Financial report and audited financial statements for the period 1 January 2008-31 December 2009

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Contents page Director-General’s Report .................................................................................................... 2 Certification of financial statements ................................................................................... 7 Letter of transmittal ............................................................................................................ 8 Opinion of the External Auditor ........................................................................................ 9 Financial Statements Statement of Financial Performance ................................................................................. 14 Statement of Financial Position ........................................................................................ 15 Statement of Changes in Net Assets/Equity ..................................................................... 16 Statement of Cash Flows .................................................................................................. 17 Statement of Accounting Policies ..................................................................................... 18 Notes to the Financial Statements..................................................................................... 21 Statement of Objectives ............................................................................................... 21 Disclosure of Consolidated and Non-Consolidated Entities........................................ 22 Supporting Information to the Statement of Financial Perfornamce ........................... 23 Supporting Information to the Statement of Financial Position .................................. 24 Supporting Information to the Statement of Changes in Net Assets/Equity................ 32 Schedule 1 – Statement of Performance by Major Funds............................................ 35 Schedule 2 – Programme Budget Utilization – General Fund..................................... 36 Schedule 2.1 – Programme Budget Utilization – Assessed Contributions............. 37 Schedule 2.2 – Programme Budget Utilization – Voluntary Funds........................ 38 Schedule 3 – Statement of Expense by Major Offices ................................................ 39

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Director-General’s Report I am pleased to present the Financial Report for the period 2008–2009. The Report provides information to Member States and other partners about the sources, allocation and uses of financial resources and helps to measure the financial implementation of the approved programme budget. The Report covers the assessed contributions approved by the Sixtieth World Health Assembly 1 and expenditure financed from other sources, as noted by the Programme, Budget and Administration Committee of the Executive Board at its ninth meeting. 2 Further analysis of the use of funds is available in the programme budget performance assessment report, which describes the implementation of the Programme budget 2008–2009.3 Details are also provided about the assets and liabilities of the Organization, together with cash flow and equity, in order to give a complete picture of the financial position of the Organization as at 31 December 2009. The Financial Report is submitted in accordance with Article 34 of the Constitution and Financial Regulation XIII. The financial statements, accounting policies and notes to the accounts have been prepared in compliance with WHO’s Financial Regulations and Financial Rules and the United Nations System Accounting Standards (UNSAS). The statutory components of the Financial Report have been audited by the Organization’s External Auditor, whose opinion is included in the Report.

I.

Revised format of the WHO Financial Report

In 2008 WHO modified the structure of the financial statements to improve the Organization’s presentation of financial information. These changes are consistent with the UNSAS qualitative characteristics of ease of understanding, relevance, reliability, and comparability over time. The main changes are as follows: • Non-consolidated entities. Hosted entities that do not form part of the WHO programme budget are not included in the statements. Each of these entities now produces its own full set of financial statements and is subject to a separate audit. The entities concerned include the Trust Fund for the Joint United Nations Programme on HIV/AIDS (UNAIDS), the International Drug Purchase Facility (UNITAID), the International Agency for Research on Cancer (IARC), the International Computing Centre (ICC), The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and the African Programme for Onchocerciasis Control (APOC). Financial statements. The presentation of the statement of financial performance (revenue and expenses) and the statement of financial position (balance sheet) has been simplified to provide the reader with more concise financial information. The revised presentation, introduced for the Interim Financial Report for the year 2008, shows the total revenue and expenses of the Organization in one consolidated statement. Notes to the financial statements show revenue and expenses by fund type, and budget implementation by strategic objective for assessed and voluntary sources of funds. This detailed information allows a more transparent comparison between the programme budget and the financial report.

•

The financial statements for the period 2006–2007 have been restated in order to facilitate comparison between the two bienniums. The restatement involves the removal of hosted entities that had been included in previous WHO financial statements. The restated figures were reviewed by the External Auditor as part of the certification audit.

1 2

See resolution WHA60.12. See document EB124/3. 3 See document A63/29.

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II.

Financial highlights

Total operating revenue for the biennium 2008–2009 was US$ 3759 million (restated figure for the biennium 2006–2007: US$ 4050 million). Operating revenue represents assessed contributions from Member States, voluntary contributions from donors and other minor sources related to WHO’s work. Of this amount, US$ 3692 million related to programme activities. A further US$ 114 million related to non-programmatic work, such as reimbursable procurement and sales of publications. Operating expenses for the same period totalled US$ 3941 million (restated figure for the period 2006–2007: US$ 3326 million), of which US$ 3866 million related to expenditure for programmes. Taking into consideration financial income of US$ 81 million for 2008–2009 (primarily interest earnings), the overall deficit (revenue less expenses) carried forward to 2010 was US$ 101 million.

Table 1. Financial highlights (US$ million)

Operating revenue Operating expense Financial revenue net Surplus

Programmatic 3692 (3866) 57 (117)

2008-2009 Non Programmatic Eliminations 114 (47) (122) 47 24 16

2006-2007 Total 3759 (3941) 81 (101) Total 4050 (3326) 181 905

The total effective programme budget for 2008–2009 under all sources of funds was US$ 4227 million. Actual budget implementation was US$ 3788 million, with an additional amount of US$ 111 million for contractual commitments (“encumbrances”) outstanding at the end of the 2009. Details of budget implementation by strategic objective are included in Schedule 2 on pages 36–38 of this Financial Report. This budget was financed through a combination of assessed contributions, Member States’ nonassessed income (formerly referred to as “miscellaneous income”, voluntary contributions, and prior biennium carry forward, as shown below:

Table 2. Financing of the programme budget (US$ million) 2008-2009 1644 3759 (3941) 81 (101) 1543 2006-2007 739 4050 (3326) 181 905 1644

Beginning balance carry forward (accumulated surplus) Total revenue current biennium Total expense current biennium Finance revenue, net Excess expense over revenue Ending balance carry forward (accumulated surplus)

The carry forward at 31 December 2009 represents voluntary contributions received in 2008–2009, to be used for programme implementation in 2010–2011, or later. This will therefore be used to pay for known commitments for staff salaries and payments to external contractors, as well as for other future planned work. Income in 2008–2009. Total recorded operating revenue of US$ 3759 million this biennium was slightly lower than the figure of US$ 4050 million recorded for 2006–2007. One reason for the lower revenue is that in the previous biennium there was a one-time accounting adjustment which increased income in 2006–2007. It should also be noted that there has been a real decrease in income in the current biennium compared to last biennium. As in previous years, the Member States continued to be the largest source of voluntary contributions, contributing 52% of the total non-assessed (voluntary) budget. Income from the United Nations and intergovernmental organizations was 17%, through

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funding for joint programmes. Foundations (21%), nongovernmental organizations and other institutions (5%), and private sector (5%) donations accounted for the remaining voluntary contributions to the Organization.

Income in kind – namely, donations of services and supplies – totalled US$ 126 million. That figure includes the value of oseltamivir made available to WHO during 2008–2009 as part of the Organization’s response to the outbreak of influenza due to the influenza A (H1N1) 2009 virus. Vaccines against this virus received and distributed at the very end of 2009, and into 2010, will be recorded in the Financial Report for the period 2010–2011.

Member States’ non-assessed income (formerly “Miscellaneous income”) was US$ 63 million after repayment of working capital and internal borrowings at the end of the period 2008–2009 (see Note 6.2 for details). The major source of this income was the collection of arrears of assessed contributions, notably a one time amount of US$ 33.6 million from Argentina for cumulative arrears dating back to 2000. Of the miscellaneous income earned, a figure of US$ 45 million was used for financing the overall assessed contribution budget. The closing balance on this account was US$ 32 million. However, taking all amounts attributable to Member States including non-assessed income above, there was an overall net unrestricted balance of just US$ 2 million as at 31 December 2009.

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Expenditure in 2008–2009. Expenditure by headquarters and regional office is given below; full details can be found in the statement of expenses by major office (Schedule 3). The share of overall expenditure by office (shown below in percentage terms) was largely unchanged from the period 2006–2007.

III. Assets Total cash and cash equivalents at the end of the period were US$ 2413 million. The investments are primarily short term in order to ensure that cash is available for programmatic needs. Some funds for longer-term liabilities are invested in securities in accordance with the recommendations of the Advisory Investment Committee. The total cash and cash equivalents balance available for WHO’s programmatic activities was US$ 989 million. US$ 513 million was cash held in WHO’s accounts on behalf of other entities (e.g. UNAIDS, UNITAID and ICC) under administrative agreements. A further US$ 911 million was cash and investments for the Staff Health Insurance Fund and for other WHO liabilities. The prevailing investment environment throughout the financial period 2008–2009 was very challenging as a result of the global banking crisis. A number of adjustments were made to WHO’s investment portfolios in order to minimize any risks of capital loss. As a result, a modest net positive investment performance was achieved, amounting to US$ 81 million after accounting for foreign exchange gains and losses. The figure for accounts receivable, representing amounts due from Member States for assessed contributions and from donors for signed agreements, has decreased slightly. Within this figure, assessed contributions amounted to US$ 191 million.4 The rate of collection of assessed contributions for the period 2008–2009 was 86%.

IV.

Liabilities

The total value of Member States’ contributions received in advance was US$ 55 million (see Note 5.8). These advances will be applied as income in 2010. As in past financial periods, WHO has created a full provision of US$ 191 million related to outstanding assessments from Member States as at 31 December 2009. The balances for accrued staff benefits of US$ 47.6 million in the period 2008–2009 indicate a slight decrease from the figure of US$ 48.4 million in 2006–2007. These accruals are used to settle current and future costs for staff entitlements for home leave, repatriation travel, education grant and removal on repatriation. The latest actuarial valuation of the accrued staff benefits (terminal payments) showed a potential unfunded liability of US$ 89 million.

4

Document A63/33.

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V.

Fund accounting

In 2008–2009 the Organization consolidated the previously existing fund structure into four funds gathering together funds of distinct types: the General Fund, the Special Purpose Fund, the Enterprise Fund and the Fiduciary Fund. The General Fund consists of all WHO’s operational income and expenditure and is linked to the programme budget for the same period. The Special Purpose Fund relates to appropriations from the regular budget which are restricted to specific projects that may extend beyond the current financial period (e.g. the Real Estate Fund and the Information Technology Fund). The Enterprise Fund relates to exchange transactions that are non-programmatic in nature (e.g. reimbursable procurement, sales of publication). The Fiduciary Fund covers funds that are held in a trustee or agent capacity for others, and cannot be used to support WHO’s own programmes (e.g. foundations and endowments). Further details on the fund types can be found in Note 1.11. The realignment of the fund structures improves the overall presentation of the financial statements by providing a clear separation between WHO’s programmatic and non-programmatic activities. The consolidated statement of revenue and expenses (Statement of Financial Performance) is subdivided into the above-mentioned four funds in Schedule 1. The revenue and expenses of the General Fund correspond primarily to the programme budget.

VI.

Conclusion

I have noted the comments made by the External Auditor in his long form report to the Health Assembly. All matters raised are being considered promptly by the Secretariat so that appropriate actions can be taken. In 2008–2009, the prior trend of biennium to biennium increases in resources has come to an end, and we remain vigilant to future resource trends. Nevertheless programme expenditure reached a record level, at US$ 3.9 billion. The introduction of the new Global Management System is an important step to further improve the integration between the programme budget, implementation and results, and enables better management of the continued resource complexity of the Organization.

Dr Margaret Chan Director-General

Geneva, 18 March 2010

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Certification of financial statements

The financial statements, notes to the statements and supporting schedules are approved.

Nicholas R. Jeffreys Comptroller

Dr Margaret Chan Director-General

18 March, 2010

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Letter of Transmittal

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Opinion of the External Auditor TRANSCRIPT INDEPENDENT AUDITOR’S REPORT

To the World Health Assembly Report on the Financial Statements We have audited the accompanying Financial Report of the World Health Organization, which comprises the statement of financial position as at 31 December 2009, and the statement of financial performance, statement of changes in net assets/equity, statement of cash flows, notes to the financial statements, schedules 1 to 3 for the financial period ended 31 December 2009, and statement of accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with United Nations System Accounting Standards (UNSAS). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the World Health Organization as at 31 December 2009, and its financial performance and of its cash flows for the period 1 January 2008 - 31 December 2009 in accordance with UNSAS.

Comptroller & Auditor General of India 9, Deen Dayal Upadhyay Marg, New Delhi - 110124 Tel. No.: ++91 11 23235797 · Fax : ++91 11 23233618 · e-mail: cag@cag.gov.in

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Report on Other Legal and Regulatory Requirements Further, in our opinion, the transactions of the World Health Organization that have come to our notice or which we have tested as part of our audit have, in all significant respects, been in accordance with the WHO Financial Regulations and Financial Rules. In accordance with Regulation XIV of the Financial Regulations, we have also issued a long-form Report on our audit of the World Health Organization.

[SIGNED] Vinod Rai Comptroller and Auditor General of India External Auditor New Delhi, India 31 March 2010

Comptroller & Auditor General of India 9, Deen Dayal Upadhyay Marg, New Delhi - 110124 Tel. No.: ++91 11 23235797 · Fax : ++91 11 23233618 · e-mail: cag@cag.gov.in

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World Health Organization Statement of Financial Performance For the biennium ended 31 December 2009 Notes Operating revenue Member states' assessed contributions Assessed contributions provision Voluntary contributions Reimbursable procurement Other operating revenue Total operating revenue 1.2 4.2 5.10 4.4 4.5 4.6 940 124 310 (51 214 139) 2 745 018 564 53 678 321 71 501 694 3 759 108 749 889 523 414 16 908 837 2 932 643 718 129 012 481 82 353 364 4 050 441 814 2008-2009 Totals 2006-2007 (re-stated)

Operating expenses Staff costs Direct financial cooperation (DFC) Contractual services General operating expenses Travel Medical supplies and literature Equipment, vehicles and furniture Training Medical research services Telecommunication Fellowships Total operating expenses Surplus/(deficit) from operations

1.4 1 742 904 674 525 186 395 514 711 753 290 482 280 255 591 911 214 188 468 207 807 250 76 656 016 66 340 170 27 163 509 20 519 460 3 941 551 886 (182 443 137) 1 572 742 709 367 146 155 407 467 070 330 133 038 158 062 447 191 532 457 164 998 176 52 303 971 37 361 100 23 014 827 21 524 018 3 326 285 968 724 155 846

Financial revenue and expense, Net Total surplus/(deficit) for the period

4.7

80 975 145 (101 467 992)

181 268 003 905 423 849

The statement of accounting policies and the accompanying notes form part of the financial statements.

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World Health Organization Statement of Financial Position As at 31 December 2009 Notes ASSETS Current assets Cash and cash equivalents Accounts receivable - current Staff receivables Prepayments Interest receivable Total current assets Non-current assets Accounts receivable - non current Land and buildings Total non-current assets TOTAL ASSETS 5.2 5.6 46 784 658 97 950 420 144 735 078 3 148 738 315 25 016 304 97 948 463 122 964 767 3 339 694 783 5.1 5.2 5.3 5.4 5.5 2 412 906 348 553 954 842 18 489 838 10 709 134 7 943 075 3 004 003 237 2 586 701 203 561 225 745 35 097 269 9 614 845 24 090 954 3 216 730 016 2008-2009 2006-2007 (re-stated)

LIABILITIES Current liabilities Contributions received in advance Accounts payable Assessed contributions provision Other current liabilities Inter-entity liabilities Total current liabilities Non-current liabilities Long term borrowings Accrued staff benefits Staff health insurance Total non-current liabilities TOTAL LIABILITIES NET ASSETS/EQUITY Net assets/reserves Member States' equity in capital assets Accumulated surpluses/(deficits) Non-restricted (Member States) Member States - Regular Budget Member States - Other Total non-restricted (Member States) Restricted Voluntary funds Total accumulated surpluses/(deficits) TOTAL NET ASSETS/EQUITY TOTAL LIABILITIES AND NET ASSETS/EQUITY 1 540 604 602 1 542 508 089 1 617 916 430 3 148 738 315 1 595 136 552 1 643 976 082 1 717 715 987 3 339 694 783 (55 409 733) 57 313 220 1 903 487 7 085 068 41 754 462 48 839 530 6.1 75 408 341 73 739 905 5.13 5.14 5.15 22 542 079 47 650 032 450 906 103 521 098 213 1 530 821 884 24 208 558 48 384 090 383 609 739 456 202 387 1 621 978 796 5.8 5.9 5.10 5.11 5.12 86 411 056 205 346 926 191 138 329 13 727 615 513 099 744 1 009 723 671 59 299 388 297 113 245 139 924 190 24 078 778 645 360 809 1 165 776 409

The statement of accounting policies and the accompanying notes form part of the financial statements.

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World Health Organization Statement of Changes in Net Assets/Equity For the biennium ended 31 December 2009 Notes Opening balance Changes 2008-2009 Ending balance

Net Assets/Reserves Member States' equity in capital assets Accumulated surpluses/(deficits) Non-restricted (Member States) Member States - Regular budget Assessed contributions Member States' non assessed income Tax equalization Working capital fund Total Member States - Regular budget Member States - Others Special purpose fund Enterprise fund Fiduciary fund Total Member States - Others Total non-restricted (Member States) Restricted Voluntary funds 1 595 136 552 (54 531 950) 1 540 604 602 6.5 6.6 21 360 513 20 393 949 41 754 462 48 839 530 7 466 905 8 556 119 (464 265) 15 558 758 (46 936 043) 28 827 418 28 950 068 (464 265) 57 313 220 1 903 487 6.2 6.3 6.4 (1 809 920) 13 821 140 (4 926 152) 7 085 068 (109 584 196) 18 381 767 (2 292 372) 31 000 000 (62 494 801) (111 394 116) 32 202 907 (7 218 524) 31 000 000 (55 409 733) 6.1 73 739 905 1 668 436 75 408 341

Total accumulated surpluses Net assets/equity at end of period

1 643 976 082 1 717 715 987

(101 467 992) (99 799 557)

1 542 508 089 1 617 916 430

The statement of accounting policies and the accompanying notes form part of the financial statements.

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World Health Organization Statement of Cash Flows For the biennium ended 31 December 2009 Notes CASH FLOWS FROM OPERATING ACTIVITIES Surplus or deficit Non-cash movements (Increase)/decrease in accounts receivable (Increase)/decrease in prepaid expenses Increase/(decrease) in contributions received in advance Increase/(decrease) in accounts payable (Increase)/decrease in non-current receivables Increase/(decrease) in provision for liabilities and charges Less : Interest income included in fund balances Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from sale of prop, plant and equipment Purchase of investments Plus : Interest income included in fund balances Less: (Increase)/decrease in interest receivable Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Inter company adjustments Increase/(decrease) in other liabilities Repayment of loans Net cash flows from financing activities Net Increase/(decrease) in cash and equivalents Cash and equivalents at beginning of period Cash and equivalents at end of period (132 261 065) 56 211 143 (1 666 479) (77 716 401) (173 794 855) 2 586 701 203 2 412 906 348 313 116 570 43 696 223 9 294 104 366 106 896 789 264 366 1 797 436 837 2 586 701 203 80 975 145 16 147 879 98 789 503 181 268 003 (6 372 691) 163 941 920 1 666 479 (10 953 393) 7 270 903 15 513 141 27 111 668 (91 766 319) (21 768 354) 51 214 139 (80 975 145) (194 867 957) (415 666 555) (8 105 663) 8 971 419 (55 022 991) 10 518 495 (5 635 000) (181 268 003) 259 215 551 (101 467 992) 905 423 849 2008-2009 2006-2007 (re-stated)

The statement of accounting policies and the accompanying notes form part of the financial statements.

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Statement of Accounting Policies 1.1 Basis of Preparation and Presentation The accounting policies and financial reporting practices applied are based on the WHO Financial Regulations and Financial Rules. 1 Where the Regulations and Rules do not provide explicit provisions, the requirements of the United Nations System Accounting Standards (UNSAS) apply. The financial statements, accompanying notes and schedules are all in accordance with UNSAS. In 2008–2009 WHO partially modified the structure of the financial statements to help improve the presentation of financial information to the readers. These changes are consistent with the UNSAS qualitative characteristics of understandability, relevance, reliability (accuracy, neutrality and completeness), and comparability over time. These financial statements have been prepared on the going concern basis, conforming to the historical cost convention using the accrual method of accounting. The financial statements, notes, schedules and accompanying tables are presented in US dollars. 1.2 Revenue Recognition (Operating Revenue) Assessed contributions – Income from contributions from Members and Associate Members for the effective working budget 2008–2009 is recorded on an accrual basis as per the assessments approved by the World Health Assembly. In accordance with Financial Regulation 7.1, pending receipt of assessed contributions, implementation of the regular budget may be financed from the Working Capital Fund and thereafter by internal borrowing against available cash reserves of the Organization, excluding Trust Funds. A provision is established for delays in collection of contributions amounting to 100% of the assessed contributions outstanding at 31 December 2009. The net increase/decrease of the provision for the current biennium is shown in statement of financial performance. When outstanding assessed contributions are paid, the amounts are credited first against any outstanding internal borrowing and then against any borrowing from the Working Capital Fund. In accordance with Financial Regulation 8.1 (g), any payments of arrears of contributions due from Member States that are not required to repay borrowings from internal borrowing and from the Working Capital Fund are credited to Non Assessed Income. New and formerly inactive Members – Income from assessed contributions from new and formerly inactive Members is subject to Financial Regulation 6.11. Voluntary contributions – Voluntary contributions are recorded on an accrual basis. Formal funding agreements signed by both parties are required in order to recognize an asset before the receipt of cash. When the entire funding is payable up front, revenue equal to the funding set out in the agreement is recognized when the agreement is signed. If the receipt of funds in conditional on a certain future date, revenue will only be recognized in that future period. Contributions in-kind or in-services – Contributions in kind or in services received by WHO are recorded as goods received or services rendered. They are treated both as revenue and expenses in the General Fund at the best estimate of fair value. Revenue-producing activities – Revolving Sales Fund – Income is recorded at fair value of the consideration received. The revenue is reflected under the Enterprise Fund. 1.3 Accounts Receivable Accounts receivable are recorded at their estimated realizable value. Consistent with existing Financial Regulations and Financial Rules, WHO created a full provision for delays in Member States’ assessed contributions. No provisions were made for non collection of voluntary contributions or other receivables. 1.4 Expense Recognition (Expenditure) Expenditure recognition occurs at the time of delivery of goods or services. The implementation of an Enterprise Resource Planning (ERP) system (Oracle) effective 30 June 2008 at Headquarters and the Western Pacific Regional Office has enabled the Organization to better 1

Note: With effect from 1 January 2010 the Financial Regulations and Financial Rules have been amended and renumbered in accordance with resolution WHA62.6.

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manage expenditures in accordance with this principle through systematic reporting of delivery dates. It should be noted that prior to the implementation of the ERP in June 2008 the legacy accounting systems used by the Organization recognized expenditure based on creation of an obligation. These legacy systems were still in use in the Regional Offices and country offices which were not using the ERP system for the period ending 31 December 2009. Plans are in place to have all offices using the ERP system before the end of the 2010–2011 biennium. To mitigate the effect of potential timing differences in expenditure recognition, the Organization has put in place policies requiring obligations to be created for only those goods/services which are due to be delivered in the current period. At the end of the financial period a full review of all outstanding obligations was performed to recognize expenditure only for goods or services which have been delivered. 1.5 Property and Equipment Land and buildings are recorded at historical costs and are not depreciated. Equipment is fully expensed in the financial period in which it is acquired. An inventory of equipment with a cost value of US$ 2 500 and above is maintained and the total value disclosed in the notes. 1.6 Employee Benefits Employee benefits are recognized as expenses on an accrual basis. Similarly terminal payments to staff members, including repatriation grant, accrued annual leave, repatriation travel and removal on repatriation are all expensed on an accrual basis. It should be noted that the current accruals for employee benefits are not sufficient to cover all future costs. 1.7 Pension Fund WHO is a member organization participating in the United Nations Joint Staff Pension Fund (UNJSPF) which was established by the United Nations General Assembly to provide retirement, death, disability and related benefits to staff. The Pension Fund is a funded defined benefit plan. The financial obligation of the Organization to the UNJSPF consists of its mandated contribution at the rate established by the United Nations General Assembly together with any share of any actuarial deficiency payments under Article 26 of the Regulations of the Fund. Such deficiency payments are only payable if and when the United Nations General Assembly has invoked the provision of Article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of the Fund as of the valuation date. At the time of this report the United Nations General Assembly had not invoked this provision. 1.8 Financial Risks The Organization is exposed to certain financial risks including foreign currency exchange risk and credit risk. The Organization does use derivative financial instruments to hedge risk exposure. The Organization has purchased foreign exchange option contracts which grants the right but not the obligation to sell US dollars and buy Euro and Swiss francs at fixed exchange rates as set out in Note 5.1e. In accordance with Financial Regulation 11.1, funds not required for immediate use may be invested. All investments are carried out within the framework of investment policies approved by the Director-General. These policies are regularly reviewed by the Advisory Investment Committee, which includes external investment specialists. The Committee makes regular recommendations to the Director-General. The range of investments types are: • Short-term fixed income in US dollars – These are invested in cash and high quality, short dated, government, agency, and corporate bonds as defined in the approved investment policy; Long-term fixed income in US dollars – These are invested in high quality, medium and long dated, government, agency, and corporate bonds. They represent funds managed for the Staff Health Insurance Fund and the Terminal Payments Account as defined in the approved investment policy; and

•

Equity investments in US dollars – In accordance with approved investment policy, this portfolio represents funds managed for the Staff Health Insurance Fund. Foreign currency exchange risk – The Organization receives voluntary and assessed contributions and makes payments in currencies other than US dollars. It is exposed to foreign exchange currency risk arising from fluctuations in the currency exchange rates. Exchange rate gains and losses on the purchase and sale of currencies, revaluation of cash book balances, and all

•

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other exchange differences are adjusted against the funds and accounts eligible to receive interest under the WHO general investment plan. Credit risk – The credit risk associated with contributions from donors and on other accounts receivables is considered above in the note on accounts receivable. The Organization is not subject to significant liquidity or price risk. Foreign Currency translation – Translation into US dollars of transactions expressed in other currencies is effected at the prevailing United Nations accounting rate of exchange, as applicable at the date of the transaction. Assets and liabilities that are denominated in foreign currencies are translated at the rates of exchange prevailing on the first day of the month for purposes of reporting. Realized/unrealized gains and losses resulting from the settlement and revaluation of foreign currency transactions are recognized in the statement of financial performance. 1.9 Tax Equalization Fund In accordance with Health Assembly resolution WHA21.10, under which the Tax Equalization Fund was established, the assessed contributions of all Members are reduced by the income generated by the staff assessment plan. In determining the reduction of assessed contributions to be applied to the Members concerned, the Tax Equalization Fund is credited with the revenue from the staff assessment plan, the credits being recorded in the name of individual Members, in proportion to their assessments for the biennium. For those Members that levy income tax on emoluments received from the Organization by their nationals or others liable to such taxes, the credit from the staff assessment plan is charged with the estimated amount to be levied by those Member States. Those amounts which have been charged are, in turn, used by the Organization to reimburse income tax paid by the staff concerned. 1.10 Savings on Prior Periods’ Unliquidated Obligations Unliquidated obligations relating to prior financial periods are settled during the current financial period in accordance with the Financial Regulations. Variances on settlement are debited/credited to the relevant account. 1.11 Fund Accounting Fund Accounting is a method of segregating resources into categories, (i.e. funds) to identify both the source and use of the funds. Establishment of such funds help to ensure better reporting of revenue and expenses. The four types of funds are the General Fund, Special Purpose Fund, Enterprise Fund and Fiduciary Fund. Any transfers between funds that would result in duplication of revenue and/or expenses are eliminated during consolidation. Intra-fund transfers such as Programme Support Costs (PSC) within the General Fund are also eliminated. The four types of funds are further explained below. General Fund – The accounts contained under this fund support the implementation of the Programme Budget. It consists of the following funds: • • • • • • • Assessed Contributions – Member States Non Assessed Income – Member States Tax Equalization Fund Voluntary Funds (core, specified and partnerships) Special Account for Servicing Costs (also referred to as Programme Support Costs) WHO’s Framework Convention on Tobacco Control 1/ Stop TB Partnership Global Drug Facility 1/

The Secretariat of WHO’s Framework Convention on Tobacco Control and the Stop TB Partnership Global Drug Facility though not included within the budget also support the achievement of the Strategic Objectives.

1/

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Special Purpose Fund – The accounts contained under this fund represent transfers from the General Fund or appropriations by the World Health Assembly. The revenue and expense under this fund are not included in the reporting of the Programme Budget. This fund contains the following accounts: • • • • • • Real Estate Fund Security Fund Information Technology Fund Staff Development Fund Revolving Fund for Teaching and Laboratory Equipment Common Costs Charges

Enterprise Fund – This fund contains accounts that generate self financing revenue. The revenue and expenses under this fund is not included in the reporting of the Programme Budget. It contains the following accounts: • • • • • Revolving Sales Fund 2/ Special Account for Concession Insurance Policies Account Self-financing Account Procurement Activities

Fiduciary Fund – This fund accounts for assets that are held by WHO in a trustee or agent capacity for others and cannot be used to support the Organization’s own programmes. These funds include private-purpose funds such as endowments (foundations) given for a specific individual or purpose but not for general use. Similarly, financial activities related to financing the Organization’s long term liabilities are managed through this fund. These funds are not available for operations and do not contribute to the Programme Budget 2008–2009. The following funds are contained therein: • • Staff Health Insurance Foundations

Notes to the Financial Statements 2. Statement of Objectives 2.1 The objective of the World Health Organization, contained in Article 1 of the Constitution, is the “attainment by all peoples of the highest possible level of health”. 2.2 In order to achieve this objective, the functions of the Organization have been established and are contained in Article 2 of the Constitution. 2.3 The Eleventh General Programme of Work, 2006–2015, approved by World Health Assembly resolution WHA59.4 provides the policy and programmatic framework for the Programme Budget 2008–2009. WHA60.11 refines the framework of the Medium Term Strategic Plan 2008–2013 and its underlying budgets which moves away from the narrowly defined areas of work to strategic objectives. 2.4 The sixtieth World Health Assembly in May 2007 (WHA60.12) resolved to appropriate an Effective Working Budget of US$ 959 million for the financial period 2008–2009. The Health Assembly also noted estimated expenditure of US$ 3 269 million to be financed from voluntary contributions.

2/

In accordance with Health Assembly resolutions WHA22.8 and WHA55.9, this fund is credited with proceeds from the sale of publications, international certificates of vaccination, films, videos, DVD’s and other information material. The related costs of production and printing are charged to the fund.

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3.

Disclosure of Consolidated and Non-Consolidated Entities 3.1 Non-Consolidated Entities In an effort to improve the presentation of the WHO financial statements, hosted entities which do not form part of the WHO Programme Budget were not included in the statements. Each of these entities produce a full set of financial statements and are subject to a separate audit. The following six entities have their own governing bodies and are not controlled by the World Health Assembly: • • • • • • Trust Fund for the Joint United Nations programme on HIV/AIDS (UNAIDS) International Drug Purchase Facility – (UNITAID) International Agency for Research on Cancer (IARC) International Computing Centre (ICC) The Global Fund to fight AIDS, Tuberculosis and Malaria (GFATM) African Programme for Onchocerciasis Control1/(APOC)

3.2 Consolidated Entities WHO administers or participates in a large number of global health partnerships at all levels of the Organization. These partnerships contribute to the achievement of the WHO objectives and as such were reflected in the 2008–2009 Programme Budget. The activities implemented by the WHO have been consolidated in the financial report under the General Fund. The Secretariat of WHO’s Framework Convention on Tobacco Control and the Stop TB Partnership Global Drug Facility though not included within the budget are considered to fall within the control of the World Health Assembly and would not qualify as separate independent entities. The partnerships and collaborative arrangements concerned are as follows: • • • • • • • • • • • • • • • • • • • • Alliance for Health Policy and Systems Research Global Alliance for Vaccines and Immunization (GAVI) Global Alliance against Chronic Respiratory Diseases Global Health Workforce Alliance Global Polio Eradication Initiative Health Metrics Network Intergovernmental Forum on Chemical Safety Partnership for Maternal, Newborn and Child Health Roll Back Malaria Partnership UNICEF/UNDP/World Bank/WHO Special Programme for Research and Training in Tropical Diseases (TDR) International Food Safety Authorities Network United Nations System Standing Committee on Nutrition United Nations Road Safety Collaboration UNDP/UNFPA/WHO/World Bank Special Programme of Development and Research Training in Human Reproduction (HRP) Initiative for Vaccine Research Violence Prevention Alliance Vision 2020: The Right to Sight WHO alliance for the global elimination of trachoma Framework Convention on Tobacco Control Stop TB Partnership Global Drug Facility Research,

1/

Includes residual values for former Onchocerciasis Control Programme

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4.

Supporting Information to the Statement of Financial Performance 4.1 Statement Overview The Statement of financial performance consolidates revenue and expenses for all activities throughout the Organization. The statement segregates operating activities from those arising from financing operations. Further details by fund and by major office are presented in Schedules 1, 2 and 3. 4.2 Member States Assessed Contributions The WHA60.12 approved a budget of US$ 4 227 million for the period 2008–2009. Details on the status of collections can be found in document A63/33. 4.3 Member States Non Assessed Income (Previously Miscellaneous Income) According to Financial Regulation 8.1(g), receipts of prior period Member States’ assessments are credited to Member States Non Assessed Income. The Member States Non Assessed Income of US$ 32.2 million forms part of the Member States income – Regular Budget (See Note 6.2). 4.4 Voluntary Contributions Total voluntary contributions to the WHO totalled US$ 2 745 million for the current period. These contributions represent revenue recognized from governments, intergovernmental organizations, institutions, other United Nations Organizations, as well as the private sector. Voluntary donations are accepted provided they are consistent with the policies and objectives of the Organization. Details are in document A63/INF.DOC./4. 4.5 Reimbursable Procurement WHO procures medicines and vaccines on behalf of Member States and other United Nations agencies. The total revenue recognized in 2008–2009 for reimbursable procurement was US$ 53.7 million. The revenue and expenses related to reimbursable procurement forms part of the Enterprise Fund and is not reported against the Programme Budget. 4.6 Other Operating Revenue In 2008–2009 the Organization earned fees for hosting other entities such as UNAIDS, UNITAID, ICC, etc. Other sources of earnings also included the sale of publications and royalties earned. Savings due to the cancellation of prior period obligations totalled US$ 36 million. In previous years these savings were reported as credits against the respective funds. 2008-2009 (US dollars) Administrative service agreements with other entities Revolving sales fund income Savings on prior period obligations Gains on sale of assets Rental income Others Total 14 664 326 11 069 082 36 029 276 167 143 3 318 870 6 252 997 71 501 694

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4.7 Financial Revenue and Expense, Net The total interest earned in the biennium was US$100 million and the net hedging gains were US$11 million. These amounts were offset by the net realized and unrealized gains and losses from the revaluation of foreign currency balances. 2008-2009 (US dollars) Interest Hedging Realised gains/(losses) Unrealised gains/(losses) Total 100 025 380 11 338 148 (15 555 095) (14 833 288) 80 975 145

5.

Supporting Information to the Statement of Financial Position The notes within this section provide further details of the information presented in the statement of financial position and changes in equity. 5.1 Cash and Cash Equivalents Cash, deposits and securities are held on behalf of the Organization, including the General Fund, Special Purpose Fund, Enterprise Fund, Fiduciary Fund and non WHO entities administered by WHO. 2008-2009 (US dollars) Cash at banks, investment accounts, in transit and on hand Headquarters Regional and country offices Total cash at banks, in transit and on hand Deposits Bank deposits Total deposits Securities Short-term fixed income in US dollars Long-term fixed income in US dollars Equity investments in US dollars Total securities Total deposits and securities Total cash and cash equivalents 661 382 716 270 236 092 52 352 993 983 971 801 2 109 071 801 2 412 906 348 573 144 578 274 975 982 67 686 297 915 806 857 2 247 190 087 2 586 701 203 1 125 100 000 1 125 100 000 1 331 383 230 1 331 383 230 251 793 448 52 041 099 303 834 547 237 099 412 102 411 703 339 511 115 2006-2007 (US dollars)

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5.1a Cash Available for Programmatic Activities: Of the total cash and cash equivalent balance of US$ 2 413 million, US$ 989 million was available for WHO programmatic activities. The remaining cash relates to funds held on behalf of other organizations and those needed to settle current and future liabilities. 2008-2009 (US dollars) Available cash and cash equivalents Fund balance - Member States Regular Budget Fund balance - Member States other Fund balance - voluntary funds Accounts receivable Total available cash and cash equivalents Restricted cash and cash equivalents Funds held on behalf of other entities (See Note 5.12) Accounts payable Accrued benefits Long-term borrowings Other current liabilities and provisions Other liabilities net Total restricted cash and cash equivalents Total cash and cash equivalents 513 099 744 205 346 926 47 650 032 22 542 079 204 865 944 430 848 375 1 424 353 100 2 412 906 348 (55 409 733) 57 313 220 1 540 604 602 (553 954 842) 988 553 247

5.1b Deposits and Securities: Funds in currencies other than US dollars are accounted at their US dollar equivalent based on the United Nations accounting rate of exchange. Securities are accounted for at current market value. Market values are determined using the market price for a particular security on the last business day of the year. The investment policy reflects the nature of the WHO funds, which may be held for the shortterm, pending programme implementation, or for the longer term in order to meet liabilities under the Staff Health Insurance Fund and other long-term funds of the Organization. Investments are recorded at current market value and investment income is recorded on an accrual basis. 5.1c Investments: Short-term fixed income in US dollars – These are invested in cash and high quality, short dated, government, agency, and corporate bonds as defined in the approved investment policy. Long-term fixed income in US dollars – These are invested in high quality, medium and long dated, government, agency, and corporate bonds. They represent funds managed for the Staff Health Insurance Fund and the Terminal Payments Account as defined in the approved investment policy. Equity investments in US dollars – In accordance with approved investment policy, this portfolio represents funds managed for the Staff Health Insurance Fund. 5.1d Foreign Exchange Hedging: In accordance with Financial Regulation 4.4, foreign exchange hedging seeks to maintain the level of the budget so that the activities that are represented by the budget approved by the World Health Assembly may be carried out, irrespective of the effect of any fluctuation of currencies against the US dollar. The amounts available for hedging are normally approved by the World Health Assembly for the financial period concerned. The exact method of hedging is determined in accordance with the investment policy, which specifies permitted hedging instruments: namely forward foreign exchange and option contracts. The exchange rate to be protected and prevailing market conditions are also taken into account. Costs associated with the purchase of foreign currency options are recorded at the time of purchase and are expensed in the biennium to which they relate. Gains/(losses) on forward contracts and any gains on option contracts are taken to income (or expenditure) when the contracts mature.

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5.1e Foreign Exchange Hedging Transactions arising in 2009: Exchange gains on foreign exchange hedging contracts in 2008–2009 amounted to US$ 19 million (US$ 7.8 million in 2006–2007), all of which have been recorded in the assessed contribution budget. Net premiums paid on these contracts amounting to US$ 7.8 million have been recorded in the assessed contribution budget. There were no outstanding foreign exchange options at 31 December 2009. There were no prepaid expenses as at 31 December 2009 (US$ 7.8 million at 31 December 2007). 5.1f Hedging Foreign Exchange Exposures on Receivables and Payables: Currency exchange risk arises due to differences in the exchange rates at which foreign currency receivables or payables are recorded, and the exchange rates at which the cash receipt or payment is subsequently recorded. To hedge this foreign currency risk, in 2009 a monthly programme of currency hedging was introduced. On an ongoing monthly basis the awards, accounts receivable and accounts payable exposures are netted by currency and each significant net foreign currency exposure is bought or sold forward using a forward foreign exchange contract equal and opposite to the net currency exposure. These exposures are re-balanced at each month end to coincide with the settings of the monthly UN exchange rates, and the forward foreign exchange contracts are adjusted and swapped back to the following month to match the revised net currency exposures. Through this process the exchange gains or losses crystallised on the forward foreign currency contracts hedge the corresponding exchange losses and gains on the movements in the net contributions, accounts receivable and accounts payable. At 31 December 2009 the total forward foreign currency exchange hedging contracts by currency were as follows: Currency EUR SEK GBP NOK AUD CAD Total Amount forward sold 35 280 000 141 000 000 1 900 000 12 900 000 2 400 000 1 300 000 Contract value (US dollars) 50 445 368 19 616 027 3 025 822 2 221 839 2 137 726 1 234 076 78 680 858

An unrealised loss of US$ 3 302 419 on the revaluation of these forward foreign currency exchange hedging contracts at the year end exchange rates is recorded in the Statement of Financial Performance. 5.1g Forward foreign exchange contracts to manage operational cash flows: Forward foreign exchange contracts are used to manage short term cash flows of foreign currency balances to minimize foreign currency transaction risk. At 31 December 2009 the net value of these forward foreign currency exchange contracts by currency were as follows: Currency EUR CHF DKK Total Amount forward sold 21 000 000 11 000 000 11 700 000 Contract value (US dollars) 30 277 224 10 629 326 2 326 679 43 233 229

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The maturity dates of these forward foreign exchange contracts were in January and February 2010. An unrealised gain of US$ 1 701 365 on the revaluation of these forward foreign currency exchange hedging contracts at the year end exchange rates is recorded in the Statement of Financial Performance. 5.1h Imprest: Imprest account balances reflect financial information recorded up to 30 November 2009, in order to ensure a consistent cut-off throughout WHO. Disbursements that have not been accounted for in the financial period will be accounted for against the liquidation of the relevant encumbrances and bank balances in 2010. 5.2 Accounts Receivable At 31 December 2009, total accounts receivable amounted to US$ 600.7 million (US$ 586.2 million at 31 December 2007). The receivable balance includes outstanding amounts for both assessed and voluntary contributions. Other receivables of US$ 4.5 million comprise payments due from international organizations and other debtors. 2008-2009 (US dollars) Accounts Receivable Member States assessed contributions receivable- current biennium Member States assessed contributions receivable- previous biennium Outstanding rescheduled assessments receivable - non current Total assessed contributions receivable Voluntary contributions receivable Revolving sales Other receivables Total Accounts Receivable 130 880 093 13 473 579 46 784 658 191 138 330 403 980 686 1 095 080 4 525 404 600 739 500

Current and Non-Current Receivables Current Accounts Receivable Non-Current Accounts Receivable Total Current and Non Current Receivable 553 954 842 46 784 658 600 739 500

5.3 Staff Receivables The total balance of Staff Receivables amounted to US$18.5 million down from US$35 million in 2007. In accordance with the WHO staff rules, staff receive salary advances pending processing of employment contracts. When staff salaries are processed through payroll, the advance is recovered and amounts charged to the respective project. Advances for education grant are settled at the end of the scholastic year upon presentation of invoices. Rental advances are allowed as per staff rule – 320.4. Travel advances are cleared upon presentation and settlement of travel claims. 2008-2009 (US dollars) Salary advance Education grant Rental advance Travel advance Other staff receivable Total 4 316 088 4 991 114 1 916 942 4 448 522 2 817 172 18 489 838

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5.4 Prepayments These represent payments to suppliers in advance of receipt of goods or services and guarantee deposits. It is common practice for technical service contractors to request funds in advance of a project to support work during project. When goods or services are delivered prepayments are applied to settlement and the appropriate expenditure account is charged. The total value of prepayments is US$ 10 709 134. 5.5 Interest Receivable This represents amounts due from banks and other investment firms for interest earned during the period. The total value of interest receivable is US$ 7 943 075. 5.6 Land and Buildings These assets represent WHO’s properties at headquarters and in regional office locations. The properties have either been purchased, constructed or received as donations. The land upon which buildings have been erected is either owned by the Organization or has been made available by the host country concerned, at no cost or at a nominal annual ground rent. The cost of land and buildings at each location comprises the following: 2008-2009 (US dollars) Headquarters Regional Office for Africa Regional Office for South-East Asia Regional Office for the Eastern Mediterranean Regional Office for the Western Pacific Total 67 971 982 8 257 182 1 483 295 12 088 203 8 149 758 97 950 420

5.7 Non-Expendable Equipment The total value at cost at 31 December 2009 amounted to US$ 75.3 million. In accordance with established accounting policy, non-expendable equipment (including furniture, computers and other office equipment and motor vehicles) is charged to expenditure at cost. An inventory of non-expendable equipment is maintained and the value disclosed in these notes. For reporting purposes, only those items with a cost value of US$ 2 500 and above are included. 5.8 Contributions Received in Advance This represents contributions received in advance or contributions that were not yet applied to receivables at 31 December 2009. The majority relates to Member States that had either in full or in part made advance payments in 2009 against their assessed contributions for 2010 and future years. Advance payments for voluntary contributions relate to funds received from agreements starting in 2010. 2008-2009 (US dollars) Assessed contributions Advances for voluntary contributions Unidentified and unapplied receipts Advances for Framework Convention on Tobacco Control Total 54 821 108 20 600 446 10 662 122 327 380 86 411 056

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5.9 Accounts Payable This represents the total amount outstanding to suppliers of goods and services at the end of 2009 by major offices. 2008-2009 (US dollars) Regional Office for Africa Regional Office for the Americas Regional Office for South-East Asia Regional Office for Europe Regional Office for the Eastern Mediterranean Regional Office for the Western Pacific Global and interregional activities Total 86 853 227 593 975 40 530 244 9 982 777 47 191 375 6 307 258 13 888 070 205 346 926

5.10 Assessed Contributions Provision Provision of 100% of the non collected assessments is consistent with the existing WHO financial policies for accounts receivable provisions. The net additional provision attributable to the current period of US$ 51 million is recorded in the Statement of Financial Performance. The total balance of US$ 191 million is in the Statement of Financial Position. 2008-2009 (US dollars) Opening Balance Plus: Outstanding 2008-2009 Assessements Less: Collections made for previous biennium Net Additional Provision Current Period Ending Balance 130 880 093 (79 665 954) 51 214 139 191 138 329 139 924 190

5.11 Other Current Liabilities These amounts relate to various short-term liabilities. Foundations are funds which WHO holds interest and is responsible for financial and administrative management. The special fund for compensation relates to an accrual for costs for service related injuries and death. 2008-2009 (US dollars) Special account for compensation Payable to PAHO Foundations WHO inter-office Other current liabilities Due to estates of deceased staff members Total 5 926 806 5 917 668 3 699 821 (4 243 101) 2 149 958 276 463 13 727 615

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5.12 Inter-Entity Liabilities WHO hosts a number of entities through administrative service agreements. As cash for all entities is managed by WHO, liabilities exist with these entities for funds held on their behalf. The total amounts due per entity are as follows. 2008-2009 (US dollars) Trust Fund for the Joint United Nations Programme on HIV/AIDS (UNAIDS) International Drug Purchase Facility (UNITAID) International Computing Centre (ICC) African Programme for Onchocerciasis Control (APOC) Other transfers Total 271 360 688 224 749 864 13 192 766 3 713 093 83 334 513 099 744

5.13 Long Term Borrowings The World Health Assembly, in resolutions WHA55.8 and WHA56.13, authorized the Director-General to proceed with the construction of a new building at headquarters for WHO and UNAIDS at a cost estimated at CHF 66 million, of which WHO’s share was estimated at CHF 33 million. The Swiss Confederation has agreed to provide an interestfree loan to WHO and UNAIDS of CHF 59.8 million of which WHO’s share is CHF 29.9 million. The Health Assembly also approved the use of the Real Estate Fund for the repayment over a 50-year period of WHO’s share of the interest-free loan provided by the Swiss Confederation with effect from the first year of the completion of the building. WHO has repaid it’s share of US$ 1 666 479 (CHF 1 794 000) in 2008–2009. 5.14 Accrued Staff Benefits This represents: (i) Terminal payments account – This account was established to provide for financing the terminal emoluments of staff members, including repatriation grant, accrued annual leave, repatriation travel and removal on repatriation. It is funded by a budgetary provision set for biennium 2008–2009 at 2.5% of salary and post adjustment. It should be noted that the account does not reflect the organization’s full long term liability for terminal benefits. The latest actuarial study estimated the full future liability to be US$139 million at 31 December 2009. This calculation did not include costs for end of service grant, separation by mutual agreement on abolishment of posts. (ii) Non payroll staff entitlements account – This account provides for non payroll staff entitlements. These consists of education grant, education grant travel, home leave, recruitment and assignment travel, assignment grant, transportation of personal effects. 2008-2009 (US dollars) Terminal payments Non-payroll staff entitlements Total 50 207 183 (2 557 151) 47 650 032

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5.15 Staff Health Insurance The revenue of the Staff Health Insurance Fund consists of contributions received in respect of both active and retired staff (of which one-third is paid by the participants and two-thirds by the Organization) as well as interest and earnings on investments. In order to ensure the adequate funding of future claims from retired staff, a fixed percentage (currently 25%) of active staff contributions is set aside each year. The remaining 75% of contributions are required to meet current claims from active staff. 2008-2009 (US dollars) Balance as at 1 January 2008 Revenue Contributions collected Income on fixed investments Interest Total revenue Expenses Claims paid Operating expenses Total expenses Balance as at 31 December 2009 126 085 603 3 776 312 129 861 915 450 906 103 169 688 551 10 594 569 16 875 159 197 158 279 383 609 739

5.16 Administrative Waivers, Amounts Written-Off, Ex-Gratia Payments During 2008–2009, there was no administrative waivers. As part of an accounting exercise to clear old personal account balances an amount of US$ 23 871 was written off in EMRO. An ex-gratia payment of US$ 1 000 was made in Timor Leste in connection with an auto accident. 5.17 Contingent Liabilities At 31 December 2009, there were pending legal proceedings against the Organization concerning: two accidents involving WHO vehicles; a rental issue at one WHO office; five alleged contractual obligations; one issue concerning alleged fraudulent fuel trafficking; cases of alleged unlawful dismissal by 27 former staff members; and three claims from consultants (SSAs) for medical expenses. Finally, there were outstanding personnel matters before the ILO Administrative Tribunal. These are currently being contested by the Organization. The legal proceedings have not progressed sufficiently to determine with certainty the extent of any liability of the Organization. 5.18 Changes in Equity This statement is broken down into various categories, namely, non-restricted and restricted equity. Non-restricted equity refers to Member States and other funds. Restricted equity refers to the fund balances under voluntary funds, which are not available to be appropriated by the Member States. 5.19 Re-statement of 2006–2007 comparative figures The presentation of figures in 2008–2009 has made it necessary to re-state relevant 2006– 2007 figures for comparative purposes. The following factors were considered in restating the comparative figures: • The 2006–2007 financial report included results from a number of other entities as identified in Note 3.1 and 3.2. The current financial report includes only results from those entities controlled by WHO; • • • • WHO continues to manage cash for the other entities, therefore it is assumed that the cash continues to be reflected under WHO’s financial statements; The expenditure has been realigned to the new expense categories; The accounts receivable has been classified by entity; and The accounts payable has been classified by entity.

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6.

Supporting Information to the Statement of Changes in Net Assets/Equity 6.1 Member States’ Equity in Capital Assets During the financial period, capital assets are expensed as purchased, thus reducing the respective fund balances appropriated. At the end of each financial period, an entry is passed to capitalize the assets and credit Member States’ equity. At the end of 2009, Member States’ equity in capital assets was US$ 75.4 million (US$ 97 950 420 total land and buildings less long-term borrowings of US$ 22 542 079). 6.2 Member States’ Non Assessed Income This fund (formerly referred to as the Miscellaneous Income Fund) is used to consolidate all sources of income attributable to Member States other than current period assessed contributions. The fund earns income from interest, exchange gains/(losses), cancellation of prior period’s obligations, and any other miscellaneous income as defined by Financial Regulation VIII. The WHA appropriated US$ 30 million (WHA60.12) for activities in 2008–2009 and a further US$ 15 million in 2009 (WHA61.6). 2008-2009 (US dollars) Balance as at 1 January 2008 Revenue Receipt of arrears of contribution Interest Savings on unliquidated obligations Other Income Total Revenue Less: Appropriation for the Regular Budget Repayment of Working Capital and Internal Borrowing Sub-total Balance as at 31 December 2009 45 000 000 32 809 920 77 809 920 32 202 907 79 665 954 3 929 245 8 800 373 3 796 115 96 191 687 13 821 140

6.3 Tax Equalization Fund A full description of the governance of the Tax Equalization Fund is provided in the Statement of Accounting Policies. 2008-2009 (US dollars) Balance as at 1 January 2008 Staff assessment plan Less: Tax levied on staff members Balance as at 31 December 2009 13 576 682 (7 218 524) (4 926 152) 11 284 310

6.4 Working Capital Fund In accordance with Financial Regulation VII, pending the receipts of assessed contributions, implementation of the Regular Budget may be financed from the Working Capital Fund and thereafter by internal borrowing against available cash reserves of the Organization, excluding trust funds. Amounts borrowed are repaid from the collection of arrears of assessed contributions and are credited first against any internal borrowing outstanding and then against any borrowing outstanding from the Working Capital Fund. Resolution WHA58.4 maintains the level of the Working Capital Fund at US$31 million.

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6.5

Special Purpose Fund These balances in the accounts which make up the fund are as follows. 2008-2009 (US dollars) Staff development fund Common charges fund IT fund Real estate fund Security fund Revolving fund for teaching and laboratory equipment Total 18 254 121 4 050 683 3 587 459 2 818 721 162 459 (46 025) 28 827 418

6.5A Real Estate Fund This fund was established by the Twenty-third World Health Assembly in resolution WHA23.l4. The Real Estate Fund is usually funded by appropriations from the regular budget. In 2008–2009 there were no appropriations. The Real Estate Fund is also credited with receipts of rentals relating to real estate operations. The fund is used to meet the costs of the construction of buildings or extensions to existing buildings; the acquisition of land which may be required; major repairs of and alterations to the Organization’s existing office buildings and residences leased to staff by the Organization. Specific World Health Assembly authorization is required for acquisition of land and construction of buildings or building extensions. 2008-2009 (US dollars) Balance as at 1 January 2008 Revenue Appropriation from regular budget Rents collected Other Revenue Total revenue Total expenses Balance as at 31 December 2009 774 722 48 397 823 119 2 179 063 2 818 721 4 174 665

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6.6 Enterprise Fund These balances in the accounts which make up the fund are as follows. 2008-2009 (US dollars) Revolving sales fund Concessions fund Insurance policies Income derived from patent policy Garage rental Reimbursable procurement fund Total 8 145 305 2 444 365 (695 182) 4 430 1 238 635 17 812 514 28 950 068

6.7 Special Account for Servicing Costs Fund This account was established in order to support the costs of servicing activities financed from sources other than the assessed contribution budget (i.e. from voluntary contributions). In 2008–2009 the Organization began recognizing the full amount of support costs based on revenue recorded instead of expenditure which had been existing practice. This policy change has resulted in a one time “catch-up” which substantially increased the level of fees earned. The Account is credited with income from the following sources: (i) Under Resolution WHA34.17, funds received for support costs from voluntary sources, including funds-in-trust arrangements with governments and other entities, and the Voluntary Fund for Health Promotion. Amounts are calculated by applying a fixed percentage rate to total project expenditures; (ii) Administrative service agreements with other entities; and (iii) Interest earned on Voluntary Funds as per Executive Board document 122/3. 2008-2009 (US dollars) Balance as at 1 January 2008 Revenue Programme support costs Administrative service agreements with other entities WHA appropriations (WHA60.8 & 61.6) Hedging operations Interest Other income Total revenue Expenses Regional Office for Africa Regional Office for the Americas Regional Office for South-East Asia Regional Office for Europe Regional Office for the Eastern Mediterranean Regional Office for the Western Pacific Global and interregional activities Total expenses Balance as at 31 December 2009 49 433 964 4 257 914 24 515 954 19 710 883 26 703 727 14 654 600 132 478 717 271 755 759 176 994 507 337 521 411 14 664 329 19 939 792 5 195 706 29 356 107 226 525 406 903 870 41 846 396

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Schedule 1 Statement of Performance by Major Funds General Fund Special Regular Budget Operating revenue Member states assessments Assessed contributions provision Voluntary contributions Procurement activities Other operating revenue Total operating revenue Operating expenses Staff costs Direct financial cooperation (DFC) Contractual services General operating expenses Travel Medical supplies and literature Equipment, vehicles and furniture Training Medical research services Telecommunication Fellowships Total operating expenses Surplus/(deficit) from operations Transfers between funds Financial revenue and expense, Net Total surplus/(deficit) for the period Fund balance - 1 January 2008 Fund balance - 31 December 2009 701 528 144 42 048 109 64 160 132 40 286 636 30 240 305 8 023 874 28 905 822 13 348 525 3 492 397 7 745 068 13 151 692 952 930 705 (48 734 430) (19 939 792) 6 179 421 (62 494 801) 7 085 068 (55 409 733) 1 052 250 577 482 691 401 445 778 540 225 322 968 220 688 224 181 949 999 157 286 748 59 255 664 62 004 165 18 254 476 7 344 055 2 912 826 817 (125 242 096) 19 939 792 50 770 354 (54 531 950) 1 595 136 552 1 540 604 602 1 753 778 721 524 739 510 509 938 672 265 609 604 250 928 529 189 973 872 186 192 571 72 604 190 65 496 562 25 999 543 20 495 747 3 865 757 522 (173 976 526) (0) 56 949 776 (117 026 751) 1 602 221 620 1 485 194 869 7 150 210 7 466 905 21 360 513 28 827 418 8 556 119 20 393 949 28 950 068 16 875 159 (464 265) (464 265) 0 80 975 145 (101 467 992) 1 643 976 082 1 542 508 090 12 062 176 121 359 3 319 355 18 516 684 4 268 839 819 849 2 660 072 4 043 150 815 790 946 058 47 573 332 316 694 7 096 521 276 343 1 403 235 6 718 288 214 767 23 192 264 18 629 446 8 676 27 818 200 045 17 760 57 785 163 8 556 119 16 870 809 49 184 50 490 (362 296) 179 777 202 483 325 160 17 863 5 952 17 339 424 (17 339 424) 46 903 554 46 903 554 1 742 904 674 525 186 395 514 711 753 290 482 280 255 591 911 214 188 468 207 807 250 76 656 016 66 340 170 27 163 509 20 519 460 3 941 551 886 (182 443 137) 44% 13% 13% 7% 6% 5% 5% 2% 2% 1% 1% 100% 940 124 310 (51 214 139) 15 286 104 904 196 275 2 744 594 187 42 990 534 2 787 584 721 940 124 310 (51 214 139) 2 744 594 187 58 276 638 3 691 780 995 373 441 47 516 585 47 890 026 50 937 53 678 321 12 612 025 66 341 282 46 903 554 46 903 554 940 124 310 (51 214 139) 2 745 018 564 53 678 321 71 501 694 3 759 108 749 Voluntary Contributions Subtotal Purpose Fund Enterprise Fund Other Fiduciary Fund Eliminations Total Percentage

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Schedule 2 Programme Budget Utilisation – General Fund Programme Budget (PB) Strategic Objectives 1 2 3 4 5 6 7 8 9 Communicable disease HIV/AIDS, tuberculosis and malaria Chronic non communicable conditions Child, adolescent, maternal, sexual and reproductive health, and ageing Emergencies and disasters Risk factors for health Social and economic determinants of health Healthier environment Nutrition, and food safety 359 833 000 218 413 000 162 057 000 65 905 000 130 456 000 126 934 000 514 054 000 134 033 000 214 344 000 542 372 000 4 227 480 000 191 117 992 369 319 866 96 067 271 34 886 869 85 997 326 46 446 425 318 419 689 126 551 005 218 456 944 489 645 064 3 788 357 789 7 284 145 3 549 189 4 964 466 570 929 2 146 049 766 524 13 655 510 4 359 230 3 367 482 17 931 125 111 263 862 198 402 137 372 869 055 101 031 737 35 457 798 88 143 376 47 212 949 332 075 199 130 910 235 221 824 426 507 576 190 3 899 621 651 161 430 863 (154 456 055) 61 025 263 30 447 202 42 312 624 79 721 051 181 978 801 3 122 765 (7 480 426) 34 795 810 327 858 349 55% 171% 62% 54% 68% 37% 65% 98% 103% 94% 92% 894 043 000 706 932 000 158 104 000 Expense 1 236 265 213 487 698 131 87 485 995 Programme Budget Utilization Encumbrance 1/

Percentage Balance Total 1 273 221 600 501 677 470 89 219 482 PB (379 178 600) 205 254 530 68 884 518 Implementation PB 142% 71% 56%

36 956 387 13 979 339 1 733 487

10 Health systems and services 11 Medical products and technologies 12 WHO leadership, governance, and partnerships 13 Enabling and support functions Programme Budget Utilisation Non-Programme Budget Utilisation Tax Equalization fund Global Drug Facility Framework Convention on Tobacco Control Other non-Programme Budget Utilisation Total Non-Programme Budget Utilisation Total Expenditure - General Fund

13 576 683 53 152 873 10 168 373 501 805 77 399 733 3 865 757 522

13 576 683 53 152 873 10 168 373 501 805 77 399 733 3 977 021 385

1/

Encumbrance equals a firm commitment or obligation for goods and services which have not yet been delivered.

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Schedule 2.1 Programme Budget Utilisation – Assessed Contributions Programme Budget (PB) Strategic Objectives 1 2 3 4 5 6 7 8 9 Communicable disease HIV/AIDS, tuberculosis and malaria Chronic non communicable conditions Child, adolescent, maternal, sexual and reproductive health, and ageing Emergencies and disasters Risk factors for health Social and economic determinants of health Healthier environment Nutrition, and food safety 55 909 000 17 631 000 39 077 000 14 427 000 32 736 000 23 054 000 139 630 000 31 244 000 139 448 000 286 105 000 958 840 000 50 596 821 18 787 439 35 140 039 16 642 448 33 583 359 20 864 559 144 428 615 31 038 534 143 172 517 268 285 763 939 354 022 451 243 151 696 489 130 67 502 244 130 140 929 1 325 795 319 685 1 372 144 3 406 074 9 370 940 51 048 064 18 939 134 35 629 168 16 709 949 33 827 490 21 005 488 145 754 410 31 358 220 144 544 661 271 691 837 948 724 962 4 860 936 (1 308 134) 3 447 832 (2 282 949) (1 091 490) 2 048 512 (6 124 410) (114 220) (5 096 661) 14 413 163 10 115 038 91% 107% 91% 116% 103% 91% 104% 100% 104% 95% 99% 85 368 000 48 996 000 45 215 000 Expense 85 313 137 49 184 805 42 315 987 Programme Budget Utilization Encumbrance 1/

Percentage Balance Total 85 934 441 49 372 752 42 909 349 PB (566 441) (376 752) 2 305 651 Implementation PB 101% 101% 95%

621 305 187 947 593 362

10 Health systems and services 11 Medical products and technologies 12 WHO leadership, governance, and partnerships 13 Enabling and support functions Programme Budget Utilisation - Assessed Contributions Non-Programme Budget Utilisation Tax Equalization fund Total Non-Programme Budget Utilisation Total Expenditure - Assessed Contributions

13 576 683 13 576 683 952 930 705

13 576 683 13 576 683 962 301 645

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Encumbrance equals a firm commitment or obligation for goods and services which have not yet been delivered.

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Schedule 2.2 Programme Budget Utilisation – Voluntary Funds Programme Budget (PB) Strategic Objectives 1 2 3 4 5 6 7 8 9 Communicable disease HIV/AIDS, tuberculosis and malaria Chronic non communicable conditions Child, adolescent, maternal, sexual and reproductive health, and ageing Emergencies and disasters Risk factors for health Social and economic determinants of health Healthier environment Nutrition, and food safety 303 924 000 200 782 000 122 980 000 51 478 000 97 720 000 103 880 000 374 424 000 102 789 000 74 896 000 256 267 000 3 268 640 000 140 521 171 350 532 428 60 927 232 18 244 421 52 413 967 25 581 866 173 991 073 95 512 471 75 284 426 221 359 301 2 849 003 767 6 832 902 3 397 493 4 475 336 503 427 1 901 919 625 595 12 329 716 4 039 544 1 995 338 14 525 051 101 892 922 147 354 073 353 929 921 65 402 568 18 747 848 54 315 886 26 207 461 186 320 789 99 552 015 77 279 765 235 884 353 2 950 896 689 156 569 927 (153 147 921) 57 577 432 32 730 152 43 404 114 77 672 539 188 103 211 3 236 985 (2 383 765) 20 382 647 317 743 311 48% 176% 53% 36% 56% 25% 50% 97% 103% 92% 90% 808 675 000 657 936 000 112 889 000 Expense 1 150 952 076 438 513 326 45 170 008 Programme Budget Utilization Encumbrance 1/

Percentage Balance Total 1 187 287 158 452 304 718 46 310 133 PB (378 612 158) 205 631 282 66 578 867 Implementation PB 147% 69% 41%

36 335 082 13 791 392 1 140 125

10 Health systems and services 11 Medical products and technologies 12 WHO leadership, governance, and partnerships 13 Enabling and support functions Programme Budget Utilisation - Voluntary Funds Non-Programme Budget Utilisation Global Drug Facility Framework Convention on Tobacco Control Other non-Programme Budget Utilisation Total Non-Programme Budget Utilisation Total Expenditure - Voluntary Funds

53 152 873 10 168 373 501 805 63 823 050 2 912 826 817

53 152 873 10 168 373 501 805 63 823 050 3 014 719 739

1/

Encumbrance equals a firm commitment or obligation for goods and services which have not yet been delivered.

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Schedule 3 Statement of Expenses by Major Offices – General Fund Operating expenses Staff costs Direct financial cooperation Contractual services General operating costs Travel Medical supplies and literature Equipment, Vehicles and furniture Training Consulting, research services Telecommunications Fellowships Total HQ 814 388 369 2 525 369 214 423 192 57 388 272 135 073 786 112 190 062 15 592 649 3 554 785 49 519 133 6 853 003 639 177 1 412 147 798 AFRO 382 908 199 387 308 954 30 464 204 58 861 623 48 611 090 7 943 034 58 852 915 22 584 708 150 880 5 272 078 4 097 171 1 007 054 853 131 433 135 432 635 9 799 709 16 870 881 3 047 138 22 075 816 7 070 436 6 922 423 AMRO 69 514 799 EMRO 168 654 426 69 246 795 99 140 074 88 524 977 17 149 863 26 333 357 43 169 119 7 760 435 908 683 4 866 037 5 157 541 530 911 307 EURO 125 355 217 113 023 39 027 581 11 697 266 11 312 346 928 337 6 396 722 6 116 825 224 033 2 370 999 9 774 203 552 122 SEARO 97 120 182 39 341 942 74 751 671 32 421 117 9 869 768 32 799 045 47 300 446 14 392 144 3 296 464 5 606 855 6 726 053 363 625 689 WPRO 95 837 530 26 203 427 30 056 135 9 645 913 21 989 253 9 780 037 5 081 011 1 324 411 8 350 231 1 030 572 3 734 598 213 033 118 Grand Total 1 753 778 721 524 739 510 509 938 673 265 609 604 250 928 529 189 973 872 186 192 571 72 604 190 65 496 562 25 999 543 20 495 747 3 865 757 522