Annual Audit Work Plan External Auditor. World Intellectual Property Organization

Transcription

1 Annual Audit Work Plan External Auditor World Intellectual Property Organization For the period June 2013 to May 2014

2 Overall Audit Strategy Document for Audits of WI PO for the year Introduction 1. This document aims at detailing the external audit assignments planned for the period June 2013 to May We will perform our audit in conformity with the International Standards of Auditing. Audit Mandate 2. Chapter 8 of the Financial Regulations of WIPO and its Annex II define the mandate for the External Auditor. As per Regulation 8.10, the External Auditor shall issue an opinion on the financial statements for each year of the financial period, and a report on the audit of the financial statements for the financial period, which shall include such information as the External Auditor deems necessary with regard to matters referred to in Regulation 8.5 and in the annex to the present Regulations referred to in Regulation Broadly, two outputs are expected from the External Auditor of WI PO. These are: The External Auditor is required to express an opinion on whether the financial statements fairly represent the financial position and results of the operations, that the financial statements were prepared in accordance with the stated accounting policies, that the accounting policies were applied on a consistent basis and on the compliance of transactions with the Financial Regulations and legislative authority. The External Auditor is required to submit a report on the financial operations to the WIPO. This report may include observations on the efficiency of financial procedures, accounting system & transactions, internal controls and, in general, the administration and management of the Organization. Audit Approach 4. As in 2012, a comprehensive audit approach is planned for the current audit cycle to address our mandate and terms of reference. This would integrate: Financial attest auditing Compliance auditing Performance Audit l ipage

3 5. The working relationship with the WIPO management has been constructive and the- audits performed at different levels - were facilitated by excellent cooperation from the Finance as well as other wings. The Internal Control environment will be-evaluated to decide the extent of relia-n-ce thereon- basea on which the nature and extent of substantive audit testing will be determined. Coordination has been established with the office of the Internal Audit and Oversight Division to avoid duplication of effort. 6. While developing our annual work plan, we have consulted senior management of WIPO inviting them to make suggestions for audits that would address areas of concern. 7. WIPO has established nine Strategic Goals, which provide the framework for Medium Term Strategic Plan and Biennial Program and Budget. These goals are expected to be achieved through 31 programs. Strategic goal wise allocation of funds is placed at Annex I. 8. We had carried out risk assessment of WIPO during July 2012 taking into account the specificities of the organization. Based on risk assessment conducted with reference to strategic issues, financial materiality, compliance and operational issues, we have prioritized the programs for audits for the year Financial Audit objective 9. WI PO has switched over to IPSAS with effect from 2010 and has prepared the 2010 financial statements in accordance with IPSAS. The Audit strategy will include attest functions of the financial statements and providing an opinion on the financial statements prepared under IPSA$. Our opinion and report shall conform to the requirements prescribed in the relevant clauses of 'Financial Regulation 8' and 'terms of reference governing External Audit' as set out in the Annex to the WIPO financial regulations. This will involve examination and evaluation of financial records to obtain competent, relevant and reasonable evidence to support our conclusions. The overall objective is to ensure that the Financial Statements are free from material misstatements and the underlying transactions comply with WIPO regulat ions. Performance Audit objective 10. The areas for performance audit will be selected on the basis of the quantum of resources allotted to them and the risk that the operations have not been carried out with due regard to economy, efficiency and effectiveness. Compliance Audit obj ectives 11. In compliance audit, we will examine the propriety of transactions and compliance to rules and regulations of WIPO, and report cases, if any, of wasteful

4 and improper expenditure. The focus of audit will be on enabling corrective measures to prevent recurrences and to recommend changes that may be needed to the system of internal controls, their adequacy and implementation. Financia ls of WIPO for t he biennium The Budget for provided a link between the Strategic Goals and the 31 programs of WIPO. The budget is monitored by the Program Budget Committee of the Assembly. The projected income and expenditure of WI PO in the last two bienniums are as under: Ta ble No.1 {in mmions of Swiss Francs) Biennium 2010/2011 Biennium 2012/2013 Income Contributions Fees from PCT System Fees from Madrid System Fees from Hague System Other Income Total Income Expenditure Personnel Non-Personnel Tot al Expendit ure The programs accounting for highest allocations are as below: Table No. 2 (in millions of Sw iss Francs) Name of the Program Budget allocation for biennium 2012/13 The PCT System 179 Madrid and Lisbon System 52 Information & Communication technology 50 General Support Services 46 Conference & Language Services 37 3jP age

5 Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries 14. WIPO being a knowledge centric organization, spends 64 percent of its budgetary resources on personnel costs which include posts, short term professional, consultant and short term employees. Non Personnel costs include travel and fellowships, contractual services, operating activities and equipment and supplies. On the receipt side, unlike other UN bodies, it has its own sources of funding namely fees received from private parties for providing services. The contribution of Member States accounts for only 5.4 percent of resource generation. The biggest source of revenue for WIPO is the PCT Union followed by Hague and Madrid Unions. 15. Over the years, WIPO has built up substantial reserves (surplus income from fees that exceed the amounts required to finance the program and budget appropriations) which are invested as per the Investment Policy of WIPO. A portion of the reserves are also utilized for financing specific projects. To that extent some of the projects are actually not part of the Program Budget. Some of the significant programs t hat are being funded out of reserves include ERP, capital investment in IT, etc. A separate report is presented to the Assembly on utilization of Reserves. Audit Coverage during Following was the Audit coverage during Year Financial Financial Performance audit Compliance Audit audit of audit of interim annual financial financial st atements statement s 2012 Geneva (2 Geneva {4 Performances audit Compliance Audit of weeks) weeks) of 'Patent 'sourcing and engagement Cooperation of special service Treaty' agreements and commercial service providers' PROPOSED AUDIT COVERAGE FOR The probable risk areas were discussed by the Sr. Director, Ext ernal Audit and his team with the head of IAOD, head of Finance and Financial Controller. Based on the discussions, past audit coverage and risk assessment following is proposed for financial, performance and compliance audit during P a ge

6 18. Financial Audit: Interim audit of the Financial Statements of first three quarters for the year 2013 is-proposed to be carried out at Geneva (as was done for 2012 accounts) for two weeks (November 2013). Final audit will be conducted for four we-eks during- April/May 2014 at Geneva. 19. Performance Audit: Based on the discussion with the management and areas identified in our risk assessment report, performance Audit topics of 'Madrid and Lisbon Systems', Strategic Realignment Programme, 'Human Resources Management and Development', 'Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries' and 'ERP systems' were considered for audit during (i) (ii) (iii) (iv) (v) Madrid and Lisbon Systems- Madrid and Lisbon system accounts for the 2nd highest budget allocation of CHF 52 million during 2012/13 and was considered as high risk in our risk assessment. However, internal audit would be covering this topic during 2013 and therefore inclusion of this topic in our work plan would amount to duplication of effort. Human resource management- Staff costs account for 64 per cent of the expenditure. Thus, human resource appears as a major risk area from the financial point of view. Further, based on our previous year audits, issue of resources and mismatch of skills of human resource was noticed. However, reports on human resource management were presented both by external auditors and internal auditors in Strategic Realignment Program (SRP) is the flagship program of WIPO for organizational improvement. As the programme will be reviewed by Joint Inspection Unit of the United Nations this year, we propose to take it up later. Performance Audit of ERP- ERP System is being expanded as part of strategic realignment program and is funded out of reserves. The current ERP system called AIMS is proposed to be expanded and enhanced to serve the whole organization. The finance, procurement and travel modules have been in place for some years. AIMS have facilitated transition to IPSAS. Three distinct projects, viz., Core HR and Payroll; Performance Management; and Business Intelligence analytics have commenced in New initiatives of ERP are likely to be completed by However, it has been covered extensively by Internal as well as External audit in recent years. Hence, it could be taken up as Performance audit during subsequent years. Performance audit of 'Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries'. This is under Strategic goal Ill (programme 9) with a budget of million Swiss francs during This topic also emerged as a high risk area in our risk assessment. In view of above, we decided to take up 'Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries' as topic for SIPage

7 Performance Audit during 2013, as the audit results would add value to WIPO operations. ~o-. -- Compliance Audit: Tliere are 257 units in WI PO covering the activities off e programs. Whi le many units correspond to specific programs, one to one correspondence in many cases cannot be established. Similarly, in many cases unit refers to an administrative office e.g., office of Director General or a small support unit. The Internal Audit or previous External Auditors have not reported results of such unit wise audit. 21. In view of above, we decided to cover Strategic Goal IX, program no. 29, construction projects with the budget of CHF 7.67 million. In addition, CHF 24 million from the WI PO reserves and CHF 40 million loans has been provided for construction of new conference hall. In the meeting of IAOC during September 2012, the Committee informed that the contract for construction of conference hall was awarded to the same contractor who defaulted in completion of Administration Building and a penalty was imposed on the contractor. The Committee also informed that this contractor had been removed from construction of conference hall and no new general contractor was to be appointed and that the project would instead be managed by inducting additional resources through "internal redeployment, secondment from other UN agencies or temporary engagements". 22. Previous External Auditor (Swiss) had also not audited the final accounts related to construction project and IAOC suggested that we consider including in our work plan an audit/inspection of the new construction projects as a priority issue, as well as audits until the successful completion of the project. 23. Audit of the construction projects as Compliance audit during will be conducted by a three member team for four weeks time during March The time schedule of various audits is set out in Annex-//. 6IP age

8 Annex-1 Strate2ic 2oal wise an<lrro2ram wise allocation of funds - - Strategic Goal Program No Program Description I Balanced Evolution of the International Normative Framework for IP Budget in CHF million 2012/ /11 1 Patent law Trademarks, Industrial Designs and Geographical 2 Indications Copyright and Related 3 Rights Traditional Knowledge, Traditional Cultural Expressions and Genetic 4 Resources Strat egic Goal I Total The PCT System Madrid, and lisbon 6 Systems II Provision of 31 The Hague System Premier Global IP Arbitration, Mediation Services 7 and Domain Names Strat egic Goal II Total Ill Facilitating the Use of IP for Development 8 9 Development Agenda Coordination Africa, Arab, Asia and the Pacific, Latin America and the Caribbean Countries, Least Developed Countries Cooperation with Certain Countries in Europe and Asia 11 The WI PO Academy Small and Medium-Sized 30 Enterprises and Innovation Strategic Goal Ill Tot al IV International Coordination and 12 Classifications and Development of Standards 7 1P a ge

9 13 Global Databases Service-s-tor Access to Information and l(now reage Business Solutions for JP Offices Strategic Goal IV Total v World Reference Source for IP Information and Analysis 16 Economics and Statistics Strategic Goal V Total VI Cooperation International on Building Respect for IP 17 Building Respect for IP Strategic Goal VI Total VII Addressing IP in Relation to Global Policy Issues 18 JP and Global Challenges Strategic Goal VII Total VIII A 19 Communications Responsive Communications Interface between External Relations, WIPO, its Member 20 Partnerships and External St at es and All Offices Stakeholders Strategic Goal VIII Total IPage

10 IX Efficient Administrative and 22 Financial Support Structure to Enable 21 Executive Management Program and Resource Management - Human Resources WI PO to Deliver its 23 Management and Programs Development 24 General Support Services Inf ormation and 25 Communication Technology 26 Internal Oversight 27 Conference and Language Services Safety and Security Construcfon Projects Strategic Goal IX Total I P a ge

11 Annex II Audit programme of WI PO for the year as follows: Audits Period of Nature of Place of Team Composition No. of Audit Audit Audit weeks/days and No. of man days Team 1 Performance WI PO 1. Senior Audit 04 weeks 21 October Audit Headquart Director (AG) 2013 to days ers at November 'Performance 2. Audit Manager 84 man-days 2013 Audit of Geneva (GO) 'Africa, Arab, 2.8 No. of Asia and the 3. Audit man months Pacific, Latin Professional America and (SAO/AO/AAO) the Caribbean Countries, Least Developed Countries' in WI PO Team 2 18 Interim Audit- WI PO 1. Senior Audit 02 weeks November to Audit of Headquart Director (AG) 14 days 29 accounts ers at pertaining to 2. Audit Manaeer 42 man-days November Geneva first 3 quarters (GO) 2013 along with 1.4 No. of 3. Audit 2013 restated man months professional balances (SAO/AO/AAO) Team3 03 March Compliance WI PO 1. Senior Audit 04 weeks 2014 to 28 Audit Headquart Director (AG) March 2014 'Construction projects' ers at Geneva 2. Audit Manager (GO) 3. Audit Professional (SAO/AO/AAO) 28 days 84 man-days 2.8 No. of man months 10 I P a g c

12 Team2 7 April Financial WI PO 1. Senior Audit 04 weeks - 2 May 2014 Audit of the Headquart -oirector (AG) - 28 days Financial ers at ~ Audit Mangger ~ 1- - statements for Geneva (GO) 84 man-daysthe year ending Audit 2.8 No. of December professional man months 2013 (SAO/AO/AAO) 11 I P ag e