:

• Capital expenditures capitalized and depreciated over useful life under accrual accounting (generally recorded as current year expenses in the budget);

• Under IPSAS, the UNORE is applied as opposed to the CDR;

• Under accrual accounting, employee benefit liabilities are reported in the Statement of Financial Position, and movements in liabilities impact the Statement of Financial Performance;

• Unliquidated obligations are included in budget reporting but are not recognized under accrual accounting.

(c) Timing differences

The budget and the financial statements both represent the year to 31 December 2018. As such there are no timing differences in the reconciliation.

(d) Presentation Differences

Presentation differences concern differences in the format and classification schemes in the Statement of Cash Flow and the Statement of Comparison of Budget and Actual Amounts.

23.2 RECONCILIATION: SURPLUS WITH BUDGET RESULT ON MODIFIED CASH BASIS

31/12/2018


Surplus per Statement of Financial Performance 1 818 a) Scope differences

OPFsurplus (1385)PFFdeficit (22579)SFFsurplus (3380)

Subtotal (27 344)

GEF deficit (25 526)

b) Accounting basis adjustmentsRevenueConstantDollaradjustment (5870)Budgetaryallotmentadjustment (54210)Foreignexchangegainandothernon-budgetaryincome (14547)

(74 627)

ExpensesEmployeebenefits 43 377 ConstantDollarAdjustment 3 232 Foreignexchangelosses 2 246 Prioryearbudgetaryexpenses 4 144 AllowanceforunpaidMemberStates'contributions 68 052 Disbursementrelatingto38C/5surplusallottedin2019 5 014 Fixedassetsaddition,depreciationandamortization 14 986 Renovationloanrepayment (7026)

134 025

c) Budget basis adjustmentUnliquidatedobligations (8112)

Total adjustments 51 286

Budget result on modified cash basis 25 760


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23.3 RECONCILIATION: BUDGETARY RESULT WITH NET CASH FLOW

31/12/2018 Expressed in ‘000 US dollars Operating activities

Investing activities

Financing activities Total

Actual net surplus as per the Statement of Comparison of Budget and Actual Amounts – – 25 760

BasisdifferencesUnliquidatedobligations 8 283 – – 8 283Unreceivedcontributionsforyear (89349) – – (89 349)Otherbasisdifferences 49 597 – – 49 597

Presentationdifference 8 474 (1316) (7158) –

Budgetary result with cash basis 2 765 (1 316) (7 158) (5 709)

Timingdifferences – – – –Entitydifferences 36 762 (63936) – (27 174)

Actual amount in the Statement of Cash Flow 39 527 (65 252) (7 158) (32 883)

23.4 UNLIQUIDATED OBLIGATIONS

Expressed in US dollars 31/12/2018 31/12/2017

General FundCommitmentportion 8 283 5 723Accrualportion 2 187 2 419

Unliquidated obligations 10 470 8 142

Other Proprietary FundsCommitmentportion 3 214 1 700Accrualportion 961 769


Programme Fiduciary FundsCommitmentportion 63 695 63 625Accrualportion 7 286 10 175


Total unliquidated obligations 85 626 84 411

For budgetary purposes UNESCO records “unliquidated obligations”. Unliquidated obligations include both budget commitments which have not yet given rise to the delivery of a service at the reporting date, and real accruals for goods and services received but not yet invoiced/settled. Budget commitments are not recorded in the financial statements whereas real accruals are recognized in accordance with IPSAS.

GEF unliquidated obligations, except those related to renovation costs, are included in the actual amounts of the General Fund budget expenditure as at 31 December 2018. The table above provides the split of unliquidated obligations between commitments and accruals for goods and services received not yet invoiced and travel costs.

NOTE24– FINANCIAL RISK MANAGEMENTExposure to credit, liquidity, currency and interest rate risk arises in the normal course of UNESCO’s operations. The following information presents information about UNESCO’S exposure to each of the above risks, policies and processes for measuring and managing risk, and UNESCO’s management of capital. There has been no changes in the policies and procedures used to manage risk.

In January 2018, the first investments were made for the After-Service Health Insurance Special Account in accordance with the Investment Policy Statement of the ASHI Fund which is based on the results of an asset and liability management study.


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In general, UNESCO’s risk management policies along with its Investment Policy and Financial Rules and Regulations aim to minimize potential adverse effects on the resources available to UNESCO to fund its activities.

The primary objective of UNESCO’s Investment Policy is the preservation of the value of resources of the Organization. Within this general objective the principal considerations for investment management are, in order of priority, security of principal, liquidity, and rate of return.

On the other hand, the strategic objective of the investment portfolio related to the After-Service Health Insurance is to mitigate the volatility of the net liability in the long run.

UNESCO has an Investment Committee comprising senior management representatives and external member(s) that advise the Chief Financial Officer on investment and cash management policy of UNESCO, on overall investment strategy and on related risk management.

24.1 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair values and fair value hierarchyUNESCO uses the following valuation technique hierarchy for determining and disclosing the fair value of financial instruments:

• Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly; or

• Level 3: Techniques which used inputs that have a significant effect on the reordered fair value that are not based on observable market data.

The fair value of cash and cash equivalents, Short term investments, Receivables: non-exchange transactions, receivables from exchange and current non-exchange transactions and other receivables approximate their recorded carrying amount due to their short term nature.

The fair value of accounts payables, transfer payables and other current liabilities and voluntary contributions approximate their recorded carrying amount due to their short term nature.

The following table shows the carrying amounts and fair values of investments and borrowings including their levels in the fair value hierarchy:

Classification Hierarchy Carrying amount Fair value

2018 2017 2018 2017

Financial assets Investments L&R Level 1 453 531 406 604 453 441 406 359Investments HTM Level 1 2 881 1 607 2 864 1 601Investments FVTPL Level 1 69 168 66 591 69 167 66 591

Total 525 580 474 802 525 472 474 551

Financial liabilities

Borrowings Amortizedcost Level 2 8 299 15704 8299 15 704

Transfers between levels of the fair value hierarchy are recognized at the end of the reporting year during which the change has occurred. There were no movements between levels in the fair value hierarchy during the year.

24.2 CREDIT RISKCredit risk is the risk of financial loss to the Organization if customers or counterparties to financial instruments fail to meet their contractual obligations. It mainly arises from UNESCO’s cash and cash equivalents, financial investments, and receivables.

Investments, cash and cash equivalentUNESCO utilizes credit ratings from the three leading credit rating agencies, Moody’s, Standard & Poor’s and Fitch, to evaluate credit risk on its financial instruments.

UNESCO holds more than 150 bank accounts in more than 50 countries that expose the organization to default risk. To mitigate this risk, UNESCO has internal guidelines such as minimizing the balances on its current accounts and operating with strong international banking groups whenever possible.

The investment management function is centralized at UNESCO headquarters whereas field offices and institutes are not permitted to engage in investing.

In accordance with its Investment Policy, UNESCO applies limits on investment counterparty exposures to mitigate credit risk. These limits are based on the several criteria including a minimum long-term rating of A-, a minimum short-term rating of A-1 and all investment counterparties should be established in a country with a long-term rating of at least AA-. All investments were compliant with UNESCO’s Investment Policy.


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The Investment Policy provides an exception to the aforementioned credit ratings for UNESCO Brasilia with significant cash balance in Brazilian Real that can be invested

in Brazilian Government Treasury Bills up to one year. The credit risk associated with these investments is the sovereign risk of Brazil which is rated BB as at 31 December 2018.

Credit ratingExpressed in

‘000 US dollar

Cash & cash equivalent

Money market instruments clas-sified as loans &

receivables

Investments at fair value

through surplus and deficit

Bonds held to maturity 2018 2017 Variation

AAA 5 000 59 000 – – 64 000 70 000 (6000)AA 50 000 278 000 – 2 881 330 881 252 619 78 262A 120 215 116 237 – – 236 452 295 253 (58801)BBB 4 793 – – – 4 793 3 132 1 661<BBB 424 – 55 262 – 55 686 67 063 (11377)Notrated 490 295 13 905 – 14 690 1 339 13 351

Total 180 922 453 532 69 167 2 881 706 502 689 406 17 096

Receivables Receivables are mainly from sovereign Member States. An allowance is established when there is objective evidence, based on a review on outstanding amounts at the reporting date that a State will not comply with the original terms of the receivables.

The credit risk exposure related to receivables are not material as contributions are primarily from governments and related bodies.

24.3 LIQUIDITY RISKLiquidity risk is the risk that UNESCO might not have adequate funds to meet its obligations as they fall due. The Organization ensures on the basis of cash flow forecasts that it has sufficient cash on demand to meet expected operating expenses.

As at the year-end, UNESCO’s cash and cash equivalents and short-term investments amount to $690.7 million which is substantially more than the current liabilities equaling $238.1 million. Therefore, the Organization is not exposed to a significant liquidity risk.

24.4 FOREIGN EXCHANGE RISKForeign exchange risk is the risk that the fair value of a financial instrument fluctuates due to changes in foreign exchange rates. UNESCO is exposed to foreign exchange risk on revenues and expenses denominated in foreign currencies, predominately Euros along with minor exposure to other currencies. A 1% increase/decrease in exchange rate would not have a material impact on the financial statements.

The Split Assessment system, whereby the Organization receives a portion of assessed contributions in euros in order to cover expenses which are denominated in that currency, is a means of ensuring that most of the exposure to exchange fluctuations between euros and US dollars is mitigated. On the other hand, the foreign exchange risk related to

the assets of UNESCO’s field offices, centres and institutes worldwide is mitigated by maintaining a minimum level of cash or other assets in local currencies at any time.

Foreign currency risk related to UNESCO’s extrabudgetary activities is managed through individual project budget planning for foreign currency expenditure.

The currency risk on Brazilian Real is limited by the fact that UNESCO Brasilia’s functional currency is Brazilian Real and its revenue and expenditure are also in the same currency.

24.5 INTEREST RATE RISKInterest rate risk arises from the effects of market interest rates fluctuations on the fair value of financial assets and liabilities and/or on future cash flows. The Organization is mainly exposed to interest rate risk on its financial interest-bearing assets.

UBO’s Brazilian Treasury Bills that are carried at fair value through surplus and deficit are floating rate debt securities. UNESCO’s surplus/deficit would be negatively impacted in case of decreasing BRL interest rates.

Investments classified as held-to-maturity, cash equivalents and investments classified as loans and receivables are not marked to market. Therefore, surplus/deficit reported in UNESCO’s financial statements is not impacted by immediate changes in interest rates. However, at maturity of these financial instruments a lower re-investment rate may have a significant impact on the reported surplus and deficit.

A 1% increase/decrease in interest rates would not have a material impact on the financial statements.

UNESCO is mainly exposed to re-investment risk. Therefore, a sensitivity analysis measuring the impact of changing interest rates on surplus and deficit assuming a change in interest rate levels as at the end of the reporting year would not show any significant risk.


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The Investment Committee regularly follows up that the rate of return of investments is in line with the benchmarks set up in the Investment Policy.

24.6 CONCENTRATION RISK The concentration risk of UNESCO is mitigated by the counterpart and country limits established by the Investment Policy of UNESCO.

The maximum exposure to any single banking group is limited to 7% or 10% of UNESCO’s internally managed investment portfolio depending on the financial rating of the counterpart.

Furthermore, the exposure to a specific country should not exceed 25% of the portfolio, except for France as the host country of the organization that has a limit of 35% with a condition that 10% of these 35% is allocated in instruments that are cashable within three business days.

All investments were compliant with UNESCO’s Investment Policy (IP).

24.7 CAPITAL MANAGEMENTUNESCO defines the capital that it manages as the aggregate of its net assets which is comprised of accumulated balances and reserves. UNESCO’s objectives in managing capital are to safeguard its ability to continue as a going concern to fund its asset base and to fulfil its mission and objectives as established by its Member States and donors. The UNESCO’s overall strategy with respect to capital management includes the balancing of its operating and capital activities with its funding on a biennial basis along with its expense requirements in US dollars against its euros revenue from Member States’ assessments.

UNESCO manages its capital structure in light of global economic conditions, the risk characteristics of the underlying assets and working capital requirements. UNESCO manages its capital by reviewing on a regular basis the actual results against the budgets approved by Member States.

NOTE25– RELATED PARTY DISCLOSURES25.1 GOVERNING BODIESUNESCO is governed by a General Conference, consisting of the representatives of the Member States of the Organization.

Representatives of Member States are appointed separately by the Government of each Member State. They do not receive any remuneration from the Organization and are not considered as key management personnel of UNESCO as defined under IPSAS. The President of the General Conference receives a representation allowance during his/her term of office as President.

The General Conference elects the 58 Member States, which form the Executive Board. The Executive Board assures the overall management of UNESCO and meets twice a year. The Organization pays for travel costs, subsistence allowance and office expenses to cover costs incurred by the representatives of the Member States in the execution of their duties as Members. The Chairman of the Executive Board receives a representation allowance during his/her term of office as Chairman.

25.2 KEY MANAGEMENT PERSONNEL Key management personnel of UNESCO are the Director-General, the Deputy Director-General, the Assistant Directors-General and the Directors of the Corporate Services as they have the authority and responsibility for planning, directing and controlling the activities of UNESCO.

The aggregate remuneration paid to key management personnel includes: net salaries, post adjustment, entitlements such as representation allowances and other allowance, grants and subsidies, and employer pension and health insurance contributions.

Key management personnel qualify also for post-employment benefits, such as after-service health insurance, repatriation benefits and payment of unused annual leave. The actuarial assumptions applied to measure such employee benefits are disclosed in Note 13.

Key management personnel are ordinary members of UNJSPF with the exception of one staff member who does not participate in to the Fund. Amounts paid by UNESCO in lieu of contributions to the plan, which represents 15.8% of the pensionable remuneration, are included in total remuneration. Advances are those made against entitlements in accordance with Staff Rules and Regulations. Loans granted to key management personnel are those granted under Staff Rules and Regulations. Advances against entitlements and loans are widely available to all UNESCO staff.

Number of individuals

Compen sation and Post

Adjustment

Entitlements (Allowances Grants and Subsidies)

Pension and Health

Plans

Total Remuneration

2018

Outstanding advances against

entitlements Ed Grant

Outstanding loans

Reimbur-sement of US Income

Tax


30 3 948 897 1 126 5 971 145 9 -

The UNESCO-owned apartment at the Place Vauban, Paris, France is put, rent-free, at the disposal of the Director-General. The Director-General has not used the apartment during the current financial year.


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NOTE26– SEGMENT INFORMATION

26.1 FINANCIAL POSITION BY SEGMENT – 2018

Expressed in ‘000 US dollars GEF OPF PFF SFF Inter-fund balances

TOTAL UNESCO

ASSETSCurrent AssetsCashandcashequivalents 75 280 35 922 52 286 17 434 – 180 922 Short-terminvestments 294 50 000 431 971 27 530 – 509 795 Accountsreceivable(non-exchangetransactions) 24 433 – 4 086 – – 28 519

Receivablesfromexchangetransactions 64 871 742 320 (316) 1 681 Inventories – 298 21 48 – 367 Advancepayments 12 954 554 17 209 854 (602) 30 969 Otherreceivables 2 213 9 883 4 825 366 (9632) 7 655

Total current assets 115 238 97 528 511 140 46 552 (10 550) 759 908

Non-current assetsAccountsreceivable(non-exchangetransactions) 1 634 – – – – 1 634

Long-termloans – 208 – – (208) –Long-terminvestments – 13 905 1 880 – – 15 785 Property,plantandequipment 517 944 2 388 2 488 271 – 523 091 Intangibleassets 179 – 300 – – 479

Total non-current assets 519 757 16 501 4 668 271 (208) 540 989

TOTAL ASSETS 634 995 114 029 515 808 46 823 (10 758) 1 300 897

LIABILITIESCurrent LiabilitiesAccountspayable(exchangetransactions) 3 732 1 939 11 744 965 (142) 18 238

Employeebenefits 30 686 2 262 13 533 820 – 47 301 TransfersPayable 876 6 14 220 – – 15 102 Voluntarycontributionswith conditions 123 – 96 114 – – 96 237 Advancereceipts 5 847 181 38 507 513 (174) 44 874 Borrowingscurrentportion 5 056 – – – – 5 056 Othercurrentliabilities 4 057 602 11 284 5 564 (10234) 11 273

Total current liabilities 50 377 4 990 185 402 7 862 (10 550) 238 081

Non-current LiabilitiesEmployeebenefits 760 611 3 619 14 199 – – 778 429 Voluntarycontributionswithconditions 52 – – – – 52 Borrowingslong-termportion 3 243 – – 208 (208) 3 243 Othernon-currentliabilities – 5 891 – – – 5 891

Total non-current liabilities 763 906 9 510 14 199 208 (208) 787 615

TOTAL LIABILITIES 814 283 14 500 199 601 8 070 (10 758) 1 025 696

NET ASSETS (179 288) 99 529 316 207 38 753 – 275 201

NET ASSETS/EQUITYReservesandfundbalances (179288) 99 529 316 207 38 753 – 275 201

NET ASSETS/EQUITY (179 288) 99 529 316 207 38 753 – 275 201


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26.2 FINANCIAL PERFORMANCE BY SEGMENT – 2018

Expressed in ‘000 US dollars GEF OPF PFF SFF Inter-fund transactions

TOTAL UNESCO

REVENUEAssessedcontributions 332 389 – 3 782 – – 336 171

Voluntarycontributions 18 339 1 493 276 903 – – 296 735

Otherrevenueproducingactivities 9 14 640 1 769 6 403 9 22 830

Other/miscellaneousrevenue 787 2 361 248 23 886 (13684) 13 598

Financerevenue 1 308 4 302 8 390 497 – 14 497

Inter-segmenttransfers 11 132 52 379 15 047 172 (78730) –

Total revenue 363 964 75 175 306 139 30 958 (92 405) 683 831

EXPENSESEmployeebenefitexpenses 194 363 43 860 88 266 22 986 (13889) 335 586

Consultants,externalexpertsandmissioncosts 12 041 4 307 37 903 - (1671) 52 580

Externaltraining,grantsandothertransfers 32 599 449 26 299 - (14053) 45 294

Supplies,consumablesandotherrunningcosts 20 916 8 718 21 241 2 446 (3989) 49 332

Contractedservices 14 393 3 636 85 405 681 24 104 139

Depreciationandamortization 15 445 1 078 1 259 100 – 17 882

Allowanceforassessedcontributions 68 051 – – – – 68 051

Otherexpenses 19 426 177 203 – 825

Foreignexchangelosses 2 248 294 100 1 131 (118) 3 655

Financecosts 902 17 3 719 31 – 4 669

Inter-segmenttransfers 28 513 11 005 19 191 – (58709) –

Total expenses 389 490 73 790 283 560 27 578 (92 405) 682 013

SURPLUS (DEFICIT) FOR THE YEAR (25 526) 1 385 22 579 3 380 – 1 818

Note that some internal activities lead to accounting transactions that create inter-segment assets, liabilities, revenue and expenses. Inter-segment transactions are reflected in the Statement of Financial Position by Segment and Statement of Financial Performance by Segment to accurately present these financial statements.


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26.3 FINANCIAL POSITION BY SEGMENT –- 2017

Expressed in ‘000 US dollars GEF OPF PFF SFF Inter-fund balances

TOTAL UNESCO(Restated Note 5)

ASSETSCurrent AssetsCashandcashequivalents 80 989 72 975 44 524 16 116 – 214 604Short-terminvestments 251 25 914 422 344 24 686 – 473 195Accountsreceivable (non-exchangetransactions) 32 945 – 2 449 – – 35 394

Receivablesfromexchangetransactions 32 747 303 568 (97) 1 553

Inventories – 306 21 44 – 371Advancepayments 13 067 232 20 497 1 231 (184) 34 843Otherreceivables 4 035 10 118 5 799 799 (9618) 11 133

Total current assets 131 319 110 292 495 937 43 444 (9 899) 771 093

Non-current assetsAccountsreceivable (non-exchangetransactions) 1 989 – – – – 1 989

Long-terminvestments – – 1 607 – – 1 607Property,plantandequipment 532 235 2 780 2 535 161 – 537 711Intangibleassets 231 – 40 – – 271

Total non-current assets 534 455 2 780 4 182 161 – 541 578

TOTAL ASSETS 665 774 113 072 500 119 43 605 (9 899) 1 312 671

LIABILITIESCurrent LiabilitiesAccountspayableandaccruals (exchangetransactions) 5 153 1 832 15 191 1 070 (97) 23 149

Employeebenefits 30 111 2 418 15 283 829 – 48 641TransfersPayable 2 212 19 14 534 – – 16 765Voluntarycontributionswith conditions 260 – 72 015 – – 72 275Advancereceipts 37 366 341 50 039 113 – 87 859Borrowingscurrentportion 7 202 – – – – 7 202Othercurrentliabilities 3 498 1 237 12 354 6 220 (10708) 12 601

Total current liabilities 85 802 5 847 179 416 8 232 (10 805) 268 492

Non-current LiabilitiesEmployeebenefits 751 746 3 579 16 774 – – 772 099Voluntarycontributionswithconditions 182 – – – – 182Borrowingslong-termportion 8 502 – – – – 8 502Othernon-currentliabilities – 5 841 – – – 5 841

Total non-current liabilities 760 430 9 420 16 774 – – 786 624

TOTAL LIABILITIES 846 232 15 267 196 190 8 232 (10 805) 1 055 116

NET ASSETS/EQUITY (180 458) 97 805 303 929 35 373 906 257 555


72

26.4 FINANCIAL PERFORMANCE BY SEGMENT – 2017

Expressed in ‘000 US dollars GEF OPF PFF SFF Inter-fund transactions

TOTAL UNESCO

REVENUEAssessedcontributions 312 554 – 3 773 – – 316 327

Voluntarycontributions 17 479 3 813 240 595 – (609) 261 278

Otherrevenueproducingactivities 26 12 408 1 801 5 721 (180) 19 776

Other/miscellaneousrevenue 845 3 009 698 22 977 (13878) 13 651

Foreignexchangegains 18 911 613 948 3 186 (79) 23 579

Financerevenue 397 4 729 8 325 360 – 13 811

Inter-segmenttransfers 132 27 824 11 644 – (39600) –

Total revenue 350 344 52 396 267 784 32 244 (54 346) 648 422

EXPENSES Employeebenefitexpenses 204 466 21 058 84 297 22 024 (13378) 318 467

Consultants,externalexpertsand missioncosts 16 018 3 775 35 611 – (2622) 52 782

Externaltraining,grants andothertransfers 24 852 675 27 068 – (11838) 40 757

Supplies,consumablesandotherrunningcosts 26 428 8 430 23 244 1 828 (5246) 54 684

Contractedservices 19 825 2 959 96 715 689 (18) 120 170

Depreciationandamortization 15 285 910 1 386 64 – 17 645

Allowanceforassessedcontributions 77 393 – – – – 77 393

Otherexpenses 748 243 248 240 – 1 479

Financecosts 729 14 4 040 10 – 4 793

Inter-segmenttransfers 814 36 20 394 – (21244) –

Total expenses 386 558 38 100 293 003 24 855 (54 346) 688 170

SURPLUS (DEFICIT) FOR THE YEAR (36 214) 14 296 (25 219) 7 389 – (39 748)

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Bureau of Financial ManagementUnited Nations Educational,

Scientific and Cultural Organization 7, place de Fontenoy,

75352 Paris 07 SP, France

FINANCIAL STATEMENTS

2018

financial financial report and consolidated financial ...€¦ · a cash flow statement this...

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