32 ECSO Financial Report and Financial Statements and the Report of the External Auditor 202 3 Organization for Security and Co-oper ation in Europe
CONTENTS Letter of Transmittal to the Chairperson of the Permanent Council of the OSCE from the Secretary General .......................................................................................... 2 Letter of Transmittal to the President of the Austrian Court of Audit from the Secretary General ........................................................................................................ 4 Financial Report of the Secretary General ................................................................... 6 Statement of the Responsibilities of the Secretary General and C onformity of the Financial Statements .................................................................................................. 18 I AUDITED FINANCIAL STATEMENTS ....................................................................... 19 Letter from the External Auditor to the Secretary General ............................................................................... 20 Audit Opinion .......................................................................................................................................... 21 STATEMENT I: Statement of Financial Pos ition ......................................................................................... 24 STATEMENT II: Statement of Financial Performance.................................................................................. 25 STATEMENT III: Statement of Changes in Net Assets ................................................................................. 26 STATEMENT IV: Cash Flow Statement ........................................................................................................ 27 STATEMENT V: Statement of Comparison of Budget and Actual Amounts ................................................. 28 Notes to the F inancial Statements ............................................................................. 29 Note 1: Reporting Structure ....................................................................................................................... 32 Note 2: Significant Accounting Policies ..................................................................................................... 33 Note 3: Assets ........................................................................................................................................... 43 Note 4: Liabilities ....................................................................................................................................... 50 Note 5: Reserves ....................................................................................................................................... 54 Note 6: Revenue ....................................................................................................................................... 55 Note 7: Expenses ...................................................................................................................................... 58 Note 8: Foreign Exchange Gains/(Losses) ................................................................................................ 62 Note 9: Reconciliations of Budgets to Financial Statements ..................................................................... 62 Note 10: Other Disclosures ......................................................................................................................... 64 II ANNEXES TO THE FINANCIAL STATEMENTS ....................................................... 68 ANNEX 1 – SEGMENTAL REPORTING BY FUND ................................................... 69 Fund Accounting and Segment Reporting ........................................................................................................ 70 1: Financial Position - Summary by Source of Funds ................................................................................ 73 2: Financial Performance - Summary by Source of Funds ........................................................................ 74 3: Cash Flow - Summary by Source of Funds ........................................................................................... 75 A.1: Financial Position - Secretariat and Institutions ..................................................................................... 76 A.2: Financial Performance - Secretariat and Institutions ............................................................................. 77 B.1: Financial Position - Field Operations by Region .................................................................................... 78 B.2: Financial Performance - Field Operations by Region ............................................................................ 79 C.1: Financial Position - South-Eastern Europe ............................................................................................ 80 C.2: Financial Performance - South-Eastern Europe .................................................................................... 81 D.1: Financial Position - Eastern Europe ...................................................................................................... 82 D.2: Financial Performance - Eastern Europe .............................................................................................. 83 E.1: Financial Position - Caucasus ............................................................................................................... 84 E.2: Financial Performance - Caucasus ....................................................................................................... 85 F.1: Financial Position - Central Asia............................................................................................................ 86 F.2: Financial Performance - Central Asia .................................................................................................... 87 G.1: Financial Position - Special Purpose Funds .......................................................................................... 88 G.2: Financial Performance - Special Purpose Funds .................................................................................. 89 H.1: Financial Position - Extra-Budgetary Funds .......................................................................................... 90 H.2: Financial Performance - Extra-Budgetary Funds................................................................................... 91 J: Expenditure - Extra-budgetary by Executive Structure .......................................................................... 92
ANNEX 2 – YEAR-END EXPENDITURE REPORT AND STAFFING OVERVIEW .... 93 Year-end Expenditure Report .............................................................................................................. 94 Staffing Overview - Budget and Actual Staff Positions, Post Table ....................................................... 100 ANNEX 3 – STATEMENT ON INTERNAL CONTROL ............................................. 101 Statement on Internal Control for 2023 .................................................................................................... 102 ANNEX 4 – REPORT OF THE EXTERNAL AUDITOR ............................................ 113 Report of the External Auditor on the Financial Statements of the Organization for Security and Co-operation in Europe for the year ended 31 December 202 3 ................................................................ 114 APPEN DIX – OSCE PROVIDENT FUND STATEMENT .......................................... 158 OSCE Provident Fund Summary Statement 2023 .................................................................................... 159
Letter of Transmittal to the Chairperson of the Permanent Council to the OSCE from the Secretary General
Letter of TransmittaltotheChairperson of thePermanentCouncilofthe OSCE fro theSecretaryGeneral ~se OrganizationforSecurityandCo-operationinEurope The Secetariat 1July 2024 Madam Chairperson, Pursuant toFinancialRegulation7.04,Ihavethehonourtosubmitthe FinancialReport andFinancialStatements oftheOrganization for SecurityandCo-operationinEurope fortheyearended31December2023andthe ReportoftheExternalAuditorthereon foryourconsiderationandapproval. Yours sincerely, HelgaMaria Schmid SecretaryGeneralPage 2
Letter of Transmittal to the First President of the Court of Auditors from the Secretary General
Organization for Security andCo-operation in Europe The Secretariat 29 March 2024 Madame,Pursuant to Financial Regulation 7.04, I havethe honour to submit the draftFinancial Statements of the Organization for Security and Co-operation in Europe for the year ended 31 December2023. Yours sincerely, Helga Maria Schmid Secretary General PresidentMs Margit Kraker Austrian Court of Auditor Page 4
Financial Report of the Secretary General
Financial Report of the Secretary General for the year ended 31 December 2023 INTRODUCTION 1. The Secretary General of the Organization for Security and Co-operation in Europe hereby submits the Financial Report, the Financial Statements, and the Report of the External Auditor, with their opinion, for the year ended 31 December 2023, in accordance with Financial Regulation 7.04. 2. The Financial Statements are prepared on an accrual basis in accordance with International Public Sector Accounting Standards (IPSAS) and the OSCE’s Financial Regulations. 3. The OSCE is a forum for political dialogue on a wide range of security issues and a platform for joint action to improve the lives of individuals and communities. Through its comprehensive approach to security that encompasses the politico- military, economic and environmental, and human dimensions and its inclusive membership, the OSCE helps bridge differences and to build trust between States by co- operating on conflict prevention, crisis management and post- conflict rehabilitation. With 57 participating States in North America, Europe, and Asia, the OSCE is the world’s largest regional security organization. The OSCE is a regional organization in the sense of Chapter VIII of the United Nations Charter and is an observer in the United Nations General Assembly. 4. This report focuses on the financial position and performance of the OSCE, its expenditure against all provisional expenditure authorizations issued in 2023, in line with FR 3.04 and relevant PC decisions, including the Financial Regulations. 5. An organisational chart of OSCE Structures and Institutions as at 31 December 20 23 is included as A nnex 1 to the Financial Report. SUMMARY OF THE YEAR 20 23 6. The most significant factor influencing the financial performance of the OSCE during the year 2023 was the lack of consensus to agree the 2023 Unified Budget, which adversely affected both programmatic activity and the efficiency of resource utilisation. In consequence of this, Financial Regulation 3.04 was applied throughout 2023 and an allotment of 25% of the 2021 budget was made to cover the first three months of the year, followed by monthly allotments for the remainder of the year and an additional expenditure authorization approved by Permanent Council D ecision 1462 dated 28 September 2023 (PC.DEC/1462). Since the Permanent Council also had not approved the 2022 Unified Budget, the budgetary allotments were made on the basis of the last approved budget, that for 2021. In an environment of high inflation, this de facto Zero Nominal Growth budget proved to be inadequate to meet the needs of the Organization and the Secretary General established an extra-budgetary Repository Programme (RP) “Core Support Mechanism” to accept contributions from participating States to cover the Unified Budget underfunding of essential non -staff core support costs across different OSCE executive structures. The RP was funded on a voluntary basis by a number of participating States which released their shares of the 2021 cash surplus and returned payments for the closure phase of the Special Monitoring Mission to Ukraine, and additional contributions. Page 6
7. There were two other significant events affecting the financial environment of the Organization. The first of these was the delayed appointment of the C hair for 2024, which had the consequent effect of leaving the Advisory Committee on Management and Finance (ACMF) without a c hairperson from the beginning of October. Secondly, the Permanent Council could not find consensus on the appointment of an external auditor until 7 September 2023, impacting the handover from the previous auditor as well as the onboarding process. The willingness of the Republic of Austria to provide external audit at very short notice is greatly appreciated. 8. The 2022 comparative figures have been restated in the 2023 Financial Statements due to a change in accounting policy for the revised provisional billing for the Special Monitoring Mission to Ukraine closure period. This restatement is a technical accounting requirement of IPSAS, a result of which is a decrease in 2022 revenue of EUR 22.8 million, reducing the 2022 consolidated surplus from EUR 27.9 million to EUR 5.1 million, and the 2022 net assets from EUR 73.4 million to EUR 50.6 million. It is important to note that this restatement has no impact on the financial position of the OSCE as of 31 December 2023. 9. The consolidated surplus increased by 3.7 million Euros, from 5.1 million Euros (restated) in 2022 to 8.8 million Euros in 2023. International Organisations are expected to be broadly in balance over time and fluctuations in operating surplus and deficit caused by timing differences between revenue and expenditure recognition are entirely normal. The increase in 2023 is caused principally by the higher interest rates on bank holdings and investments made during the year, and the revenue reco gnised for the closed Mission, the Project Co-ordinator in Ukraine, against which there was no budgetary allotment. The overall financial position remains sound, with significant liquid assets in the form of cash and short- term investments. FINANCIAL STATEMENTS TREND ANALYSIS 10. Direct comparison of financial information between years is difficult due to the impacts of Covid- 19 and the closure of the missions described above, and the drivers of the differences are not always clear. For this reason, variances between years should be treated with caution. Key financial information is presented in the table below and analysed beneath, which spans the period from 2019, the last complete year before Covid. STATEMENT OF FINANCIAL POSITION 2019 2020 2021 2022 2023 EUR’000 (restated) Cash, bank and investments 109,065 134,744 133,347 159,910 173,945 Contributions receivable 16,897 18,861 29,129 26,765 18,713 Other current assets 11,946 11,167 12,708 11,983 12,295 CURRENT ASSETS 137,908 164,772 175,183 198,658 204,953 Non-current assets 15,974 17,823 20,110 13,783 11,660 TOTAL ASSETS 153,882 182,594 195,293 212,441 216,613 CURRENT LIABILITIES 112,545 130,007 141,825 158,063 153,371 NON-CURRENT LIABILITIES 6,458 3,434 3,544 3,737 3,513 TOTAL LIABILITIES 119,003 133,441 145,369 161,800 156,883 TOTAL NET ASSETS 34,879 49,154 49,924 50,641 59,730 Page 7
STATEMENT OF FINANCIAL PERFORMANCE 2019 2020 2021 2022 2023 EUR’000 (restated) Assessed Contributions 213,201 227,218 229,570 183,862 138,204 Extra-budgetary contributions 43,344 30,512 34,899 41,340 47,888 Contributions in kind 81,685 72,042 75,491 43,081 30,089 Other revenue 10,845 5,734 3,276 3,661 7,470 TOTAL REVENUE 349,075 335,506 343,236 271,944 223,651 Staff costs 220,409 214,820 217,674 163,604 128,235 Consultancy and sub-contracting 34,851 31,196 35,235 25,458 25,092 Travel 24,722 7,988 11,794 17,654 14,629 Services and office costs 41,538 32,130 38,238 34,543 34,192 Other expenses 34,552 32,020 29,601 28,302 11,306 TOTAL EXPENSES 356,072 318,153 332,542 269,561 213,453 Gains/(Losses) (390) (1,875) 1,310 2,748 (1,350) SURPLUS/(DEFICIT) FOR THE YEAR (7,387) 15,478 12,003 5,131 8,848 Assets 11. The cash position of the Organization remains sound, with current assets a t 1.34 times the current liabilities and total assets at 1.38 times total liabilities. The quick ratio, which is the generally accepted measure of liquidity, and which should ideally stand at above 1, is 1. 29 (investments are included in the calculation because none exceeded six months as at 31 December 2023). All three ratios show a positive position, with assets exceeding liabilities. The tables below illustrate these ratios over the course of the past five years, demonstrating that the Organization maintains good liquidity. The gradual increase in all three ratios over this period demonstrates that the organization has maintained a healthy financial position, a result of the sound management action taken notwithstanding the zero nominal growth budgets in 2020 and 2021 and the lack of an approved budget in both 2022 and 2023. Current Assets to current liabilities (EUR’000) 2019 2020 2021 2022 2023 (restated) Current assets 137,908 164,772 175,183 198,658 204,953 Current liabilities 112,545 130,007 141,825 158,063 153,371 Ratio 1.23 1.27 1.24 1.26 1.34 Total Assets to total liabilities (EUR’000) 2019 2020 2021 2022 2023 (restated) Total assets 153,882 182,594 195,294 212,441 216,613 Total liabilities 116,225 133,441 145,369 161,800 156,883 Ratio 1.32 1.37 1.34 1.31 1.38 Quick Ratio (EUR’000) 2019 2020 2021 2022 2023 (restated) Liquid assets 129,839 157,150 166,921 191,400 197,639 Current liabilities 112,545 130,007 141,825 158,063 153,371 Ratio 1.15 1.21 1.18 1.21 1.29 Page 8
Liabilities 12. Non-current liabilities, which are relatively low at the OSCE compared to many International Organisations, are made up of liabilities for employee benefits that are expected to fall due after more than one year, specifically for the expected cost of repatriation. The principal reason they are low is that the OSCE does not offer After Service Health Insurance (ASHI), which is a significant liability for many International Organisations. 13. The principal movement in current liabilities relates to funds held for third parties, partly in funds held for payment of seconded personal on behalf of the seconding nations. Another significant element relates to SMM, where surplus amounts from the bills issued to finance closure activities are also recognised as funds held for third parties. Extra -budgetary contributions, both in revenue deferred because it has not yet met the criteria for recognition, and in provisions for the return of unused pledges, total EUR 109.5 million, although the movements in these two elements between 2022 and 2023 largely cancel each other. COVID-19 had an impact in reducing programmatic activity during 2020 and 2021 with the result that pledges remained unused at their expiry and were awaiting return to donors at the end of the year. Revenue 14. Overall, total revenue of the OSCE de creased to EUR 223.7 million (EUR 271.9 million in 2022, restated) , mainly due to de creases in reven ue recognised in respect of SMM, where reductions have been recorded in assessed contributions (EUR 45 .7 million), voluntary contributions (EUR 5.1 million) and contributions in kind (EUR 12.0 million) for the closed Mission. Revenue from Assessed Contributions for the Secretariat, Institutions and Field Offices r emained stable at EUR 138.2 million in all five years 0F 1 , due to Z ero Nominal Growth budgets in 2020 and 2021 and the fact that Financial Regulation 3.04 had the same practical effect in 2022 and 2023. *This table exclud es the category other revenue from the principal sources of revenue 1 The total approved UB for 2019 was EUR 139.0 million, of which EUR 138.2 was financed from Assessed Contributions and the remainder was made up of supplemental budgets funded from cash surpluses. In 2022 and 2023, the Permanent Council also increased the sum of provisional expenditure authorizations to finance unfunded requirements. 61% 68% 67% 68% 62% 12% 9% 10% 15% 21% 23% 21% 22% 16% 13% - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 2019 2020 2021 2022 2023 Principal Sources of Revenue (EUR 000) Assessed ContributionsExtra-Budgetary ContributionsContributions in KindPage 9
Expenses 15. The closure of SMM and PCUk largely explains th e reduction in total expense of 36% between 2021 and 2023. Staff costs remain the biggest category of OSCE expense and inflation-driven pay increases promulgated by the International Civil Service Commission (ICSC) have driven cost growth in each year. Staff seconded by participating States remained an important resource, and these contributions had a total estimated value to the OSCE of EUR 24.4 million in 2023, significantly less than in the years up to 2021, again largely due to the closure of SMM. The reduction between 2019 and 2020 was caused by a refinement in the method of estimating the value of secondees, which had the effect of reducing reported costs. 16. While total staff costs remain broadly constant except for the effects of mission closures and the inflation mentioned above, travel costs tend to reflect levels of programmatic activity. The sharp decrease in 2020 and the upward trajectory thereafter until 2023 are mostly due to the effects of the COVID-19 pandemic and recovery from it to pre-pandemic levels of activity, although total costs are significantly lower due to the amount of operational travel undertaken by SMM. Surplus/Deficit 17. Since International Organizations are not generally operated to make profits, there is an expectation that surpluses and deficits will broadly balance over time as they are driven by timing differences between the recognition of revenue and the expenditure of funds. Consequently, fluctuations are not unusual and do not necessarily present any cause for concern. Due in large part to the reduction in expenditure caused by the COVID-19 pandemic, the years 2020 and 2021 show relatively large operating surpluses in the Unified Budget, in particular 2020 when the pandemic first struck and programmatic activity and expenditure reduced. Special Purpose Funds (SPF) were dominated by SMM, which accounts for the majority (EUR 2.9 million) of the 2022 SPF deficit of EUR 3.7 million, though the impact of SMM on the 62% 68% 65% 61% 60% 10% 10% 11% 9% 12% 7% 3% 4% 7% 7% 12% 10% 11% 13% 16% 10% 10% 9% 10% 5% - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 2019 2020 2021 2022 2023 Principal Expenditure Categories (EUR 000) StaffConsultancy & SubcontractingTravelServices and Office CostsOtherPage 10
2023 SPF deficit fell significantly (to EUR 179 thousand). ExB projects show a series of surpluses and deficits, in line with the expectation that revenue and expenditure will balance over time. EUR’000 2019 2020 2021 2022 2023 (restated) Unified Budget 758 10,112 3,117 5,336 8,692 Special Purpose Funds (6,436) 5,836 8,319 (3,702) (897) Extra-budgetary funds (1,709) (470) 567 3,497 1,053 Total Surplus/(Deficit) for the period (7,387) 15,478 12,003 5,131 8,848 18. The cash surplus/deficit differs from operating surplus/deficit shown above for three reasons: (i) It relates only to those Executive Structures that make up the Unified Budget; (ii) The budget and IPSAS definitions of both revenue and expenditure differ and adjustments are necessary to reconcile the two; and (iii) An adjustment is made for net Assessed Contributions received by adding the amount outstanding as at 1 January and deducting the amount as at 31 December of the year in question. 19. The cash surplus for 2023 shows a substantial increase compared to 2022, a trend mirrored by the EUR 8.8 million overall operating surplus, which is EUR 3.7 million higher than in 2022. T he greater part of the cash surplus comes from the closure of SMM (EUR 20.7 million), with the 2023 Unified Budget cash surplus for 2023 totalling EUR 3.7 million. The position in the Unified Budget Funds is considerably tauter, with a reduction in the budgetary surplus of EUR 1.9 million against an increase in the operating surplus of EUR 3.4 million. The principal cause of this reduction is an increase in the level of unpaid contributions, offset by revenue from PCUk that was neither allotted nor consumed. As a proportion of the total Assessed Contributions, it is low, reflecting the tautness of the budgets under which the OSCE operates. EUR’000 2019 2020 2021 2022 2023 (restated) Budget Surplus/(Deficit) for the period 758 10,112 3,117 3,931 2,028 IPSAS adjustments 1,626 (7,506) (540) 427 2,971 Project Co-ordinator in Ukraine unallotted provision - - - - 3,619 Net Assessed Contributions received 394 1,434 1,250 (4,338) (4,893) Cash surplus1F 2 2,778 4,040 3,827 19 3,725 Final Unified Budget/Provisional Expenditure Authorizations 139,017 138,204 138,204 139,117 134,586 Cash Surplus percentage of UB 2.0% 2.9% 2.8% 0.0% 2.8% 2 The cash surplus relates purely to those Executive Structures that form the Unified Budget. The cash surplus recorded in the 2022 Financial Statements includes an additional amount of EUR 198 thousand relating to the Border Observer Mission, which was closed in October 2021. Page 11
SEGMENTAL BREAKDOWN 20. The OSCE had three principal revenue streams during 2023: Assessed Contributions (AC) for the Secretariat, Institutions and Field Missions; projects financed through Extra-Budgetary (ExB) contributions accepted under the terms of Article IX of the Financial Regulations; and other Special Purpose (SP) and ExB Funds to meet various objectives established by the Permanent Council. The following table shows the principal elements of the financial statements pertinent to each part of the OSCE’s budgetary structure. STATEMENT OF FINANCIAL POSITION EUR’000 UB SP ExB Total Current Assets 61, 762 23,880 119,311 204,953 Non-current Assets 8,111 626 2,924 11,660 TOTAL ASSETS 69,873 24,506 122,234 216,613 Current Liabilities 38,589 303 114,478 153,371 Non-current Liabilities 3,481 - 32 3,513 TOTAL LIABILITIES 42,070 303 114,510 156,883 TOTAL NET ASSETS 27,802 24,203 7,724 59,730 STATEMENT OF FINANCIAL PERFORMANCE EUR’000 UB SP ExB Total Revenue 174, 248 562 48,840 223,651 Expenses 165,253 1,454 46,746 213,453 Foreign Exchange Gains/(Losses) (304) (5) (1,041) (1,350) SURPLUS/(DEFECIT) FOR THE YEAR 8,692 (897) 1,053 8,848 2023 PROVISIONAL RESOURCE UTILISATION 21. Expenditure for 2023 is presented on a modified cash basis, which records expenses when they are incurred or binding commitments made, whereas expenses in the Statement of Financial Performance are recognised as goods or services are delivered in accordance with the accruals basis of IPSAS. The Statement of Comparison of Budget and Actual Amounts (Statement V) compares amounts on the budgetary basis and Note 9 provides detailed reconciliations between the two. In addition, the two accounting frameworks use different systems of cost classification to reflect the differing needs of the users. The following section of the report considers the budgetary performance on the budgetary basis, as distinct from the IPSAS basis discussed in the foregoing sections. 22. The Permanent Council could not find consensus on the Unified Budget Proposals tabled by the Chair and consequently there is no approved budget for 2023. Financial Regulation 3.04 provides that, in these circumstances, the Secretary General and Heads of Institution are authorized to incur obligations and make payments until 31 March of the current financial year up to the level of 25 per cent of the previous Budget, and thereafter, on a monthly basis up to 1/12th of the previous Budget until the new Budget is adopted. Since no new Budget was approved during the year, the Organization operated under Provisional Expenditure Authorizations throughout 2023 at the level of the approved 2021 Unified Budget (EUR 138 million, PC.DEC/1413 dated 18 August 2021), until PC.DEC/14 62 dated 28 September 2023 approved an Additional Provisional Expenditure Authorization of EUR 958 thousand, funded from the 2021 cash surplus. 23. The 2023 RUR represents an assessment of the extent to which the resources available in 2023 under the total provisional expenditure authorization have been used to report on progress towards outcomes. Furthermore, this report provides information on financial utilization, comparing actual expenditure to available resources as at the end of 2023, as well as the post table occupancy rate. The financial utilization rates throughout the RUR are calculated by reference to the original provisional expenditure Page 12
authorization made available at the level of 2021 UB, in line with Financial Regulation 3.04. Detailed information by executive structure, main programme and programme is provided below. 24. Due to the lack of an approved budget for 2023, the Organization was operating under the provisional expenditure authorization in accordance with Financial Regulation 3.04 for the entire year. The provisional expenditure authorization made available in line with Financial Regulation 3.04 amounted to EUR 134.6 million (at the level of the 2021 approved UB as per PC.DEC/1413 dated 18 August 2021, excluding the closed structures). In order for the Organization to meet its 2023 financial obligations concerning the conference and language services, in September 2023, the Permanent Council approved the additional provisional expenditure authorization in the amount of EUR 958 thousand (PC.DEC/1462 dated 28 September 2023), funded from the available cash surplus. 25. The absence of a consensus among participating States regarding the approval of the 2022 and 2023 UBs significantly hampered the OSCE’s ability to commit resources in a planned manner, posed serious challenges to the Organization’s ability to fund mandated activities and meet its contractual obligations and staff salaries, led to a real loss of purchasing power given the unprecedented level of inflation across whole OSCE area, and prevented the Organization from achieving planned cost efficiencies. The lack of budget approval continues to damage the reputation of the OSCE, renders the Organization less reliable in terms of delivery of the programmatic activities, and makes it a less attractive contracting partner, thus leading to a loss of credibility, trust and legitimacy. 26. In the last 5 years, the average UB utilization remained at the level of 98%. However, in most executive structures, the implementation rate is closer to 100% and starting with 2023 it exceeded 100% necessitating alternative means of funding (RP ‘Core Support Mechanism’). The achieved utilization rate is a reflection of the increased efforts by Programmes to sustain, constrain and adapt their operations to the monthly provisional allotments despite the lack of an approved budget and respond to the dire financial situation by reducing and reprioritizing their activities. *2023 budgetary expenditure includes EUR 1,240 thousand from the Repository Programme “Core Support Mechanism” 27. The 2023 total provisional expenditure authorization comprises EUR 63.3 million (47%) for the Secretariat and institutions and EUR 72.2 million (53%) for the field operations. The geographical distribution of resources made available under the total provisional expenditure authorization and the 2023 actual expenditure is shown below . 139,017 138,204 138,204 139,117 135,544 137,160 134,875 135,723 135,185 134,756 90% 91% 92% 93% 94% 95% 96% 97% 98% 99% 100% 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 2019 2020 2021 2022 2023 Budget vs Expenditure 2019 -2023 (EUR 000) Implementation Rate (%) Approved Unified Budget (Provisional Expenditure Authorisations for 2022 and 2023)Budgetary Expenditure Budget Utilisation 97.6%98.7% 98.2% 97.2% 99.4%Page 13
28. The distribution of the resources by main cost category, shown below, indicates that Staff Costs represent the largest category with 64% of the 2023 total provisional expenditure authorization, followed by the Operational Costs, the second largest, with 29%. The actual expenditure in 2023 by main cost category reflects a proportion of 67% for Staff Costs and 33% for Non-Staff costs as shown in the chart below. 29. Due to the lack of an approved budget for 2022 and 2023, the 2021 post table remained binding in 2023. The distribution of the approved posts in the chart below shows that 73% of all posts are located in field operations and the remaining 27% are in the Secretariat and institutions. From a staff category point of view, the post table shows the following breakdown: General Services – 53%, National Professional – 18%, International Seconded – 18% and International Contracted – 11%. Page 14
30. While staff costs continue to represent the largest share of total expenditures, the lack of updated and approved Post Table to meet the Organization’s critical needs hampers its ability to deliver its mandate. Due to the lack of an approved 2022 and 2023 UB, the Organization's human resources, which remained tied to the 2021 UB approved post table, were stretched to the limit. Lack of a UB approval in the past two years meant that none of the proposed post table changes could be implemented. Taking into account the vacancy rate per staff category, secondments – while being the most cost- effective category of staffing – continue to be the most challenging to fill, resulting either in the inability to carry out planned activities or the requirement to hire more expensive temporary staff. 31. During 2023, the OSCE advertised 181 international positions (68 contracted and 113 seconded), attracting 9,177 applications (7,350 for contracted roles and 1,827 for seconded positions). Of all applicants, 44% were long-listed for contracted international roles, surpassing our target of 35%. 32. The OSCE continues to rely heavily on the secondment system for a significant proportion of its post table (18% in 2023 or 61% of all international posts), and therefore the continuity of programmatic activities depends on the participating States’ sustained support and commitment to actively second qualified personnel. In 2023, the quality of applications for seconded positions generally did not meet expectations, with only 67% being long-listed per vacancy, falling short of the 75% target. This led to the extension and re-advertisement of 80% of seconded roles, significantly above the 15% target. On a brighter note, the recruitment process was more efficient, with the average time to hire in 2023 being 116 days. Page 15
Summit Periodic meeting of OSCE Heads of State or Government Permanent Council Regular body for political consultation and decision-making (weekly in Vienna) Forum for Security Co-operation Regular body for arms control and CSBMs (weekly in Vienna) Chairman-in-Office (CiO) North Macedonia (2023) Troika (Poland, North Macedonia, Malta) High-Level Planning Group Preparing for an OSCE Peacekeeping Force for Nagorno-Karabakh OSCE Assistance in Implementation of Bilateral Agreements Representative to the Latvian-Russian Joint Commission on Military Pensioners Personal Representatives of the CiO Court of Conciliation and Arbitration Geneva Open Skies Consultative Commission Promotes implementation of Open Skies Treaty, Meets in Vienna Joint Consultative Group Promotes implementation of CFE Treaty, Meets in Vienna OSCE related Bodies Ministerial Council Annual meeting of OSCE Foreign Ministers (except in years with Summit) Secretary General Vienna Office for Democratic Institutions and Human Rights Warsaw OSCE Representative on Freedom of the Media Vienna OSCE Parliamentary Assembly Copenhagen High Commissioner on National Minorities The Hague OSCE Secretariat Vienna and Prague Office Legend: ______ Line of Responsibility ............ Provides Support OSCE Field Operations OSCE Centre in Ashgabat OSCE Programme Offices: Dushabe Bishkek Astana Presence in Albani a The Personal Representative of CiO on the Conflict Dealt with by the OSCE Minsk Conference Project Co-ordinator in Uzbekistan The Minsk Process OSCE Mission in/to: Serbia Montenegro Moldova Kosovo Bosnia and Herzegovina Skopje Information Security Enhancement Fund IT Infrastructure Upgrade Fund Capital Investment Plan Technical Fund OSCE Structures and Institutions As at 31 December 2023Page 16
Statement of Responsibilities of the Secretary General and Conformity of the Financial Statements
Statement of the Responsibilities of the Secretary General and Conformity of the Financial Statements with the Financial Regulations of the OSCEand with International Public Sector Accounting Standards RESPONSIBILITIES OF THE SECRETARY GENERAL 1. The Secretary General, assisted by the heads of mission and heads of institution, is required by Financial Regulation 7.01 to maintain such accounting records for all Funds operated by the OSCE as are necessary according to International Public Sector Accounting Standards, and to prepare annual financial statements. 2. Financial Regulation 7.02 requires that the financial statements shall contain: a statement of financial position; a statement of financial performance; a cash flow statement; a statement of changes in net assets; a statement of comparison of budget and actuals; accompanied by segment reporting by Fund and such other information as may be requested by the Permanent Council or deemed necessary or useful by the Secretary General. 3. The Secretary General is further required to establish and issue Financialand Administrative Instructions, in consultation with the heads of institution whererequired, to provide for the appropriate implementation of the Financial Regulations as approved by the Permanent Council, including effective financial administration and the exercise of economy. Mechanisms for internal oversight and financial control are required to support the Secretary General’s management of the Organization’s resources. The Secretary General and the heads of institution, to the extent that their institutions are concerned, are responsible and accountable for the proper application of the Financial Regulations. STATEMENT OF CONFORMITY 4. We hereby confirm that the financial statements and supporting notes were properly prepared in accordance withthe Financial Regulations and applicable International Public Sector Accounting Standards. gaMaSchmid ley Secretary General ief of Accounts and Treasury Unit Acting Director of Management and Finance 30June 2024 Page 18
I AUDITED FINANCIAL STATEMENTS
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Financial Statements
EUR '000 1000 Note 2023 2022 ASSETS (Restated) Current Assets Cash and Cash Equivalents 3.1 112,818 48,313 Investments 3.2 61,127 111,597 Contributions Receivable 3.3 18,713 26,765 Accounts Receivable 3.4 4,980 4,725 Prepayments 3.5 6,526 6,954 Inventory 3.6 792 291 Other Current Assets 3.7 (4) 12 204,953 198,658 Non-Current Assets Property, Plant and Equipment 3.8 7,915 9,764 Intangible Assets 3.9 3,725 3,999 Other Non-Current Assets 3.7 20 20 11,660 13,783 Total Assets 216,613 212,441 LIABILITIES Current Liabilities Accounts Payable 4.1 3,505 3,290 Accruals 4.2 7,903 7,180 Deferred Revenue 4.3 5,764 5,607 Conditional ExB Contributions 4.4 102,639 91,721 Funds Held for Third Parties 4.5 17,657 19,026 Employee Benefits Current 4.6 8,387 7,558 Cash Surplus Current 4.7 0 3,827 Provisions 4.8 6,897 17,250 Other Current Liabilities 4.9 618 2,605 153,371 158,063 Non-Current Liabilities Employee Benefits Non-Current 4.6 3,513 3,737 Other Non-Current Liabilities 4.9 0 0 3,513 3,737 Total Liabilities 156,883 161,800 Net Assets 59,730 50,641 NET ASSETS/EQUITY Cash Surplus 5.1 24,613 218 Cash Surplus Withheld 5.2 15 27 Revolving Fund 5.3 2,710 2,710 Contingency Fund 5.3 2,180 2,180 Other Reserves 5.4 (2,844) (3,098) Accumulated Surplus/(Deficit) 5.5 33,056 48,604 Total Net Assets/Equity 59,730 50,641 (Signed) (Signed) (Signed) Helga Maria Schmid James Oxley Secretary General Chief of Accounts and Treasury 30 June 2024 Acting Director Management and Finance TOTAL OSCE I. Statement of Financial Position Total OSCE As at 31 December 2023 John AguirreThe accompanying Notes are an integral part of these Statements Page 24
EUR '000 1000 Note 2023 2022 REVENUE (Restated) Assessed Contributions 6.1 138,204 183,862 Extra-Budgetary Contributions 6.2 47,888 41,340 Finance Revenue 6.3 3,630 578 Contributions In-Kind 6.4 30,089 43,081 Revenue from Exchange Transactions 6.5 1,178 334 Other Revenue 6.6 2,662 2,747 Total Revenue 223,651 271,944 EXPENSES Staff Costs 7.1 128,235 163,604 Consultancy and Subcontracting 7.2 25,092 25,458 Travel Expenses 7.3 14,629 17,654 Services and Office Costs 7.4 34,192 34,543 Consumables and Supplies 7.5 3,204 6,104 Depreciation and Amortisation 7.6 3,297 9,238 Equipment Expenses 7.7 3,701 7,793 Other Operating Expenses 7.8 1,104 5,166 Total Expenses 213,453 269,561 Foreign Exchange Gains/(Losses) 8 (1,350) 2,748 Surplus/(Deficit) for the Period 9.1 8,848 5,131 (Signed) (Signed) (Signed) Helga Maria Schmid James Oxley Secretary General Chief of Accounts and Treasury 30 June 2024 Acting Director Management and Finance TOTAL OSCE II. Statement of Financial Performance Total OSCE For the Year Ended 31 December 2023 John AguirreThe accompanying Notes are an integral part of these Statements Page 25
III. Statement of Changes in Net Assets Total OSCE For the Year Ended 31 December 2023 EUR '000 Note Cash Surplus Cash Surplus Withheld Revolving Fund Contingency Fund Other Reserves Accumulated Surplus/(Deficit) Total Net Assets Balance as at 31 December 2022 218 27 2,710 2,180 (3,098) 48,604 50,641 Changes in Net Assets for 2023 Increase/(Decrease) in Cash Surplus Withheld 5.2 (12) (12) Allocation of Current Year Cash Surplus 4.7 0 Actuarial Gains/(Losses) 4.6 253 253 Surplus/(Deficit) for the Period 5.1, 9.1 24,395 (15,547) 8,848 Balance as at 31 December 2023 24,613 15 2,710 2,180 (2,844) 33,056 59,730 (Signed) (Signed) (Signed) Helga Maria Schmid James Oxley Secretary General Chief of Accounts and Treasury 30 June 2024 John Aguirre Acting Director Management and FinanceThe accompanying Notes are an integral part of these Statements Page 26
EUR '000 1000 Note 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES (Restated) Surplus/(Deficit) for the Period 9.1 8,848 5,131 Non-Cash Movements Deduction of Unrealized Foreign Exchange Gains/Losses on Cash and Cash Equivalents 8 982 (2,332) Deduction of Depreciation, Amortisation and Impairments 7.6, 3.10 3,297 9,238 Deduction of Loss on Disposal of PP&E 6.5 238 265 Deduction of Non-Cash Changes in Net Assets 5.4 253 (573) (Increase) / Decrease in Contributions Receivable 3.3 8,052 2,364 (Increase) / Decrease in Accounts Receivable 3.4 (255) (280) (Increase) / Decrease in Prepayments 3.5 428 (311) (Increase) / Decrease in Inventory 3.6 (501) 1,318 (Increase) / Decrease in Other Current/Non-Current Assets 3.7 16 (2) Increase / (Decrease) in Accounts Payable 4.1 215 1,272 Increase / (Decrease) in Accruals 4.2 723 (4,130) Increase / (Decrease) in Deferred Revenue 4.3 157 (3,524) Increase / (Decrease) in Conditional ExB Contributions 4.4 10,918 (2,273) Increase / (Decrease) in Funds Held for Third Parties 4.5 (1,369) 13,656 Increase / (Decrease) in Employee Benefits 4.6 605 (291) Increase / (Decrease) in Cash Surplus Payable 4.7 (3,827) (213) Increase / (Decrease) in Provisions 4.8 (10,353) 10,161 Increase / (Decrease) in Other Liabilities 4.9 (1,986) 1,773 Net Cash Flows from Operating Activities 16,441 31,248 CASH FLOWS FROM INVESTING ACTIVITIES (Purchase) / Sale of Investments 3.2 50,469 (82,787) (Addition) / Disposal of PP&E and Intangibles 3.8, 3.9 (1,412) (3,176) Net Cash Flows from Investing Activities 49,058 (85,963) CASH FLOWS FROM FINANCING ACTIVITIES Credits for Cash Surplus Withheld 5.2 (12) (14) Allocation of Cash Surplus 4.7 0 (3,827) Transfer between Funds - - Net Cash Flows from Financing Activities (12) (3,841) Net Increase/(Decrease) in Cash and Cash Equivalents 3.1 65,487 (58,557) Cash and Cash Equivalents at Beginning of Period 3.1 48,313 104,537 Foreign Exchange Gains/(Losses) on Cash and Cash Equivalents 8 (982) 2,332 Cash and Cash Equivalents at End of Period 112,818 48,313 (Signed) (Signed) (Signed) Helga Maria Schmid James Oxley Secretary General Chief of Accounts and Treasury 30 June 2024 Acting Director Management and Finance IV. Cash Flow Statement Total OSCE For the Year Ended 31 December 2023 TOTAL OSCE John AguirreThe accompanying Notes are an integral part of these Statements Page 27
Note 2023 Provisional Expenditure Authorization (FR 3.04) 1 Additional Provisional Expenditure Authorization (PC.DEC/1462) 2 Total Provisional Expenditure Authorizations 3 Actuals 4 Variance Repository Programme Expenditure 5 Total Variance Under/(Over) Total Authorizations 40,874 958 41,832 41,540 292 562 42,102 (270) 16,394 0 16,394 16,374 20 0 16,374 20 3,504 0 3,504 3,504 0 188 3,692 (188) 1,609 0 1,609 1,603 6 0 1,603 6 62,381 958 63,339 63,021 318 750 63,771 (432) 47,043 - 47,043 46,919 124 300 47,218 (176) 2,308 - 2,308 2,218 91 0 2,218 91 2,339 - 2,339 1,112 1,226 0 1,112 1,226 20,516 - 20,516 20,247 269 191 20,438 78 72,205 - 72,205 70,495 1,710 491 70,986 1,219 Total 9.2 134,586 958 135,544 133,516 2,028 1,240 134,756 787 (759) 3,730 Project Co-ordinator in Ukraine unallotted provision 3,619 8,618 Add:Assessed Contributions receivable as at 1 January 2023 7,722 Less:Assessed Contributions receivable as at 31 December 2023 8 12,615 Cash Surplus for the year 2023 5.1, 9.1 3,725 (Signed) (Signed) (Signed) Helga Maria Schmid James Oxley Secretary General Chief of Accounts and Treasury 30 June 2024 V. Statement of Comparison of Budget and Actual Amounts Secretariat, Institutions and Field Operations For the Year Ended 31 December 2023 1 - No Unified Budget for 2023 was approved by the Permanent Council and allotments were made under Financial Regulation 3.04 up to the level of the last approved budget (2021 Unified Budget). 2 - An Additional Provisional Expenditure Authorization for the Conference and Language Services Programme for 2023 was approved by the Permanent Council under PC.DEC/1462 dated 28 September 2023. EUR '000 Non-budget revenue 7 Reconciliation to Cash Surplus Revenue credits 6 Eastern Europe Caucasus Central Asia Total Field Operations Office for Democratic Institutions and Human Rights High Commissioner on National Minorities Representative on Freedom of the Media Total Secretariat and Institutions South-Eastern Europe 7 - Non-budget revenue represents amounts received over and above the Assessed Contributions, principally interest received from banks. John Aguirre Acting Director Management and Finance The Secretariat Budgetary excess of revenue over expenditure 8 - Contributions were assessed in accordance with Financial Regulation 4.04 and a second bill was issued to fund the allotments made under Financial Regulation 3.04. A full breakdown by Fund, Main Programme and Programme can be found in the Resource Utilization Report at Annex 2 to these Financial Statements. 3 - The Total Provisional Expenditure Authorization represents the level of 2021 Unified Budget complemented by PC.DEC/1462. 4 - The budget basis and the accounting basis differ. Actuals are reported on this statement on a budget basis. Refer to Note 9 for more information on the difference in bases. 5 - Revenue credits represent additional revenue items which are recorded as credits to expenditure to finance purchase of replacement assets. 6 - Revenue credits represent additional revenue items which are recorded as credits to expenditure to finance purchase of replacement assets. The accompanying Notes are an integral part of these Statements Page 28
Notes to the Financial Statements
Notes Notes to the Financial Statements NOTE 1: REPORTING STRUCTURE 1.1 – Reporting Entity 1.2 – Fund Accounting and Segment Reporting NOTE 2: SIGNIFICANT ACCOUNTING POLICIES 2.1 – Basis of Presentation 2.2 – Prior Year Restatements and Changes in Estimates and Presentation 2.3 – Financial Instruments 2.4 – Uncollected Assessed Contributions 2.5 – Inventories 2.6 – Property, Plant and Equipment 2.7 – Intangible Assets 2.8 – Impairment of Assets 2.9 – Operating Leases 2.10 – Accruals 2.11 – Employee Benefits 2.12 – Cash Surplus or Deficit 2.13 – Deferred Revenue 2.14 – Provisions 2.15 – Contingent Liabilities and Contingent Assets 2.16 – Revenue from Non-Exchange Transactions 2.17 – Contributions In-Kind 2.18 – Revenue from Exchange Transactions 2.19 – Indirect Common Costs 2.20 – Expenses 2.21 – Critical Accounting Estimates and Judgments NOTE 3: ASSETS 3.1 – Cash and Cash Equivalents 3.2 – Investments 3.3 – Contributions Receivable 3.4 – Accounts Receivable 3.5 – Prepayments and Services Receivable 3.6 – Inventory 3.7 – Other Current and Non-Current Assets 3.8 – Property, Plant and Equipment 3.9 – Intangible Assets 3.10 – Impairment of Assets NOTE 4: LIABILITIES 4.1 – Accounts Payable 4.2 – Accruals These Notes are an integral part of the Financial Statements Page 30
Notes 4.3 – Deferred Revenue 4.4 – Conditional Extra-Budgetary Contributions 4.5 – Funds Held for Third Parties 4.6 – Employee Benefits 4.7 – Cash Surplus Current 4.8 – Provisions 4.9 – Other Current and Non-Current Liabilities NOTE 5: RESERVES 5.1 – Cash Surplus 5.2 – Cash Surplus Withheld 5.3 – Revolving and Contingency Funds 5.4 – Other Reserves 5.5 – Accumulated Surplus/(Deficit) NOTE 6: REVENUE 6.1 – Assessed Contributions 6.2 – Extra-Budgetary Contributions 6.3 – Finance Revenue 6.4 – Contributions In-Kind 6.5 – Revenue from Exchange Transactions 6.6 – Other Revenue NOTE 7: EXPENSES 7.1 – Staff Costs 7.2 – Consultancy and Subcontracting 7.3 – Travel Expenses 7.4 – Services and Office Costs 7.5 – Consumables and Supplies 7.6 – Depreciation and Amortization 7.7 – Equipment Expense 7.8 – Other Operating Expenses NOTE 8: FOREIGN EXCHANGE GAINS/(LOSSES) NOTE 9: RECONCILIATIONS OF BUDGETS TO FINANCIAL STATEMENTS 9.1 – Reconciliation of Surplus/ (Deficit) for the Period 9.2 – Reconciliation of Actual Amounts on a Comparable Basis and Cash Flow Statement NOTE 10: OTHER DISCLOSURES 10.1 – Financial Risk Management 10.2 – Contingent Assets and Contingent Liabilities 10.3 – Leases and Contractual Obligations 10.4 – Related Party Disclosures 10.5 – Events After the Reporting DateThese Notes are an integral part of the Financial Statements Page 31
Notes Notes to the Financial Statements NOTE 1: REPORTING STRUCTURE 1.1 – Reporting Entity The OSCE traces its origins to the early 1970s, to the Helsinki Final Act (1975) and the creation of the Conference on Security and Co-operation in Europe (CSCE). In 1994, the CSCE, having evolved well beyond its initial role, was renamed the Organization for Security and Co-operation in Europe. Now with 57 participating States in Europe, North America and Asia, the OSCE is the world’s largest regional security organization, working to ensure peace and stability for more than a billion people. The OSCE is a regional organization in the sense of Chapter VIII of the United Nations Charter and is an observer in the United Nations General Assembly. The OSCE operates in three dimensions: Politico-military dimension – includes mechanisms for conflict prevention and resolution, and military confidence-building measures. Economic and environmental dimension – activities aimed at counteracting threats and challenges to security and stability caused by economic and environmental factors. Human dimension – set of norms and activities related to human rights and the rule of law. With its Secretariat, specialized Institutions, expert units and network of Field Operations, the OSCE addresses a range of issues that have an impact on common security, including arms control, terrorism, good governance, energy security, human trafficking, democratization, media freedom and minority rights. OSCE’s Secretariat is based in Vienna. Most of the OSCE’s activities are implemented in South-Eastern Europe, Eastern Europe, the South Caucasus and Central Asia. Field Operations play a major role in this regard, they are established at the invitation of the respective host countries, and their mandates are agreed by consensus by the participating States. Additional activities, funded from axtra- budgetary contributions, are undertaken in accordance with Article IX of the Financial Regulations to supplement the Unified Budget and other programmes. 1.2 – Fund Accounting and Segment Reporting The basic financial governing document of OSCE is the Financial Regulations approved by the Permanent Council on 27 June 1996 (DOC.PC/1/96) and subsequently revised. The latest revision is PC.DEC/1419 dated 16 November 2021. In accordance with these Regulations, the OSCE operates a system of fund accounting and the audited Financial Statements present the consolidated financial results of Budgetary Funds, as well as Special Purpose Funds and Extra-Budgetary Funds. For purposes of the presentation of the 2023 Unified Budget Proposal, Funds were grouped under Secretariat and Institutions; and Field Operations, with the latter, in turn, being grouped into Regions. This hierarchical presentation is also followed in the segmental reports annexed to the 2023 Financial Statements. The segmental information also includes an analysis of extra-budgetary expenses broken down by Executive Structure. Full details of the Funds budgeted and segments reported in 2023 can be found in Annex 1 to these Statements. These Notes are an integral part of the Financial Statements Page 32
Notes NOTE 2: SIGNIFICANT ACCOUNTING POLICIES 2.1 – Basis of Presentation 2.1.1 – Applicable Accounting Standards These Financial Statements are prepared on an accrual basis, in accordance with the requirements of International Public Sector Accounting Standards (IPSAS) and the OSCE Financial Regulations, and using the historic cost convention. Where IPSAS is silent concerning any particular matter, the appropriate International Financial Reporting Standard (IFRS) or International Accounting Standard (IAS) is applied. The Organization has adopted IPSAS 41 “Financial Instruments” with effect from 1 January 2023. This Standard replaces IPSAS 29 and establishes new requirements for classifying, recognizing, and measuring financial instruments. 2.1.2 – Reporting Year These Financial Statements cover the calendar year ended 31 December 2023. The reporting period coincides with the calendar year. 2.1.3 – Going Concern basis The Financial Satements are prepared on the basis that the OSCE is a going concern. 2.1.4 – Currency The Financial Statements are presented in Euro which is also the functional currency of the Organization. The figures are presented rounded to the nearest thousand Euros and to the nearest one-tenth of a percent, which may result in totals that differ slightly from the sum of their constituents. Foreign currency transactions are translated into Euros based on the prevailing United Nations Operational Rates of Exchange (UNORE). The UNORE are normally set on the first day of each month, and revised mid-month with effect from the 15 th of the month. Assets and liabilities are valued at the end of the reporting period using the UNORE prevailing on 31 December. Gains and losses arising from transactions and translation are recorded as currency exchange adjustments. 2.2 – Prior Year Restatements, Changes in Estimates and Presentation Differences The 2022 Financial Statements represent the financial position of the Organization as at 31 December 2022, in accordance with the operational activites and all relevant management information available at the time. During October 2023, a second provisional bill was issued in relation to the SMM administrative closure period from 1 April 2022 onwards, to align the total billing with the proposed budgetary requirements. However, the decision to issue this revised provisional first bill in October 2023 represents a change in accounting policy, the 2022 comparative figures have therefore been restated accordingly. the effects of which are disclosed below. 2.2.1 – Restatement - Revenue Revenue from Assessed Contributions for SMM was recorded in the 2022 Financial Statements at EUR 68.5 million, this comprised of the provisional second bill for the Extension of the Mandate of the Special Monitoring Mission to Ukraine from 1st April 2021 until 31st March 2022 in the amount of EUR 22.8 million, as per PC.DEC/1401, and the provisional first bill from 1 April 2022 onwards for EUR 45.7 million. As the revised provisional first bill from 1 April 2022 onwards reduced the assessment to EUR 22.8 million, the 2022 comparative figure for assessed contributions revenue has been restated at EUR 45.7 million in Statement II, with the effects also disclosed in Note 6.1. These Notes are an integral part of the Financial Statements Page 33
Notes The allowance for doubtful debt reported in 2022, in line with IPSAS 29, included the outstanding arrears for assessed contribution arising from the provisional first bill from 1 April 2022 onwards. The 2022 comparative figures for other revenue under Statement II and Note 6.6 have been restated to reflect the decrease in the allowance for doubtful debt resulting from the reduction in outstanding arrears. 2.2.2 – Restatement – Assessed Contributions Receivable Assessed contributions receivable reported in the 2022 Financial Statements included all unpaid amounts arising from the provisional first bill from 1 April 2022 onwards . The 2022 comparative figures in Statement I and Note 3.3 have been restated to reflect the reduction of EUR 10.5 million in open receivables as a result of the revised provisional first bill from 1 April 2022 onwards, and the decrease in the allowance for doubtful debt, an overall decrease in Contributions Receivable of EUR 10.4 million. 2.2.3 – Restatement – Funds Held for Third Parties The 2022 comparative figures for funds held for third parties have been restated in Statement I and Note 4.5, to include the cash received from participating States for SMM assessed contribution in excess of the revised provisional first bill from 1 April 2022 onwards. 2.2.4 – Reconciliations The effects of these restatements on the Total Net Assets/Equity for 2022 in Statement I and the Surplus for the year 2022 in Statement II are tabulated below. Statement I Statement of Financial Position EUR ‘000 Note Amount in 2022 Financial Statements Amount of Restatement Restated Amount in 2023 Financial Statements Contributions Receivable 2.2.2 37,205 (10,440) 26,765 Current Assets 209,097 (10,440) 198,658 Total Assets 222,880 (10,440) 212,441 Funds Held for Third Parties 2.2.3 6,666 12,359 19,026 Current Liabilities 145,704 12,359 158,063 Total Liabilities 149,441 12,359 161,800 Net Assets 73,440 (22,799) 50,641 Accumulated Surplus/(Deficit) 71,403 (22,799) 48,604 Total Net Assets/Equity 73,440 (22,799) 50,641 Statement II Statement of Financial Performance EUR ‘000 Note Amount in 2022 Financial Statements Amount of Restatement Restated Amount in 2023 Financial Statements Assessed Contributions 2.2.1 206,691 (22,829) 183,862 Other Revenue 2.2.1 2,718 30 2,747 Total Revenue 294,743 (22,799) 271.944 Surplus/(Deficit) for the Period 27,930 (22,799) 5,131 These Notes are an integral part of the Financial Statements Page 34
Notes 2.3 – Financial Instruments Financial instruments consist of cash, bank accounts, short-term deposits, contributions and other accounts receivable and accounts payable. Financial instruments maturing within one year of the reporting date are classified as current. Financial instruments with a maturity date of more than one year after the reporting date are classified as non-current assets. The OSCE does not engage in transactions involving hedging or derivative financial instruments. Financial instruments are recognized when OSCE becomes a party to the contractual provisions of the instrument until such time as the rights to receive cash flows from those assets have expired or have been transferred and the Organization has transferred substantially all the risks and rewards of ownership. Financial instruments are initially recognized at fair value, normally being the transaction price. The subsequent measurement depends on their classification. The OSCE classifies its financial instruments at amortized cost based on the Organizations management model and the contractual cash flow characteristics of the financial instruments. The OSCE assesses impairment of its financial assets on a forward-looking expected credit loss basis. Impact of the adoption of IPSAS 41 Classification and measurement principles for financial assets The new IPSAS introduces a principles-based approach to the classification of financial assets and requires the use of two criteria: the entity’s model for managing its financial assets and the contractual cash-flow characteristics of those assets. Depending on these criteria, financial assets are classified in the following categories: ‘financial assets at amortized cost’ (AC), ‘financial assets at fair value through net assets/equity’ (FVNA), or ‘financial assets at fair value through surplus or deficit’. Impairment model Whereas the previous impairment model was based on incurred losses, IPSAS 41 has introduced a forward-looking impairment model based on expected credit losses (ECL) over the lifetime of the financial assets (the simplified approach). The ECL is the present value of the difference between the contractual cash flows and the cash flows that the OSCE expects to receive and takes into account possible default events and the evolution of the credit quality of the financial assets. The new impairment model applies to all financial assets measured at AC or at FVNA. With the adoption of IPSAS 41, the measurement category of each group of financial instruments was reviewed. The table below identifies the measurement category for each group of financial instruments under IPSAS 29 and IPSAS 41. As can be seen from the table, there was no change in the application of the classification requirements between the two standards as the recognition of the financial assets and financial liabilities remain at amortized cost. FINANCIAL ASSETS Asset Category Financial Asset Classification IPSAS 29 Classification IPSAS 41 Management Model Test SPPI Test* Classification Category Cash & Cash Equivalents Cash in bank and on hand – convertible & non- convertible Loans & Receivables (at amortized cost) Hold to collect cash flows N/A Amortized cost These Notes are an integral part of the Financial Statements Page 35
Notes Term Deposits & Others (< 90 days) Loans & Receivables (at amortized cost) Passed Amortized cost Investments Term Deposits (90 days or more) Loans & Receivables (at amortized cost) Hold to collect cash flows Passed Amortized cost Certificate of Deposit Loans & Receivables (at amortized cost) Amortized cost Receivables Assessed Contributions Loans & Receivables (at amortized cost) Hold to collect cash flows Passed Amortized cost Voluntary Contributions Amortized cost Other Receivables Amortized cost Derivatives (Not applicable for OSCE) Forward contracts/ Foreign currency options Held for trading Held for trading N/A Fair Value Through Surplus and Deficit *The “SPPI test” takes the contractual terms of a financial asset and considers whether the cash flows give rise to payments on specified dates that are solely payments of principal and interest (SPPI) on the principal amount outstanding. FINANCIAL LIABILITIES Category of Financial Liabilities Classification IPSAS 29 Classification IPSAS 41 Accounts payable and accrued liabilities Amortized cost Amortized cost Contributions received in advance N/A N/A Funds held on behalf of third parties Amortized cost Amortized cost Derivative liabilities (Not applicable for OSCE) Fair value through surplus and deficit Fair Value Through Surplus and Deficit All financial liabilities other than those at fair value through surplus or deficit Amortized cost Amortized cost Other liabilities In accordance with the relevant accounting standard. In accordance with the relevant accounting standard. Further, as a result of the IPSAS 41 requirement to estimate expected credit losses of financial assets, an analysis was performed to identify if there were any changes in the carrying value of these financial assets as at 1 January 2023, the date of initial application of IPSAS 41. The analysis identified no change in the carrying value as at 1 January 2023 other than the carrying value of assessed These Notes are an integral part of the Financial Statements Page 36
Notes contributions receivable. The carrying value and valuation allowance under IPSAS 41 and IPSAS 29 was as follows: Carrying value as at 1 January 2023 (EUR ‘000) Financial instruments Under IPSAS 29 (Restated) Under IPSAS 41 (Restated) Assessed Contribution Receivables 9,295 9,922 Valuation allowance as at 1 January 2023 (EUR ‘000) Financial instruments Under IPSAS 29 (Restated) Under IPSAS 41 (Restated) Assessed Contribution Receivables 2,724 2,097 The change in carrying value of assessed contributions receivable of EUR 627 thousand was recorded as a decrease in the allowance for doubtful debts, charged in 2023 as the amount was deemed to be immaterial for restatement as a change in accounting principle. 2.4 - Uncollected Assessed Contributions The forward-looking impairment model, introduced following the adoption of IPSAS 41, incorporates reasonable and supportable information that is available without undue cost or effort at the reporting date. The asset’s carrying amount is reduced by the amount of the impairment lifetime loss which is recognised in the Statement of Financial Performance. If, in a subsequent period, the amount of the impairment loss decreases, the previously recognised impairment loss is reversed through the Statement of Financial Performance. This allowance does not relieve the participating States in arrears from their obligations to the OSCE. 2.5 - Inventories Inventories consist of two classes: - Consumables and supplies held for use by the Organization to support the delivery of its programmatic objectives and - Inventories held for distribution to beneficiaries at no or nominal charge. Consumables and supplies are expensed upon purchase. Where a material stock is purchased and is in store at year end for future consumption, it is stated at the lower of cost or net realisable value, subject to capitalization thresholds of EUR 150 per item and EUR 50 thousand per class and location. Cost is determined using a weighted average cost formula. Net realisable value is the estimated selling price, less any costs of disposal. Inventories held for distribution to beneficiaries at no or nominal charge are stated at the lower of either cost or current replacement cost, subject to a capitalization threshold of EUR 150 per item. These items are uniquely identifiable and cost is therefore determined using the specific identification method. Current replacement cost is that which the OSCE would incur to acquire the asset as at the reporting date. Write downs from cost to current replacement cost or net realizable value are recognized in the Statement of Financial Performance as incurred. These Notes are an integral part of the Financial Statements Page 37
Notes 2.6 - Property, Plant and Equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and any recognized impairment losses. The threshold for capitalization of property, plant and equipment is EUR 1 thousand. Subsequent costs that are included in an asset’s carrying amount include freight and installation. Repairs and maintenance costs are charged to the Statement of Financial Performance during the period in which they are incurred. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset, and are included in the Statement of Financial Performance. Depreciation is charged using the straight-line method and the residual values are estimated at zero. The estimated useful lives for the different property, plant and equipment classes are shown in the following table. For leasehold improvements, the shorter of the useful life or the lease agreement applies. Asset Class Useful Life (Years) ICT Equipment 3 to 10 Vehicles, including Unmanned Aerial Vehicles 5 to 12 Household and Office Equipment 3 to 10 Security and Safety Equipment 3 to 25 Other Equipment 3 to 10 Leasehold Improvements 7 to 35 2.6.1 – Leasehold Improvements Leasehold improvements refer to improvements made by the OSCE to the buildings occupied by the Secretariat and Institutions. Leasehold improvements in all other Executive Structures are expensed immediately due to the short term nature of their mandates. These improvements revert to the lessor at the expiration of the lease or right to use agreement and include building adjustments, fixtures, technical, communication and security infrastructure. The threshold for capitalization of leasehold improvements is established at EUR 50 thousand. 2.6.2 – Buildings Buildings are not capitalized as assets because, although the OSCE has been given the right to use them, there is no full transfer of the risks and rewards incidental to ownership. The buildings affected by this decision are those used by the Secretariat and Institutions in the following locations: - The Secretariat, Wallnerstrasse 6-6a and part of Wallnerstrasse 8, 1010 Vienna, Austria; - The Secretariat (Documentation Centre in Prague), Náměstí Borisa Němcova, 160 00 Prague 6, Czechia; - Office for Democratic Institutions and Human Rights, Ul. Miodowa 10, 00-251 Warsaw, Poland; and - High Commissioner on National Minorities, Prinsessegracht 22, 2514 AP The Hague, The Netherlands. 2.7 - Intangible Assets Intangible assets consist of software and are stated at cost less accumulated amortization and any recognized impairment losses. These Notes are an integral part of the Financial Statements Page 38
Notes Intangible assets are amortized using the straight line method over their estimated useful life; residual values are estimated at zero. The OSCE has identified two main reporting classes of intangible assets: software licenses externally acquired and internally-developed software. The capitalisation thresholds and useful lives for the different asset classes are tabulated below. Self-constructed intangible assets, including those under development, are recorded at cost, including any directly attributable costs of preparing the asset for its intended use. These include salaries and employee benefits, as well as external consultancy costs. Amortization starts once the completed assets are available for use. Software maintenance and service costs are charged to the Statement of Financial Performance during the period in which they are incurred. Asset Class Capitalisation Threshold (EUR '000) Useful Life (Years) Externally Purchased Software 1 5 Internally-Developed Software 50 7 Internally-Developed Software Under Development 50 7 2.8 - Impairment of Assets The OSCE performed a review of its assets in conjunction with revenue earned to identify whether it owned any cash-generating assets. Cash-generating assets are assets held with the primary objective of generating a commercial return. In 2023 there were no intangible assets or items of property, plant and equipment which met this definition, therefore all assets were classified as non-cash-generating and IPSAS 21 - Impairment of Non-Cash-Generating Assets was applied to the reporting of impairments. Intangible assets and items of property, plant and equipment are reviewed annually for impairment to determine if the carrying amount is still considered to be recoverable. Situations that could lead to impairment include major damage or obsolescence. Impairment losses are recognized in the Statement of Financial Performance for the amount by which the asset’s carrying amount exceeds its recoverable service amount, and are reported together as amortization and depreciation. 2.9 - Operating Leases Leases where the OSCE does not retain a significant portion of the risks and rewards inherent in ownership are classified as operating leases. As explained in Note 2.6.2, buildings occupied by the Secretariat and Institutions are not capitalised. Buildings occupied by other Missions are regarded as operating leases due to the short terms of their mandates. Rent under operating leases, both cash payments and contributions in-kind, is charged to the Statement of Financial Performance as incurred. 2.10 - Accruals Accruals include liabilities for goods and services delivered during the year, but for which invoices were not received at the year-end. Unliquidated obligations (ULOs) represent obligations for goods ordered but not yet delivered to the Organization at the year-end. ULOs are recognized for budgetary purposes, but do not satisfy the delivery principle under IPSAS and are therefore not included in these financial statements, except for the actuals in Statement V - Statement of Comparison of Budget and Actual Amounts. These Notes are an integral part of the Financial Statements Page 39
Notes 2.11 - Employee Benefits Employee benefits entitlements are set out in the OSCE Staff Regulations and Staff Rules approved by the Permanent Council. 2.11.1 - Employee Benefits Current Current employee benefits are expected to be settled within 12 months of the reporting date and include pay and allowances, assignment grants, education grants, annual leave, home leave and rest and recuperation for employees in certain Field Operations. The amounts related to these liabilities are calculated by OSCE and determined by an independent actuary using the methodology and assumptions as described in Note 4.6 – Employee Benefits, based on personnel data and past experience, and are as follows: - Annual leave – in accordance with OSCE’s Staff Rules, OSCE officials may carry forward up to thirty days of unused leave from one leave year to the next. The leave year runs from 1 January to 31 December of each year. As part of the recovery from the COVID-19 situation, a deferral of the carryover cut off date was approved, with the effect that the entire leave balance as at 31 December 2022 was carried forward, with the proviso that the excess over thirty days must be used during January 2023. As at 31 December 2023, the liability reverted to the normal thirty days. In addition, a fixed-term staff or mission member may be granted advance annual leave up to a maximum of fifteen days. Annual leave is considered as a current benefit and hence is not subject to actuarial valuation. The liability for annual leave is calculated by multiplying the net number of unused leave days as of 31 December 2023 up to a maximum of thirty days by the basis of the monthly net salary, including post adjustment if applicable, and employer’s provident fund contributions. - Home leave and rest and recuperation leave – Heads of Mission and other fixed-term international Mission Members, both contracted and seconded, are entitled to home leave once every twelve months. In addition, for those staff serving in duty stations designated as hazardous or hardship, there is an additional entitlement to rest and recuperation leave once every twelve months. For international fixed-term contracted Staff Members, the entitlement for home leave is once every two years. The OSCE also covers the travel expenses of spouse and dependent children who reside at the duty station with the Staff Member. The liabilities for home leave and rest and recuperation are calculated by using estimates of travel expenses based on historical average costs. The effect of discounting on these liabilities is deemed to be immaterial and these liabilities were classified as current. The duty stations that qualified for rest and recuperation at 31 December 2023 were as follows: - Programme Office in Nur-Sultan/Astana; - Centre in Ashgabat; - Programme Office in Bishkek; - Project Co-ordinator in Uzbekistan; - Programme Office in Dushanbe; - Personal Representative of the Chairperson-in-Office (PRCiO) on the Conflict Dealt with by the Minsk Conference (in certain locations only). 2.11.2 - Employee Benefits Non-Current Non-current employee benefits are disclosed in accordance with IPSAS 39. They relate to post- employment benefits, including repatriation benefits such as: - Repatriation Grant – OSCE makes a grant towards the costs of repatriation for international fixed term contracted staff members and their eligible dependents, upon separation from service. This These Notes are an integral part of the Financial Statements Page 40
Notes entitlement is subject to minimum qualifying periods ranging from one to five years depending on grade and date of entry into service. The amount of the grant is calculated on the basis of the staff member’s last salary, excluding post adjustment, and the staff member’s completed years and months of qualifying service. - Repatriation Travel – upon separation, the OSCE covers the travel expenses for fixed-term contracted OSCE officials, seconded officials and international short-term contracted staff. The spouse and dependent children of international fixed-term contracted staff members are also entitled to repatriation travel. - Removal of Household Effects – upon separation, international contracted staff members appointed for a period of one year or more are entitled to the payment of the removal of household effects. The costs to be reimbursed shall be the actual expenses incurred. The present value of non-current employee benefits liabilities is determined by discounting the estimated cash outflows using interest rates of high-quality corporate bonds with a duration that approximates the maturity terms of the related liabilities. Although some benefits classed as non- current will fall due for payment within twelve months, the amount is not considered material and is not separately recognised under current liabilities. 2.12 - Cash Surplus or Deficit The calculation and treatment of the cash surplus is laid down in Financial Regulation 7.07, which is reproduced in the next three sub-paragraphs. (a) At the end of each financial year the cash surplus or deficit for the Funds financed through assessed contributions shall be determined by calculating the excess of revenue received over the expenditure, or the excess of the expenditure over revenue received, as the case may be. (b) Unless otherwise determined by the Permanent Council, the cash surplus of all Funds financed through assessed contributions shall be credited against contributions of the participating States during the year following the one in which the financial statements were accepted by the Permanent Council. The crediting shall be done in accordance with the scale of distribution for the year to which the surplus relates. The allocation to a participating State of its share of the cash surplus shall be deferred in cases where that State is in arrears for the year to which the surplus relates and until such time as these arrears have been paid in full. (c) In the event of a cash deficit the Secretary General shall bring the matter to the attention of the Permanent Council and make proposals for appropriate action by the Council. Cash surplus is not calculated for Extra-Budgetary Funds. Unspent amounts are refunded upon request of donors after expiration of the pledges. Cash surpluses for Special Purpose Funds are calculated in accordance with the Permanent Council Decisions that established each of the Funds. Cash surpluses are regarded as a part of Equity until the conditions in sub-paragraph (b) above are met, at which point they are transferred to liabilities and are recognised as current liabilities at the end of the year in which the statements are accepted. 2.13 - Deferred Revenue Unified Budget deferred revenue consists mainly of assessed contributions received in advance and credits to participating States to be deducted from future assessments. These Notes are an integral part of the Financial Statements Page 41
Notes Extra-budgetary contributions are either used as agreed in the project related to the pledge, or are returned or redeployed at the direction of the donor. Such pledges are therefore considered to be conditional and are initially recognised as deferred revenue until such time as the condition is met and project expenditure incurred. 2.14 - Provisions Provisions are recognized in circumstances when the OSCE has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. The amount of the provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. 2.15 - Contingent Liabilities and Contingent Assets Contingent liabilities are disclosed when there are possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the OSCE. Contingent assets are disclosed when there are probable assets that arise from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the OSCE. 2.16 - Revenue from Non-Exchange Transactions Revenue from assessed contributions and revenue from extra-budgetary contributions are recognized as non-exchange transactions in accordance with IPSAS 23. Revenue from assessed contributions from participating States is recorded on an accrual basis, independent from when the cash is received. It reflects the Unified Budget proposed for the year, including any revisions, and adjusted for any shortfall between the Budget and the approved Scales of Contribution; together with any Special Purpose Funds that are financed by assessed contributions, also including any applicable revisions. Extra-budgetary contributions are initially recognized in the Statement of Financial Position, as they are all considered to be conditional (see note 2.13), and are subsequently recognized as revenue in the Statement of Financial Performance when project expenditure occurs. Where the criteria for recognition as stipulated under a donor agreement are not fulfilled, the contributions are refundable to donors. 2.17 – Contributions In-Kind Contributions in-kind in the form of goods (including inventory, property, plant and equipment and intangible assets) are measured at fair value and recorded as contributions in-kind in the Statement of Financial Performance. Contributions in-kind of services comprise seconded staff occupying posts approved by the Permanent Council or agreed as part of an extra-budgetary project, certain ancillary services related to premises provided free of rent (security, maintenance, utilities etc.) and other services. Although recognition is not required by IPSAS 23, these classes of services in-kind are measured at fair value and recorded as contributions in-kind in the Statement of Financial Performance. The estimated value of seconded personnel is based on a calculation of the additional cost of employing international contracted staff and mission members in their place, and is not intended to reflect the actual costs to the States seconding them. These Notes are an integral part of the Financial Statements Page 42
Notes 2.18 - Revenue from Exchange Transactions Revenue from exchange transactions refers mainly to the occasional sales of assets. Revenue is measured at the fair value of the consideration received or receivable and is recognized as goods and services are delivered. 2.19 – Indirect Common Costs Indirect Common Costs are levied on Extra-budgetary projects and some third-party payments and are intended to defray costs incurred for provision of administrative support that cannot be easily attributed to specific projects. As revenue is recognised, it is transferred to a separate extra-budgetary accounting fund for subsequent allotment and use. 2.20 - Expenses Expenses are accounted for on an accrual basis and are recognized when the goods or services are delivered to the OSCE. 2.21 - Critical Accounting Estimates and Judgments The preparation of the Financial Statements involves the use of accounting estimates and professional judgment; therefore there is a risk that actual amounts could differ from the related estimates. The areas where those are more significant in the preparation of OSCE’s Financial Statements include inter alia: useful lives of tangible and intangible assets, provisions, accruals, deferred revenue, contingent assets and liabilities and employee benefits. NOTE 3: ASSETS 3.1 – Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, cash at bank, and short-term deposits with initial maturity of 3 months or less. OSCE operates a pooling system for banking purposes and most cash is held in Secretariat bank accounts. Consequently, some Funds, particularly Extra-Budgetary and Special Purpose Funds, hold comparatively little or no cash as it is transferred from the Secretariat accounts to local accounts as required, under internal financial regulatory arrangements. The inter-fund balances shown in Annex 1 complete the picture of each Fund’s net asset position. In accordance with Financial Regulation 5.02, funds not needed for immediate requirements are pooled in bank accounts administered by the Secretariat and invested in the form of money market deposits. Those deposits with an initial maturity of 3 months or less were classified as cash equivalents. Cash, cash equivalents and investments are adjusted at each reporting date to reflect lifetime expected credit losses calculated using weighted long-term average default rates per the financial rating of the banking institutions in which they are held. These Notes are an integral part of the Financial Statements Page 43
Notes As at 31 December 2023 As at 31 December 2022 Total EUR '000 Secretariat, Institutions, Field Offices and Cash Pools Special Purpose Funds Extra- Budgetary Funds Total Cash 231 - - 231 184 Bank 87,193 - 5,394 92,587 48,129 Short-term Deposits - - 20,000 20,000 - Total 87,424 - 25,394 112,818 48,313 3.2 – Investments Investments consist of money-market deposits with initial maturity over 3 months. At the end of the reporting period, investments (including Revolving and Contingency Funds) amounted to EUR 61,127 thousand (EUR 111,597 thousand in 2022), made up entirely of deposits held in relation to Extra- Budgetary Funds. 3.3 – Contributions Receivable Contributions receivable include assessments billed to participating States and extra-budgetary contributions billed to donors that have not yet been received by OSCE. See also note 6.1 on changes to the billing of the Special Monitoring Mission to Ukraine which has led to a reduction in the amounts receivable. EUR ’000 2023 2022 (Restated) Secretariat, Institutions and Field Offices Assessed Contributions Receivable 12,615 7,722 Special Monitoring Mission to Ukraine Assessed Contributions Receivable 1,675 4,297 Extra-budgetary Contributions Receivable 6,003 17,470 Total Contributions Receivable 20,292 29,489 Allowance for Doubtful Debts (1,579) (2,724) Total Net Contributions Receivable 18,713 26,765 The 2022 comparative amounts for the Special Monitoring Mission to Ukraine assessed contributions receivable and the allowance for doubtful debts have been restated, as described in Note 2.2. The amount reported in the 2022 Financial Statements for SMM assessed contributions receivable was EUR 14,753 thousand, with total contributions receivable of EUR 39,945 thousand. The amount recorded for the allowance for doubtful debts in 2022 was EUR 2,740 thousand, resulting in total net contributions receivable of EUR 37,205 thousand. The forward-looking impairment model, introduced following the adoption of IPSAS 41, incorporates reasonable and supportable information that is available without undue cost or effort at the reporting date. The asset’s carrying amount is reduced by the amount of the impairment lifetime loss which is recognised in the Statement of Financial Performance. If, in a subsequent period, the amount of the impairment loss decreases, the previously recognised impairment loss is reversed through the Statement of Financial Performance. These Notes are an integral part of the Financial Statements Page 44
Notes 3.3.1 - Unified Budget Assessed Contributions Receivable A schedule of outstanding Assessed Contributions Receivable by participating State is shown below: EUR ‘000 Participating State Outstanding for 2021 and Prior Years 2022 2023 Outstanding Balance as at 31 December 2023 Albania - - 44 44 Azerbaijan - - 44 44 France - - 867 867 Kyrgyzstan 714 46 46 806 Russian Federation - 5,285 5,569 10,854 Total 714 5,331 6,570 12,615 An allowance for doubtful debts of EUR 1,176 thousand has been created to leave a net carrying balance of EUR 11,439 thousand. 3.3.2 - Special Purpose Funds Assessed Contributions Receivable Assessed Contributions Receivable for Special Purpose Funds related to the bills issued for the financing of the Special Monitoring Mission to Ukraine are tabulated below. The open contributions receivable for the financial year 2022 take into account the revised provisional bill for the Special Monitoring Mission to Ukraine (SMM) from 1 April 2022 onwards: EUR ‘000 Participating State Outstanding for 2021 and Prior Years 2022 2023 Outstanding Balance as at 31 December 2023 Azerbaijan - 5 - 5 Belarus - 9 - 9 Hungary - 87 - 87 Kyrgyzstan 2 9 - 11 Russian Federation - 1,141 - 1,141 Serbia - 5 - 5 Tajikistan 12 9 - 21 Turkmenistan 102 9 - 111 Uzbekistan 262 22 - 285 Total 378 1,297 - 1,675 An allowance for doubtful debts of EUR 403 thousand has been created to leave a net carrying balance of EUR 1,272 thousand. These Notes are an integral part of the Financial Statements Page 45
Notes 3.3.3 – Extra-budgetary Contributions Receivable Extra-budgetary contributions receivable relates to the agreements and pledge acceptances with donors which are due for payment. The breakdown by Extra-budgetary Funds is as follows: EUR’ 000 2023 2022 Fund to Support OSCE Action for Peace, Democracy and Stability in Bosnia and Herzegovina 108 1,061 Fund for Activities Relating to Economic and Environmental Aspects of Security 432 338 Fund for Activities Related to Special Monitoring Mission to Ukraine 10 10 Other PC Established Funds – Partnership Fund 120 119 Other Activities and Special Projects 5,333 15,943 Total 6,003 17,470 The aging of the extra-budgetary accounts receivable is as follows: EUR’ 000 Outstanding Balance Less than one year 1 – 3 years 3 – 4 years More than 4 years Fund to Support OSCE Action for Peace, Democracy and Stability in Bosnia and Herzegovina 108 21 87 - - Fund for Activities Relating to Economic and Environmental Aspects of Security 432 392 40 - - Fund for Activities Related to Special Monitoring Mission to Ukraine 10 - - 10 - Other PC Established Funds - Partnership Fund 120 1 - - 119 Other Activities and Special Projects 5,333 2,422 2,571 75 265 Total 6,003 2,836 2,698 85 384 3.4 – Accounts Receivable Accounts receivable are carried at the original invoice amount, less an allowance for estimated doubtful debts based on a review of all outstanding amounts at the year-end. Accounts receivable consist mainly of recoverable Value Added Tax and other receivables. The receivable from customers includes EUR 1,336 thousand (EUR 2,029 thousand in 2022) for the excess of premiums paid to the insurance company Cigna over settlements made, which will be used in the future to defray cost increases or provide additional services. The 2022 comparative amounts for tax receivable from governments and other receivables have been restated to correctly record all open tax receivables under the appropriate expenditure type. The amount reported in the 2022 Financial Statements for tax receivable from governments was EUR 1,074 thousand, with other receivables of EUR 1,320 thousand. Total accounts receivable remains unchanged. These Notes are an integral part of the Financial Statements Page 46
Notes EUR '000 2023 2022 (Restated) Tax Receivable from Governments 2,684 2,260 Receivable from Customers 1,884 2,504 Other Receivables 76 135 Accrued Interest Receivable 960 430 Allowance for Doubtful Debts (624) (604) Total 4,980 4,725 3.5 – Prepayments and Services Receivable Prepayments do not meet the definition of financial instruments as defined by IPSAS 28 – Financial Instruments: Presentation because they are intended to be settled through delivery of goods or services, rather than cash. Furthermore, prepayments are considered non-monetary items as defined by IPSAS 4 - The Effects of Changes in Foreign Exchange Rates, and therefore are translated at the transaction exchange rate. EUR '000 2023 2022 Prepayments to and services receivable from Suppliers 4,372 4,712 Prepayments to and services receivables from Implementing Partners 1,350 1,434 Prepayments to Staff 768 792 Other Prepayments 36 16 Total 6,526 6,954 3.6 – Inventory Inventory recognized in the Statement of Financial Position consists of project assets held for distribution to beneficiaries. The total amount of inventories recognized as an expense during 2023 was EUR 2,115 thousand (EUR 4,766 thousand in 2022). EUR '000 2023 2022 Project assets held for distribution to beneficiaries 792 291 Total 792 291 3.7 – Other Current and Non-Current Assets Other current and non-current assets include payroll prepayments, deposits for rent recoverable after the termination of the leases and insurance premium receivable. EUR '000 2023 2022 Current Payroll Prepayments (4) 12 Total Other Current Assets (4) 12 Long Term Deposit for Rent 20 20 Total Other Non-Current Assets 20 20 Total 16 32 These Notes are an integral part of the Financial Statements Page 47
Notes 3.8 – Property, Plant and Equipment Property, Plant and Equipment is initially recognized at cost and subsequently depreciated using the straight line method over the assets’ useful life to an assumed residual value of zero. 2023 2022 EUR'000 ICT Equipment Vehicles Household and Office Equipment Security and Safety Equipment Leasehold Improve- ments Other Equipment Total Property, Plant and Equipment Cost as at 1 January 2023 9,313 33,380 4,478 1,560 4,381 426 53,538 Additions 426 1,615 172 331 0 8 2,552 Disposals (1,366) (10,157) (233) (175) 0 (38) (11,968) Cost as at 31 December 2023 8,374 24,839 4,417 1,716 4,381 396 44,122 Accumulated Depreciation and Impairment Losses as at 1 January 2023 7,313 27,636 4,007 1,282 3,174 362 43,775 Depreciation 1,007 1,129 174 161 81 12 2,564 Impairments 0 38 0 0 0 0 38 Disposals (1,291) (8,581) (182) (112) 0 (5) (10,170) Accumulated Depreciation and Impairment Losses as at 31 December 2023 7,030 20,222 3,999 1,331 3,255 370 36,206 Net Carrying Amount as at 31 December 2023 1,344 4,617 418 385 1,126 26 7,915 EUR'000 ICT Equipment Vehicles Household and Office Equipment Security and Safety Equipment Leasehold Improve- ments Other Equipment Total Property, Plant and Equipment Cost as at 1 January 2022 11,658 49,557 6,125 3,579 4,381 504 75,804 Additions 969 1,688 179 184 0 60 3,080 Disposals (3,314) (17,865) (1,826) (2,203) 0 (138) (25,345) Cost as at 31 December 2022 9.313 33,380 4,478 1,560 4,381 426 53,538 Accumulated Depreciation as at 1 January 2022 8,902 39,436 5,192 2,884 2,994 431 59,838 Depreciation 1,155 1,333 250 146 180 20 3,084 Impairments 161 4,522 307 442 0 13 5,445 Disposals (2,904) (17,654) (1,742) (2,190) 0 (102) (24,592) Accumulated Depreciation and Impairment Losses as at 31 December 2022 7,313 27,636 4,007 1,282 3,174 362 43,775 Net Carrying Amount as at 31 December 2022 2,000 5,744 471 278 1,207 64 9,764 These Notes are an integral part of the Financial Statements Page 48
Notes The Property, Plant and Equipment total cost as at 31 December 2023 of EUR 44,122 thousand includes fully depreciated assets still in use to the amount of EUR 27,582 thousand (EUR 33,082 thousand in 2022). 3.9 – Intangible Assets Internally developed software and intangible assets under development consist of software licenses and costs incurred to make the software operational. These costs include salaries and professional fees. 2023 EUR'000 Software Licenses Purchased Internally Developed Software Intangible Assets under Development Total Intangible Assets Cost as at 1 January 2023 2,102 6,894 944 9,940 Additions 76 0 357 433 Disposals (321) 0 0 (321) Assets under Construction Capitalized 0 0 0 0 Cost as at 31 December 2023 1,857 6,894 1,301 10,053 Accumulated Amortization as at 1 January 2023 1,458 4,483 0 5,941 Amortization 210 485 0 695 Impairments 0 0 0 0 Disposals (308) 0 0 (308) Accumulated Amortization and Impairment Losses as at 31 December 2023 1,360 4,968 0 6,328 Net Carrying Amount as at 31 December 2023 497 1,927 1,301 3,725 2022 EUR'000 Software Licenses Purchased Internally Developed Software Intangible Assets under Development Total Intangible Assets Cost as at 1 January 2022 2,215 5,802 1,530 9,546 Additions 79 0 507 585 Disposals (191) 0 0 (191) Assets under Construction Capitalized 0 1,093 (1,093) 0 Cost as at 31 December 2022 2,102 6,894 944 9,940 Accumulated Amortization as at 1 January 2022 1,387 4,034 0 5,421 Amortization 222 448 0 670 Impairments 40 0 0 40 Disposals (190) 0 0 (190) Accumulated Amortization and Impairment Losses as at 31 December 2022 1,458 4,483 0 5,941 Net Carrying Amount as at 31 December 2022 644 2,412 944 3,999 These Notes are an integral part of the Financial Statements Page 49
Notes 3.10 - Impairment of Assets Impairment losses of EUR 38 thousand were recorded in 2023 (EUR 5,484 thousand in 2022), in relation to the disposal of vehicles of the former missions in Ukraine. There were no reversals of impairment recorded during the year. NOTE 4: LIABILITIES 4.1 – Accounts Payable Accounts Payable consisted mainly of invoiced amounts due to suppliers and payments due to OSCE staff. EUR '000 2023 2022 Payables to Suppliers 2,478 1,606 Payables to Implementing Partners 4 65 Amounts Owed to Staff 1,023 1,619 Total 3,505 3,290 4.2 – Accruals Accruals include liabilities for goods and services delivered during the year, but for which invoices were not received at the year-end. EUR ’000 2023 2022 Accruals 7,903 7,180 Total 7,903 7,180 Payroll-related accruals are reported as part of Employee Benefits Current in note 4.6. 4.3 – Deferred Revenue The Permanent Council approved deferral of the use by the Office for Democratic Institutions and Human Rights of EUR 849 thousand (PC.DEC/1288) which was originally approved through a supplementary budget in 2016 (PC.DEC/1177) and carried forward to 2017 (PC.DEC/1240). This amount is deferred until the time the observations of local elections are carried out in certain areas of Donetsk and Luhansk. The Special Funds deferred revenue consists of cash received in respect of the sale of assets that had not yet been transferred to the purchaser. Total deferred revenue is summarized by source of funds in the table below: EUR ’000 2023 2022 Advance Assessed Contributions payments by participating States 4,915 3,676 Deferred funds per PC.DEC/1288 849 849 Total Unified Budget Deferred Revenue 5,764 4,525 Cash received for asset sales - 1,082 Total Special Purpose Funds Deferred Revenue - 1,082 Total Deferred Revenue 5,764 5,607 These Notes are an integral part of the Financial Statements Page 50
Notes 4.4 – Conditional Extra-Budgetary Contributions In line with the requirements of IPSAS 23 - Revenue from Non-Exchange Transactions, extra-budgetary contributions subject to conditions are classified as deferred revenue. As the conditions are satisfied, the carrying amount of the liability is reduced and an amount of revenue equal to that reduction is recognized. The amount recognized as a liability is the best estimate of the amount that would be required to settle the obligation as at the reporting date. As the conditions on extra-budgetary contributions are satisfied through performance as set within projects, the carrying amount of the liability is reduced and an amount of revenue is recognized equal to the amount expensed in the period for the activities specified in the extra-budgetary projects. EUR ’000 2023 2022 Extra-Budgetary Contributions Subject to Conditions 101,240 89,282 Extra-Budgetary Contributions Advances 1,399 2,439 Total Extra-Budgetary Contributions 102,639 91,721 4.5 – Funds Held for Third Parties Funds held for Third Parties are mainly funds received from participating States for payment on their behalf of salaries to personnel seconded to the OSCE at no cost to the Organization, and overpayments for the Special Monitoring Mission to Ukraine resulting from the adjustment described in note 6.1 where the participating State concerned had not notified its intended disposition of the funds. In 2023 there were five participating States on whose behalf the salary is paid by OSCE. The services of these personnel are donated by participating States. The personnel concerned are paid by the OSCE on behalf of the States concerned from the third-party funds held in its accounts for this purpose. Depending on the timing differences between receipt of funds from the participating States concerned and disbursements to individuals, large sums may be held for salary payments at the end of the reporting period. EUR ’000 2023 2022 (Restated) Seconded personnel salary funds 9,509 5,836 Special Monitoring Mission to Ukraine overpayments 7,441 12,360 Other third party funds 707 830 Total Funds Held for Third Parties 17,657 19,026 The 2022 comparative amounts have been restated to include the overpayments of EUR 12,360 thousand toward the Special Monitoring Mission to Ukraine assessed contributions, as described in Note 2.2. The total funds held for third parties reported in the 2022 Financial Statements was EUR 6,666 thousand. 4.6 – Employee Benefits Actuarial assumptions are required to be disclosed in the Financial Statements in accordance with IPSAS 39 – Employee Benefits. The following key assumptions and methods have been used by the actuary to determine the value of non-current employee benefits in order to estimate the liability. Discount rate of 3.14% (3.23% in 2022) derived in reference to market yields of high quality corporate bonds - iBoxx Euro Corporate AA Euro bonds, with a duration of 1.72 years, which approximates the maturity terms of the related liabilities; Present value of future benefits based on salary projections; Average increases in salary of 4.9% in 2024 (3.6% projected in 2022), followed by 2.5 per year thereafter; No increase in shipment; Increase in travel costs of 2.5% in 2024, 2.1% in 2025 and 2026 and 0% thereafter (5.5%, 2.5% and 0% projected in 2022); and Estimated years of service based on OSCE’s historical averages. These Notes are an integral part of the Financial Statements Page 51
Notes The actuarial valuation of the defined benefits obligation is determined by discounting the probable future payment required to settle the obligation resulting from employee service rendered in the current and prior periods. Actuarial gains or losses arise when the actuarial assessment differs from the long term expectation on the obligations: they result from experience adjustments (differences between the previous actuarial assumptions and what has actually occurred) and the effects of change in actuarial assumptions. Actuarial gains or losses for non-current benefit obligations are recognized directly in Equity/Net Assets. Current service cost is the increase in the present value of the defined obligation resulting from employee service in the current period. The service cost is recognized in the Statement of Financial Performance. The following table provides more details regarding how the different types of benefits have changed in 2023: EUR’000 Defined Benefit Obligation as at 1 January 2023 Current Service Cost Interest Cost Actual Payments Actuarial (Gains)/ Losses Defined Benefit Obligation as at 31 December 2023 Home leave and rest and recuperation 228 278 - (281) - 225 Annual leave 6,654 274 - (316) - 6,612 Total annual leave, home leave and rest and recuperation 6,882 552 - (597) - 6,837 Repatriation grant 2,584 554 76 (513) (261) 2,440 Repatriation shipment 907 218 27 (330) 41 863 Repatriation travel 246 56 7 (66) (33) 210 Total repatriation benefits 3,737 828 110 (909) (253) 3,513 Total 10,619 1,380 110 (1,506) (253) 10,350 Liabilities for current employee benefits also include payroll-related accruals in the amount of EUR 1,550 thousand (EUR 676 thousand in 2022), for total current employees liabilities of EUR 8,387 thousand (EUR 7,558 thousand in 2022). The repatriation benefits estimates in the table are based on the actuarial assumptions set out above. If these assumptions were to change, the effects on the defined benefit obligation would be as tabulated below. Discount Rate Effect 2023 Effect 2022 Effect on Defined Benefit Obligation in % of +0.1% -0.17% -0.15% Effect on Defined Benefit Obligation in % of -0.1% +0.18% +0.15% Future salary increase Effect on Defined Benefit Obligation in % of +1% +1.69% +1.42% Effect on Defined Benefit Obligation in % of -1% -1.66% -1.40% The post-employment repatriation benefits are entirely unfunded and the liabilities will be met from budget allotments for the years in which they fall due, or from extra-budgetary revenue, as appropriate. The expected servicing cost of repatriation liabilities, net of payments, in 2024 amount to minus EUR 492 thousand, due to the increased number of staff reaching the end of their contracts during the year (expected servicing cost for 2023 of minus EUR 1,056 thousand reported in 2022). These Notes are an integral part of the Financial Statements Page 52
Notes 4.6.1 - Provident Fund The Provident Fund is a defined contribution plan. The employer contributions of 15% of staff salaries are fixed and are recognized as payroll expense. Employees contribute 7.5% of their salary and may make additional voluntary contributions of up to 15%. The assets are held by Utmost Worldwide in the beneficial ownership of the employee. The Secretary General's responsibility is to establish arrangements to provide a Provident Fund facility to employees and to monitor these arrangements. The balance of funds held for the benefit of OSCE Staff by the Provident Fund as at 31 December 2023 was EUR 123,678 thousand (EUR 121,181 thousand in 2022). The Provident Fund is administered by Utmost Worldwide Limited in accordance with the contract. The OSCE obtains the Financial Statements of Utmost Worldwide Limited on an annual basis. The latest available Financial Statements were in respect of the year ended 31 December 2023 and were audited by PricewaterhouseCoopers CI LLP, Chartered Accountants, who gave an unmodified opinion on the Financial Statements. The Provident Fund summary statement for the year ending 31 December 2023 is shown in the Appendix. 4.7 – Current Cash Surplus Unless otherwise determined by the Permanent Council, the cash surplus is credited against assessed contributions of the participating States in the year following the year in which the financial statements are accepted by the Permanent Council. The Permanent Council accepted the Financial Statements for 2021 on 28 July 2022 (PC.DEC/1442) and the cash surplus of EUR 3,827 thousand became payable by the end of 2023. The Permanent Council decided on 8 December 2022 to apply EUR 958 thousand to finance additional expenditures by the Conference and Language Services Programme of the Secretariat (PC.DEC/1462), and the balance of EUR 2,869 thousand was returned to participating States. Certain States agreed to the allocation of their shares of the cash surplus to the Repository Programme ‘Core Support Mechanism’ to make good budgetary shortfalls arising from the lack of an approved Unified Budget for 2023 as described in note 6.2. The Permanent Council has not to date accepted the Financial Statements for 2022 and the cash surpluses of EUR 218 thousand (EUR 19 thousand from Assessed Contributions and a further EUR 198 thousand arising from the Special Purpose Fund for the Observer Mission to Two Russian Checkpoints on the Russian- Ukrainian Border) are therefore not yet payable and remain in reserves (see note 5.1). EUR ‘000 Secretariat & Institutions Field Operations Total 2021 Cash Surplus as at 1 January 2023 2,001 1,826 3,827 PC.DEC/1462 – Additional Provisional Expenditure Authorization for the Conference and Language Services Programme for 2023 (958) - (958) Credit of residual 2021 Cash Surplus to participating States (1,043) (1,826) (2,869) Total Current Cash Surplus as at 31 December 2023 - - - 4.8 – Provisions The provision for unearned revenue of extra-budgetary pledges currently expiring on or before 31 December 2023 amounts to EUR 6,897 thousand (EUR 17,250 thousand in 2022). This represents funds pledged for extra-budgetary projects prior to 31 December 2023 where the pledge is now time-expired and the Organization awaits instructions from the donor on whether to extend the pledge validity for a further period of time or to return or re-purpose the unspent amounts. These Notes are an integral part of the Financial Statements Page 53
Notes 4.9 – Other Current and Non-Current Liabilities Other current liabilities consist primarily of pending refunds of Provident Fund reimbursements to staff and refunds of office rent received in advance from Governments. EUR '000 2023 2022 Governments Advance Refunds 393 833 Other Current Liabilities 225 1,771 Total Other Current Liabilites 618 2,605 Non-Current Liabilities - - Total Other Non-Current Liabilities - - Total 618 2,605 NOTE 5: RESERVES 5.1 - Cash Surplus The cash surplus for 2023 is not due for settlement until the year following acceptance of these Financial Statements, and it is therefore classified as Equity until the date of that acceptance. The Secretariat, Institutions and Field Offices total cash surplus for 2023 is calculated as shown in Statement V and reconciled to the IPSAS Surplus/(Deficit) in Note 9.1. In addition, the final closure of all transactions related to the former Border Observer Mission resulted in a cash surplus in 2022. Since the Permanent Council has not to date accepted the Financial Statements for 2022, the cash surpluses are not yet payable and remain in reserves. An interim cash surplus for the Special Monitoring Mission to Ukraine is calculated from the sum of all revenues and expenses during all mandates from 2014 to 31 March 2022 and the closure period to 31 October 2022, as at 31 December 2023. Further transactions are expected during 2024 and a further cash surplus/deficit position will be calculated when all known transactions have been completed. In addition two Special Purpose Funds established by the Permanent Council for specific purposes are now closed and the remaining funds are added to the total cash surpluses for the years indicated: - The OSCE Information Security Enhancement Fund established by PC.DEC/1247 dated 6 April 2017. - The Technical Fund for the Purpose of Financing Agreed Capital Requirements established by PC.DEC/1422 dated 25 November 2021 (the amount is under EUR 1,000 and hence is not visible in the table below). EUR ‘000 2023 2022 Secretariat, Institutions and Field Offices 19 19 Border Observer Mission 198 198 Total Cash Surpluses for 2022 218 218 Cash Surplus for 2023 3,725 - Special Monitoring Mission to Ukraine cash surpluses as at 31 December 2023 20,669 - Closure of the Information Security Enhancement Fund 1 - Closure of the Fund for the Purpose of Financing Agreed Capital Requirements - - Total Cash Surpluses for 2023 24,395 218 Total Cash Surpluses as at 31 December 2023 24,613 218 These Notes are an integral part of the Financial Statements Page 54
Notes 5.2 - Cash Surplus Withheld The cash surplus for those participating States that have not settled their assessed contributions in full is withheld by the OSCE until the outstanding payments are received. Cash surplus withheld does not meet the definition of a liability and is therefore included in the reserves. The table below is a summary of the cash surplus withheld by participating State and by year. There were no cash surplus distributions related to the fiscal years 2014 through 2017 and cash surpluses for 2022 and 2023 are not yet due for distribution, and therefore none are retained for those years. The longest outstanding cash surplus withheld is from the fiscal year 2006. In 2023 Kyrgyzstan paid EUR 88 thousand against the outstanding receivables. releasing EUR 4 thousand in Cash Surplus withheld. Uzbekistan cleared all of its outstanding liabilities for assessed contributions during 2023, releasing EUR 8 thousand in Cash Surplus withheld. EUR ‘000 2019 and Prior Years 2020 2021 Total Kyrgyzstan 13 1 1 15 Total Cash Surplus Withheld 13 1 1 15 5.3 – Revolving and Contingency Funds The Revolving Fund, in the amount of EUR 2,710 thousand, was established by the Permanent Council (PC.DEC/133 dated 27 June 1996) to meet the short-term cash requirements of duly authorized OSCE activities that could result from the period between the billing and payment of assessed contributions. The Contingency Fund, in the amount of EUR 2,180 thousand, was established by the Permanent Council (PC.DEC/182 dated 17 July 1997) to allow OSCE to act immediately after the adoption of a Permanent Council decision on a new activity and to cover the corresponding financial requirements prior to the approval of the relevant supplementary budget. 5.4 – Other Reserves Other Reserves consists of actuarial gains and losses related to employee benefits of EUR 2,844 thousand in 2023 (EUR 3,098 thousand in 2022). 5.5 – Accumulated Surplus/(Deficit) The decrease in the Accumulated Surplus/Deficit during 2023 to EUR 33,056 thousand (EUR 71,403 thousand in 2022) as shown in Statement III includes the Cash Surplus for 2023 in the amount of EUR 24,395 thousand (see Note 5.1 – Cash Surplus), the surplus for the period in the amount of EUR 8,848 thousand (see Note 9.1 – Reconciliation of Surplus/(Deficit) for the Period) and a reduction in the Special Monitoring Mission closure bill of EUR 22,815 thousand. NOTE 6: REVENUE 6.1 – Assessed Contributions Accrued revenue from provisional assessed contributions amounted to EUR 138,204 thousand (EUR 183,862 thousand in 2022). Participating States could not reach consensus on the Unified Budget for 2023 and provisional asessments in the sum of EUR 138,204 thousand (also EUR 138,204 thousand in 2022) were made in pursuance of Financial Regulation 4.04 and to fund obligations incurred and payments made under Financial Regulation 3.04. The billing for SMM in 2022 was adjusted during the course of 2023, reducing the assessment to participating States by EUR 22,815 thousand. These Notes are an integral part of the Financial Statements Page 55
Notes EUR ’000 2023 2022 (Restated) Provisional assessments for the 2023 Unified Budget 138,204 138,204 Total Unified Budget Revenue from Assessed Contributions 138,204 138,204 PC.DEC/1401 – Extension of the mandate of the OSCE Special Monitoring Mission to Ukraine – Second Bill - 22,829 Adjusted provisional assessment for the closure of the OSCE Special Monitoring Mission to Ukraine – 1 April to 31 October 2022 - 22,829 Total Special Purpose Funds Revenue from Assessed Contributions - 45,658 Total Revenue from Assessed Contributions 138,204 183,862 The 2022 comparative amount for the Special Monitoring Mission to Ukraine revenue has been restated, as described in Note 2.2. On 17 October 2023, a revised assessment in the amount of EUR 22,829 thousand was made to align the provisional billing to the total provisional budget for the administrative closure, noting that residual transactions continued throughout 2023 and into 2024 and the final outturn amount is not yet certain. Consequently, all excess payments made prior to the issuance of the revised bills were credited back to participating States in 2023 and were either refunded or treated as described in notes 4.5 and 6.2, as directed by the State concerned. Revenue of EUR 45,658 thousand was reported in the 2022 Financial Statements in relation to the total assessed contributions for the closure of the Special Monitoring Mission to Ukraine, billed on 5 April 2022, based on the mutatis mutandis application of Financial Regulation 4.04. Total Special Purpose Funds revenue was reported as EUR 68,487 thousand in 2022, with total revenue from assessed contributions of EUR 206,691 thousand. 6.2 – Extra-Budgetary Contributions Revenue from extra-budgetary contributions includes revenue received in 2023, as well as revenue from conditional agreements previously recorded as deferred revenue, for which conditions were satisfied in 2023. Revenue from extra-budgetary contributions of EUR 50,626 in 2023 includes an amount of EUR 1,240 thousand, from a total of EUR 4,144 thousand pledged, in respect of the Repository Programme (RP) “Core Support Mechanism”. The RP was established to accept contributions from participating States to cover the underfunding of core costs across all executive structures to bridge the gap between the UB funding level and the expected actual requirements. Unspent amounts are carried forward into 2024. The RP had three sources of revenue: - A number of participating States that had already paid more than their revised SMM closure bill as described in note 6.1 above agreed to transfer all or some of the amounts credited to them; - Certain participating States agreed to the use of all or some of their share of the 2021 cash surplus for this purpose; and - Additional voluntary contributions made by participating States. A breakdown of expenditure on the RP can be found in Schedule J of Annex 1 to these financial statements. EUR '000 2023 2022 Revenue from Extra-Budgetary Contributions 50,626 53,195 Revenue from Conditional Agreements Recognized/(Deferred) during the period (3,656) (12,350) Reallocation of Project Funds 918 495 Total 47,888 41,340 The reallocation of project funds resulted in a net inflow of EUR 918 thousand (EUR 495 thousand in 2022) from Third Party Funds to Extra-Budgetary Funds. These Notes are an integral part of the Financial Statements Page 56
Notes 6.3 – Finance Revenue Finance revenue includes interest from bank balances and short-term cash deposits. EUR '000 2023 2022 Interest received from banks 3,100 157 Accrual adjustments 530 421 Total 3,630 578 6.4 – Contributions In-Kind Revenue from contributions in-kind consists of contributions in-kind from seconded staff, ancillary services and donated goods as shown in the table below: EUR '000 2023 2022 Seconded Staff 24,352 37,018 Ancillary Services 855 803 Goods In-Kind 4,882 5,261 Total Contributions In-Kind 30,089 43,081 The total value of contributions in-kind of the services of seconded personnel is recorded as Contributions In-Kind in the Statement of Financial Performance. The estimated value of seconded personnel is based on a calculation of what it would cost to employ international contracted staff and mission members in their place, and does not reflect the actual costs to the participating States seconding them. Due to the closure of SMM, there are no personnel seconded to Special Purposes Funds in 2023. EUR '000 2023 2022 Special Purpose Funds Seconded Personnel - 12,021 Other Funds Seconded Staff, including extra-budgetary projects 24,352 24,997 Total Contributions In-Kind of Seconded Staff Services 24,352 37,018 In addition, certain ancillary services, such as security, maintenance and utilities, were provided in respect of premises provided free of charge. EUR '000 2023 2022 Ancillary Services 855 803 Total Contributions In-Kind of Ancillary Services 855 803 Contributions in-kind in the form of goods (including supplies, inventory, property, plant and equipment and intangible assets) are measured at fair value and recorded as Contributions In-Kind in the Statement of Financial Performance. The total fair value of goods in-kind received consists of the following items: EUR '000 2023 2022 Donated Property, Plant and Equipment and Intangible Assets - - Premises 4,876 5,253 Equipment 6 7 Premises and Equipment provided rent-free 4,882 5,261 7 Total Revenue from Goods In-Kind 4,882 5,261 These Notes are an integral part of the Financial Statements Page 57
Notes 6.5 – Revenue from Exchange Transactions Revenue from Exchange Transactions refers to gains and losses related to the sale of assets and minor equipment. 6.6 – Other Revenue Revenue Reallocated from Internal Sources in 2023 represents funds reallocated from Cash Surplus to finance the Additional Provisional Expenditure Authorization for the Conference and Language Services Programme for 2023 approved by the Permanent Council under PC.DEC/1462 dated 28 September 2023. Indirect Common Costs (ICC) revenue of EUR 57 thousand (EUR 60 thousand in 2022) derived from charges for the processing on behalf of participating States of salaries for personnel seconded by them to OSCE. The remaining EUR 3,132 thousand (EUR 2,042 thousand in 2022) of ICC revenue recognised in segment report H.2 represents charges levied on extra-budgetary projects as described in Note 2.19 and is recorded as Extra- Budgetary Revenue. Other revenue includes, inter alia, revenue from certain shared conference services, insurance claims and discounts taken. EUR '000 2023 2022 (Restated) Revenue Reallocated from Internal Sources 958 913 Indirect Common Costs Revenue 57 60 Other Revenue 1,647 1,774 Total 2,662 2,747 The 2022 comparative amount for other revenue has been restated as a consequence of the change in allowance for doubtful debts for the Special Monitoring Mission to Ukraine, as described in Note 2.2. Other revenue was reported at EUR 1,745 thousand in the 2022 Financial Statements, with total other revenue reported as EUR 2,718 thousand. NOTE 7: EXPENSES 7.1 – Staff Costs Salaries include amounts paid to international and local contracted staff, local professional staff, and temporary assistance. The board and lodging allowance (BLA) consists of a daily allowance payable by the OSCE which is intended to partially cover the living costs incurred by international mission members. BLA is paid to international contracted and seconded staff. The BLA rates are established for each Mission in December each year and remain valid for the following year. Other staff costs include hazard pay, personal income tax, medical services, overtime, vacancy advertisement costs and ex gratia payments to staff and mission members. Insurance refers to health, life and accident insurance. Other employee benefits include education grant, child and spouse allowance, appointment travel, assignment grant, rental subsidy, training, interns compensation and service cost for employee benefits (see Note 2.11 - Employee Benefits). These Notes are an integral part of the Financial Statements Page 58
Notes EUR '000 2023 2022 Salaries 73,143 77,108 BLA for international seconded staff 9,382 26,112 BLA for international contracted staff 1,441 3,098 Provident fund 9,804 9,681 Other staff costs 1,123 3,802 Insurance 3,239 581 Other employee benefits 5,751 6,205 In-kind seconded staff costs 24,352 37,017 Total 128,235 163,604 The in-kind seconded staff costs recognize the value to the Organisation of staff seconded free of charge by participating States. The estimated value is based on a calculation of what it would cost to employ international contracted staff and mission members in their place, and does not reflect the actual costs to the participating States seconding them. The significant reduction between 2022 and 2023 is due to the closure of the missions in Ukraine. 7.1.1 - Ex Gratia Payments Ex gratia payments are made in extraordinary situations when the OSCE has a moral obligation or it is in the overall interest of the Organization to do so. Disclosure of ex gratia payments is required by Financial Regulation 6.05. During 2023 ex gratia payments to staff and mission members totalling EUR 3 thousand were made (EUR 1,218 thousand in 2022). Details of other ex gratia payments may be found in note 7.8.1. The list of Executive Structures concerned is as follows: EUR ‘000 2023 2022 Secretariat 3 - Office for Democratic Institutions and Human Rights - 58 High Commissioner on National Minorities - 12 Project Co-ordinator in Ukraine - 222 Special Monitoring Mission to Ukraine - 926 Total 3 1,218 7.2 – Consultancy and Subcontracting Other contractual services include, inter alia, subcontracting services related to the implementation of projects. Paramedical services were provided during 2022 to the Special Monitoring Mission to Ukraine and in 2023 to certain extra-budgetary projects. EUR ‘000 2023 2022 Special Services Agreements 14,523 14,378 Implementing Partner costs 6,403 5,090 Paramedical services 133 1,797 Other contractual services 4,033 4,193 Total 25,092 25,458 These Notes are an integral part of the Financial Statements Page 59
Notes 7.3 – Travel Expenses Travel expenses include travel ticket costs, daily subsistence allowance, local transportation, terminal allowances and other travel costs. Travel of non-OSCE officials includes the same types of cost and is related mainly to their attendance at conferences and seminars and recruitment of new staff. EUR '000 2023 2022 Travel of non-OSCE officials 8,378 7,252 Duty travel for OSCE officials 5,996 10,034 Travel for training of OSCE officials 255 368 Total 14,629 17,654 7.4 – Services and Office Costs Communication services include, among others, internet access fees, rental of communication equipment and leased lines. IT services refer to software maintenance and support fees, as well as rental and installation of IT equipment. EUR '000 2023 2022 Rental and maintenance of buildings 15,257 15,315 Conferences, seminars, workshops 7,792 6,007 IT services 5,507 5,867 Communication services 1,143 1,630 Interpreters, translators and typing services 1,829 1,991 Bank charges 495 1,038 Printing and copying services 419 370 Vehicles maintenance costs 267 537 Freight and transportation 266 412 Insurance other than staff 361 574 Ancillary services in-kind 856 803 Total 34,192 34,544 Incurred costs of EUR 117 thousand (EUR 234 thousand in 2022) of services and office costs relates to agreements with third parties which are fully reimbursable. 7.5 – Consumables and Supplies Consumables and supplies include items that are either used or consumed in rendering services, such as office supplies, ICT supplies and spare parts. Other supplies include mainly safety and security supplies and stationery. EUR '000 2023 2022 Fuel and lubricants 424 624 Other supplies 1,547 2,391 Communication and IT supplies 453 1,151 Publications, newspapers and printed materials 227 301 Spare parts 107 139 Building/Household Supplies 446 339 Inventory Consumption - 1,159 Total 3,204 6,104 These Notes are an integral part of the Financial Statements Page 60
Notes 7.6 – Depreciation, Amortization and Impairments Amortization charges are applied to intangible assets capitalized on the OSCE Statement of Financial Position. Depreciation relates to tangible property, plant and equipment. EUR '000 2023 2022 Amortization 695 670 Depreciation 2,564 3,084 Impairments 38 5,484 Total 3,297 9,238 Impairments reported relate to the disposal of assets of the former missions in Ukraine. 7.7 – Equipment Expense Equipment expenses include costs related to the acquisition of equipment which would otherwise meet the definition of Property, Plant and Equipment but are below the capitalization threshold of EUR 1 thousand, both those purchased by OSCE and those donated to the Organization. Also included is the estimated value of equipment loaned by donors on cost-free rentals. Inventory donated to third parties includes all items donated and is not subject to the capitalisation threshold. EUR '000 2023 2022 Equipment Purchased 1,579 3,020 Inventory Donated to Third Parties 2,116 4,766 Equipment Received In-kind 6 7 Total Equipment Expenses 3,701 7,793 7.8 – Other Operating Expenses Unmanned aerial vehicles were operated exclusively in Ukraine and the contract was terminated during the year 2022. The decrease in other operating costs is due to compensation payments for the loss of personal property in 2022. 7.8.1 - Ex Gratia Payments Ex gratia payments are made in extraordinary situations when the OSCE has a moral obligation or it is in the overall interest of the Organization to do so. Disclosure of ex gratia payments is required by Financial Regulation 6.05. During 2023 ex gratia payments other than to staff and mission members totalling EUR 11 thousand were approved by the Secretary General (EUR 11 thousand in 2022). Details of ex gratia payments to staff and mission members may be found in note 7.1.1. The list of Executive Structures concerned is as follows: EUR '000 2023 2022 Unmanned Aerial Vehicle Services - 1,238 Other Operating Costs 522 3,380 Representation Costs 344 384 Project Costs 231 164 Change in Allowance for Doubtful Debts 7 - Total 1,104 5,166 These Notes are an integral part of the Financial Statements Page 61
Notes EUR '000 2023 2022 Mission to Bosnia and Herzegovina 1 - Mission to Moldova 3 - Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference 5 - Special Monitoring Mission to Ukraine 2 3 Secretariat – Panel of Adjudicators - 6 Programme Office in Dushanbe - 2 Total 11 11 7.8.2 – Cash and Other Losses and Write-Offs The Joint Consultative Group (JCG) on the Conventional Forces in Europe Treaty has been underpaying by 9% its invoiced contributions to the costs of the Hofburg. OSCE continues to press its claim for these funds without success to date. Consequently, a bad debt allowance has been created with a corresponding write- down in 2023 of EUR 20 thousand (EUR 34 thousand in 2022). This allowance does not represent an abandonment of the claim or release the JCG from its obligation to pay under the terms of its Financial Agreement with the OSCE. NOTE 8: FOREIGN EXCHANGE GAINS/(LOSSES) Gains and losses made on transactions in currencies other than the Euro consist of amounts realized when the payable balance is settled and those not yet realized because the payable remains open. The latter may change with future exchange rate movements until the moment that they are realized. EUR '000 2023 2022 Unrealized Gains/(Losses) – cash and cash equivalents (982) 2,332 Unrealized Gains/(Losses) – other 9 (27) Subtotal Unrealized Gains/(Losses) (973) 2,305 Realized Gains/(Losses) (377) 443 Total (1,350) 2,748 NOTE 9: RECONCILIATIONS OF BUDGETS TO FINANCIAL STATEMENTS Statement V (comparison of budget and actual amounts) is provided in accordance with the principles of IPSAS 24, which requires “a comparison of budget amounts and the actual amounts arising from execution of the budget to be included in the financial statements of entities that are required to, or elect to, make publicly available their approved budget(s), and for which they are, therefore, held publicly accountable”. Since only the Unified Budget is publicly available, Statement V does not consider the Special Purpose or extra-budgetary Funds and other projects. The Permanent Council could not find consensus on the Unified Budget Proposals tabled by the Chairperson and therefore there was no approved budget for 2023. Financial Regulation 3.04 provides that, in these circumstances, the Secretary General and Heads of Institution are authorized to incur obligations and make payments until 31 March of the current financial year up to the level of 25 per cent of the previous Unified Budget, and thereafter, on a monthly basis up to 1/12th of the previous approved Budget until the Unified Budget is adopted. Since no Budget was approved during the year, the Organization operated under Provisional Expenditure Authorizations throughout 2023 at the level of the last approved Unified Budget, that for 2021 (EUR 138,204 thousand, PC.DEC/1413 dated 18 August 2021), and PC.DEC/1462 dated 28 September 2023 approved an “Additional Provisional Expenditure Authorization for the Conference And Language Services Programme for 2023” of EUR 958 thousand, funded from the 2021 cash surplus. Statement V is therefore presented on the basis of the final Provisional Expenditure Authorization approved under PC.DEC/1462. The difference of EUR 2,028 thousand between the the actual amounts and the 2021 Unified Budget total (EUR 2,481 thousand in 2022), excluding the Project Co-ordinator in Ukraine, plus the Total Provisional Expenditure Authorization are tabulated by Secretariat and Institution and by region and These Notes are an integral part of the Financial Statements Page 62
Notes reconciled to the cash surplus in Statement V and are further broken down by Main Programme and Programme in the Resource Utilization Report at Annex 2 to these Statements. Reporting on the Performance against the Provisional Expenditure Authorization is in summary in the Financial Report that accompanies these Statements, and elaborated in more detail in the Resource Utilization Report (RUR) available to participating States. 9.1 - Reconciliation of Surplus/ (Deficit) for the Period The Financial Statements are prepared on an accrual basis, while the budget is prepared on a modified cash basis. The following table shows a reconciliation of the Cash Surplus in the Statement of Comparison of Budget and Actual Amounts (Statement V), and the Surplus/(Deficit) for the Period as reported in the Statement of Financial Performance (Statement II). The differences are due to IPSAS adjustments affecting revenue and expenses. The 2022 comparative amount has been restated as a consequence of the Special Monitoring Mission to Ukraine billing adjustment, issued 17 October 2023, as described in Note 2.2. The Special Purpose Funds surplus/(deficit) for the period was reported in the 2022 Financial Statements as a surplus of EUR 19,097 thousand, with a total OSCE Surplus of EUR 27,930 thousand. EUR ‘000 2023 2022 (Restated) Cash Surplus for the year 3,725 19 Assessed Contributions receivable as at 1 January (7,722) (3,384) Assessed Contributions receivable as at 31 December 12,615 7,722 Budgetary Excess of Income over Expenditure 8,618 4,358 IPSAS Adjustments: Revenue Accrued Interest 530 666 Contributions In-Kind 29,171 30,716 Revenue from Exchange Transactions (29) (95) Other Revenue 219 2,155 Revenue from Change in Allowance for Doubtful Debts 1,152 (48) Subtotal Revenue 31,037 33,395 Expense Expense from Change in Allowances for Doubtful Debts - - Negative Bank Interest - (245) Unliquidated Obligations 457 (2,463) Accruals Adjustments (61) 535 Budget Deferrals 42 (212) Prepayments Adjustments (459) 233 Employee Benefits 517 (168) Contributions In-Kind Expense (29,171) (30,716) Insurance Adjustments (698) 2,041 Inventory Adjustments (377) (1,137) Property, plant and equipment Adjustments (682) 170 Intangibles Adjustments (531) (456) Subtotal Expense (30,963) (32,416) Gains/(Losses) - - Total IPSAS Adjustments 74 978 IPSAS Budget Surplus/(Deficit) for the Period 8,692 5,336 Special Purpose Funds Surplus/(Deficit) for the Period (897) (3,702) Extra-Budgetray Surplus/(Deficit) for the Period 1,053 3,497 IPSAS Total OSCE Surplus/(Deficit) for the Period 8,848 5,131 These Notes are an integral part of the Financial Statements Page 63
Notes 9.2 – Reconciliation of Actual Amounts on a Comparable Basis and Cash Flow Statement The expenditure authorizations are calculated on a modified cash basis (actual expenditure plus contractual and other obligations), whereas the Financial Statements are prepared on an accrual basis, which therefore differs from the budget basis. For the purpose of preparing the comparison of budget and actuals in the Statement of Comparison of Budget and Actual Amounts, actuals are calculated on a modified cash basis comparable with the expenditure authorizations. Since the Financial Statements and budgetary accounting are prepared on different bases, the actual amounts presented on a comparable basis to the budget in Statement V - Statement of Comparison of Budget and Actual Amounts need to be reconciled to the net cash flow from operating, investing and financing activities as required under IPSAS 24 – Presentation of Budget Information in Financial Statements. The reconciliation requires that any differences be separately identified: - Basis differences - in order to reconcile the budgetary results to the Cash Flow Statement, differences between the budgetary framework and IPSAS such as unliquidated obligations, prepayments and depreciation need to be considered as basis differences; - Presentation differences - differences in the content and classification used in the Statement of Cash Flow versus the Statement of Comparison of Budget and Actual Amounts; for example, the budgetary framework makes no distinction between operating, investing and financing activities; - Timing differences - occur in such cases when the budget cycle differs from the financial reporting cycle. There are no timing differences, since both cycles coincide. - Entity differences - the Statement of Comparison of Budget and Actual Amounts refers to the Secretariat, Institutions and Field Missions only whereas the Cash Flow Statement includes also Special Purpose Funds and Extra-Budgetary funds. The latter two are excluded from Statement V because annual budgets are not publicly available. EUR’000 Operating Activities Investing Activities Financing Activities Total Actual Amount on Comparable Basis 2,028 - - 2,028 Basis Differences 45,062 - - 45,062 Presentation Differences (35,241) 38,998 188 3,944 Timing Differences - - - - Entity Differences 4,593 10,060 (200) 14,453 Actual Amount in the Cash Flow Statement 16,441 49,058 (12) 65,487 NOTE 10: OTHER DISCLOSURES 10.1 - Financial Risk Management Financial risk management is carried out by the Treasury Unit in the Secretariat under policies approved by the Investment Committee and by applying the guidelines included in OSCE’s Financial/Administrative Instruction Five - Income and Cash Management. IPSAS 30 - Financial Instruments: Disclosures states the types of risks that the Organization should disclose: (a) Liquidity risk – is the risk that an entity will encounter difficulty in receiving funds to meet its financial commitments. The OSCE invests funds not required for immediate operational purposes in short-term deposits up to a maximum of nine months. Maturities are scheduled on the basis of operational requirements as identified by the Treasury Unit and OSCE Executive Structures’ cash flow forecasts. Liquidity is monitored through cash flow forecast reports for a period of 12 months into the future. The timing of payment of assessed contributions by participating States has an impact on the liquidity of the Organization. Delays in payment by large contributors can affect normal operations, although the comfortable Cash position is available to meet short-term cash requirements. These Notes are an integral part of the Financial Statements Page 64
Notes (b) Currency risk - is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The OSCE has a policy of not using derivative financial instruments to hedge against currency risk. Risk is mitigated by limiting the amount of cash held in currencies other than euro; by concluding most of the OSCE contracts in euro; and by not converting one currency to another to avoid realization of gains and losses. In 2023, the majority of net expenditures were transacted in euro or currencies pegged to the euro. Transactions in foreign currencies are recorded in euro at the UN Operational Rates of Exchange in effect on the date of the transactions. At the end of the reporting period assets and liabilities are valued at the rates applicable as at 31 December 2023. Gains and losses arising from transactions and translation are recorded as currency exchange adjustments. In compliance with Financial Administrative Instruction Five (FAI 5) on Income and Cash Management, large exchange rate gains or losses incurred under Extra- Budgetary Funds have been credited or charged to the respective Fund. (c) Interest rate risk – is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The OSCE did not enter into any transactions involving variable interest rates in 2023 and only made short-term deposits for fixed durations and fixed interest rates. Fluctuations in interest rates only affect the interest revenue from short-term deposits to be concluded in the future; however, the OSCE is not dependent on interest revenue for the continuation of its activities. (d) Market risk – is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices. None of the OSCE’s financial instruments in 2023 were affected by changes in market prices. (e) Credit risk – is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The largest exposures to such risk for the OSCE are Assessed Contributions Receivable and bank risk. The Treasury Unit monitors the creditworthiness of its banks on a regular basis and has strict guidelines to limit the amount deposited with each approved bank. The table below shows the amounts deposited with banks according to their credit rating. At the end of the reporting period, 99.43% of the total (99.39% in 2022) was held in bank accounts carrying an investment grade (BBB- and above). The table reflects the fact that due to the financial crisis most bank ratings have been revised downwards in recent years. The remaining balances are held in non- investment grade or unrated banks to support OSCE local operational needs. At the end of the reporting period, 98.37% of the total cash (97,84% in 2022) was held in bank accounts administered by the Treasury Unit. The remaining 1.63% was held in bank accounts throughout OSCE locations for daily operational purposes (2.16% in 2022). EUR ‘000 Rating Total as at 31 December % Total as at 31 December 2023 2022 High Grade AA- to AA+ 32,764 18.8% 74 Upper Medium Grade A- to A+ 110,548 63.6% 124,585 Lower Medium Grade BBB- to BBB+ 29,401 16.9% 34,086 Non-Investment Grade BB- to BB+ 296 0.2% 173 Highly Speculative B- to B+ - 0.0% - Unrated N/A 703 0.4% 807 Total Bank Balances 173,712 99.9% 159,725 Cash N/A 233 0.1% 184 Total Cash and Bank Balances 173,945 100% 159,910 (f) Cash flow risk – is the risk that future cash flows associated with a monetary financial instrument will fluctuate in amount. For the OSCE such fluctuations relate to future money-market deposits in the event of changes in interest rates. As mentioned in (b) above, the OSCE is not dependent on the cash flows resulting from money-market deposits for the continuation of its activities. (g) There were no significant changes in the OSCE’s exposure to risk or to its risk management policies during the reporting period. These Notes are an integral part of the Financial Statements Page 65
Notes 10.2 – Contingent Assets and Contingent Liabilities The OSCE has no contingent assets. Two contingent liabilities exist in respect of the closure of the Special Monitoring Mission to Ukraine. Outstanding authorised travel for which no expenses claims have been submitted; and the Organization has not yet received some other outstanding claims from suppliers and Mission Members. It is not possible to estimate the amount of either liability with certainty, as both depend on submissions by former Mission Members and it is not known if they will materialise. 10.3 – Leases and Contractual Obligations Lease agreements in the Secretariat, Institutions and Field Offices refer to leases of premises and office equipment. These agreements are classified as operating leases and the related payments are charged as an expense over the period of the lease. The total lease expense for the year 2023 amounted to EUR 5,837 thousand (EUR 7,268 thousand in 2022). Future minimum lease payments include payments for such rented premises that would be required until the earliest possible termination date under the respective agreements. The minimum lease payments also include Host Country reimbursments in the amount of EUR 1,947 thousand expected to be received (EUR 2,946 thousand in 2022). There are no agreements that contain purchase options. The total amount of future minimum lease payments under non-cancellable operating leases is as follows: EUR ‘000 Less than 1 Year 1 to 5 Years More than 5 Years Total Minimum Lease Payments 2,051 611 - 2,662 In the majority of cases operating lease arrangements for field office premises can be cancelled by providing notice up to 90 days. Also the majority of the operating lease agreements contain renewal clauses which enable the Organization to extend the terms of the leases at the end of the original lease terms. 10.4 – Related Party Disclosures 10.4.1 - Governing Bodies Based in Vienna, the Permanent Council is the body for regular political consultation and decision-making on all issues pertinent to the OSCE and is responsible for the day-to-day business of the Organization. The OSCE Permanent Council is formed by the delegates of the 57 participating States. Representatives of the OSCE Parliamentary Assembly and of executive structures may attend meetings of the decision-making bodies as observers. The OSCE's 11 Partners for Co-operation may be invited to attend as observers. A delegation to the Permanent Council consists of a team of diplomats of the participating State headed by an ambassador. Members of the delegations are appointed separately by the Governments of each participating State and are not considered key management personnel as defined by IPSAS. They do not receive remuneration from the Organization. OSCE decisions have to be taken by consensus and the Chairman seeks approval from all delegations. In the case of one or more delegations opposing a decision, the issue is renegotiated. If all delegates agree, the decision becomes politically binding for all participating States. During periods between Summits, decision-making and governing power lies with the Ministerial Council, whose members are the Foreign Ministers of the OSCE participating States. The Ministerial Council meets once a year to consider issues relevant to the OSCE and make appropriate decisions. At OSCE Summits, the Heads of State or Government of the OSCE participating States set the Organization’s priorities and provide orientation for several years. There are no general rules determining how often Summits take place. Any participating State can propose a Summit. The decision has then to be taken by consensus. The last OSCE summit took place in 2010 in Astana (Kazakhstan). These Notes are an integral part of the Financial Statements Page 66
Notes 10.4.2 - Key Management Personnel The Secretary General, Heads of Institutions and Heads of Missions, including Personal Representatives who are Fund Managers, as well as the Secretariat’s Main Programme Managers at the Director level represent the key management personnel as they have authority for planning, directing and controlling the activities of OSCE. The aggregate remuneration paid to key management personnel includes: net salaries, post adjustment, entitlements such as allowances, grants and subsidies, and employer contributions to the provident fund and health insurance. As defined in the Staff Regulations and Rules, Heads of Mission and Personal Representatives who are Fund Managers are seconded by or through a participating State and therefore do not receive a salary remuneration from OSCE, but are entitled to a board and lodging allowance. Advances are those made against entitlements in accordance with Staff Regulations and Rules and are available to all OSCE staff. The table below details the number of key management personnel positions and the number of key management staff who held these positions over the course of the year. EUR’000 Number of Individuals Number of Posts Remuneration and Post Adjustment Entitlements Provident Fund and Health Plan Total Remuneration 2023 Outstanding Advances Against Entitlements SG and Heads of Institutions 4 4 879 38 145 1,063 - Secretariat’s Directors 11 7 1,139 176 172 1,487 - Heads of Mission and Personal Representatives 17 13 49 1,231 2 1,282 - Key Management Personnel 32 24 2,067 1,446 318 3,832 - 10.5 – Events After the Reporting Date The Financial Statements were submitted to the External Auditors on and were authorized for issuance by the Secretary General on 30 June 2024. In pursuance of the requirements set out in IPSAS 14 - Events After the Reporting Date, significant events which occurred between the reporting date and the date of issuance are set out below. 10.5.1 - Adjusting Events There are no adjusting events. 10.5.2 - Non-Adjusting Events There are no non-adjusting events. These Notes are an integral part of the Financial Statements Page 67
II ANNEXES TO THE FINANCIAL STATEMENTS
ANNEX 1 SEGMENTAL REPORTING BY FUND
Fund Accounting and Segment Reporting For purposes of the presentation of the 2023 expenses, Funds were grouped as presented and approved in the 2021 Unified Budget: under Secretariat and Institutions; and Field Operations, with the latter, in turn, being grouped into Regions. This presentation is also followed in the segmental reports. In addition, the segmental information is presented based on the main sources of financing of the Organization (Assessed Contributions other than for the OSCE Special Monitoring Mission to Ukraine (SMM), Special Purpose Funds, Extra-Budgetary Funds and other Extra-Budgetary projects undertaken in accordance with Article IX of the Financial Regulations and not specifically approved by the Permanent Council). The segmental information also includes an analysis of extra- budgetary expenses broken down by Executive Structure. The Funds listed below were operational in 2023. The letters indicated in brackets correspond to the Reporting Segment in this Annex. Segments A to F reflect the structure of the approved 2021 Unified Budget while G and H report Special Purpose and extra-budgetary Funds and projects respectively, and J presents the consolidated reports for the Special Monitoring Mission to Ukraine. These annexes are not separately audited and do not fall within the scope of the audit opinion. Secretariat and Institutions (A) These Funds are financed through the Standard Scale of Contributions for 2019 (PC.DEC/1325) on a provisional basis, pending agreement of Scales for 2023: The Secretariat Office for Democratic Institutions and Human Rights High Commissioner on National Minorities Representative on Freedom of the Media Field Operations (B) Segment B presents the Missions funded through the Unified Budget, aggregated into the geographical Regions in the approved 2021 budget. These Funds are financed through the Field Operations Scale of Contributions for 2019 (PC.DEC/1325) on a provisional basis, pending agreement of Scales for 2023: South-Eastern Europe (C) Eastern Europe (D) Augmentations 1 Mission in Kosovo Mission to Bosnia and Herzegovina Mission to Serbia Presence in Albania Mission to Skopje Mission to Montenegro Mission to Moldova Project Co-ordinator in Ukraine (closed in 2022) Representative to the Latvian-Russian Joint Commission on Military Pensioners Caucasus (E) Central Asia (F) High Level Planning Group The Minsk Process Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference Programme Office in Astana Centre in Ashgabat Programme Office in Bishkek Project Co-ordinator in Uzbekistan Programme Office in Dushanbe 1 The Augmentations Fund, including posts based in the Secretariat and in the Office for Democratic Institutions and Human Rights, was established on a provisional basis under PC.DEC/827 dated 21 December 2007 and is financed on the basis of the Field Operations Scale of Contributions. Page 70
Closed Funds (B) Missions and Field Operations funded by the Unified Budget and whose mandate has expired are grouped under Closed Funds and included in Field Operations: Action Against Terrorism Assistance Group to Chechnya Mission to Croatia Office in Zagreb Mission to Estonia Representative to the Estonian Commission on Military Pensioners Mission to Georgia End of Mandate Procedure Mission to Georgia Project Co-ordinator in Baku Mission to Latvia Representative to the Joint Committee on the Skrunda Radar Station Missions of Long Duration to Kosovo, Sandjak and Vojvodina Sanctions Assistance Missions Office in Minsk Expert Mission to Ukraine Office in Yerevan Special Purpose Funds (G) The Information Security Enhancement Fund was established by PC.DEC/1247 dated 6 April 2017 to finance the strengthening of OSCE information security and was allocated total funding of EUR 800 thousand. The Fund initially covered an implementation period extending to 24 months, with the balance carried forward from one year to the next, and was extended until 6 October 2020 by PC.DEC/1324 dated 4 April 2019. The validity of the Fund was further extended until 6 July 2021 by PC.DEC/1374 dated 30 July 2020, at which point it was closed. The IT Infrastructure Upgrade Fund was established by PC.DEC/1322 dated 28 March 2019 for the financing of the upgrade to the latest version of the ICT core platform technologies and the re-architecture and deployment of a secure OSCE IT infrastructure and was allocated EUR 3,560 thousand. This amount was supplemented by PC.DEC/1345 to finance necessary 2019 measures aimed at mitigating the risk of vendor support expiration for the ICT Core Platform Infrastructure in the amount of EUR 630 thousand, and further supplemented by PC.DEC/1422 dated 25 November 2021 in the sum of EUR 482 thousand taking the total to EUR 4,672 thousand. The Fund covers the implementation period, with the balance carried forward from one year to the next. Following completion of all mandated activity, the Fund was closed in 2023. The CIP Technical Fund was established by PC.DEC/1422 dated 25 November 2021 for the purpose of financing agreed capital requirements under the Capital Investment Programme (CIP) and was allocated an amount of EUR 960 thousand taken from identified 2021 underspending. Unless otherwise decided by the Permanent Council, the Fund will be closed upon completion of the agreed capital investment projects. The Special Monitoring Mission to Ukraine, originally established pursuant to PC.DEC/1117 dated 21 March 2014, was financed through provisional assessed contributions on the basis of the Field Operations Scale of Contributions set out in PC.DEC/1325 dated 11 April 2019, and through voluntary contributions, the latter reported as part of segment H. The Permanent Council was unable to find consensus on an extension of its mission beyond 31 March 2022 and it was administratively closed on 31 October of that year. The Observer Mission to Two Russian Checkpoints on the Russian-Ukrainian Border, established by PC.DEC/1130 dated 24 July 2014, deployed observers to the two Russian checkpoints of Donetsk and Gukovo until the expiry of the mandate on 30 September 2021 and subsequent winding down operation approved by PC.DEC/1415 dated 23 September 2021. Page 71
Extra-Budgetary Funds (H) The following Extra-Budgetary Funds were established by Permanent Council decisions and are shown individually in the segment reports: The Fund to support OSCE Action for Peace, Democracy and Stability in Bosnia and Herzegovina (PC.DEC/101 dated 11 January 1996); The Voluntary Fund for Activities Related to Economic Aspects of Security (PC.DEC/150 dated 19 December 1996); The following Extra-Budgetary Funds, established by Permanent Council decisions are grouped together and shown as Other PC Established Funds in the segment reports: The Fund to foster the integration of recently admitted participating States (PC.DEC/23 dated 2 March 1995); The Fund related to the Stability Pact for South Eastern Europe (PC.DEC/306 dated 1 July 1999); The Fund for Activities Related to the Removal and Destruction of Russian Ammunition and Armaments from Moldova (PC.DEC/329 dated 9 December 1999); The Fund for Activities related to the reduction of Military Forces and equipment from Georgia (293rd Reinforced Meeting of the Permanent Council on Georgia dated 17 July 2000); The Bishkek International Conference on Enhancing Security and Stability in Central Asia: Strengthening Comprehensive Efforts to Counter Terrorism (PC.DEC/440 dated 11 October 2001); The Partnership Fund (PC.DEC/812 dated 30 November 2007). That element of the Special Monitoring Mission to Ukraine financed through voluntary contributions in accordance with PC.DEC/1401 dated 31 March 2021. Extra-budgetary contributions accepted under Article IX of the Financial Regulations are not individually approved by the Permanent Council and are shown under a separate Extra-Budgetary grouping of projects called Other Activities and Special Projects. This also includes the Repository Programme “Core Support Mechanism” described in note 6.2 of the financial statements. Indirect Common Costs levied on these projects and certain third- party payments as described in note 2.19 are also disclosed separately. Expenses of other activities and special projects are shown inclusive of Indirect Common Costs, and an eliminations column eliminates these internal revenues and expenses to reconcile to the totals in the statement of financial performance. Extra-Budgetary Expenditure by Executive Structure (J) Extra-budgetary expenditure shown in Segment report H.2 is summarised by Executive Structure in Schedule J, with the Core Support Mechanism disclosed separately. Page 72
1. Segment Reporting Schedule of Financial Position Summary by Source of Funds As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS (Restated) (Restated) (Restated) (Restated) Current Assets Cash and Cash Equivalents 3.1 85,138 34,685 2,287 1,893 87,424 36,578 0 0 25,394 11,735 112,818 48,313 Investments 3.2 0 40,000 0 0 0 40,000 0 0 61,127 71,597 61,127 111,597 Contributions Receivable 3.3 7,217 3,510 4,222 1,884 11,439 5,394 1,272 3,901 6,003 17,470 18,713 26,765 Accounts Receivable 3.4 3,531 3,084 1,482 1,607 5,013 4,691 (33) 34 0 0 4,980 4,725 Prepayments 3.5 4,437 4,233 1,956 2,586 6,393 6,819 23 54 110 80 6,526 6,954 Inventory 3.6 0 0 304 141 304 141 0 0 488 151 792 291 Inter-Fund Balances (55,802)(42,180) 6,995 5,442 (48,807)(36,737) 22,618 20,841 26,189 15,896 0 0 Other Current Assets 3.7 (4) 12 0 0 (4) 12 0 0 0 0 (4) 12 44,516 43,345 17,246 13,553 61,762 56,897 23,880 24,831 119,311 116,929 204,953 198,658 Non-Current Assets Property, Plant and Equipment 3.8 1,993 2,723 3,674 3,938 5,666 6,661 595 2,284 1,655 819 7,915 9,764 Intangible Assets 3.9 2,356 2,858 68 52 2,424 2,909 31 42 1,269 1,048 3,725 3,999 Other Non-Current Assets 3.7 20 20 0 0 20 20 0 0 0 0 20 20 4,369 5,600 3,742 3,990 8,111 9,590 626 2,327 2,924 1,866 11,660 13,783 Total Assets 48,885 48,945 20,988 17,543 69,873 66,487 24,506 27,158 122,234 118,796 216,613 212,441 LIABILITIES Current Liabilities Accounts Payable 4.1 2,616 2,213 527 760 3,143 2,974 149 292 213 24 3,505 3,290 Accruals 4.2 1,046 1,301 2,787 2,972 3,833 4,272 132 113 3,939 2,795 7,903 7,180 Deferred Revenue 4.3 5,764 4,525 0 0 5,764 4,525 0 1,082 0 0 5,764 5,607 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 102,639 91,721 102,639 91,721 Funds Held for Third Parties 4.5 17,629 18,998 28 28 17,657 19,026 0 0 0 0 17,657 19,026 Employee Benefits Current 4.6 3,404 3,364 4,187 3,940 7,591 7,304 5 27 791 227 8,387 7,558 Cash Surplus Current 4.7 0 2,001 0 1,826 0 3,827 0 0 0 0 0 3,827 Provisions 4.8 0 0 0 0 0 0 0 0 6,897 17,250 6,897 17,250 Other Current Liabilities 4.9 419 2,069 182 193 601 2,262 18 343 0 (0) 618 2,605 30,879 34,470 7,710 9,719 38,589 44,190 303 1,857 114,478 112,017 153,371 158,063 Non-Current Liabilities Employee Benefits Non-Current 4.6 3,413 3,470 68 77 3,481 3,547 0 2 32 188 3,513 3,737 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 3,413 3,470 68 77 3,481 3,547 0 2 32 188 3,513 3,737 Total Liabilities 34,292 37,940 7,778 9,797 42,070 47,737 303 1,859 114,510 112,205 156,883 161,800 Net Assets 14,593 11,005 13,210 7,746 27,802 18,751 24,203 25,299 7,724 6,591 59,730 50,641 NET ASSETS Cash Surplus 5.1 (730) (1,119) 4,674 1,138 3,944 19 20,669 198 0 0 24,613 218 Cash Surplus Withheld 5.2 11 20 4 6 15 27 0 0 0 0 15 27 Revolving Fund 5.3 2,710 2,710 0 0 2,710 2,710 0 0 0 0 2,710 2,710 Contingency Fund 5.3 2,180 2,180 0 0 2,180 2,180 0 0 0 0 2,180 2,180 Other Reserves 5.4 (3,524) (3,704) 565 573 (2,959) (3,131) 427 426 (312) (393) (2,844) (3,098) Accumulated Surplus/(Deficit) 5.5 13,945 10,917 7,967 6,029 21,913 16,946 3,108 24,674 8,036 6,984 33,056 48,604 Total Net Assets 14,593 11,005 13,210 7,746 27,802 18,751 24,203 25,299 7,724 6,591 59,730 50,641 Total Extra-Budgetary Funds TOTAL OSCE Total Secretariat and Institutions Total Field OperationsTotal Unified Budget Total Special Purpose FundsPage 73
2. Segment Reporting Schedule of Financial Performance Summary by Source of Funds For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 (Restated) (Restated) REVENUE Assessed Contributions 6.1 60,392 60,392 77,812 77,812 138,204 138,204 0 45,658 0 0 138,204 183,862 Extra-Budgetary Contributions 6.2 9 (9) 0 0 9 (9) 0 0 47,879 41,349 47,888 41,340 Finance Revenue 6.3 3,630 578 0 0 3,630 578 0 0 0 0 3,630 578 Contributions In-Kind 6.4 12,469 14,018 16,702 16,698 29,171 30,716 0 12,021 918 344 30,089 43,081 Revenue from Exchange Transactions 6.5 15 9 397 257 412 266 784 130 (18) (62) 1,178 334 Other Revenue 6.6 2,062 3,786 761 (76) 2,823 3,709 (222) (1,022) 61 60 2,662 2,747 Total Revenue 78,577 78,774 95,672 94,691 174,248 173,465 562 56,788 48,840 41,691 223,651 271,944 EXPENSES Staff Costs 7.1 50,909 49,333 62,083 61,646 112,992 110,979 566 41,464 14,676 11,161 128,235 163,604 Consultancy and Subcontracting 7.2 5,579 5,714 6,156 6,849 11,735 12,562 369 2,043 12,988 10,853 25,092 25,458 Travel Expenses 7.3 2,272 2,929 5,166 5,199 7,438 8,129 12 4,240 7,180 5,285 14,629 17,654 Services and Office Costs 7.4 13,891 14,461 11,429 11,877 25,320 26,338 236 4,132 8,635 4,074 34,192 34,543 Consumables and Supplies 7.5 365 514 1,890 2,401 2,255 2,915 29 1,826 920 1,363 3,204 6,104 Depreciation and Amortisation 7.6 1,432 1,455 1,305 1,230 2,738 2,686 213 5,227 346 1,325 3,297 9,238 Equipment Expenses 7.7 95 398 1,855 3,723 1,950 4,121 26 192 1,725 3,480 3,701 7,793 Other Operating Expenses 7.8 435 312 389 427 824 739 4 1,310 276 3,117 1,104 5,166 Total Expenses 74,979 75,117 90,274 93,352 165,253 168,470 1,454 60,434 46,746 40,658 213,453 269,561 Foreign Exchange Gains/(Losses) 8 (231) 468 (73) (127) (304) 341 (5) (56) (1,041) 2,464 (1,350) 2,748 Surplus/(Deficit) for the Period 9.1 3,366 4,124 5,326 1,212 8,692 5,336 (897) (3,702) 1,053 3,497 8,848 5,131 Total Extra-Budgetary Funds Total OSCE Total Secretariat and Institutions Total Field OperationsTotal Unified Budget Total Special Purpose FundsPage 74
3. Segment Reporting Cash Flow Schedule Summary by Source of Funds For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 (Restated) (Restated) (Restated) (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Surplus/(Deficit) for the Period 9.1 3,366 4,124 5,326 1,212 8,692 5,336 (897) (3,702) 1,053 3,497 8,848 5,131 Non-Cash Movements Deduction of Unrealized Foreign Exchange Gains/Losses on Cash and Cash Equivalents 8 164 (425) 22 26 187 (399) 0 (10) 795 (1,923) 982 (2,332) Deduction of Depreciation, Amortisation and Impairments7.6, 3.10 1,432 1,455 1,305 1,230 2,738 2,686 213 5,227 346 1,325 3,297 9,238 Deduction of Loss on Disposal of PP&E 6.5 25 (535) (280) (447) (256) (982) 327 1,092 167 155 238 265 Deduction of Non-Cash Changes in Net Assets 5.4 180 (843) (9) 28 172 (816) 1 301 81 (59) 253 (573) (Increase) / Decrease in Contributions Receivable 3.3 (3,707) (3,488) (2,338) (1,875) (6,045) (5,362) 2,629 7,464 11,468 262 8,052 2,364 (Increase) / Decrease in Accounts Receivable 3.4 (447) (190) 125 (531) (322) (721) 67 442 0 0 (255) (280) (Increase) / Decrease in Prepayments 3.5 (204) (550) 630 (586) 426 (1,136) 31 871 (30) (46) 428 (311) (Increase) / Decrease in Inventory 3.6 0 0 (164) (50) (164) (50) 0 1,136 (337) 232 (501) 1,318 (Increase) / Decrease in Other Current/Non-Current Assets3.7 16 (2) 0 0 16 (2) 0 0 0 0 16 (2) Increase / (Decrease) in Accounts Payable 4.1 403 1,274 (234) 166 169 1,440 (143) (191) 189 24 215 1,272 Increase / (Decrease) in Accruals 4.2 (255) (424) (185) (883) (440) (1,306) 19 (2,632) 1,144 (192) 723 (4,130) Increase / (Decrease) in Deferred Revenue 4.3 1,239 (256) 0 0 1,239 (256) (1,082) (3,268) 0 0 157 (3,524) Increase / (Decrease) in Conditional ExB Contributions4.4 0 0 0 0 0 0 0 0 10,918 (2,273) 10,918 (2,273) Increase / (Decrease) in Funds Held for Third Parties4.5 (1,368) 1,293 (0) 4 (1,369) 13,656 0 0 0 0 (1,369) 13,656 Increase / (Decrease) in Employee Benefits 4.6 (17) 1,070 238 129 222 1,198 (24) (1,266) 408 (223) 605 (291) Increase / (Decrease) in Cash Surplus Payable 4.7 (2,001) (314) (1,826) 101 (3,827) (213) 0 0 0 0 (3,827) (213) Increase / (Decrease) in Provisions 4.8 0 0 0 0 0 0 0 0 (10,353) 10,161 (10,353) 10,161 Increase / (Decrease) in Other Liabilities 1.9 (1,650) 1,335 (12) 115 (1,661) 1,451 (325) 322 0 (0) (1,986) 1,773 Increase / (Decrease) in Inter-Fund Balances 13,622 (20,099) (1,553) 5,125 12,070 (14,973) (1,776)(19,636)(10,293) 34,610 0 0 Net Cash Flows from Operating Activities 10,801 (16,575) 1,047 3,765 11,848 (451) (961)(13,851) 5,554 45,549 16,441 31,248 CASH FLOWS FROM INVESTING ACTIVITIES (Purchase) / Sale of Investments 3.2 40,000 (30,000) 0 0 40,000 (30,000) 0 0 10,469 (52,787) 50,469 (82,787) (Addition) / Disposal of PP&E and Intangibles 3.8, 3.9 (225) (245) (777) (969) (1,002) (1,215) 1,161 (1,038) (1,570) (924) (1,412) (3,176) Net Cash Flows from Investing Activities 39,775 (30,245) (777) (969) 38,998 (31,215) 1,161 (1,038) 8,899 (53,711) 49,058 (85,963) CASH FLOWS FROM FINANCING ACTIVITIES Credits for Cash Surplus Withheld 5.2 (9) (7) (3) (7) (12) (14) 0 0 0 0 (12) (14) Allocation of Cash Surplus 4.7 0 (2,001) 0 (1,826) 0 (3,827) 0 0 0 0 0 (3,827) Transfer between Funds 51 (815) 149 (710) 200 (1,525) (200) 1,525 0 0 0 0 Net Cash Flows from Financing Activities 42 (2,823) 146 (2,543) 188 (5,366) (200) 1,525 (0) 0 (12) (3,841) Net Increase/(Decrease) in Cash and Cash Equivalents 3.1 50,617 (49,644) 416 253 51,034 (49,391) (0) (1,004) 14,453 (8,162) 65,487 (58,557) Cash and Cash Equivalents at Beginning of Period 3.1 34,685 83,903 1,893 1,666 36,578 85,570 0 994 11,735 17,974 48,313 104,537 Foreign Exchange Gains/(Losses) on Cash and Cash Equivalents 8 (164) 425 (22) (26) (187) 399 0 10 (795) 1,923 (982) 2,332 Cash and Cash Equivalents at End of Period 85,138 34,685 2,287 1,893 87,424 36,578 (0) (0) 25,394 11,735 112,818 48,313 Total OSCE Total Secretariat and Institutions Total Field OperationsTotal Unified Budget Total Special Purpose Funds Total Extra-Budgetary FundsPage 75
A.1. Segment Reporting Schedule of Financial Position Secretariat and Institutions As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS (Restated) (Restated) Current Assets Cash and Cash Equivalents 3.1 84,584 33,506 434 1,000 120 179 0 0 85,138 34,685 Investments 3.2 0 40,000 0 0 0 0 0 0 0 40,000 Contributions Receivable 3.3 4,667 2,273 1,938 939 419 204 192 93 7,217 3,510 Accounts Receivable 3.4 2,840 2,272 532 611 132 156 27 46 3,531 3,084 Prepayments 3.5 3,423 2,938 946 1,112 52 167 17 16 4,437 4,233 Inventory 3.6 0 0 0 0 0 0 0 0 0 0 Inter-Fund Balances (55,119)(42,504) (380) 308 (264) (71) (39) 86 (55,802)(42,180) Other Current Assets 3.7 0 0 (4) 12 0 0 0 0 (4) 12 40,395 38,486 3,466 3,982 459 635 197 242 44,516 43,345 Non-Current Assets Property, Plant and Equipment 3.8 1,707 2,335 271 357 11 25 3 6 1,993 2,723 Intangible Assets 3.9 2,354 2,855 0 0 2 3 0 0 2,356 2,858 Other Non-Current Assets 3.7 20 20 0 0 0 0 0 0 20 20 4,081 5,210 271 357 13 28 3 6 4,369 5,600 Total Assets 44,476 43,695 3,737 4,339 472 662 200 248 48,885 48,945 LIABILITIES Current Liabilities Accounts Payable 4.1 2,371 1,853 243 357 3 2 (0) 1 2,616 2,213 Accruals 4.2 648 823 354 375 35 96 9 6 1,046 1,301 Deferred Revenue 4.3 4,915 3,676 849 849 0 0 0 0 5,764 4,525 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 17,191 18,654 438 343 0 0 0 0 17,629 18,998 Employee Benefits Current 4.6 2,210 2,310 812 711 234 206 148 136 3,404 3,364 Cash Surplus Current 4.7 0 1,131 0 552 0 192 0 125 0 2,001 Provisions 4.8 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 346 1,992 (0) (0) 73 77 0 0 419 2,069 27,681 30,439 2,696 3,188 345 574 157 269 30,879 34,470 Non-Current Liabilities Employee Benefits Non-Current 4.6 1,816 1,859 1,183 1,206 335 302 79 102 3,413 3,470 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 1,816 1,859 1,183 1,206 335 302 79 102 3,413 3,470 Total Liabilities 29,497 32,299 3,879 4,394 680 876 236 371 34,292 37,940 Net Assets 14,979 11,397 (143) (55) (208) (214) (36) (124) 14,593 11,005 NET ASSETS Cash Surplus 5.1 783 (643) (1,084) (284) (297) (128) (132) (64) (730) (1,119) Cash Surplus Withheld 5.2 10 15 1 3 0 1 0 1 11 20 Revolving Fund 5.3 2,710 2,710 0 0 0 0 0 0 2,710 2,710 Contingency Fund 5.3 2,180 2,180 0 0 0 0 0 0 2,180 2,180 Other Reserves 5.4 (1,714) (1,943) (1,459) (1,444) (260) (215) (90) (102) (3,524) (3,704) Accumulated Surplus/(Deficit) 5.5 11,011 9,077 2,400 1,670 349 128 186 42 13,945 10,917 Total Net Assets 14,979 11,397 (143) (55) (208) (214) (36) (124) 14,593 11,005 The Secretariat Office for Democratic Institutions and Human Rights High Commissioner on National Minorities Representative on Freedom of the Media Total InstitutionsPage 76
A.2. Segment Reporting Schedule of Financial Performance Secretariat and Institutions For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 39,120 39,120 16,160 16,160 3,504 3,504 1,609 1,609 60,392 60,392 Extra-Budgetary Contributions 6.2 9 (9) 0 0 0 0 0 0 9 (9) Finance Revenue 6.3 3,628 577 1 1 0 0 0 0 3,630 578 Contributions In-Kind 6.4 9,000 10,401 2,352 2,504 607 588 510 524 12,469 14,018 Revenue from Exchange Transactions 6.5 1 6 14 0 0 3 0 0 15 9 Other Revenue 6.6 1,789 4,031 206 (116) 46 (89) 20 (40) 2,062 3,786 Total Revenue 53,547 54,126 18,733 18,548 4,158 4,007 2,139 2,093 78,577 78,774 EXPENSES Staff Costs 7.1 34,795 34,967 10,557 9,257 3,682 3,289 1,875 1,820 50,909 49,333 Consultancy and Subcontracting 7.2 1,120 1,436 4,412 4,096 33 143 14 38 5,579 5,714 Travel Expenses 7.3 1,173 1,364 831 1,174 168 267 99 125 2,272 2,929 Services and Office Costs 7.4 11,123 11,077 2,533 3,087 176 230 60 67 13,891 14,461 Consumables and Supplies 7.5 152 248 195 231 9 25 9 10 365 514 Depreciation and Amortisation 7.6 1,327 1,369 89 70 14 14 3 4 1,432 1,455 Equipment Expenses 7.7 (11) 222 98 144 7 19 1 13 95 398 Other Operating Expenses 7.8 371 280 41 16 17 11 5 4 435 312 Total Expenses 50,050 50,962 18,755 18,076 4,106 3,998 2,067 2,081 74,979 75,117 Foreign Exchange Gains/(Losses) 8 (186) 502 (45) (34) (0) (0) 0 0 (231) 468 Surplus/(Deficit) for the Period 9.1 3,310 3,665 (67) 438 52 8 72 12 3,366 4,124 The Secretariat Office for Democratic Institutions and Human Rights High Commissioner on National Minorities Representative on Freedom of the Media Total InstitutionsPage 77
EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 0 0 1,083 852 62 60 51 30 1,090 951 2,287 1,893 0 0 2,287 1,893 Investments 3.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 113 48 2,552 1,139 316 144 125 57 1,096 497 4,202 1,884 20 0 4,222 1,884 Accounts Receivable 3.4 0 0 949 915 27 50 6 11 501 631 1,482 1,607 0 0 1,482 1,607 Prepayments 3.5 29 24 768 1,105 70 115 4 10 1,084 1,332 1,956 2,586 0 0 1,956 2,586 Inventory 3.6 0 0 172 90 0 0 0 0 132 50 304 141 0 0 304 141 Inter-Fund Balances (153) (24) 113 2,097 4,755 1,268 2,226 1,872 1 159 6,943 5,373 52 70 6,995 5,442 Other Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (11) 48 5,637 6,198 5,231 1,637 2,412 1,980 3,904 3,620 17,173 13,483 73 70 17,246 13,553 Non-Current Assets Property, Plant and Equipment 3.8 0 0 2,321 2,384 295 374 125 169 933 1,012 3,674 3,938 0 0 3,674 3,938 Intangible Assets 3.9 0 0 40 35 1 2 0 0 27 14 68 52 0 0 68 52 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,361 2,419 297 376 125 169 960 1,027 3,742 3,990 0 0 3,742 3,990 Total Assets (11) 48 7,997 8,617 5,527 2,012 2,537 2,148 4,864 4,647 20,915 17,473 73 70 20,988 17,543 LIABILITIES Current Liabilities Accounts Payable 4.1 0 0 284 312 47 237 0 4 196 208 527 760 (0) (0) 527 760 Accruals 4.2 33 37 1,335 1,474 85 84 8 22 1,326 1,355 2,787 2,972 0 0 2,787 2,972 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 27 28 0 0 0 0 0 0 28 28 0 0 28 28 Employee Benefits Current 4.6 144 106 3,177 2,956 108 41 42 41 715 796 4,187 3,940 0 0 4,187 3,940 Cash Surplus Current 4.7 0 75 0 613 0 58 0 834 0 201 0 1,782 0 44 0 1,826 Provisions 4.8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 0 0 173 183 1 1 (0) (0) 8 10 182 193 0 0 182 193 177 218 4,996 5,564 242 422 50 901 2,245 2,571 7,710 9,675 0 44 7,710 9,719 Non-Current Liabilities Employee Benefits Non-Current 4.6 (0) 0 43 53 1 3 1 2 23 20 68 77 0 0 68 77 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (0) 0 43 53 1 3 1 2 23 20 68 77 0 0 68 77 Total Liabilities 177 218 5,039 5,617 243 425 51 903 2,268 2,590 7,778 9,752 0 44 7,778 9,797 Net Assets (187) (169) 2,958 3,000 5,285 1,588 2,486 1,246 2,596 2,057 13,137 7,720 73 26 13,210 7,746 NET ASSETS Cash Surplus 5.1 (79) (29) (1,639) (678) 4,639 1,040 2,240 1,022 (549) (251) 4,613 1,104 61 34 4,674 1,138 Cash Surplus Withheld 5.2 0 0 2 3 0 0 0 1 1 1 3 5 1 1 4 6 Revolving Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Reserves 5.4 350 350 372 361 3 2 (8) (5) (146) (126) 572 581 (8) (8) 565 573 Accumulated Surplus/(Deficit) 5.5 (459) (490) 4,223 3,314 643 546 253 228 3,290 2,433 7,949 6,031 18 (2) 7,967 6,029 Total Net Assets (187) (169) 2,958 3,000 5,285 1,588 2,486 1,246 2,596 2,057 13,137 7,720 73 26 13,210 7,746 As at 31 December 2023 B.1. Segment Reporting Schedule of Financial Position Field Operations by Region Closed Funds Total Field Operations Augmentations South-Eastern Europe Eastern Europe Caucasus Central Asia Total RegionsPage 78
B.2. Segment Reporting Schedule of Financial Performance Field Operations by Region For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 1,988 1,988 47,043 47,043 5,927 5,927 2,339 2,339 20,516 20,516 77,812 77,812 0 0 77,812 77,812 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 0 0 12,339 11,866 897 1,055 691 815 2,776 2,962 16,702 16,698 0 0 16,702 16,698 Revenue from Exchange Transactions 6.5 0 0 355 331 22 1 0 0 20 (75) 397 257 0 0 397 257 Other Revenue 6.6 15 (26) 412 (230) 39 181 10 (19) 256 49 731 (44) 30 (32) 761 (76) Total Revenue 2,003 1,962 60,148 59,011 6,884 7,164 3,039 3,134 23,568 23,452 95,642 94,723 30 (32) 95,672 94,691 EXPENSES Staff Costs 7.1 1,932 1,679 46,391 44,273 2,053 3,577 1,413 1,567 10,295 10,549 62,083 61,646 0 (0) 62,083 61,646 Consultancy and Subcontracting 7.2 45 167 2,410 2,619 151 372 6 2 3,544 3,689 6,156 6,849 0 0 6,156 6,849 Travel Expenses 7.3 31 5 1,863 1,793 129 465 55 167 3,088 2,769 5,166 5,199 0 0 5,166 5,199 Services and Office Costs 7.4 15 4 6,790 6,669 564 907 281 281 3,779 4,015 11,429 11,877 0 0 11,429 11,877 Consumables and Supplies 7.5 4 0 1,013 1,205 123 252 21 31 729 913 1,890 2,401 0 0 1,890 2,401 Depreciation and Amortisation 7.6 0 0 846 788 94 99 44 46 321 298 1,305 1,230 0 0 1,305 1,230 Equipment Expenses 7.7 0 0 836 1,696 22 138 15 16 981 1,873 1,855 3,723 0 0 1,855 3,723 Other Operating Expenses 7.8 0 0 120 157 56 88 11 7 202 176 389 427 0 0 389 427 Total Expenses 2,026 1,855 60,269 59,200 3,193 5,898 1,847 2,117 22,940 24,283 90,274 93,352 0 (0) 90,274 93,352 Foreign Exchange Gains/(Losses) 8 0 0 (4) (4) 1 (30) (1) 0 (70) (94) (73) (127) 0 0 (73) (127) Surplus/(Deficit) for the Period 9.1 (23) 107 (125) (193) 3,693 1,236 1,192 1,018 558 (925) 5,296 1,243 30 (32) 5,326 1,212 Closed Funds Total Field Operations Augmentations South-Eastern Europe Eastern Europe Caucasus Central Asia Total RegionsPage 79
C.1 Segment Reporting Schedule of Financial Position South-Eastern Europe As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 258 77 277 229 322 68 128 114 41 360 57 4 1,083 852 Investments 3.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 952 423 633 283 339 152 161 72 352 158 116 52 2,552 1,139 Accounts Receivable 3.4 164 261 226 307 41 74 62 61 443 190 14 22 949 915 Prepayments 3.5 236 404 133 187 232 283 41 53 96 136 31 42 768 1,105 Inventory 3.6 13 14 94 21 0 0 0 0 2 55 63 0 172 90 Inter-Fund Balances 111 541 (132) 646 (384) 86 2 170 107 (46) 409 700 113 2,097 Other Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,733 1,719 1,231 1,673 549 662 394 470 1,040 853 690 820 5,637 6,198 Non-Current Assets Property, Plant and Equipment 3.8 994 1,036 625 561 175 218 117 116 391 425 19 27 2,321 2,384 Intangible Assets 3.9 36 20 2 4 0 0 1 1 1 2 0 8 40 35 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,029 1,056 627 565 175 218 118 117 392 427 19 35 2,361 2,419 Total Assets 2,762 2,775 1,858 2,239 724 880 512 588 1,432 1,280 709 855 7,997 8,617 LIABILITIES Current Liabilities Accounts Payable 4.1 21 162 29 36 36 11 88 82 99 6 10 15 284 312 Accruals 4.2 283 313 412 265 260 352 74 75 133 211 173 258 1,335 1,474 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 7 7 2 2 0 0 18 19 0 0 27 28 Employee Benefits Current 4.6 1,317 1,192 725 802 322 371 133 148 640 377 40 64 3,177 2,956 Cash Surplus Current 4.7 0 75 0 159 0 15 0 65 0 132 0 167 0 613 Provisions 4.8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 131 54 17 12 20 (1) (0) (0) 4 3 2 114 173 183 1,752 1,796 1,190 1,281 640 749 296 370 893 749 224 619 4,996 5,564 Non-Current Liabilities Employee Benefits Non-Current 4.6 17 20 11 10 4 5 2 3 7 11 2 3 43 53 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 17 20 11 10 4 5 2 3 7 11 2 3 43 53 Total Liabilities 1,769 1,816 1,201 1,291 644 754 298 373 900 760 226 622 5,039 5,617 Net Assets 993 959 657 947 80 126 214 214 532 519 483 234 2,958 3,000 NET ASSETS Cash Surplus 5.1 (749) (338) (427) (151) (298) (131) (33) 2 (184) (94) 53 33 (1,639) (678) Cash Surplus Withheld 5.2 1 1 0 0 0 0 0 0 0 1 0 0 2 3 Revolving Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Reserves 5.4 273 266 34 34 30 30 17 17 17 13 1 1 372 361 Accumulated Surplus/(Deficit) 5.5 1,467 1,030 1,050 1,064 348 226 230 195 700 600 428 200 4,223 3,314 Total Net Assets 993 959 657 947 80 126 214 214 532 519 483 234 2,958 3,000 Mission to Skopje Mission to Montenegro Total South-Eastern Europe Mission in Kosovo Mission to Bosnia and Herzegovina Mission to Serbia Presence in AlbaniaPage 80
C.2. Segment Reporting Schedule of Financial Performance South-Eastern Europe For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 17,463 17,463 11,682 11,682 6,259 6,259 2,981 2,981 6,506 6,506 2,152 2,152 47,043 47,043 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 5,755 5,351 1,908 1,692 1,321 1,363 923 979 1,896 2,015 535 466 12,339 11,866 Revenue from Exchange Transactions 6.5 118 125 98 145 27 9 6 51 103 0 2 0 355 331 Other Revenue 6.6 119 (58) 180 (57) 32 (64) 32 36 40 (63) 9 (24) 412 (230) Total Revenue 23,455 22,881 13,868 13,462 7,639 7,567 3,942 4,048 8,546 8,458 2,698 2,595 60,148 59,011 EXPENSES Staff Costs 7.1 19,187 18,117 10,926 10,098 5,573 5,476 2,917 2,992 6,294 6,222 1,493 1,369 46,391 44,273 Consultancy and Subcontracting 7.2 707 772 451 409 353 458 133 147 377 445 390 387 2,410 2,619 Travel Expenses 7.3 405 536 368 323 412 377 184 171 351 267 142 119 1,863 1,793 Services and Office Costs 7.4 2,083 2,195 1,550 1,471 1,108 1,090 542 471 1,176 1,076 332 367 6,790 6,669 Consumables and Supplies 7.5 451 563 319 259 68 64 45 58 113 220 17 41 1,013 1,205 Depreciation and Amortisation 7.6 352 364 240 189 71 68 51 35 125 121 8 10 846 788 Equipment Expenses 7.7 240 542 282 237 76 112 77 82 92 434 68 290 836 1,696 Other Operating Expenses 7.8 23 25 30 28 13 11 6 9 24 57 23 27 120 157 Total Expenses 23,448 23,114 14,167 13,013 7,674 7,655 3,955 3,965 8,551 8,842 2,473 2,611 60,269 59,200 Foreign Exchange Gains/(Losses) 8 (0) 0 (0) 0 (17) (15) 6 6 8 5 0 0 (4) (4) Surplus/(Deficit) for the Period 9.1 7 (233) (299) 450 (53) (104) (7) 89 2 (379) 225 (16) (125) (193) Mission to Montenegro Total South-Eastern Europe Mission in Kosovo Mission to Bosnia and Herzegovina Mission to Serbia Presence in Albania Mission to SkopjePage 81
D.1. Segment Reporting Schedule of Financial Position Eastern Europe As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 62 60 0 0 0 0 62 60 Investments 3.2 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 123 56 193 88 0 0 316 144 Accounts Receivable 3.4 26 50 0 0 0 0 27 50 Prepayments 3.5 70 115 (0) (0) 0 0 70 115 Inventory 3.6 0 0 0 0 0 0 0 0 Inter-Fund Balances 107 (78) 4,640 1,340 8 6 4,755 1,268 Other Current Assets 3.7 0 0 0 0 0 0 0 0 390 202 4,833 1,428 8 6 5,231 1,637 Non-Current Assets Property, Plant and Equipment 3.8 295 373 0 1 0 0 295 374 Intangible Assets 3.9 1 2 0 0 0 0 1 2 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 297 375 0 1 0 0 297 376 Total Assets 686 577 4,833 1,429 8 6 5,527 2,012 LIABILITIES Current Liabilities Accounts Payable 4.1 (10) (32) 57 269 0 0 47 237 Accruals 4.2 85 76 0 7 0 0 85 84 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 0 0 0 0 0 0 Employee Benefits Current 4.6 108 41 0 0 0 0 108 41 Cash Surplus Current 4.7 0 39 0 16 0 3 0 58 Provisions 4.8 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 0 1 1 1 0 0 1 1 184 125 58 293 0 4 242 422 Non-Current Liabilities Employee Benefits Non-Current 4.6 1 3 0 0 0 0 1 3 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 1 3 0 0 0 0 1 3 Total Liabilities 185 128 58 293 0 4 243 425 Net Assets 501 449 4,775 1,136 8 3 5,285 1,588 NET ASSETS Cash Surplus 5.1 14 (36) 4,617 1,073 8 3 4,639 1,040 Cash Surplus Withheld 5.2 0 0 0 0 0 0 0 0 Revolving Fund 5.3 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 Other Reserves 5.4 (6) (7) 9 9 0 0 3 2 Accumulated Surplus/(Deficit) 5.5 493 492 150 54 0 0 643 546 Total Net Assets 501 449 4,775 1,136 8 3 5,285 1,588 Mission to Moldova Project Co-ordinator in Ukraine Representative on the Latvian-Russian Joint Commission on Military Pensioners Total Eastern EuropePage 82
D.2. Segment Reporting Schedule of Financial Performance Eastern Europe For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 2,303 2,303 3,619 3,619 6 6 5,927 5,927 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 807 802 0 165 90 87 897 1,055 Revenue from Exchange Transactions 6.5 22 2 0 (1) 0 0 22 1 Other Revenue 6.6 13 254 26 (73) 0 (0) 39 181 Total Revenue 3,144 3,361 3,644 3,710 95 92 6,884 7,164 EXPENSES Staff Costs 7.1 1,963 1,961 0 1,529 90 87 2,053 3,577 Consultancy and Subcontracting 7.2 151 211 0 161 0 0 151 372 Travel Expenses 7.3 129 194 0 269 0 3 129 465 Services and Office Costs 7.4 557 499 7 408 0 0 564 907 Consumables and Supplies 7.5 122 178 1 74 0 0 123 252 Depreciation and Amortisation 7.6 94 77 0 22 0 0 94 99 Equipment Expenses 7.7 22 122 0 17 0 0 22 138 Other Operating Expenses 7.8 56 36 0 52 0 0 56 88 Total Expenses 3,094 3,278 8 2,531 90 90 3,193 5,898 Foreign Exchange Gains/(Losses) 8 1 (8) (0) (22) 0 0 1 (30) Surplus/(Deficit) for the Period 9.1 51 75 3,636 1,158 5 3 3,693 1,236 Mission to Moldova Project Co-ordinator in Ukraine Representative on the Latvian-Russian Joint Commission on Military Pensioners Total Eastern EuropePage 83
E.1. Segment Reporting Schedule of Financial Position Caucasus As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 0 0 0 0 51 30 51 30 Investments 3.2 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 13 6 49 22 63 29 125 57 Accounts Receivable 3.4 2 4 0 0 4 8 6 11 Prepayments 3.5 0 1 0 0 4 9 4 10 Inventory 3.6 0 0 0 0 0 0 0 0 Inter-Fund Balances 161 164 1,538 1,208 527 500 2,226 1,872 Other Current Assets 3.7 0 0 0 0 0 0 0 0 176 174 1,587 1,230 649 575 2,412 1,980 Non-Current Assets Property, Plant and Equipment 3.8 1 1 0 0 124 168 125 169 Intangible Assets 3.9 0 0 0 0 0 0 0 0 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 1 1 0 0 124 168 125 169 Total Assets 177 175 1,587 1,230 773 743 2,537 2,148 LIABILITIES Current Liabilities Accounts Payable 4.1 0 0 0 0 0 4 0 4 Accruals 4.2 2 1 0 7 6 14 8 22 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 0 0 0 0 0 0 Employee Benefits Current 4.6 12 16 0 0 30 25 42 41 Cash Surplus Current 4.7 0 63 0 586 0 186 0 834 Provisions 4.8 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 0 0 0 0 (0) (0) (0) (0) 14 80 0 593 36 229 50 901 Non-Current Liabilities Employee Benefits Non-Current 4.6 0 0 0 0 1 2 1 2 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 1 2 1 2 Total Liabilities 14 80 0 593 37 231 51 903 Net Assets 163 96 1,587 638 736 512 2,486 1,246 NET ASSETS Cash Surplus 5.1 122 62 1,704 782 413 179 2,240 1,022 Cash Surplus Withheld 5.2 0 0 0 0 0 0 0 1 Revolving Fund 5.3 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 Other Reserves 5.4 0 0 0 0 (8) (5) (8) (5) Accumulated Surplus/(Deficit) 5.5 41 33 (118) (145) 330 339 253 228 Total Net Assets 163 96 1,587 638 736 512 2,486 1,246 The Minsk Process Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference Total Caucasus High-Level Planning GroupPage 84
E.2. Segment Reporting Schedule of Financial Performance Caucasus For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 248 248 911 911 1,180 1,180 2,339 2,339 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 450 489 0 0 241 326 691 815 Revenue from Exchange Transactions 6.5 0 0 0 0 0 0 0 0 Other Revenue 6.6 1 (2) 4 (6) 5 (11) 10 (19) Total Revenue 698 734 916 905 1,426 1,495 3,039 3,134 EXPENSES Staff Costs 7.1 546 584 0 0 867 984 1,413 1,567 Consultancy and Subcontracting 7.2 0 0 0 0 6 2 6 2 Travel Expenses 7.3 5 10 0 110 50 47 55 167 Services and Office Costs 7.4 80 74 0 1 201 206 281 281 Consumables and Supplies 7.5 1 1 0 0 20 30 21 31 Depreciation and Amortisation 7.6 1 1 0 0 43 45 44 46 Equipment Expenses 7.7 1 0 0 0 14 16 15 16 Other Operating Expenses 7.8 0 0 0 0 11 6 11 7 Total Expenses 635 669 0 112 1,212 1,336 1,847 2,117 Foreign Exchange Gains/(Losses) 8 0 0 0 0 (1) 0 (1) 0 Surplus/(Deficit) for the Period 9.1 64 65 916 793 213 160 1,192 1,018 Total Caucasus High-Level Planning Group The Minsk Process Personal Representative of the CiO on the Conflict Dealt with by the Minsk ConferencePage 85
F.1. Segment Reporting Schedule of Financial Position Central Asia As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 65 133 101 130 196 56 277 97 452 535 1,090 951 Investments 3.2 0 0 0 0 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 120 54 89 40 364 165 133 61 391 177 1,096 497 Accounts Receivable 3.4 7 12 8 13 90 153 34 66 363 387 501 631 Prepayments 3.5 50 93 24 47 650 801 62 48 298 343 1,084 1,332 Inventory 3.6 0 0 0 0 40 49 24 2 68 0 132 50 Inter-Fund Balances 122 82 18 (43) (444) (221) 65 316 240 25 1 159 Other Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 363 374 239 188 896 1,003 594 590 1,812 1,466 3,904 3,620 Non-Current Assets Property, Plant and Equipment 3.8 104 147 81 125 175 253 103 156 471 331 933 1,012 Intangible Assets 3.9 1 1 2 6 17 4 3 2 4 1 27 14 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 105 148 83 131 192 257 106 158 474 332 960 1,027 Total Assets 468 522 322 319 1,088 1,260 699 748 2,286 1,799 4,864 4,647 LIABILITIES Current Liabilities Accounts Payable 4.1 5 22 3 16 (95) (22) 3 61 281 131 196 208 Accruals 4.2 143 79 62 39 488 501 136 160 497 577 1,326 1,355 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 0 0 0 0 0 0 0 0 0 0 Employee Benefits Current 4.6 96 100 87 106 171 185 65 72 296 333 715 796 Cash Surplus Current 4.7 0 67 0 15 0 (9) 0 39 0 88 0 201 Provisions 4.8 0 0 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 1 0 3 1 (0) 2 2 1 2 6 8 10 245 269 155 177 564 657 205 334 1,076 1,134 2,245 2,571 Non-Current Liabilities Employee Benefits Non-Current 4.6 3 2 3 3 5 5 1 2 11 9 23 20 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 3 2 3 3 5 5 1 2 11 9 23 20 Total Liabilities 248 271 158 180 569 662 206 335 1,087 1,143 2,268 2,590 Net Assets 220 251 164 139 518 598 494 413 1,200 656 2,596 2,057 NET ASSETS Cash Surplus 5.1 (71) (38) (65) (28) (313) (149) 50 55 (150) (91) (549) (251) Cash Surplus Withheld 5.2 0 0 0 0 0 0 0 0 0 0 1 1 Revolving Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 Other Reserves 5.4 (15) (15) (10) (6) (58) (54) (12) (8) (51) (43) (146) (126) Accumulated Surplus/(Deficit) 5.5 306 304 239 173 889 801 455 366 1,400 790 3,290 2,433 Total Net Assets 220 251 164 139 518 598 494 413 1,200 656 2,596 2,057 Total Central Asia Programme Office in Astana Centre in Ashgabat Programme Office in Bishkek Project Co-ordinator in Uzbekistan Programme Office in DushanbePage 86
F.2. Segment Reporting Schedule of Financial Performance Central Asia For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 2,233 2,233 1,661 1,661 6,811 6,811 2,499 2,499 7,312 7,312 20,516 20,516 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 463 382 448 369 766 946 283 241 815 1,024 2,776 2,962 Revenue from Exchange Transactions 6.5 (5) (12) (3) 0 (19) (7) 34 (53) 13 (3) 20 (75) Other Revenue 6.6 23 (26) 9 (7) 28 172 9 (22) 186 (67) 256 49 Total Revenue 2,714 2,576 2,116 2,023 7,586 7,922 2,825 2,665 8,326 8,265 23,568 23,452 EXPENSES Staff Costs 7.1 1,188 1,105 1,188 1,257 3,215 3,239 1,105 1,069 3,599 3,880 10,295 10,549 Consultancy and Subcontracting 7.2 329 348 170 200 1,558 1,611 417 477 1,070 1,053 3,544 3,689 Travel Expenses 7.3 428 429 202 113 984 877 337 252 1,137 1,098 3,088 2,769 Services and Office Costs 7.4 480 456 389 315 1,159 1,420 578 541 1,173 1,284 3,779 4,015 Consumables and Supplies 7.5 53 100 47 52 216 220 65 63 349 478 729 913 Depreciation and Amortisation 7.6 48 49 29 25 69 56 45 59 130 108 321 298 Equipment Expenses 7.7 135 134 46 62 454 624 173 225 173 828 981 1,873 Other Operating Expenses 7.8 82 69 16 12 13 17 18 35 74 44 202 176 Total Expenses 2,742 2,690 2,086 2,036 7,669 8,063 2,737 2,721 7,705 8,773 22,940 24,283 Foreign Exchange Gains/(Losses) 8 (8) (10) (2) 3 2 (12) 7 23 (69) (97) (70) (94) Surplus/(Deficit) for the Period 9.1 (36) (124) 28 (10) (81) (153) 96 (33) 552 (605) 558 (925) Total Central Asia Programme Office in Astana Centre in Ashgabat Programme Office in Bishkek Project Co-ordinator in Uzbekistan Programme Office in DushanbePage 87
G.1. Segment Reporting Schedule of Financial Position Special Purpose Funds As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS (Restated) (Restated) Current Assets Cash and Cash Equivalents 3.1 0 0 0 0 0 0 0 0 0 0 0 0 Investments 3.2 0 0 0 0 0 0 0 0 0 0 0 0 Contributions Receivable 3.3 0 0 0 0 0 0 1,272 3,901 0 0 1,272 3,901 Accounts Receivable 3.4 0 0 7 2 0 0 (39) 33 0 0 (33) 34 Prepayments 3.5 5 25 8 1 8 13 2 15 0 0 23 54 Inventory 3.6 0 0 0 0 0 0 0 0 0 0 0 0 Inter-Fund Balances 0 1 456 871 862 1,083 21,305 18,692 (5) 194 22,618 20,841 Other Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 5 26 471 874 870 1,096 22,539 22,641 (5) 194 23,880 24,831 Non-Current Assets Property, Plant and Equipment 3.8 5 20 2 14 144 115 443 2,135 0 0 595 2,284 Intangible Assets 3.9 12 19 12 23 7 0 0 0 0 0 31 42 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 17 40 14 37 151 115 443 2,135 0 0 626 2,327 Total Assets 22 66 485 912 1,022 1,212 22,983 24,775 (5) 194 24,506 27,158 LIABILITIES Current Liabilities Accounts Payable 4.1 0 0 0 0 0 0 149 292 0 0 149 292 Accruals 4.2 0 0 56 17 36 7 40 89 0 0 132 113 Deferred Revenue 4.3 0 0 0 0 0 0 0 1,082 0 0 0 1,082 Conditional ExB Contributions 4.4 0 0 0 0 0 0 0 0 0 0 0 0 Funds Held for Third Parties 4.5 0 0 0 0 0 0 0 0 0 0 0 0 Employee Benefits Current 4.6 0 0 0 9 0 0 5 18 0 0 5 27 Cash Surplus Current 4.7 0 0 0 0 0 0 0 0 0 0 0 0 Provisions 4.8 0 0 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 4.9 0 0 0 0 0 0 18 343 0 0 18 343 0 0 56 26 36 7 212 1,823 0 0 303 1,857 Non-Current Liabilities Employee Benefits Non-Current 4.6 0 0 0 0 0 0 0 2 0 0 0 2 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 2 Total Liabilities 0 0 56 26 36 7 212 1,826 0 0 303 1,859 Net Assets 22 66 429 885 986 1,205 22,771 22,950 (5) 194 24,203 25,299 NET ASSETS Cash Surplus 5.1 0 0 0 0 0 0 20,669 0 0 198 20,669 198 Cash Surplus Withheld 5.2 0 0 0 0 0 0 0 0 0 0 0 0 Revolving Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 Other Reserves 5.4 0 0 0 0 0 0 428 427 (1) (1) 427 426 Accumulated Surplus/(Deficit) 5.5 22 66 429 885 986 1,205 1,674 22,523 (4) (4) 3,108 24,674 Total Net Assets 22 66 429 885 986 1,205 22,771 22,950 (5) 194 24,203 25,299 Special Monitoring Mission to Ukraine Observer Mission to Two Russian Checkpoints on the Russian-Ukrainian Border Total Special Purpose Funds Information Security Enhancement IT Infrastructure Upgrade Fund CIP Technical FundPage 88
G.2. Segment Reporting Schedule of Financial Performance Special Purpose Funds For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 (Restated) (Restated) REVENUE Assessed Contributions 6.1 0 0 0 0 0 0 0 45,658 0 0 0 45,658 Extra-Budgetary Contributions 6.2 0 0 0 0 0 0 0 0 0 0 0 0 Finance Revenue 6.3 0 0 0 0 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 0 0 0 0 0 0 0 12,021 0 0 0 12,021 Revenue from Exchange Transactions 6.5 0 0 (0) 0 0 0 784 130 0 0 784 130 Other Revenue 6.6 (2) (0) 0 1 0 (3) (220) (971) 0 (49) (222) (1,022) Total Revenue (2) (0) (0) 1 0 (3) 564 56,839 0 (49) 562 56,788 EXPENSES Staff Costs 7.1 0 0 220 244 0 0 345 41,220 0 0 566 41,464 Consultancy and Subcontracting 7.2 0 0 172 59 51 104 146 1,880 0 0 369 2,043 Travel Expenses 7.3 0 0 36 14 1 0 (25) 4,226 0 0 12 4,240 Services and Office Costs 7.4 20 20 5 15 71 12 139 4,084 0 1 236 4,132 Consumables and Supplies 7.5 0 0 0 1 29 6 0 1,817 0 2 29 1,826 Depreciation and Amortisation 7.6 21 23 23 35 40 17 129 5,143 0 9 213 5,227 Equipment Expenses 7.7 0 0 0 0 26 180 0 12 0 0 26 192 Other Operating Expenses 7.8 0 0 0 0 0 0 4 1,310 0 0 4 1,310 Total Expenses 41 43 456 368 218 318 739 59,693 0 12 1,454 60,434 Foreign Exchange Gains/(Losses) 8 0 0 0 0 0 0 (5) (56) 0 0 (5) (56) Surplus/(Deficit) for the Period 9.1 (43) (44) (456) (367) (218) (321) (179) (2,910) 0 (61) (897) (3,702) Special Monitoring Mission to Ukraine Observer Mission to Two Russian Checkpoints on the Russian-Ukrainian Border Total Special Purpose Funds Information Security Enhancement IT Infrastructure Upgrade Fund CIP Technical FundPage 89
H.1. Segment Reporting Schedule of Financial Position Extra-Budgetary Funds As at 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 ASSETS Current Assets Cash and Cash Equivalents 3.1 0 0 0 0 0 0 0 0 25,394 11,735 0 0 25,394 11,735 Investments 3.2 0 0 0 0 0 0 11,127 11,597 50,000 60,000 0 0 61,127 71,597 Contributions Receivable 3.3 108 1,061 432 338 10 10 120 119 5,333 15,943 0 0 6,003 17,470 Accounts Receivable 3.4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Prepayments 3.5 0 0 1 0 0 0 0 0 97 80 12 0 110 80 Inventory 3.6 224 0 0 0 0 0 0 0 264 151 0 0 488 151 Inter-Fund Balances 2,888 3,460 6,775 4,894 441 195 (943) (855) 11,167 4,147 5,861 4,055 26,189 15,896 Other Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,220 4,521 7,207 5,231 451 205 10,304 10,860 92,255 92,057 5,873 4,055 119,311 116,929 Non-Current Assets Property, Plant and Equipment 3.8 0 1 0 0 196 435 0 0 1,454 383 4 0 1,655 819 Intangible Assets 3.9 0 0 0 0 0 0 0 0 1,269 1,048 0 0 1,269 1,048 Other Non-Current Assets 3.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 196 435 0 0 2,724 1,431 4 0 2,924 1,866 Total Assets 3,220 4,522 7,207 5,231 647 639 10,304 10,860 94,979 93,487 5,877 4,055 122,234 118,796 LIABILITIES Current Liabilities Accounts Payable 4.1 0 0 0 0 0 0 0 0 213 24 0 0 213 24 Accruals 4.2 223 11 856 951 0 0 0 1 2,847 1,827 13 5 3,939 2,795 Deferred Revenue 4.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Conditional ExB Contributions 4.4 3,249 4,876 6,315 4,492 (0) (0) 7,573 304 85,501 82,049 0 0 102,639 91,721 Funds Held for Third Parties 4.5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Employee Benefits Current 4.6 45 0 13 0 0 0 0 0 683 191 49 36 791 227 Cash Surplus Current 4.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Provisions 4.8 285 183 998 845 0 10 197 7,429 5,417 8,783 0 0 6,897 17,250 Other Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 (0) 0 0 0 (0) 3,801 5,070 8,183 6,288 0 10 7,771 7,733 94,661 92,874 63 41 114,478 112,017 Non-Current Liabilities Employee Benefits Non-Current 4.6 3 1 4 0 0 0 0 0 9 179 16 8 32 188 Other Non-Current Liabilities 4.9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 1 4 0 0 0 0 0 9 179 16 8 32 188 Total Liabilities 3,804 5,071 8,187 6,288 0 10 7,771 7,733 94,670 93,053 78 49 114,510 112,205 Net Assets (584) (549) (980) (1,057) 647 629 2,533 3,128 309 434 5,799 4,006 7,724 6,591 NET ASSETS Cash Surplus 5.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash Surplus Withheld 5.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Revolving Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contingency Fund 5.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Reserves 5.4 (1) 2 (7) 2 (5) (5) 0 0 (276) (387) (24) (5) (312) (393) Accumulated Surplus/(Deficit) 5.5 (584) (551) (973) (1,059) 652 634 2,533 3,128 585 821 5,823 4,011 8,036 6,984 Total Net Assets (584) (549) (980) (1,057) 647 629 2,533 3,128 309 434 5,799 4,006 7,724 6,591 Fund to Support OSCE Action for Peace, Democracy and Stability in Bosnia and Herzegovina Fund for Activities Related to Economic and Environmental Aspect of Security Other PC Established Funds Other Activities and Special Projects Total Extra-Budgetary Funds Funds for Activities Related to Special Monitoring Mission to Ukraine Indirect Common Costs FundPage 90
H.2. Segment Reporting Schedule of Financial Performance Extra-Budgetary Funds For the Year Ended 31 December 2023 EUR '000 1000 Note 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 REVENUE Assessed Contributions 6.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Extra-Budgetary Contributions 6.2 2,524 1,775 3,563 2,813 0 5,095 116 188 41,650 31,478 3,158 2,042 (3,132) (2,042) 47,879 41,349 Finance Revenue 6.3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Contributions In-Kind 6.4 0 0 0 0 0 0 0 0 918 344 0 0 0 0 918 344 Revenue from Exchange Transactions 6.5 (1) 0 0 0 65 0 0 0 (81) (62) 0 0 0 0 (18) (62) Other Revenue 6.6 0 0 0 0 0 (0) 0 0 0 0 61 60 0 0 61 60 Total Revenue 2,523 1,775 3,563 2,813 65 5,095 116 188 42,487 31,760 3,219 2,102 (3,132) (2,042) 48,840 41,691 EXPENSES Staff Costs 7.1 827 657 291 188 0 1,003 39 11 12,475 8,822 1,045 479 0 0 14,676 11,161 Consultancy and Subcontracting 7.2 371 420 2,100 2,126 0 328 2 22 10,388 7,897 126 60 0 0 12,988 10,853 Travel Expenses 7.3 98 76 514 472 0 0 48 69 6,491 4,666 29 2 0 0 7,180 5,285 Services and Office Costs 7.4 610 88 273 220 0 76 18 26 7,556 3,619 178 45 0 0 8,635 4,074 Consumables and Supplies 7.5 103 38 89 5 0 4 0 0 715 1,316 13 0 0 0 920 1,363 Depreciation and Amortisation 7.6 0 0 0 9 47 1,223 0 0 299 93 0 0 0 0 346 1,325 Equipment Expenses 7.7 438 333 2 2 (54) (54) 0 0 1,337 3,199 3 0 0 0 1,725 3,480 Other Operating Expenses 7.8 163 103 215 174 0 2,926 8 16 3,009 1,939 14 0 (3,133) (2,042) 276 3,117 Total Expenses 2,610 1,715 3,484 3,196 (7) 5,506 116 144 42,269 31,552 1,408 587 (3,133) (2,042) 46,746 40,658 Foreign Exchange Gains/(Losses) 8 (0) (0) 8 5 0 0 (595) 2,040 (454) 418 0 0 0 0 (1,041) 2,464 Surplus/(Deficit) for the Period 9.1 (87) 60 86 (379) 72 (411) (594) 2,085 (236) 627 1,811 1,515 1 (0) 1,053 3,497 Other PC Established Funds Total Extra-Budgetary Funds Fund to Support OSCE Action for Peace, Democracy and Stability in Bosnia and Herzegovina Fund for Activities Related to Economic and Environmental Aspect of Security Funds for Activities Related to Special Monitoring Mission to Ukraine Other Activities and Special Projects Indirect Common Costs Fund EliminationsPage 91
EUR '000 Project Costs ICC Total Secretariat 19,866 467 20,333 Office for Democratic Institutions and Human Rights 8,483 673 9,156 High Commissioner on National Minorities 643 - 643 Representative on Freedom of the Media 814 - 814 Total – Secretariat and Institutions 29,805 1,140 30,946 Mission in Kosovo 486 - 486 Mission to Bosnia and Herzegovina 2,273 94 2,367 Mission to Serbia 1,218 - 1,218 Presence in Albania 1,346 64 1,411 Mission to Skopje 2,750 59 2,808 Mission to Montenegro 425 - 425 Total – South-Eastern Europe 8,498 217 8,715 Mission to Moldova 807 - 807 Representative on the Latvian-Russian Joint Commission on Military Pensioners - - - Total – Eastern Europe 807 - 807 Office in Yerevan - - - Project Co-ordinator in Baku - - - High Level Planning Group - - - The Minsk Process - - - Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference - - - Total - Caucasus - - - Programme Office in Astana 232 - 232 Centre in Ashgabat 441 - 441 Programme Office in Bishkek 1,682 30 1,712 Project Co-ordinator in Uzbekistan 152 - 152 Programme Office in Dushanbe 2,858 13 2,871 Total – Central Asia 5,365 43 5,407 TOTAL - EXTRA-BUDGETARY PROJECTS 44,475 1,400 45,875 REPOSITORY PROGRAMME - CORE SUPPORT MECHANISM Secretariat 562 562 High Commissioner on National Minorities 188 188 Mission in Kosovo 250 250 Mission to Bosnia and Herzegovina 50 50 Centre in Ashgabat 17 17 Programme Office in Bishkek 174 174 TOTAL - REPOSITORY PROGRAMME - CORE SUPPORT MECHANISM 1,241 - 1,241 GRAND TOTAL 45,716 1,400 47,115 IPSAS Adjustments: Staff Costs 1,528 8 1,536 Depreciation and Amortisation 346 - 346 Other 882 - 882 Total – IPSAS Adjustments 2,756 8 2,764 GRAND TOTAL 48,472 1,408 49,879 Elimination of ICC charges (3,133) NET TOTAL - EXTRA-BUDGETARY EXPENSES 46,746 J Segment Reporting Project Costs include ICC charges, which are removed to reconcile to total Extra-budgetary expenses presented in Segment report H2. Extra-budgetary expenditure by Executive Structure Extra-budgetary and Indirect Common Cost (ICC) sub-fund expenditure shown in Segment report H.2 is presented by Executive Structure in the table below. Various IPSAS adjustments are not attributed to individual Executive Structures and are summarized at the foot of the table to show the total spent on an IPSAS basis. The Repository Programme "Core Support Mechanism" is described in Note 6.2 to the financial statements and is included in "Other Activities and Special Projects" in Schedules H.1 and H.2.Page 92
ANNEX 2 YEAR-END EXPENDITURE REPORT AND STAFFING OVERVIEW
OSCE 2023 Year-end Expenditure Report Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D I. FUNDS RELATED TO SECRETARIAT AND INSTITUTIONS The Secretariat Secretary General and Central Services Executive Management 1,190,500 1,277,200 - 1,277,2001,277,200 100 0 7,100 1,284,300 101 Security Management 636,500 699,550 - 699,550 699,517 100 33 19,087 718,605 103 External Co-operation 653,700 639,730 - 639,730 639,724 100 6 7,600 647,324 101 Office of Legal Affairs 786,800 813,380 - 813,380 813,330 100 50 15,980 829,310 102 Communication and Media Relations Section 1,664,000 1,615,305 - 1,615,3051,615,303 100 2 53,751 1,669,053 103 Conference and Language Services 5,437,500 5,363,125 958,000 6,321,1256,320,982 100 143 - 6,320,982 100 The OSCE Documentation Centre in Prague 640,100 606,310 - 606,310 606,218 100 92 36,589 642,807 106 Gender Issues 437,100 431,600 - 431,600 431,551 100 49 8,500 440,051 102 TOTAL 11,446,200 11,446,200 958,000 12,404,20012,403,825 100 375 148,607 12,552,432 101 Chairperson-in-Office Short-Term Mission/Visits of CiO and PR of the CiO 500,000 500,000 - 500,000 347,405 69 152,595 - 347,405 69 Advisory Committee on Management and Finance (ACMF) 11,000 11,000 - 11,000 3,592 33 7,408 - 3,592 33 Panel of Adjudicators 32,800 32,800 - 32,800 10,801 33 21,999 - 10,801 33 Audit Committee 34,000 34,000 - 34,000 31,171 92 2,829 - 31,171 92 External Auditors 85,200 85,200 - 85,200 48,833 57 36,367 - 48,833 57 TOTAL 663,000 663,000 - 663,000 441,801 67 221,199 - 441,801 67 Internal Oversight Internal Oversight 1,828,900 1,828,900 - 1,828,9001,822,872 100 6,028 - 1,822,872 100 TOTAL 1,828,900 1,828,900 - 1,828,9001,822,872 100 6,028 - 1,822,872 100 Office of the Special Representative/Co-ordinator for Combating Trafficking in Human Beings Office of the Special Representative/Co-ordinator for Combating Trafficking in Human Beings 1,073,700 1,073,700 - 1,073,7001,073,608 100 92 - 1,073,608 100 TOTAL 1,073,700 1,073,700 - 1,073,7001,073,608 100 92 - 1,073,608 100 Addressing Transnational Threats Co-ordination of TNT Activities 547,300 554,700 - 554,700 554,652 100 48 - 554,652 100 Strategic Police Matters Unit 706,900 698,150 - 698,150 698,126 100 24 5,500 703,626 101 Action Against Terrorism 830,600 827,000 - 827,000 826,933 100 67 17,500 844,433 102 Borders Security and Management 684,800 689,750 - 689,750 689,713 100 37 9,400 699,113 101 TOTAL 2,769,600 2,769,600 - 2,769,6002,769,424 100 176 32,400 2,801,824 101 Activities Related to the Economic and Environmental Aspects of Security Co-ordinator of OSCE Economic and Environmental Activities1,979,200 1,979,200 - 1,979,200 1,972,804 100 6,396 - 1,972,804 100 Economic and Environmental Forum 256,500 256,500 - 256,500 202,953 79 53,547 - 202,953 79 TOTAL 2,235,700 2,235,700 - 2,235,700 2,175,756 97 59,944 - 2,175,756 97 Expenditure Page 94
OSCE 2023 Year-end Expenditure Report (continued) Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D Conflict Prevention CPC Direction and Management 460,400 444,550 - 444,550 444,537 100 13 5,000 449,537 101 Policy Support Service 1,474,000 1,381,550 - 1,381,5501,381,425 100 125 - 1,381,425 100 Operations Service 1,184,700 1,246,200 - 1,246,2001,246,193 100 7 14,650 1,260,843 101 Programming and Evaluation Support Unit 530,000 539,500 - 539,500 539,468 100 32 5,900 545,368 101 FSC Chairmanship 12,700 11,700 - 11,700 11,644 100 56 - 11,644 100 FSC Support 696,200 671,200 - 671,200 671,134 100 66 2,900 674,034 100 Communications and Technology Unit 633,900 697,200 - 697,200 697,184 100 16 2,400 699,584 100 TOTAL 4,991,900 4,991,900 - 4,991,9004,991,584 100 316 30,850 5,022,434 101 Human Resources Management Department of Human Resources 4,171,600 4,171,600 - 4,171,6004,171,054 100 546 190,700 4,361,754 105 TOTAL 4,171,600 4,171,600 - 4,171,6004,171,054 100 546 190,700 4,361,754 105 Department of Management and Finance Management and Co-ordination 888,200 887,200 - 887,200 887,026 100 174 10,100 897,126 101 Budget and Finance Services 2,162,200 2,192,800 - 2,192,8002,192,768 100 32 25,995 2,218,764 101 Information and Communication Technology Services 4,370,900 4,324,400 - 4,324,4004,324,385 100 15 122,946 4,447,331 103 Mission Support Services 2,517,600 2,534,500 - 2,534,5002,534,499 100 1 - 2,534,499 100 TOTAL 9,938,900 9,938,900 - 9,938,9009,938,679 100 221 159,041 10,097,720 102 TOTAL FOR THE SECRETARIAT 39,119,500 39,119,500 958,000 40,077,50039,788,603 99 288,897 561,598 40,350,201 101 Office for Democratic Institutions and Human Rights Direction and Policy 1,294,600 1,408,000 - 1,408,0001,407,329 100 671 - 1,407,329 100 Fund Administration Unit 2,970,700 2,943,800 - 2,943,8002,941,844 100 1,956 - 2,941,844 100 Human Dimension Meetings 603,000 193,050 - 193,050 188,674 98 4,376 - 188,674 98 Democratization 1,580,300 1,560,400 - 1,560,4001,560,221 100 179 - 1,560,221 100 Human Rights 1,232,200 1,127,600 - 1,127,6001,125,853 100 1,747 - 1,125,853 100 Elections 6,505,200 7,142,250 - 7,142,2507,136,055 100 6,195 - 7,136,055 100 Tolerance and Non-Discrimination 1,418,200 1,279,100 - 1,279,1001,278,479 100 621 - 1,278,479 100 Roma and Sinti Issues 555,700 505,700 - 505,700 505,282 100 418 - 505,282 100 TOTAL 16,159,900 16,159,900 - 16,159,90016,143,736 100 16,164 - 16,143,736 100 High Commissioner on National Minorities Fund Administration Unit 544,700 501,700 - 501,700 501,613 100 87 79,610 581,222 116 Office of the High Commissioner 2,959,300 3,002,300 - 3,002,3003,002,273 100 27 108,746 3,111,018 104 TOTAL 3,504,000 3,504,000 - 3,504,0003,503,886 100 114 188,355 3,692,241 105 Representative on Freedom of the Media Freedom of the Media 1,608,800 1,608,800 - 1,608,8001,603,089 100 5,711 - 1,603,089 100 TOTAL 1,608,800 1,608,800 - 1,608,8001,603,089 100 5,711 - 1,603,089 100 TOTAL FOR FUNDS RELATED TO THE SECRETARIAT AND INSTITUTIONS 60,392,200 60,392,200 958,000 61,350,200 61,039,313 99 310,887 749,953 61,789,267 101 Expenditure Page 95
OSCE 2023 Year-end Expenditure Report (continued) Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D II. FUNDS RELATED TO OSCE FIELD OPERATIONS AUGMENTATIONS Secretariat Augmentations Policy Support Service 247,800 247,800 - 247,800 245,198 99 2,602 - 245,198 99 Information and Communication Technology Services 768,200 785,300 - 785,300 785,252 100 48 - 785,252 100 Mission Support Service 738,300 721,200 - 721,200 720,916 100 284 - 720,916 100 TOTAL 1,754,300 1,754,300 - 1,754,300 1,751,366 100 2,934 - 1,751,366 100 ODIHR Augmentations ODIHR Democratization 234,100 234,100 - 234,100 230,032 98 4,068 - 230,032 98 TOTAL 234,100 234,100 - 234,100 230,032 98 4,068 - 230,032 98 TOTAL FOR AUGMENTATIONS 1,988,400 1,988,400 - 1,988,400 1,981,398 100 7,002 - 1,981,398 100 SOUTH-EASTERN EUROPE Mission in Kosovo Office of Head of Mission 2,750,300 2,876,900 - 2,876,900 2,876,752 100 148 - 2,876,752 100 Fund Administration Unit 5,495,100 5,270,800 - 5,270,800 5,270,647 100 153 249,998 5,520,644 105 Security and Public Safety 1,582,700 1,584,300 - 1,584,300 1,584,270 100 30 - 1,584,270 100 Democratization 1,744,600 1,701,000 - 1,701,000 1,700,863 100 137 - 1,700,863 100 Human Rights and Communities 5,889,900 6,029,600 - 6,029,600 6,029,549 100 51 - 6,029,549 100 TOTAL 17,462,600 17,462,600 - 17,462,600 17,462,081 100 519 249,998 17,712,078 101 Mission to Bosnia and Herzegovina Office of Head of Mission 1,593,400 1,612,500 - 1,612,500 1,611,831 100 669 - 1,611,831 100 Fund Administration Unit 3,974,900 3,928,600 - 3,928,600 3,927,016 100 1,584 49,708 3,976,724 101 Shared Service Centre, ICT Help Desk 253,800 262,100 - 262,100 262,011 100 89 - 262,011 100 Security Co-operation 581,300 551,300 - 551,300 550,703 100 597 - 550,703 100 Human Dimension 5,278,600 5,327,500 - 5,327,500 5,326,967 100 533 - 5,326,967 100 TOTAL 11,682,000 11,682,000 - 11,682,000 11,678,526 100 3,474 49,708 11,728,235 100 Mission to Serbia Office of Head of Mission 995,400 973,100 - 973,100 973,082 100 18 - 973,082 100 Fund Administration Unit 1,700,600 1,674,150 - 1,674,150 1,674,139 100 11 - 1,674,139 100 Security Co-operation 950,800 978,800 - 978,800 978,752 100 48 - 978,752 100 Democratization 1,115,400 1,137,100 - 1,137,100 1,137,048 100 52 - 1,137,048 100 Media 443,200 462,600 - 462,600 462,548 100 52 - 462,548 100 Rule of Law and Human Rights 1,053,200 1,032,850 - 1,032,850 1,032,816 100 34 - 1,032,816 100 TOTAL 6,258,600 6,258,600 - 6,258,600 6,258,385 100 215 - 6,258,385 100 Expenditure Page 96
OSCE 2023 Year-end Expenditure Report (continued) Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D Presence in Albania Office of Head of Mission 487,300 469,300 - 469,300 467,318 100 1,982 - 467,318 100 Fund Administration Unit 1,035,900 1,083,900 - 1,083,900 1,077,099 99 6,801 - 1,077,099 99 Security Co-operation 346,100 339,100 - 339,100 337,916 100 1,184 - 337,916 100 Governance in Economic and Environmental Issues 308,200 318,200 - 318,200 316,240 99 1,960 - 316,240 99 Democratization 432,100 389,100 - 389,100 384,692 99 4,408 - 384,692 99 Rule of Law and Human Rights 371,600 381,600 - 381,600 379,281 99 2,319 - 379,281 99 TOTAL 2,981,200 2,981,200 - 2,981,200 2,962,545 99 18,655 - 2,962,545 99 Mission to Skopje Office of Head of Mission 987,000 1,074,000 - 1,074,000 1,071,758 100 2,242 - 1,071,758 100 Fund Administration Unit 1,939,500 2,044,500 - 2,044,500 2,037,019 100 7,481 - 2,037,019 100 Public Safety and Community Outreach 1,778,700 1,626,700 - 1,626,700 1,600,393 98 26,307 - 1,600,393 98 Human Dimension 1,800,900 1,760,900 - 1,760,900 1,745,468 99 15,432 - 1,745,468 99 TOTAL 6,506,100 6,506,100 - 6,506,100 6,454,639 99 51,461 - 6,454,639 99 Mission to Montenegro Office of Head of Mission 316,100 320,100 - 320,100 319,476 100 624 - 319,476 100 Fund Administration Unit 603,800 601,300 - 601,300 597,274 99 4,026 - 597,274 99 Democratization 467,900 423,900 - 423,900 396,901 94 26,999 - 396,901 94 Media 361,700 368,200 - 368,200 365,195 99 3,005 - 365,195 99 Security Co-operation and Governance 402,600 438,600 - 438,600 423,664 97 14,936 - 423,664 97 TOTAL 2,152,100 2,152,100 - 2,152,100 2,102,509 98 49,591 - 2,102,509 98 TOTAL FOR SOUTH-EASTERN EUROPE 47,042,600 47,042,600 - 47,042,600 46,918,685 100 123,915 299,706 47,218,391 100 EASTERN EUROPE Mission to Moldova Office of Head of Mission 421,200 421,200 - 421,200 396,319 94 24,881 - 396,319 94 Fund Administration Unit 874,000 901,000 - 901,000 897,308 100 3,692 - 897,308 100 Conflict Prevention/Resolution 532,400 505,400 - 505,400 477,280 94 28,120 - 477,280 94 Human Rights 475,100 475,100 - 475,100 446,490 94 28,610 - 446,490 94 TOTAL 2,302,700 2,302,700 - 2,302,700 2,217,398 96 85,302 - 2,217,398 96 Representative to the Latvian-Russian Joint Commission on Military Pensioners Office of Head of Mission 5,500 5,500 - 5,500 111 2 5,389 - 111 2 TOTAL 5,500 5,500 - 5,500 111 2 5,389 - 111 2 TOTAL FOR EASTERN EUROPE 2,308,200 2,308,200 - 2,308,200 2,217,509 96 90,691 - 2,217,509 96 Expenditure Page 97
OSCE 2023 Year-end Expenditure Report (continued) Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D CAUCASUS High-Level Planning Group Office of Head of Mission 247,600 247,600 - 247,600 184,883 75 62,717 - 184,883 75 TOTAL 247,600 247,600 - 247,600 184,883 75 62,717 - 184,883 75 The Minsk Process Office of Head of Mission 911,200 911,200 - 911,200 - - 911,200 - - - TOTAL 911,200 911,200 - 911,200 - - 911,200 - - - Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference Office of Head of Mission 467,300 467,300 - 467,300 296,482 63 170,818 - 296,482 63 Fund Administration Unit 712,400 712,400 - 712,400 630,814 89 81,586 - 630,814 89 TOTAL 1,179,700 1,179,700 - 1,179,700 927,296 79 252,404 - 927,296 79 TOTAL FOR CAUCASUS 2,338,500 2,338,500 - 2,338,5001,112,179 48 1,226,321 - 1,112,179 48 CENTRAL ASIA Programme Office in Astana Office of Head of Mission 225,000 227,200 - 227,200 227,130 100 70 - 227,130 100 Fund Administration Unit 669,600 720,300 - 720,300 716,797 100 3,503 - 716,797 100 Politico-Military Activities 444,800 431,800 - 431,800 431,794 100 6 - 431,794 100 Economic and Environmental Activities 448,400 427,800 - 427,800 427,089 100 711 - 427,089 100 Human Dimension Activities 444,900 425,600 - 425,600 423,289 99 2,311 - 423,289 99 TOTAL 2,232,700 2,232,700 - 2,232,700 2,226,099 100 6,601 - 2,226,099 100 Centre in Ashgabat Office of Head of Mission 407,400 437,000 - 437,000 435,796 100 1,204 - 435,796 100 Fund Administration Unit 547,100 564,800 - 564,800 564,495 100 305 16,752 581,247 103 Conflict Prevention and Confidence and Security Building 233,100 218,000 - 218,000 217,898 100 102 - 217,898 100 Economic and Environmental Activities 249,100 239,300 - 239,300 239,169 100 131 - 239,169 100 Human Dimension Activities 224,500 202,100 - 202,100 199,058 98 3,042 - 199,058 98 TOTAL 1,661,200 1,661,200 - 1,661,200 1,656,417 100 4,783 16,752 1,673,169 101 Programme Office in Bishkek Office of Head of Mission 1,240,300 1,250,600 - 1,250,600 1,250,570 100 30 - 1,250,570 100 Fund Administration Unit 1,427,300 1,555,826 - 1,555,826 1,555,260 100 566 174,084 1,729,344 111 Politico-Military Activities 1,490,400 1,434,072 - 1,434,072 1,434,036 100 36 - 1,434,036 100 Economic and Environmental Activities 1,449,700 1,371,273 - 1,371,273 1,371,076 100 197 - 1,371,076 100 Human Dimension Activities 1,203,300 1,199,229 - 1,199,229 1,199,220 100 9 - 1,199,220 100 TOTAL 6,811,000 6,811,000 - 6,811,000 6,810,161 100 839 174,084 6,984,245 103 Expenditure Page 98
OSCE 2023 Year-end Expenditure Report (continued) Fund Provisional Revised Additional Total Expenditure Final Main Programme Expenditure Provisional Provisional Revised Implementation funded via Implementation Programme Authorization Expenditure Expenditure Provisional Rate 2 Available Repository Total Rate 3 Fin. Reg 3.04Authorization 1 Authorization Expenditure % Balance Programme Expenditure % PC.DEC/1462 Authorization Figures in EUR A B C D=B+C E F=E/D G=D-E H I=H+E J=I/D Project Co-ordinator in Uzbekistan Office of Head of Mission 261,300 287,300 - 287,300 279,361 97 7,939 - 279,361 97 Fund Administration Unit 529,600 582,100 - 582,100 582,009 100 91 - 582,009 100 Politico-Military Activities 532,200 479,700 - 479,700 445,604 93 34,096 - 445,604 93 Economic and Environmental Activities 639,700 639,700 - 639,700 626,445 98 13,255 - 626,445 98 Human Dimension Activities 536,400 510,400 - 510,400 503,687 99 6,713 - 503,687 99 TOTAL 2,499,200 2,499,200 - 2,499,2002,437,106 98 62,094 - 2,437,106 98 Programme Office in Dushanbe Office of Head of Mission 1,169,300 1,053,300 - 1,053,300 940,732 89 112,568 - 940,732 89 Fund Administration Unit 2,035,500 2,185,500 - 2,185,5002,180,360 100 5,140 - 2,180,360 100 Political and Military Aspects of Security 1,857,300 1,862,300 - 1,862,3001,841,627 99 20,673 - 1,841,627 99 Economic and Environmental Activities 1,112,000 1,052,000 - 1,052,0001,030,159 98 21,841 - 1,030,159 98 Human Dimension Activities 1,137,500 1,158,500 - 1,158,5001,124,032 97 34,468 - 1,124,032 97 TOTAL 7,311,600 7,311,600 - 7,311,6007,116,911 97 194,689 - 7,116,911 97 TOTAL FOR CENTRAL ASIA 20,515,700 20,515,700 - 20,515,70020,246,694 99 269,006 190,836 20,437,530 100 TOTAL FOR FUNDS RELATED TO THE OSCE FIELD OPERATIONS 74,193,400 74,193,400 - 74,193,40072,476,464 98 1,716,936 490,542 72,967,007 98 TOTAL OSCE 134,585,600 134,585,600 958,000 135,543,600133,515,778 99 2,027,822 1,240,496 134,756,273 99 3 Final Implementation rate is consisting of total UB expenditure and expenditure funded via Repository Programme "Core Support Mechanism" calculated against the total provisional expenditure authorization. Expenditure 1 Includes all transfers processed to end of December 2023, including transfers in line with Financial Regulation 3.02(b) and Financial Regulation 3.02(a)(iv) as approved in PC.DEC/1461 and PC.DEC/1465 on Revised Provisional Expenditure Authorization for 2023. 2 Implementation rate calculated against the provisional expenditure authorization for twelve months and the additional provisional expenditure authorization approved in PC.DEC/1462. Page 99
Budget ActualBudget ActualBudget ActualBudget ActualBudget ActualBudget ActualBudget Actual The Secretariat 142.0 126.0 73.0 56.0 215.0 182.0 0.0 0.0 183.6 171.4 183.6 171.4 398.6 353.4 Office for Democratic Institutions and Human Rights 63.0 55.0 24.0 13.0 87.0 68.0 0.0 0.0 56.0 50.5 56.0 50.5 143.0 118.5 High Commissioner on National Minorities 16.0 16.0 5.0 4.0 21.0 20.0 0.0 0.0 11.5 11.5 11.5 11.5 32.5 31.5 Representative on Freedom of the Media 7.0 7.0 6.0 6.0 13.0 13.0 0.0 0.0 4.0 4.0 4.0 4.0 17.0 17.0 Total for the Secretariat and Institutions 228.0 204.0 108.0 79.0 336.0 283.0 0.0 0.0 255.1 237.4 255.1 237.4 591.1 520.4 Mission in Kosovo 7.0 7.0 108.0 89.0 115.0 96.0 102.0 99.0 273.5 263.5 375.5 362.5 490.5 458.5 Mission to Bosnia and Herzegovina 5.0 5.0 29.0 27.0 34.0 32.0 135.0 121.0 145.5 130.0 280.5 251.0 314.5 283.0 Mission to Serbia 1.0 1.0 20.0 16.0 21.0 17.0 35.5 32.0 62.0 56.5 97.5 88.5 118.5 105.5 Presence in Albania 1.0 1.0 18.0 12.0 19.0 13.0 19.0 17.0 45.5 39.5 64.5 56.5 83.5 69.5 Mission to Skopje 2.0 2.0 36.0 24.0 38.0 26.0 26.0 24.0 89.5 83.0 115.5 107.0 153.5 133.0 Mission to Montenegro 1.0 1.0 8.0 8.0 9.0 9.0 8.0 6.0 15.0 14.0 23.0 20.0 32.0 29.0 South-Eastern Europe 17.0 17.0 219.0 176.0 236.0 193.0 325.5 299.0 631.0 586.5 956.5 885.51,192.51,078.5 Mission to Moldova 1.0 1.0 12.0 9.0 13.0 10.0 9.0 9.0 30.0 24.0 39.0 33.0 52.0 43.0 Eastern Europe 1.0 1.0 12.0 9.0 13.0 10.0 9.0 9.0 30.0 24.0 39.0 33.0 52.0 43.0 High Level Planning Group 0.0 0.0 8.0 5.0 8.0 5.0 0.0 0.0 1.0 1.0 1.0 1.0 9.0 6.0 Personal Representative of the CiO on the Conflict Dealt with by the Minsk Conference 1.0 1.0 5.0 3.0 6.0 4.0 0.0 0.0 11.0 11.0 11.0 11.0 17.0 15.0 Caucasus 1.0 1.0 13.0 8.0 14.0 9.0 0.0 0.0 12.0 12.0 12.0 12.0 26.0 21.0 Programme Office in Astana 1.0 1.0 5.0 5.0 6.0 6.0 4.0 4.0 18.0 17.0 22.0 21.0 28.0 27.0 Centre in Ashgabat 1.0 1.0 5.0 3.0 6.0 4.0 2.0 2.0 21.0 19.0 23.0 21.0 29.0 25.0 Programme Office in Bishkek 3.0 3.0 10.0 9.0 13.0 12.0 23.0 23.0 87.0 74.0 110.0 97.0 123.0 109.0 Project Co-ordinator in Uzbekistan 0.0 0.0 4.0 3.0 4.0 3.0 6.0 6.0 30.0 29.0 36.0 35.0 40.0 38.0 Programme Office in Dushanbe 4.0 3.0 18.0 11.0 22.0 14.0 20.0 16.0 90.0 83.0 110.0 99.0 132.0 113.0 Central Asia 9.0 8.0 42.0 31.0 51.0 39.0 55.0 51.0 246.0 222.0 301.0 273.0 352.0 312.0 Total for Funds related to OSCE Field Operations 28.0 27.0 286.0 224.0 314.0 251.0 389.5 359.0 919.0 844.51,308.51,203.51,622.51,454.5 Total OSCE 2023 Post Table 256.0 231.0 394.0 303.0 650.0 534.0 389.5 359.01,174.11,081.91,563.61,440.92,213.61,974.9 Professional General Services Sub-Total Staffing Overview - Budget and Actual Staff Positions Post table as at 31 December 2023 Fund number of positions International Staff Local Staff Grand Total Contracted Seconded Sub-TotalPage 100
ANNEX 3 STATEMENT ON INTERNAL CONTROL
Organization for Securityand Co-operation in Europe Statement on Internal Control 2023 29 March 2024 As Secretary General of the OSCE, I am responsible to the Permanent Council (PC) for overseeing the efficient use of the Organization’s resources.This is in accordance with the responsibilitiesassigned to me, including under Ministerial Council (MC) Decision No. 15/04. To this end, and vested with the executive and administrative authority in my role as Chief Administrative Officer of the OSCE, I established mechanisms of internal oversight and financial control in accordance with “FinancialRegulation 6.01 : Principles”. In line with article 7.02 ofthe Financial Regulations, and as part ofthe exercise ofmy duties as Secretary General, I am accompanying the annual financial statements with this Statement of Internal Control. The governance structure ofthe OSCE relies on a decentralized fund management architecture withdual reporting lines for the executive structures.Fund Managers report directly to the Chairperson-in-Office and participating States (PS) on policy and programmatic matters, and to me on administrative matters. This architecture has the potential to result in challenges when exercising my role as Chief Administrative Officer. The Directors ofthe Department ofHuman Resources (DHR) and the Department of Management and Finance (DMF) support me in this role in their respective areas, including by maintaining close contact with Chiefs of Fund Administration (CFAs) in all executivestructures, who currently do not directly report to me. Re-invigorating discussions on strengthening the administrative reporting lines of the CFAs would have a positive effect on internal controls and translate into a reinforcement ofthe Common Regulatory Management System. The upcoming revision of Staff Instruction 1 7 on Recruitment will seek to strengthen my role in the selection ofCFAs in the field operations. I am committed to continue to improve the effectiveness ofour internal controls. To thisend, I launched a Functional Review Process in 2021. This Secretariat-wide initiative covered the assessment of measures aimed at the improvement of processes, systems and functions. As a result of this review,the OSCE has already introducedorganizational adjustments in key priority areas. This Statement of Internal Controlapplies for the year ended 31 December 2023, and up to the issuance of the OSCE’s financial statements. Page 102
Internal Control activities provide assurance on the efficient use of OSCE resources The resources entrusted to the OSCE by participating States demand that it is accountable for thoseresources, that it has in place a robust system of internal controls, and that a sufficient level ofassurance is derived from the application ofthese internal controls. Taken together, internal controls form a set of systematic measures implemented by the Permanent Council, the Secretary General,the Fund Managers, senior management, and other OSCE officials, that is designed to provide reasonable assurance on the following objectives: - the achievement oforganizational program objectives and outcomes, - the effectiveness and efficiency of operations, - the safeguarding of assets, - thereliability, accuracy and completeness of the recording of transactions and their related financial reporting process,and - compliance with the OSCE’s Common Regulatory Management System (CRMS). The rest ofthe Statement of Internal Control is organized as follows: First, it explains how these systematic measures are framed around a dualapproach:the use of a Risk Management framework as a forward-looking management tool; and the use of an Internal ControlFramework to articulate those internal controls used for the management of financial, human and material resources. Second, it highlights issues faced during 2023 that hindered the effectiveness of internal controls. Third, it summarises long-standing internal controls which are specific tokey areas of OSCE activity and the principal actors involved, as they took place in 2023. Fourth, it explains how external factors limit the effectiveness of internal controls. Finally, it lists improvements in policiesand procedures related to internal controls activities. I. RiskManagement activities and the Internal Control Framework The OSCE has in place a risk managementframework covering major risks affecting the Organization as a whole, as well as operational risks affecting individual Executive Structures and programmes. The risk management framework allows for the identification, assessment and management of risks applicable to the appropriate ExecutiveStructure. This includes periodic interactions with risk owners, setting up training sessions and reviewing the risk management framework. To this end, the Department of Management and Finance reviewed the current risk management framework in accordancewith the External Auditor and Audit Committee Page 103
recommendations. This resulted in the assessment of major risks at the Secretariat and the issuance ofcontrol measures. The framework stipulates an annual review ofthe major risks. The Internal Control Framework (‘the framework’) includes Ministerial Council(MC) and Permanent Council (PC) decisions related to the management of OSCE’sactivities, the Code of Conduct, the Financial Regulations, Staff Regulations and Staff Rules, Staff Instructions, Financial/Administrative Instructions (FAI), security instructions and guidelines. Taken as a whole, the framework provides mechanisms for managing financial, human and materialresources at the OSCE in the form of internal controls. The framework complements risk management activities in DMF, supports the Secretary General, heads ofinstitutions and heads ofmissions for the properapplication ofthe Common Regulatory Management System, and establishes automated and manual monitoring activities. The framework provides additional tools for the efficient use of OSCEresources, helping ensure that the OSCE’s objectives are achieved efficiently. The framework also includes a coordinated review by the Secretariat of all Unified Budget (UB) documents, the application of the Performance Based ProgrammeBudgeting (PBPB) methodology, and the undertaking of activities to ensure compliance with the Common RegulatoryManagement System. II. Issues in 2023 hindering the effectiveness of internal controls Most of the issues affecting the effectiveness of internal controls at the OSCE in 2022 continued to exist in 2023. The following is a summary ofthese issues andthe progress made since last year, as well as indicates new issues which emerged during the reporting year. Lack ofapproval ofthe budget In recent years, adoption ofthe UB has come later and later in the year, or was not adopted at all. The 2020 budget was adopted in June, the 2021 budget in August, and the 2022 and 2023 budgetswere not adopted. Late or lack of adoption of the budget significantly impedes the implementation of programmatic activities, weakens the ability of the OSCE to operate in an effective and efficient manner, leads to additional costsand greater administrative burden, and risks damage to the reputation ofthe OSCE, which is perceived as less reliable in delivering programmatic activities and a less attractive business partner. The lack of an approved budget undermines the OSCE’s ability to commit resources and exercise soundfinancial management. In turn, this diminishes its capability to react to emerging issues and risks. Finally, the inescapable increase in costs, particularly as a result of unprecedented inflationary levels, against stagnant resources is notsustainable. This led to 3 Page 104
severalExecutive Structures and Programmes at the Secretariat to forecasting a financial deficit in 2023. In order to meet the anticipatedfinancial requirements exceeding available resources of the Conference and Language Services programme in the Secretariat, in September 2023 the Permanent Council approved the additional provisional expenditure authorization funded on an exceptional basis from the 2021 cash surplus (PC.DEC/1462). However, this PC Decision only partiallyaddressed the gap between the available resources and the critical and contractually bound financial requirements that existed across the entire OSCE. Therefore, an extrabudgetary Repository Programme “CoreSupport Mechanism” was established as an emergency and a temporary stop-gap measure, in light of the financial pressures stemming from the lack of approval of the 2023 UB, and previously the 2022 UB, forcing the OSCE to operate at the 2021 level ofresources in 2023, a de facto Zero Nominal Growth budget. The Repository Programme served as a framework for covering the underfunded and essential non-staff UB core support costs across all executive structures by means of voluntary ExB contributions from participating States. While the RepositoryProgramme addressed the UB shortfall in 2023, it does not represent a sustainable solution going forwardand is not a replacement for a sufficiently resourced UB financed from the assessedcontributions from all participating States. Scales of Contribution The participating States (PS) did not reach consensus on a systematic reform of scales of contribution, as presented by the Informal Working Group in October 2021, while an interim arrangement for 2019 expired on 31 December 2019. Since that time, p5 have been assessed on a provisional basis. Some p5 continue to find it difficult to pay their assessments based on expired scales, which results in increasedfinancial risk to the Organization, including possible cash deficits due to late payment or under-payment of assessments.Overall, this situation is detrimental to the properfunctioning ofthe Organizatioi and is not sustainable and no solution by the pS is yet in sight. Appointment ofan External Auditor The mandate of the French Court of Accounts (Cour des comptes) as the OSCE’s External Auditor expired on 30 April 2023. A new ExternalAuditor, the Court ofAudit ofthe Republic ofAustria, was only appointed on 7 September 2023 through the PC Decision No. 1460 and I am grateful to participating States for reachingconsensus on this important matter.However, the tenure ofthe Austrian Court ofAudit is limited to one year rather than the usual three years prescribed in the FinancialRegulations and expires on 15 September 2024. For adequate monitoring of the Organization’s financial stability, it is important to ensure a proper and longer-termExternal Audit funct ion beyond 15 September 2024. 4 Page 105
Challenges to StaffRecruitment and Retention Internal controls rely primarily on availability,competence, capacity and continuity of staff. The OSCE continues to face challenges in attracting and retainingqualifiedcandidates and staff, primarily due to the non-competitive nature ofthe compensation packages, particularly in field operations, and limited periods of service. The Organization has faced increasing challengestowards aligning alllocal Mission members’salaries to a level of at least 80% of that foreseen in the relevant UN salary scales. The lack ofbudget adoption in the last years has forced increases in unfilled vacancies for long periods, so as to generate savings to avoid budget deficits. Furthermore, the non-adoption of the budget negatively affects learning and developmental opportunities for staff. Addressing these issues remains a top priority, with ongoing efforts to introduce equitablecompensation for local mission members, to reassess the methodology for determining the board and lodging allowance for seconded mission members, and to increase learning and development opportunities for staff. Legal Framework ofthe OSCE The lack of a uniform set of privileges and immunities across the Organization continues to pose legal, financial and compliance risks butalso safety and security risks for the OSCE. The Organization remains dependent on bilateral arrangements with, or the national legislation of p5 to serve as legal basis for the capacity of field operations as well as the privileges and immunities of field operations and of the OSCEofficials assigned to them. This fragmented structureresults in a lack ofuniformity and certainty regarding the existence, scope, and extent of such privileges and immunities and carries the additional risk that a p5may unilaterally cease to recognize a bilateral arrangement or terminate it. Similarly, in those pS where the OSCE carries out activities but doesnot have an established field presence, and where there is no bilateral arrangement or nationallegislation in place granting the OSCEappropriate status and protection, the Organization’s ability to conduct basic operational functions can be impaired and the Organization may face financial risks. I continued to make determined efforts in 2023 to engage with p5 where OSCE activities take place and where the current bilateral legal arrangements are less than optimal. In this regard, progress was made in the negotiations ofthe OSCE’s bilateral MoUs with specific p5. The issue of local staff incometax continues to be of concern in certain p5 where the OSCE has field presence. The Local Staff Income Tax Task Force in the Secretariat continues its efforts to find solutions,including through MoU negotiations.Successfulnegotiations resulted in the signing in 2023 of a Protocol amending the MoUwith Serbia, providing a tax exemption for OSCE Mission to Serbia local mission members and Serbian nationals serving in other OSCE ESs. 5 Page 106
III. Long-standing internal controls in key areas of OSCE activities Taking all the above into account, my review of the effectiveness of the system of internal controls is mainly informed by: Accountability for performance and results falls, in the first instance, on Fund Managers from the field operations and Institutions, as well as Main Programme Managers at the Secretariat. This includes balancing thecontrol ofactivities and the resources entrusted to the tasks. Managing Programmes and Projects. The framework includes the management of UB programmes, as well as extra-budgetary (EXB)projects supporting UB programmes. CPC organized trainings on PBPB methodology to stafifrorn the Executive Structures in 2023. The Department oflluman Resources’ work on defining the HR-relatedpart ofCRMS aims at senuring that it is strong,yet lean. Itsenforcement of the CRMS and talent outreach procedures aim at ensuring the recruitment of qualified staff in the Secretariat, as well as international staffand mission members elsewherewithin the Organization, where DHR leads or supports the process. Advisory support to field operations and institutions on human resource (HR) matters aims at reducing the risk of non-compliance. Regular revision of staff development opportunities and working conditions, informed bya robust HR analytics team, and leading to corresponding adjustments, aims at reducing the risk ofhaving a higher than the natural staffturnovcr, due to the stafftenure policy at the OSCE. Four-eye verification of HR and payroll data entry prior to approval ensures smooth and accurate payroll runs. Learning and development opportunities facilitated by DHR aim to ensure that staff and mission members have the skills and knowledge to effectively meet their performance objectives. Lastly, as part ofthe Functional Review I launched for the Secretariat, DHR revampedthe onboarding process, with focus on automation oftasks and improvement ofthe employeeexperience in the process. The Department ofManagement and Finance supports compliance with the CRMS through a multitude of actions, including checks on financial transactions, verification of initiatives intended to use OSCE resources, and the provision of advice and training on administrative matters. DMF also provides internal control activities in its role as a second line ofdefence for administrative processes such as theannual physical inventory of assets,the overseeing of monthly bank reconciliations, the approval of credit cards, the opening of bank accounts, and the month-endclosure checklists. On the occasions whereexceptions to the CRMS are requested, DMF ensures that these are kept to a minimum and are well-documented. Following a recommendation from the External Auditors, OSCE, through DMF, implemented verifications of the effectiveness of internal controls for all ES, independently reviewed by 6 Page 107
CFAs and DMF. Thefindings are formalized by the ES in the form of Letters of Attestation. These are cross-checked by the Office of Internal Oversight, and are submitted by every ES in support of the Financial Statements. CPC coordinates its own exercise around the subject of project management. Where improvements in project monitoring and project risk management practices are identified, these are addressed through trainings and instructions. The third line of defence is entrusted to the Office of Internal Oversight (010) through its internal audits, evaluations, advisory services and investigations. Reports on the results of internal audit activities provide independent and objective information on the adequacy of the OSCE’s governance, risk management, and internal control processes, and on the compliance with the CRMS. Independent evaluations provide evidence for the efficiency and effectiveness of programmes whileinvestigations help ensure zero tolerance for fraud andother forms of misconduct. 010 recommendations contribute to enhancing performance, learning and the efficiency and effectiveness of operations. The internal control ofextra-budgetary project proposals is exercised across different parts ofthe OSCE, including the CPC, DMF and relevant technical points, in accordance with article 6.2 of FAI 04/2004 on Extra-budgetary Contributions. CPC in particular acts in three ways: first, it directly reviewsextra-budgetary projects planned by the field operations, the Secretariat and RFOM, to ensure compliance with the CRMS and OSCE project management standards; second, it provides expertise and advice to ODIHR and HCNM as they carry out their own reviews; third, CPC also provides trainings and carries out regular reviews of project management practices, including any updates and alignment with donor requirements. The OSCE’s extra-budgetaryproject portfolio has been steadily increasing in terms of programme size and project budget, bringing with it adaptations to project management and technicalinfrastructure to maintain operational agility. Importantly,this increase in size and complexity has taken place on the back of a decade of zero nominal growth in OSCE budget. The Audit Committee was established by the PC in December 2004 to strengthen internal and external control mechanisms, which are essential for ensuring the effective and efficient management of the OSCE. The Audit Committee strives to provide the participating States with independent assurance that the Organization’s controls are in place and operating properly through, inter alia, the independentreview ofthe OSCE internal controls, including the day- to-day administration and management of the Organization, and the work of the Office of Internal Oversight; In addition, the Audit Committeereviews the work by the External Auditor and provides advice to management and the participating States on issues within its mandate. The External Auditor is appointed according to the Financial Regulations, DOC.PC/l/96, Rev PC.DEC/1419, Article VIII. Regulation 8.02 outlines the scope ofthe audit ‘The External Auditor may make observations with respect to the efficiency ofthe financial procedures, the accounting system, the internal financial controls and, in general, the administration and management of the OSCE.’ 7 Page 108
Iv. External factors limiting effectiveness of internal controls The effectiveness of the OSCE’s internal controls is subject to limitations imposed by insufficient resources, themselves informed in the lack ofa 2023 UB budget; the impact of the evolvingpolitical environment on decisionmaking; changes in mandates governing field operations,including therisk of closures and ongoing challenges to the integrity of OSCE’s information security. These factors have been mitigated by the Organization, but only partially. The ability to continue to provide this mitigation is, to a large extent, subject to the OSCEbeing able to attract andretain sufficient financial and human resources. This report will explain each external factor in turn: Insufficient resources Continuous underfunding ofthe Organization and the lack ofan approved budget in 2023, as in 2022, has resulted in the OSCE continuing to operate with inadequate resources. The lack ofan approved UB for the past two years exacerbates the already dire situation, as the OSCE was forced to operate at the 202 1 level oF resources in 2023, a deflicto Zero Nominal Growth budget allocated in a piece-meal fashion. Significant inflationary cost increases. both in staff and non-staff costs, were not followed by commensurate increases in funding. This had a detrimental impact on the financial stability ofall ES, including some forecasting a year-end deficit in 2023. As a result, the capacity ofthe Organization to provide appropriate levels ofassuraiice across all ES has dangerously eroded. The Organization must have the necessary resources to fulfil its internal control duties,not least, in my efforts to strengthen governance at all levels, The internaljustice system, which remains high on the agenda, and emphasizes the early resolution ofdisputes is also negatively affected by having insufficient resources. The Audit Committee itselfhas echoed the risks to the well-functioning ofthe Organization as a consequence of long- term underfunding. Change offield operation mandates and risk ofclosure offield operations The mandates ofmost OSCE field operations are subject to periodic renewal (annually or more frequently, depending on the mission) by the PC. It is therefore possible that a mandate is not renewed on time; is subject to substantive changes (including in relation to the mandate duration); is not extended; or, in the extreme case where consensus on extension cannot be reached, is forced to close as occurred in 2022. This uncertainty imposes significant operational, administrative as well as resource burdens on the Organization, in addition to their regular tasks, which also creates legal uncertainty asto the status of the affected field operations and the OSCE staff assigned to them,reducing morale across the Organization, and leading to key staff seeking more secure employment elsewhere. 8 Page 109
Information Security The OSCE has experienced major information security incidents in the past, which impacted the confidentiality, integrity and availability ofour systems and information. In response, DMF implemented a multi-year Information Security Plan (ISP) to strengthen the OSCE’s information security. An Information Security Management System(ISMS) was introduced to bolster technical controls and enhance oversight. New tools and processes were established, including the creation ofa Security Operations Centre, the introduction oftools for preventing and detectingcyber-security incidents, the inclusion of information security in internal control walkthroughs, improved security awareness training for staff, and the major Secure Microsoft Infrastructure (SMI) project to upgrade and secure the entire ICT architecture of the OSCE, completed in 2023. This system continues to be firmly in place. In addition, in 2023, DMF continued to implement the OSCE-wideInformation Security Management System, and coordinatedBusiness Impact Assessments across the organization The latter included conducting Business Continuity workshops at the Secretariat and coordinating BusinessImpact Assessments for executive structures. The aim is to establish the foundations ofa Business ContinuityPlanning framework throughout the OSCE. To strengthen the Secretariat’s role as the second line ofdefence in information security, DMF has undertaken a number of actions: it has met each executive structure and discussed bilateralinformation security risk assessments; it has issued regular publications and conducted webinars on information security related topics. It has also introduced process improvements for its Security Operation Centre, new security controls for mobile devices; and has initiated the essential “SMI 2.0” project to further secure and modernize the OSCE’s ICT infrastructure. These measuressignificantly improved the information security controls of the OSCE. Nevertheless, the OSCE continues to be targeted by sophisticated threat actors, and like all international organizations, it is exposed tothe risk of cyber-attacks on our systems and data. The OSCE budget and human resources allocated for ICT and Information Security are well below averages of comparable organizations, impairing the level and scope of information security controls that the Organization is able tooffer. V. Improvements in Policies and Procedures It has been my key objective from the beginning to create a safer, more inclusive, and transparent working environment at the OSCE,where respect and equality prevail, irrespective of an individual’s background or personal characteristics, and achieving greater adaptability and efficiency in our operations. In addition to previously revised Staff Instructions (SI) such as SI 2 1 on Professional Working Environement and SI 32 on Prevention of Sexual Exploitation and Abuse, a notable advancement in 2023 has been the introduction of Staff Instruction No. 33 on Whistleblowing and Protection against Retaliation. This newpolicy established a robust framework that encourages all OSCEofficials and non-OSCE staff to report, in goodfaith, any suspected 9 Page 110
misconduct or wrongdoing without fear of reprisal. It marks a significant step forward in fostering a culture, wherespeaking tip is supported and encouraged in line with the best practices of internationalorganizations.Our commitment to a harassment-freeworkplace remains unwaveringthroughmaintaining clear and consistent communication and application ofa zero-tolerance policy for sexual or any other form ofharassment. The OSCE continues to invest considerable effort into learningand awareness-raising initiatives in this area. Further refiningoperational policies, a second revision to Staff Instruction No.26 on Short- term Appointments and Assignments(STA) was promulgated in 2023, making the management of STAs administratively leaner, whilemaintaining strong controls over the process. Finally, the second revision to StafflnstructionNo. 23 on SpecialService Arrangements (SSA) was promulgated. This revision expands the capacity to engage consultants by introducing more flexible and comprehensive selection processes and the type ofservices which they may be hired to deliver extending the allowable duration of SSAs within a year, and emphasizing the principle of value for money in consultant selection. These changes enhance internal controls in the selection and management ofconsultants while allowing to respond effectively and efficiently to organizational iieeds and priorities. In 2023, significant strides were iriade iii leveraging I 1k. analytics to enhance our organizational decision-making. Several new [JR analytics tools and dashboards were introduced to improve the understanding and management oF workforcc dy narn ics. In line with the OSCE strategic directions and operational requirements, security-related training and exercises continue.Security Managementcontinues to organize and deliver security certification training for Security Officials to ensure standard and effective implementation ofthe 2020 Security Instructions and Guidelines across ES. CPC and Security Management also secured the continuation ofHostile EnvironmentAwarenessTraining in co operation with the Austrian Armed Forces International Centre. They also initiated a series of table-top crisis simulation exercises to stress-test crisis response procedures and capacities of all Field Operations. I endorsed this initiative as a recommendation to integrate operational and security lessons learned during the evacuation and relocation of 5MM mission members. In 2023, DMF revisedFinancial and Administrative Instructions(FAI),partictilarly FAI I on Delegation of Approval Authority and FAI 8 on Premises Management. The aim of these revisions was to add clarity on FAI provisions and in case ofFAl 8, to align with best practices on the use ofoffice space. Revision ofother FAIs (FAI 6, FAI 7, FAI 9, FAI 13 and FAI 5) continue. Records Management as an internal control enabler for the use of Information and Knowledge Records management is a coherent set ofactivities that enables internal control by ensuring the availability of records, information and knowledge of the Organizations activities, It directly contributes to the attainment of a number of internalcontrol objectives, e.g., by reducing the 10 Page 111
risk of fraudulent activities, of data breaches, unauthorized access, alteration, loss, and/or misuse ofpersonal, or private and proprietary information. Records Management also enhances accountability by documenting actions taken, decisions made, and by whom. In addition, Records Management is an essential part of business continuity initiatives. Given its importance, I established a Task Force to update the current Organization’s Records Management framework, which dates from 2013. This implied a review of FAI 3 - Records Management, and its Implementation Policy. This revision also brought to light some shortcomings in existing businessprocesses. This formed part ofan informed decision-making process, resulting in a proposal to set up Records Management as a separate unit reporting to the Director of OSG. ConclusionEffective internal controls, no matter how well designed, have inherent limitations — including the possibility of circumvention — and, therefore, can provide only reasonable assurance. However, I am committed to continuously improve our internal controls, as well as overall accountability and oversight mechanisms. We will continue to work on initiatives to safeguard the OSCE’s capacity to deliver on its mandate, exercise its duty ofcare, increase effectiveness and efficiency in the use of its resources. I reiteratethat the decentralized nature of OSCE and the indirect reporting lines of Fund Managers and CFAs continue to be a risk to the effectiveness ofthese activities. More urgently, the lack offinancial and human resources will sooner or later negatively affect our capacity to maintain the level of internalcontrol I want to see moving forward. Based on the above, I hereby conclude that, to the best ofmy knowledge and information, there are no material weaknesses which would prevent the External Auditor from providing an unmodified opinion on the OSCE’s financial statements, nor are there other significant matters arising which would need to be raised in the present document for the year ended 31 December 2023.OSCE Secretary General 11 Page 112
ANNEX 4 REPORT OF THE EXTERNAL AUDITOR
GZ 2024–0.471.576 External Audit on the Financial Statements 2023 }(