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  • Annual Audit Work Plan

    External Auditor

    World Intellectual Property

    Organization

    For the period

    June 2013 to May 2014

  • Overall Audit Strategy Document for Audits of WI PO for the year 2013-2014

    Introduction

    1. This document aims at detailing the external audit assignments planned for the period June 2013 to May 2014. We will perform our audit in conformity with the International Standards of Auditing.

    Audit Mandate

    2. Chapter 8 of the Financial Regulations of WIPO and its Annex II define the mandate for the External Auditor. As per Regulation 8.10, the External Auditor shall issue an opinion on the financial statements for each year of the financial period, and a report on the audit of the financial statements for the financial period, which shall include such information as the External Auditor deems necessary with regard to matters referred to in Regulation 8.5 and in the annex to the present Regulations referred to in Regulation 8.4.

    3. Broadly, two outputs are expected from the External Auditor of WI PO. These are:

    The External Auditor is required to express an opinion on whether the financial statements fairly represent the financial position and results of the operations, that the financial statements were prepared in accordance with the stated accounting policies, that the accounting policies were applied on a consistent basis and on the compliance of transactions with the Financial Regulations and legislative authority.

    The External Auditor is required to submit a report on the financial operations to the WIPO. This report may include observations on the efficiency of financial procedures, accounting system & transactions, internal controls and, in general, the administration and management of the Organization.

    Audit Approach

    4. As in 2012, a comprehensive audit approach is planned for the current audit cycle to address our mandate and terms of reference. This would integrate:

    Financial attest auditing Compliance auditing Performance Audit

    l iPage

  • 5. The working relationship with the WIPO management has been constructive and the- audits performed at different levels - were facilitated by excellent cooperation from the Finance as well as other wings. The Internal Control environment will be-evaluated to decide the extent of relia-n-ce thereon- basea on which the nature and extent of substantive audit testing will be determined. Coordination has been established with the office of the Internal Audit and Oversight Division to avoid duplication of effort.

    6. While developing our annual work plan, we have consulted senior management of WIPO inviting them to make suggestions for audits that would address areas of concern.

    7. WIPO has established nine Strategic Goals, which provide the framework for Medium Term Strategic Plan and Biennial Program and Budget. These goals are expected to be achieved through 31 programs. Strategic goal wise allocation of funds is placed at Annex I .

    8. We had carried out risk assessment of WIPO during July 2012 taking into account the specificities of the organization. Based on risk assessment conducted with reference to strategic issues, financial materiality, compliance and operational issues, we have prioritized the programs for audits for the year 2012-18.

    Financial Audit objective

    9. WI PO has switched over to IPSAS with effect from 2010 and has prepared the 2010 financial statements in accordance with IPSAS. The Audit strategy will include attest functions of the financial statements and providing an opinion on the financial statements prepared under IPSA$. Our opinion and report shall conform to the requirements prescribed in the relevant clauses of 'Financial Regulation 8' and 'terms of reference governing External Audit' as set out in the Annex to the WIPO financial regulations. This will involve examination and evaluation of financial records to obtain competent, relevant and reasonable evidence to support our conclusions. The overall objective is to ensure that the Financial Statements are f ree from material misstatements and the underlying transactions comply with WIPO regulat ions.

    Performance Audit objective

    10. The areas for performance audit will be selected on the basis of the quantum of resources allotted to them and the risk that the operations have not been carried out with due regard to economy, efficiency and effectiveness.

    Compliance Audit objectives

    11. In compliance audit, we will examine the propriety of transactions and compliance to rules and regulations of WIPO, and report cases, if any, of wasteful

  • and improper expenditure. The focus of audit will be on enabling corrective measures to prevent recurrences and to recommend changes that may be needed to the system of internal controls, their adequacy and implementation.

    Financia ls of WIPO for t he biennium 2012-13

    12. The Budget for 2012-2013 provided a link between the Strategic Goals and the 31 programs of WIPO. The budget is monitored by the Program Budget Committee of the Assembly. The projected income and expenditure of WI PO in the last two bienniums are as under:

    Table No.1 {in mmions of Swiss Francs)

    Biennium 2010/2011 Biennium 2012/2013

    Income

    Contributions 34.8 34.9

    Fees from PCT System 446.2 480.6

    Fees from Madrid System 106.0 104.4

    Fees from Hague System 7.4 11.2

    Other Income 24.2 16.4

    Total Income 618.6 647.4

    Expenditure

    Personnel 405.4 413.4

    Non-Personnel 213.3 234.0

    Tot al Expendit ure 618.6 647.4

    13. The programs accounting for highest allocations are as below:

    Table No. 2 (in m illions of Sw iss Francs)

    Name of the Program Budget allocation for

    biennium 2012/13

    The PCT System 179

    Madrid and Lisbon System 52

    Information & Communication technology 50

    General Support Services 46

    Conference & Language Services 37

    3jP age

  • Africa, Arab, Asia and the Pacific, Latin America and 35 -- -- - ------ ---- - -- the Caribbean Countries, Least Developed Countries

    14. WIPO being a knowledge centric organization, spends 64 percent of its budgetary resources on personnel costs which include posts, short term professional, consultant and short term employees. Non Personnel costs include travel and fellowships, contractual services, operating activities and equipment and supplies. On the receipt side, unlike other UN bodies, it has its own sources of funding namely fees received from private parties for providing services. The contribution of Member States accounts for only 5.4 percent of resource generation. The biggest source of revenue for WIPO is the PCT Union followed by Hague and Madrid Unions.

    15. Over the years, WIPO has built up substantial reserves (surplus income from fees that exceed the amounts required to finance the program and budget appropriations) which are invested as per the Investment Policy of WIPO. A portion of the reserves are also utilized for financing specific projects. To that extent some of the projects are actually not part of the Program Budget. Some of the significant programs t hat are being funded out of reserves include ERP, capital investment in IT, etc. A separate report is presented to the Assembly on utilization of Reserves.

    Audit Coverage during 2012

    16. Following was the Audit coverage during 2012.

    Year Financial Financial Performance audit Compliance Audit

    audit of audit of

    interim annual

    f inancial financial

    st atements statement s

    2012 Geneva (2 Geneva {4 Performances audit Compliance Audit of

    weeks) weeks) of 'Patent 'sourcing and engagement

    Cooperation of special service

    Treaty' agreements and

    commercial service

    providers'

    PROPOSED AUDIT COVERAGE FOR 2013-14

    17. The probable risk areas were discussed by the Sr. Director, Ext ernal Audit and his team with the head of IAOD, head of Finance and Financial Controller. Based on the discussions, past audit coverage and risk assessment following is proposed for financial, performance and compliance audit during 2013-14.

    4 1P a ge

  • 18. Financial Audit: Interim audit of the Financial Statements of first three quarters for the year 2013 is-proposedto be carried out at Geneva (as was done for 2012 accounts) for two weeks (November 2013). Final audit will be conducted for four we-eks during- April/May 2014 at Geneva.

    19. Performance Audit: Based on the discussion with the management and areas identified in our risk assessment report, performance Audit topics of 'Madrid and Lisbon Systems', Strategic Realignment Programme, 'Human Resources Management and Development', 'Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries' and 'ERP systems' were considered for audit during 2013.

    (i) Madrid and Lisbon Systems- Madrid and Lisbon system accounts for the 2nd highest budget allocation of CHF 52 million during 2012/13 and was considered as high risk in our risk assessment. However, internal audit would be covering this topic during 2013 and therefore inclusion of this topic in our work plan would amount to duplication of effort.

    (ii) Human resource management- Staff costs account for 64 per cent of the expenditure. Thus, human resource appears as a major risk area from the financial point of view. Further, based on our previous year audits, issue of resources and mismatch of skills of human resource was noticed. However, reports on human resource management were presented both by external auditors and internal auditors in 2011.

    (iii) Strategic Realignment Program (SRP) is the fl

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