WIPO Continues Honing Its Audit And Oversight Functions

The UN World Intellectual Property Organization has been working in recent years to improve its audit and oversight functions under the watchful eye of its member states. On the opening day of its meeting this week, the influential Program and Budget Committee (PBC) took several actions to advance the process, with some key positions in flux.

The WIPO PBC is meeting from 14-18 September. Meeting documents are available here.

This meeting of the PBC will be followed by the annual WIPO General Assemblies from 5-14 October.

The structure for oversight and audit of WIPO include the Internal Oversight Division (IOD), member-state Independent Advisory Oversight Committee (IAOC), External Auditor, and the UN Joint Inspection Unit (JIU), all of which provided reports to this week’s PBC meeting. The external auditor is scheduled to appear at the PBC tomorrow (16 September).

IAOC

A critical element of the WIPO oversight structure is the Independent Advisory Oversight Committee (IAOC), made up of seven member state representatives. These are aimed to be one from each of the regional groups of WIPO if possible, working independently of their governments (note that China is its own regional group at WIPO).

Currently, the group is:

• Mary Ncube (Zambia), Chair (African Group)
• Gábor Ámon (Hungary), Vice-Chair (Group of Central European and Baltic States (CEBS))
• Anol Chatterji (India) (Asian Group)
• Egbert Kaltenbach (Germany) (Group B)
• Nikolay Lozinskiy (Russia) (Group of Central Asian, Caucasus and Eastern European States (CACEEC))
• Fernando Nikitin (Uruguay) (Group of Countries of Latin America and the Caribbean)
• Zhang Guangliang (China)

Four members’ terms will expire on 31 January 2017: Ncube, Nikitin, Chatterji, and Lozinskiy.

PBC Discussion

The PBC approved a number of documents related to audit and oversight, including WO/PBC/24/2, 3, 4, and 6.

The PBC adopted the report of the IAOC (WO/PBC/24/2), as well as a document setting out a process for the next rotation of IAOC membership (WO/PBC/24/3). Officials are appointed for 3-year terms.

Separately, the PBC approved a proposed revision of the terms of reference of the IAOC, document WO/PBC/24/4. The changes include: aligning the terms with recent changes in the WIPO Internal Oversight Charter, incorporating best practices in oversight committees, elaborating the committee’s role in giving advise in investigations, and enhancing independent oversight over WIPO’s ethics function. The document included text showing the tracked changes.

Ámon presented the IAOC report to the PBC. Some members also commented that the IAOC report was made available late, that it was too descriptive and needed more analysis.

The PBC noted the apparently high number of JIU recommendations still outstanding, despite progress, and changed the decision paragraph in document WO/PBC/24/7 to scale back the statement that the PBC endorsed the implementation of the recommendations, until they could be examined.

WIPO Revenues Up in 2014

In its report, the IAOC said matters reviewed included external audit, where it mentioned WIPO budget highlights from 2014. This included that for 2014, WIPO’s surplus was CHF 37 million, up from CHF 15.1 million in 2013, an increase of 145 percent.

Total revenue was CHF 370.2 million. The largest source of revenue, it said, was the Patent Cooperation Treaty (PCT), at CHF 278.6 million, which was more than 75 percent of the overall revenues earned by WIPO and a 8.2 percent increase over 2013.

The Madrid system for trademark registration was the second largest revenue source, accounting for nearly 15 percent of total revenue for 2014, a 1.1 percent increase from 2013. The Hague system for industrial designs was the third largest source of revenue, bringing in CHF 3.2 million (less than 1 percent of the total). Most of the remainder of the WIPO budget (less than 9 percent) comes from governments.

Other Items

Meanwhile, the IAOC also looked at internal oversight, including noting the departure of the IOD Director Thierry Rajaobelina effective in April 2015. He moved to take the position of director of internal oversight at another organisation on the UN system. A search suggests that he moved to the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), in Amman, Jordan.

The initial search for a new IOD director was unsuccessful, so that the process is ongoing to find the new director. The acting director is Mr. Tuncay Efendioglu, who is also the head of the internal audit section with IOD. The IAOC reported that it was informed that the other vacant positions in IOD have been filled, such as associate evaluation officer and secretary for the Investigations Section.

Another element of the IAOC report was internal audit, including an audit of the WIPO Academy, which the report said is being repositioned. Also, evaluation was a topic, including regular briefings on investigation cases.

An issue the IAOC was asked to deal with was a highly confidential investigation that arose after accusations were made last year by a WIPO deputy director general about certain actions of the director general (IPW, WIPO, 19 May 2014). According to an informed source, the investigation went to UN investigative authorities. Its current status is unknown.

On the JIU, the IAOC was advised that “significant progress” was made in 2014 on a recommendations made in JIU reports and notes, raising the implementation rate from 29 percent at the end of 2013 to 55 percent at the end of 2014.

And on yet another topic, ethics and ombudsperson, the IAOC said it was informed that in future the chief ethics officer will report directly to the director general. Yesterday in the PBC plenary, members were informed that a new chief ethics officer takes office at WIPO today. The position has been open since July 2014. The secretariat press office declined to provide the name of the new officer despite this being public information. But a source said the new chief ethics officer is Ms. Chitra Radhakishun.

Still another new position at WIPO about which the IAOC reported was a meeting with the new director, Security and Information Assurance Division, the chief security officer of the organisation.

Description of Functions

A document, WO/PBC/24/5, WIPO Responses to External Auditor’s report, provided to the PBC this week, shed more light on the various roles of the audit and oversight functions.

Below is a verbatim section from the document:

“Review of effectiveness

My review of effectiveness of the system of internal controls is mainly informed by:

• My senior managers, in particular Deputy Directors-General and Assistant Directors‑General who play important roles and are accountable for expected results, performance, their Division’s activities and the resources entrusted to them. The information channels mainly rely on periodic meetings held by the Senior Management Team.

• I derive assurance from Management Representation Letters signed by key WIPO officers. These letters recognize their responsibility for having and maintaining, in the programs, well-functioning systems and a mechanism for internal control aimed at presenting and/or detecting instances of fraud and major errors.
• The Chief Ethics Officer who provides confidential advice and counsel to the Organization and its staff on ethics and standards of conduct and promotes ethical awareness and responsible behavior in handling referrals concerning allegations of unethical behavior including conflict of interest,

• The Internal Oversight Division (IOD), on whose reports of internal audits, evaluations and advisory services I rely, also provide their reports to the Independent Advisory Oversight Committee (IAOC). These include independent and objective information on the adequacy and effectiveness of the Organization’s system of internal controls, and the related functions of oversight.

• In accordance with its terms of reference, the IAOC provides assurance to Member States on the appropriateness and effectiveness of internal controls at WIPO. The Committee oversees audit performance by monitoring of timely, effective and appropriate responses from management with regard to audit recommendations and implementation of the same. Finally, the IAOC keeps Member States informed of its work on a regular basis and reports annually to the Program and Budget Committee (PBC) and to the General Assembly,

• The Joint Inspection Unit (JIU) of the United Nations System,

• The External Auditor, whose comments are submitted to the PBC and the Assemblies, and

• The Governing Bodies’ observations”