Audited Financial Statements for the year ended 31 December 2017

A71/29 1 Table of Contents 2017 Statement of Internal Control ............................................................................................................. 2 Certification of financial statements for the year ended 31 December 2017 ............................................... 6 Letter of transmittal .................................................................................................................................... 7 Opinion of the External Auditor ................................................................................................................... 8 Statement I. Statement of Financial Position ..............................................................................................11 Statement II. Statement of Financial Performance .....................................................................................12 Statement III. Statement of Changes in Net Assets/Equity .........................................................................13 Statement IV. Statement of Cash Flow .......................................................................................................14 Statement V. Statement of Comparison of Budget and Actual Amounts ....................................................15 1. Notes to the financial statements ......................................................................................................16 2. Significant accounting policies ............................................................................................................17 3. Note on the restatement of balances .................................................................................................26 4. Supporting information to the Statement of Financial Position ..........................................................26 5. Supporting information to the Statement of Financial Performance ..................................................48 6. Supporting information to the Statement of Changes in Net Assets/Equity .......................................53 7. Supporting information to the Statement of Comparison of Budget and Actual Amounts .................59 8. Segment reporting .............................................................................................................................61 9. Amounts written-off and ex-gratia payments ....................................................................................63 10. Related party and other senior management disclosures ...................................................................63 11. Events after the reporting date ..........................................................................................................63 12. Contingent liabilities, commitments and contingent assets................................................................64 Schedule I. Statement of Financial Performance by major funds ................................................................65 Schedule II. Expenses by major office ‒ General Fund only .........................................................................66 Schedule III. Financial overview – all funds, 2016-2017 and 2014-2015 ......................................................67 A71/29 2 2017 Statement of Internal Control Scope of responsibility As Director-General of the World Health Organization, I am accountable to the World Health Assembly for the administration of the Organization and the implementation of its programmes. Under Financial Regulations I and XII, I am accountable for maintaining a sound system of internal control, including internal audit and investigation, to ensure the effective and efficient use of the Organization's resources and the safeguarding of its assets. Pursuant to Financial Regulation I, I have delegated authority and accountability to Regional Directors, Deputy Directors-General, Assistant Directors-General, Directors, WHO Heads of Country Offices and other relevant staff. Every individual in the Organization has, to varying degrees of responsibility, a role to play in internal control. Purpose of internal control Internal control is designed to reduce and manage, rather than eliminate the risk of failure to achieve the Organization’s aims, objectives and related policies. It therefore provides reasonable but not absolute assurance of effectiveness. It is an ongoing process designed to identify the principal risks, evaluate the nature and extent of those risks, and manage them efficiently, effectively and economically. Internal control is a key role of management and an integral part of the overall process of managing operations. As such WHO management at all levels has the responsibility to: • establish an environment and culture that promotes effective internal control; • identify and assess risks that may affect the achievement of objectives, including the risk of fraud and corruption; • specify and implement policies, plans, operating standards, procedures, systems and other control activities to manage the risks associated with any exposure identified; • ensure an effective flow of information and communication so that all WHO personnel have the information they need to fulfil their responsibilities; and • monitor the effectiveness of internal control. From an operational perspective, WHO’s internal control system operates continually at all levels of the Organization through internal control processes to ensure the above objectives. This is WHO’s second statement of internal control and applies for the year ended 31 December 2017, up to the date of the approval of the Organization's 2017 financial statements. WHO’s operating environment WHO operates in more than 150 countries in some very challenging environments, and is therefore exposed to situations with a high level of inherent risk, including for the security of employees and its ability to maintain high standards of internal control. The security situation in each country in which WHO (and the United Nations in general) operates is closely monitored, and strategic decisions are taken where necessary to adapt WHO’s operations and to manage and mitigate the risk exposure of its personnel. All risks at budget centre level are captured in a formal risk register, which is subject to regular review by managers and advanced to more senior levels for attention, as required. A71/29 3 The Internal Control Framework and risk management The WHO Accountability Framework, along with the corporate risk management policy and the WHO Internal Control Framework, are critical systems and structures to ensure that the Organization fulfils its mandate and achieves its objectives. Well-grounded risk management and internal control policies, systems and processes help to better understand the risks that the Organization is exposed to, ensure that appropriate accountabilities and controls are in place to address those risks, and effectively pursue the Organization's operations. For the third year, WHO has used internal control self-assessment checklists, completed by each of the Organization’s budget centres, as a key tool to assess the status and effectiveness of its internal controls and raise awareness of the importance of internal control issues. In 2017, following a recommendation from WHO’s external auditors, self-assessment data has been reviewed and validated systematically by the respective regional directors and assistant directors-general. The WHO corporate risk management policy firmly embeds risk management in WHO’s strategic and operational planning and budgeting cycles, as well as in the accountability and internal control frameworks. The key objective is to ensure that all of the risks inherent to the Organization’s operations are fully understood, and the appropriate strategy chosen to manage them. In 2017, to increase staff awareness and build capacity in risk management, training in risk management was organized throughout the Organization. During 2017, using a newly developed on-line risk management tool, budget centres have continued to identify risks related to their objectives, evaluate those risks according to likely impact and probability, and develop response plans to deal with them. This bottom-up risk management process is complemented by a top-down phase of validation and escalation. At the global level, the biggest challenges that WHO encounters in achieving its mandate are reflected in a corporate level risk register (“WHO Principal Risks”), which is discussed and reviewed by the Global Policy Group. An annual risk report is subsequently presented to Member States through the Executive Board. As the Director-General of the Organization, I have the ultimate responsibility for assessing the risks associated with the implementation of programmes and projects and the overall operations of the Organization. I am assisted in this task by the Regional Directors, as well as the newly established WHO Risk Committee, led by the Deputy Director-General for Corporate Operations. The Committee plays a key role in ensuring that the most critical risks are identified and addressed in an efficient manner. Furthermore, I am supported by the Office of Compliance, Risk Management and Ethics, which facilitates and guides the Organization-wide risk management process. At the same time, as highlighted in the WHO corporate risk management policy, every WHO staff member has the responsibility to identify risks at his or her own level of work. Review of the effectiveness of internal controls My review of the effectiveness of WHO’s system of internal control is based on the following. (a) An annual “letter of representation”. This is reviewed and approved by all Regional Directors, Deputy Directors-General and Assistant Directors-General, and confirms the importance of ensuring that adequate internal controls are in place, along with other assurances. All issues raised in the letter of representation feed into the annual audit and financial statements. (b) The internal control self-assessment checklist. This is completed and submitted by all budget centre managers, including all WHO Representatives. The checklist is used by each budget centre manager to review all key controls and rate compliance. The results of the 2017 internal control framework self-assessment exercise concluded that Organization-wide internal controls are strong. Globally, the most room for improvement has been identified in the areas of travel planning, systematic monitoring of budget centres’ compliance with rules and regulations, and implementation of risk responses. The need for further improvement was also noted in the areas of procurement planning, A71/29 4 timeliness of recruitment processes, succession planning and asset management procedures. The results of the self-assessments are being shared with the relevant business owners to ensure that corrective action can be taken. (c) Reports issued by the Office of Internal Oversight. These reports provide objective information on compliance and control effectiveness, together with recommendations for improvement. Critical findings from these reports were transmitted separately to Member States, through the audits conducted in 2017. (d) Reports issued by the WHO External Auditor. The external audit provides independent oversight and reporting on WHO’s compliance with financial rules and regulations. The Republic of the Philippines Commission on Audit presents an update of its work and key findings to the governing bodies. A key area reviewed in 2017 was the review of implementation of the transition provisions for property, plant and equipment in respect of the International Public Sector Accounting Standards (IPSAS). For further information, see the report of the External Auditor to the Seventy-first World Health Assembly (document A71/32). (e) The work of the Independent Expert Oversight Advisory Committee. The Committee reviews all audit reports, risk reports, and financial reports, as well as other information relevant to the overall control framework. The Committee's reports are presented to the Executive Board, which identifies areas for potential improvement and advises how to address weaknesses with regard to risk management, and financial and internal control matters. Significant risk issues noted After each WHO budget centre completed the risk register in 2017, the consolidated findings were reviewed by the Office of Compliance, Risk Management and Ethics and presented to WHO senior management and the WHO Risk Committee. Having reviewed the findings, I have concluded that the most significant risks currently facing the Organization are as summarized in the table below. Risk Examples of ongoing and planned risk response actions Financing of the 2018–2019 Programme budget (primary risk related to flexible funding due to reduction in core voluntary contributions and uncertainty regarding future funding prospects) 1. Targeted resource mobilization, including with potential new donors. 2. Running a financing campaign. 3. Creating a strong, integrated external relations function. 4. Taking internal measures to reduce expenditures. 5. Effective and timely implementation of funds according to donor agreements. Financing and operational readiness of the WHO Health Emergencies Programme 1 The Independent Oversight and Advisory Committee for the Health Emergencies Programme reviewed and made recommendations on the Programme's overall progress, structure and risks. 1 2. The report by the Director-General to the Seventieth World Health Assembly on Health Emergencies – WHO’s response in severe, large- scale emergencies, provides an overview of WHO’s operations in grade 3 emergencies. 2 Polio transition, notably risks to programmes or offices most dependent on polio funds; financial liabilities associated with the fixed- term staff of those programmes; and potential delays to the timely eradication of polio The latest update on the polio transition planning was presented to the Executive Board in January 2018. 3 1 See document A70/8. 2 See document A70/9. 3 See document EB142/11. A71/29 5 Risk Examples of ongoing and planned risk response actions Funding of long-term liabilities, notably the after-service health care costs 1. Introducing and implementing cost containment and efficiency measures (through governance of staff health insurance). 2. Increasing staff and WHO contribution levels. Fraud/corruption/misconduct 1. Prevention: enhanced training in high-risk areas (such as ethics, fraud); strict enforcement of relevant policies and the Code of ethics and professional conduct; rapid resolution of audit recommendations. 2. Detection: Whistle-blower hotline; implementation of automated system controls (Global Management System) and exception reporting; enhanced monitoring. 3. Response: enhancement of investigation capacity; proactive and rapid action in case of fraud/corruption/misconduct. Business continuity risks linked to major incidents affecting WHO operations (for example, natural disaster or major terrorist attack) 1. Updating business continuity plans across the Organization. 2. Conducting simulation exercises. 3. Implementing a United Nations-wide organizational resilience policy. Security of WHO staff and premises 1. Prioritizing security in programme planning and financing decisions. 2. Developing a structured financing model that ensures security is budgeted and financed as an integral part of donor contributions. Cyber security (such as hacking of digital assets) 1. Implementing the Organization-wide cyber security road map. 2. Global implementation of information technology projects with defined security standards. 3. Developing and implementing policies related to cyber security. Each of the above risks has been discussed by the WHO Risk Committee, as well as with the relevant risk owners, to ensure that appropriate action is taken to address these risks. Statement Internal control, while operating effectively, has inherent limitations, including the possibility of circumvention, no matter how well designed, and therefore can provide only reasonable assurance. Furthermore, because of changes of conditions, the effectiveness of internal control may vary over time. I am committed to addressing any weaknesses in internal controls that may be noted during the year and brought to my attention. Based on the above, I conclude that, to the best of my knowledge and information, there are no material weaknesses that would prevent the external auditor from providing an unqualified opinion on the Organization’s financial statements, nor are there other significant matters arising that would need to be raised in the present document for the year ended 31 December 2017 and up to the date of approval of the financial statements. Dr Tedros Adhanom Ghebreyesus Director General Geneva, 23 March 2018 A71/29 6 Certification of financial statements for the year ended 31 December 2017 A71/29 7 Letter of transmittal A71/29 8 Opinion of the External Auditor A71/29 9 A71/29 10 A71/29 11 Financial statements World Health Organization Statement I. Statement of Financial Position As at 31 December 2017 (In thousands of US dollars) Description Notes 31 December 2017 31 December 2016 (restated) Current assets Cash and cash equivalents 4.1 540 652 436 890 Short-term investments 4.2 2 578 038 2 717 079 Receivables – current 4.3 1 214 410 871 808 Staff receivables 4.4 10 104 10 243 Inventories 4.5 43 641 39 554 Prepayments and deposits 4.6 20 312 9 615 Total current assets 4 407 157 4 085 189 Non-current assets Receivables – non-current 4.3 236 603 207 278 Long-term investments 4.2 118 745 95 846 Property, plant and equipment 4.7 103 545 89 213 Intangibles 4.8 3 807 4 788 Total non-current assets 462 700 397 125 TOTAL ASSETS 4 869 857 4 482 314 LIABILITIES Current liabilities Contributions received in advance 4.9 107 320 68 346 Accounts payable 4.10 65 662 41 129 Staff payable 4.11 2 339 2 005 Accrued staff benefits – current 4.12 50 058 46 648 Deferred revenue – current 4.13 431 320 379 908 Financial liabilities 4.2 72 857 24 668 Other current liabilities 4.14 101 142 63 348 Inter-entity liabilities 4.15 948 291 1 020 690 Long-term borrowings – current 4.16 611 583 Total current liabilities 1 779 600 1 647 325 Non-current liabilities Long-term borrowings – non-current 4.16 43 004 33 139 Accrued staff benefits – non-current 4.12 1 578 122 1 259 809 Deferred revenue – non-current 4.13 236 603 207 278 Other liabilities – non-current 4.17 804 Total non-current liabilities 1 858 533 1 500 226 TOTAL LIABILITIES 3 638 133 3 147 551 NET ASSETS/EQUITY General Fund 6.1 2 293 877 2 168 181 Member States – other 6.2 (1 103 757) (876 511) Fiduciary fund 6.3 41 604 43 093 TOTAL NET ASSETS/EQUITY 1 231 724 1 334 763 TOTAL LIABILITIES AND NET ASSETS/EQUITY 4 869 857 4 482 314 The section on significant accounting policies and the accompanying notes form part of the financial statements. A71/29 12 World Health Organization Statement II. Statement of Financial Performance For the year ended 31 December 2017 (In thousands of US dollars) Description Notes 31 December 2017 31 December 2016 (restated) REVENUE 5.1 Assessed contributions 456 711 470 036 Voluntary contributions 2 139 305 1 751 811 Voluntary contributions in-kind and in-service 136 832 87 749 Reimbursable procurement 9 047 25 294 Other revenue 33 405 29 186 Total revenue 2 775 300 2 364 076 EXPENSES 5.2 Staff costs 966 300 910 791 Medical supplies and materials 253 019 244 462 Contractual services 781 552 670 740 Transfers and grants 260 062 254 190 Travel 201 907 200 331 General operating expenses 167 685 131 785 Equipment, vehicles and furniture 35 843 55 762 Depreciation and amortization 14 167 2 836 Total expenses 2 680 535 2 470 897 Net Finance revenue 5.3 77 273 62 682 TOTAL SURPLUS / (DEFICIT) FOR THE YEAR 172 038 (44 139) The section on significant accounting policies and the accompanying notes form part of the financial statements. A71/29 13 World Health Organization Statement III. Statement of Changes in Net Assets/Equity For the year ended 31 December 2017 (In thousands of US dollars) Description Notes 31 December 2017 Other adjustments (refer to Note 4.12) Surplus/(deficit) 31 December 2016 (restated) General Fund 6.1 2 293 877 125 696 2 168 181 Member States – other 6.2 (1 103 757) (275 077) 47 831 (876 511) Fiduciary Fund 6.3 41 604 (1 489) 43 093 TOTAL NET ASSETS/EQUITY 1 231 724 (275 077) 172 038 1 334 763 The section on significant accounting policies and the accompanying notes form part of the financial statements. A71/29 14 World Health Organization Statement IV. Statement of Cash Flow For the year ended 31 December 2017 (In thousands of US dollars) Description 31 December 2017 31 December 2016 CASH FLOWS FROM OPERATING ACTIVITIES TOTAL SURPLUS/(DEFICIT) FOR THE YEAR 172 038 (44 139) Depreciation and amortization 14 167 2 836 Unrealized (gains)/losses on investments (27 096) (989) Unrealized (gains)/losses on revaluation of long-term borrowings 1 085 808 (Increase)/decrease in receivables – current (342 602) (5 792) (Increase)/decrease in staff receivables 139 459 (Increase)/decrease in inventories (4 087) 13 598 (Increase)/decrease in prepayments and deposits (10 697) 2 859 (Increase)/decrease in receivables – non-current (29 325) (9 806) Increase/(decrease) in contributions received in advance 38 974 11 267 Increase/(decrease) in accounts payable 24 533 (12 468) Increase/(decrease) in staff payable 334 (151) Increase/(decrease) in accrued staff benefits – current 3 410 (74) Increase/(decrease) in deferred revenue – current 51 412 40 490 Increase/(decrease) in other current liabilities 37 794 (45 399) Increase/(decrease) in inter-entity liabilities (72 399) 11 779 Increase/(decrease) in accrued staff benefits – non-current 43 236 27 995 Increase/(decrease) in deferred revenue – non-current 29 325 9 806 Increase/(decrease) in other liabilities – non-current 804 Net cash flows from operating activities (68 955) 3 079 CASH FLOWS FROM INVESTING ACTIVITIES (Increase)/decrease in short-term investments 156 315 36 702 (Increase)/decrease in long-term investments (20 081) 1 475 Increase/(decrease) in financial liabilities 55 193 (30 463) (Increase)/decrease in property, plant and equipment (27 652) (8 044) (Increase)/decrease in intangibles 134 (2 614) Net cash flows from investing activities 163 909 (2 944) CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in long-term borrowings – current 28 583 Increase/(decrease) in long-term borrowings – non-current 8 780 4 854 Net cash flows from financing activities 8 808 5 437 Net increase/(decrease) in cash and cash equivalents 103 762 5 572 Cash and cash equivalents at beginning of the year 436 890 431 318 Cash and cash equivalents at end of the year 540 652 436 890 The section on significant accounting policies and the accompanying notes form part of the financial statements. A71/29 15 W o rl d H e al th O rg an iz at io n St at e m e n t V . S ta te m e n t o f C o m p ar is o n o f B u d ge t an d A ct u al A m o u n ts Fo r th e ye a r en d ed 3 1 D ec em b er 2 0 1 7 (I n t h o u sa n d s o f U S d o lla rs ) D e sc ri p ti o n P ro gr am m e b u d ge t 2 0 1 6- 2 0 1 71 R e vi se d A p p ro ve d P ro gr am m e b u d ge t 2 0 1 6- 2 0 1 7 1 Ex p e n se s 2 01 6 Ex p e n se s 2 01 7 To ta l e xp e n se s D if fe re n ce – P ro gr am m e b u d ge t an d e xp en se s Im p le m en ta ti o n (% ) C at e go ri e s 1 C o m m u n ic ab le d is ea se s 7 6 5 0 0 0 7 8 3 5 0 0 2 9 3 9 1 0 3 5 1 3 5 4 6 4 5 2 6 4 1 3 8 2 3 6 8 2 % 2 N o n co m m u n ic ab le d is ea se s 3 3 9 9 0 0 3 7 6 0 0 0 1 2 0 8 9 9 1 2 8 0 5 7 2 4 8 9 5 6 1 2 7 0 4 4 6 6 % 3 P ro m o ti n g h ea lt h t h ro u gh t h e lif e -c o u rs e 3 8 1 7 0 0 3 8 1 7 0 0 1 5 7 3 7 9 1 4 2 5 8 8 2 9 9 9 6 7 8 1 7 3 3 7 9 % 4 H ea lt h s ys te m s 5 9 4 5 0 0 5 9 4 5 0 0 2 3 4 0 8 5 2 6 0 0 1 8 4 9 4 1 0 3 1 0 0 3 9 7 8 3 % 5 P re p ar ed n es s, s u rv ei lla n ce a n d r es p o n se 3 7 9 7 0 0 Em er ge n ci es 4 8 5 1 0 0 1 3 9 5 9 7 1 9 0 3 8 8 3 2 9 9 8 5 1 5 5 1 1 5 6 8 % 6 C o rp o ra te s er vi ce s/ en ab lin g fu n ct io n s 7 3 3 5 0 0 7 3 3 5 0 0 3 1 9 0 3 2 3 4 2 4 0 6 6 6 1 4 3 8 7 2 0 6 2 9 0 % P o lio , O u tb re ak a n d C ri si s R es p o n se a n d Sp ec ia l P ro gr am m es 1 1 9 0 6 0 0 1 1 9 0 6 0 0 9 1 7 2 8 3 9 7 5 2 5 4 1 8 9 2 5 3 7 (7 0 1 9 3 7 ) 1 5 9 % To ta l 4 3 8 4 9 0 0 4 5 4 4 9 0 0 2 1 8 2 1 8 5 2 3 9 0 0 6 5 4 5 7 2 2 5 0 (2 7 3 5 0 ) 1 0 1 % B as is d if fe re n ce s Ta x Eq u al iz at io n F u n d e xp en se s 1 6 7 4 0 1 2 2 0 0 2 8 9 4 0 Sp ec ia l a rr an ge m en ts 4 6 1 0 0 6 6 9 8 7 1 1 3 0 8 7 O th er n o n -p ro gr am m e b u d ge t ex p en se s (1 4 9 2 0 ) 5 0 4 1 7 3 5 4 9 7 To ta l b as is d if fe re n ce s 4 7 9 2 0 1 2 9 6 0 4 1 7 7 5 2 4 Ti m in g d if fe re n ce s P ro gr am m e b u d ge t ex p en se s fo r o th er p er io d s 8 0 2 7 5 1 3 8 3 8 1 6 5 8 To ta l t im in g d if fe re n ce s 8 0 2 7 5 1 3 8 3 8 1 6 5 8 To ta l e xp e n se s – G e n e ra l F u n d 2 3 1 0 3 8 0 2 5 2 1 0 5 2 4 8 3 1 4 3 2 En ti ty d if fe re n ce s Ex p en se s u n d er C o m m o n F u n d , E n te rp ri se Fu n d , S p ec ia l P u rp o se F u n d , a n d F id u ci ar y Fu n d 7 2 8 6 8 2 2 6 5 1 9 5 5 1 9 In -k in d /i n -s er vi ce e xp en se s 8 7 6 4 9 1 3 6 8 3 2 2 2 4 4 8 1 To ta l e n ti ty d if fe re n ce s 1 6 0 5 1 7 1 5 9 4 8 3 3 2 0 0 0 0 To ta l e xp e n se s as p e r th e S ta te m en t o f Fi n an ci al P e rf o rm an ce ( St at em en t II ) 2 4 7 0 8 9 7 2 6 8 0 5 3 5 5 1 5 1 4 3 2 T h e se ct io n o n s ig n if ic a n t a cc o u n ti n g p o li ci es a n d t h e a cc o m p a n yi n g n o te s fo rm p a rt o f th e fi n a n ci a l st a te m en ts . 1 Se e re so lu ti o n W H A 6 8 .1 ( 2 01 5 ) an d d ec is io n W H A 6 9 (9 ) (2 0 1 6 ). A71/29 16 A 7 1 /2 9 1. Notes to the financial statements (a) Reporting Entity The World Health Organization (WHO) is an intergovernmental organization and a specialized agency of the United Nations. In accordance with its Constitution (which came into force on 7 April 1948), WHO acts as the directing and coordinating authority on international health work. The Organization’s headquarters are located in Geneva, Switzerland. WHO also has six regional offices and more than 150 country offices. (b) Non-consolidated entities WHO provides administrative services to the following non-consolidated entities: – Trust Fund for the Joint United Nations Programme on HIV/AIDS (UNAIDS) – Unitaid – International Agency for Research on Cancer (IARC) – International Computing Centre (ICC) – Staff Health Insurance (SHI) These entities are governed by their own constitutions, bylaws and governance structures. They prepare their own financial statements and undergo separate external audit and certification. WHO has the same voting rights (except in Unitaid) as any other member or partner and transactions with these organizations are at arm’s length. Assets and liabilities are owned by the respective organization; in the event of dissolution, the division of all assets and liabilities amongst members and partner organizations shall be agreed by constitution, bylaws and governance structure on the basis of a formula to be defined at that time. (c) Basis of preparation and presentation The financial statements of the World Health Organization have been prepared in accordance with the International Public Sector Accounting Standards (IPSAS). They have been prepared using the historical cost convention. Investments and loans, however, are recorded at fair value or amortized cost. Where a specific matter is not covered by IPSAS, the appropriate International Financial Reporting Standards (IFRS) have been applied. These financial statements have been prepared under the assumption that WHO is a going concern, and will meet its mandate for the foreseeable future (IPSAS 1 -Presentation of Financial Statements). These financial statements and notes are presented in United States dollars and all values are rounded to the nearest thousand, also denoted as US$ thousands (US$ 000s). Functional currency and translation of foreign currencies Foreign currency transactions are translated into United States dollars at the prevailing United Nations Operational Rates of Exchange, which approximates to the exchange rates at the date of the transactions. The Operational Rates of Exchange are set once a month, and revised mid-month if there are significant exchange rate fluctuations relating to individual currencies. Assets and liabilities in currencies other than United States dollars are translated into United States dollars at the prevailing United Nations Operational Rates of Exchange year-end closing rate. The resulting gains or losses are accounted for in the Statement of Financial Performance. A71/29 17 The non-United States dollar denominated assets and liabilities in the investment portfolios are translated into United States dollars at the month-end closing rate used by the custodian. Materiality and the use of judgments and estimates Materiality 1 is central to WHO’s financial statements. The Organization’s process for reviewing accounting materiality provides a systematic approach to the identification, analysis, evaluation, endorsement and periodic review of decisions taken involving the materiality of information, spanning a number of accounting areas. The financial statements include amounts based on judgments, estimates and assumptions by management. Changes in estimates are reflected in the period in which they become known. Financial statements In accordance with IPSAS 1, a complete set of financial statements has been prepared as follows: • Statement of Financial Position; • Statement of Financial Performance; • Statement of Changes in Net Assets/Equity; • Statement of Cash Flow; • Statement of Comparison of Budget and Actual Amounts; and • Notes to the financial statements, comprising a description of the basis of preparation and presentation of the statements, a summary of significant accounting policies, and other relevant information. 2. Significant accounting policies 2.1 Cash and cash equivalents Cash and cash equivalents are held at nominal value and comprise cash on hand, cash at banks, collateral deposits, commercial paper, money market funds and short-term bills and notes. All investments that have a maturity of three months or less from the date of acquisition are included as cash and cash equivalents. This includes cash and cash equivalents held in the portfolios managed by external investment managers. 2.2 Investments and financial instruments Financial instruments are recognized when WHO 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. Investments can be classified as being: (i) financial assets or financial liabilities at fair value through surplus or deficit; (ii) held-to-maturity; or (iii) bank deposits and other receivables. All purchases and sales of investments are recognized on the basis of their trade date. Financial assets or financial liabilities at fair value through surplus or deficit are financial instruments that meet either of the following conditions: (i) they are held-for-trading; or (ii) they are designated by the entity upon initial recognition at fair value through surplus or deficit. Financial instruments in this category are measured at fair value and any gains or losses arising from changes in the fair value are accounted for through surplus or deficit and included within the Statement of Financial Performance in the period in which they arise. All derivative instruments, such as swaps, currency forward 1 Omissions or misstatements of items are material if they could, individually or collectively, influence the decisions or assessments of users made on the basis of the financial statements. A71/29 18 A 7 1 /2 9 contracts or options are classified as held-for-trading except for designated and effective hedging instruments as defined under IPSAS 29 (Financial Instruments: Recognition and Measurement). Financial assets in the externally managed portfolios designated upon initial recognition as at fair value through surplus or deficit are classified as current assets or non-current assets according to the time horizon of the investment objectives of each portfolio. If the time horizon is less than or equal to one year, they are classified as current assets, and if it is more than one year, they are classified as non-current assets. Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that WHO has both the intention and the ability to hold to maturity. Held-to-maturity investments are stated at amortized cost using the effective interest rate method, with interest revenue being recognized on an effective yield basis in the Statement of Financial Performance. As at 31 December 2017, no held-to maturity investments were held by the Organization. Bank deposits and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Accrued revenue related to interest, dividends and pending cash to be received from investments are included herein. Bank deposits and other receivables are stated at amortized cost calculated using the effective interest rate method, less any impairments. Interest revenue is recognized on the effective interest rate basis, with the exception of short-term receivables for which the recognition of interest would be immaterial. Other financial liabilities include payables and accruals relating to investments and are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, with the exception of short-term liabilities for which the recognition of interest would be immaterial. 2.3 Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not traded in an active market. Current receivables are for amounts due within 12 months of the reporting date, while non- current receivables are those that are due more than 12 months from the reporting date of the financial statements. Voluntary contributions receivable are recognized based on the payment terms specified in a binding agreement between WHO and the contributor. Where no payment terms are specified, the full amount receivable is recognized as currently due. Assessed contributions receivable are recognized annually, at the beginning of the year as per the assessments approved by the Health Assembly. Receivables are recorded at their estimated net realizable value and not discounted as the effect of discounting is considered immaterial. An allowance for doubtful accounts is recognized when there is a risk that the receivables may be impaired. Changes in the allowance for doubtful accounts are recognized in the Statement of Financial Performance (Statement II). 2.4 Inventories WHO recognizes medicines, vaccines, humanitarian supplies, and publications as part of its inventory. Inventories are valued taking the lower amount of (i) cost or (ii) net realizable value, using a weighted average basis. A physical stock count is conducted once every year. Packaging, freight and insurance charges are allocated based on the total value of inventory purchases and added to the inventory value. Where inventories have been acquired through a non-exchange transaction (i.e. inventories were donated as an in-kind contribution), the value of inventory is determined by reference to the donated goods’ fair value at the date of acquisition. When inventories are sold, exchanged or distributed, their carrying amount is recognized as an expense. A71/29 19 2.5 Prepayments and deposits Prepayments relate to amounts paid to suppliers for goods or services not yet received. Deposits relate to amounts paid as security for the leasing of office space. Deposits and prepayments are recorded at cost. 2.6 Property, plant and equipment Property, plant and equipment with a value greater than US$ 5000 are recognized as non-current assets in the Statement of Financial Position. Property, plant and equipment are stated at historical cost, less accumulated depreciation and any impairment losses. Property, plant and equipment acquired through a non-exchange transaction are recognized at fair value at the date of acquisition. WHO considers all assets of this type to be non-cash generating. Depreciation is calculated on a straight-line basis over the asset’s useful life except for land, which is not subject to depreciation. Property, plant and equipment are reviewed annually for impairment to ensure that the carrying amount is still considered to be recoverable. The estimated useful lives of the asset classes that make up property, plant and equipment are provided in the table below. Asset class Estimated useful life (in years) Land N/A Buildings – permanent 60–100 Buildings – mobile 5 Furniture, fixtures and fittings 5 Vehicles and transport 5 Office equipment 3 Communications equipment 3 Audio visual equipment 3 Computer equipment 3 Network equipment 3 Security equipment 3 Other equipment 3 Improvements are capitalized over the remaining life of the asset when the improvement results in an increase in the useful life of the asset or adds usable space. The residual value of the asset and the cost of the improvement will be amortized over the adjusted useful life (remaining life). Normal repair and maintenance costs are expensed in the year when the costs are incurred. 2.7 Intangibles Intangible assets that are above the pre-established threshold of US$ 100 000 are stated at historical cost less accumulated amortization and any impairment losses. Amortization is determined over the estimated useful life of the assets using the straight-line method of amortization. The estimated useful life of “software acquired externally” is between two and six years. WHO’s intangible assets are assumed to have a residual value of zero as intangible assets are not sold or transferred at the end of their useful life. Intangible assets are reviewed annually for impairment. Some intangible assets may have a shorter useful life. 2.8 Leases A lease is an agreement whereby the lessor conveys to the lessee (the Organization), in return for a payment or series of payments, the right to use an asset for an agreed period of time. Every lease is reviewed to determine A71/29 20 A 7 1 /2 9 whether it constitutes a financial or operating lease. Necessary accounting entries and disclosures are made accordingly. Where WHO is the lessor, lease revenue from operating leases is recognized as revenue on a straight-line basis over the lease term. All costs associated with the asset incurred in earning the lease revenue, including depreciation, are recognized as an expense. 2.9 Contributions received in advance Contributions received in advance arise from legally binding agreements between WHO and its contributors ‒ including governments, international organizations and private and public institutions ‒ whereby contributions are received in advance of the amounts concerned falling due to the Organization. 2.10 Accounts payable and accrued liabilities Accounts payable are financial liabilities for goods or services that have been received by WHO and invoiced but not yet paid for. Accrued liabilities are financial liabilities for goods or services that have been received by WHO and which have neither been paid for nor invoiced to WHO. Accounts payable and accrued liabilities are recognized at cost, as the effect of discounting is considered immaterial. 2.11 Employee benefits WHO recognizes the following categories of employee benefits: • short-term employee benefits that fall due wholly within 12 months following the end of the accounting period in which employees render the related service; • post-employment benefits; • other long-term employee benefits; • termination benefits. WHO is a member organization participating in the United Nations Joint Staff Pension Fund (the Fund), which was established by the United Nations General Assembly to provide retirement, death, disability and related benefits to employees. The Fund is a funded, multi-employer defined benefit plan. As specified by Article 3(b) of the Regulations of the Fund, membership in the Fund shall be open to the specialized agencies and to any other international, intergovernmental organization that participates in the common system of salaries, allowances and other conditions of service of the United Nations and the specialized agencies. The plan exposes participating organizations to actuarial risks associated with participation of current and former employees of other organizations in the Pension Fund, with the result that there is no consistent and reliable basis for allocating the obligation, plan assets, and costs to individual organizations participating in the plan. WHO and the UNJSPF, in line with the other participating organizations in the Fund are not in a position to identify WHO’s proportionate share of the defined benefit obligation, the plan assets and the costs associated with the plan with sufficient reliability for accounting purposes. WHO has therefore treated it as a defined contribution plan in line with the requirements of IPSAS 39 (Employee Benefits). WHO’s contributions to the Fund during the financial period are recognized as expenses in the Statement of Financial Performance (Statement II). A71/29 21 2.12 Inter-entity liabilities Inter-entity liabilities are cash balance held by WHO on behalf of hosted entities (refer to Note 4.2 and 4.15). 2.13 Provisions and contingent liabilities Provisions are recognized for future liabilities and charges where WHO has a present legal or constructive obligation as a result of past events and it is probable that the Organization will be required to settle the obligation. Other commitments, which do not meet the recognition criteria for liabilities, are disclosed in the notes to the financial statements as contingent liabilities when their existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events that are not wholly within the control of WHO. 2.14 Contingent assets Contingent assets will be disclosed when an event gives rise to a probable inflow of economic benefits or service potential and there is sufficient information to assess the probability of the inflow of economic benefits or service potential. 2.15 Deferred revenue Deferred revenue derives from legally binding agreements between WHO and its contributors, including governments, international organizations and private and public institutions. Deferred revenue is recognized when: • a contractual agreement is confirmed in writing by both the Organization and the contributor; and • the funds are earmarked and due in a future period. Deferred revenue also includes advances from exchange transactions. Deferred revenue is presented as non-current assets if the revenue is due one year or more after the reporting date. 2.16 Revenue Revenue comprises gross inflows of economic benefits or service potential received and receivable by WHO during the year, and represents an increase in net assets/equity. The Organization recognizes revenue following the established criteria of IPSAS 9 (Revenue from Exchange Transactions) and IPSAS 23 (Revenue from Non-Exchange Transactions). The main sources of revenue for WHO include but are not limited to: Non-exchange revenue – Assessed contributions. Revenue from contributions from Member States and Associate Members is recorded annually at the beginning of the year as per the assessments approved by the Health Assembly. – Voluntary contributions. Revenue from voluntary contributions is recorded when a binding agreement is signed by WHO and the contributor. Where there are “subject to” clauses in an agreement, WHO does not control the resource and does not record the revenue and amount receivable until the cash is received. Where there are no payment terms specified by the contributor or payment terms are in the current accounting year, revenue is recognized in the current period. Where payment terms specify A71/29 22 A 7 1 /2 9 payment after the year end, the amount is reported as deferred revenue. Where start date of the contract is after 31 December, revenue is recognized in the future accounting year. – Contributions in-kind and in-service. Contributions in-kind and in-service are recorded at an amount equal to their fair market value as determined at the time of acquisition, based on an agreement between WHO and the contributor and upon confirmation from the receiving budget centre of the receipt of the goods or services. An entry corresponding to the expense is recorded in the same period that the contributions in-kind and in-service are recorded as revenue. Exchange revenue – Reimbursable procurement, concessions, revolving sales and other exchange revenue. Revenue from reimbursable procurement on behalf of Member States or from the sale of goods or services is recorded on an accrual basis at the fair value of the consideration received or receivable when it is probable that the future economic benefits and/or service potential will flow to WHO and those benefits can be measured reliably. The corresponding expense is recognized in the same year as the revenue. 2.17 Expenses Expenses are defined as decreases in economic benefits or service potential during the reporting period in the form of outflows, consumption of assets, or incurrences of liabilities that result in decreases in net assets/equity. WHO recognizes expenses at the point where goods have been received or services rendered (delivery principle) and not when cash or its equivalent is paid. 2.18 Fund accounting Fund accounting is a method of segregating resources into categories (i.e. funds) to identify both the source and the use of the funds. Establishing such funds helps to ensure better reporting of revenue and expenses. The General Fund, the Special Purpose Fund, the Enterprise Fund and the Fiduciary Fund serve to ensure the proper segregation of revenue and expenses. 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 within the General Fund are also eliminated. General Fund The accounts contained under this fund support the implementation of the programme budget. The General Fund contains the following: – Assessed Contributions Fund. This fund consolidates revenues and expenses arising from assessed contributions from Member States and includes interest and other miscellaneous income. – Tax Equalization Fund. In accordance with resolution WHA21.10 (1968), in which the Health Assembly decided to establish the Tax Equalization Fund, the assessed contributions of all Member States are reduced by the revenue generated by the staff assessment plan. In determining the reduction of assessed contributions to be applied to the Member States concerned, the Tax Equalization Fund is credited with the revenue from the staff assessment plan, the credits being recorded in the name of individual Member States, in proportion to their assessments for the biennium. For those Member States 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, as per resolution WHA21.10. A71/29 23 – Working Capital Fund. The Fund was established to implement the programme budget pending receipt of assessed contributions in arrears. In accordance with Financial Regulation VII, implementation of that part of the budget financed from assessed contributions may be financed from the Working Capital Fund and thereafter by internal borrowing against available cash reserves of WHO, excluding trust funds. Amounts borrowed are repaid from the collection of arrears of assessed contributions and are credited first against any internal borrowing and then against any borrowing from the Working Capital Fund. – Voluntary funds (core, specified and partnerships). This fund consolidates revenue and expenses arising from the following funds: ‒ Voluntary Contributions Core Fund ‒ Voluntary Contributions Specified Fund ‒ Special Programme for Research and Training in Tropical Diseases (TDR Trust Fund) ‒ Special Programme of Research, Development and Research Training in Human Reproduction (HRP Trust Fund) ‒ Special Programmes and Collaborative Arrangements Fund, Special Account for Servicing Costs Fund ‒ Outbreak and Crisis Response Fund and Contingency Fund for Emergencies. ‒ Pre-qualification Fund - This fund was established to record and report fees charged to manufacturers for pre-qualification services to assess the quality, safety and efficacy of medical produces (vaccines, medicines or diagnostics). Member States – other The following accounts are contained in Member States – other: – Common Fund. This fund reflects the movement in the asset and liability accounts of the Organization resulting from changes in items such as inventory, fixed assets adjustment, construction-in-progress adjustment, depreciation, investment gain and losses and exchange gains and losses. – Enterprise Fund. This fund contains accounts that generate self-sustaining revenue. The revenue and expenses under this fund are not included in the reporting of the programme budget. The Enterprise Fund contains the following: ‒ Accident and Illness Insurance Fund. This fund was established as a self-insurance mechanism to provide coverage for staff members in case of accident and illness. ‒ Concessions Fund. This fund was established to manage activities for concessionaries. It is financed from amounts paid by the concessionaires for space, equipment utilities and use of facilities made available by the Organization. ‒ Garage Rental Fund. This fund was established mainly to record and report activities for the maintenance of a garage facility in Geneva. It is financed by way of a charge towards usage of the garage facility by applicable staff members. ‒ Insurance Policies Fund. This fund was established to manage activities for commercial insurance policies. It is financed from benefits received from the applicable commercial insurance policies. ‒ In-kind Contributions Fund.1 This fund was established to record and report in-kind contributions. 1 Transactions under the In-kind Contributions Fund are from non-exchange transactions. Total revenue equals total expenses; hence there is no fund balance at year-end (refer to note 2.16). A71/29 24 A 7 1 /2 9 ‒ Revolving Sales Fund.1 This fund was established to record and report activities for publications. ‒ Reimbursable Procurement Fund.2 This fund was established to record and report procurement activities undertaken on behalf of Member States or other UN Organizations. – Special Purpose Fund. The accounts contained under this fund represent transfers from the General Fund or appropriations by the Health Assembly. The revenue and expenses under this fund are not included in the reporting of the programme budget. The Special Purpose Fund contains the following: ‒ Building Loan Fund. This fund was established to record and report on a loan from the Swiss Government in support of expenses towards the construction of new building in Geneva. It is funded by the Swiss Government loan. ‒ Internal Service Cost Recovery Fund. This fund was established to record and report services provided between departments within the Organization. ‒ Infrastructure Fund. This fund was established by the Seventieth World Health Assembly through decision WHA70(16) to consolidate reporting for Real Estate Fund and Information Technology Fund. ‒ Information Technology Fund. This fund was established to meet current and future administrative requirements of the Organization. It may be financed by way of appropriation from the regular budget and from voluntary contributions including the Special Account for Servicing Costs. ‒ Real Estate Fund. This fund was established by the Twenty-third World Health Assembly through resolution WHA23.14 (1970). It is funded mainly by appropriation from the regular budget. The Real Estate Fund is also credited with receipts from rentals relating to real estate operations (other than garage rentals and income from the operation of concessions at headquarters), by way of a charge on salary cost of staff members and interest earned. The fund was established to meet the costs of the construction of new buildings or extensions to existing buildings, the acquisition of land that may be required and major maintenance and repairs of real estate assets owned by the Organization. Specific Health Assembly authorization is required for acquisition of land and construction of buildings or building extensions. ‒ Mobility Fund. This fund was established to provide financing towards staff mobility entitlements such as assignment grant and reassignment grant. It is financed by way of a charge on salary cost of staff members. ‒ Non-Payroll Staff Entitlements Fund. This fund was established to provide financing towards staff entitlements such as home leave, education grant etc. It is financed by way of a charge on salary cost of staff members. ‒ Post Occupancy Charge Fund. This fund was established to finance corporate and administrative expenses of the Organization. It is financed by way of a charge on salary cost of staff members. ‒ Polio Staff Fund. This fund was established to manage staff liabilities due to the closure of the polio programme. ‒ Staff Health Insurance Fund. This fund was established to record and report after service health liability of the Organization. It is financed by way of a charge on salary cost of staff members. 1 In accordance with Health Assembly resolution WHA22.8 (1969) and resolution WHA55.9 (2002), the Revolving Sales Fund is credited with proceeds from the sale of publications, international certificates of vaccination, films, videos, DVDs and other information material. The related costs of production and printing are charged to the Fund. 2 Transactions under the Reimbursable Procurement Fund are from exchange transactions. Total revenue equals total expenses; hence there is no fund balance at year-end (refer to note 2.16). A71/29 25 ‒ Security Fund. This fund was established to record and report security expenses. It may be financed by way of appropriation from the regular budget and from voluntary contributions including the Special Account for Servicing Costs. ‒ Special Fund for Compensation. This fund was established by the Director-General for the payment of periodic benefits awarded to staff members under WHO compensation rules for service-incurred accidents and illnesses. It may be financed by funds allocated to cover the cost of employing the staff member, benefits received from the commercial accident and illness insurance policies established for this purpose, and by way of any interest earned. ‒ Stockpiles Replenishment Fund. This fund was established to support emergency procurement needs, mainly for the Eastern Mediterranean Region. ‒ Terminal Payments Fund. This fund was established to finance the terminal emoluments of staff members, including repatriation grant, accrued annual leave, repatriation travel and removal on repatriation. It is financed by way of a charge on salary cost of staff members and any interest earned. Fiduciary Fund This fund accounts for assets that are held by WHO in a trustee or agent capacity for others and that cannot be used to support the Organization’s own programmes. The Fund includes the assets of the partnerships that are administered by the Organization and whose budgets are not approved by the Health Assembly. The Fund is not available for operations and did not contribute to the Programme budget 2016–2017, and at 31 December 2017 contained the following: ‒ WHO Framework Convention on Tobacco Control (FCTC) ‒ Partnership for Maternal, Newborn and Child Health Fund ‒ Alliance for Health Policy and System Research Fund ‒ Global Health Workforce Alliance Fund ‒ European Observatory on Health Systems and Policies ‒ Expanded Special Project for Elimination of Neglected Tropical Diseases (ESPEN) Fund 2.19 Segment reporting As required under IPSAS, WHO reports on segments based on its regional structure. Revenue, expenses, assets and liabilities are reported for each major office (region). The use of major offices is in line with the decision making practices of the Member States and the Secretariat, with respect to the allocation of resources. WHO’s programme budget is presented by major office, which supports using major offices as the segments. Furthermore, the accountability for results and management of assets and liabilities lies with the heads of each regional office. 2.20 Statement of Cash Flow The Statement of Cash Flow (Statement IV) is prepared using the indirect method. 2.21 Budget comparison WHO’s budget and accounting basis differ. Budgets within the Organization are approved on a modified cash basis rather than the full accrual basis of IPSAS. In addition, budgets are prepared on a biennial basis. A71/29 26 A 7 1 /2 9 Although WHO’s financial statement covers all the activities of the Organization, budgets are approved only for the General Fund. There are no approved budgets for other funds. All funds are administered in accordance with the Financial Regulations and Financial Rules. As required under IPSAS 24 (Presentation of Budget Information in Financial Statements), the actual amounts presented on a comparable basis to the budget shall, where the financial statements and the budget are not prepared on a comparable basis, be reconciled to the actual amounts presented in the financial statements, identifying separately any basis, timing, presentation and entity differences. There may also be differences in formats and classification schemes adopted for the presentation of financial statements and the budget. The Health Assembly approved the Programme budget 2016‒2017 through resolution WHA68.1 (2015) and amended it through decision WHA69(9) (2016). The Statement of Comparison of Budget and Actual Amounts (Statement V) compares the final budget to actual amounts calculated on the same basis as the corresponding budgetary amounts. As the basis used to prepare the budget and financial statements differ, Note 7 reconciles the actual amounts presented in Statement V to the actual amounts presented in the Statement of Cash Flow (Statement IV). 3. Note on the restatement of balances (a) The transition provision as allowed under IPSAS 17 (Property, Plant and Equipment) expired at the end of 2016. On 1 January 2017, the Organization recognized all the capital assets that were not fully depreciated and a piece of land in Brazzaville where ownership was cleared. As a result, the opening balance for Property, Plant and Equipment increased from US$ 71 million to US$ 89.2 million and total net assets/equity correspondingly increased from US$ 1316.5 million to US$ 1334.7 million (an increase of US$ 18.2 million). Capitalized assets, by category are summarized below: Asset category (US$ thousands) Vehicles and transport equipment 14 040 Computer and communications equipment 3 181 Machinery and specialized equipment 861 Furniture 135 Land 32 Total property, plant and equipment 18 249 (b) To better present expenses by their nature, mapping for ”fellowship expenses” of US$ 5 million for 2016 was reclassified from Contractual services to Transfers and grants. 4. Supporting information to the Statement of Financial Position 4.1 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at banks, investments in money market funds, collateral deposits, bank deposits, and short-term highly liquid investments with original maturity dates of three months or less from the date of acquisition. Cash and cash equivalents are held for the purpose of meeting the short-term cash requirements of the Organization, rather than for longer-term investment purposes. They are held on behalf of the Organization, including the General Fund, the Special Purpose Fund, the Enterprise Fund, the Fiduciary Fund and non-WHO A71/29 27 entities administered by the Organization. The figures include cash and cash equivalents held in the portfolios managed by external investment managers. The table below shows cash and cash equivalents by major office. Description 31 December 2017 31 December 2016 US$ thousands Major office Headquarters 148 085 115 149 Regional Office for Africa 14 965 26 108 Regional Office for the Eastern Mediterranean 8 943 12 015 Regional Office for Europe 1 563 1 489 Regional Office for South-East Asia 6 884 3 163 Regional Office for the Western Pacific 3 441 3 893 Cash at banks, investment accounts, in transit and on hand 183 881 161 817 Headquarters 356 771 275 073 Cash and cash equivalents held by investment portfolios 356 771 275 073 Total cash and cash equivalents 540 652 436 890 4.2 Investments and financial instruments Details of the accounting policies for investments and financial instruments are described in Note 2.2. WHO’s principal investment objectives in descending order of priority are: ‒ the preservation of capital; ‒ the maintenance of sufficient liquidity to meet the payment of liabilities on time; and ‒ the optimization of investment returns. The Organization’s investment policy reflects the nature of its funds, which may be held either short-term pending implementation of programmes, or for a longer term to meet its long-term liabilities. WHO’s investments include funds managed for other entities (refer to Note 4.15). An analysis of the Organization’s investments is provided in the following table. A71/29 28 In ve st m e n ts a n d f in an ci al in st ru m e n ts ( in U S$ t h o u sa n d s) D e sc ri p ti o n In te rn al ly m an ag e d f u n d s Ex te rn al ly m an ag ed f u n d s Fo re ig n Ex ch an ge H e d gi n g co n tr ac ts G ra n d t o ta l as a t 3 1 D e ce m b e r 2 0 1 7 G ra n d t o ta l as a t 3 1 D e ce m b e r 2 0 1 6 Ti m e D e p o si ts an d c as h Lo n g te rm p o rt fo lio To ta l Sh o rt t er m p o rt fo lio A Sh o rt t er m p o rt fo lio B Sh o rt t er m p o rt fo lio C Sh o rt t er m p o rt fo lio D To ta l In ve st m e n ts u n d er c u rr e n t A ss e ts C as h a n d c as h e q u iv al e n t h e ld b y in ve st m e n t p o rt fo lio 2 0 0 2 5 6 9 7 2 0 0 3 5 3 1 0 6 0 3 8 8 0 8 1 2 7 5 0 4 1 4 7 9 5 1 5 6 4 1 8 3 5 6 7 7 1 2 7 5 0 7 3 Sh o rt -t er m in ve st m en ts Fi n an ci al a ss et s at f ai r va lu e th ro u gh s u rp lu s o r d ef ic it – h el d f o r tr ad in g 3 0 2 1 8 7 3 4 9 2 7 4 8 6 7 9 7 8 4 7 2 0 Fi n an ci al a ss et s at f ai r va lu e th ro u gh s u rp lu s o r d ef ic it – u p o n in it ia l r ec o gn it io n 3 5 0 7 3 2 3 0 6 9 4 9 5 3 3 5 9 5 5 3 2 7 4 8 1 7 2 4 0 2 4 1 7 2 4 0 2 4 1 7 7 7 8 0 8 B an k d ep o si ts a n d o th er r e ce iv ab le s 8 2 9 8 0 9 2 9 8 2 9 8 3 8 3 4 2 5 8 6 1 8 2 1 7 3 1 9 8 2 1 6 1 9 8 8 4 6 0 3 6 9 3 4 5 5 1 To ta l s h o rt -t e rm in ve st m e n ts 8 2 9 8 0 9 2 9 8 2 9 8 3 8 3 5 4 4 5 9 3 1 5 7 5 4 5 3 5 7 6 8 5 3 4 7 3 3 1 7 4 0 7 1 4 7 4 8 6 2 5 7 8 0 3 8 2 7 1 7 0 7 9 To ta l i n ve st m e n ts u n d er c u rr e n t as se ts 1 0 3 0 0 6 5 1 2 6 1 0 3 0 1 9 1 4 6 0 4 9 7 3 2 3 8 3 5 5 6 3 2 7 2 5 4 9 5 2 8 1 8 9 7 1 3 2 7 4 8 6 2 9 3 4 8 0 9 2 9 9 2 1 5 2 In ve st m e n ts u n d er n o n -c u rr e n t as se ts Lo n g- te rm In ve st m en ts Fi n an ci al a ss et s at f ai r va lu e th ro u gh s u rp lu s o r d ef ic it – u p o n in it ia l r ec o gn it io n 1 1 8 7 4 5 1 1 8 7 4 5 1 1 8 7 4 5 9 5 8 4 6 To ta l l o n g- te rm in ve st m e n ts u n d e r n o n - cu rr en t as se ts 1 1 8 7 4 5 1 1 8 7 4 5 1 1 8 7 4 5 9 5 8 4 6 Fi n an ci al li ab ili ti e s u n d e r cu rr en t lia b ili ti e s Fi n an ci al li ab ili ti es a t fa ir v al u e th ro u gh su rp lu s o r d ef ic it h e ld f o r tr ad in g (1 4 7 2 ) (8 2 8 ) (2 3 0 0 ) (4 1 6 3 ) (6 4 6 3 ) (1 3 4 6 7 ) P ay ab le s an d a cc ru al s (5 0 9 0 8 ) (1 5 4 8 6 ) (6 6 3 9 4 ) (6 6 3 9 4 ) (1 1 2 0 1 ) To ta l f in an ci al li ab ili ti e s u n d e r cu rr en t lia b ili ti e s (5 2 3 8 0 ) (1 5 4 8 6 ) (8 2 8 ) (6 8 6 9 4 ) (4 1 6 3 ) (7 2 8 5 7 ) (2 4 6 6 8 ) To ta l i n ve st m e n ts – n e t 1 0 3 0 0 6 5 1 1 8 8 7 1 1 1 4 8 9 3 6 4 0 8 1 1 7 3 0 8 3 4 9 5 6 3 2 7 2 5 4 8 7 0 0 1 8 2 8 4 3 8 3 3 2 3 2 9 8 0 6 9 7 3 0 6 3 3 3 0 A71/29 29 A 7 1 /2 9 Short-term investments Short-term investments relating to funds held pending the implementation of programmes are invested in cash and high-quality short-term government, agency, corporate bonds and time deposits as defined in the approved investment policy. Investments included within “financial assets at fair value through surplus or deficit” include fixed-income securities and derivative instruments held to cover projected liabilities and any unexpected cash requirements. Financial assets in the externally managed portfolios designated upon initial recognition as at fair value through surplus or deficit are classified as short-term investments where the investment time horizon objective of these portfolios is less than or equal to one year. For short-term tactical investment reasons, the external managers of these portfolios may from time to time decide to lengthen temporarily the average duration of these portfolios to slightly longer than one year. This will not change the short-term classification of these financial assets unless the investment time horizon objective of the portfolio and the duration of its benchmark have been changed to more than one year. At the end of 2017, there were no investments in the held-to-maturity portfolio. Other receivables include accrued revenue on investments and receivables from investments that were sold before 31 December 2017 and settled after that date. Description 31 December 2017 31 December 2016 US$ thousands Financial assets at fair value through surplus or deficit – held-for-trading 7 978 4 720 Financial assets at fair value through surplus or deficit – upon initial recognition 1 724 024 1 777 808 Bank deposits and other receivables 846 036 934 551 Total short-term investments 2 578 038 2 717 079 Long-term investments Long-term investments for the Terminal Payments Fund are placed in line with the approved investment policy and are invested in high-quality, medium-dated and long-dated, government, agency and corporate bonds. The financial assets at fair value through surplus or deficit upon initial recognition in the Terminal Payments Fund investment portfolio are classified as long-term investments in accordance with the investment time horizon objective of the portfolio and the duration of its benchmark, which are both greater than one year. Description 31 December 2017 31 December 2016 US$ thousands Financial assets at fair value through surplus or deficit – upon initial recognition 118 745 95 846 Total long-term investments 118 745 95 846 Financial liabilities Financial liabilities disclosed under “financial liabilities at fair value through surplus or deficit ‒ held-for-trading” include derivative transactions such as foreign exchange forward contracts and interest rate swaps. Financial liabilities disclosed under “payables and accruals” relate to other financial liabilities from investments, including assets purchased before 31 December 2017 and settled after that date. Description 31 December 2017 31 December 2016 US$ thousands Financial liabilities at fair value through surplus or deficit – held-for-trading 6 463 13 467 Payables and accruals 66 394 11 201 Total financial liabilities 72 857 24 668 A71/29 30 A 7 1 /2 9 The fair value hierarchy The fair value hierarchy represents the categorization of market pricing to indicate the relative ease with which the value of investments held by WHO can be realized. The majority of the financial instruments held by WHO have quoted prices in active markets which are classified as Level 1. Derivative instruments that are “over-the-counter” are classified as Level 2 because their fair value is observable ‒ either directly as a price, or indirectly after being derived from prices. The instruments shown under the Level 2 fair value measurement category consist of foreign currency hedging forward contracts and derivative contracts in the externally managed portfolios. Description Level 1 Level 2 Total US$ thousands Cash and cash equivalents 119 467 119 467 Short-term investments Financial assets at fair value through surplus or deficit – held-for-trading 7 727 7 727 Financial assets at fair value through surplus or deficit – upon initial recognition 1 723 704 1 723 704 Total short-term investments 1 723 704 7 727 1 731 431 Long-term investments Financial assets at fair value through surplus or deficit – upon initial recognition 118 745 118 745 Financial liabilities Financial liabilities at fair value through surplus or deficit – held-for-trading 0 (6 463) (6 463) Total 1 961 916 1 264 1 963 180 Risk management WHO is exposed to financial risks including credit risk, interest rate risk, foreign exchange risk and investment price risk. The Organization uses derivative financial instruments to hedge some of its risk exposures. In accordance with WHO’s Financial Regulations, funds not required for immediate use may be invested. All investments are carried out within the framework of the investment policy approved by the Director-General. Some portfolios are managed by external managers appointed by the Organization to manage funds in accordance with a defined mandate. The Advisory Investment Committee reviews regularly the investment policies, the investment performance and the investment risk for each investment portfolio. The Committee is composed of external investment specialists who can make investment recommendations to the Director- General. Nature of financial instruments Investments are categorized as follows. Investments with short-term maturities. These investments are invested in cash and high-quality short-dated government, agency, and corporate bonds as defined in the approved investment policy. Investments with long-term maturities. These investments comprise funds managed for the Terminal Payments Fund as defined in the approved investment policy. They are invested in high-quality medium-dated and long-dated, government, agency, corporate bonds and an externally managed global bond index fund. Credit risk WHO’s investments are widely diversified in order to limit its credit risk exposure to any individual investment counterparty. Investments are placed with a wide range of counterparties using minimum credit quality limits A71/29 31 and maximum exposure limits by counterparty established in investment mandates. These limits are applied both to the portfolios managed internally by the Organization’s Treasury Unit, and to the portfolios managed by external investment managers. The Treasury Unit monitors the total exposure to counterparties across all internally and externally managed portfolios. The credit risk and liquidity risk for cash and cash equivalents are minimized by investing only in major financial institutions that have received strong investment grade credit ratings from primary credit rating agencies. The Treasury Unit regularly reviews the credit ratings of the approved financial counterparties and takes prompt action whenever a credit rating is downgraded. The investments with long-term credit ratings are summarized as follows. Minimum rating category Total asset value US$ thousands AAA 309 622 AA+ 505 540 AA 114 945 AA- 254 065 A+ 111 538 A 98 447 A- 75 879 Not rated 434 510 Total 1 904 546 Where the investments and securities are not rated for credit worthiness by the major credit ratings agencies (for example, fixed income securities issued by sovereigns, collateralized mortgage obligations issued by sovereign backed agencies and investment funds), the Treasury Unit ensures that the deposits and securities and the constituent securities in the investment funds are issued by issuers whose credit ratings are equal to or better than the single A minimum credit rating requirement for WHO investments as set out in the investment guidelines for the external portfolio managers which are agreed with the Advisory Investment Committee, and the investment grade minimum credit rating requirement for investments for the Terminal Payments fund, which is also agreed with the Advisory Investment Committee. Interest rate risk WHO is exposed to interest rate risk through its short-term and long-term fixed-income investments. The investment duration is a measure of sensitivity to changes in market interest rates, and the effective average duration of the Organization’s investments as at 31 December 2017 was 0.5 years for the short-term investments and 6.9 years for the long-term investments. The duration of the long-term investments was lengthened by purchasing longer term fixed income products to better match the duration of the liabilities which are funded by these investments. Fixed-income derivative instruments may be used by external investment managers to manage interest rate risk under strict investment guidelines. Interest rate instruments of this type are used for portfolio duration management and for strategic interest rate positioning. A71/29 32 A 7 1 /2 9 Foreign exchange currency risk WHO receives contributions and makes payments in currencies other than the United States dollar. The Organization is thus exposed to foreign exchange currency risk arising from fluctuations in currency exchange rates. Exchange rate gains and losses on the purchase and sale of currencies, revaluation of cash book balances, and all other exchange differences are adjusted against the funds and accounts eligible to receive interest under the interest apportionment programme. The translation of transactions expressed in other currencies into the United States dollar is performed at the United Nations Operational Rates of Exchange prevailing at the date of transaction. Assets and liabilities that are denominated in foreign currencies are translated at the United Nations Operational Rates of Exchange year-end closing rate. Forward foreign exchange contracts are transacted to hedge foreign currency exposures and to manage short-term cash flows. Realized and unrealized gains and losses resulting from the settlement and revaluation of foreign currency transactions are recognized in the Statement of Financial Performance (Statement II). With effect from 2014, 50% of assessed contributions are calculated in Swiss francs to reduce the currency risk of headquarters expenses in that currency. 1 Hedging foreign exchange exposures on future payroll costs: The United States dollar value of non-dollar expenses in 2018 has been protected from the impact of movements in foreign exchange rates through the transaction of forward currency contracts during 2017. As at 31 December 2017 these forward foreign currency exchange hedging contracts by currency are summarized as follows. Currency forward bought (in thousands) Net amount sold (US$ thousands) Net unrealized gain/(loss) (US$ thousands) Swiss franc 122 040 127 785 (853) Euro 98 400 114 268 5306 Indian rupee 908 400 13 396 586 Malaysian ringgit 36 000 8 309 525 Philippine peso 748 800 14 506 393 Total 278 264 5 957 There was a net unrealized gain on these contracts of US$ 6 million as at 31 December 2017 (unrealized loss of US$ 10.2 million as at 31 December 2016). Realized gains or losses on these contracts will be recorded on maturity of the contracts and applied during 2018. Hedging foreign exchange exposures on receivables and payables: Currency exchange risk arises as a result of 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. A monthly programme of currency hedging is in place to protect against this foreign currency risk. On a monthly basis, the exposures in respect of receivables and accounts payable 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 setting of the monthly United Nations Operational Rates of Exchange. Through this process the exchange gains or losses realized on the forward foreign currency contracts match the corresponding unrealized exchange losses and gains on the movements in net receivables and accounts payable. As at 31 December 2017, the total forward foreign currency exchange hedging contracts by currency were as follows. 1 See resolution WHA66.16 (2013). A71/29 33 Currency forward sold (in thousands) Currency forward bought (US$ thousands) Net unrealized gain/(loss) (US$ thousands) Australian dollar 1 500 1 169 (2) Canadian dollar 24 700 19 617 (82) Swiss franc 700 717 (4) Euro 91 850 109 927 (534) Pound sterling 186 600 251 154 (1 297) Swedish Kroner 199 000 24 192 (141) Total 406 776 (2 060) There was a net unrealized loss on these contracts of US$ 2.1 million as at 31 December 2017 (unrealized net loss of US$ 2.5 million as at 31 December 2016). Realized gains or losses on these contracts will be recorded on the maturity of the contracts and applied during 2018. Forward foreign exchange contracts to manage operational cash flows: Forward foreign exchange contracts are also used to manage short-term cash flows of foreign currency balances to minimize foreign currency transaction risk. At 31 December 2017 a total net amount of 65.7 million Swiss francs was forward sold against the United States dollar. The maturity dates of these forward foreign exchange contracts were in January 2018. Net unrealized losses on these contracts amounted to US$ 0.6 million as at 31 December 2017 (unrealized net gains of US$ 0.3 million as at 31 December 2016). Sensitivity of forward foreign exchange contracts to movements in the relative value of the United States dollar: A 1% appreciation in the relative value of the United States dollar against the forward foreign exchange hedging contracts mentioned above would result in an increase in the net unrealized gain of US$ 1.9 million. A 1% depreciation in the relative value of the United States dollar would result in an increase in the net unrealized loss of US$ 1.9 million. Forward and spot foreign exchange contracts and other derivative financial instruments are held within the externally managed investment portfolios: In accordance with the investment guidelines set up for each externally managed portfolio, the external investment managers use forward and spot foreign exchange contracts, futures contracts and interest rate swap contracts to manage the currency and interest rate risk of groups of securities within each portfolio. The net values of these instruments as at 31 December 2017, as evaluated by the Organization’s investment custodian, are recorded by portfolio under “financial assets/liabilities at fair value through surplus or deficit – held-for-trading”. The outstanding forward and spot foreign exchange contracts are summarized hereafter. Net sold amount (in thousands) US dollar equivalent (in thousands) Australian dollar 8 022 6 259 Canadian dollar 14 563 11 625 Danish kroner 68 330 11 020 Euro 49 949 60 019 Japanese yen 6 768 800 60 151 Pound sterling 49 828 67 425 Total 216 499 A71/29 34 A 7 1 /2 9 A 1% appreciation in the relative value of the United States dollar against the above-mentioned forward foreign exchange hedging contracts would result in an increase in the unrealized gain of US$ 2.1 million. A 1% depreciation in the relative value of the United States dollar would result in an increase in the unrealized loss of US$ 2.2 million. The net outstanding interest rate and bond futures contracts are summarized below. Long positions Products Exchange a No. of contracts Canadian Bankers’ Acceptances 3-month MAR 2019 Montreal 106 Eurodollar JUN 2018 CME 405 Eurodollar SEP 2018 CME 9 Eurodollar DEC 2018 CME 412 Eurodollar MAR 2020 CME 41 US 2- year T-Note MAR 2018 CBOT 12 Short positions Products Exchangea No. of contracts 30-day Fed Funds Dec 2017 CBOT 22 Eurodollar MAR 2018 CME 20 Eurodollar JUN 2018 CME 5 Eurodollar DEC 2018 CME 9 Eurodollar MAR 2019 CME 41 Eurodollar JUN 2019 CME 425 Eurodollar SEP 2019 CME 38 Eurodollar DEC 2019 CME 445 Eurodollar DEC 2020 CME 10 3 month GBP Mar 2020 ICE 606 US-5year T-Note MAR 2018 CBOT 40 US5year T-Note MAR 2019 CBOT 299 a ASX refers to Australian Securities Exchange. CBOT refers to Chicago Board of Trade. CBOT is part of the Chicago Mercantile Exchange Group (CME). ICE refers to Inter continental Exchange. A71/29 35 4.3 Receivables As at 31 December 2017, total receivables (current and non-current) amounted to US$ 1451 million (US$ 1079 million as at 31 December 2016). The receivables balance includes outstanding amounts for both assessed and voluntary contributions. Receivables are split between current and non-current based on the payment terms of when the amounts become due. Description 31 December 2017 31 December 2016 US$ thousands Receivables – current Assessed contributions receivablea 187 015 77 381 Voluntary contributions receivable 1 054 697 818 960 Revolving sales receivable 333 155 Other receivables 10 197 5 281 Allowance for doubtful accounts (37 832) (29 969) Total receivables – current 1 214 410 871 808 Receivables – non-current Outstanding rescheduled assessments receivablea 14 923 19 027 Voluntary contributions receivable 236 603 207 278 Allowance for doubtful accounts (14 923) (19 027) Total receivables – non-current 236 603 207 278 Total receivables 1 451 013 1 079 086 a See document A71/31 for details of the status of collection of assessed contributions. As at 31 December 2017, the total allowance for doubtful accounts was US$ 52.8 million (US$ 48.9 million at 31 December 2016). This figure comprises an allowance of US$ 49.5 million for assessed contributions and an allowance of US$ 3.3 million for voluntary contributions. The allowance for assessed contributions receivable includes amounts receivable from prior years, all rescheduled amounts receivable and any current amounts receivable from Member States in arrears less any subsequent payments received before the preparation of the financial statements. The allowance for voluntary contributions receivable is based on a detailed review of all amounts receivable more than one year overdue and a review of amounts less than one year overdue where there is evidence that the amount is unlikely to be received. With certain contributors, WHO signs agreements that may span many years of implementation. These agreements do not state the payment terms for the transfer of instalments; instead, they are reimbursed based on quarterly expenses incurred. WHO records the full amount of revenue in the financial year in which the agreement is signed and recognizes the full receivable as currently due. As at 31 December 2017, the total receivable shown as currently due under this arrangement was US$ 432.3 million outstanding, of which US$ 187.5 million outstanding was due on agreements ending in 2019 and beyond (US$ 356.4 million outstanding as currently due at 31 December 2016, of which US$ 148.6 million outstanding was due on agreements ending in 2018 and beyond). A71/29 36 A 7 1 /2 9 Description 31 December 2017 31 December 2016 US$ thousands Opening balance – assessed contributions 45 990 48 301 (Decrease)/increase in allowance for doubtful accounts (refer to Note 5.1) 3 487 (2 311) Ending balance – assessed contributions 49 477 45 990 Opening balance – voluntary contributions 3 006 3 179 (Decrease)/increase in allowance for doubtful accounts (refer to Note 5.1) 272 (173) Ending balance – voluntary contributions 3 278 3 006 Total allowance for doubtful accounts 52 755 48 996 Allowance for doubtful accounts Allowance – current 37 832 29 969 Allowance – non-current 14 923 19 027 Total allowance for doubtful accounts 52 755 48 996 4.4 Staff receivables In accordance with WHO’s Staff Regulations and Staff Rules, staff members are entitled to certain advances including those for salary, education, rent and travel. The total balance of staff receivables amounted to US$ 10.1 million as at 31 December 2017 (US$ 10.2 million as at December 2016). The largest balance relates to education grant which represents advances made to staff for the 2018 portion of the 2017–2018 school year. Description 31 December 2017 31 December 2016 US$ thousands Education grant advances 7 680 7 878 Rental advances 1 178 1 157 Salary advances 752 697 Travel receivables 527 495 Other staff receivables (33) 16 Total staff receivables 10 104 10 243 4.5 Inventories The total value of inventory as at 31 December 2017 was US$ 43.6 million (US$ 39.5 million as at 31 December 2016). The movement of inventory items during the year is shown in the table below: Description 31 December 2016 Net additions Net shipments Net disposals and expired items Net inventory in-transit 31 December 2017 US$ thousands Medicines, vaccines and humanitarian supplies 34 255 45 069 41 916 3 473 4 085 38 020 Publications 5 299 4 595 3 474 799 5 621 Total inventory 39 554 49 664 45 390 4 272 4 085 43 641 Total expenses relating to inventories during the period (net shipments, net disposals and expired items) amounted to US$ 49.6 million (US$ 82.9 million as at 31 December 2016). The expenses relating to inventories are reported in the Statement of Financial Performance (Statement II) under “Medical Supplies and materials”. The year-end inventory balance includes shipping cost of 15%. A71/29 37 4.6 Prepayments and deposits The total value of prepayments as at 31 December 2017 was US$ 20.3 million (US$ 9.6 million in 2016). These represent payments to suppliers in advance of the receipt of goods or services. It is common practice for technical service contractors to request payments in advance to support project work. When goods or services are delivered, prepayments are applied to the appropriate expense account. Prepayments include US$ 4.1 million of deposits (US$ 0.3 million as at 31 December 2016). Deposits represent amounts given to landlords as a security to rent office space. 4.7 Property, plant and equipment As at 31 December 2017, the total value of recognized property, plant and equipment (net of accumulated depreciation) was US$ 103.5 million (US$ 89.2 million as at 31 December 2016, restated). The increase includes US$ 15.8 million in new additions, ongoing construction projects and US$ 20 million recognized as other property, plant and equipment. In locations where WHO does not own the land, surface rights were granted at no cost. No value has been recognized as the Organization does not have the ability to dispose of these rights in a commercial transaction. Major office 31 December 2016 (restated) Additions Disposals Transfers Impairments Depreciation 31 December 2017 US$ thousands Headquarters Land 1 000 1 000 Buildings 35 650 (1 270) 34 380 CIP 8 384 14 660 23 044 Total property – Headquarters 45 034 14 660 (1 270) 58 424 Regional Office for Africa Land 103 103 Buildings 4 031 753 (250) (268) 4 266 CIP 1 314 (625) 689 Total property – Regional Office for Africa 5 448 753 (875) (268) 5 058 Regional Office for South East Asia Buildings 144 (29) 115 CIP Total property – Regional Office for South East Asia 144 (29) 115 Regional Office for the Eastern Mediterranean Buildings 19 500 (403) 19 097 CIP Total property – Regional Office for the Eastern Mediterranean 19 500 (403) 19 097 Regional Office for the Western Pacific Buildings 871 350 (535) 686 CIP Total property – Regional Office for the Western Pacific 871 350 (535) 686 Total WHO Land 1 103 1 103 Buildings 60 196 1 103 (250) (2 505) 58 544 CIP 9 698 14 660 (625) 23 733 Total property – WHO 70 997 15 763 (875) (2 505) 83 380 A71/29 38 A 7 1 /2 9 In 2017, new equipment to the amount of US$ 13.3 million (US$ 9.2 million as at 31 December 2016) was recognized in the assets register. The transition period expired on 31 December 2016. From 1 January 2017, all eligible assets are capitalized based on the remaining useful life. The opening balance for property, plant, and equipment was restated accordingly, resulting in an increase of US$ 18.2 million (refer to Note 3). In addition, a plot of land in Brazzaville was recognized at a value of US$ 32 248 and the opening balance was restated (refer to Note 3). The details of the property, plant, and equipment are as follows. Asset category 01 January 2017 Additions Depreciation Disposals Transfers 31 December 2017 US$ thousands Vehicles and transport equipment 14 040 9 527 (7 101) (549) 15 917 Computer and communications equipment 3 181 2 423 (2 621) (12) 2 971 Machinery and specialized equipment 861 1 373 (1 040) (8) 1 186 Furniture 135 9 (53) - 91 Total equipment – WHO 18 217 13 332 (10 815) (569) 20 165 The Organization also continues to use the fully depreciated assets, the total purchase cost of which was US$ 65.4 million. The details of property, plant, and equipment are as follows. Asset category Equipment in service as at 31 December 2017 units Vehicles and transport equipment 1 270 Computer and communications equipment 1 580 Machinery and specialized equipment 443 Furniture 31 Total Equipment 3 324 4.8 Intangibles Intangible assets held as at 31 December 2017 amounted to US$ 3.8 million (US$ 4.8 million as at 31 December 2016), most of which relates to new purchases. Asset category 31 December 2016 Additions Disposals/ Transfers Impairments Amortization (refer to Note 5.2) 31 December 2017 US$ thousands Software acquired 2 996 1 658 (847) 3 807 Software under development 1 792 723 (2 515) - Total intangible assets (net) 4 788 2 381 (2 515) (847) 3 807 4.9 Contributions received in advance The amount for contributions received in advance mainly concerns payments received from Member States in 2017 for their 2018 assessed contributions. The balance for advance payments for voluntary contributions reflects funds received for agreements starting in 2018. Unapplied and unidentified receipts are amounts received in 2017 but not yet matched as at 31 December 2017. A71/29 39 Description 31 December 2017 31 December 2016 US$ thousands Assessed contribution advances 51 793 50 405 Advances for voluntary contributions 52 090 9 512 Unapplied and unidentified receipts 2 566 8 372 Other advances 871 57 Total contributions received in advance 107 320 68 346 4.10 Accounts payable Accounts payable represents the total amount due to suppliers by major office as at 31 December 2017. Description 31 December 2017 31 December 2016 US$ thousands Headquarters 19 671 12 048 Regional Office for Africa 8 161 9 244 Regional Office for the Eastern Mediterranean 21 916 11 547 Regional Office for Europe 5 077 2 311 Regional Office for South-East Asia 7 888 3 905 Regional Office for the Western Pacific 2 949 2 074 Total accounts payable 65 662 41 129 4.11 Staff payable The balance of staff payable represents the total amount outstanding to staff as at 31 December 2017. Salaries payable consist of balances due to staff pending the finalization of clearance certificates. Bank returns are balances due to staff for which the payment is pending the receipt of updated bank account information. Description 31 December 2017 31 December 2016 US$ thousands Salaries payable 2 001 1 808 Bank returns 338 197 Total staff payable 2 339 2 005 4.12 Accrued staff benefits Accrued staff benefits include terminal payments, staff health insurance, group accident and illness insurance and liabilities due to service-incurred death or disability (Special Fund for Compensation). A71/29 40 A 7 1 /2 9 Description 31 December 2017 31 December 2016 US$ thousands Accrued staff benefits – current Terminal payments 47 534 44 339 Special Fund for Compensation 612 582 Accident and Illness Insurance 1 912 1 727 Total accrued staff benefits – current 50 058 46 648 Accrued staff benefits – non-current Terminal payments 59 378 60 072 Special Fund for Compensation 17 004 13 589 Accident and Illness Insurance 1 262 637 Staff health insurance 1 500 478 1 185 511 Total accrued staff benefits – non-current 1 578 122 1 259 809 Accrued staff benefits Terminal payments 106 912 104 411 Special Fund for Compensation 17 616 14 171 Accident and Illness Insurance 3 174 2 364 Staff health insurance 1 500 478 1 185 511 Total accrued staff benefits 1 628 180 1 306 457 Terminal payments The Terminal Payments Fund was established to finance the terminal emoluments of staff members, including repatriation grants, accrued annual leave, repatriation travel and removal on repatriation. It is funded by a charge made to salary. Liabilities arising from repatriation benefits and annual leave are determined by independent consulting actuaries. However, the accrued leave is calculated on a walk-away basis ‒ that is, as if all staff separated immediately ‒ and, therefore, is not discounted. The latest actuarial study (as at 31 December 2017) estimated the full terminal payment liability to be US$ 106.9 million (short-term liability, US$ 47.5 million; long-term liability, US$ 59.4 million) compared to US$ 104.4 million as at 31 December 2016, a net increase of US$ 2.5 million, which is recognized by nature of expense, in the Statement of Financial Performance (Statement II). This calculation does not include costs for the end-of-service grant, separation by mutual agreement or abolishment of posts. The defined benefit obligation amounted to US$ 68 million (US$ 67.6 million as at 31 December 2016) for terminal entitlements, and US$ 38.9 million (US$ 36.8 million as at 31 December 2016) for annual leave which is included in the terminal payments current balance. Special Fund for Compensation In the event of a death or disablement attributable to the performance of official duties of an eligible staff member, the Special Fund for Compensation covers all reasonable medical, hospital, and other directly related costs, as well as funeral expenses. In addition, the Fund provides compensation to disabled staff members (for the duration of the disability) or to the surviving family members. WHO accounts for the Special Fund for Compensation as a post-employment benefit. Actuarial gains and losses are recognized in the net assets/equity (Statement III), in accordance with IPSAS 39 (Employee Benefits). A71/29 41 As per the actuarial study, the total liability was US$ 17.6 million at 31 December 2017 (US$ 14.2 million as at 31 December 2016). In accordance with IPSAS 39, the actuarial loss of US$ 3.3 million (gain of US$ 2 million in 2016) was charged directly to net assets/equity (Statement III) in 2017, US$0.2 million (US$ 0.6 million in 2016) was charged by nature of expense in the Statement of Financial Performance (Statement II). Accident and Illness Insurance The Accident and Illness Insurance Fund was established to cover benefit payments in the event of death, permanent disability, loss of function and sick leave (SLIC) to staff members of WHO, PAHO, IARC, ICC, Unitaid and UNAIDS. It is funded by contributions from staff and their organizations. Liabilities for these benefits are determined by professional consulting actuaries and recorded as other long- term benefits. Actuarial gains and losses are recognized by nature of expense, in the Statement of Financial Performance (Statement II). As per the actuarial study, the total liability was US$ 3.2 million at 31 December 2017 (US$ 2.4 million at 31 December 2016). Staff Health Insurance The Secretariat manages its own health insurance scheme as a separate entity. The Staff Health Insurance has its own governance structure and provides for the reimbursement of a major portion of expenses for medically recognized health care incurred by staff members, retired staff members and their eligible family members. The Staff Health Insurance is financed by the contributions made by the participants (one third) and the Organization (two thirds) and from investment income. The Organization accounts for after-service staff health insurance as a post-employment benefit. Actuarial gains and losses are recognized in the net assets/equity in accordance with IPSAS 39 (Employee Benefits). Professional actuaries determined the 2017 defined benefit obligation for the Staff Health Insurance based on personnel data and payment experience provided by WHO. As at 31 December 2017, the unfunded defined benefit obligation amounted to US$ 1500 million (US$ 1186 million in 2016). In accordance with IPSAS 39, the actuarial loss of US$ 272 million (US$ 90 million in 2016) was charged directly to net assets/equity (Statement III) in 2017, US$ 43 million (US$ 23 million in 2016) was charged by nature of expense in the Statement of Financial Performance (Statement II) – refer to Note 5.2. Further details on Staff Health Insurance liability can be found in the annual report of the Staff Health Insurance scheme. A71/29 42 A 7 1 /2 9 Actuarial summary of terminal payments, the Staff Health Insurance and the Special Fund for Compensation (US$ thousands) Description Terminal Payments (other than accrued leave) Special Fund For Compensation Accident and Illness Insurance Staff Health Insurance Reconciliation of Defined Benefit Obligation Defined Benefit Obligation as at 31 December 2016 67 604 14 171 2 364 1 855 896 Service cost 8 085 741 4 963 81 135 Interest on Defined Benefit Obligation 1 787 472 9 49 324 Actual Gross Benefit Payments (6 750) (1 048) (1 674) (39 105) Actual Administrative Expenses (1 008) (2 589) Actual Contributions by Participants 11 122 Plan Amendments (177) (Gain)/Loss on DBO Due to Financial Assumption Changes (3 653) 311 (5) 130 891 (Gain)/Loss on DBO Due to Other Assumption Changes 1 117 2 969 (1 475) 191 965 Defined Benefit Obligation as at 31 December 2017 68 013 17 616 3 174 2 278 639 Reconciliation of Assets Assets as at 31 December 2016 670 385 Actual Gross Benefit Payments for 2017 (6 750) (1 048) (1 674) (64 309) Actual Administrative Expenses (1 008) (4 428) Organization Contributions during 2017 6 750 1 048 2 682 72 589 Participant Contributions during 2017 36 454 Net Transfer to/from WHO-PAHO/PAHO for 2017 (394) Interest On Incurred-but-Not-Paid Reserve for 2017 (469) Gain/(Loss) on Incurred-But-Not-Paid Reserve (1 929) Interest on SHI Assets for 2017 19 439 Gain/(Loss) on Plan Assets 50 823 Assets as at 31 December 2017 778 161 Reconciliation of Unfunded Status Defined Benefit Obligation Active 68 013 3 546 1 253 285 Inactive 14 070 3 174 1 025 354 Total Defined Benefit Obligation 68 013 17 616 3 174 2 278 639 Plan Assets Gross Plan Assets 801 073 Offset for Incurred-but-Not-Paid Reserve for 2017 (22 912) Total Plan Assets 778 161 Net Liability (Asset) Recognized in Statement of Financial Position 68 013 17 616 3 174 1 500 478 (Gain)/Loss on Defined Benefit Obligation (2 536) 3 280 (1 480) 322 856 Current 8 635 612 1 912 Noncurrent 59 378 17 004 1 262 1 500 478 Net Liability (Asset) Recognized in Statement of Financial Position 68 013 17 616 3 174 1 500 478 Annual Expense for 2017 Service Cost 8 085 741 4 963 81 135 Interest on (Surplus)/Deficit 1 787 472 9 30 354 Past Service (Credit)/Cost (177) Remeasurements (2 536) Not Applicable (1 480) Not Applicable Total Expense Recognized in Statement of Financial Performance 7 159 1 213 3 492 111 489 Actuarial (Gain)/Loss Recognized in Net Assets/Equity Not Applicable 3 280 Not Applicable 271 795 Expected Contributions during 2018 Contributions by WHO 8 784 622 4 546 52 396 Contributions by Participants 26 198 Total expected contributions for 2018 8 784 622 4 546 78 594 A71/29 43 Staff health insurance sensitivity analysis 2017 discount rate US$ (thousands) Current discount rate assumption minus 1% 1 847 819 Current discount rate assumption 2 278 639 Current discount rate assumption plus 1% 2 852 696 31 December 2017 defined benefit obligation US$ (thousands) Current medical inflation assumption minus 1% 2 899 437 Current medical inflation assumption 2 278 639 Current medical inflation assumption plus 1% 1 827 414 Approximate duration of Defined Benefit Obligation 26 years Actuarial methods and assumptions Each year the Organization identifies and selects assumptions and methods that will be used by the actuaries in the year-end valuation to determine the expense and contribution requirements for the Organization’s employee benefits. Actuarial assumptions are required to be disclosed in the financial statements, in accordance with IPSAS 39 (Employee Benefits). In addition, each actuarial assumption is required to be disclosed in absolute terms. The actuaries used the roll-forward method to estimate the liabilities in 2017. Normally, a full revaluation is done every three years. Measurement date All plans: 31 December 2017 Discount rate Terminal payments (other than accrued leave): The weighted-average discount rate used is 3.5% (increase from 2.8% in the prior valuation). Based on the projected benefit payments with weights of 100% on the Aon AA Above Median Curve outside of Switzerland. The resulting discount rate is rounded to the nearest 0.1%. Staff health insurance: Europe, 1.1% (1.1% in prior valuation); the Americas, 3.8% (decrease from 4.3% in prior valuation); Other Countries, 4% (decrease from 4.6% in prior valuation. Discount rates are based on the yields of high-grade corporate bonds. WHO uses a yield curve approach, which reflects the expected cash flows and assumed currency exposure—specific to the ASHI—for each grouping of offices. The liability is assumed to be incurred in Swiss francs, euros, and U.S. dollars, based on the approximate liability mix for each grouping of offices and the following yield curves. These curves were prescribed by the United Nations. for use in its retiree medical valuations, based on consultations with Aon: Switzerland—SIX Swiss Exchange curve, Euro Zone—iBoxx Euro Zone curve, and the United States— Aon Hewitt AA Above Median curve. The discount rates for the 31 December 2017 valuation are based on the geographic locations of the offices, as described in the “Regional groupings for all purposes except claims costs” below. The resulting rate is rounded to the nearest 0.1%. A71/29 44 A 7 1 /2 9 Special Fund for Compensation: The weighted-average discount rate used is 3.1% (decrease from 3.4% in the prior valuation). Based on the combined projected benefit payments with weights of 75% on the Aon AA Above Median Curve outside of Switzerland and 25% on the SIX Swiss Exchange yield curve for Switzerland. The resulting discount rate is rounded to the nearest 0.1%. Accident and Illness Insurance: The weighted-average discount rate used is 0.7% (increase from 0.6% in the prior valuation). Based on the combined projected benefit payments with weights of 30% on the Aon AA Above Median Curve outside of Switzerland and 70% on the SIX Swiss Exchange yield curve for Switzerland. The resulting discount rate is rounded to the nearest 0.1%. Annual general inflation Terminal payments (other than accrued leave): The weighted-average inflation rate used is 2.2%. The regional weightings used are 100% on non-Swiss rate. Rounding of the resulting weighted-average inflation rates for each plan to the nearest 0.1%. Staff health insurance: Europe 1.5%, the Americas 2.2%, Other Countries 2.2%. The rates are based on the United Nations common assumptions (for long-duration plans) as directed by the United Nations System Task Force on Accounting Standards. Specifically, the rate for Europe is a weighted average of the rates for Switzerland (1.3%) and the rest of Europe (1.8%), with the result rounded to the nearest 0.1%. Special Fund for Compensation: The weighted-average inflation rate used is 2%. The regional weightings used are 75% on non-Swiss rate and 25% on Swiss rate. Rounding of the resulting weighted-average inflation rates for each plan to the nearest 0.1%. Accident and Illness Insurance: The weighted-average inflation rate used is 1.4%. The regional weightings used are 30% on non-Swiss rate and 70% on Swiss rate. Rounding of the resulting weighted-average inflation rates for each plan to the nearest 0.1%. Annual salary scale All plans: Includes merit/promotional increases, plus 3.5% static increases for general inflation, plus productivity growth. Regional groupings for all purposes except claims costs Terminal payments (other than accrued leave): Not applicable Staff health insurance: Based on: the Regional Office for Europe, headquarters, which are grouped as Europe; the Regional Office for the Americas constitutes the Americas; and the African Region, the Eastern Mediterranean Region, the South-East Asia Region, and the Western Pacific Region, which are grouped as Other Countries. Special Fund for Compensation: Not applicable Accident and Illness Insurance: Not applicable Repatriation travel and removal on repatriation Terminal payments (other than accrued leave): Calculated using the projected unit credit method with service prorated, and an attribution period from the “entry on duty date” to separation. A 2% increase is applied for incurred but not paid benefits (IBNP). Staff health insurance: Not applicable Special Fund for Compensation: Not applicable Accident and Illness Insurance: Not applicable Repatriation grant, termination indemnity, and grant in case of death Terminal payments (other than accrued leave): Using the projected unit credit method with accrual rate proration. A 2% increase is applied for incurred but not paid benefits (IBNP). Staff health insurance: Not applicable Special Fund for Compensation: Not applicable Accident and Illness Insurance: Not applicable A71/29 45 Accrued leave Terminal payments (other than accrued leave): The liability is set equal to the walk-away liability ‒ that is, as if all staff separated immediately. Plus 2% increase is applied for incurred but not paid benefits (IBNP). Staff health insurance: Not applicable Special Fund for Compensation: Not applicable Accident and Illness Insurance: Not applicable Abolition of post, end-of-service grant, and separation by mutual agreement Terminal payments (other than accrued leave): These benefits are considered termination benefits under IPSAS 39 and, therefore, are excluded from the valuation. Staff health insurance: Not applicable Special Fund for Compensation: Not applicable Accident and Illness Insurance: Not applicable United Nations Joint Staff Pension Fund The Fund’s Regulations state that the Pension Board shall have an actuarial valuation made of the Fund at least once every three years by the Consulting Actuary. The practice of the Pension Board has been to carry out an actuarial valuation every two years using the Open Group Aggregate Method. The primary purpose of the actuarial valuation is to determine whether the current and estimated future assets of the Pension Fund will be sufficient to meet its liabilities. The Agency’s financial obligation to the UNJSPF consists of its mandated contribution, at the rate established by the United Nations General Assembly (currently at 7.9% for participants and 15.8% for member organizations) together with any share of any actuarial deficiency payments under Article 26 of the Regulations of the Pension 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. Each member organization shall contribute to this deficiency an amount proportionate to the total contributions which each paid during the three years preceding the valuation date. During 2017, the Fund identified that there were anomalies in the census data utilized in the actuarial valuation performed as of 31 December 2015. As such, as an exception to the normal biannual cycle, a roll forward of the participation data as of 31 December 2013 to 31 December 2016 was used by the Fund for their 2016 financial statements. An actuarial valuation as of 31 December 2017 is currently being performed. The roll forward of the participation data as of 31 December 2013 to 31 December 2016 resulted in a funded ratio of actuarial assets to actuarial liabilities, assuming no future pension adjustments, of 150.1% (127.5% in the 2013 valuation). The funded ratio was 101.4% (91.2% in the 2013 valuation) when the current system of pension adjustments was taken into account. After assessing the actuarial sufficiency of the Fund, the Consulting Actuary concluded that there was no requirement, as of 31 December 2016, for deficiency payments under Article 26 of the Regulations of the Fund as the actuarial value of assets exceeded the actuarial value of all accrued liabilities under the Fund. In addition, the market value of assets also exceeded the actuarial value of all accrued liabilities as of the valuation date. At the time of this report, the General Assembly has not invoked the provision of Article 26. During 2017, WHO paid US$ 170.8 million (US$ 162.3 million in 2016) as a contribution to the UNJSPF. Expected contributions due in 2018 are US$ 170 million. A71/29 46 A 7 1 /2 9 The United Nations Board of Auditors carries out an annual audit of the Pension Fund and reports to the Pension Fund Pension Board on the audit every year. The UNJSPF publishes quarterly reports on its investments and these can be viewed by visiting the UNJSPF website at www.unjspf.org. 4.13 Deferred revenue Deferred revenue on voluntary contributions represents multi-year agreements signed in 2017 or prior years but for which the revenue recognition has been deferred to future financial periods. The balance on voluntary contributions is split into current and non-current deferred revenue, depending on when the funds are available to the Organization to spend. Further details of voluntary contributions by fund and by contributor are available on the WHO Programme Budget Web Portal and the WHO Internet. 1 Deferred revenue on reimbursable procurement relates to revenue recognized where supplies or services have not been delivered to requesting parties at year end. As reimbursable procurement is an exchange transaction, revenue is recorded on an accrual basis. The entire amount of deferred revenue for reimbursable procurement is current. Description 31 December 2017 31 December 2016 US$ thousands Voluntary contributions 415 518 364 297 Reimbursable procurement 15 802 15 611 Total deferred revenue – current 431 320 379 908 Voluntary contributions 236 603 207 278 Total deferred revenue – non-current 236 603 207 278 Total deferred revenue 667 923 587 186 4.14 Other current liabilities The total balance for other current liabilities as at 31 December 2017 was US$ 101.1 million (US$ 63.3 million as at 31 December 2016). The largest component is composed of the various year-end accruals totalling US$ 81.1 million. Description 31 December 2017 31 December 2016 US$ thousands Accrual for uninvoiced goods and services 59 506 21 269 Accrual for restructuring cost 1 642 661 Accrued staff liability 14 424 12 520 Accrual for refunds payable 5 489 7 890 Pension payable 748 775 Insurance payable 3 630 4 632 Foundations 3 565 3 505 Other liabilities 12 138 12 096 Total other current liabilities 101 142 63 348 The balance for foundations concerns funds that WHO holds in trust and for whose financial and administrative management the Organization is responsible. As at 31 December 2017, the foundations with funds in trust were as follows. 1 WHO Programme Budget Web Portal – http://extranet.who.int/programmebudget/ and details of voluntary contributions by fund and by contributor, 2017 (document A71/INF./2) on the WHO website – http://www.who.int/about/finances- accountability/reports/en/ (accessed 20 March 2018). A71/29 47 • Down Syndrome Research Prize Foundation in the Eastern Mediterranean Region • Dr A.T. Shousha Foundation • Dr Comlan A.A. Quenum Prize for Public Health • Ihsan Doğramacı Family Health Foundation • Jacques Parisot Foundation • Léon Bernard Foundation • Francesco Pocchiari Fellowship • Foundation for the State of Kuwait Prize for the Control of Cancer, Cardiovascular Diseases and Diabetes in the Eastern Mediterranean Region • State of Kuwait Health Promotion Foundation • United Arab Emirates Health Foundation • Dr Lee Jong-Wook Memorial Prize for Public Health 4.15 Inter-entity liabilities WHO hosts a number of entities through administrative service agreements. As cash for all entities is managed by the Organization, liabilities exist with these entities for funds held on their behalf. The total amounts due per entity are as follows (refer to Note 4.2). Description 31 December 2017 31 December 2016 US$ thousands Staff Health Insurance (SHI) 16 391 53 953 International Computing Centre (ICC) 33 268 22 035 Unitaid 753 210 791 148 Trust Fund for the Joint United Nations Programme on HIV/AIDS (UNAIDS) 145 422 153 554 Total inter-entity liabilities 948 291 1 020 690 4.16 Long-term borrowings Resolution WHA55.8 (2002) and resolution WHA56.13 (2003), authorized construction of a new building at headquarters for WHO and UNAIDS at an estimated cost of CHF 66 million, of which WHO’s share was estimated at CHF 33 million. The Swiss Confederation agreed to provide an interest-free loan to WHO and UNAIDS of CHF 59.8 million, of which WHO’s share is CHF 29.9 million. In the resolutions mentioned above, the World Health Assembly also approved the use of the Real Estate Fund for the repayment over a 50-year period of the Organization’s share of the interest-free loan provided by the Swiss Confederation with effect from the first year of the completion of the building. The outstanding amount of US$ 22.3 million for the UNAIDS building loan is reflected at an amortized cost using the effective interest rate of 0.36% (0.35% for 2016) applicable for Swiss Confederation 30-year bonds. Of the total amount outstanding on the loan, US$ 0.6 million will be due in the next 12 months and is shown as current liability, which is separately disclosed. In 2015, following decision WHA 67(12), the Organization signed a new loan agreement for the planning and construction of a new WHO building in Geneva. A total of US$ 21.3 million had been received as of 31 December 2017 (US$ 11.9 million as at 31 December 2016). A71/29 48 A 7 1 /2 9 The outstanding balance of the loan at 31 December 2017 was US$ 43.6 million (US$ 33.7 million at 31 December 2016) and is made up as follows: Description 31 December 2017 31 December 2016 US$ thousands Current liabilities WHO/UNAIDS building 611 583 Total current liabilities 611 583 Non-current liabilities WHO/UNAIDS building 21 680 21 234 WHO HQ building 21 324 11 905 Total non-current liabilities 43 004 33 139 Total long-term borrowings 43 615 33 722 4.17 Other liabilities – non-current The total balance for other liabilities non-current as at 31 December 2017 was US$ 0.8 million (nil as at 31 December 2016). The balance represents retention money from various suppliers for the new Geneva building project. 5. Supporting information to the Statement of Financial Performance 5.1 Revenue Assessed contributions Assessed contributions for 2017 were US$ 457 million 1 (US$ 470 million for 2016). Description 31 December 2017 31 December 2016 US$ thousands Assessed contributions 460 199 467 725 Decrease/(Increase) in allowance for doubtful accounts (refer to Note 4.3) (3 487) 2 311 Assessed contributions net of allowance 456 712 470 036 In May 2015, the Sixty-eighth World Health Assembly adopted the resolution for the financial period 2016‒2017, 2 in which it approved a total effective budget of US$ 4385 million which was later revised to US$ 4545 million through the adoption of decision WHA69(9) (2016). In resolution WHA68.1, the Health Assembly further resolved that the total assessment on Member States in respect of the financial period 2016– 2017 would be US$ 929 million. Following resolution WHA66.16 (2013), since 2014 the assessed contributions have been invoiced in Swiss francs and United States dollars. Where the total annual assessed contribution for a Member State is US$ 200 000 or more, the contribution is assessed half in United States dollars and half in Swiss francs. Where the annual assessed contribution for a Member State is less than US$ 200 000, the contribution is assessed in United States dollars only. The annual assessment for 2017 amounted to US$ 478 million or US$ 241 million 1 See document A71/31 for details of the status of collection of assessed contributions. 2 Resolution WHA68.1 A71/29 49 and CHF 224 million per year using the May 2015 exchange rate. Contributions are due from 1 January so the Swiss franc portion of the assessment was recorded at the January 2017 exchange rate, which resulted in an exchange loss on recording of US$ 18 million. As a result, the total accounted assessed contributions were US$ 460 million. Voluntary contributions Voluntary contributions for 2017 were US$ 2139 million (US$ 1752 million for 2016). Description 31 December 2017 31 December 2016 US$ thousands Voluntary contributions 2 139 577 1 751 639 Decrease/(increase) in allowance for doubtful accounts (272) 172 Voluntary contributions net of allowance 2 139 305 1 751 811 These contributions represent revenue recognized from governments, intergovernmental organizations, institutions, other United Nations organizations as well as non-government organizations. Much of the revenue reported in 2017 relates to agreements that continue in future years. Further details of voluntary contributions by fund and by contributor are contained in the Annex to the Financial Report. 1 The figure for total voluntary contributions reported of US$ 2139 million is after the deduction of (i) refunds to contributors ‒ these amounted to US$ 14.5 million (US$ 17.8 million for 2016); (ii) reductions in revenue recognized in prior years due to evidence arising in the current year that amounts will no longer be collected ‒ these amounted to US$ 8.2 million (US$ 11.8 million for 2016); and (iii) the adjustment of payment terms with the effect of increasing deferred revenue and decreasing current revenue for revenue recognized in previous years – these amounted to nil (US$ 13.6 million for 2016). Voluntary contributions in-kind and in-service WHO receives non-cash contributions from Member States and other contributors. In 2017, the Organization received in-kind and in-service contributions amounting to US$ 136.8 million (US$ 87.7 million as at 31 December 2016). 2 Further details of in-kind and in-service contributions are available on the WHO Programme Budget Web Portal and on the WHO Internet. 3 Description 31 December 2017 31 December 2016 US$ thousands In-kind – Medical supplies and materials 112 482 62 127 In-kind – Office space 10 256 9 090 In-service 14 094 16 532 Total voluntary contributions in-kind and in-service 136 832 87 749 In addition, WHO also benefits from land made available from the host governments either at no cost or at a token rent. As the title to the land remains with the government, the use of the land is not recognized in the 1 Document A71/INF./2, the Annex to the Financial Report, is also available at: http://www.who.int/about/finances- accountability/funding/voluntary-contributions/en/. 2 Further details of in-kind and in-service contributions is available on the WHO Programme Budget Web Portal and on the WHO Internet: http://www.who.int/about/finances-accountability/funding/voluntary-contributions/en/. 3 See http://www.who.int/about/finances-accountability/funding/voluntary-contributions/en/. A71/29 50 A 7 1 /2 9 financial statements. The table below indicates the locations where land has been made available to WHO to construct or purchase premises. Region Country City Headquarters Switzerland Geneva Africa Equatorial Guinea Malabo Africa Republic of South Sudan Juba Africa Nigeria Maiduguri, Borno State Eastern Mediterranean Egypt Cairo Eastern Mediterranean Afghanistan Kabul Eastern Mediterranean Pakistan Islamabad Eastern Mediterranean Jordan Amman Eastern Mediterranean Tunisia Tunis Eastern Mediterranean Somalia Garowe South-East Asia India New Delhi Western Pacific Philippines Manila Western Pacific Solomon Islands Honiara Reimbursable procurement WHO procures medicines, vaccines, equipment and other supplies on behalf of Member States and other United Nations agencies. The total revenue and expenses recognized for 2017 for reimbursable procurement was US$ 9 million (US$ 25.3 million for 2016) after the deduction of refunds to contributors of US$ 1.7 million (US$ 2.7 million for 2016). The balance of funds received in advance for reimbursable procurement is reported as deferred revenue. The revenue and expenses related to reimbursable procurement form part of the Enterprise Fund and are not reported against the programme budget. Other revenue In 2017, other revenue totalled US$ 33.4 million (US$ 29.1 million as at 31 December 2016). This mainly represents earnings generated for hosting entities such as UNAIDS, Unitaid, and International Computing Centre and staff contributions for accident and illness insurance. Other sources of earnings also included rental income and sale of publications and royalties. 5.2 Expenses Staff costs Staff and other personnel costs reflect the total cost of employing staff at all locations and include charges for base salary, post adjustment and any other types of entitlements (such as pensions and insurances) paid by the Organization. Staff costs also include the movement in the staff health insurance actuarial, special fund for compensation, terminal payments and accident and illness insurance (refer to Note 4.12) liability that is recognized in the Statement of Financial Performance (Statement II). Description 31 December 2017 31 December 2016 US$ thousands Salary cost 839 986 811 855 Actuarial cost 43 173 23 067 Other personnel costs 83 141 75 869 Total staff costs 966 300 910 791 A71/29 51 Medical supplies and materials Medical supplies and materials are mainly purchased and distributed by WHO to support programmatic activities in countries. These include hospital supplies, vaccines, medicines as well as related shipping costs. The medical supplies expense includes the cost of reimbursable procurement – refer to Note 5.1 (Reimbursable procurement). Description 31 December 2017 31 December 2016 US$ thousands Medical supplies 140 537 182 805 Medical supplies – in-kind 112 482 61 657 Total medical supplies and materials 253 019 244 462 Contractual services Contractual services represent expenses incurred for suppliers engaged by WHO to provide services in support of the Organization’s programmatic activities. The main components within contractual services are direct implementation (implemented by WHO such as vaccination campaigns directly in collaboration with national governments), agreements for performance of work, consulting contracts including special service agreements (SSA) given to individuals to perform activities on behalf of the Organization. Medical research activities and security expenses are also included in contractual services. Description 31 December 2017 31 December 2016 (restated) US$ thousands Direct implementation 257 599 233 042 Contractual services 451 561 361 627 SSA 48 783 56 202 Security and other costs 23 609 19 869 Total contractual services (refer to Note 3) 781 552 670 740 Transfers and grants Transfers and grants to counterparts include non-exchange contracts signed with national counterparts (mainly health ministries), letters of agreement signed with other counterparts to perform activities that are in line with the Organization’s objectives, fellowship expenses and equipment purchased for third parties. Transfers and grants to government ministries are referred to as “direct financial cooperation” (DFCs). Funds are normally expensed at the time of transfer to the contractual partner. Counterparts are required to report back on the use of funds to ensure that they are used according to the agreement, and WHO performs on-site monitoring and spot checks of ongoing activities on DFCs and post-facto review of selected DFCs based on risk assessments. WHO may withhold further funding to recipients of transfers and grants on the basis of performed assurance activities if the requirements of the agreement have not been met. Description 31 December 2017 31 December 2016 (restated) US$ thousands Direct financial cooperation 151 585 203 695 Grant letters of agreement 68 399 45 515 Equipment procured for third parties 35 462 Fellowships (refer to Note 3) 4 616 4 980 Total transfers and grants 260 062 254 190 A71/29 52 A 7 1 /2 9 Travel The cost of travel includes both WHO staff and non-staff participants in meetings, consultants and representatives of Member States paid by the Organization. Travel expenses include airfare, per diem and other travel-related costs. Description 31 December 2017 31 December 2016 US$ thousands Travel 201 907 200 331 General operating expenses General operating expenses reflect the cost of general running costs incurred to maintain country offices, regional offices and headquarters including utilities, telecommunications (fixed telephone, mobile phone, Internet and global network expenses), office rents etc. Hospitality and courtesy expenses that are mainly incurred during workshops, meetings and training are included here, as well as the catastrophic accident and illness insurance premium. “Other in-kind” pertains to the computers, vehicles, office rent, supplies and other items that were received as in-kind contributions. Description 31 December 2017 31 December 2016 US$ thousands General operating costs 152 448 118 668 Courtesy and hospitality 4 981 3 652 Other in-kind 10 256 9 465 Total general operating expenses 167 685 131 785 Equipment, vehicles and furniture Until 2016, the Organization benefited from the transitional provision under IPSAS 17 (Property, Plant, and Equipment), (refer to Note 3). As from 2017, only items below the capitalization threshold were expensed; remaining were capitalized and depreciated as per policy. Total expenses for 2017 was US$ 35.9 million (US$ 55.8 million for 2016). Depreciation and amortization Depreciation is the expense resulting from the systematic allocation of the depreciable amounts of property, plant and equipment over their useful lives. From 2017, all capitalized items above threshold were depreciated as per policy. A71/29 53 Amortization is the expense resulting from the systematic allocation of the amortizable amount of intangible assets over their useful lives. As of 2017, it relates to purchased software. Description 31 December 2017 31 December 2016 US$ thousands Depreciation 13 320 2 204 Amortization (refer to Note 4.8) 847 632 Total depreciation and amortization 14 167 2 836 5.3 Finance revenue Finance revenue includes the following: Description 31 December 2017 31 December 2016 US$ thousands Investment revenue 44 037 34 308 Bank charges and investment management fees (2 800) (3 279) Net realized foreign exchange gains or (losses)a (1 937) 50 056 Net unrealized foreign exchange gains or (losses) 53 951 (4 120) Actuarial revaluation gains or (losses) on Terminal Payments Fund and Accident and Illness Insurance Fund 4 016 (1 889) Actuarial interest cost related to valuation of Terminal Payments Fund and Accident and Illness Insurance Fund (2 268) (2 465) Net total finance revenue (WHO and other entities) 94 999 72 611 Investment revenue and foreign exchange gains and losses apportioned to other entities (17 726) (9 929) Total net finance revenue WHO 77 273 62 682 a Includes differences due to rounding of the financial statements to the nearest thousand US dollars. Total finance revenue includes amounts related to funds administered by WHO on behalf of other entities (refer to Note 4.15). The investment income relating to other entities is allocated to those entities. Certain funds earned investment income; in addition, interest is apportioned based on average fund balance and reported as finance revenue for the fund. 6. Supporting information to the Statement of Changes in Net Assets/Equity 6.1 General Fund This note provides fund balance details for the General Fund. Description 31 December 2017 31 December 2016 US$ thousands Regular budget 34 340 3 838 Voluntary funds 2 259 537 2 164 343 Total General Fund 2 293 877 2 168 181 A71/29 54 A 7 1 /2 9 6.1.a Regular budget This note provides details of revenue and expenses of the regular budget. Description Member States AC Fund Tax Equalization Fund Working Capital Fund Total in US$ thousands Balance as at 1 January 2017 (18 349) (8 813) 31 000 3 838 Net Member States’ assessed contributions (refer to Note 5.1) 456 712 456 712 Appropriation to Tax Equalization Fund (13 489) 13 489 - Appropriation to Infrastructure Fund (15 000) (15 000) Finance Revenue 8 266 8 266 Miscellaneous expenses (479) (479) Programmatic expenses (406 797) (406 797) Tax reimbursements to staff members (12 200) (12 200) Balance as at 31 December 2017 10 864 (7 524) 31 000 34 340 For details regarding assessed contributions revenue, see Note 5.1. Under resolution WHA68.1, US$ 13.5 million was transferred to the Tax Equalization Fund. Under resolution WHA63.7, US$ 10 million was transferred to the Infrastructure Fund (Real Estate fund) and decision WHA70(16), US$ 5 million was transferred to the Infrastructure Fund (Information Technology Fund). Under resolution WHA68.1, the Health Assembly decided that the Working Capital Fund should be maintained at its existing level of US$ 31 million. 6.1.b Voluntary Funds This note provides fund balance details for the core, specified and partnerships of the Voluntary Fund. Description Notes 31 December 2017 31 December 2016 in US$ thousands Voluntary Contributions Core Fund 105 874 190 285 Voluntary Contributions Specified Fund 1 201 310 1 145 431 Special Programme for Research and Training in Tropical Diseases (TDR Trust Fund) 18 717 19 277 Special Programme of Research, Development and Research Training in Human Reproduction (HRP Trust Fund) 34 431 44 291 Special Programmes and Collaborative Arrangements Fund 200 523 193 359 Special Account for Servicing Costs Fund 6.1.b.i 366 462 415 062 Outbreak and Crisis Response Fund 299 889 139 561 Contingency Fund for Emergencies 6.1.b.ii 18 294 17 077 Fee for service fund – exchange transactions 14 037 Total Voluntary funds 2 259 537 2 164 343 A71/29 55 6.1.b.i Special Account for Servicing Costs Fund The Special Account for Servicing Costs Fund (AS Fund) 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). The Fund is credited with revenue from the following sources: • under resolution WHA34.17 (1981), funds are received for programme support costs from voluntary sources and are calculated by applying a fixed percentage rate to total expenses • administrative service agreements with other entities • interest earned on voluntary funds is described in document EB122/3 A summary of the Fund is provided below. Description 31 December 2017 31 December 2016 US$ thousands Balance as at 1 January 415 062 302 775 Revenue Programme support costs 161 784 148 667 Finance revenue 48 078 67 134 Administrative service agreements with other entities 5 552 6 144 Other revenue 1 363 1 310 Total revenue 216 777 223 255 Expenses Staff and other personnel costs 150 630 68 487 Medical supplies and materials 4 048 289 Contractual services 25 620 19 841 Transfers and grants to counterparts 1 099 (38) Travel 7 896 2 676 General operating expenses 25 551 16 711 Equipment, vehicles and furniture 4 701 3 174 Total expenses 219 545 111 140 Less: Increase/(decrease) in allowance for doubtful accounts – voluntary contributions Note (a) – refer to Note 4.3 272 (172) Transfer to Special Purpose Fund Note (b) 45 560 Balance as at 31 December 366 462 415 062 (a) In 2017, there was an increase (decrease in 2016) in the allowance for doubtful accounts under voluntary contributions, refer to Note 4.3. (b) In 2017, the following transfers were made: i. US$ 30 million to Polio Staff Liability Fund ii. US$ 15.56 million to Infrastructure Fund (US$ 14.9 million was transferred to Information Technology Fund and US$ 0.66 million was transferred to Real Estate Fund). A71/29 56 A 7 1 /2 9 Expenses under the Fund by major office are as follows: Expenses by major office 31 December 2017 31 December 2016 US$ thousands Global and interregional activities 98 467 44 140 Regional Office for Africa 37 989 20 811 Regional Office for the Americas 12 035 9 043 Regional Office for the Eastern Mediterranean 20 933 14 047 Regional Office for Europe 12 991 6 219 Regional Office for South-East Asia 22 957 9 414 Regional Office for the Western Pacific 14 173 7 466 Total expenses by major office 219 545 111 140 6.1.b.ii Contingency Fund for Emergencies This fund was established by the Sixty-eighth World Health Assembly in decision WHA68(10) (2015). The purpose of the fund is to provide temporary financing for the emergency field operations with a target capitalization of US$ 100 million. It will be funded by voluntary contributions. A summary of the Fund is as follows. Description 31 December 2017 31 December 2016 US$ thousands Balance as at 1 January 17 077 14 265 Revenue Contributions 12 988 18 090 Total revenue 12 988 18 090 Expenses Staff costs 742 867 Medical supplies and materials 1 232 1 556 Contractual services 3 600 3 615 Transfers and grants 545 565 Travel 1 903 5 517 General operating expenses 2 954 2 795 Equipment, vehicles and furniture 795 363 Total expenses 11 771 15 278 Balance as at 31 December 18 294 17 077 6.2 Member States – other This note provides fund balance details for the Member States – other. Description 31 December 2017 31 December 2016 (restated) US$ thousands Common Fund 135 999 104 271 Enterprise Fund (refer to Note 6.2.a) 22 706 17 483 Special Purpose Fund (refer to Note 6.2.b) (1 262 462) (998 265) Total Member States – other (1 103 757) (876 511) A71/29 57 6.2.a Enterprise Fund This note provides fund balance details for the Enterprise Fund. Description 31 December 2017 31 December 2016 US$ thousands Enterprise Fund Revolving Sales Fund 4 442 3 848 Concessions Fund 4 551 3 724 Insurance Policies Fund 1 966 1 063 Garage Rental Fund 3 652 2 873 Accident and Illness Insurance Fund 8 095 5 975 Total Enterprise Fund 22 706 17 483 6.2.b Special Purpose Fund This note provides fund balance details for the Special Purpose Fund. Description 31 December 2017 31 December 2016 US$ thousands Special Purpose Fund Infrastructure Fund (refer to Note 6.2.b.i) 134 546 99 866 Building Loan Fund (19 515) (7 891) Security Fund 2 794 2 794 Special Fund for Compensation (8 693) (4 859) Terminal Payments Fund 15 855 6 479 Non-Payroll Staff Entitlements Fund 12 928 16 624 Post Occupancy Charge Fund 12 431 26 243 Mobility Fund 18 592 10 073 Internal Service Cost Recovery Fund 3 534 4 413 Staff Health Insurance Fund (refer to Note 4.12) (1497 478) (1182 510) Stockpiles Replenishment Fund 12 544 10 503 Polio Staff Liability Fund 50 000 20 000 Total Special Purpose Fund (1262 462) (998 265) 6.2.b.i Infrastructure Fund This fund was established by the Health Assembly in decision WHA70 (16). The summary of the fund is as follows: Description 31 December 2017 31 December 2016 in US$ thousands Real Estate Fund (refer to Note 6.2.b.i.a)) 111 458 95 725 IT Fund (refer to Note 6.2.b.i (b)) 23 088 4 141 Total Infrastructure Fund 134 546 99 866 A71/29 58 A 7 1 /2 9 6.2.b. i.(a) Real Estate Fund This fund was established by the Health Assembly in resolution WHA23.14 (1970). The Fund is used to meet the costs of: the construction of buildings or extensions to existing buildings; the acquisition of land that may be required; and major repairs and alterations to WHO’s existing office buildings and to residences leased to staff by the Organization. Specific Health Assembly authorization is required for the acquisition of land and the construction of buildings or extensions to existing buildings. The summary of the fund is as follows: Description 31 December 2017 31 December 2016 US$ thousands Balance as at 1 January 95 725 90 980 Revenue Appropriation received in accordance with resolution WHA63.7 10 000 Transfer for special projects Note (a) 4 231 Rents collected 2 252 2 073 Other revenue 10 632 8 886 Total revenue 27 115 10 959 Expenses Staff and other personnel costs 17 9 Medical supplies and materials 22 Contractual services 7 849 4 173 Travel (2) 34 General operating expenses 2 547 1 063 Equipment, vehicles and furniture 971 913 Total expenses 11 382 6 214 Balance as at 31 December 111 458 95 725 (a) In 2017, US$ 2.6 million by AFRO, US$ 1.7 million by headquarters and US$ 1.0 million by WPRO was transferred to the Real Estate Fund.US$ 1.2 million was transferred back to AS Fund. Expenses under the Real Estate Fund are as follows: Description 31 December 2017 31 December 2016 US$ thousands Expenses by major office Headquarters 6 286 1 692 Regional Office for Africa 4 624 3 825 Regional Office for the Eastern Mediterranean 442 326 Regional Office for South-East Asia 30 Regional Office for the Western Pacific 371 Total expenses 11 382 6 214 6.2.b.i (b) Information Technology Fund This Fund was established to meet the Organization’s current and future administrative requirements . It may be financed by way of appropriation from the regular budget and from voluntary contributions including the Special Account for Servicing Costs. The summary of the Fund is as follows: A71/29 59 Description 31 December 2017 31 December 2016 US$ thousands Balance as at 1 January 4 141 12 009 Revenue Appropriation received in accordance with decision WHA70(16) 15 000 Transfer for special projects 14 900 Total revenue 29 900 Expenses Staff and other personnel costs 3 016 2 921 Contractual services 6 595 3 506 Travel 167 260 General operating expenses 760 465 Equipment, vehicles and furniture 415 716 Total expenses 10 953 7 868 Balance as at 31 December 23 088 4 141 6.3 Fiduciary Fund This note provides fund balance details for the Fiduciary Fund. Description 31 December 2017 31 December 2016 US$ thousands Fiduciary Fund WHO Framework Convention on Tobacco Control 8 459 10 707 Roll Back Malaria Partnership Fund (481) 964 Partnership for Maternal, Newborn and Child Health Fund 4 291 2 255 Alliance for Health Policy and System Research Fund 14 040 14 851 Global Health Workforce Alliance Fund 1 089 1 515 European Observatory on Health Systems and Policies 7 223 5 074 ESPEN Fund 6 983 7 727 Total Fiduciary Fund 41 604 43 093 6.4 Changes to funds under Statement III (Statement of Changes in Net Assets/Equity) As at 31 December 2017, the following new funds were established: Infrastructure Fund. This Fund was established by the Seventieth World Health Assembly through decision WHA70(16) to consolidate reporting for the Real Estate Fund and the Information Technology Fund. Pre-qualification Fund. This Fund was established to record and report fees charged to manufacturers for pre- qualification services to assess the quality, safety and efficacy of medical produces (vaccines, medicines or diagnostics). 7. Supporting information to the Statement of Comparison of Budget and Actual Amounts In May 2015, the Health Assembly adopted resolution WHA68.1 on the Programme budget 2016–2017, in which it approved the budget for the financial period 2016–2017, under all sources of funds, namely, assessed and voluntary contributions of US$ 4385 million. WHO’s budget is adopted on a biennial basis by the Health Assembly. In May 2016, the Health Assembly adopted decision WHA69(9) to revise A71/29 60 A 7 1 /2 9 the Programme budget 2016-2017 to US$ 4545 million (an increase of US$ 160 million compared to the figure originally approved). WHO’s budget and financial statements are prepared using a different accounting basis. The Statement of Financial Position (Statement I), Statement of Financial Performance (Statement II), Statement of Changes in Net Assets/Equity (Statement III), and Statement of Cash Flow (Statement IV) are prepared on a full accrual basis, whereas the Statement of Comparison of Budget and Actual Amounts (Statement V) is established on a modified cash basis (i.e. actual expenses are used to measure the budget utilization). As per the requirements of IPSAS 24 (Presentation of Budget Information in Financial Statements), the actual amounts presented on a comparable basis to the budget shall, where the financial statements and the budget are not prepared on a comparable basis, be reconciled to the actual amounts presented in the financial statements, identifying separately any differences in terms of basis, timing, entity and presentation. The General Fund, as per Note 2.18, represents the programme budget results, except for the Tax Equalization Fund expenses, other non-programme budget utilization and all in-kind/in-service expenses which are not included in the programme budget results. As required by IPSAS 24 (Presentation of Budget Information in Financial Statements), reconciliation is provided on a comparable basis between the actual amounts as presented in Statement V and the actual amounts in the financial accounts identifying separately any basis, timing, entity and presentation differences. Basis differences occur when the components of the approved programme budget are used for activities other than the implementation of technical programmes. Examples of this include Tax Equalization Fund expenses, other non-programme budget utilization and special arrangements. Timing differences represent the inclusion in WHO’s financial accounts of programme budget expenses in other financial periods. Entity differences represent the inclusion in WHO’s financial accounts of the amounts against two funds: Member States – other and the Fiduciary Fund. These funds do not form part of the Organization’s programme budget. Presentation differences concern differences in the format and classification schemes in the Statement of Cash Flow (Statement IV) and the Statement of Comparison of Budget and Actual Amounts (Statement V). A reconciliation between the actual amounts on a comparable basis in Statement V and the actual amounts in Statement IV for December 2017 is presented below. Description 2017 Operating Investing Financing Total US$ thousands Actual amount on a comparable basis (Statement V) (2 390 065) (2 390 065) Basis differences 129 604 214 328 8 808 352 740 Timing differences 1 383 1 383 Entity differences 159 483 (22 901) 136 582 Presentation differences 2 030 640 (27 518) 2 003 122 Actual amount in the Statement of Cash Flow (Statement IV) (68 955) 163 909 8 808 103 762 A71/29 61 8 . Se gm e n t re p o rt in g 8 .1 St at e m e n t o f Fi n an ci al P o si ti o n b y se gm e n ts A s a t 3 1 D ec em b er 2 0 1 7 ( In t h o u sa n d s o f U S d o lla rs ) D es cr ip ti o n H ea d q u ar te rs R eg io n al O ff ic e fo r A fr ic a R eg io n al O ff ic e fo r th e A m er ic as R eg io n al O ff ic e fo r th e Ea st er n M ed it er ra n ea n R eg io n al O ff ic e fo r Eu ro p e R eg io n al O ff ic e fo r So u th -E as t A si a R eg io n al O ff ic e fo r th e W es te rn P a ci fi c To ta l A SS ET S C u rr en t as se ts C as h a n d c as h e q u iv al en ts 5 0 4 8 5 6 1 4 9 6 5 0 8 9 43 1 5 6 3 6 8 8 4 3 4 4 1 5 4 0 6 5 2 Sh o rt -t er m in ve st m e n ts 2 5 7 8 0 38 0 0 0 0 0 0 2 5 7 8 0 3 8 R ec ei va b le s – cu rr e n t 1 7 8 7 1 98 1 8 23 (5 77 3 54 ) 60 2 3 8 9 1 5 0 8 2 4 4 1 2 1 4 4 1 0 St af f re ce iv ab le s 4 7 2 8 2 1 79 0 94 7 3 2 9 7 5 7 1 1 6 4 1 0 1 0 4 In ve n to ri es 27 4 1 7 1 4 94 0 13 9 7 9 0 3 6 2 3 8 9 4 3 6 4 1 P re p ay m e n ts a n d d e p o si ts 9 5 4 2 51 2 0 1 0 71 1 6 1 8 6 3 2 3 9 4 2 0 3 1 2 To ta l c u rr en t as se ts 4 9 1 1 7 79 2 0 9 7 3 (5 7 7 35 4) 25 5 4 2 2 4 4 2 1 8 1 4 3 5 6 3 2 4 4 0 7 1 5 7 N o n -c u rr en t as se ts R ec ei va b le s – n o n -c u rr e n t 2 3 6 6 0 3 0 0 0 0 0 0 2 3 6 6 0 3 Lo n g- te rm in ve st m e n ts 1 1 8 7 4 5 0 0 0 0 0 0 1 1 8 7 4 5 P ro p er ty , p la n t an d e q u ip m en t 59 3 5 7 1 5 8 4 7 0 24 2 0 2 1 2 0 0 1 5 5 7 1 3 8 2 1 0 3 5 4 5 In ta n gi b le s 3 8 0 7 0 0 0 0 0 0 3 8 0 7 To ta l n o n -c u rr en t as se ts 4 1 8 5 1 2 1 5 8 4 7 0 24 2 0 2 1 2 0 0 1 5 5 7 1 3 8 2 4 6 2 7 0 0 TO TA L A SS ET S 5 3 3 0 2 91 3 6 8 2 0 (5 7 7 35 4) 49 7 4 4 3 6 4 2 1 9 7 0 0 7 0 1 4 4 8 6 9 8 5 7 LI A B IL IT IE S C u rr e n t lia b ili ti es C o n tr ib u ti o n s re ce iv e d in a d va n ce 1 0 7 2 5 5 0 0 56 0 9 0 1 0 7 3 2 0 A cc o u n ts p ay ab le 19 6 7 1 8 1 61 0 21 9 1 6 5 0 7 7 7 8 8 8 2 9 4 9 6 5 6 6 2 St af f p ay ab le 64 7 1 0 56 0 29 2 8 0 1 7 1 9 3 2 3 3 9 A cc ru ed s ta ff b en ef it s – c u rr e n t 22 9 7 9 1 2 7 1 7 0 4 4 03 3 5 4 4 3 3 1 2 3 1 0 3 5 0 0 5 8 D ef er re d r ev e n u e – c u rr en t 4 3 1 3 2 0 0 0 0 0 0 0 4 3 1 3 2 0 Fi n an ci al li ab ili ti es 72 8 5 7 0 0 0 0 0 0 7 2 8 5 7 O th er c u rr e n t lia b ili ti es (1 3 8 8 7 9 3 3) 6 1 09 3 30 14 1 2 8 6 3 5 79 5 25 1 1 0 9 8 7 7 1 7 6 7 0 3 0 1 2 8 2 0 2 7 1 0 1 1 4 2 In te r- e n ti ty li ab ili ti es 9 4 8 2 9 1 0 0 0 0 0 0 9 4 8 2 9 1 Lo n g- te rm b o rr o w in gs – c u rr e n t 61 1 0 0 0 0 0 0 6 1 1 To ta l c u rr en t lia b ili ti e s (1 2 2 84 3 02 ) 6 1 31 2 64 14 1 2 8 6 3 6 06 1 92 1 1 1 8 5 7 8 1 7 7 8 4 1 0 1 2 8 8 1 7 2 1 7 7 9 6 0 0 N o n -c u rr en t lia b ili ti es Lo n g- te rm b o rr o w in gs – n o n -c u rr e n t 43 0 0 4 0 0 0 0 0 0 4 3 0 0 4 A cc ru ed s ta ff b en ef it s – n o n -c u rr e n t 1 0 0 5 0 42 2 4 2 5 6 3 0 74 4 4 8 1 1 3 4 0 7 8 2 6 5 6 6 0 0 0 6 1 5 7 8 1 2 2 D ef er re d r ev e n u e – n o n -c u rr en t 2 3 6 6 0 3 0 0 0 0 0 0 2 3 6 6 0 3 O th er li ab ili ti es – n o n -c u rr e n t 80 4 0 0 0 0 0 0 8 0 4 To ta l n o n -c u rr en t lia b ili ti es 1 2 8 5 4 53 2 4 2 5 6 3 0 74 4 4 8 1 1 3 4 0 7 8 2 6 5 6 6 0 0 0 6 1 8 5 8 5 3 3 TO TA L LI A B IL IT IE S (1 0 9 98 8 49 ) 6 3 73 8 27 14 1 2 8 6 3 6 80 6 40 1 2 3 1 9 8 5 1 8 6 1 0 6 6 1 3 4 8 1 7 8 3 6 3 8 1 3 3 N ET A SS ET S/ EQ U IT Y G en er al F u n d 16 4 4 8 5 0 8 (6 0 0 0 8 8 5) (7 03 9 96 ) (3 4 17 7 2 3) (1 0 7 4 9 3 2 ) (1 7 2 3 2 5 5 ) (1 2 3 3 8 4 0 ) 2 2 9 3 8 7 7 M em b e r St at es – o th er (1 85 2 25 ) (3 30 4 73 ) (1 4 43 1) (2 12 9 05 ) (1 3 5 7 4 5 ) (1 1 7 8 0 7 ) (1 0 7 1 7 1 ) (1 1 0 3 7 5 7 ) Fi d u ci ar y fu n d s 65 8 5 7 (5 6 49 ) (2 13 ) (2 68 ) (1 7 6 6 6 ) (3 0 4 ) (1 5 3 ) 4 1 6 0 4 TO TA L N ET A SS ET S/ EQ U IT Y 16 3 2 9 1 4 0 (6 3 3 7 0 0 7) (7 1 8 64 0) (3 6 3 0 8 9 6) (1 2 2 8 3 4 3 ) (1 8 4 1 3 6 6 ) (1 3 4 1 1 6 4 ) 1 2 3 1 7 2 4 TO TA L LI A B IL IT IE S A N D N ET A SS ET S/ EQ U IT Y 5 3 3 0 2 91 3 6 8 2 0 (5 7 7 35 4) 49 7 4 4 3 6 4 2 1 9 7 0 0 7 0 1 4 4 8 6 9 8 5 7 A71/29 62 8 .2 St at e m e n t o f Fi n an ci al P e rf o rm an ce b y se gm e n ts Fo r th e ye a r en d ed 3 1 D ec em b er 2 0 1 7 ( In t h o u sa n d s o f U S d o lla rs ) D e sc ri p ti o n H e ad q u ar te rs R e gi o n al O ff ic e f o r A fr ic a R e gi o n al O ff ic e f o r th e A m e ri ca s R e gi o n al O ff ic e f o r th e Ea st e rn M e d it e rr an e an R e gi o n al O ff ic e f o r Eu ro p e R e gi o n al O ff ic e f o r So u th -E as t A si a R e gi o n al O ff ic e f o r th e W e st e rn P ac if ic To ta l R e ve n u e A ss es se d c o n tr ib u ti o n s 4 5 6 7 12 (1 ) 4 5 6 7 11 V o lu n ta ry c o n tr ib u ti o n s 2 1 3 9 2 7 2 3 3 2 1 3 9 3 0 5 V o lu n ta ry c o n tr ib u ti o n s in -k in d a n d in -s er vi ce 1 3 6 8 32 1 3 6 8 32 R ei m b u rs ab le p ro cu re m en t 9 0 4 7 9 0 4 7 O th er r ev en u e 4 1 5 0 6 (4 1 6 8 ) 3 0 6 (1 8 8 8 ) (1 9 4 0 ) (4 1 1 ) 3 3 4 0 5 To ta l r e ve n u e 2 7 8 3 3 6 9 (4 1 68 ) 3 0 6 (1 8 55 ) (1 9 40 ) (4 1 2) 2 7 7 5 3 0 0 Ex p e n se s St af f co st s 4 4 8 8 30 2 2 5 4 04 2 6 7 8 0 8 8 0 6 3 6 9 6 5 6 5 3 0 2 9 5 4 5 3 8 9 6 6 3 00 M ed ic al s u p p lie s an d m at er ia ls 3 4 7 7 1 8 3 2 3 2 2 0 4 0 7 8 9 7 5 7 1 4 8 3 8 6 6 3 8 1 9 0 2 5 3 0 19 C o n tr ac tu al s er vi ce s 1 8 5 2 38 1 8 9 8 03 1 9 3 0 9 2 5 5 7 86 4 8 1 1 7 5 7 8 4 0 2 5 4 5 9 7 8 1 5 52 Tr an sf er s an d g ra n ts 2 3 1 4 1 1 0 1 1 10 3 0 2 3 8 7 3 0 7 4 1 7 9 2 5 0 5 6 1 6 2 4 6 2 6 0 0 62 Tr av el 8 8 7 6 3 5 1 0 7 2 1 3 6 1 4 1 6 3 5 3 1 3 3 7 9 9 1 5 8 9 5 6 8 2 0 1 9 07 G en er al o p er at in g ex p en se s 3 9 5 2 9 4 8 4 1 6 1 0 9 9 8 3 6 9 4 8 1 2 3 5 7 1 3 7 7 0 5 6 6 7 1 6 7 6 85 Eq u ip m en t, v eh ic le s an d f u rn it u re 4 1 1 5 8 3 6 6 1 6 1 6 0 2 3 6 2 2 7 9 2 2 0 4 8 3 5 8 4 3 D ep re ci at io n a n d a m o rt iz at io n 2 7 7 6 6 4 7 1 2 6 4 4 5 1 1 8 4 3 9 2 2 1 4 1 6 7 To ta l e xp en se s 8 2 7 1 63 7 1 3 8 74 7 5 7 6 4 5 8 2 2 36 1 5 7 7 09 2 0 1 1 51 1 2 2 6 38 2 6 8 0 5 3 5 Fi n an ce r e ve n u e 7 4 2 4 1 ( 1 9 5) ( 4 ) 1 2 2 8 2 4 9 1 6 2 3 1 3 1 7 7 2 7 3 TO TA L SU R P LU S/ (D EF IC IT ) FO R T H E Y EA R a 2 0 3 0 4 4 7 (7 1 8 2 3 7) (7 5 7 6 8) (5 8 0 7 0 2) (1 5 9 3 1 5) (2 0 1 4 6 8) (1 2 2 9 1 9) 1 7 2 0 38 a Th e r ev e n u e b al an ce s h o w s a h ig h s u rp lu s fo r h ea d q u ar te rs a n d d ef ic it s fo r o th er o ff ic es . T h is is a c o n se q u e n ce o f th e p o lic y o f ce n tr al iz e d a cc o u n ti n g fo r re ve n u e an d d e ce n tr al iz e d a cc o u n ti n g fo r ex p e n se s. A71/29 63 A 7 1 /2 9 9. Amounts written-off and ex-gratia payments During 2017, a total of US$ 453 915 was approved as write-off (US$ 328 434 in 2016). This amount is comprised of: US$ 388 620 relating to travel advances from former staff members, meeting participants and old cases with staff members where recovery was deemed impossible; US$ 40 478 relating to supplier advances and credit memos where the balance was deemed impossible to recover; and US$ 24 917 relating to salary advances or missing pension contributions from former staff members where the balance was deemed impossible to recover. No ex-gratia payment was approved in 2017(US$ nil in 2016). 10. Related party and other senior management disclosures Staff members considered to be “key management personnel” are the Director-General, regional directors and all other ungraded staff. The number of key management personnel who held these positions over the course of the year was 32. The table below details their aggregate remuneration. Description US$ thousands Compensation and post adjustment 4 592 Entitlements 1 200 Pension and health plans 1 229 Total remuneration 7 021 Outstanding advances against entitlements 167 Outstanding loans (in addition to normal entitlements, if any) – The aggregate remuneration of key management personnel includes: net salaries, post adjustment, entitlements such as representation allowance and other allowances, assignment and other grants, rental subsidy, personal effect shipment costs, and employer pension and current health insurance contributions. Key management personnel are also qualified for post-employment benefits at the same level as other employees. These benefits cannot be reliably quantified. Key management personnel are ordinary members of the UNJSPF. The Regional Director for the Americas is included among the key management personnel. However, as the Regional Director is receiving all entitlements and benefits from PAHO, the entitlements and benefits concerned are disclosed in PAHO’s financial statements and not in WHO’s financial statements. During the year, no loans were granted to key management personnel beyond those widely available to staff outside this grouping. 11. Events after the reporting date WHO’s reporting date is 31 December 2017. The financial statements were authorised for issue on 23 March 2018, the date at which they were submitted to the External Auditor by the Director-General. On the date of the signing of these accounts, no material events, favourable or unfavourable, had arisen between the balance sheet date and the date when the financial statements were authorized for issue that would have had an impact on the financial statements. A71/29 64 A 7 1 /2 9 12. Contingent liabilities, commitments and contingent assets Contingent liabilities As at 31 December 2017, WHO had a number of legal cases pending. Most involve disputes that are not recorded because the likelihood of repayment has been determined to be remote. However, there are three cases involving contractual disputes that are to be considered contingent liabilities. The total potential cost to the Organization is estimated at US$ 288 407 (US$ 16 150 as at 31 December 2016). Operating lease commitments WHO enters into operating lease arrangements for renting office space in various country offices. Future minimum lease rental payments for the following periods are as follows. Description Total US$ thousands Year 2017 Year 2016 Under 1 Year 7 292 7 139 1 to 5 years 6 656 9 046 5 years + 1 258 1 107 Total operating lease commitments 15 206 17 292 The Organization has no outstanding leases qualifying as finance leases at the reporting date. WHO leased office space to six tenants. As at 31 December 2017, total revenue from the leasing activities was US$ 0.8 million (US$ 0.8 million as at 31 December 2016). Contingent assets In accordance with IPSAS 19 (Provisions, Contingent Liabilities and Contingent Assets), contingent assets will be disclosed for cases where an event will give rise to a probable inflow of economic benefits. As at 31 December 2017, there are no material contingent assets to disclose. A71/29 65 Sc h ed u le I. S ta te m e n t o f Fi n an ci al P e rf o rm an ce b y m aj o r fu n d s Fo r th e ye a r en d ed 3 1 D ec em b er 2 0 1 7 (I n t h o u sa n d s o f U S d o lla rs ) D es cr ip ti o n G e n e ra l F u n d M em b er S ta te s – o th er Fi d u ci ar y Fu n d Su b to ta l El im in at io n sa To ta l P e rc en ta ge R e gu la r b u d ge t V o lu n ta ry fu n d s El im in at io n sa Su b to ta l C o m m o n F u n d En te rp ri se F u n d Sp e ci al P u rp o se Fu n d R ev en u e A ss es se d c o n tr ib u ti o n s 4 5 6 7 1 2 45 6 7 1 2 (1 ) (1 ) 4 5 6 7 1 1 1 6 % V o lu n ta ry c o n tr ib u ti o n s 2 1 10 5 65 2 1 10 5 65 3 0 7 0 1 3 0 7 0 1 (1 9 6 1 ) 2 1 3 9 3 0 5 7 7 % V o lu n ta ry c o n tr ib u ti o n s in -k in d an d in -s e rv ic e 13 6 8 3 2 1 3 6 8 3 2 1 3 6 8 3 2 5 % R ei m b u rs ab le p ro cu re m e n t 9 0 47 9 0 4 7 9 0 4 7 0 % O th er r ev e n u e (4 7 9) 1 8 1 1 9 8 (1 5 8 6 4 9 ) 22 0 7 0 1 10 8 5 7 2 6 1 8 6 9 1 5 3 8 2 7 4 2 6 5 (2 6 2 9 3 0 ) 3 3 4 0 5 1 % To ta l o p er at in g re ve n u e 4 5 6 2 3 3 2 2 91 7 63 (1 5 8 64 9) 2 5 89 3 47 15 6 7 3 6 2 6 1 8 6 9 3 2 2 3 9 4 5 0 8 4 4 (2 6 4 8 9 1 ) 2 7 7 5 3 0 0 1 0 0 % Ex p en se s St af f co st s 2 9 1 3 4 3 6 5 7 8 2 9 94 9 1 7 2 20 1 3 7 1 5 6 1 7 3 1 4 9 9 4 1 9 1 3 0 4 (1 7 4 1 7 6 ) 9 6 6 3 0 0 3 6 % M ed ic al s u p p lie s an d m at e ri al s 6 0 80 1 3 7 9 1 7 14 3 9 9 7 (4 4 96 ) 11 6 3 4 7 4 5 9 1 2 6 1 1 6 4 6 8 (7 4 4 6 ) 2 5 3 0 1 9 9 % C o n tr ac tu al s er vi ce s 52 0 4 2 6 8 8 4 6 2 74 0 5 0 4 (1 2 54 8) 24 9 5 4 8 2 6 7 7 0 9 5 0 2 3 6 (9 1 8 8 ) 7 8 1 5 5 2 2 9 % Tr an sf er s an d g ra n ts 14 2 1 4 2 3 9 7 1 0 25 3 9 2 4 48 3 3 6 40 6 6 2 3 8 4 5 8 6 3 0 (2 4 9 2 ) 2 6 0 0 6 2 1 0 % Tr av el 25 9 7 2 1 7 0 6 0 6 19 6 5 7 8 10 2 1 9 0 4 3 4 7 5 5 4 8 1 (1 5 2 ) 2 0 1 9 0 7 8 % G en er al o p er at in g e xp e n se s 37 3 8 4 3 1 4 5 6 6 (1 5 8 6 4 9 ) 19 3 3 0 1 (2 1 06 ) 11 3 6 2 3 1 4 6 2 3 6 1 7 4 4 3 3 5 (6 9 9 5 1 ) 1 6 7 6 8 5 6 % Eq u ip m e n t, v eh ic le s an d f u rn it u re 6 9 62 36 6 1 4 43 5 7 6 (1 4 36 3) 1 3 56 6 6 9 8 6 2 (6 2 4 7 ) (1 4 8 6 ) 3 5 8 4 3 1 % D ep re ci at io n a n d a m o rt iz at io n 14 1 6 7 1 4 1 6 7 1 4 1 6 7 1 % To ta l e xp en se s 4 3 3 9 9 7 2 2 45 7 04 (1 5 8 64 9) 2 5 21 0 52 (1 8 8 63 ) 15 3 1 9 3 2 5 6 3 1 6 3 3 7 2 8 4 2 4 3 7 4 (2 6 4 8 9 1 ) 2 6 8 0 5 3 5 1 0 0 % Fi n an ce r ev en u e 8 2 66 49 1 3 5 57 4 0 1 12 8 6 5 1 6 80 5 3 2 7 1 9 8 7 2 7 7 2 7 3 TO TA L SU R P LU S/ (D EF IC IT ) FO R T H E Y EA R 30 5 0 2 95 1 9 4 12 5 6 9 6 31 7 2 8 5 2 23 1 0 8 8 0 (1 4 8 9 ) 4 6 3 4 2 1 7 2 0 3 8 Fu n d b al an ce – 1 J an u ar y 2 01 7 3 8 38 2 1 64 3 43 2 1 68 1 81 10 4 2 7 1 17 4 8 3 (9 9 8 2 6 5 ) 4 3 0 9 3 (8 3 3 4 1 8 ) 1 3 3 4 7 6 3 D ir ec t ad ju st m en ts t o n et a ss e ts / eq u it y (2 7 5 0 7 7 ) (2 7 5 0 7 7 ) (2 7 5 0 7 7 ) Fu n d b al an ce – 3 1 D e ce m b er 2 0 17 34 3 4 0 2 2 59 5 37 2 2 93 8 77 13 5 9 9 9 22 7 0 6 (1 2 6 2 4 6 2 ) 4 1 6 0 4 (7 8 7 0 7 6 ) 1 2 3 1 7 2 4 a El im in at io n s as r ep o rt e d in t h e “S ta te m e n t o f fi n an ci al p er fo rm an ce b y m aj o r fu n d ( Sc h ed u le 1 )” a re a cc o u n ti n g ad ju st m e n ts m ad e to r e m o ve t h e e ff ec t o f in te r- fu n d t ra n sf er s th at w o u ld o th er w is e o ve rs ta te r ev en u e a n d e xp e n se s o f th e O rg an iz a ti o n . T h es e ac co u n ti n g ad ju st m e n ts a re d o n e th ro u gh a s ep ar at e e lim in at io n f u n d e st ab lis h e d f o r th is p u rp o se . A71/29 66 Sc h ed u le II . E xp en se s b y m aj o r o ff ic e ‒ G en er al F u n d o n ly Fo r th e ye a r en d ed 3 1 D ec em b er 2 0 1 7 (I n t h o u sa n d s o f U S d o lla rs ) D e sc ri p ti o n H e ad q u ar te rs R e gi o n al O ff ic e f o r A fr ic a R e gi o n al O ff ic e f o r th e A m er ic as R e gi o n al O ff ic e f o r th e E as te rn M e d it er ra n e an R e gi o n al O ff ic e f o r Eu ro p e R e gi o n al O ff ic e f o r So u th -E as t A si a R e gi o n al O ff ic e f o r th e W es te rn P ac if ic To ta l Ex p e n se s St af f co st s 4 4 6 1 7 2 2 2 1 1 2 9 2 6 7 8 0 8 7 0 7 5 6 0 8 6 9 5 3 1 0 6 5 4 0 4 1 9 4 9 1 7 2 M ed ic al s u p p lie s an d m at er ia ls 2 3 1 5 3 2 6 3 0 8 2 0 4 0 6 9 1 1 9 7 8 7 2 1 2 6 1 6 2 8 8 9 1 4 3 9 9 7 C o n tr ac tu al s e rv ic es 1 5 2 2 9 4 1 8 1 8 2 5 1 9 3 0 9 2 5 5 8 0 8 4 7 2 5 4 5 8 4 2 1 2 5 5 9 3 7 4 0 5 0 4 Tr an sf er s an d g ra n ts 2 2 5 4 6 9 9 8 2 2 3 0 2 3 8 5 7 2 9 4 2 0 1 2 2 4 4 1 1 6 1 6 2 2 5 3 9 2 4 Tr av el 8 5 2 9 9 4 9 6 9 9 1 3 6 1 4 1 6 1 6 0 1 3 0 7 2 9 1 4 0 9 5 9 4 1 9 6 5 7 8 G en er al o p e ra ti n g ex p en se s 7 8 1 3 3 4 4 5 1 5 1 0 9 9 8 3 5 2 4 3 7 1 1 1 1 3 0 5 2 4 2 4 9 1 9 3 3 0 1 Eq u ip m en t, v eh ic le s an d f u rn it u re 3 5 7 4 1 3 7 6 0 1 7 9 4 9 2 3 5 9 3 2 3 6 2 6 9 8 4 3 5 7 6 To ta l e xp e n se s 8 1 1 1 7 1 6 3 7 0 5 8 7 5 7 6 4 5 6 7 0 8 3 1 4 2 7 3 8 1 7 2 0 1 2 1 1 5 2 2 6 2 5 2 1 0 5 2 P e rc e n ta ge o f ex p e n se s b y e xp e n se t yp e ac ro ss m aj o r o ff ic e St af f an d o th e r p er so n n el c o st s 4 7 % 2 3 % 3 % 9 % 6 % 6 % 6 % 1 0 0 % M ed ic al s u p p lie s an d m at er ia ls 1 6 % 1 8 % 1 % 4 8 % 5 % 9 % 2 % 1 0 0 % C o n tr ac tu al s e rv ic es 2 1 % 2 5 % 3 % 3 5 % 6 % 8 % 3 % 1 0 0 % Tr an sf er s an d g ra n ts t o c o u n te rp ar ts 9 % 3 9 % 1 % 3 4 % 2 % 9 % 6 % 1 0 0 % Tr av el 4 3 % 2 5 % 7 % 8 % 7 % 5 % 5 % 1 0 0 % G en er al o p e ra ti n g ex p en se s 4 0 % 2 3 % 6 % 1 8 % 4 % 7 % 2 % 1 0 0 % Eq u ip m en t, v eh ic le s an d f u rn it u re 8 % 3 2 % 0 % 4 1 % 5 % 7 % 6 % 1 0 0 % To ta l p e rc e n ta ge 3 2 % 2 5 % 3 % 2 2 % 6 % 7 % 5 % 1 0 0 % P e rc e n ta ge o f ex p e n se s b y e xp e n se t yp e w it h in e ac h m aj o r o ff ic e St af f an d o th e r p er so n n el c o st s 5 5 % 3 5 % 3 5 % 1 5 % 4 3 % 3 1 % 4 7 % 3 8 % M ed ic al s u p p lie s an d m at er ia ls 3 % 4 % 3 % 1 2 % 6 % 7 % 3 % 6 % C o n tr ac tu al s e rv ic es 1 9 % 2 9 % 2 5 % 4 5 % 3 3 % 3 4 % 2 2 % 2 9 % Tr an sf er s an d g ra n ts t o c o u n te rp ar ts 3 % 1 6 % 4 % 1 5 % 3 % 1 3 % 1 4 % 1 0 % Tr av el 1 1 % 8 % 1 8 % 3 % 9 % 5 % 8 % 8 % G en er al o p e ra ti n g ex p en se s 1 0 % 7 % 1 5 % 6 % 5 % 8 % 4 % 8 % Eq u ip m en t, v eh ic le s an d f u rn it u re 0 % 2 % 0 % 3 % 2 % 2 % 2 % 2 % To ta l p e rc e n ta ge 1 0 0 % 1 0 0 % 1 0 0 % 1 0 0 % 1 0 0 % 1 0 0 % 1 0 0 % 1 0 0 % A71/29 67 A 7 1 /2 9 A 7 1 /2 9 Schedule III. Financial overview – all funds, 2016–2017 and 2014-2015 For the year ended 31 December 2017 (In millions of US dollars) Description Total 2017 Total 2016 Total 2016–2017 Total 2014–2015 Assessed contributions 457 470 927 955 Voluntary contributions – programme budget 2 111 1 717 3 828 3 839 Total contributions – programme budget 2 568 2 187 4 755 4 794 Non-programme budget revenue 70 89 159 123 Voluntary contributions in-kind and in-service (refer to Note 5.1) 137 88 225 180 Total revenue (all sources) 2 775 2 364 5 139 5 097 Expenses – programme budget 2 390 2 182 4 572 4 357 Expenses – non-programme budget and other 153 201 354 511 Expenses – in-kind and in-service 137 88 225 175 Total expenses (all sources) 2 680 2 471 5 151 5 043 Finance revenue 77 63 140 28 Total surplus/(deficit) 172 (44) 128 82 = = =