35 C OUTLINE. 35 C/28 31 July 2009 Original: English. Item 11.2 of the provisional agenda. Source: Financial Regulation

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1 35 C 35 C/28 31 July 2009 Original: English Item 11.2 of the provisional agenda FINANCIAL REPORT AND AUDITED FINANCIAL STATEMENTS RELATING TO THE ACCOUNTS OF UNESCO FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND REPORT BY THE EXTERNAL AUDITOR Source: Financial Regulation OUTLINE Background: In accordance with this Financial Regulation the report of the External Auditor, the audited financial statements and the report of the Director-General on the accounts of UNESCO for the financial period ended 31 December 2007 are hereby transmitted to the General Conference. Purpose: Purpose: To submit to the General Conference for examination the audited final accounts for the biennium , the report of the External Auditor thereon and the report of the Director-General on the implementation of the recommendations of the External Auditor. Decision required: paragraph 4.

2 35 C/28 FINANCIAL STATEMENTS AND EXTERNAL AUDIT REPORT 1. This document incorporates document 180 EX/33 Part I Rev. and Part II (Annex) containing the report of the Director-General on the accounts of UNESCO for the financial period ended 31 December 2007, the audit opinion of the External Auditor, the audited financial statements and the report of the External Auditor together with the written comments of the Director-General thereon. 2. Having examined these reports and financial statements, the Executive Board decided, in 180 EX/Decision 33, paragraph 9, to transmit them to the General Conference. 3. The General Conference is invited to receive and accept the report of the External Auditor and the audited financial statements. 4. The General Conference may wish to adopt a decision along the following lines: The General Conference, 1. Having examined document 35 C/28, 2. Expresses its appreciation to the External Auditor for the high standard of his work; 3. Notes the opinion of the External Auditor that the financial statements presented fairly in all material respects, the financial position of UNESCO as at 31 December 2007 and the results of its operations and its cash flows for the two-year financial period then ended, and that they were prepared in accordance with the stated accounting policies, which were applied on a basis consistent with that of the preceding financial period; 4. Notes that although he does not qualify his opinion, the External Auditor draws attention to two points: first, the need to strengthen internal oversight within the Organization and second, the need to take action and prepare for the changes resulting from the adoption of International Public Sector Accounting Standards (IPSAS); 5. Notes the use of the unspent balance of unliquidated obligations to liquidate other outstanding legal obligations of the Organization as explained in Note 5(d) to the Financial Statements; 6. Notes the recommendations of the External Auditor and the Director-General s comments thereon; 7. Receives and accepts the report of the External Auditor and the audited financial statements on the accounts of UNESCO for the financial period ended 31 December 2007.

3 Executive Board Hundred and eightieth session ANNEX 35 C/28 Annex 180 EX/33 Part I Rev. PARIS, 4 August 2008 Original: English/French Item 33 of the provisional agenda FINANCIAL REPORT AND AUDITED FINANCIAL STATEMENTS OF UNESCO FOR THE PERIOD ENDED 31 DECEMBER 2007, AND REPORT BY THE EXTERNAL AUDITOR PART I SUMMARY In accordance with Financial Regulation 12.10, the report by the External Auditor and the audited financial statements, together with the report by the Director-General on the accounts of UNESCO for the financial period ended 31 December 2007, are submitted to the Executive Board. The financial report and the audited financial statements, together with the formal opinion of the External Auditor, are contained in document BOC/133 (attached hereto) while the report by the External Auditor, together with the comments of the Director-General thereon, is presented in document 180 EX/33 Part II. Action expected of the Executive Board: proposed decision in paragraph In accordance with Financial Regulation 12.10, the Executive Board is required to examine the External Auditor s report together with the final audited accounts and to forward them to the General Conference with such comments as it deems appropriate. 2. The Executive Board may also wish to note in particular the opinion of the External Auditor on the financial statements which states: My opinion is that the financial statements present fairly, in all material respects, the financial position of UNESCO as at 31 December The longform report of the External Auditor and the Director-General s comments thereon are to be found in document 180 EX/33 Part II.

4 180 EX/33 Part I Rev. page 2 Action expected of the Executive Board 3. The Board may wish to adopt a decision along the following lines: The Executive Board, 1. Recalling Article of the Financial Regulations, 2. Having examined document 180 EX/33 Parts I and II, 3. Expresses its appreciation to the External Auditor for the high standard of his work; 4. Notes the opinion of the External Auditor that the financial statements presented fairly, in all material respects, the financial position of UNESCO as at 31 December 2007 and the results of its operations and its cash flow for the two-year financial period then ended; that they were prepared in accordance with the stated accounting policies, which were applied on a basis consistent with that of the preceding financial period; 5. Takes note of the unobligated balances in Statement IV by appropriation line and approves the expenditure as reported; 6. Invites the Director-General to report on the implementation of the recommendations of the External Auditor to the General Conference at its 35th session and to submit this report to the Executive Board at its 182nd session for prior review; 7. Decides to transmit to the General Conference the report by the External Auditor and the audited financial statements of UNESCO for the period ended 31 December 2007.

5 180 EX/33 Part I Rev. page 3 BOC/133 PARIS, 16 June 2008 Original: English UNITED NATIONS EDUCATIONAL, SCIENTIFIC AND CULTURAL ORGANIZATION FINANCIAL REPORT AND AUDITED FINANCIAL STATEMENTS OF UNESCO FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007

6 180 EX/33 Part I Rev. page 5 CONTENTS 1. REPORT OF THE DIRECTOR-GENERAL ON THE ACCOUNTS OF UNESCO FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER OPINION OF THE EXTERNAL AUDITOR 3. APPROVAL OF THE FINANCIAL STATEMENTS 4. STATEMENTS Statement I Statement II Statement III Statement IV Statement of Income and Expenditure and Changes in Reserves and Fund Balances as at 31 December 2007 for the financial period ended 31 December 2007 Statement of Assets, Liabilities and Reserves and Fund Balances as at 31 December 2007 Statement of Cash Flow of Proprietary Funds (General, Working Capital and Other) for the financial period ended 31 December 2007 Status of Appropriations of the General Fund Regular and Participation Programmes for the financial period ended 31 December NOTES TO THE FINANCIAL STATEMENTS 6. SCHEDULES Schedules of Income and Expenditure and Changes in Reserves and Fund Balances for the financial period ended 31 December 2007 for the following funds: Schedule 1.1 Schedule 1.2 Schedule Schedule Schedule Schedule 1.3 Schedule Schedule Schedule 1.4 General Fund (GEF) Other Proprietary Funds (OPF) Other Proprietary Funds (OPF) Revenue-Generating Activities Other Proprietary Funds (OPF) Support Costs Other Proprietary Funds (OPF) Staff Related Accounts Programme Fiduciary Funds (PFF) Special Accounts for Institutes Other Special Accounts and Trust Funds Staff Fiduciary Funds (SFF) Schedules of Assets, Liabilities and Reserves and Fund Balances as at 31 December 2007 for the following funds: Schedule 2.1 Schedule 2.2 Schedule General and Working Capital Funds Other Proprietary Funds Other Proprietary Funds Revenue-Generating Activities

7 180 EX/33 Part I Rev. page 6 Schedule Schedule Schedule 2.3 Schedule Schedule 2.4 Other Proprietary Funds (OPF) Support Costs Other Proprietary Funds (OPF) Staff-Related Accounts Programme Fiduciary Funds Special Accounts for Institutes Staff Fiduciary Funds 7. UNAUDITED ANNEXES Annex I Annex II Annex III Annex IV Ex gratia payments Report of special accounts and trust funds established and closed during the financial period ended 31 December 2007 Aged analysis of assessed contributions receivable Waivers granted for contracts submitted to the Contracts Committee

8 180 EX/33 Part I Rev. page 7 REPORT OF THE DIRECTOR-GENERAL ON THE ACCOUNTS OF UNESCO FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 Full biennium combined financial situation 1. In , UNESCO has achieved another record of programme expenditure (i.e. excluding Staff Fiduciary Funds) of which over 50% relates to non-regular programme activities. It is interesting to recall that the $1 billion threshold was attained in the biennium. A net increase of $26,514K on overall total expenditure was recorded when compared to the previous financial period. The table below shows the expenditure for the biennium , together with comparative figures of the previous financial period, which are broken down by business area $ '000s % $ '000s % General Fund (GEF Schedule 1.1) 620, , Other Proprietary Funds (OPF Schedule 1.2) 75, , Total, Proprietary Funds (A) 696, , Add: Programme Fiduciary Funds (PFF Schedule 1.3) (B) 743, , Less: Transfers from General Fund (C) (60,698) (4.40) (55,791) (4.12) Total, Programme Funds (A) + (B) - (C) 1,379, ,352, When compared with the biennium, increases (decrease) in total expenditure were recorded in the following business areas: General Fund ($0.2 million) % Other Proprietary Funds $6.6 million + 9.5% Programme Fiduciary Funds $25.0 million + 3.5% 2. Although the budget of the General Fund (regular programme) remained unchanged at the level of zero nominal growth of $610 million for the two consecutive biennia and , the rate of programme execution achieved in the period under review was a record high at 99.8%. This should be viewed as a major achievement and, as a consequence, only $97K of the total approved budget of the regular programme has been declared as unspent at the close of the biennium Expenditure on Other Proprietary Funds (OPFs) has increased by a significant 9.5% ($6.6 million) notably on the Revenue-Generating Accounts and support costs funds for extrabudgetary activities. 4. The overall net increase of 3.5% ($24.9 million) in expenditure on Programme Fiduciary Funds (extrabudgetary activities) was principally due to the institutes (with the inclusion of UIL for the first time this biennium), and other Special Accounts and Trust Funds, with the exception of Brazil where expenditure showed a decrease of $22 million.

9 180 EX/33 Part I Rev. page 8 Contributions and cash flow general fund 5. Receipts of contributions in respect of the biennium amounted to $563.2 million against an assessed total of $610 million, which represents 92% of the total receivable on Member States during the biennium. 6. Receipts of contributions in respect of previous biennia and payment plans prior to the 33rd session of the General Conference amounted to $49 million against a total due of $71.9 million for Before the approval of four new payment plans at the 34th session of the General Conference, the total deferred to future years equalled $14.3 million but after the new payment plans, the total amount almost doubled to $27.6 million under 24 payment plans. 7. Unpaid contributions remain a cause for concern with $91 million due at the end of 2007 representing a 7% increase as compared to $85.1 million in The working capital fund of $28 million was not sufficient to finance arrears and instalments deferred for future years. 8. The cash position of Headquarters accounts based on the total resources of the General Fund with and without the Working Capital Fund as at the end of each month for is shown graphically as follows, in millions of US dollars: General Fund Cash Position with and without Working Capital Fund at Headquarters Cash position Combined with WCF /06 3/06 5/06 7/06 9/06 11/06 1/07 3/07 5/07 7/07 9/07 11/ JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Cash position Combined with WCF Cash position Combined with WCF The peak amounts from April to June are due to the receipt of large contributions in those months in 2006 and 2007, whereas payments are more evenly spread throughout the two years. 10. As at 31 December 2007, the General Fund at Headquarters showed a negative cash balance of $33.7 million, but with the Working Capital Fund of $28 million the net negative cash balance equalled $5.7 million.

10 180 EX/33 Part I Rev. page Internal borrowing was required in November 2006 and between October and December 2007, but it did not entail any cost as it remained within the ceiling of non-interest-bearing special accounts. Investments 12. At the end of December 2007, the investment portfolio of UNESCO totalled $1,168.6 million in comparison to $1,035.2 million at the end of The performance of the investments made in accordance with the Investment Policy of the Organization has been in line with the set benchmarks. The Organization has a very conservative investment policy and was not affected by the turmoil of the financial markets during the second half of Strengthening internal controls 13. UNESCO has recently published an internal control policy framework which captures in a single document the revised framework for its financial policies, procedures and processes underpinned by the Organization s ethical value system. The framework will provide a base for developing specific rules, policies and processes to comply with the forthcoming IPSAS requirements as well as give a common understanding of internal control issues to all staff. 14 Steps have also been taken to tighten the control environment within the Secretariat by changing the reporting structure of the Comptroller s Office and reaffirming the functional relationship between the Administrative Officers and the Comptroller. A Financial Policy and Compliance Section was established within the Bureau of the Comptroller with a mandate to respond to internal control issues raised by our governing bodies and the External Auditor and to facilitate the policy and reporting framework under IPSAS. International Public Sector Accounting Standards 15. The next biennium s Financial Statements should be the last to be prepared under the United Nations System Accounting Standards. For reporting periods commencing 1 January 2010 the Organization will adopt International Public Sector Accounting Standards (IPSAS). One of the main reasons for this change is the growing awareness to base United Nations organizations financial reporting on a more uniform and commonly accepted standard. 16. We have the obligation and responsibility to manage financial resources entrusted to us in a transparent and accountable manner. IPSAS is one important tool for doing this, leading to the enhancement of UNESCO s credibility. Liabilities for employee benefits 17. The funding of long-term contractual obligations with employees, both current and past, remains an issue for the Organization. The liability, estimated at $658 million at the end of 2007, relates mainly to After-Service Health Insurance. 18. This amount is currently disclosed as a note to the Financial Statements. Under IPSAS the full liability will be included in the Statement of Financial Position and prudent management would favour the direct funding of this amount over a reasonable period of time.

11 180 EX/33 Part I Rev. page 11 First President Paris, 28 July 2008 To: Mr Koïchiro Matsuura Director-General of the United Nations Educational, Scientific and Cultural Organization OPINION OF THE EXTERNAL AUDITOR I have audited the financial statements of UNESCO for the period ended 31 December 2007, the notes thereto, the statements of income and expenditure and the distribution of the result. It is now for me to express an opinion, based on this audit, on these documents, which have been drawn up under the responsibility of the Director-General of UNESCO. We conducted our audit in accordance with the common accounting standards of the Panel of External Auditors of the United Nations, the specialized agencies and the International Atomic Energy Agency and with the International Standards of Auditing. These standards require that I organize and perform my work in such a way as to obtain reasonable assurance that the financial statements are free of material misstatement. An audit consists in particular of examining, through testing, evidence supporting the amounts and other data disclosed in the financial statements. It also consists of assessing the accounting principles used and significant estimates made by the Director-General of UNESCO, and of evaluating the overall presentation of the financial statements. I believe that my audit provides a reasonable basis on which to found my opinion. In my opinion, the financial statements present fairly, in all material respects, the financial position of UNESCO as at 31 December 2007 and of the results of operations and cash flows in the period then ended and were prepared in accordance with the accounting standards of the United Nations system, which were applied in a manner consistent with that of the preceding financial period. Furthermore, in my opinion, those UNESCO transactions that came to my notice or that I examined by testing as part of the audit complied in all significant respects with the Financial Regulations and the legislative authority. Although I do not qualify my opinion, I should, however, like to draw attention to two points. First, internal oversight within the Organization should be strengthened in order to ensure compliance with all internal regulations adopted by the Organization. Second, the adoption of the International Public Sector Accounting Standards (IPSAS) as from 1 January 2010 is an important step forward for UNESCO. It is indispensable to take action now to prepare for the changes (in working methods and computer hardware) that will be required in the central services and in the field offices. Philippe SÉGUIN

12 180 EX/33 Part I Rev. page 12 APPROVAL OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007

13 STATEMENT I UNESCO STATEMENT OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) PROPRIETARY FUNDS PROGRAMME FIDUCIARY FUNDS General Fund Other Programme Staff Inter-fund (Regular Programme) Proprietary Total Proprietary Funds Fiduciary Fiduciary Eliminations Funds Funds Funds "GEF" "OPF" "PFF" "SFF" Total Managed Funds (Schedule) (1.1) (1.2) (1.3) (1.4) INCOME Assessed contributions Voluntary contributions Revenue producing activities Funds received under inter-organization arrangements Allocations from other funds (Regular Programme) (51 431) Income for services rendered (26 822) Investment income Currency exchange adjustments (5 043) (2 870) Other income TOTAL INCOME (78 253) EXPENDITURE (78 253) TOTAL EXPENDITURE (78 253) EXCESS (SHORTFALL) OF INCOME OVER EXPENDITURE (770) (860) Increase in land and buildings (Note 11) Transfer (to)/from reserves (246) 246 Distribution to members of USLS (41 596) (41 596) (28 001) Decrease in budgetary surpluses (8 182) (8 182) (5 012) (8 182) (5 012) Other adjustments to reserves and fund balances Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD The accompanying notes and schedules are an integral part of the financial statements. (a) Represented by - : Budget Surplus - Statement IV 97 New Member State - Montenegro 3 Miscellaneous income Currency exchange adjustments Currency Exchange Reserve (16 074) Singapore Special Account OPF 246 Use of Savings MBF Subcontracting (2 072) (770) 180 EX/33 Part I Rev. - page 13

14 UNESCO STATEMENT OF ASSETS, LIABILITIES AND RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) PROPRIETARY FUNDS PROGRAMME FIDUCIARY FUNDS General Fund Other Programme Staff (Regular Programme) Proprietary Inter-fund Total Proprietary Funds Fiduciary Fiduciary Inter-fund Funds Eliminations Funds Funds Eliminations STATEMENT II Total Managed Funds "GEF" "OPF" "PFF" "SFF" (Schedule) (2.1) (2.2) (2.3) (2.4) ASSETS Cash and term deposits (Note 6) (1 902) Investments (Note 7) Accounts receivable Assessed contributions receivable from Member States (Note 8) Inter-fund balances (246) (859) Other (Note 9) Other assets (Note 10) Land and buildings (Note 11) Renovation work in progress (Note 12) TOTAL ASSETS (246) (859) LIABILITIES Payments or contributions received in advance Unliquidated obligations Accounts payable Inter-fund balances (246) (859) Other Members' deposits Other liabilities Loan for HQ building renovation (Note 12) Loan for IBE building (Note 11) EX/33 Part I Rev. - page 14 TOTAL LIABILITIES (246) (859) RESERVES AND FUND BALANCES Working Capital Fund (Note 3) Capital funds relating to land and buildings (Note 11) Currency Exchange Reserve (Note 12) (16 942) (16 942) (868) (16 942) (868) Operating reserves (Note 5) Balances relating to projects funded by donors Budgetary surpluses (Note 4) Other surpluses (Note 5) TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES (246) (859) The accompanying notes and schedules are an integral part of the financial statements.

15 180 EX/33 Part I Rev. - page 15 Statement lll UNESCO PROPRIETARY FUNDS (General, Working Capital and Other) STATEMENT OF CASH FLOW FOR THE PERIOD ENDED 31 DECEMBER CASH FLOWS FROM OPERATING ACTIVITIES Net excess (shortfall) of income over expenditure (Statement I) (860) (Increase) decrease in contributions receivable (5 879) Increase in other accounts receivable (6 399) (4 273) Increase in other assets (322) (82) (Increase) decrease in inter-fund balances receivable (852) Increase (decrease) in contributions or payments received in advance 450 (20 916) Increase (decrease) in unliquidated obligations (6 613) Increase (decrease) in accounts payable Decrease in other liabilities (255) (300) Increase (decrease) in inter-fund balances payable 750 (32 511) Less: Interest income (22 751) (13 174) Plus: Interest expense Currency exchange adjustments (13 204) (3 032) NET CASH FROM OPERATING ACTIVITIES (47 677) (38 981) CASH FLOWS FROM INVESTING ACTIVITIES: Increase in renovation work in progress (36 686) (28 896) (Increase) decrease in land and buildings 1 (25 251) Increase in borrowings Plus: Interest income Less: Interest expense (349) (314) Currency exchange adjustments NET CASH USED FROM INVESTING (7 106) CASH FLOWS FROM FINANCING ACTIVITIES Savings on or cancellation of prior periods' obligations Credits to member States (8 182) (5 011) Other adjustments to reserves and fund balances NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND TERM DEPOSITS (25 409) CASH AND TERM DEPOSITS, BEGINNING OF PERIOD CASH AND TERM DEPOSITS, END OF PERIOD

16 180 EX/33 Part I Rev. - page 16 STATEMENT IV UNESCO GENERAL FUND STATUS OF APPROPRIATIONS REGULAR AND PARTICIPATION PROGRAMMES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in 000s US dollars) Main Appropriation Line PART I GENERAL POLICY AND DIRECTION 33 C/5 Approved Authorized Transfers Additional Appropriations 33 C/5 Approved as Adjusted Disbursements Expenditure $ $ $ $ $ $ $ $ ULOs Total Unobligated balance A. Governing Bodies 1. General Conference Executive Board Total Part I.A B. Direction (Including: Directorate; Office of the Director-General; Internal Oversight; International Standards and Legal Affairs) C. Participation in the Joint Machinery of the United Nations System PART II PROGRAMMES AND PROGRAMME RELATED SERVICES TOTAL, PART I A. Programmes Major Programme I - Education Major Programme II - Natural Sciences Major Programme III - Social and Human Sciences Major Programme IV - Culture Major Programme V - Communication and Information UNESCO Institute for Statistics Field - Management of decentralized programmes (4 013) Total, Part II.A B. Participation Programme C. Programme Related Services 1. Coordination of action to benefit Africa (188) 2. Fellowships Programme (73) 3. Public information (493) 4. Strategic planning and programming monitoring Budget preparation and monitoring Anticipation and Foresight Total, Part II.C PART III SUPPORT FOR PROGRAMME EXECUTION AND ADMINISTRATION TOTAL PART II A. Field management and coordination (949) B. External relations and cooperation C. Human resources management (120) D. Administration (2 008) TOTAL, PART III (2 870) TOTAL, PARTS I - III Reserve for reclassifications (1 500) PART IV ANTICIPATED COST INCREASES (13 766) TOTAL

17 180 EX/33 Part I Rev. page 17 UNESCO NOTES TO THE FINANCIAL STATEMENTS 1. OBJECTIVES (purpose, mandate and governance of the Organization) (a) (b) The United Nations Educational, Scientific and Cultural Organization (UNESCO) was created in London on 16 November 1945 by governments of the States Parties to contribute to peace and security by promoting collaboration among the nations through education, science and culture in order to further universal respect for justice, for the rule of law and for human rights and fundamental freedoms which are affirmed for the peoples of the world, without distinction of race, sex, language or religion, by the Charter of the United Nations Organization. As one of the specialized agencies referred to in Article 57 of the Charter of the United Nations Organization, the provisions of Articles 104 and 105 of that Charter concerning the legal status of that Organization, its privileges and immunities, apply in the same way to UNESCO. UNESCO is governed by a General Conference, consisting of the representatives of its Member States, which determines the policies and main lines of work of the Organization. The Executive Board, which consists of 58 Member States elected by the General Conference, takes, in accordance with the decisions of the General Conference, all necessary measures to ensure the effective and rational execution of the programme by the Director-General. 2. SIGNIFICANT ACCOUNTING POLICIES Introduction The financial statements have been prepared in accordance with the provisions of UNESCO s Financial Regulations and with stated accounting policies as described below. These accounting policies conform to the United Nations System Accounting Standards (UNSAS) which provide a framework for accounting and financial reporting in the United Nations system. The financial period of UNESCO is a biennium and consists of two consecutive calendar years, beginning with an even-numbered year. The financial statements are presented in thousands ( 000s/K) of United States dollars ($). (a) Financial Statement presentation In conformity with the framework for financial reporting in the United Nations system, the financial statements are prepared on a combined basis, which includes the accounts of all the funds managed by UNESCO with a sub-grouping for UNESCO Proprietary Funds (GEF and OPF), on which the Statement of Cash Flow is presented at the end of each financial period, followed by Programme Fiduciary Funds (PFF) and Staff Fiduciary Funds (SFF). Elimination columns show adjustments for inter-fund transfers and balances. Managed Funds are disclosed in the following business areas: (1) General Fund (GEF) includes both the General and Working Capital Funds set up in accordance with Financial Regulations 6.1 and 6.2. (2) Other Proprietary Funds (OPF) include revenue-generating activities, programme support costs for special accounts and trust funds, the Staff Compensation Fund, the Terminal Payments Fund, and Headquarters-related special accounts. The United Kingdom and United States Special Funds are also included under this grouping.

18 180 EX/33 Part I Rev. page 18 These funds are used to carry out the programmes, or to group other authorized expenditure, of UNESCO. The residual right of ownership of all of these funds is ultimately vested in Member States. The funds have been established in accordance with Financial Regulation 6.6 and normally have individual special financial regulations. (3) Programme Fiduciary Funds (PFF) include institutes, special accounts and trust funds set up in accordance with Financial Regulation 6.6. They are used to carry out extrabudgetary programme activities in accordance with the respective agreements signed between UNESCO and the related parties or other legal authority. During the year 2006, steps were taken to transform the UNESCO Institute for Education (UIE), from a foundation under German law, into a fully fledged UNESCO institute. The former UIE was dissolved on 30 June 2006 following a decision of the UIE Governing Board in February The new Institute s name was changed to the UNESCO Institute for Lifelong Learning (UIL), (Executive Board, 174th session). During this transition period, the Institute functioned as an international UNESCO project. On 21 February 2007 a host country agreement was signed, by UNESCO and the Government of the Federal Republic of Germany, transforming UIL into a category 1 UNESCO institute. The full effect of the transformation to UIL for the period from 1 July 2006 to 31 December 2007 has been presented in this biennium s Financial Statements. (4) Staff Fiduciary Funds (SFF) are funds that have been established for the benefit of UNESCO s staff members, namely the Medical Benefits Fund, the UNESCO Staff Savings and Loans Services (USLS), UNESCO Commissary Fund (UCF), the UNESCO Restaurant Services (URS) and the UNESCO Children s Club and Day Nursery. The residual right of ownership of these funds is totally or partially vested in staff or retired staff members. The resources of each fund in the Programme Fiduciary Funds and the Staff Fiduciary Funds can only be used for the purposes for which the respective fund has been established. (b) Income recognition Income from assessed contributions represents a legal obligation of Member States, which is recognized as income in the year or biennium in which it becomes due and payable. No provision is made for delays in the collection of assessed contributions. Voluntary contributions are recognized when funds are received. Other sources of income are recorded on an accrual basis of accounting. A provision for doubtful receivables is recorded at the end of the financial period to recognize the risk of non-receipt of certain amounts. (c) Expenditure recognition Expenditure is recorded on a modified accruals basis and includes amounts for goods supplied and services rendered in the financial period as well as amounts for legal obligations of the financial period. UNESCO employees are entitled to annual leave, termination and repatriation grant entitlements. The Organization also contributes an amount equal to the employees' share of medical costs. The cost of these benefits is normally recognized as an expense in the financial period in which they are paid. However, a Terminal Payment Fund (TPF) reserve for repatriation grant and other post-termination entitlements is maintained by appropriate

19 180 EX/33 Part I Rev. page 19 transfers from certain non-general Fund accounts for the benefit of staff financed by these accounts. Acquisitions of non-expendable equipment, including furniture, computers and other office equipment and motor vehicles as well as maintenance and repairs to buildings are charged to operations in the financial period in which the expenditure is contracted. A figure for non-expendable equipment (referred to as Inventories) is given in Note 14 of these Financial Statements. (d) Translation of currencies Transactions carried out during the period in currencies other than United States dollars are translated to United States dollars using the United Nations operational rate of exchange at the date of the transaction, except for budgetary income and expenditure in euros of the Regular and Participation Programmes of the General Fund. For budgetary purposes, General Fund expenditures (Regular and Participation Programmes) in euros are translated to United States dollars using UNESCO constant budget rate. The difference between the translation at constant and operational rates of exchange is recorded in the currency exchange adjustments account. Likewise, the differences between the constant budget rate and operational rates of exchange at which the assessed contributions of the General Fund are brought to account are also credited or debited in the currency exchange adjustments account. Monetary balances carried at fair value are converted using the United Nations rate of exchange at 1 January of the following year. Non-monetary balances carried at historical cost are converted using the United Nations rate of exchange at the date of the transaction. (e) Land and buildings Land and buildings are carried at historical purchase cost, except for donated properties where land is shown at nominal valuation and structures at insurance valuation as of the balance sheet date. Major construction and renovation in progress are recorded at cost, which includes material, direct labour and related overheads and are capitalized under land and buildings when a project, or distinct phase of a project, is completed. In the case of large projects, the duration of which extends over several accounting periods, cost may be initially recorded as work-in-progress before being transferred to land and buildings on completion. No provision is made for depreciation since the cost is charged to expenditure as approved by the General Conference. (f) Pension fund participation UNESCO is a member organization participating in the United Nations Joint Staff Pension Fund (UNJSPF) which was established by the United Nations General Assembly to provide retirement, death, disability and related benefits. The Pension Fund is a defined benefit plan. The financial obligation of the Organization to the UNJSPF consists of its mandated contribution at the rate established by the United Nations General Assembly, together with any share of any actuarial deficiency payments under Article 26 of the Regulations of the Fund. Such deficiency payments are only payable if and when the United Nations General Assembly has invoked the provision of Article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of

20 180 EX/33 Part I Rev. page 20 the Fund as of the valuation date. At the time of this report the United Nations General Assembly has not invoked this provision. (g) Investments Investments are recorded at cost adjusted for amortization of premiums or discounts to maturity or market value, if significant. 3. FUNDS (a) General Fund A General Fund has been established for the purpose of accounting for the expenditure of the regular programme appropriation voted by the General Conference of UNESCO for a given financial period. It is financed from assessed contributions from Member States. Appropriations, which are voted by the General Conference, are available for obligation during the financial period to which they relate and for a further twelve months to the extent that they are required to discharge obligations incurred during that financial period. In addition to the appropriations voted by the General Conference, the Director-General is authorized by Financial Regulation 7.3 to accept voluntary contributions, gifts, bequests and subventions. Such receipts are shown as voluntary contributions in Statement I and as Additional Appropriations in Statement IV. (b) Working Capital Fund A Working Capital Fund has been established in an amount and for purposes to be determined from time to time by the General Conference. It is financed by advances from Member States made in accordance with the scale of assessments as determined by the General Conference. By 33 C/Resolution 81, the authorized level of the fund, which was maintained at K$28,000 for , was subsequently adjusted to K$28,097 to include assessments made on new Member States. (c) Trust funds, reserves and special accounts Trust funds, reserves and special accounts are established by the Director-General and are reported to the Executive Board. They are administered in accordance with the Financial Regulations of UNESCO unless otherwise provided. Trust funds and special accounts are financed principally by voluntary donations. They are organized into three groups, namely, Institutes, Self-Benefiting Trust Fund-Brazil and Other. Details of Other, their sources of income and the projects they support are detailed in Schedule INCREASE/DECREASE IN BUDGETARY SURPLUSES Budgetary surpluses for a financial period, after deducting therefrom any contributions of Member States relating to that financial period which remain unpaid, shall, in accordance with Financial Regulations 4.3 and 4.4, unless otherwise determined by the General Conference, be apportioned among Member States in proportion to their assessed contributions for that financial period and surrendered to each Member State once its contribution for that financial period has been paid in full. The balance of budgetary surplus from previous periods which has not been paid to Member States is summarized as follows:

21 180 EX/33 Part I Rev. page Un-apportioned surpluses relating to the budgets of previous financial periods: $ 000s Not yet available for apportionment Surpluses apportioned but not surrendered 1,958 5,279 1,958 5,279 Total (Statement II) 7,237 7,237 In accordance with 34 C/Resolution 76 (III) the existing experimental scheme to encourage prompt payment of contributions should be continued for a further six-year period. 5. OPERATING RESERVES AND OTHER SURPLUSES (i) Operating reserves Operating reserves have been created within the legislative authority of certain funds as is deemed to be required for the purpose of sound administration or legal obligation and are summarized as follows: $ 000s Increase/ (Decrease) (a) Administrative reserves (i) Public Information Liaison and Relations Fund 1,351 1, (ii) International Centre for Theoretical Physics (ICTP) 10,006 7,782 2,224 (iii) International Institute for Education Planning (IIEP) 4,898 3,314 1,584 (iv) UNESCO Institute of Statistics (UIS) 1, (b) Currency fluctuation reserves Public Information Liaison and Relations Fund (PILRF) (c) Staff savings reserves 17,522 13,104 4, UNESCO Savings and Loan Service (USLS) 25,683 20,820 4,863 (d) Other reserves 25,683 20,820 4,863 Headquarters Utilization Fund (HQF) Total (Statement II) 43,474 34,110 9,364

22 180 EX/33 Part I Rev. page 22 (a) (b) (c) (d) Administrative reserves have been established in accordance with the rules pertaining to each fund to cover mainly staff-related costs (separation, after-service entitlements, etc.) and other outflows that may arise in the future. The currency fluctuation reserve is established to cover the foreign currency risk element arising from the operation of the coupons programme. The staff savings reserves for USLS include statutory reserves and special reserves for unrealized portfolio profits and interest rate stability. The Headquarters Utilization Reserve is intended to cover accidental damages to works of art. (ii) Other surpluses (a) (b) Other surpluses consist of the net amount of all miscellaneous income earned for the biennium after taking into account currency exchange adjustments and the balance of the currency clearing account. Included also are other General Fund surpluses, surpluses on other proprietary funds and surpluses on fiduciary funds. Apart from surpluses of the regular programme and certain other funds, to which special rules apply, surpluses can be carried forward from one financial period to the next. An overall summary of all other surpluses is given in the following table: $ 000s Increase/ (Decrease) Proprietary funds Regular programme (Note 5(ii)(c)) 18,451 11,528 6,923 Other Proprietary Funds 54,857 44,231 10,626 73,308 55,759 17,549 Fiduciary funds Special Accounts 25,977 14,561 11,416 Staff Fiduciary Funds 32,208 27,450 4,758 58,185 42,011 16,174 Total (Statement II) 131,493 97,770 33,723 (c) The surplus of the regular programme is reconciled to the balance available for distribution under the positive incentive scheme to encourage prompt payment of contributions as follows:

23 180 EX/33 Part I Rev. page 23 Excess of regular programme income over expenditure (Schedule 1.1) Unspent balance of appropriations from previous financial period (Note 5(ii)(d)) Unspent balance on MBF subcontracting $ 000s 1,302 8,018 3,735 2,478 Unspent balance on Use of carry-forward funds 105 Currency Exchange Reserve 16, Distribution PILRF Transfer to Special Account IPSAS in accordance with 34 C/Resolution 77 Transfer to Special Account Renovation Plan in accordance with 34 C/Resolution 85 (246) (3,735) Other surpluses (Schedule 2.1) 18,451 11,528 Adjust for: (i) MBF subcontracting in accordance with 32 C/Resolution 64 (2,478) (ii) Currency Exchange Reserve (868) Balance available for distribution under the positive incentive scheme 18,451 8,182 (d) At the close of the financial period, a provision of K$32,639 was set up to cover the unliquidated obligations of the Regular and Participation Programmes at that date. Those unliquidated obligations remained available for 12 months up to 31 December 2006 to the extent that they were required to discharge obligations against goods received and services rendered in the financial period and to liquidate any other outstanding legal obligations of that financial period. As previously reported to the General Conference (34 C/29) a part of the unspent balance of these unliquidated obligations has been used to liquidate other outstanding legal obligations of the Organization as follows:

24 180 EX/33 Part I Rev. page $ 000s Unspent balance 4,237 5,259 (i) Courier sub-account deficit 1,871 (ii) Field offices expenditure (iii) Headquarters expenditure (iv) ILO Administrative Tribunal Judgement 180 (v) Liquidation of lawsuit additional costs 52 (vi) Clearance of stock of photocopy paper 48 (vii) Accounts receivable written off 98 (viii) UIE additional allocation 177 Subtotal 502 2,781 Total 3,735 2,478 In accordance with 34 C/Resolution 85 the unspent balance from the biennium, amounting to K$3,735, may be used to finance the additional costs of the renovation plan of UNESCO Headquarters. 6. CASH AND TERM DEPOSITS The table below shows that of the total K$1,107,049 (2005 K$869,169), the amount available under proprietary funds is K$66,628 (2005 K$60,955) and the remaining balances are held by UNESCO in a fiduciary capacity $ 000 Regular programme (GEF) (1,902) 4,742 Other Proprietary Funds (OPF) 68,530 56,213 Total Proprietary Funds 66,628 60,955 Programme Fiduciary Funds (PFF) 547, ,090 Staff Fiduciary Funds (SFF) 493, ,124 Total (Statement II) 1,107, ,169 The term deposits are held with international banks which are assigned deposit ceilings in accordance with the investment policy of UNESCO. The deposit ceilings are determined using the following criteria: minimum equity $2.5 billion and minimum Fitch ratings: sovereign AA-, individual B/C, support 2.

25 180 EX/33 Part I Rev. page 25 The Investment Committee regularly follows up that the rate of return is in line with the benchmarks set up in the investment policy. 7. INVESTMENTS Investments, all of which are held in a fiduciary capacity, are summarized as follows: $ 000s $ 000s Carrying value Market value Carrying value Market value Short-term money market funds and shares ,100 Bonds 128, , , ,478 Total (Statement II) 129, , , ,578 Within Staff Fiduciary Funds (SFF), the UNESCO Staff Savings and Loan Service (USLS) portfolio managers are authorized within defined limits to buy and sell futures contracts which complement the bond investment strategy by covering firm investment positions and generating additional income. All such contracts are traded on organized markets and valued at official settlement prices. As at 31 December 2007, the fair market value of futures contracts owned by USLS was K 4,307 (K$6,353) and as at 31 December 2005 K 6,607 (K$7,819). The futures are off-balance sheet amounts and consequently, the underlying values are not included in the Financial Statements. Bonds include obligations issued or guaranteed by governments, supranational organizations or corporations with a duration of 3 to 5 years, the quality of which is not to be less than AA (Standard & Poors or its equivalent) except for Euro zone sovereign bonds for which a rating of A is accepted. The Investment Committee regularly follows up that the investment performance is in line with the benchmarks set up in the investment policy.

26 180 EX/33 Part I Rev. - page ASSESSED CONTRIBUTIONS RECEIVABLE FROM MEMBER STATES The balance of assessed contributions receivable is summarized as follows: $ 000s $ 000s Contributions due as at 1 January 2006 Contributions received Unpaid contributions as at 31 December 2007 Unpaid contributions as at 31 December 2005 Arrears * 70,397 (56,995) 13,402 14,141 Contributions assessed for 610,271 (560,427) 49,844 48,002 the biennium** Subtotal 680,668 (617,422) 63,246 62,143 Deferred arrears under payment plans Subtotal contributions Receivable Working Capital Fund 97 27,636 22,957 90,882 85,100 TOTAL (Statement II) 90,979 85,100 * includes arrears payable in annual instalments up to the current year. ** includes new Member States and Associated Members. Summary of aged Contributions Receivable: Due for Arrears $ 000s 11, ,844 Subtotal 1 62,352 Arrears under payment plans (annual instalments) Deferred arrears under payment plans ,636 Subtotal 2 28,530 Working Capital Fund TOTAL 90,979

27 180 EX/33 Part I Rev. page 27 In application of 33 C/Resolution 79.II paragraph 1(c), the contributions for that remained unpaid as at 31 December 2007 that were assessed in euros are considered as due and payable in United States dollars thereafter and are converted into United States dollars at the United Nations operational rate of exchange for the Euro prevailing in December 2007: USD 1 = EUR A detailed listing of unpaid contributions as at 31 December 2007 is shown in Annex III. In addition, the complete statement of assessed contributions and payments received is available in separate documents submitted to the governing bodies of UNESCO. 9. ACCOUNTS RECEIVABLE OTHER The balances of Accounts Receivable Other, which are shown net of any provisions established to cover the risk of non-payment of any sum which appears doubtful, are summarized as follows: $ 000s Staff loans and advances 54,019 41,863 Interest receivable 13,681 5,897 Amounts receivable for goods and services 3,693 4,480 Value added tax recoverable 5,440 2,554 Advances to project partners 6,267 2,220 Miscellaneous 10,284 6,180 Total (Statement II) 93,384 63, OTHER ASSETS Other assets are summarized as follows: $ 000s Field office payments 423 1,051 Stock on hand, at lower of cost or net realizable value 1,720 1,678 Fixed assets 4,484 3,246 Miscellaneous 1, Total (Statement II) 7,936 6,888

28 180 EX/33 Part I Rev. page LAND AND BUILDINGS $ 000s Headquarters premises, Place de Fontenoy at cost 23,022 23,022 Add Phase I Belmont Plan renovation costs, Place de Fontenoy 23,549 23,549 Subtotal, Headquarters premises, Place de Fontenoy at cost 46,571 46,571 Headquarters Fifth Building, rue Miollis at cost 7,899 7,899 Headquarters Sixth Building, rue François Bonvin at cost 30,426 30,426 Headquarters Seventh Building, rue François Bonvin at cost 3,525 3,525 Industrial building, rue François Bonvin at cost Headquarters Apartment, place Vauban at cost 2,601 2,602 Building of the International Bureau of Education (IBE), Geneva at cost 4,615 4,615 Ocampo Villa, Buenos Aires 1,800 1,800 Total (Statement II) 98,141 98,142 (a) Headquarters buildings The land at Place de Fontenoy is rented from the French Government at a nominal rent of 2 per annum and the land lease covers a period of 99 years starting with the year The land at rue Miollis and François Bonvin is rented from the French Government at a nominal rent of 15 per annum and the land lease covers a period of 84 years starting from 1 January (i) Building renovation costs of Phase I Belmont Plan The Phase I of the Belmont Plan on the renovation of the Fontenoy Building complex was completed in 2004 and the associated costs amounting to K$23,549 were brought to account and capitalized under Land and Buildings as at 31 December (ii) Headquarters Apartment Place Vauban By 32 C/Resolution 76, the General Conference approved the purchase of the apartment currently occupied by the Director-General under the conditions stated in the available offer for the use of UNESCO Directors-General and authorized the Executive Board to review and approve on its behalf the implementation of this purchase, including its funding from UNESCO s own cash balances. The resolution states that the purchase will be amortized over two biennia starting in and invites the Director-General to include in future budgets the necessary funds to cover such amortization. The purchase was concluded in May 2004 and the cost incurred in the entire acquisition of K$2,601 is disclosed in the above table. The total of K$1,300 has been amortized in

29 180 EX/33 Part I Rev. page 29 (b) IBE building (and related loan) (i) Building An agreement was signed on 31 July 1984 between UNESCO and FIPOI (Property Foundation for International Organizations) of Switzerland for the purchase of three floors of a building situated at 17 rue des Morillons, Geneva to house the International Bureau of Education. Further to an agreement signed between FIPOI and the Canton of Geneva on 16 October 1996, UNESCO s share of the costs of this building have been finalized at KCHF (thousands of Swiss francs) 6,692 (K$4,615) and the IBE building has consequently been brought to account for this amount. This amount was financed partly by a donation of KCHF 2,255 by the Conseil d Etat of the Republic and Canton of Geneva and partly by loans from FIPOI for the balance of KCHF 4,437. Following a renegotiation of the repayment schedule in December 1997 it was agreed to fix the amount of the loan outstanding as of 1 January 1998 at KCHF 3,223 (K$2,270) repayable in equal annual instalments of KCHF 133 from 1998 until 2021, with a final payment of KCHF 19 in (ii) IBE loan outstanding Swiss francs $ 000s Balance at 1 January ,156 1,646 Less:- (i) Loan repayment 2006 and 2007 (267) (220) (ii) Exchange adjustment on revaluation 307 Balance at 31 December ,889 1,733 Amount payable in 2008 Amount payable in future periods 133 1, ,611 (c) Ocampo Villa, Buenos Aires Land is valued at a nominal amount of $1 and structures are included at their insurance valuation. (d) Capital funds related to land and building The increase in the capital funds relating to land and buildings amounting to K$9,590 bringing the total capital funds at 31 December 2007 to K$103,484 (2005 K$93,894) is due to the following: (i) (ii) Renovation loan amortization for a total sum of K$8,377 corresponding to the repayments made in 2006 and 2007; Headquarters Apartment amortization of K$1,300;

30 180 EX/33 Part I Rev. page 30 (iii) Repayment of the outstanding loan on IBE building equivalent to K$220 and a loss on the loan revaluation of K$ RENOVATION LOAN AND WORK-IN-PROGRESS (a) Loan for renovation Phase II of the Belmont Plan By 32 C/Resolution 74, the General Conference had authorized the Director-General to contract an interest-free loan of K 79,875 with a lender chosen by him in cooperation with the Government of France and to take into account the necessity of making provision in future budgets for the funds required for reimbursement of the sums borrowed. An agreement was signed on 23 March 2004 between UNESCO, the Caisse des Dépôts et Consignations (CDC) and the Government of France for the interest-free loan which would be drawn in five yearly instalments from 2004 to 2008 and repaid over eight biennia starting in The loan repayments are fully guaranteed by the Government of France. Four instalments were received from CDC between April 2004 and March 2007 for a total sum of K 62,469. The interest that would have been payable by the Organization during the biennium under a non-interest-free arrangement amounts to K 3,141. $ 000s Balance at 1 January ,567 30,573 Loan withdrawals from CDC in ,902 41,313 Less:- (i) Loan repayment in (7,280) (8,377) Add:- (ii) Exchange adjustment on revaluation 16,942 Balance at 31 December ,189 80,451 Amount payable in 2008 Amount payable in future periods 5,654 49,535 6,507 73,944 Due to the significant impact and the extraordinary nature of the renovation loan, the exchange difference arising from the revaluation of the loan balance at the close of the reporting period is disclosed under a Currency Exchange Reserve account dedicated to the renovation loan. The exchange difference of K$16,942 from revaluation has therefore been reported separately in the balance sheet of the General Fund (GEF) (Statement II) as at 31 December (b) Work-in-progress Renovation costs are recorded as work-in-progress due to the significant amounts involved, the duration of the remaining phases of the Belmont Plan and the approved method of charging expenditure.

31 180 EX/33 Part I Rev. page 31 The renovation work undertaken under Phase II of the Belmont Plan includes major reconstruction and improvements to the existing Headquarters premises at the Place de Fontenoy. In conformity with the United Nations System Accounting Standards (UNSAS), the expenditure incurred on such undertakings would need to be accumulated and disclosed in a separate account and then on completion should be brought to account at final cost. In this respect the accumulated costs incurred under Phase II of the Plan as at 31 December 2007 amounting to K$ 65,582 (of which K$36,686 was incurred during ) are currently disclosed separately in the GEF balance sheet as Renovation Work-in-Progress. It is anticipated that when the renovation project is completed, the total costs incurred will be brought to account at cost under Land and Buildings. If the General Conference had approved that expenditure of Phase II of the Belmont Plan be recognized based on costs incurred rather than on the reimbursement schedule of the amount borrowed, then the above stated K$36,686 would have been treated as expenditure in the current biennium. 13. LIABILITIES FOR EMPLOYEE BENEFITS (a) Annual leave, termination and repatriation grants As stated in note 2(c) on expenditure recognition, UNESCO does not normally recognize in its financial statements liabilities for accrued annual leave, termination and repatriation grant entitlements. Where not provided, charges are recorded in the financial period in which they are paid. At 31 December 2007, UNESCO s total liability for these costs is estimated to be approximately K$44,000 (2005 K$38,000) of which an amount of K$19,657 (2005 K$16,002) has been accumulated as reserves in the Financial Statements. (b) After-service medical care Staff retiring from UNESCO, who have reached their fifty-fifth birthday and who have completed at least 10 years of participation in the Medical Benefits Fund as at the date of their separation, may opt to remain (indefinitely) in that Fund as an associate participant with UNESCO continuing to participate in the funding of their contributions. The Organization s policy is to undertake a detailed actuarial valuation at the end of each biennium in order to calculate the potential amount of after service medical care costs. As at 31 December 2007 the net present value of UNESCO s liability, which is not provided for in these Financial Statements, amounted to K$614,000 (2005 K$601,000). 14. INVENTORIES (non-expendable equipment) Estimates of Inventories, excluding Works of Art, at Paris Headquarters, UNESCO institutes and offices away from Headquarters as at 31 December 2007 are as follows: $ 000s Paris Headquarters UNESCO institutes at valuation/original cost at valuation/original cost 6,811 10,316 6,797 10,736 Offices away from Headquarters at original cost 10,310 7,539

32 180 EX/33 Part I Rev. page CONTINGENT LIABILITIES (a) (b) A civil action suit alleging acts of administrative impropriety was filed in January 2005 against high-ranking former officials of the National Social Security Institute of Brazil in which UNESCO and its former representative in the country were also cited as co-defendants, with respect to technical assistance agreements concluded between the aforementioned Institute and the UNESCO Brazil Office. Action on the case has been suspended pending determination by Brazil s Supreme Court of Justice on UNESCO s immunity from legal process. At this time it is not possible to determine the outcome of the above claim nor can the likelihood or the amount, if any, of loss associated with the outcome be determined. A number of legal cases are pending before labour courts in which former employees have lodged claims for compensation alleging violation of employment contracts. It is not possible at this time to determine whether any of these cases will result in a material outflow of resources.

33 SCHEDULE 1.1 UNESCO GENERAL FUND SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) MBF TOTAL Regular Subcontracting Programme (33 C/RES 86) INCOME Assessed contributions Member States New Member States Associate Member States Voluntary contributions Interest income Currency exchange adjustments (5 043) (5 043) Other income TOTAL INCOME EXPENDITURE TOTAL EXPENDITURE EXCESS (SHORTFALL) OF INCOME OVER EXPENDITURE (2 072) (770) Increase in land and buildings Transfers (to)/from other funds (246) (246) Decrease in budgetary surpluses (8 182) (8 182) (5 012) Other adjustments to reserves and fund balances Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD EX/33 Part I Rev. - page 33

34 INCOME Revenue Generating activities UNESCO OTHER PROPRIETARY FUND SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 ( Expressed in '000s US dollars ) Support costs Staff related accounts Renovation plan New Management Monitoring Instruments US special account UK special account IPSAS special account (Schedule 1.2.1) (Schedule 1.2.2) (Schedule 1.2.3) Elimination SCHEDULE 1.2 Voluntary contributions Revenue producing activities Allocations from other funds (640) Income for services rendered Investment income Currency exchange adjustment (121) Other TOTAL 180 EX/33 Part I Rev. - page 34 TOTAL INCOME (640) EXPENDITURE (640) TOTAL EXPENDITURE (640) EXCESS ( SHORTFALL ) OF INCOME OVER EXPENDITURE (310) (455) (5 357) (6 873) Savings on prior period obligations Transfer to/from reserves Other adjustments to reserves and fund balances (46) (72) Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD

35 UNESCO REVENUE GENERATING ACTIVITIES SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE Public Information Liaison and Relations Fund Publications and Auditory and Visual Material Fund Utilization of Headquarters Fund Special Account for Documents/ Publications Services Special Account for Interpretation Services TOTAL INCOME Revenue producing activities Sales & Royalties Rental & Charges from letting Allocation from other funds 200 Investment income Currency exchange adjustment Other TOTAL INCOME EXPENDITURE Cost of Goods Sold Staff Costs Other Expenditure TOTAL EXPENDITURE EXCESS (SHORTFALL) OF INCOME OVER EXPENDITURE (91) Other adjustments to reserves and fund balances (46) (46) Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD EX/33 Part I Rev. - page 35

36 UNESCO STAFF RELATED ACCOUNTS SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) Terminal Payment Fund Staff Compensation Fund Language Courses TOTAL SCHEDULE EX/33 Part I Rev. - page INCOME Allocations from other funds Investment income Currency exchange adjustment 1 Other TOTAL INCOME EXPENDITURE Staff Costs Compensation/Benefits Paid 196 Other Expenditure TOTAL EXPENDITURE EXCESS (SHORTFALL) OF INCOME OVER EXPENDITURE 303 (90) Other adjustments to reserves and fund balances Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD

37 UNESCO PROGRAMME SUPPORT COSTS FOR SPECIAL ACCOUNTS AND TRUST FUNDS SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE Funds-in Trust Overhead Cost Account (FITOCA) Special Account for Administrative and Operational Services ( UNDP-AOS ) Technical Support Services at the Programme Level ( UNDP-SPPD ) Technical Support at the Project Level (UNDP-STS ) TOTAL INCOME Income for services rendered Programme Support Costs Investment income Currency exchange adjustment (129) Other TOTAL INCOME EXPENDITURE Staff Costs Other Expenditure TOTAL EXPENDITURE EXCESS (SHORTFALL) OF INCOME OVER EXPENDITURE (2 358) Other adjustments to reserves and fund balances Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD (332) 180 EX/33 Part I Rev. - page 37

38 UNESCO PROGRAMME FIDUCIARY FUNDS SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) Institutes (Schedule 1.3.1) Self-Benefiting Trust Fund-Brazil Other Special Accounts and Trust Funds (Sch ) TOTAL SCHEDULE EX/33 Part I Rev. - page 38 INCOME Assessed contributions Voluntary contributions Revenue producing activities Funds received under inter-organization arrangements Allocations from other funds Income for services rendered Investment income Currency exchange adjustments Other TOTAL INCOME EXPENDITURE Expenditure TOTAL EXPENDITURE EXCESS OF INCOME OVER EXPENDITURE Other adjustments to reserves and fund balances Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD

39 UNESCO GENERAL AND WORKING CAPITAL FUNDS SCHEDULE OF ASSETS, LIABILITIES AND RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE 2.1 MBF TOTAL Regular Subcontracting Programme (33 C/RES 86) ASSETS Cash and term deposits (1 902) (1 902) Assessed contributions receivable from Member States Accounts receivable Inter-fund balances Other Other assets Land and buildings Renovation work in progress TOTAL ASSETS LIABILITIES Payments or contributions received in advance Unliquidated obligations Accounts payable Inter-fund balances 687 Other Other liabilities Loan for HQ building renovation Loan for IBE building TOTAL LIABILITIES RESERVES AND FUND BALANCES Working Capital Fund Capital funds relating to land and buildings Currency Exchange Reserve (16 942) (16 942) (868) Budgetary surpluses Other surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES EX/33 Part I Rev. - page 39

40 UNESCO STAFF FIDUCIARY FUNDS SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s US dollars) Medical Benefit Fund UNESCO Staff Savings and Loan Service UNESCO Commissary Fund UNESCO Restaurant Service UNESCO Children's Club & Day Nursery* SCHEDULE 1.4 TOTAL EX/33 Part I Rev. - page 40 INCOME Revenue Producing Activities Employer Contribution to Benefit Plan Employee Contribution to Benefit Plan Allocation from Other Funds Investment Income Currency Exchange Adjustments (938) Other TOTAL INCOME EXPENDITURE Staff costs Compensation/Benefit Paid Other Expenditures TOTAL EXPENDITURE EXCESS/(SHORTFALL) OF INCOME OVER EXPENDITURE (33) (140) Distribution to members of USLS (41 596) (41 596) (28 001) Other adjustment to reserves & fund balances (813) Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD * The UNESCO Childrens' Club and Day Nursery has been incorporated in SFF as from 01 January 2006.

41 U N E S C O Schedule page 1/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies PART I - UN SOURCES UN AIDS - AIDS Prevention, Awareness and Education Projects UNDP/Spain MDG Fund UN Development Programme UN Development Programme Projects UN East Timor J. Cultural Centre UN Economic and Social Commission for Asia and the Pacific UN Environment Programme - Memoranda of Understanding UN Fund for International Partnership UN Fund for Population Activities UN Joint Programmes UN Multi-Donor : International Workshops/Conferences UNESCO/UNOCHA Trust Fund for Tsunami Disaster Relief UNHCR Fund United Nations Central Emergency Response Fund United Nations Development Group Iraq Trust Fund United Nations Human Security Fund United Nations International Strategy for Disaster Reduction United Nations Lebanon Recovery Fund UNICEF Fund World Conference on Education for All TOTAL PART I PART II - OTHER EXTRA-BUDGETARY SOURCES A.TECHNICAL ASSISTANCE PROJECTS FINANCED BY LOANS / GRANTS FROM INSTITUTIONS African Development Bank: Cameroon Côte d'ivoire Democratic Republic of Congo Gambia Niger Rwanda Sierra- Leone Support to the ECOWAS Peace and Development Programme Co-operative Programme Arab Fund For Economic Development: Feasibility Study - Educational Industries / Decision Support Systems in Arab countries Asian Development Bank: HIV/AIDS Vulnerability and Risk Reduction among Ethnic Minorities Groups through Communication Strategies in GMS Lao PDR Uzbekistan EX/33 Part I Rev. - page 41

42 Vietnam U N E S C O Schedule page 2/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies Inter-American Development Bank: Brazil Latin America - Comparative Evaluation of Education Latin America - Summit of the Presidents for Education Evaluation Peru EX/33 Part I Rev. - page 42 Islamic Development Bank: Chad Niger Co-operative Programme Japan Bank for International Cooperation: Vietnam OPEC Fund: World Bank: Bangladesh Côte d'ivoire Mali Mauritania Populations and Perspectives for Development in the Arab World Senegal Strengthening Education Sector Response to prevent HIV/AIDS Tajikistan Co-operative Programme African Education Planners Study Tour Bangladesh Brazil Conservation Master Plan, Rehabilitation Activities for Cultural Heritage in the Bethlehem Area Consultation of the Mena Education Stake Holders Consulting Services within the Framework of UN Special Initiative - Africa Co-operation under EFA Framework - Consultancy Services - Africa Ghana Global Initiative for Quality Assurance Capacity Haiti Iran Latin American Laboratory for Assessment of the Quality of Education Morocco Programme of Analytical and Capacity Building conducted by the Pôle de Dakar Uzbekistan Vietnam Workshop on Strengthening the Role of Education Ministries in the Government's response to HIV/AIDS in Central Asia SUB-TOTAL PART II A B.SELF BENEFITING PROJECTS Aga Khan Foundation Albania Bahrain Cameroon

43 U N E S C O Schedule page 3/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies Chile Costa Rica Ecuador Guatemala Iraq Jordan Korea, Republic of Latin American Laboratory for Assessment of Quality in Education Lebanon Libyan Arab Jamahiriya Mexico Namibia Nigeria Saudi Arabia United Arab Emirates Uruguay SUB-TOTAL PART II B C.DONATED PROJECTS Albanian Trust Fund Arab Gulf Programme for United Nations Development Associate Experts' Scheme Austria Belgium Denmark Finland France Germany Greece Italy Japan Korea, Republic of Netherlands Norway Portugal Spain Sweden Switzerland United Kingdom Association of Private Committees Trust Fund Australian Trust Fund Belgian (Flanders) Trust Fund Canadian Trust Fund Czech Republic Trust Fund Danish Trust Fund European Commission Trust Fund Felissimo Trust Fund Finnish Trust Fund French Trust Fund German Trust Fund Greek Trust Fund Iranian Trust Fund Irish Trust Fund Islamic Call Society Trust Fund Italian Trust Fund Japanese Trust Fund Korea, Republic of, Trust Fund EX/33 Part I Rev. - page 43

44 U N E S C O Schedule page 4/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies Luxembourg Trust Fund Malta Trust Fund Menorca Trust Fund Mexico Trust Fund Multi-Donor Trust Fund Netherlands Trust Fund New Zealand Trust Fund Norwegian Agency for Development Trust Fund Norwegian Trust Fund OECD Trust Fund Portuguese Trust Fund Private Sector Trust Funds - other Private Sector UNESCO Chairs Qatar Foundation Trust Fund Romania Trust Fund Saudi Arabian Trust Fund Spanish Trust Fund Swedish Trust Fund Swiss Trust Fund United Arab Emirates Trust fund United Kingdom Trust Fund United States of America Trust Fund EX/33 Part I Rev. - page 44 SUB- TOTAL PART II C D.FUNDS FOR CULTURAL CAMPAIGNS, VOLUNTARY CONTRIBUTIONS AND INTERNATIONAL APPEALS PRIZES AND AWARDS : Arirang Prize (Korea Rep. Of) Emir Jaber Al-Ahmad Al-Jaber Al-Sabah Prize Felix Houphouet-Boigny Peace Prize International Prize for Water Conservation : "Great Artificial River" Japan Shipbuilding Industry Foundation Endowment for UNESCO Peace Prize Javad Husain "Young Scientist" Prize King Hamad Bin Isa Al-Khalifa Prize Literacy Prizes Conficius Prize for Literacy International Reading Association Literacy Award King Sejong Literacy Prize Malcolm Adiseshiah International Literacy Prize Noma Literacy Prize Melina Mercouri Prize Prince of Asturias Prize Samarkand Taronasi Prize Sharjah Prize for Arab Culture Sheikh Zayed Bin Sultan Al Nahyan Prize Special Account for : International Simon Bolivar Prize Sultan Qaboos Prize for Environmental Preservation UNESCO/Jikji Memory of the World Prize UNESCO Kalinga Prize for the Popularization of Science UNESCO Prize for Children and Young People Literature in the Service of Tolerance UNESCO Prize for the Promotion of the Arts UNESCO-Madanjeet Singh Prize for the Promotion of Tolerance and Non-Violence

45 U N E S C O Schedule page 5/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies FELLOWSHIP AND SCHOLARSHIP FUNDS : Nessim Habif Fund Scholarship Fund for Higher Educational Students in Occupied Arab Territories Scholarship Programme for Girls in Africa Theresa McKay Memorial Fund Fellowships Third World Academy of Sciences UNESCO-ASCHBERG Foundation Trust Fund UNESCO Fellowship Bank OTHERS : Action in Education for Afghan Refugees African Research and Development - Science & Technology ANSTI Membership Fund Asian Programme of Educational Innovation for Development Asia-Pacific Programme of Education for All Capacity Building for Education for All CCT Links Children in Need Conservation and Restoration of Wat Phu Archaelogical Sites Copyrights Programme Criança Esperanza - Hope on our Children Education For All - Dakar Follow-up Emergency Relief Fund Fund for the Elimination of Doping in Sport Global Alliance for Cultural Diversity Great Apes Survival Project Increased Aid to Developing Countries Information Programme for All Initiative for the Volga-Caspian basin Integral Study of the Silk Roads Intergovernmental Informatics Programme Intergovernmental Oceanographic Commission ( I.O.C ) International Campaigns - Cultural Heritage International Computer Driving License International Fund for Cultural Diversity International Fund for the Development of Physical Education and Sport International Fund for the Promotion of Culture International Fund for the Promotion of the Return of Cultural Works of Art to their Country of Origin International Programme for the Development of Communication International Programme on Technical and Vocational Education (UNEVOC) Man and Biosphere Programme (MAB) Mitigation Against Earthquake Losses in the Mediterranean Region Ocampo Donations Special Account Plan for the Promotion of Arab Culture Portal on Higher Education Institutions Preliminary Microzonation Map for Bam Priority Africa Programme for Education of Children in Difficult Situations Promotion of Cultural Heritage Activities Protection of Cultural Property in the Middle East in the Event of Armed Conflict Protection of the World Cultural and Natural Heritage Special Account - Egypt Special Accounts for General Histories Special Account - Contribution to Internal Oversight Service Special Account for Science and Human Sciences Sector - Div. of Foresight & Philosophy EX/33 Part I Rev. - page 45

46 U N E S C O Schedule page 6/6 OTHER SPECIAL ACCOUNTS AND TRUST FUNDS BALANCES AS AT 1 JANUARY 2006, RECEIPTS AND DISBURSEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 AND BALANCES AS AT 31 DECEMBER 2007 (Expressed in US dollars) RECEIPTS DISBURSEMENTS Fund Balances UNESCO Government Amounts Investment Exchange Other Project Programme Fund Balances Unliquidated Fund excluding ULOs Regular Contributions Financed From Income Difference Receipts Disbursements Support excluding ULOs Obligations Balances 1 January Programme UN and Costs 31 December (ULOs) 31 December 2006 UN Agencies Special Account for South South Cooperation in Education Special Account for Voluntary Contributions Special Account for the Reinforcement of the 33C/ Special Account for the Strengthening of UNESCO's Infrastructure and its Programme Special Fund for Youth The Convention for the Safeguarding of the Intangible Cultural Heritage Trust Fund for the Establishment of the Nubia Museum in Aswan and - - the National Museum of Egyptian Civilization in Cairo Trust Funds for the Preservation of : Moenjodaro Parsi Zorastrian Culture and Heritage Trust Funds for Safeguarding the : Monuments of Borobodur Monuments of Venice Tsunami Special Account UNESCO History Project UNESCO Media Fund World AIDS Foundation World Commission on Culture and Development World Heritage Fund World Solar Summit - High Level Expert Meeting EX/33 Part I Rev. - page 46 Sub-Total Part II D E. GOVERNMENT CONTRIBUTIONS TO FIELD OFFICES Special Account for the Contribution of the Government - - of Qatar for the Operation of the UNESCO Regional - Representative's Office in the Arab States of the Gulf Brazil UNESCO Antenna Beirut Office Venice Office Regional Bureau for Science and Culture in Europe - Venice SUB-TOTAL - PART II E F. CONTRIBUTIONS FOR HQ RENOVATIONS Japanese Garden - Renovation Plan SUB-TOTAL - PART II F TOTAL - PART II TOTAL PROGRAMME EXPENDITURE PARTS I AND II Closing Exchange Revaluation GRAND TOTAL Note: The fund balance of US $286,381,941 at 31 December 2007 includes amounts of US $28,307,782 held as Endowments

47 UNESCO SPECIAL ACCOUNTS FOR INSTITUTES SCHEDULE OF INCOME AND EXPENDITURE AND CHANGES IN RESERVES AND FUND BALANCES FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007 (Expressed in '000s USD) SCHEDULE International Bureau of Education International Centre for Theoretical Physics International International UNESCO Total International UNESCO Institute for Higher UNESCO-IHE Institute for Institute for UNESCO Institute for Institute for Education in Latin Institute for Capacity Information Institute of Educational Lifelong America and the Water Education Building in Technologies in Statistics Planning Learning Carribean Africa Education IBE ICTP IESALC IHE IICBA IIEP IITE UIS UIL INCOME Voluntary contributions Revenue producing activities Allocations from other funds (regular programme) Income for services rendered Investment income Currency exchange adjustments 24 2 (22) (2) (312) Other TOTAL INCOME EXPENDITURE Expenditure TOTAL EXPENDITURE EXCESS (SHORTFALL) OF INCOME (715) (80) (18) (2 279) OVER EXPENDITURE Savings on prior period obligations Transfers to/from reserves Other adjustments to reserves and fund balances (11) Reserves and fund balances, beginning of period RESERVES AND FUND BALANCES, END OF PERIOD EX/33 Part I Rev. - page 47

48 ASSETS UNESCO OTHER PROPRIETARY FUND SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE 2.2 Revenue Staff related New Management United States United Kingdom Generating Support costs Renovation plan TOTAL accounts Monitoring special account special account IPSAS Unattributed activities Instruments special account OPF Balances (Schedule 2.2.1) (Schedule 2.2.2) (Schedule 2.2.3) EX/33 Part I Rev. - page 48 Cash and term deposits Accounts receivable Inter-fund balances (67 048) Other Other assets TOTAL ASSETS LIABILITIES Unliquidated obligations Accounts payable Inter-fund balances Other Other liabilities TOTAL LIABILITIES RESERVES AND FUND BALANCES Operating reserves Other Surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES

49 UNESCO SPECIAL ACCOUNTS FOR INSTITUTES SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s USDs) SCHEDULE International Bureau of Education International Centre for Theoretical Physics International Institute for Higher Education in Latin America and the Carribean UNESCO-IHE Institute for Water Education International Institute for Capacity Building in Africa International Institute for Educational Planning UNESCO Institute for Information Technologies in Education UNESCO Institute of Statistics UNESCO Institute for Lifelong Learning Total IBE ICTP IESALC IHE IICBA IIEP IITE UIS UIL ASSETS Cash and term deposits Investments Accounts receivable Inter-fund balances Other Other assets TOTAL ASSETS LIABILITIES Unliquidated obligations Accounts payable Inter-fund balances Other Other liabilities TOTAL LIABILITIES RESERVES AND FUND BALANCES Operating reserves Other surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES EX/33 Part I Rev. - page 49

50 UNESCO PROGRAMME FIDUCIARY FUNDS SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) Institutes (Schedule 2.3.1) UNESCO Brasilia Office Other Special Inter-fund Accounts and Trust Eliminations Funds 2007 TOTAL SCHEDULE EX/33 Part I Rev. - page 50 ASSETS Cash and term deposits Investments (Market Value $2,372; $1,852) Accounts receivable Inter-fund balances (34 284) Other Other assets TOTAL ASSETS (34 284) LIABILITIES Unliquidated obligations Accounts payable Inter-fund balances (34 284) 0 Other Other liabilities TOTAL LIABILITIES (34 284) RESERVES AND FUND BALANCES Balances relating to projects funded by donors Operating reserves Other surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES (34 284)

51 UNESCO STAFF RELATED ACCOUNTS SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE Terminal Payment Fund Staff Compensation Fund Language Courses TOTAL ASSETS Accounts receivable Inter-fund balances TOTAL ASSETS LIABILITIES Unliquidated obligations TOTAL LIABILITIES RESERVES AND FUND BALANCES Other Surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES EX/33 Part I Rev. - page 51

52 UNESCO PROGRAMME SUPPORT COSTS FOR SPECIAL ACCOUNTS AND TRUST FUNDS SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) Funds-in Trust Overhead Cost Account (FITOCA) Special Account for Administrative and Operational Services (UNDP-AOS) Technical Support Services at the Programme Level (UNDP-SPPD) Technical Support at the Project Level (UNDP-STS) TOTAL SCHEDULE EX/33 Part I Rev. - page ASSETS Accounts receivable Inter-fund balances TOTAL ASSETS LIABILITIES Unliquidated obligations TOTAL LIABILITIES RESERVES AND FUND BALANCES Other Surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES

53 UNESCO REVENUE GENERATING ACTIVITIES SCHEDULE OF ASSETS, LIABILITIES, RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) SCHEDULE Public Information Liaison and Relations Fund Publications and Auditory and Visual Material Fund Utilization of Headquarters Fund Special Account for Documents/ Publications Services Special Account for Interpretation Services TOTAL ASSETS Cash and term deposits Accounts receivable Inter-fund balances Other Other assets TOTAL ASSETS LIABILITIES Unliquidated obligations Accounts payable Unredeemed coupons Other Other liabilities 65 TOTAL LIABILITIES RESERVES AND FUND BALANCES Operating reserves Other Surpluses TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES EX/33 Part I Rev. - page 53

54 UNESCO STAFF FIDUCIARY FUNDS SCHEDULE OF ASSETS, LIABILITIES AND RESERVES AND FUND BALANCES AS AT 31 DECEMBER 2007 (Expressed in '000s US dollars) Medical Benefit Fund UNESCO Staff Savings and Loan Service UNESCO Commissary Fund UNESCO Restaurant Service UNESCO Children's Club & Day Nursery SCHEDULE 2.4 TOTAL EX/33 Part I Rev. - page 54 ASSETS Cash and term deposits Investments Accounts receivable Inter-fund balances 1 1 Loans to staff members Other Stock on hand at lower of cost or net realizable value Other assets TOTAL ASSETS LIABILITIES Accounts payable Inter-fund balances 10 Distribution payable to members Members' deposits Other Liabilities 51 TOTAL LIABILITIES RESERVES AND FUND BALANCES Operating reserves Surplus TOTAL RESERVES AND FUND BALANCES TOTAL LIABILITIES, RESERVES AND FUND BALANCES

55 180 EX/33 Part I Rev. Annex I ANNEX I UNESCO EX GRATIA PAYMENTS Financial Regulation 10.3 states that ex gratia payments shall be notified to the General Conference. No ex gratia payments were recorded during the financial period ended 31 December 2007.

56 180 EX/33 Part I Rev. Annex II ANNEX II UNESCO SPECIAL ACCOUNTS AND TRUST FUNDS The new special accounts and trust funds established during the financial period were the following: United Nations sources UNDP/Spain MDG Fund UN Economic and Social Commission for Asia and the Pacific United Nations Central Emergency Response Fund UN Joint Programmes United Nations Lebanon Recovery Fund Technical Assistance Projects African Development Bank Democratic Republic of the Congo Support to the ECOWAS Peace and Development Programme Asian Development Bank HIV/AIDS Vulnerability and Risk Reduction among Ethnic Minority Groups through Communication Strategies in GMS Inter-American Development Bank Latin America Comparative Evaluation of Education Japan Bank for International Cooperation Viet Nam OPEC Fund Burkina Faso Strengthening Education Sector Response to prevent HIV/AIDS World Bank Global Initiative for Quality Assurance Capacity Latin American Laboratory for Assessment of the Quality of Education Programme of Analytical and Capacity-Building conducted by the Pôle de Dakar Self-Benefiting Projects Albania Cameroon Iraq Korea, Republic of United Arab Emirates Donated Projects Associate Experts Scheme Greece Associate Experts Scheme Switzerland Albanian Trust Fund Association of Private Committees Trust Fund Czech Republic Trust Fund Greek Trust Fund Malta Trust Fund Multi-Donor Trust Fund Romania Trust Fund

57 180 EX/33 Part I Rev. Annex II page 2 Ali.S.O. Al-Kaabi Abu Dhabi Association Vocations Patrimoine CISCO Systems International Coca Cola Foundation Foundation for the Preservation of Cultural Properties, Korea Gordon and Betty Moore Foundation International Management Group Maersk Oil Qatar MBl Jaber Foundation Odebrecht Engineering OSISA Space Group, Korea Studio Galli Ingegneria Spa The William and Flora Hewlett Foundation The Christensen Fund The British and Foreign School Society The British Council, Nigeria Universita degli Studi di Bergamo The Getty Grant Program Special Accounts for: King Hamad Bin Isa Al-Khalifa Prize Confucius Prize for Literacy UNESCO Kalinga Prize for the Popularization of Science Fund for the Elimination of Doping in Sport International Fund for Cultural Diversity Portal on Higher Education Institutions South Cooperation in Education The Reinforcement of the 33 C/5 The Strengthening of UNESCO's Infrastructure and its Programme The Convention for the Safeguarding of the Intangible Cultural Heritage UNESCO/Jikji Memory of the World Prize Criança Esperanza - Hope for our Children Great Apes Survival Project Preliminary Microzonation Map for Bam Tsunami UNESCO History Project The following special accounts were closed during the biennium: Malcolm Adiseshiah International Literacy Prize UNESCO Prize for Children's and Young People's Literature in the Service of Tolerance Scholarship Fund for Higher Educational Students in Occupied Arab Territories Conservation and Restoration of Wat Phu Archaeological Sites Copyrights Programme Emergency Relief Fund Initiative for the Volga-Caspian basin Intergovernmental Informatics Programme International Programme on Technical and Vocational Education (UNEVOC) Tsunami World AIDS Foundation World Solar Summit High-Level Expert Meeting The UK Special Account

58 ANNEX III UNPAID CONTRIBUTIONS AS AT 31 DECEMBER 2007 PART I: ARREARS ON CONTRIBUTIONS FOR PRIOR FINANCIAL PERIODS (EXCLUDING ARREARS PAYABLE IN ANNUAL INSTALMENTS) AS OF 31 DECEMBER 2007 Balance due Balance due Balance due Balance due Balance due Balance due Balance due Balance due Balance due TOTAL Member States * Balance due USD USD USD USD USD USD USD USD USD USD Antigua and Barbuda 63,897 76,034 76,340 16,268 16,330 16,054 19,072 17, ,652 Bolivia 52,968 52,968 Brazil 2,524,485 2,524,485 Burundi Cape Verde 7,062 7,062 Central African Republic 6,357 7,062 13,419 Chile 652, ,830 Comoros 6,357 7,062 13,419 Costa Rica 149, ,162 Democratic Republic of the Congo 21,169 21,169 Dominica 7,062 7,062 Gambia 3,489 7,062 10,551 Guinea 14,125 14,125 Guinea-Bissau 7,062 7,062 India 1,279,396 1,279,396 Iran, Islamic Republic of 639, ,141 Iraq 468, ,652 1,026,533 1,059, , , , , ,466 5,531,440 Israel 10,575 10,575 Italy 387, ,494 Kenya 2,022 2,022 Kiribati 1,307 1,307 Lebanon 122, ,499 Liberia Libyan Arab Jamahiriya 218, ,004 Madagascar Marshall Islands 7,062 7,062 Mauritania 3,469 3,469 Mexico 1,403,880 1,403,880 Micronesia 2,013 2,013 Myanmar 52,968 52,968 Pakistan 27,567 27,567 Palau 5,815 5, EX/33 Part I Rev. Annex III

59 ANNEX III UNPAID CONTRIBUTIONS AS AT 31 DECEMBER 2007 PART I: ARREARS ON CONTRIBUTIONS FOR PRIOR FINANCIAL PERIODS (EXCLUDING ARREARS PAYABLE IN ANNUAL INSTALMENTS) AS OF 31 DECEMBER 2007 Balance due Balance due Balance due Balance due Balance due Balance due Balance due Balance due Balance due TOTAL Member States * Balance due USD USD USD USD USD USD USD USD USD USD Panama 58,625 58,625 Papua New Guinea 17,657 17,657 Qatar 79,424 79,424 Senegal 8,781 8,781 Sierra Leone 6,310 7,062 13,372 Singapore 285, ,348 Somalia 103,293 63,897 76,034 76,340 5,422 5,445 5,704 6,357 7, ,554 Spain 10,299,725 10,299,725 Sudan 63,562 63,562 Suriname 3,521 3,521 Tajikistan 1,506 1, EX/33 Part I Rev. Annex III - page 2 The former Yugoslav Republic of Macedonia Timor-Leste 4,230 4,230 Tunisia 200, ,638 Turkmenistan United States of America 30,865,265 30,865,265 Uzbekistan 71,865 71,865 Vanuatu 3,055 3,055 Venezuela 89,138 89,138 Zimbabwe 28,544 28,544 Yugoslavia, SFRY** 2,469, , ,766,483 Yugoslavia, Former FRY** 1,528, , , ,918 85, ,669,816 Total Member States 3,040,483 2,784,612 2,128,816 1,978, , , , ,662 49,844,242 62,351,515 *Arrears on contributions due in euros for are translated at the UN operational rate of exchange rate prevailing in December 2007 of USD 1 = EUR ** Recovery of arrears from the Socialist Federal Republic of Yugoslavia (SFRY) amounting to USD 2,766,483 and the former Federal Republic of Yugoslavia (FRY) amounting to USD 3,669,816 is under review.

60 UNPAID CONTRIBUTIONS AS AT 31 DECEMBER 2007 PART II: ARREARS OF CONTRIBUTIONS PAYABLE UNDER PAYMENTS PLANS AS OF 31 DECEMBER 2007 General TOTAL Conference Member State 2006 and 2007 total due Total deferred DUE PLUS session prior years to 2015 DEFERRED $ $ $ $ $ $ $ $ $ $ 32nd 1 AFGHANISTAN nd th 2 ANTIGUA AND BARBUDA th th 3 ARGENTINA - 34th nd 4 ARMENIA nd nd 5 AZERBAIJAN nd nd 6 CENTRAL AFRICAN REPUBLIC nd nd 7 COMOROS nd rd 8 COSTA RICA rd th 9 DJIBOUTI - 34th nd 10 GABON nd st 11 GAMBIA st nd 12 GEORGIA nd rd 13 GUINEA-BISSAU rd nd 14 KYRGYZSTAN nd rd 15 LIBERIA rd rd 16 NAURU rd rd 17 NIGER rd th 18 PARAGUAY 34th rd 19 PERU rd rd 20 REPUBLIC OF MOLDOVA rd th 21 SAO TOME AND PRINCIPE th nd 22 SIERRA LEONE nd nd 23 TAJIKISTAN nd nd 24 TURKMENISTAN nd TOTAL EX/33 Part I Rev. Annex III - page 3

61 180 EX/33 Part I Rev. Annex IV ANNEX IV WAIVERS GRANTED FOR CONTRACTS SUBMITTED TO THE CONTRACTS COMMITTEE In accordance with 176 EX/Decision 39.7 (c), information on waivers granted after review by the Contracts Committee during is as follows: Regular Programme Extrabudgetary TOTAL Contracts Submitted $ 000s Contracts Submitted $ 000s Contracts Submitted $ 000s Total contracts approved Total waivers approved The waivers granted in regard to the regular programme were mainly for Single Source Situations (e.g. when certain equipment has been bought competitively, but after-sales services have to be obtained by the manufacturer to ensure the validity of guarantees) or for reasons of standardization and harmonization, mainly in respect of UNESCO IT infrastructure to facilitate maintenance and support. For the extrabudgetary funds, the main reason for granting a waiver was due to partnerships or multi-year projects where it would not have been cost effective to change the partner/contractor after a satisfactory performance during the first part of the project. The issue on partnerships will in future be governed by Manual Item 513 on Implementation Partnerships. Printed on recycled paper

62 Executive Board Hundred and eightieth session 180 EX/33 Part II PARIS, 18 August 2008 Original: English Item 33 of the provisional agenda FINANCIAL REPORT AND AUDITED FINANCIAL STATEMENTS OF UNESCO FOR THE PERIOD ENDED 31 DECEMBER 2007 AND REPORT BY THE EXTERNAL AUDITOR PART II REPORT BY THE EXTERNAL AUDITOR SUMMARY This document contains the full report by the External Auditor on the accounts of UNESCO for the biennium, together with the written comments of the Director-General thereon.

63 180 EX/33 Part II OFFICE OF THE EXTERNAL AUDITOR OF THE UNITED NATIONS EDUCATIONAL, SCIENTIFIC AND CULTURAL ORGANIZATION REPORT On the financial statements for the biennium