IPSAS 17 PROPERTY, PLANT AND EQUIPMENT

Movement 2012 Equipment Furniture & Furnishings (in thousands of Swiss francs) Total

January 1, 2012 Gross carrying amount Accumulated depreciation Net carrying amount Movements in 2012: Additions Disposals Disposals depreciation Depreciation Total movements in 2012 December 31, 2012 Gross carrying amount Accumulated depreciation Net carrying amount 14,920 -13,015 1,905 2,836 -2,224 612 Furniture & Furnishings (in thousands of Swiss francs) 17,756 -15,239 2,517 125 -903 893 -1,220 -1,105 -41 40 -107 -108 125 -944 933 -1,327 -1,213 15,698 -12,688 3,010 2,877 -2,157 720 18,575 -14,845 3,730

Movement 2011

Equipment

Total

January 1, 2011 Gross carrying amount Accumulated depreciation Net carrying amount Movements in 2011: Additions Disposals Disposals depreciation Depreciation Total movements in 2011 December 31, 2011 Gross carrying amount Accumulated depreciation Net carrying amount 15,290 -11,817 3,473 2,363 -2,175 188 17,653 -13,992 3,661

905 -497 284 -1,155 -463

624 -110 104 -86 532

1,529 -607 388 -1,241 69

15,698 -12,688 3,010

2,877 -2,157 720

18,575 -14,845 3,730

All equipment in the inventory is valued at cost less depreciation based upon the straight-line basis. Furniture and furnishings are depreciated over a ten year useful life. All other equipment is depreciated over a five year useful life. Heritage assets including donated works of art are not recognized as assets on the Statement of Financial Position.

Tests conducted

Sr. No 1. Initial recognition

Result Test Following the transition to IPSAS from January 1, 2010, buildings which were occupied at that date were valued at an amount determined independently by external consultants, which represents the estimated value of the building when new (deemed cost of construction) less accumulated depreciation and impairment. Buildings which are brought into use after January 1, 2010 should be initially valued at cost. Check the cost (includes purchase price, any costs directly attributable to bringing the asset to its current location and condition, and the initial estimate of dismantling and removing the item and restoring the site where it is located if WIPO is obliged to do so) depreciation and Impairment calculations. Changes in the carrying value resulting from revaluation will be credited or debited directly to revaluation surplus which forms part of net assets, except to the extent that an increase reverses a previous revaluation decrease that was debited to the Statement of Financial Performance in a previous period. In such a case the revaluation increase is recognized on the Statement of Financial Performance. Check the accounting entries in this regard. Total cost consists of the asset purchase price, generally the invoice price (less discounts), import duties and non-refundable purchase taxes, and any directly attributable costs (such as the cost of site preparation, initial delivery and handling costs or installation costs) of bringing the asset to working condition for its intended use. Total cost does not include any refundable taxes or other similar refundable costs. Select a sample of assets purchased during the year to verify the manner in which the costs were determined. Where an asset is acquired at no cost (gifted, contributed or donated) or for a nominal cost, check whether the fair value of the asset as at the date of acquisition was used. Note: Fair value will be determined as equal to WIPOs replacement cost as established by the Procurement Department. The market price of a similar asset can Yes No

KD ref

Remarks

also be used.

2.

Asset Capitalization Verify for a sample of assets that were depreciated and capitalized whether they were owned by WIPO as a result of past events through purchase, construction or donation. Note: other conditions set for capitalization of asset has useful life of more than one year, equipment with a total cost of at least CHF 5,000 per unit, buildings and improvements to buildings with a total cost of at least CHF 50,000 per building or building improvement project

3.

Subsequent expenditure Subsequent expenses include major renovations and improvements to fixed assets that increase the future economic benefits or service potential of the fixed asset measured over its estimated useful life, beyond its most recently assessed standard of performance. To capitalize subsequent expenses, they must meet both of the following conditions: a) the relevant fixed asset must have a remaining estimated useful life of more than one year after the completion of the expense; and b) the cost of subsequent expense must exceed the cost threshold applicable to the class of assets (i.e. a total cost of least CHF 5000 per unit for equipment and CHF 50000 for building improvement projects). In case of replacements, check whether the carrying amount of the component that was replaced derecognized, value was reduced to zero and an equal amount charged to expense. Check the accounting entries of a sample of replacements carried out.

4.

Depreciation a) Straight-line depreciation method followed.

b) Depreciation charged on a monthly basis. c) Full months depreciation notwithstanding the date of receipt. charged

d) Separate useful lives of the component parts of permanent buildings including basic infrastructure, elevators, heating and ventilating systems, etc. have been established on the advice of an independent architectural consultant. The estimated useful lives of all fixed assets were to be reviewed periodically to determine whether revisions are required. If the useful life of an asset or asset component is changed, the carrying value at the date of the change of useful life is depreciated over the remaining portion of the revised useful life. i) Check whether this exercise was carried out during the year and carry out a substantive testing of a sample to determine whether carrying amounts and depreciation were calculated correctly. ii) Also look for any abnormalities such as total depreciation within few years of asset acquisition without matching impairments recorded etc., iii) Check if there were any assets where the more than due useful life was used for calculating depreciation. 5. Initial Recognition and Revaluation Changes in the value of land will be accounted for by debiting or crediting fixed assets and crediting or debiting revaluation surplus which forms part of net assets/equity. However, if the accumulated balance in revaluation surplus falls below zero, any net decrease is recognized on the Statement of Financial Performance. i) Check for a sample of assets that were revalued where the accumulated balance in revaluation had fallen below zero to verify whether it was reflected in the Statement of Financial Performance. Note: Conversely, if the carrying amount of a class of assets is increased as a result of a revaluation, the increase shall be credited directly to revaluation surplus under net assets/equity. However, the increase shall be recognized in the statement of financial performance to the extent that it reverses a revaluation decrease of the same class of assets previously recognized in surplus or deficit. ii) Check the classification of assets adopted in the AIMS system for a sample of inventory to verify

whether their classification was in order and correct useful life was indicated. iii) Check if there are any differences in the asset values i.e as per the Financial Statements and the values given in the Fixed Assets Register 6. Impairment Impairment loss should be recognized whenever the recoverable value of an asset falls materially below the carrying amount of the asset (net book value). The impairment loss is considered an expense in the statement of financial performance. All equipment held pending disposal will be considered fully impaired from the date on which the equipment is taken out of service. At each statement of financial position date, a review of all assets for any indication that an asset may be impaired will be undertaken. (para 12.2.20 of WIPO IPSAS Manual). Check whether this was done. 7. Assets Retirement, Disposal and Donation An item of property, plant and equipment should be removed from the financial statements on disposal or when no future economic benefits or service potential is expected from its use. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment should be determined as the difference between the actual net disposal proceeds and the carrying amount of the asset. The gain or loss should be included in the Statement of Financial Performance as an item of revenue or expense, as appropriate. Carry out the following tests to check depiction in the accounts for a sample of assets disposed during the period. a) cash proceeds in cash flows as investment activity-proceeds from the sale of PPE b) recognition of loss/profit c) removal of the asset from the statement of financial position 8. Disclosure Check whether the following disclosures were made (para 12.3 of WIPO IPSAS manual) a) Method of measurement (historical cost for WIPO) and the depreciation method used, 5

along with the threshold and useful life by class. b) Any contractual capital commitments and restrictions on titles. This will include disclosure of the interest in the surface rights on the land below the existing HQ buildings and the restrictions imposed by the grants from the Canton of Geneva. c) The nature and effect of a change in an accounting estimate, details of fair value and impairment calculations (if any) should be disclosed in the notes to the financial statements. d) For property revalued to fair value, the date of the revaluation, use of an independent valuer, method and significant assumptions used in the valuation in the notes to the financial statements. e) Changes in revaluation surplus should be recognized on the Statement of Changes in Net Assets (statement III) by class of asset revalued. 9. Accounting procedure-Adjustment ledger entries Randomly, check the accounting adjustment ledger entries in respect of the following as outlined at para 12.5 of WIPO IPSAS Manual. a) Buildings Building construction, Building completion, Building depreciation, Building impairment, b) Equipment Equipment acquisition, Equipment depreciation, Equipment impairment, Equipment disposal, Land revaluation