world meteorological organization cg-18/inf. 9.6(3) world...

SFAO-19036 | External Auditor’s Report | 8 May 2019

World Meteorological Organization

WORLD METEOROLOGICAL CONGRESS

Eighteenth Session Geneva, 3 to 14 June 2019

Cg-18/INF. 9.6(3) Submitted by:

Secretary-General

21.V.2019

OVERSIGHT

REPORT OF THE EXTERNAL AUDITOR

Audit of 2018 Financial Statements World Meteorological Organization (WMO)

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SFAO-19036 | External Auditor’s Report | 8 May 2019 2

Swiss Federal Audit Office Monbijoustrasse 45 3003 Berne

Ordering address Suisse Ordering number 1.19036.952.00412.002

www.efk.admin.ch [email protected] twitter: @EFK_CDF_ SFAO

Additional information + 41 58 463 11 11

Reprint Authorized (please mention source)

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Table of contents

Executive summary ....................................................................................... Paragraphs 1 - 4

Regulations, standards and information ........................................................ Paragraphs 5 - 15

Follow-up of recommendations ..................................................................... Paragraphs 16 - 18

Internal control system ................................................................................. Paragraphs 19 - 72

Preparation of IPSAS-compliant financial statements ..................................... Paragraphs 73 - 79

Audit of 2018 financial statements .............................................................. Paragraphs 80 - 158

Conclusion ............................................................................................... Paragraphs 159 - 161

Annex 1: External Auditor’s report

Annex 2: Follow-up of recommendations from previous audits

Annex 3: Summary of findings concerning risk analysis

Annex 4: Additional entries

The mandate of externally auditing the financial statements of the World Meteorological Organization (WMO) is traditionally exercised by members of the supreme public financial auditing body of the country chosen. On the basis of this provision and further to its sixty-seventh session, the WMO Executive Council entrusted the Swiss Federal Audit Office (SFAO), in accordance with Article 15.1 of the WMO Financial Regulations, with the mandate of External Auditor of the WMO accounts for the period from 1 July 2016 to 30 June 2020

The mandate is defined in Article 15 of the WMO Financial Regulations and in the Additional Mandate for External Audits of the Accounts attached to those Regulations. Moreover, the mission is described and specified by the letter of 19 November 2015 confirming the mandate, the terms of which WMO accepted in its reply of 11 February 2016. The members of SFAO conducting the mandate perform their duties in an autonomous and independent fashion, with the support of their collaborators.

SFAO provides the services relating to the external audit of the WMO accounts completely independently of its role as the supreme financial oversight body of the Swiss Confederation. The SFAO has a team of highly qualified professionals, and enjoys extensive experience of auditing international organizations.

For further information, please contact:

Eric-Serge Jeannet, Deputy Director, Tel. +41 58 463 10 39, [email protected]

Didier Monnot, Mandate Officer, Tel. +41 58 463 10 48, [email protected]

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Audit of 2018 Financial Statements World Meteorological Organization (WMO)

Executive summary

1. The Swiss Federal Audit Office (SFAO) confirms that the audit of the financial statements for2018, presented in accordance with the International Public Sector Accounting Standards(IPSAS), has yielded a satisfactory result overall and that it is in a position to issue anunqualified audit opinion.

2. However, the account closing process and the preparation of financial statements regularlypresent a challenge to WMO. Improvements were made to the reconciliation of cash accountsand third party receivables. Other controls, of equal importance in the closing process, did notreceive the same attention. Certain accounts were closed late in the audit.

3. A special effort was made in 2018 to implement recommendations. WMO has made progresson the majority of the recommendations. Ten of the 17 open recommendations have beenfully implemented. The implementation of new procedures defined by WMO still remains tobe validated.

4. SFAO noted significant progress in project management. Estimates of the progress of projectswere deemed to be of good quality. The new IT tools should improve the circulation ofinformation within the organization, thereby enabling the financial service to present a fairview of the financial statements. There is still work to be done regarding reimbursements todonors and the presentation of activities to be carried out relating to voluntary contributions.

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Regulations, standards and information

Financial regulations and purpose of the audit 5. Financial years are regulated by the provisions of the Convention of the World Meteorological

Organization (WMO) and by the Financial Regulations, in accordance with the InternationalPublic Sector Accounting Standards (IPSAS).

6. The audit covered the WMO financial statements for the year ended 31 December 2018. Thesecomprise the Statement of Financial Position (financial statement I), the Statement of FinancialPerformance (financial statement II), the Statement of Changes in Net Assets/Equity (financialstatement III), the Statement of Cash Flow (financial statement IV), and the Statement ofComparison of Budget and Actual Amounts for the General Fund (financial statement V), aswell as a summary of the main accounting methods and other explanatory notes.

Auditing standards, information and acknowledgements 7. Audits were carried out in accordance with the International Standards on Auditing (ISA),1

consistent with the additional mandate which forms an integral part of the Organization’sFinancial Regulations.

8. The International Standards on Auditing specify the role that auditors must play in relation tothe risk of misstatements in the financial statements, whether due to fraud or error (ISA 240).Consequently, the External Auditor has applied special procedures in this area.

9. Where audit sampling was carried out, SFAO selected samples on the basis of risks or therelative size of the amounts recorded under the headings examined.

10. Minor issues which were clarified and discussed with those responsible in the course of thework are not covered in this report.

11. During the auditing process, members of SFAO team met with Ms E. Manaenkova, DeputySecretary-General, Mr W. Zhang, Assistant Secretary-General, Mr B. Cover, Chief of theFinance Division since 1 March 2019, Ms B. Cruz, Acting Chief of the Finance Division, Mr T.Mizutani, Chief of the Budget Office and Controller ad interim since 17 January 2019, andother staff from the finance department and other WMO departments.

12. SFAO wishes to emphasize the good cooperation and spirit of openness which characterizedthe auditing process. We also express thanks for the willingness with which information anddocuments were provided by all WMO staff whose cooperation was sought.

1 International Standards on Auditing (ISA), published by the International Auditing and Assurance Standards Board (IAASB).

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13. The audit findings were communicated at the final discussion on 18 April 2019. This meetingwas attended by Ms E. Manaenkova, Mr W. Zhang, Mr B. Cover, Ms B. Cruz and Mr T.Mizutani. The External Auditor was represented by Mr A. Baumann, Head of the CompetenceCentre, and Ms V. Bugnon, Audit Officer.

14. The original language in which this report was drafted is French, and we recall that it is theFrench text which is deemed to be authoritative.

Collaboration with the Internal Oversight Office 15. SFAO noted the work carried out by the Internal Oversight Office (IOO) and wishes once again

to emphasize the excellent collaboration maintained with the WMO internal audit unit. Inaccordance with ISA 610, the results of the work carried out by IOO and likely to be relevant toour audit procedures were taken into account.

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Follow-up of recommendations

16. The recommendations made in our previous closing audits were followed up. Theirimplementation status, which was examined at the end of March 2019, is set out below:

2015 Audit (carried out in 2016): Of the five recommendations made, one has beenimplemented.

2016 Audit (carried out in 2017): Of the six recommendations made, five have beenimplemented.

2017 Audit (carried out in 2018): Of the six recommendations made, four have beenimplemented.

In total, 10 of the 17 recommendations made have been implemented. Progress has been made regarding the majority of the other open recommendations. Annex 2 describes in greater detail the status of the recommendations that remain open.

17. The six new recommendations made following the closing audit of the 2018 accounts appearin this report.

18. SFAO notes that WMO has made a special effort in 2018 to implement its recommendations.These efforts focused mainly on updating the staff regulations and rules, as a result of whichthe design of the controls has been adapted. Experience within the organization has shownthat the weaknesses stem mainly from inadequate implementation of and compliance withcontrols. Therefore, SFAO encourages WMO to implement controls effectively and to complywith them on the basis of its new rules.

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Internal control system

19. The internal control system and the main processes which affect the financial statements areassessed on a multi-year basis and presented in the 2018 Audit Planning Report. The processesare covered by various audit missions, according to the following rotation schedule.

Process Evaluation Planned Rotation

2018 2019

Controls at the organizational level

IT general controls (ITGC)

Regular contributions and other income

Voluntary contributions and project management

Procurement

Travel

Human resources

Fixed assets

Closure of accounts/ preparation of financial statements

Key

There is a significant deficiency requiring urgent action, as ICS is unreliable.

A significant improvement is needed. There are regular

controls, but these are not standardized and/or depend heavily on individuals. ICS is informal in nature.

The results meet SFAO expectations.

Important processes covered by the external audit.

Important processes not covered by the external audit (rotation

principle).

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20. The audit opinion is also based on an assessment of the existence of formalized processes andkey controls stemming from an analysis of risks. The External Auditor does not comment ontheir sustainability or effectiveness. A distinction should be made between the audit of thefinancial statements and other types of audits, such as financial supervisory audits or theaudits performed by IOO, as the latter focus more on the operational aspects of processes andon the effectiveness of the related key process controls.

21. SFAO carried out a review of the internal control system during the interim audit, which tookplace in December 2018. This was followed up during the closing audit carried out inMarch 2019.

Controls at the organizational level Control environment

22. SFAO considers the WMO regulatory framework to be of good quality and has noted that it isupdated regularly according to a predefined process. Anti-fraud/anti-corruption guidelineswere incorporated in this framework in 2018. However, the post of Ethics Officer remainedvacant for part of 2018 and was filled ad interim by the Legal Counsel.

23. As regards the organizational structure of WMO, SFAO notes that communication andexchange flows between the different departments are relatively limited. SFAO feels that thecontrol culture is not sufficiently developed, mainly as a result of the lack of clear definitions ofeach staff member’s responsibilities. The establishment of risk and control matrices for mostof organization’s key processes (Human Resources, Procurement, ITSD, Agreements andProject Management) was validated at the end of 2018. It is expected that theseimprovements will help with the exchange of information.

24. SFAO notes that two financial posts remained unfilled during 2018, following the departure ofthe Chief of Finance and the Director of the Administration Department. These posts were notfilled after these individuals left, which affected the preparation and quality of the financialstatements.

25. With the increase in voluntary contributions, excellent project management skills havebecome a necessity. Poor project management skills may lead to significant risks for theOrganization. In October 2018, WMO put in place a documentation and project managementtool (ePM) to help project managers develop a project management culture within theOrganization.

26. SFAO noted in its previous audits that the governance of the Organization should lead byexample. A code of conduct for the governance bodies (Executive Council, Audit Committee,etc.) was drawn up and approved by the Executive Council in 2018. SFAO noted investigationsinto suspected fraud within WMO in the awarding of IT contracts (Capgemini, Lutech, UN ICC).The results of the enquiries did not confirm or disprove fraud. However, gaps and weaknessesin internal control were noted. The governance of the Organization has taken the necessarymeasures to address these shortcomings and must continue to do so.

Risk assessment

27. According to the WMO Risk Management Policy, the WMO Risk Management Committeeoperates under the supervision of the Deputy Secretary-General. This committee’s mission interms of risk policy and risk management is set out in Service Note No. 14/2010 of 12 August2010 (‟Risk Management Committee”). A service note issued on 6 March 2014 (4/2014,

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‟Implementation of risk management”) instructs department heads, programme managers and divisions to carry out a regular review of risks relating to their field of activity. The committee consolidates the results at the organizational level. The Risk Management Committee submits risk maps to the Audit Committee.

28. SFAO notes that following the departure of the Risk Manager, who was the Secretary of theRisk Management Committee made up of all the Directors, this committee did not meet in2018. No consolidation of the risks identified in each department has been carried out since2017. In 2018, the risks were addressed and evaluated informally. WMO is currently amendingits risk assessment and risk management process. It is expected that this process will beformalized in 2019.

Control activities

29. The controls are carried out primarily by the departments, which prepare an annual Statementon Internal Controls. The integration of risk and control matrices should make the bases forestablishing these controls clearer in the future.

30. According to the Financial Regulations, all commitments, obligations and expenditures requireat least two authorized signatures. They must first be signed (certified) by a duly designatedcertifying officer. After certification, a duly designated approving officer must sign to“approve” the establishment of the commitment, the recording of the expenditure in theaccounts and the processing of payments. Certifying officers are also responsible for managingthe use of resources.

31. As a result of the shortcomings in certification identified in 2017, WMO reviewed the processand regulations concerning the steps for validating expenditure, as well as the roles andresponsibilities of the certifying officers. SFAO points out that importance should be given toapplying processes and controls, and not simply to a review of the organization’s internalregulations.

Control monitoring

32. Following the recommendation made by SFAO in 2018, WMO designated the AssistantSecretary-General as the second line of defence. It also assigned the role of Controller adinterim to the Chief of the Budget Office, with effect from 17 January 2019. This role includesthe development, management and improvement of the Organization’s internal controlsystem, as well as responsibility for preparing and updating the documents relating to thecontrols, conducting a sampling procedure in order to ensure that the controls set out arefollowed, and making staff aware of the usefulness of the internal controls. Theimplementation of this monitoring remains to be demonstrated.

33. The control documentation was updated in 2018 by means of the review of key processes inthe Standing Instructions and the integration of flow diagrams and/or risk and control matricesfor the Human Resources, Procurement, ITSD, Agreements and Project Managementprocesses.

Travel process 34. The travel process (old and new) analysed by SFAO includes the activities and controls from

the start of the travel request to the advance payment of Daily Subsistence Allowances (DSAs)and airline tickets until the final closure of the purchase order.

35. Since 2014, two processes have been defined: the new process (80% of cases) handles travelfrom point A to point B. The Travel Unit has very little involvement in the control of this

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process, and WMO operates on the basis of trust between the person arranging the travel, the person travelling, and the person providing certification. The old process is still applied for travel in stages, with the close involvement of the Travel Unit.

Documentation

36. The travel process is described in several WMO documentary sources, namely various chaptersof the Standing Instructions, the Staff Regulations and Rules and the WMO FinancialRegulations. There is no complete, cross-cutting overview of the procurement process, and therisks, key internal controls and responsibilities are not clearly identified and described. A cleardescription of the processes, established across the Organization, would bring transparency tointernal control. A risk and control matrix based on these processes would clarifyresponsibilities.

Implementation and compliance

37. SFAO notes that the basic controls (especially for the new process), and in particular thoserelated to cost-effectiveness and the final validation of travel, are not documented, and thatthere are numerous exceptions to the rules in force, which should, in principle, always byvalidated by SG. In order to obtain competitive prices, the rule concerning reservation within aperiod of 16 days prior to the date of travel is not always respected. As DSAs are paid inadvance, eligibility for these allowances can only be verified on the basis of confirmation ofattendance at the meeting. Despite the obligation to forward requests for reimbursement oftravel expenses, plus supporting documents, within two weeks of travel, these documents areoften not sent. There are no checks on receipt of reimbursement requests and the penaltyreducing the DSA by 25% is never enforced.

38. Many purchase orders remain open until the end of the year, which means there is noguaranteed control of the budget. One of the consequences of this is the budgetaryreallocation exercise carried out in September, with the associated risk of budgetary depletionand poor cost-effectiveness. This situation relates to recommendation 5/2017. Without issuinga further recommendation, SFAO encourages WMO to carry out the final closure of purchaseorders systematically at the time of payment.

Multiple approvals

39. For each journey, the Travel Request Form (TRF) involves multiple validation steps which varyaccording to the organization of each directorate. Ideally, there are three TRF validations:Preparation, Approval and Authorization, to which additional validations, such as “Return” and“Delegate”, may be added. Thus, each stage of the approval process involves numerousindividuals. The inclusion of a large number of approvers makes the control ineffective. SFAOreported similar findings with regard to the procurement process in 2017, and issuedrecommendation 4/2018.

IT systems

40. Since the IT systems in place are ineffective and unsuitable for managing travel, the Travelprocess involves numerous activities and controls performed manually. As there is noautomatic workflow for the overall process, the existing systems do not guarantee itseffectiveness. As from 2019, the Travel Unit will be transferred to the Language, Conferenceand Publishing Services Department (LCP), and there will be a separation of tasks, whichshould avoid any conflict of interest within the LCP department between staff organizingconferences and those booking travel.

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SFAO professional assessment

SFAO notes that costs associated with travel represent a significant part of the organization’s expenditure, besides salary costs. In 2018, expenses amounted to 9.5 million francs. In the interests of economy, efficiency and effectiveness the ICS, the IT tools and the processes and resources should all function properly and cover the risks.

The rules in force should be applied and respected. Key controls should be clearly documented to allow the application of the rules to be traceable. In any future change to the IT system, an automatic workflow covering the whole process should be defined. The number of approvals required should not exceed two for each stage of the process.

Recommendation No. 1

SFAO recommends that WMO prepare a cross-cutting description of the Travel process, including a risk, control and responsibility matrix. The process should meet the objectives of efficiency and cost-effectiveness. The controls defined should then be implemented and applied.

Comment by the Secretary-General:

Recommendation accepted. WMO is in the process of reviewing and updating the processes supporting travel, with appropriate emphasis on efficiency and cost-effectiveness. In connection with the process update, WMO will develop a revised travel process description, including a risk and control matrix.

Planned implementation – 31 December 2019

Process for voluntary contributions and project management 41. In response to SFAO recommendations from previous years, WMO has defined a new project

management process in chapter 13 of the Standing Instructions. The process includes aresponsibilities and activities flow and a risk and control matrix. It should be noted that itrefers only to class 3 projects, namely development, technical assistance and technicalcooperation projects implemented in WMO member countries, which require rigorousnarrative and financial reporting and activities in the field. The projects in class 1 (support forregular programmes/activities) and class 2 (support for specific activities/events) are outsidethe scope of these instructions.

42. Because these instructions came into force in mid-December 2018, the projects under wayhave not yet been able to benefit fully from the new process, and SFAO notes that the controlsand activities that were already in place have not been fully applied. With regard to the“WISER HIGHWAY EWS East Africa” project, SFAO notes the following irregularities:

The amendment to the contract was signed by a department director, whereas contractsexceeding 200 000 CHF should be ratified by the Secretary-General.

The Concept Note was approved in March 2018, although the project started in October2017.

The Acceptance Checklist for the project was not completed. The project was not formally approved by PMB.

43. SFAO takes note of the controls carried out by the PCU to ensure that internal guidelines arecomplied with and that the documentation required since the new process came into effect iscomplete. In view of the implementation of these controls, SFAO declines to make a

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recommendation, but invites WMO to continue to ensure compliance with the rules and to train staff on the process.

44. This new process improves the exchange of information between the different departmentsand services. The key element is the development of a new document management system(Elios) and a project management application (ePM). An interface compatible with Oracle isenvisaged in the future.

45. Elios enables project documentation to be centralized. However, information is archived indifferent locations in Elios. PCU has developed a documentation structure for class 3 projects,while those in classes 1 and 2 are saved in other Elios locations.

46. The ePM application is used for managing all projects, from the preparation phase to thecompletion phase. Each project manager uses this tool to follow his or her projects,documenting the stages of the process. The tool is also used by PCU, both for overall controland for detailed control by project.

47. These tools make it easier to track project progress and improve the consistency of projectmanagement between departments Based on the information in ePM, PCU draws up a list ofprojects under way. This list is sent regularly to the Finance Division to ensure that the projectsare fully integrated in the accounts. However, the organization does not yet have an overall listof all the projects under way in all the classes.

48. However, SFAO notes that there is little integration in the new process of the importantactivities and controls carried out by the Finance Division. It includes neither the assessment ofthe classification of contracts according to IPSAS 23 or IPSAS 9, despite the fact that thiscontrol has a significant impact on the financial statements, nor verification of the recognitionof reimbursement of unused funds. Recommendations 1/2016 and 2/2016 remain open.

49. Along with these innovations, each manager now approves all the invoices related to his or herprojects in order to ensure that the expenditure exists and is correct. Project managers alsosign all the financial reports, including a budget comparison, jointly with the Finance Division.The integration of this review has increased the project manager’s responsibility in financialterms. All the implementing partners have been asked to submit a statement of progress atthe closing of accounts, according to a specific format. This request has improved theestimating of project progress, a task which was previously carried out by the Chief of Financealone.

50. WMO has also updated the “Agreements” chapter of the Standing Instructions, clearly definingthe review and validation steps for each type of contract. SFAO notes a voluntary financingcontract containing a clause that is both unclear and unachievable by the Organization. In thisclause, the donor requires the WMO External Auditor to audit the financial report on theproject, certifying that the contribution has been used in accordance with the contract, withinthree months of the year end. Failure to implement certain contract clauses could havefinancial and non-financial consequences for the Organization. This example illustrates theineffectiveness of contract reviews not based on WMO internal models, as set out in theAgreements process. SFAO invites WMO to improve its analysis of the contract clauses in orderto avoid the inclusion of conditions which WMO is unable to fulfil.

Procurement process 51. During its audit, SFAO analysed the database of suppliers, particularly the existence of

duplicates, and notes that around 200 suppliers appear twice or more in the database. Thisduplication mainly involves natural persons.

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The process for verifying the existence of a supplier before creating a new entry is judged ineffective. SFAO believes that entering supplier data in fields that are open in the Oracle system means that entry variants cannot be limited.


SFAO recommends that WMO review the supplier database regularly in order to avoid duplicates.


Recommendation accepted. An instruction will be issued to staff reminding them to follow the correct procedure when creating suppliers. A six-monthly audit will take place to ensure the database is reviewed and any duplication deleted.

Planned implementation – 30 June 2019

Closing process Controls for the closure of accounts and quality of the financial statements

52. The closing of accounts is carried out according to a closing programme which sets outdeadlines and responsibilities. As a concept, the programmes meet expectations; however, thetimely implementation and effectiveness of controls still need to be improved.

53. Significant shortcomings noted in the audit of the 2017 accounts have been addressed. TheUNDP and UNICC cash and receivables accounts have been reconciled and WMO has enteredthe adjustments in the books.

54. Despite improvements in certain controls, SFAO still finds shortcomings in the closing process.Although the financial statements were made available at the start of the audit, it is noted thatthe review of the financial statements and the closing activities and controls had still not takenplace by that date. Many entries were still being recorded between 4 March 2019, the start ofthe audit, and 28 March 2019, the date for delivering the second version of the financialstatements. These entries relate mainly to the clearance of accounts, for example thesuspense account, prepaid expenses and accrued liabilities, and were made followingquestions raised by the new Chief of Finance and SFAO.

55. SFAO points out that the principle of periodic adjustment requires significant efforts on thepart of WMO. The organization was not able to determine the balance of accrued liabilities at31 December 2018 or to supply the related documentation until the end of the audit. SFAOwishes to point out that the closure of this account took place more than a month after thetheoretical closure date. On the balance determined by WMO, the External Auditor proposesan audit adjustment of 244 475 CHF in respect of unjustified accrued liabilities (see Annex 4).

56. In view of the points mentioned above, recommendation 4/2016 remains open.

Interfund eliminations

57. As part of the preparation of WMO consolidated accounts, interfund transactions should beeliminated. These transactions mainly occur in the rebilling of IT or telecommunication costsbetween departments. Contributions between funds, for example, from the general fund to atrust fund, should also cancel each other out.

58. WMO has defined the elimination procedure. However, noting that the review of thepreparation of the elimination/consolidation entries did not allow certain errors to be

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identified, SFAO has proposed some audit adjustments (see Annex 4). Additional checks during the review of the interfund eliminations should be defined. The revenue account balances after eliminations, together with note 8.2 “Statement of financial performance by segment”, form an appropriate basis for the effective verification of consolidation entries. SFAO reminds WMO of the importance of carrying out a comprehensive review of the financial statements.

IT general controls 59. The Information Technology Services Unit has been reorganized and transferred from

the Administration Department to the Observation Department.

Password parameters

60. SFAO notes that the passwords in the Windows Active Directory and the Oracle System E-Business Manager are not optimal.

61. In the Windows AD, the blocking of an account after a set number of unsuccessful attempts isnot activated. According to the policy laid down, accounts should be blocked after fiveincorrect attempts.

62. According to the policy, passwords consisting of easy-to-guess combinations of characters,such as abcd1234*, are allowed.


SFAO is of the opinion that sub-optimal password parameters increase the risk of abuse.


SFAO recommends that WMO strengthen the security of password parameters, first by activating account blocking after a set number of unsuccessful attempts for the Windows AD, and second by defining and prohibiting in the password policy sequences or combinations of characters that can be easily reproduced in systems.


Recommendation accepted. WMO has already implemented an Account Lockout Threshold (after 5 failed attempts in Active Directory). WMO is introducing dual factor authentication and will investigate solutions including password strength as part of the implementation of the modern work space project, noting that the latter might require additional funding as this is not natively supported in Windows.

Planned implementation – 30 October 2019

Access to data and critical systems

63. A review of Oracle E-Business Suite access rights was carried out in October 2018. Thesignatures of department heads (business owners) certifying that access rights are up to dateand appropriate still need to be obtained.

64. A review of the accounts in the Active Directory for which the HR department is responsiblewas carried out, and the necessary changes were made.

65. A review of the administrator, service and generic accounts and the e-mail boxes managed bythe IT department had not yet been completed as at 10 December 2018

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SFAO is of the opinion that failure to carry out a periodic review of access rights places the Organization at risk of unauthorized persons accessing information outside their responsibilities.


SFAO recommends that WMO institutionalize a periodic review of Oracle E-Business Suite and Active Directory access rights, ensuring that all matrices are reviewed and approved in an identifiable manner by the business owners.


Recommendation accepted. The annual review of access rights has been added to the duties of the Chief Information Security Officer (CISO). The initial review is currently in the consultation process, which involves business owners.

Planned implementation – 30 June 2019

66. SFAO notes that three accounts (UNICC, CONCJOB and SYSADMIN) have administrative rightsfor the Oracle E-Business Suite system. These accounts are not personal, and transactionscarried out via these accounts are therefore anonymous. SFAO also notes that the use of theseaccounts is not supervised.

67. Two default accounts (APPSMGR and INDUSTRY DATA) exist within the Oracle E-Business Suite.These are not blocked, and they have either no password or a known password.

68. SFAO also notes that default and/or non-personal accounts exist in the Oracle E-BusinessSuite’s productive database. The use of these accounts has not been approved and noprocedures defined. Furthermore, SFAO notes that they are accessed with non-personalaccounts that have administrative roles.

69. SFAO notes that there are a number of non-personal accounts that provide access to theActive Directory, the use of which is not clearly defined. IOO also learned during an inquiry intothe misuse of privileged access rights that transactions conducted with an administrator profileare not controlled.


SFAO believes that administrative rights should be restricted to appropriate and personalized tasks. Administrator accounts must be supervised when used. There is no reason to keep the default accounts. The current situation increases the risk of an unauthorized user accessing data and conducting fraudulent transactions.


SFAO recommends that WMO replace non-personal administrator access rights with more restricted, personalized access rights. Specific procedures should apply to the use of administrator accounts (authorization, unblocking, log review, etc.). All default accounts must be blocked and disabled. Where necessary, WMO must take steps with the ICC to improve access security.

Comment by the Secretary-General

Recommendation accepted. Access to privileged functions for impersonal System Administrator accounts (SYSADMIN, CONCJOB and UNICC) have been reviewed and restricted to minimum required levels. The use of remaining admin accounts is being monitored by the CISO on a quarterly basis, with periodic review of activity within quarters done by both the CISO and

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other management with IT. WMO has assessed the impact of disabling default accounts APPSMGR and INDUSTRY DATA in Oracle EBS development environment as low. The implementation is scheduled in Production environment before 31 May 2019. The process for monitoring of authorization of admin accounts is under review.

Planned implementation – Completed by 31 May 2019

Planning and monitoring batch jobs

70. SFAO notes that planned programmes are conducted with the SYSADMIN user, even thoughthe CONCJOB batch jobs user is available. SFAO encourages WMO to use the dedicatedCONCJOB account to perform planned work processed in the background.

ISAE 3402 report

71. The International Computing Centre (ICC) provides services to WMO such as the operation ofthe Oracle application.

72. In its work during December 2018, SFAO took note of the ISAE 3402 (Type 2) report of ICCproduced by PwC for the period from 1 January to 31 December 2017. SFAO noted thereservations in this report and will monitor developments. The report for 2018 will bepublished during 2019.

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Preparation of IPSAS-compliant financial statements

73. The WMO 2018 financial year was closed in accordance with IPSAS. These standards constitutea rapidly changing accounting framework and require constant updating of knowledge and ofthe presentation aspects of the financial statements.

74. In 2018, IPSAS 39 “Employee Benefits”2 came into effect, replacing IPSAS 25. Application ofIPSAS 39 did not require a restatement of opening balances related to actuarial liabilities.

75. The next changes will be made in 2019 when IPSAS 40 “Public Sector Combinations”,3 willcome into effect, then in 2022 when IPSAS 41 “Financial Instruments”4 and IPSAS 42 “SocialBenefits”5 will come into effect.

76. IPSAS 40 will have no impact on the WMO financial statements, unless a public-sectorcombination occurs.

77. IPSAS 41 will replace IPSAS 29 “Financial Instruments: Recognition and Measurement”. Themain differences are as follows:

Application of a single classification and measurement model for financial assets thatconsiders the characteristics of the asset’s cash flows and the objective for which the assetis held.

Application of a single forward-looking expected credit loss model that is applicable to allfinancial instruments subject to impairment testing.

Application of an improved hedge accounting model that broadens the hedgingarrangements in scope of the guidance.

78. IPSAS 42 provides guidance on accounting for social benefits expenditure. It defines socialbenefits as cash transfers paid to specific individuals and/or households to mitigate the effectof social risk.

79. The standards require retroactive application, which implies that opening balances will have tobe retreated. The balances at 1 January 2021 will therefore have to be retreated at the closingof the 2022 accounts.

2 https://www.ifac.org/publications-resources/ipsas-39-employee-benefits 3 https://www.ifac.org/publications-resources/ipsas-40-public-sector-combinations 4 https://www.ifac.org/publications-resources/ipsas-41-financial-instruments 5 https://www.ifac.org/publications-resources/ipsas-42-social-benefits

Cg-18/INF. 9.6(3), p. 19


Audit of 2018 financial statements

STATEMENT I – BALANCE SHEET

Cash and cash equivalents 80. The balances as at 31 December 2018 for the various cash accounts amounted to CHF 88

million (CHF 68 million at the end of 2017).

81. At 31 December 2017, the control accounts had not been cleared for several years and had acumulative balance of CHF 115 974. At end-2018, WMO cleared these accounts, and thebalances stood at zero. Only one petty cash control account had a balance of CHF 921, thereason being that the cash was in transit.

82. To limit the amount of petty cash within regional offices, WMO introduced the Swiss bankersvalue card. These cards work as prepaid cards. At 31 December 2018, the petty cash balance ofthe regional offices amounted to only a few francs.

83. Unlike in 2017, SFAO obtained evidence for each account at 31 December 2018, through abank confirmation, bank statement or cash register. As required, the accounts were reconciledat closing. SFAO encourages WMO to continue conducting monthly reconciliations, in keepingwith the WMO Financial Regulations (Rule 111.9).

84. As was the case in previous years, only individual signing rights are required for some bankaccounts, as per the confirmations of business relationships received at 31 December 2018 (forexample, for the Banco National de Costa Rica). The Finance Division informed SFAO thatindividual signing rights were sometimes necessary in the regional offices, where thesegregation of duties was not feasible, given the small number of staff on site. SFAO declinesto issue a recommendation, but still wishes to mention this point.

85. While no anomaly was found in the accounts, SFAO notes that the treasurer has write accessto the general accounts.

Cg-18/INF. 9.6(3), p. 20



SFAO feels that the treasurer’s role should be segregated from accounting functions, or cross checks should be used to mitigate risks.


SFAO recommends that WMO review the segregation of duties within the Finance Division, adapts IT access or puts in place cross checks.

Comment by the Secretary-General

Recommendation accepted. A review of the segregation of duties, particularly with respect to the Treasurer’s functions regarding initiating accounting transactions, and the implementation of required process modifications and/or of compensating controls will be performed.

Planned implementation – 30 September 2019

Statutory contributions 86. Short-term receivables tied to contributions amounted to CHF 12.0 million (CHF 17.1 million at

the end of 2017). Long-term receivables tied to contributions amounted to CHF 0.3 million(CHF 0.4 million at the end of 2017). This decline was mainly due to contributions from twoMember countries.

87. SFAO was able to validate the provision relating to statutory contributions. Provisions aremade for outstanding contributions if the Member country loses its right to vote. This is thecase if it does not comply with its payment obligations two years in a row. It regains the rightto vote and the provision is released if the amount due is paid or if the country agrees tofollow a payment plan.

Voluntary contributions 88. Short-term receivables tied to voluntary contributions amounted to CHF 21.0 million (CHF 20.3

million at the end of 2017). Long-term receivables tied to voluntary contributions amounted toCHF 6.8 million (CHF 4.4 million at the end of 2017).

89. Based on a selection of new contracts (pledges) signed in 2018, SFAO confirmed that openbalances existed and that the contracts were correctly recorded in the accounts. Only onecontract concerning the PRO NEWS programmes was the subject of discussions during theaudit. WMO considered this project to be a transaction with a counterparty (IPSAS 9), whileSFAO feels that the contribution received had no direct counterparty. This contract should berecognized in accordance with IPSAS 23. SFAO therefore recommended that the amount ofCHF 143 737 be recognized in the income statement (see Annex 4). Both the income and thereceivable should be recognized as transactions with no direct counterparty.

90. Contracts with contributors (pledges) always include additional clauses stating that the totalcontract amount is released only if the annual budget of the contributor is approved by itsparliament. Under these conditions, the annual instalment approved by the parliament isrecorded as a receivable and the remainder as a contingent asset.

91. SFAO notes that the Finance Division has improved its recognition of contingent assets. SFAOrequested only one adjustment concerning a contribution that does not fulfil the definition ofa contingent asset under IPSAS 19 (see Annex 4).

Cg-18/INF. 9.6(3), p. 21


Inventory 92. The inventory shown in the balance sheet represented a value of nearly CHF 61 000 (CHF 63

000 at the end of 2017), consisting mainly of souvenirs. Owing to the materiality thresholds,the auditors did not carry out any specific detailed procedures in this section.

Advances for projects and meetings 93. Advances for projects and meetings amounted to CHF 7.1 million (CHF 3.3 million at the end of

2017). In 2017, the amount of advances decreased substantially because the Climate ServicesAdaptation Programme in Africa, funded by Norway, came to an end. In 2018, numerousadvances were not paid until year-end. The related expenses will be realized from 2019.

94. In its previous audits, SFAO noted the difficulty of obtaining financial progress reports in timeto enter the expenses correctly in the profit and loss account. A further difficulty arose in thatthe reporting period rarely coincides with the year-end closing. At 31 December 2018, WMObegan the process of requesting costs to date from each implementing partner. The rate ofresponse was satisfactory. For one advance paid to an implementing partner, the estimatedcosts to date were sent to WMO after account closing and could not be taken intoconsideration. SFAO recommends reducing advances by CHF 354 765 and recognizing therespective expenses and income (see Annex 4).

Other short-term receivables 95. Other short-term receivables amounted to CHF 3.9 million (CHF 5.4 million at the end of 2017).

They mainly included prepaid expenses, tax owed to the USA, a deposit with UNDP andeducation grants.

96. A confirmation of balances with the United Nations Development Programme (UNDP) wasestablished. WMO has two types of relationship with UNDP, reflected by the Service ClearingAccount (SCA) and the Project Clearing Account (PCA). Following SFAO’s recommendation,WMO reconciled the balances at 31 December 2018. Consequently, WMO made anadjustment of CHF 84 542 in expenses, under finance costs.

97. For prepaid expenses and the suspense account, respective adjustments of CHF 248 129 andCHF 1 044 137 were made by WMO during the audit. The balances of these accounts were notreviewed at closing.

98. Taxes owed to the USA of CHF 1.3 million included advances paid to WMO employees of CHF675 195 and recoverable taxes of CHF 599 543. In 2018, the US tax authorities refused toreimburse part of the amount claimed by WMO for the 2014 to 2016 financial years owing to adifference in the calculation method. Following this refusal, WMO had to write down thereceivables by CHF 123 657.

99. For the tax years for which a tax rebate has already been requested from the US taxauthorities, WMO conducted an estimate based on the expected repayment amount. Based onthe decision for the 2014 to 2016 financial years, WMO set aside a provision of CHF 73 020.

100. There is no provision for the advances to employees in the amount of CHF 675 195. The risk of loss is deemed low. Advances for a given tax year can be carried over to subsequent years. SFAO nevertheless notes that the balance includes a receivable of CHF 468 798 relating one employee. SFAO is of the opinion that the process for allocating and paying advances must place limits on amounts. There is a risk for the Organization if the employee leaves WMO.

Cg-18/INF. 9.6(3), p. 22


101. As of the 2019 tax year, the Staff Regulations have been amended. WMO will only reimburse the taxes received by the tax authorities. WMO will not cover any additional costs.

102. The provision for other receivables mainly covers the risks on other receivables and tax assets concerning the USA. SFAO notes that the provision for other debtors of CHF 167 635 was recognized twice. SFAO recommends an audit adjustment (see Annex 4).

Interests in joint ventures and associates 103. In accordance with IPSAS standards 34-38, WMO recognizes its share of the income of Data

Buoy Cooperation Panel, the Joint WMO/ICSU/IOC Climate Research Fund and the Global Climate Observing System using the equity method. Interests in joint ventures remained stable in 2018, at CHF 1.6 million.

104. Following a calculation error, SFAO recommended an adjustment of CHF 67 000 to the amount for interests in joint ventures and associates.

Property, plant and equipment 105. The closing balance sheet shows an amount of CHF 72.1 million in respect of property, plant

and equipment (CHF 78.1 million at the end of 2017). This item includes property, plant and equipment, office furniture and fittings, as well as computer equipment.

106. IPSAS 17 ‟Property, Plant and Equipment” applies to the accounting treatment in the balance sheet of the building owned by WMO. For reference, the fair value of the building for the IPSAS opening balance sheet in 2010 was estimated using the depreciated replacement value method. Note 2 of the annexes to the financial statements states in this connection that the building was valued on the basis of historical cost (as per IPSAS 17, paragraph 43).

107. The calculation of annual depreciation recorded is currently based on this method, in line with IPSAS. As the useful lives were not in line with the accounting manual, WMO commissioned CBRE, a company specializing in real estate valuation, to provide an independent valuation of the building. Modification of the useful lives of the components resulted in higher depreciation in 2017, of CHF 8.8 million.

108. During the audit of the 2017 financial statements, SFAO undertook an assessment of the CBRE report. SFAO noted differences in the entry of the new useful lives in the WMO system. In 2018, WMO updated the useful lives of the components based on the SFAO recommendation in the report on the 2017 financial statements. When checking the 2018 accounts, SFAO noted that the useful lives entered in the WMO system were still inaccurate. The necessary corrections were finally made outside the system for the 2018 account closing.

109. SFAO also observed that the useful lives of different components are grouped together in the WMO system. This method means that the components cannot be monitored in the event that parts of the building are removed or replaced. SFAO recommends reorganizing the data by component in the WMO system in 2019.

Intangible assets 110. An amount of CHF 116 000 appears in the accounts as at 31 December 2018 (CHF 311 000 at

the end of 2017) as intangible assets. This amount was checked and did not give rise to any particular comments.

Cg-18/INF. 9.6(3), p. 23


Payables and accruals 111. The sum of CHF 4.4 million (CHF 2.9 million at the end of 2017) appears in the closing balance

sheet as payables and accruals.

112. As mentioned above in the paragraphs concerning the internal control system, ineffective controls gave rise to several adjustments identified by SFAO. As in 2017, no provision was made for the cost of the 2018 external audit (CHF 140 000). A number of adjustments for accruals totalled CHF 244 475 (see Annex 4).

Contributions received in advance 113. Contributions received in advance came to CHF 9.9 million at the end of the year (CHF 10.7

million at the end of 2017). They comprised regular contributions from Member States which were paid in 2018 but relate to the 2019 financial year. These amounts were checked to ensure that the income period was properly adjusted.

114. A voluntary contribution received in advance of CHF 296 100 was recognized in accordance with IPSAS 9. WMO considers there to be a service in return. This contribution covers costs for activities that took place starting in February 2018. WMO did not apportion the income at 31 December 2018. SFAO therefore recommended recognizing income of CHF 212 789 (see Annex 4).

Deferred income 115. Short-term deferred income was CHF 37.0 million (CHF 33.6 million at the end of 2017), and

long-term deferred income was CHF 16.7 million (CHF 4.5 million at the end of 2017).

116. SFAO reviewed a significant proportion of the contracts relating to voluntary contributions received during the 2018 accounting year in order to validate the periodic apportioning of income and the accounting treatment in accordance with IPSAS 23. Not including the adjustment and the recommendation concerning provisions for repayments to donors (see the section on provisions), SFAO detected no other anomalies.

117. With regard to the presentation of the accounts, SFAO considers that short-term deferred income of CHF 33.6 million at end-2107 could have been recognized as income in 2018. 2018 income amounted to just half the short-term deferred income in 2017. SFAO therefore reiterates its statement concerning the incoherent apportioning between short-term and long-term deferred income. In an earlier version of the 2018 financial statements, short-term deferred income amounted to CHF 48.3 million. It seemed inappropriate to consider that projects and activities in that amount would be conducted in 2019 given the size and capacity of WMO. During its audit, SFAO therefore asked for the breakdown of deferred income to be reviewed. WMO analysed 13 projects representing CHF 37 million of the short-term deferred income at 31 December 2018. CHF 10.9 million was reclassified from short-term to long-term deferred income (see Annex 4).

118. Without issuing a recommendation, SFAO encourages WMO to more accurately estimate the breakdown between short- and long-term deferred income.

119. This incoherence is due to deferred income not being adjusted to actual project progress. WMO is facing cumulative delays on several projects, which is now reflected in the deferred income balance. Therefore, the Finance Division should work with project managers to adjust the apportioning of deferred income between the short term and the long term on an annual basis.

Cg-18/INF. 9.6(3), p. 24


Loans and other financial liabilities 120. WMO borrowed funds from FIPOI for the construction of its building. The nominal amount

stood at CHF 44.3 million (CHF 45.8 million at the end of 2017). An amount of CHF 1.4 million appears in the balance sheet under short-term financial liabilities. This sum is in line with the annual repayment schedule.

121. The loan has been updated with a rate of 2.43% and recognized in the balance sheet as CHF 31.2 million (CHF 1.4 million short term). The annual expenses for updating the loan amounted to CHF 0.8 million.

122. IPSAS standards require the presentation of contributions in kind for services below the market value. Given that the loan is non-interest-bearing and that the land was made available free of charge, WMO is receiving benefits in kind amounting to CHF 1.9 million per annum. The nominal amount of the debt with FIPOI is consistent with confirmation of the latter.

Provisions 123. The sum of CHF 698 000 (CHF 31 000 at the end of 2017) appears in the closing balance sheet

under provisions.

124. Provisions primarily represented reimbursements to donors of voluntary contributions in the amount of CHF 695 654 at end-2018. During its review of trust funds to be wound up, SFAO observed three cases in which the funds had not been spent even though the projects had ended. A provision of CHF 665 909 should have been made for the amounts to be reimbursed to donors (see Annex 4). SFAO reiterates the need for checks and for information to be centralized and shared between departments. Recommendation 1/2016 is therefore still open.

125. According to the Legal Counsel, WMO has a number of legal cases to deal with.

126. Even though these are personnel-related disputes, the WMO legal counsel deals with them without involving the human resources department. The Swiss Federal Audit Office notes also that the WMO Legal Counsel has difficulty evaluating those cases in accordance with IPSAS and quantifying their impact on the financial statements as at 31 December 2018. The Swiss Federal Audit Office has requested that the contingent liabilities be updated to a total of CHF 1.2 million in the annex to the financial statements (see Annex 4). No need for a provision is indicated as at 31 December 2018.

Funds held in trust 127. As the trust funds do not manage cash accounts, finance flows (payments) pass through a

current account managed by WMO. This balance totalled CHF 14.8 million in 2018 (CHF 11.4 million at the end of 2017).

128. The most significant balances concern GIEC-IPCC (CHF 7.1 million), SMOI-GEO (CHF 4.4 million), GCOS (CHF 1.3 million), JCRF (CHF 1.0 million) and ESCAP (CHF 0.8 million). They were reconciled at the end of 2018. The checks did not give rise to any comments.

Employee Benefits Employee benefits: ASHI

129. WMO has a contractual obligation to finance medical care by subsidising medical insurance premiums for retired employees (Article 6.2 of the Staff Regulations).

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130. WMO current financial statements show a provision for ASHI (health insurance fund) of CHF 61.1 million on the liabilities side (CHF 69.5 million at the end of 2017), a decrease compared with the 2017 financial year. The decrease in the provision was justified by an independent actuarial valuation.

131. The decrease in this provision in 2018 was essentially due to a change in certain actuarial assumptions. Actuarial gains amounted to CHF 9.5 million in 2018. They arose primarily from the increase in the discount rate and the reduction in the rate of change in health-care costs. Payments of benefits in 2018 reduced the provision by CHF 1.5 million. Interest and the additional year of service led to an increase in the actuarial debt of CHF 2.7 million.

132. With regard to the accounting technique, SFAO notes that the Organization has adopted the ‟Other comprehensive income” (OCI) method for recognizing actuarial gains and losses. This option is consistent with the guidelines of the new IPSAS 39 applied from 1 January 2018, and no figures needed to be restated.

Employee benefits: repatriation grants

133. WMO has an obligation to pay civil servants repatriation grants (Article 9.4 of the Staff Regulations).

134. The provisions entered in the accounts at 31 December 2018 as repatriation grants amounted to CHF 5.7 million on the liabilities side (CHF 5.4 million at the end of 2017), and were justified by an actuarial valuation.

135. The increase in the provision was primarily due to the additional year of service, which was offset by the increase in the discount rate from 3.2% in 2017 to 4.0% in 2018 and the benefits paid in 2018.

Employee benefits: accumulated leave

136. WMO has an obligation to grant home leave to civil servants (Article 5.3 of the Staff Regulations).

137. Provisions for accumulated leave were entered under liabilities for an amount of CHF 3.0 million (CHF 3.2 million at the end of 2017) and were justified by an actuarial valuation. The discount rate increased from 3.1% in 2017 to 3.9% in 2018.

Actuarial assumptions

138. SFAO has verified the actuarial assumptions used by the actuary to calculate the commitment at 31 December 2018.

139. The actuarial assumptions used are in conformity with current market conditions and with the characteristics of WMO.

Data to be submitted for the actuarial study

140. SFAO carried out verifications of the data submitted to the actuary for the actuarial calculations as at 31 December 2018.

141. During the closing audit of 31 December 2015 (recommendation 8/2016), SFAO noted that there was no formalized control mechanism for ensuring that the data is submitted correctly. SFAO invited WMO to formalize a control mechanism and procedure to ensure that the

Cg-18/INF. 9.6(3), p. 26


relevant data submitted for the actuarial calculation of commitments relating to employee benefits was comprehensive and reliable. As part of the follow-up to recommendations, a control mechanism was put in place in 2018. SFAO does not think that this control mechanism meets its objectives or is effective. Final approval by the Human Resources Division occurred after the accounts were closed and after the report signed by the actuary was received. Moreover, SFAO once again noted that the data submitted contained several errors. For two people, it was not clear which organization (WMO or IPCC) should bear responsibility for the commitment. WMO must clarify this. Recommendation 8/2016 is therefore still open.

Employee benefits reserves 142. The reserves presented in Note 3.16 of the financial statements were validated by SFAO and

comprise three elements:

CHF 8.2 million, representing the net actuarial gain arising from actuarial valuations ofemployee benefits. This amount was verified based on the actuary’s report.

CHF 1.9 million, representing the post-retirement benefits reserve. The reserve is financedby the 3% payroll deduction. SFAO verified the inflows and outflows.

CHF 0 million, representing the recruitment and termination reserve. The reserve isfinanced by the 4% payroll deduction. The reserve had a negative balance and SFAOtherefore recommended an adjustment to bring it to zero (see Annex 4). The overuse ofthis reserve must be recognized in personnel costs.

143. SFAO notes that the use of reserves in 2018 exceeded allocations. Over the long term, if no additional allocations are made, the reserves will not be sufficient to cover future expenses.

STATEMENT II – INCOME STATEMENT

144. Expenditure and income were subjected to analytical checks and sampling based on the materiality threshold applied during the audit. The adjustments made are explained in the corresponding balance sheet sections.

Cg-18/INF. 9.6(3), p. 27


145. Data analyses (journal entries testing) were also conducted in collaboration with KPMG. They concerned manual entries and comprised specific tests (unusual users and entries, entries recorded at the end of the period, adjustment entries, etc.). This work provided a reasonable assurance of the accuracy of the expenditure and income recorded for 2018.

146. WMO is still having difficulties presenting expenditure according to the principles of continuity. Similar expenses are presented in different accounts from one year to another. Recommendation 4/2016 is therefore still open.

STATEMENT III – NET ASSETS / EQUITY 147. SFAO reviewed the Statement of Changes in Net Assets/Equity (financial statement III) and

made no particular observations.

STATEMENT IV – CASH FLOW 148. SFAO reviewed all the positions on the Statement of Cash Flow (financial statement IV), and

checked that the amounts shown matched the changes in balances between the opening and closing of the balance sheet.

STATEMENT V – AUDIT OF 2018 BUDGET IMPLEMENTATION 149. Although the financial statements are prepared on an annual basis under IPSAS, the WMO

programme and budget cover the biennium 2018-2019. Checks were carried out on the information contained in financial statement V and in Note 7 to the financial statements. In accordance with IPSAS 24, SFAO checked the budget information for the year 2018 in financial statement V (Original budget amount). This was reconciled with the information presented at the sixty-ninth session of the Executive Council.

150. From 2014 to 2017, WMO reported significant actual losses (CHF 13.7 million in 2017, CHF 15.9 million in 2016, CHF 21.9 million in 2015 and CHF 14.8 million in 2014). SFAO notes that the actual loss in 2018 was reduced by half compared with 2017 (CHF 7.6 million in 2018). However, each year the budget presents balanced figures. There are various reasons for this discrepancy. Depreciation of fixed assets, which totalled CHF 6.1 million, had a major impact. Like the impact of IPSAS 39 for employee benefits, this is not included in the budget.

151. Indeed, the budget is based solely on the General Fund, and more precisely the transactions in fund 211000. However, the comparison between the budgeted amounts and expenditure (Note 7) is based on fund 211000 and the general fund family.

152. Not including the general fund family, there are around 200 additional trust funds, called extrabudgetary funds, in the WMO accounts. They are not included in the budget monitoring.

NOTES 153. SFAO audited the notes in parallel to the balance sheet and profit and loss account positions. It

proposed a number of modifications between the first version of the financial statements and the final version. The points for improvement are mentioned in the ICS section of this report.

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Note 8.2 Segment reporting 154. In the financial statements, WMO presents five segments. They are defined as follows:

General Fund (financed from the regular budget) Support programmes / activities Events & awards Development, technical assistance & technical cooperation Nationally owned technical assistance

155. Each trust fund is allocated to a segment, which allows a logical and understandable distribution of assets, liabilities, revenue and expenditure.

156. IPSAS 18, concerning segment reporting, provides for segments according to the internal reporting structure. These could be according to service areas or geographical areas. A grouping according to the type of trust funds reflects the respective activities of the services offered by WMO. Consequently, the structure follows the logic proposed by IPSAS.

157. Internal reporting is defined by the fact that the segments are reported to the governing body and accompanied by budgets. This is not the case at WMO, despite an internal decision on new segments dating from 2015. Segment reporting fulfils the IPSAS requirements, which are also applicable in the absence of internal reporting.

Note 11.3 Other commitments 158. The balance of purchase orders at the end of 2018 was CHF 6.5 million (CHF 10.7 million in

2017), after corrections proposed by SFAO (see Annex 4). The balance of the commitments included advances already paid to implementing partners, as well as some items from 2009. Consequently, recommendation 5/2017 is still open.

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Conclusion

159. Following the work carried out, SFAO can confirm that the WMO 2018 financial statements are presented in accordance with IPSAS. In light of the materiality threshold predefined on the basis of the International Standards on Auditing, it can also confirm that the accounting data published in the financial statements reflects WMO accounting.

160. SFAO notes that its recommendations were actively followed in 2018. It is now time to implement and comply with the design of the controls.

161. SFAO is therefore able to issue the audit opinion attached to this report, which has been drawn up in accordance with paragraph 5 of the Additional Mandate for the External Auditing of the Accounts (annex to the WMO Financial Regulations).

SWISS FEDERAL AUDIT OFFICE

(External Auditor)

Eric-Serge Jeannet Andreas Baumann Deputy Director Head of the Competence Centre

Annexes:

1) External Auditor’s Report

2) Follow-up of recommendations from previous audits

3) Summary of findings concerning risk analysis

4) Additional entries

Cg-18/INF. 9.6(3), p. 30


Annex 1: External Auditor’s Report

To the Executive Council of the World Meteorological Organization (WMO)

Report on the audit of the financial statements

Opinion

SFAO has audited the financial statements of the World Meteorological Organization, namely, the Statement of Financial Position as at 31 December 2018, the Statement of Financial Performance, the Statement of Changes in Net Assets/Equity, the Statement of Cash Flow and the Statement of Comparison of Budget and Actual Amounts for the year then ended, as well as the annexed notes, including a summary of the main accounting methods.

In the opinion of SFAO, the financial statements present fairly, in all material aspects, the financial position of WMO as at 31 December 2018 as well as its financial performance and cash flow for the year then ended, in accordance with the International Public Sector Accounting Standards (IPSAS) and the WMO Financial Regulations.

Basis for the opinion

SFAO has performed its audit in accordance with the International Standards on Auditing (ISA). Its responsibilities under these standards are described in detail in the section ‟Responsibility of the auditor for the financial statements audit” in the present report. SFAO is independent of WMO, in accordance with the rules of professional conduct that apply to financial statements in Switzerland, and it has discharged the professional duties incumbent upon it according to those rules. It believes that the audit evidence it has obtained is sufficient and appropriate to provide a basis for its opinion.

Responsibility of the Secretary-General for the financial statements

The Secretary-General is responsible for the preparation and fair presentation of the financial statements in accordance with IPSAS and the WMO Financial Regulations, as well as any internal controls deemed necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

During preparation of the financial statements, the Secretary-General is responsible for evaluating the capacity of WMO to continue as a going concern, for communicating any issues that may arise regarding its continued operation and for applying the relevant accounting principle, unless the Secretary-General intends to liquidate WMO or cease its activities, or if it can find no other realistic solution.

It is the responsibility of the governance officers to oversee the WMO financial information reporting process.

Responsibilities of the auditor for the financial statements audit

The auditor’s objectives are to obtain reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether due to fraud or error, and to issue an

Cg-18/INF. 9.6(3), p. 31


audit opinion. Reasonable assurance means a high level of assurance, but this does not guarantee that an audit performed in compliance with ISA standards will always enable every material misstatement to be detected. Misstatements can be the result of fraud or error, and they are considered material when it is reasonable to expect that individually or collectively, they may influence the financial decisions taken by users of the financial statements on the basis of those statements.

When performing an audit in accordance with ISA standards, SFAO exercises its professional judgement and adopts a critical approach throughout the audit. In addition:

SFAO identifies and evaluates the risk that the financial statements contain materialmisstatements, whether as a result of fraud or error, develops and implements auditprocedures in response to this risk, and gathers adequate and appropriate evidence onwhich to base its opinion. The risk of failing to detect a material misstatement resultingfrom fraud is higher than in the case of a material misstatement due to an error, as fraudcan involve collusion, falsification, deliberate omissions, false declarations or circumventionof the internal control system;

SFAO acquires an understanding of the aspects of internal control that are relevant to theaudit in order to develop appropriate audit procedures, and not to express an opinion as tothe effectiveness of the WMO internal control system;

SFAO assesses the appropriateness of the accounting methods used and thereasonableness of the accounting estimates made by the Secretary-General, as well as ofthe related information provided by the latter;

SFAO draws a conclusion regarding the appropriate use by the Secretary-General of theaccounting principle of “going concern” and, according to the evidence obtained, as to theexistence or otherwise of material uncertainty connected with events or situations likely tocast significant doubt on the capacity of WMO to continue its operations. If SFAO concludesthat there is material uncertainty, it is obliged to draw the attention of readers of its reportto the information concerning this uncertainty contained in the financial statements or, ifthe information is insufficient, to express a modified opinion. Its conclusions are based onthe evidence obtained up to the date of its report. However, future events or situationscould cause WMO to cease operation;

SFAO evaluates the overall presentation, form and content of the financial statements,including the information provided in the notes, and assesses whether the financialstatements represent the underlying operations and events in such a way as to give a truepicture.

SFAO notifies the governance officers of the planned scope and timetable for the audit and of its key findings, including any major internal control failures it has noted during the audit.

Bern, 8 May 2019

SWISS FEDERAL AUDIT OFFICE6

(External Auditor)

6 Mailing address: Monbijoustrasse 45, CH-3003 Bern

Cg-18/INF. 9.6(3), p. 32


Eric-Serge Jeannet Andreas Baumann Deputy Director Head of the Competence Centre

Cg-18/INF. 9.6(3), p. 33


Annex 2: Follow-up of recommendations from previous audits

As mentioned in paragraph 18, this annex describes in greater detail the situation at mid-April 2019 concerning the recommendations made in the audit reports for the financial statements of 2015 (Audit 16127), 2016 (Audit 17085) and 2017 (Audit 18068), which are still open. This situation is as follows:

Summary table of open recommendations

Audit report Recommendations

No. Date No. Type7 Unit Planned implementation date

19036 08.05.2019 1 SCI ADM/TRAVEL 31.12.2019

19036 08.05.2019 2 SCI ADM/PCTD/TRAVEL 30.06.2019

19036 08.05.2019 3 SCI/IT ITS/OBS 30.10.2019

19036 08.05.2019 4 SCI/IT ITS/OBS 30.06.2019

19036 08.05.2019 5 SCI/IT ITS/OBS 31.05.2019

19036 08.05.2019 6 SCI ADM/FIN 30.09.2019

18068 16.04.2018 3 SCI ADM/FIN 31.12.2019

18068 16.04.2018 6 IT/HR ITCSD/HR 31.12.2019

17085 02.05.2017 5 SCI ADM/BO 31.12.2019

16127 20.04.2016 1 SCI ADM/FIN&BO, DRA/PCU

31.12.2019

16127 20.04.2016 2 SCI ADM/FIN&BO, DRA/PCU

31.12.2019

16127 20.04.2016 4 SCI ADM/FIN&ITCSD 31.12.2019

16127 20.04.2016 8 SCI ADM/FIN 31.12.2019

Recommendation No. 1 of audit report 18068 of 16 April 2018 on the audit of the 2017 financial statements

SFAO recommends that each WMO expenditure, without exception, be approved by a certifying officer who fulfils the responsibilities described in the financial rules of the Organization.

7 FS: Recommendations concerning the financial statements, presentation of the accounts and accounting

ICS: Recommendations concerning the internal control system

IT: Recommendations concerning information technology

Cg-18/INF. 9.6(3), p. 34


Comment by the Secretary-General: The recommendation is accepted. The three non-compliance cases identified by the external auditors are regrettable. Certifying officers should be involved in all expenditure categories without exception. WMO will ensure full compliance with the Financial Rules and Regulations (Deadline: May 2018).

Follow-up in December 2018 and March 2019: Chapter 5 of the Standing Instructions, “Financial, budget and internal oversight”, was updated to ensure that each expenditure would be approved by a certifying officer. The development of the controls was finalized in January 2019. The controls have not yet been implemented, but no exceptions were noted in 2018. This recommendation is closed.


SFAO recommends that WMO assign one of its senior managers the task of overseeing the internal control system of the Organization. This person would be responsible for preparing and updating the documents relating to the controls, conducting a sampling procedure in order to ensure that the controls set out are followed and making the staff aware of the usefulness of the internal controls.

Comment by the Secretary-General: The recommendation is accepted. The responsibility for the second line of defence for the internal control system role will be given to the Assistant Secretary-General (ASG) so that the control system may be reinforced (Deadline: June 2018).

Follow-up in December 2018 and March 2019: The Assistant Secretary-General was made responsible for the second line of defence on 21 December 2018. This recommendation is closed. It still needs to be shown that these tasks and responsibilities have been implemented for the 2019 financial year.


SFAO recommends that WMO implement a control with regard to creating an accounting entry for an asset. The person given the corresponding responsibility should attach his/her approval to each invoice so that the invoice may be capitalized. Key information such as the amount, the date the asset became operational, the asset category and its useful life should be reviewed by a second person.

Comment by the Secretary-General: The recommendation is accepted. Within the context of the internal control, WMO will improve the description of the acquisition process of fixed assets in order to clearly identify “process owners” and “control owners” (Deadline: June 2018).

Follow-up in December 2018 and March 2019: A control was described in Chapter 10 of the Standing Instructions, “Procurement and contract management”. The implementation of this control could not be verified for the 2018 financial year because the instructions were approved in mid-December 2018 and no fixed asset acquisition and activation occurred. This recommendation has therefore been partially implemented.


SFAO recommends that WMO review the procurement process in its entirety in order to improve the efficiency of the process.

Cg-18/INF. 9.6(3), p. 35


Comment by the Secretary-General: The recommendation is accepted. WMO will simplify the expenditure approval process with the objective of making it more efficient and effective. When appropriate, project managers will be included in the approval process (Deadline: end of 2018).

Follow-up in December 2018 and March 2019: Chapter 10 of the Standing Instructions, “Procurement and contract management”, was revised. This recommendation has been implemented.


SFAO recommends that WMO comply with the financial rules for determining and approving ex gratia payments.

Comment by the Secretary-General: The recommendation is accepted. WMO will duly report ex gratia payments to the Audit Committee, the Financial Advisory Committee (FINAC) and the Executive Council. WMO will take measures to fully comply with the financial regulations and rules with regard to ex gratia payments. WMO will include references to ex gratia payments in human resources documents and other relevant regulatory documents and will ensure that the relevant competent authority is clearly indicated (Deadline: June 2018).

Follow-up in December 2018 and March 2019: Chapter 4, “Human Resources”, and Chapter 10, “Procurement and contract management”, of the Standing Instructions were modified to include additional details regarding ex gratia payments and to ensure that the financial regulations are applied. There was no new ex gratia payment in 2018. This recommendation is closed.


SFAO recommends that WMO remove the administrator access rights of the person in question by the end of January 2018 and review the actions of the user in Oracle from 1 October 2017 until the removal of those rights. SFAO also recommends that a control be established in conjunction with the Human Resources Department to ensure that the access of users leaving WMO is deactivated in a timely manner.

Comment by the Secretary-General: The recommendation is accepted. WMO will implement the proposed measures (Deadline: June 2018).

Follow-up in December 2018 and March 2019: The access rights of the person in question were removed. In December 2018, a new process was introduced for employees leaving WMO. However, SFAO has identified persons whose access was removed at a date subsequent to the date they actually left WMO. This recommendation has been partially implemented.

Recommendation No. 1 of audit report 17085 of 2 May 2017 on the audit of the 2016 financial statements

SFAO recommends that WMO take steps to ensure that a control matrix is introduced into the description of the most important processes used by the departments.

Comment by the Secretary-General: The recommendation is accepted. WMO will progressively include information about risks and related controls in the description of its key organizational processes as part of their ongoing documentation.

Cg-18/INF. 9.6(3), p. 36


Follow-up in December 2017: No progress has been observed. This recommendation is still open.

Follow-up in December 2018 and March 2019: A risk and control matrix has been added to the “Human Resources”, “Procurement and contract management”, “Agreements with external entities”, “Project management” and IT processes and chapters of the Standing Instructions. SFAO feels that a risk and control matrix still needs to be added to the Travel process. A new specific recommendation has been issued. The 2017 recommendation has been closed.


SFAO invites WMO to implement a control for the approval of project costs. During the procurement process, the project manager should be one of those responsible for approving invoices related to the projects for which he or she is responsible.

Comment by the Secretary-General: The recommendation is accepted. The project managers’ responsibilities will be described in greater detail to ensure that those responsibilities regarding procurement and financial management are clearly explained.

Follow-up in March 2018: No progress has been observed. This recommendation is still open.

Follow-up in December 2018 and March 2019: The project manager is now included in the invoice approval process. This recommendation has been implemented.


SFAO recommends that WMO include in every financial report of a project a comparison of the incurred costs and budgeted costs. Costs must be regularly approved by the project manager according to the progress of the project, but at a minimum at the end of each year. The project manager must approve the accuracy and completeness of the costs incurred in his/her project annually with a signed version of the report.

Comment by the Secretary-General: The recommendation is accepted. The finance portal, which is currently under development, is expected to facilitate the generation of financial reports showing actual expenditure and budgeted amounts. The portal is expected to go live as of 1 January 2018.

Follow-up in December 2017: Development of the finance portal is underway. It is due to go live in January 2018.

Follow-up in March 2018: No progress has been observed. This recommendation is still open.

Follow-up in December 2018 and March 2019: The financial reports for a project now include a comparison of the costs incurred and the budget. The report prepared by the finance division is reviewed and approved by the finance manager. This recommendation has been implemented.


SFAO encourages WMO to use a single payment system that can automatically retrieve the necessary information from a single database.

Comment by the Secretary-General: The recommendation is accepted. One of the main objectives for 2017 is to identify and implement solutions to directly transfer payment

Cg-18/INF. 9.6(3), p. 37


instructions from the financial system to financial institutions. Considerable progress is expected by the end of the year.

Follow-up in December 2017: WMO has taken steps to evaluate the use of a single payment system. The project is ongoing. This recommendation is still open.

Follow-up in December 2018 and March 2019: The Mammut application has been updated, which has increased the level of security. This recommendation is considered to be closed.


SFAO invites WMO to review on a regular basis and at the closing of accounts the list of purchase orders and to eliminate all errors. Under the ‟other commitments” note, all advances should be deducted.

Comment by the Secretary-General: The recommendation is accepted. As has been the case in the past, WMO will continue to review open purchase orders on a regular basis, particularly for the year-end closure of accounts. At the monthly closure of accounts, special attention should be paid to the status of the receipts for open purchase orders to ensure that accruals are accounted for accurately.

Follow-up in March 2018: SFAO obtained a list of ‟other commitments” just a few days before the end of the audit. It notes the existence of items from 2009 and negative amounts. It concludes that the review of the list of purchase orders was not part of the closure of accounts control tasks. This recommendation is still open.

Follow-up in December 2018 and March 2019: Many purchase orders open at 31 December 2018 included in the accrued liabilities were not justified. The advances were not deducted from “Other commitments”. This recommendation is still open.


SFAO invites WMO to reconcile annually its account balance with UNDP and to eliminate any discrepancies.

Comment by the Secretary-General: The recommendation is accepted. The discrepancies will be eliminated in 2017.

Follow-up in March 2018: The balance with UNDP shows significant discrepancies. The amount indicated on the UNDP confirmation does not reconcile with the WMO accounts, and the discrepancies are not explained. This recommendation is still open.

Follow-up in December 2018 and March 2019: WMO has reconciled its account balance with UNDP. The differences have been eliminated. This recommendation is closed.


SFAO invites WMO to centralize project-related information and to process it on an interdepartmental basis. Information such as the progress of a project, interactions with the donor concerning extending the project duration, or funds reimbursements should be included.

Cg-18/INF. 9.6(3), p. 38


Comment by the Secretary-General: The recommendation is accepted. WMO will establish the necessary procedures to centralize project-related information and to make it available to internal stakeholders as part of the Project Management Tool project.

Follow-up in December 2016: WMO has chosen three centralized project management tools (MS project, Oracle and Elios). WMO departments are not yet working with a shared information base, and access to the software has not been clearly defined. The connecting element and the structure between the project number, budget code, trust fund and pledge number have not yet been defined. This recommendation is still open.

Follow-up in March 2018: SFAO notes that some funding contracts were not forwarded to the finance division in time for inclusion in the year-end accounts. Consequently, inclusion of all the pledges in the end-of-year closure is not assured.

To date, there is no exhaustive list of ongoing projects in progress used by the finance division, the budget office and the WMO departments. Additionally, the WMO Internal Oversight Office notes in its 2018-02 report that the Elios application is not used in a uniform manner.

This recommendation is still open.

Follow-up in December 2018 and March 2019: The majority of the information has been centralized. However, SFAO notes that funds reimbursements are still not included in the centralized information. Audit adjustments to recognize provisions for the repayment of unused funds have been identified. This recommendation has been partially implemented.


SFAO invites WMO to prepare a description of the project management process, from the acceptance of voluntary funds to completion of the project and any potential reimbursement. The description should include all the departments and managers involved and the key controls carried out. One key control should be validation of the overall accounting treatment for each project.

Comment by the Secretary-General: The recommendation is accepted. Initial steps have already been taken in this respect with the preparation of a project management handbook which was recently approved by the Project Management Board. WMO will now endeavour to implement the procedures defined in this document throughout the Organization.

Follow-up in December 2016: With the drawing-up of the project management guidelines and handbook, WMO is making progress in its aim of improving project management. With the definition of a project life cycle, WMO has outlined the most important stages of a project. If the monitoring of the process in general and the controls in particular are to be effective, both the owner and the object of the control must be clearly defined. The process does not give an overview of how voluntary contributions are processed with the controls performed by different departments (for example, annual review of trust funds, annual review of accounting treatment). This recommendation has been partially implemented.

Follow-up in December 2017: No progress has been observed. This recommendation is still open.

Follow-up in December 2018 and March 2019: The new Chapter 13 of the Standing Instructions, “Voluntary contributions and project management”, includes a description of the project management process. This chapter focuses mainly on the administrative and operational management of projects. It includes relatively few activities and controls that ensure that voluntary contributions are correctly recorded and reported under IPSAS. These

Cg-18/INF. 9.6(3), p. 39


controls should be described and documented. This recommendation has been partially implemented.


SFAO invites WMO to systematically establish clear reconciliations and relevant supporting documents for the account balances and to define a control in order to ensure the correct assignment of expenditure and income. Quality assurance for these tasks for preparation of the financial statements should be strengthened.

Comment by the Secretary-General: The recommendation is accepted.

Follow-up in March 2017: Reconciliations were prepared for the close of the 2016 financial year. However, a sample of entries in the expenditure accounts showed that certain positions were incorrectly assigned. Audit procedures for the assignment of expenditure are included in the closing checklist (point 73) but are ineffective. This recommendation is still open.

Follow-up in March 2018: During the final audit, SFAO noted major shortcomings in the reconciliation of the cash accounts. The reconciliation of the UNDP and UNICC accounts also proved difficult and had not been carried out in time for the start of the audit. According to the 2017-02 IOO report, challenges concerning the correct assignment of expenditure accounts persist, which SFAO can confirm. This recommendation is still open.

Follow-up in December 2018 and March 2019: Progress has been made on the reconciliation of UNDP and UNICC cash and receivables accounts. However, other closing controls, such as the clearance of suspense accounts, accrued liabilities and prepaid expenses, have been set aside. In addition, controls are missing for interfund eliminations. This recommendation remains open.


SFAO invites WMO to improve the system for estimating project costs, particularly for projects on which the Organization works with implementing partners.

Comment by the Secretary-General: The recommendation is accepted. WMO will take steps to improve its project management practices.

Follow-up in March 2017: WMO has had some difficulties with estimating project costs, caused by its operational partners. Despite the requests sent by the finance division, the partners do not always reply. For them, the reporting deadline is authoritative. In the absence of confirmation from its partners, WMO is unable to give an estimate. SFAO has noted cases where project progress according to the accounts does not correspond to reality (such as Norway II, for example). This recommendation is still open.

Follow-up in March 2018: Same observation as in 2017. WMO is not in a position to proceed with a sufficiently precise apportionment of expenditure incurred for projects (such as Climandes II, for example). The recommendation is therefore still open.

Follow-up in December 2018 and March 2019: A control has been put in place. Requests for progress estimates from implementing partners have been satisfactorily answered. This recommendation has been implemented.

Cg-18/INF. 9.6(3), p. 40



SFAO invites WMO to formalize a control mechanism and procedure to ensure that the relevant data submitted for the actuarial calculation of commitments relating to employee benefits (IPSAS 25) is comprehensive and reliable. Moreover, the baseline data used by the expert and the methodology applied should also be subject to an a posteriori control based on the actuarial report.

Comment by the Secretary-General: The recommendation is accepted.

Follow-up in December 2016: WMO prepares the data carefully. However, the control procedure cannot be verified. This recommendation is still open.

Follow-up in March 2018: The errors detected by SFAO in the data submitted to the actuary for the calculation of commitments relating to employee benefits as at 31 December 2017 show that the control mechanism needs to be strengthened. The recommendation is therefore still open.

Follow-up in December 2018 and March 2019: WMO informed SFAO that a control was put in place and implemented for the 2018 closure. This control does not meet the objectives and is not efficient. The Human Resources Division gave its final approval after the accounts were closed and the signed report was received from the actuary. In addition, SFAO again found data delivery errors. For two individuals, it is not clear which organization (WMO or IPCC) should be responsible for the commitment. WMO should clarify this. This recommendation is still open.

Cg-18/INF. 9.6(3), p. 41


Annex 3: Summary of findings concerning risk analysis

The following table sets out the main points of the audit programme and the risk analysis and includes a summary of the findings of SFAO during the fifth year of its mandate.

Significant Risk # 1 SFAO Audit Approach

Management could invalidate or override controls, requirements or directives.

Assessment of control environment Audit material manual accounting entries

and testing with an element ofunpredictability

Analytical reviews (including potential exgratia payments)

Use of analysis tool (JET) Follow-up of prior year’s audit

recommendations issued by SFAOfollowing the audit of the WMO financialstatements

Audit finding The WMO internal control system was audited for the 2018 financial year, particularly with regard to travel, procurement, voluntary contributions, project management and the preparation of IPSAS-compliant financial statements. Recommendations are made in this report.

Cg-18/INF. 9.6(3), p. 42



Application of IPSAS

The financial statements

include amounts based on

estimates and assumptions

by management.

There is a possibility that

the year-end financial

statements do not entirely

comply with IPSAS

requirements.

Testing whether the new accountingstandards in 2018 have been adhered to(if applicable)

Critical review of application of IPSAS 39 Review of critical accounting policies Discussion and plausibility checks of

accounting estimates Review of the year-end financial

statements Focus on changes in the standards and

new business activities and particulartransactions

Testing of transactions Follow-up of prior year’s audit

recommendations issued by SFAO

Audit finding IPSAS standards are constantly changing. In 2018, IPSAS 39 entered into force. Keeping up to date with this accounting framework requires an investment of time and resources. WMO has succeeded in maintaining a good standard of quality in the compliance of its financial statements with IPSAS requirements. SFAO continues to encourage WMO to follow the changes in the IPSAS standards and to study their impact on its financial statements.


Revenue recognition,

collection of accounts

receivable and weaknesses

in monitoring projects

Review of accounting policy forvoluntary contributions (IPSAS 23)

Audit of significant contracts signed in2018

Review of project progress Testing of recoverability of accounts

receivable Follow-up of prior year’s audit

recommendations issued by SFAO onproject management

Audit finding Checks were carried out on income and voluntary contributions in order to ensure proper accounting treatment. The audit procedures included analyses of project management and the control environment for voluntary contributions. Open recommendations from previous audits were partially implemented. Audit adjustments were proposed.

Cg-18/INF. 9.6(3), p. 43



Cash balances and

transactions with other

United Nations entities

Confirmation of balances Audit of reconciliations Follow-up of prior year’s audit

recommendations issued by SFAO onproject management

Audit finding The balance confirmations and balance recognitions carried out by WMO have certified the existence, accuracy and completeness of the balances as at 31 December 2018. The open recommendation has been implemented.

Cg-18/INF. 9.6(3), p. 44


Annex 4: Additional entries

The following table sums up the additional entries noted during the audit procedures on the financial statements as at 31 December 2018.

Unadjusted additional entries (Sum of unadjusted differences)

No. Amount Description Type Result for the financial year

- - - - -

Adjusted additional entries (Sum of adjusted differences)


1 104 697 Depreciation on the building Reclassification of a correction of depreciation on the building

P/L 0

2 354 765 Project advance Release of the advance and recognition of related expenses and income

P/L 24 828

3 167 635 Provision for other receivables Provision recorded twice

P/L 167 635

4 67 000 Interest in joint ventures Error in the calculation of the equity method for joint ventures

P/L -67 000

5 123 204 COS and IT expenses Allocation of COS and IT expenses to GCOS in connection with interfund eliminations

P/L 123 204

6 62 828 Reclassification of consulting services Reclassification in connection with interfund eliminations

P/L 0

Cg-18/INF. 9.6(3), p. 45



7 140 000 2018 audit fees Expenses for the 2018 audit to be specified

P/L -140 000

8 82 000 Reclassification of COS expenses Reclassification in connection with interfund eliminations

P/L 0

9 73 431 Recruitment & termination benefits reserve Overspending of the reserve

P/L -73 431

10 10 867 102 Deferred income Reclassification of short-term to long-term deferred income

BS 0

11 212 789 IPSAS 9 revenue, SEE-MHEWS contract Recognition of IPSAS 9 revenue based on the progress of activities

P/L 212 789

12 244 475 Accrued liabilities Unjustified accrued liabilities

P/L 244 475

13 147 424 Provision for reimbursement to the donor – German JPOs Missing provision

P/L -147 424

14 371 589 Provision for reimbursement to the donor – IGAD HYCOS Phase II Missing provision

P/L -371 589

15 146 896 Provision for reimbursement to the donor – USAID Missing provision

P/L -146 896

16 950 684 Voluntary contribution receivables

Reclassification of receivables from short-term to long-term

BS 0

17 18 080 Update of voluntary contribution receivables Update of long-term receivables reclassified in accordance with adjustment 16

P/L -18 080

18 143 737 PRO NEWS project Reconsideration of the PRO NEWS project according to IPSAS 23 instead of IPSAS 9

P/L 0

Cg-18/INF. 9.6(3), p. 46



19 300 000 Contingent liability Update of a contingent liability concerning an ongoing case before the joint appeals board

Note 0

20 900 000 Contingent liability Update of a contingent liability concerning an ongoing case before the joint appeals board

Note 0

21 1 079 082 Contingent asset Contract that does not meet the definition of a contingent asset

Note 0

22 6 823 578 Other commitments Correction to Other commitments concerning advances already paid and unjustified open purchase orders

Note 0

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