United Nations

Educational, Scientific and

Cultural Organization

FINANCIAL
STATEMENTS
2018
Contents
FINANCIAL REPORT OF THE DIRECTOR-GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

STATEMENT ON INTERNAL CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

OPINION OF THE EXTERNAL AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

I. CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

II. CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

III. CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

IV. CONSOLIDATED STATEMENT OF CASH FLOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

V. CONSOLIDATED STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – GENERAL FUND . . . . . . . . . . . . 39

VI. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

NOTE 1 – REPORTING ENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
NOTE 3 – ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
NOTE 4 – ACCOUNTING STANDARDS ISSUED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
NOTE 5 – CHANGES IN ACCOUNTING POLICIES AND NOTE DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
NOTE 6 – CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
NOTE 7 – INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
NOTE 8 – ACCOUNTS RECEIVABLE FROM NON-EXCHANGE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
NOTE 9 – ADVANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
NOTE 10 – OTHER RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
NOTE 11 – PROPERTY, PLANT AND EQUIPMENT (PP&E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
NOTE 12 – INTANGIBLE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
NOTE 13 – EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
NOTE 14 – TRANSFERS PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NOTE 15 – VOLUNTARY CONTRIBUTIONS WITH CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NOTE 16 – ADVANCE RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NOTE 17 – BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NOTE 18 – OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
NOTE 19 – NET ASSETS/EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
NOTE 20 – REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
NOTE 21 – EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
NOTE 22 – CONTINGENT LIABILITIES, COMMITMENTS AND CONTRACTUAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
NOTE 23 – APPROVED BUDGET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
NOTE 24 – FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
NOTE 25 – RELATED PARTY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
NOTE 26 – SEGMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
1 FINANCIAL REPORT OF
THE DIRECTOR-GENERAL
INTRODUCTION
In accordance with Article 11.1 of the Financial Regulations, I have the honour to submit the financial statements
and financial report of the Organization for the year ended 31 December 2018.

The External Auditor has expressed an unqualified (clean) opinion on the financial statements. His report is
submitted to the Executive Board in accordance with Article 12 of the Financial Regulations.

This section, the financial report, presents the Director-General’s discussion and analysis of UNESCO’s consolidated
financial position and financial performance for the financial year ended 31 December 2018.

OVERVIEW OF THE FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with International Public Sector Accounting Standards
(IPSAS) as required under Article 11.1 of the Financial Regulations of the Organization. Consolidated financial
statements are prepared for all UNESCO operations and entities including the nine category 1 institutes. The
financial statements cover all four business segments, namely;

The General Fund (GEF)

This segment, financed from the assessed contributions of Member States, covers the main operations of the
Organization. The programme appropriations for the financial period are voted by the General Conference
of Member States.

Other Proprietary Funds (OPF)

Includes revenue-generating activities, programme support costs for special accounts and trust funds, the
Staff Compensation Fund, the Terminal Payment Fund and Headquarters-related special accounts.

Programme Fiduciary Fund (PFF)

This segment relates to programmes and activities financed from funding provided by donors through
agreements or other legal authority. The UNESCO category 1 institutes which are set up as separate entities
are accounted for under this segment.

Staff Fiduciary Funds (SFF)

Activities/funds under this segment have been established for the benefit of UNESCO’s staff members
through the Medical Benefits Fund, the Restaurant Services and the Day Nursery and Children’s Club.

The financial statements consist of:

A Statement of Financial Position

This provides information about the net assets/equity at the reporting year-end date – the difference
between UNESCO’s total assets and liabilities. It gives information about the extent to which resources are
available to support future operations and the unfunded liabilities.

A Statement of Financial Performance

This measures the net surplus or deficit of the reporting year – the difference between revenues and
expenses. It provides information about the Organization’s cost of programme delivery and the sources of
revenue.

A Statement of Changes in Net Assets/Equity

Which highlights the sources of changes in the overall financial position.

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 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

A Cash Flow Statement

This provides information about UNESCO’s liquidity and solvency including how the organization raised and
used cash during the period and the repayment of borrowing. It measures the difference between the actual
cash coming in and cash going out.

A Comparison of Budget and Actual Amounts

This highlights whether resources where used in accordance with the approved budget. It shows differences
between the actual expenditure and the approved budget appropriation.

Notes to the Financial Statements

Which assist in understanding the financial statements. Notes comprise of a summary of significant
accounting policies and other explanatory information. It provides additional information on the financial
statements as required under IPSAS.

ORGANIZATIONAL BACKGROUND, OBJECTIVES,

STRATEGY AND PROGRAMMES
UNESCO was created in 1945 with an aim of contributing to peace and security by promoting collaboration
among the nations through education, science and culture in order to further universal respect for justice, for the
rule of law, human rights and fundamental freedoms which are affirmed for the peoples of the world, without
distinction of race, sex, language or religion, by the Charter of the United Nations Organization. Membership of
the Organization comprises of 193 Member States and 11 Associate Members as at 31 December 2018.

The current Medium-Term Strategy (37 C/4), approved by the General Conference in November 2013, sets out
the strategic vision and programmatic framework for UNESCO’s actions over the period 2014-2021 built around
the following mission statement: “As a specialized agency of the United Nations, UNESCO – pursuant to its
Constitution - contributes to the building of peace, the eradication of poverty and sustainable development and
intercultural dialogue through education, the sciences, culture, communication and information”. The strategy
defines two overarching objectives – peace and equitable and sustainable development – as well as two global
priorities – Africa and gender equality. The Strategy further defines nine strategic objectives.

These strategic objectives are translated into programmatic priorities through main lines of action and expected
results in the C/5 Programme and Budget document adopted by the General Conference. Programmes are defined
for four years while the budget allocation is approved every two years.

The following section provides a summary of key achievements of the implementation of UNESCO’s Major
Programmes during 2018.

MAJOR PROGRAMME I – EDUCATION

Throughout 2018, UNESCO’s leading role in coordinating SDG 4 – Education 2030 – has contributed to ensuring
that education remained high on the global development agenda. Following a series of regional consultations and
the first-ever G20 Education Ministers meeting to which UNESCO contributed, the year culminated in the Global
Education Meeting (Brussels, December 2018), which set key education recommendations to guide the global
implementation of SDG 4.

In November, UNESCO released the 2019 Global Education Monitoring Report, which focused on migration and
displacement, and provided concrete recommendations on how to address education barriers for refugees and
migrants. The #RightToEducation campaign, which ran from October to December 2018 and marked the 70th
anniversary of the Universal Declaration of Human Rights, raised awareness on this crucial human right and the
bottlenecks impeding its realization. At the end of the campaign, UNESCO convened the International Expert
Meeting on Public Policies Supporting the Right to Education of Refugees (Barcelona, December 2018), resulting
in policy recommendations for providing quality education for refugees in a lifelong learning perspective.

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Noteworthy progress was made on the recognition of higher education qualifications and academic mobility. At
the global level, the first intergovernmental consultation meeting was convened (Paris, December 2018) to review
the Global Convention on the Recognition of Higher Education Qualifications. In LAC, participants at III Regional
Conference on Higher Education (Cordoba, Argentina, June 2018), adopted a plan of action (2018-2028) to guide
the strengthening of higher education systems.

UNESCO supported over 40 Member States to strengthen their teacher policies and provided a series of teacher
trainings in different regions: More than 15,000 teachers, teacher educators and non-formal literacy providers from
over 25 countries were trained in gender-responsive pedagogy, skills development in the delivery of content that
promotes gender equality, healthy relationships and skills for life and work. UNESCO also continued to advocate
for increasing the supply of and support to qualified teachers, notably through the Joint ILO/UNESCO Committee
of Experts on the Application of the 1966 and 1977 Recommendations on Teachers (CEART), (Geneva, April 2018),
World Teachers Day (Paris, 8 October) and the International Task Force on Teachers’ 11th Policy Dialogue Forum
(Montego Bay, November 2018).

MAJOR PROGRAMME II – NATURAL SCIENCES

Programme implementation in the Natural Sciences Sector (SC) is generally on track, despite the challenge of
decreasing operational budget. Overall priority continued to be given to Africa, with particular focus on initiatives
that promote scientific research and innovation capacity on the continent, in particular under the “Afrimpulse”
initiative.

Gender equality in the sciences was also at the centre of Major Programme II’s work: five outstanding women
scientists received the 2018 UNESCO-L’Oréal for “Women in Science” Awards in life sciences, marking the
20th anniversary of this strategic partnership. This important achievement was flagged during the UNESCO’s
Partners Forum: Structured Financing Dialogue (September 2018), where partners gave evidence of the impact
of UNESCO’s work in gender mainstreaming in STI, among others. Moreover, the online Global Observatory of
STI Policy Instruments (GO-SPIN) with a specific focus on gender in STI was launched, and allows for countries to
monitor all SDGs notably Targets 9.5 and 17.6.

Major achievements over the period also included the launching of the BIOPALT project, a multisectoral flagship
project addressing SDGs 6, 11 and 15, and aimed at safeguarding and sustainably managing the hydrological,
biological and cultural resources of the Lake Chad Basin utilizing an inclusive, demand-driven and community-
based approach. The Synthesis Report of SDG  6 presented at the United Nations High-level Political Forum on
Sustainable Development (HLPF) was coordinated by the UNESCO World Water Assessment Programme (UNESCO
WWAP) on behalf of UN Water. UNESCO and United Nations Economic Commission for Europe (ECE) also prepared
a global report dedicated to SDG 6 Indicator 6.5.2.

INTERGOVERNMENTAL OCEANOGRAPHIC COMMISSION (IOC)

The end of the year 2017 was very special for the Intergovernmental Oceanographic Commission (IOC) with
the endorsement by the 72nd session of United Nations General Assembly of the IOC’s proposal to proclaim the
years 2021-2030 as the United Nations Decade of Ocean Science for Sustainable Development (the Decade). IOC
is working with Members States, United Nations, all partners and stakeholders to develop an implementation
plan for the Decade. This is a once-in-a-life-time opportunity for all to achieve a breakthrough in the capacity of
oceanography to serve people and the planet.

Significant progress was made in the development of the methodology to support Member States’ implementation
of and reporting on SDG targets 14.3.1 and 14.a, for which the IOC has been assigned the custodian’s role. Both
indicators have been upgraded to Tier 2 status, meaning that the indicator is now conceptually clear, has an
internationally established methodology, and standards are available, but data are not yet regularly produced
by countries. After more than four years of international collaboration coordinated by IOC, the South China Sea
region now has its own dedicated Tsunami Advisory Centre. The IOC showcased its experience in supporting
countries in the implementation of maritime spatial planning through three flagship events at the Sustainable Blue
Economy conference organized by Kenya and Canada, 26-28 November 2018 in Nairobi. As part of its awareness
raising strategy with regard to gender equality, the side event “Making waves: Women in Ocean Science” was
organized with the support of Canada at the High-Level Scientific Conference “From COP21 towards the United

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 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

Nations Decade of Ocean Science for Sustainable Development”. The event focused on the role of women in
ocean science, in improving global ocean knowledge, and in supporting informed and inclusive decision-making.

Overall, the main challenge for the Commission’s Secretariat is to succeed in raising extra budgetary resources
necessary to maintain its core operational programmes, as well as to lead and coordinate the Decade’s preparation
phase. A new approach to fund-raising and outreach, based on highlighting the societal benefits of IOC’s work
and demonstrating the return on investment in ocean science and observation is being developed.

MAJOR PROGRAMME III – SOCIAL AND HUMAN SCIENCES

Overall, programme implementation under MP III is on track with a high likelihood of achievement of the 39 C/5
expected results by the end of 2019.

Concerted efforts focused on the social dimensions of Agenda 2030, which resonate with UNESCO’s mandate
to support Member States in managing contemporary social transformations. Anchored in fundamental human
rights’ values and norms, aspiring to social justice and inclusion for all, at the core of the SDGs is the need for social
inclusion; the eradication of extreme poverty; the reduction of inequalities; inclusive policies for cities; as well as
inclusive and participatory decision-making. UNESCO’s work has focused on policy advice and capacity-building,
supporting Member States directly in the achievement of the SDGs.

Key achievements of MP III include: provision of upstream policy advice on youth in a number of countries;
advancement of the research-policy nexus in social policies at regional level – in particular in Latin America and
Africa – as well as at national level; capacity-building and institutional development; establishment of advanced
Futures Literacy capabilities in Member States, including in Africa, and achieving near-universal ratification of
the International Convention against Doping in Sport. Recognizing that UNESCO’s work on youth must better
integrate the engagement of young people in all of its programmes, the concept of youth spaces as a flagship
initiative was launched.

MAJOR PROGRAMME IV – CULTURE

During the first year of this new biennium, the Culture Sector has put into practice a more integrated approach to
programme design and implementation that cuts across all the culture conventions and programmes. As reflected
in the report on progress in the achievement of expected result 8, strategic focus was put on the development
of measuring frameworks to assess the impact of culture on sustainable development that are now ready to be
tested. This will eventually help bridge the data gap that exists in this area.

The monitoring and benchmarking capacities of several cultural conventions were improved through the finalization
of new or revised monitoring frameworks and periodic reporting systems, which will also help collect and analyse,
over time, data on how the normative work contributes to the implementation of relevant SDGs and targets where
culture is mainstreamed or explicitly included.

The Culture Sector has strengthened its leadership and convening power in the area of conflicts with the launch
of the “Revive the spirit of Mosul” initiative and other large-scale operational projects, as well as the conclusion
of important partnerships.

Overall, however, the budgetary situation remains fragile and the Culture Sector continues to struggle with the
weight of the statutory costs of the conventions and uneven resource mobilization. Important instruments, notably
the 1954 and 1970 Conventions and the Heritage Emergency Fund, are still severely under-resourced. These
difficulties affect the Secretariat’s capacity to deliver in areas of strategic importance to the Organization. The
Sector is fully mobilized to address these challenges, including through the Structured Financing Dialogues, which
are however likely to persist, and prioritization remains more necessary than ever.

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 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

MAJOR PROGRAMME V – COMMUNICATION AND INFORMATION

In 2018, the relevance of freedom of expression and media development to achieve the 2030 Agenda was increasingly
recognized, supporting UNESCO’s lead role in monitoring and reporting on SDG target 16.10, particularly on
safety of journalists and guaranteed access to information. Work on the safety of journalists strengthened with
the United Nations system and media actors playing a greater role. Media and Information Literacy (MIL) has
also been attracting more attention from several actors, as the extent of disinformation has grown. Internet
issues have expanded to encompass artificial intelligence (AI). UNESCO’s concept of Internet Universality and the
related indicators serve as a suitable framework for assessing such developments, which heavily impact freedom
of expression and privacy. Major Programme V work under Main Line of Action 1 continues to give high attention
to Africa, including through the International Programme for the Development of Communication (IPDC) project
prioritization. During 2018, 12 out of the 26 Member States that strengthened their policies or practices for
media diversity and pluralism were African countries. Activities followed an overall gender-responsive, and, where
possible, gender-transformative approach, involving women journalists, women-led CSOs and female policy- and
decision-makers. All publications and training materials were developed through a gender lens paying attention
to women journalists.

UNESCO continued to promote universal access to information, the innovative use of ICTs for sustainable
development, and the preservation and accessibility of documentary heritage, with a view to building inclusive
knowledge societies. The Information for All Programme provided support to Member States in its six priority
areas. UNESCO pursued its work promoting access for people with disabilities, and fostering multilingualism online
and offline, acting as the lead United Nations agency for the organization of the 2019 International Year of
Indigenous Languages. A draft text of a recommendation on open educational resources (OER) was circulated
to Member States, and UNESCO launched version 3 of its ICT Competencies Framework for Teachers. Main Line
of Action  2 also focused on UNESCO’s global priorities, as exemplified by the Youth Mobile initiative, which
supported young people to create mobile apps for sustainable development. Together with partners, UNESCO
opened the Software Heritage archive, which collects and preserves software source code. The Memory of the
World Programme launched a series of consultations for the implementation of the 2015 Recommendation
concerning the preservation of, and access to, documentary heritage, including in digital form, linking this to the
2030 Agenda. UNESCO also launched a cross-cutting reflection on the impact of Artificial Intelligence, and on the
ways to harness its potential to achieve the Sustainable Development Goals.

The way forward for Major Programme V includes strengthening partnerships and increasing the use of international
days as platforms to raise awareness, build capacity and contribute to policy improvement in the interests of
Member States.

SIGNIFICANT EVENTS
Israel and the United States of America have formally withdrawn on 31 December 2018 as Member States of the
Organization. Prior to their withdrawals, these two Member States, since 2011, have suspended their contributions
to the Organization. Consequently, the biennial budgets of the Organization were adjusted to take account of the
non-payment of contributions by these two Member States.

At the time of their withdrawal, the United States of America and Israel owe $611.8 million and $10 million
respectively to the Organization. The Organization will continue to engage them for the payment of these arrears.

Though their withdrawal would not have an immediate financial impact, it is regrettable that UNESCO will have
two Member States less. The Organization’s membership now stands at 193 Member States and 11 Associate
Members.

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 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

FINANCIAL STATEMENT HIGHLIGHTS

The consolidated surplus for the year is $1.8 million compared to a deficit of $39.7 million in the previous year. The
regular programme operations generated a deficit of $25.5 million (a deficit of $36.2 million in 2017), whereas the
other combined operations generated a surplus of $27.3 million (a deficit of $3.5 million in 2017).

Total revenue of $683.8 million increased by 5.5% (or $35.4 million) compared to the previous period. Assessed and
voluntary contributions revenue increased by 6% ($19.8 million) and 13.6% ($35.5 million) respectively. Whereas
the voluntary contributions increase is attributable to additional funding received from donors, the increase in
assessed contributions is due to exchange rate variations between the euro and the US dollars. On other revenues,
there were significant movements in exchange gains and losses- a loss of $3.7 million in 2018 compared to a gain
of $23.6 million in 2017.

Expenditure slightly decreased by 0.9% ($6.2 million) to $682.0 million for the year ended 31 December 2018.

Overall, the net assets position increased by $17.6 million to $275.2 million as at 31 December 2018.

Total current assets of $759.9 million decreased by 1.5 % ($11.2 million) compared to the previous year. Short-
term investments, cash and cash equivalents of $ 690.7 million represent 90.9% of the total current assets.

Current liabilities decreased by 11.3% ($30.4 million) to $238.1 million. This is mainly due to a decrease in advance
receipts and accounts payable.

Gross outstanding assessed contribution from Member States has increased significantly over the last years to
$654.6 million due to the suspension of payments, since 2011, by the two Member States who have now left the
Organization on 31 December 2018.

FINANCIAL PERFORMANCE
BUSINESS SEGMENT ANALYSIS
As shown in Table 1 below, the deficit of $25.5 million recorded under the regular programme segment (GEF)
decreased by $10.7 million. In 2018, the Proprietary Fiduciary Fund (PFF) improved significantly, showing a surplus
of $22.6 million compared to a deficit of $25.2 million in 2017. The Other Proprietary Fund (OPF) segment surplus
of $14.3 million in 2017 has decreased by $12.9 million and the Staff Fiduciary Fund (SFF) recorded in 2018 a
surplus of $3.3 million, a significant decrease of $4.1 million compared to the prior year.

TABLE 1.  SUMMARY FINANCIAL PERFORMANCE BY FUND

Inter-fund TOTAL
Expressed in million US dollars GEF OPF PFF SFF transactions UNESCO

Total Revenue 364.0 75.2 306.1 30.9 (92.4) 683.8

Total Expenses (389.5) (73.8) (283.5) (27.6) 92.4 (682.0)

(Deficit)/Surplus – 2018 (25.5) 1.4 22.6 3.3 – 1.8

(Deficit)/Surplus – 2017 (36.2) 14.3 (25.2) 7.4 – (39.7)

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 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

REVENUE ANALYSIS
Gross assessed contributions amounting to $336.2 million represent 49.2% of the total revenue (2017: 48.8%)
with voluntary contributions accounting for 43.4% (2017: 40.3%).

Other revenue Other revenue

producing M$28.1
activities 4.1%
M$22.8
3.3%

FIGURE 1

REVENUE BY Assessed
SOURCE (AMOUNTS Voluntary contributions
contributions M$336.2
IN USD MILLIONS): 49.2%
M$296.7
TOTAL $683.8 MILLION 43.4%

An allowance for unpaid contributions of $68.1 million was made for the year and this mainly reflects the decision
of the two withdrawing Member States to suspend their regular contributions, thus bringing the net assessed
contributions revenue to $268.1 million.

400 2018

2017
350
2016
300
2015

250 2014
FIGURE 2
200
REVENUE SOURCES:
5-YEAR COMPARISON 150
(IN USD MILLIONS)
100

50

0
Assessed Voluntary Other revenue Other
contributions contributions producing acivities revenue

As shown under Figure 2 above, assessed contributions over the past five years have remained relatively stable
reflecting the zero nominal growth budget in place. The variations are due to currency exchange movements
between the US dollar and the euro as part of Member States contributions are assessed in euros.

After a significant decrease in 2016, mainly attributable to less revenue received from donors and the discontinuation
of the IHE Delft Institute as a UNESCO category 1 institute, revenue from voluntary contributions has been on the
increase reaching $296.7 million in 2018.

11
 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

EXPENSE ANALYSIS

TABLE 2.  EXPENSE VARIATION

(Expressed in millions of USD)

Net Change Net Change
Nature of expenses 2018 2017 (USD) (%)

Employee benefits expenses 335.6 318.5 17.1 5.4%

Consultants, external experts and mission costs 52.6 52.8 (0.2) (0.4%)
External training, grants and other transfers 45.3 40.7 4.6 11.3%
Supplies, consumables and other running costs 49.3 54.7 (5.4) (9.9%)
Contracted services 104.1 120.2 (16.1) (13.4%)
Allowance for unpaid Member States contributions 68.0 77.4 (9.4) (12.1%)
Other expenses 27.1 23.9 3.2 13.4%

Total expenses 682.0 688.2 (6.2) (0.9%)

Employee benefits expenses increased by 5.4% ($17.1 million) to $335.6 million. Salaries of international
and national staff based at Headquarters, in more than 50 field and liaison offices worldwide, and in the nine
category 1 institutes amounting to $234.3 million, represent 69.8% of employee benefit. A further $33.3 million
(9.9% of employee benefits) was spent on temporary personnel to support the delivery of programmes and
activities. Medical benefit expenses and accrual of After-Service Health Insurance costs for current and retired staff
amounted to $68.0 million.

Contracted services of $104.1 million have decreased by 13.4% ($16.1 million). These represent expenses where
a third party entity is engaged to perform work on behalf of the Organization. This could be a contract with
a commercial organization, not-for-profit organizations and government ministries for the implementation of
activities/programmes under UNESCO’s mission and mandate.

The allowance for assessed contribution of $68.0 million represents mainly the unpaid contributions of the current
year from the two withdrawing Member States who have suspended the payment of their contributions to the
Organization.

4%
Employee benefit
10% expenses

Consultants, external
experts and mission costs
External training,
FIGURE 3 15% grants and transfers

Supplies, consumables
49% and other running costs
COMPOSITION OF 2018
EXPENSES BY NATURE Contracted services
7%
Allowance for unpaid
Member States
7% contributions
8% Other expenses

12
 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

BUDGETARY PERFORMANCE
The General Conference approved a regular programme expenditure plan of $518 million for the 2018-2019
budgetary period in order to ensure that Organization operates within the expected cash flow.

The 2018 budget expenditure amounted to $257.6 million ($256.4 million in 2017). As figure 4 shows, the
expenditure on Programmes was $162.5 million representing 63.1% of the total budget expenditure.

Reserve fir After Service

Health Insurance (ASHI) 1.6

Part IV: Loan Repayment 7.0

FIGURE 4 Part III: Corporate Services 36.6

Part II.C: PP and Fellowships 4.9

2018 BUDGETARY
EXPENDITURE BY Part II.B: Programme Related Services 22.4
APPROPRIATION LINE
(IN USD MILLIONS) Part II.A: Programmes 162.5

Part I: General Policy and Direction 22.6

0 20 40 60 80 100 120 140 160 180

FINANCIAL POSITION
The net assets/equity of the main segment GEF is still negative at $179.3 million in 2018 (2017: $180.4 million).
Even though the PFF net assets/equity decreased by $26.9 million in 2017, its overall position remained strong with
net assets of $316.2 million in 2018.

TABLE 3.  SUMMARY FINANCIAL POSITION BY FUND

Inter-fund TOTAL
Expressed in ‘000s US dollars GEF OPF PFF SFF transactions UNESCO

Total Assets 635.0 114.0 515.8 46.9 (10.8) 1 300.9

Total Liabilities (814.3) (14.5) (199.6) (8.1) 10.8 (1 025.7)

Net assets/Equity – 2018 (179.3) 99.5 316.2 38.8 – 275.2

Net assets/Equity – 2017 (180.4) 97.8 303.9 35.4 0.9 257.6

The net working capital (current assets less current liabilities) amounted to $521.8 million (2017: $502.6 million).
This high level of working capital is attributable to the significant amount of cash and short-term investments held
for the execution of extra-budgetary projects. The regular programme segment (GEF) working capital of $64.8
million (2017: $45.5 million) represents 12.4 % of the overall working capital of the Organization (2017: 9.1%).

13
 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

CONTRIBUTIONS
As compared to 30 June 2016, the collection rate as at 30 June 2018 increased thanks to earlier payments from
some of the top contributors. Overall, the rate of collection of assessed contributions in the year of assessment
remained stable since 2012.

100
As of 31 December
As of 30 June

90

FIGURE 5 80
73 74 73 73
72 71
70
ASSESSED CONTRIBUTIONS 70
TO THE REGULAR BUDGET: 64
COLLECTION RATE 66
(IN % IN THE YEAR OF 60
ASSESSMENT) 61
59
51
50 46 47

40
2012 2013 2014 2015 2016 2017 2018

Gross outstanding assessed contributions amounted to $654.6 million, an increase of 9.9% over the previous
year’s level. Outstanding contributions to the Regular Budget are due from 63 Member States, six Associate
Members and two States that have withdrawn from the Organization.

The gross assessed contributions are due and payable to the Organization in accordance with the Constitution
and Financial Regulations of the Organization and none of the balance is written-off. However, as required under
IPSAS, an allowance is made for the non-payment of contributions and the cumulative amount is $627.7 million
thus bringing the net assessed contributions in the statement of financial position to $26.9 million.

Allowance
700
654.6
650 627.7 Gross
595
600
560
550 521
500
482
447
FIGURE 6 450 411
400
353
GROSS OUTSTANDING 350
335
CONTRIBUTIONS VS.
ALLOWANCE (IN USD 300
MILLIONS) 250
200
150
100
50
0
2014 2015 2016 2017 2018

14
 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

AFTER-SERVICE HEALTH INSURANCE (ASHI) LIABILITY

Since 2015, the ASHI liability remained stable, 2014 being an exceptional situation due to the change in discount
rate.

In 2018, the funds being set aside for the ASHI liability were invested in diversified fixed income and equity ETFs
as per its Investment Policy Statement. As at 31 December 2018, total long-term investments amount to $13.9
million.

1400 1265.1
1200

1000
780 767 759 765.1
800
FIGURE 7
600
ASHI LIABILITY
(IN USD MILLIONS) 400

200
13.91
0
2014 2015 2016 2017 2018

Liability Assets

INVESTMENT PORTFOLIO
The investment portfolio of UNESCO (including cash and cash equivalent) amounted to $692  million as at 31
December 2018 (excluding the above-mentioned ASHI funds). The portfolio is mainly composed of investments in
saving accounts, money market deposits and other short-term investments with major banking institutions with
strong credit ratings (minimum single “A”).

The functional currency of UNESCO Brasilia (UBO) is the Brazilian Real (BRL) and consequently its investments were
made in short-term Brazilian Government Treasury Bills in BRL that were rated BB- as at the year-end.

15
 FINANCIAL REPORT OF THE DIRECTOR-GENERAL

Other investments

Cash equivalents
400
350
FIGURE 8
300
RATING BREAKDOWN 250
OF UNESCO’S INVESTMENT
PORTFOLIO 200 281
(IN USD MILLION)
116
150
100
5
50 59 121
50 5 55
0
AAA AA A BBB BBB - UBO

The primary objective of UNESCO’s Investment Policy is the preservation of the value of resources of the Organization.
Within this general objective, the principal considerations for investment management are in order of priority:
security of principal, liquidity and rate of return. UNESCO’s euro investments outperformed their benchmarks,
while USD investments performed in line with their benchmarks. The performance of the BRL investment portfolio
was also in line with that of its respective benchmark.

Audrey Azoulay
Director-General

16
2 STATEMENT ON
INTERNAL CONTROL
Statement on Internal Control

19
 Statement on Internal Control

20
Statement on Internal Control

21
 Statement on Internal Control

22
3 OPINION OF THE
EXTERNAL AUDITOR
 OPINION OF THE EXTERNAL AUDITOR

207 EX/29.I – page 22

INDEPENDENT AUDITOR’S REPORT

To the General Conference of the United Nations Educational, Scientific and Cultural Organization

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of the United Nations Educational, Scientific
and Cultural Organization and its controlled entities (the Group), which comprise the consolidated
statement of financial position as at 31 December 2018, and the consolidated statement of financial
performance, consolidated statement of changes in net assets/equity, consolidated statement of
cash flow, and consolidated statement of comparison of budget and actual amounts for the year then
ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 December 2018, and its
consolidated financial performance and its consolidated cash flows, for the year then ended in
accordance with International Public Sector Accounting Standards (IPSASs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Other Matter

The consolidated financial statements of the Group for the year ended 31 December 2017 were
audited by another auditor who expressed an unmodified opinion on those consolidated financial
statements on 25 July 2018.

Other Information

Management is responsible for the other information. The other information comprises the
information included in the Financial Report, but does not include the consolidated financial
statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.

25
 OPINION OF THE EXTERNAL AUDITOR

207 EX/29.I – page 23

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IPSASs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting
process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements

26
 OPINION OF THE EXTERNAL AUDITOR

207 EX/29.I – page 24

represent the underlying transactions and events in a manner that achieves fair
presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision, and performance of
the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

Report on Compliance with Specified Authorities

Opinion

In conjunction with the audit of the consolidated financial statements, we have audited transactions
of the United Nations Educational, Scientific and Cultural Organization coming to our notice for
compliance with specified authorities. The specified authorities against which compliance was
audited are the UNESCO Financial Regulations.

In our opinion, the transactions of the United Nations Educational, Scientific and Cultural
Organization that came to our notice during the audit of the consolidated financial statements have
complied, in all material respects, with the specified authorities referred to above.

Responsibilities of Management for Compliance with Specified Authorities

Management is responsible for the United Nations Educational, Scientific and Cultural
Organization’s compliance with the specified authorities named above, and for such internal control
as management determines is necessary to enable the United Nations Educational, Scientific and
Cultural Organization to comply with the specified authorities.

Auditor’s Responsibilities for the Audit of Compliance with Specified Authorities

Our audit responsibilities include planning and performing procedures to provide an audit opinion
and reporting on whether the transactions coming to our notice during the audit of the consolidated
financial statements are in compliance with the specified authorities referred to above.

Sylvain Ricard, CPA, CA

Interim Auditor General of Canada

Ottawa, Canada
29 May 2019

27
4 APPROVAL OF
THE CONSOLIDATED
FINANCIAL STATEMENTS
 APPROVAL OF THE Consolidated FINANCIAL STATEMENTS

207 EX/29.I – page 25

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

In accordance with Financial Regulation 11.1 of the United Nations Educational, Scientific and
Cultural Organization attached are the consolidated financial statements and accompanying notes
for the year ended 31 December 2018.

The consolidated financial statements are the responsibility of Management and have been prepared
in accordance with International Public Sector Accounting Standards and comply with the Financial
Regulations of the United Nations Educational, Scientific and Cultural Organization. They include
certain amounts that are based on Management’s best estimates and judgements.

Accounting procedures and related systems of internal control, developed by Management, provide
reasonable assurance that assets are safeguarded, that the books and records properly reflect all
transactions.

The External Auditor, in line with Article 12 of the Financial Regulations, also provides an opinion on
the consolidated financial statements.

The consolidated financial statements numbered I to V and the accompanying notes are hereby
approved and submitted to the Governing Bodies of the United Nations Educational, Scientific and
Cultural Organization.

Established by: Approved by:

___________________ ___________________

Nutan Wozencroft Audrey Azoulay

Chief Financial Officer Director-General

29 May 2019 29 May 2019

31
5 CONSOLIDATED
FINANCIAL STATEMENTS
I. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
31/12/2017
Expressed in ‘000 US dollars Note  31/12/2018 (Restated Note 5)
   
ASSETS
Current Assets
Cash and cash equivalents 6 180 922 214 604
Short-term investments 7 509 795 473 195
Accounts receivable from non-exchange transactions 8 28 519 35 394
Receivables from exchange transactions 1 681 1 553
Inventories 367 371
Advance payments 9 30 969 34 843
Other receivables 10 7 655 11 133
Total current assets 759 908 771 093
 
Non-current assets  
Accounts receivable from non-exchange transactions 1 634 1 989
Long-term investments 7 15 785 1 607
Property, plant and equipment 11 523 091 537 711
Intangible assets 12 479 271
Total non-current assets 540 989 541 578
TOTAL ASSETS 1 300 897 1 312 671
 
LIABILITIES  
Current Liabilities  
Accounts payable and accruals (exchange transactions) 18 238 23 149
Employee benefits 13 47 301 48 641
Transfers payable 14 15 102 16 765
Voluntary contributions with conditions 15 96 237 72 275
Advance receipts 16 44 874 87 859
Borrowings current portion 17 5 056 7 202
Other current liabilities 18 11 273 12 601
Total current liabilities 238 081 268 492
 
Non-current Liabilities  
Employee benefits 13 778 429 772 099
Voluntary contributions with conditions 15 52 182
Borrowings long-term portion 17 3 243 8 502
Other non-current liabilities 18 5 891 5 841
Total non-current liabilities 787 615 786 624

TOTAL LIABILITIES 1 025 696 1 055 116

NET ASSETS/EQUITY 19 275 201 257 555

The accompanying notes form an integral part of these consolidated financial statements.

35
 II. CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 DECEMBER 2018
 Expressed in ‘000 US dollars  Note 31/12/2018 31/12/2017
   
REVENUE
Assessed contributions 336 171 316 327

Voluntary contributions 296 735 261 278

Other revenue producing activities 22 830 19 776

Other/miscellaneous revenue 13 598 13 651

Foreign exchange gains – 23 579

Finance revenue 14 497 13 811

Total revenue 20 683 831 648 422

EXPENSES
Employee benefit expenses 335 586 318 467

Consultants, external experts and mission costs 52 580 52 782

External training, grants and other transfers 45 294 40 757

Supplies, consumables and other running costs 49 332 54 684

Contracted services 104 139 120 170

Depreciation and amortization 17 882 17 645

Allowance for assessed contributions 68 051 77 393

Other expenses 825 1 479

Foreign exchange losses 3 655 –

Finance costs 4 669 4 793

Total expenses 21 682 013 688 170

SURPLUS/(DEFICIT) FOR THE YEAR 1 818 (39 748)

The accompanying notes form an integral part of these consolidated financial statements.

36
III. CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/
EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018
31/12/2017
Expressed in ‘000 US dollars Note 31/12/2018 (Restated
Note 5)

Net Assets/Equity at the beginning of the year 257 555 255 359

Exchange differences on foreign operations 19 (9 899) (284)

Decrease in Working Capital Fund 19 (6 600) –

Actuarial gain on post-employment benefits 19 36 217 48 216

Other adjustments 19 (567) (701)

Return of funds to donors 19 (3 323) (5 287)

 
Total of item recognized directly in Net Assets/Equity 15 828 41 944
 
Surplus/(Deficit) for the year 19 1 818 (39 748)

Total recognized revenue and expense for the year 17 646 2 196

Net Assets/Equity at the end of the year 275 201 257 555

The accompanying notes form an integral part of these consolidated financial statements.

37
 IV. CONSOLIDATED STATEMENT OF CASH FLOW FOR
THE YEAR ENDED 31 DECEMBER 2018
2017
Expressed in ‘000 US dollars Note 2018 (Restated
Note 5)

Cash flows from operating activities

Surplus / (Deficit) for the year 1 818 (39 748)
Depreciation & amortization 17 882 17 645
(Increase) / decrease in accounts receivable (167) 4 489
Decrease / (Increase) in inventories 2 (6)
Decrease / (Increase) in advance payments 2 608 (4 003)
Decrease / (Increase) in other receivables 4 386 (10 375)
(Decrease) / Increase in accounts payable and accruals (4 730) 5 125
Increase in employee benefits 41 793 37 247
(Decrease) / Increase in transfers payable (896) 1 789
Increase in voluntary contributions with conditions 24 151 14 108
(Decrease) in advance receipts (42 880) (683)
(Decrease) / Increase in other liabilities (4 975) 1 863
Loss on disposal of property, plant and equipment 104 339
Effect of exchange rates on operating activities 4 918 (6 093)
Net cash flows from operating activities 44 014 21 697

Cash flows from investing activities

Purchase of property, plant and equipment (3 921) (5 486)
Decrease / (Increase) in short-term investments (47 153) 38 760
Decrease / (Increase) in long term investment (14 178) 5
Net cash flows from investing activities (65 252) 33 279

Cash flows from financing activities

Repayment of loans (7 158) (6 971)
Net cash flows from financing activities (7 158) (6 971)
Net Increase / (Decrease)in cash and cash equivalents (28 396) 48 005

Cash and cash equivalents, beginning of the year 6 214 604 154 508
Effect of foreign exchange gain/loss on foreign-denominated cash (5 286) 12 091
& cash equivalents

Cash and cash equivalents, end of the year 6 180 922 214 604

The accompanying notes form an integral part of these consolidated financial statements.

38
V.  ONSOLIDATED STATEMENT OF COMPARISON OF
C
BUDGET AND ACTUAL AMOUNTS FOR THE YEAR
ENDED 31 DECEMBER 2018 – GENERAL FUND
Final
2018 Additional 2018 Ac-
Authorized budget less
Main appropriation line Original appro- Allotment tual expen­
transfers1 actual ex­pen­
allotment priations3 as adjusted diture
ditture
Expressed in ‘000 US dollars
PART I – GENERAL POLICY AND DIRECTION            
A. Governing bodies    
(Including General Conference and Executive Board) 3 956 3 – 3 959 2 725 1 234
B. Direction 6 636 (4) – 6 632 6 632 –
1. Directorate and Executive office of the Director-General 2 667 (22) – 2 645 2 654 (9)
2. Internal Oversight 2 202 11 – 2 213 2 208 5
3. International Standards and Legal Affairs 1 410 6 – 1 416 1 412 4
4. Ethics Office 357 1 – 358 358 –
C. Participation in the Joint Machinery
of the United Nations System 11 076 4 655 – 15 731 13 236 2 495
TOTAL, PART I 21 668 4 654 – 26 322 22 593 3 729
PART II – PROGRAMMES AND PROGRAMME-
RELATED SERVICES        
A. Programmes      
Major Programme I – Education 42 333 99 3 982 46 414 43 649 2 765
Major Programme II – Natural sciences 19 835 170 1 904 21 909 18 961 2 948
Intergovernmental Oceanographic Commission 5 333 163 61 5 557 5 168 389
Major Programme III – Social and human sciences 13 373 299 648 14 320 13 270 1 050
Major Programme IV – Culture 23 612 334 2 315 26 261 23 788 2 473
Major Programme V – Communication and information 12 297 (244) 1 125 13 178 12 727 451
UNESCO Institute for Statistics 4 061 – – 4 061 4 061 –
Management of Field Offices 42 794 879 669 44 342 40 862 3 480
Total, Part II.A 163 638 1 700 10 704 176 042 162 486 13 556
B. Programme-Related Services    
1. Coordination and monitoring of action to benefit Africa 2 053 233 20 2 306 1 883 423
2. Coordination and monitoring of action to benefit Gender
Equality 950 3 3 956 911 45
3. Strategic planning, programme monitoring and budget
preparation 3 699 213 70 3 982 3 942 40
4. Organization-wide knowledge management 4 867 225 – 5 092 5 066 26
5. External relations and public information 9 808 (507) 352 9 653 9 575 78
6. Field Support and Coordination 1 025 31 – 1 056 985 71
Total, Part II.B 22 402 198 445 23 045 22 362 683
C. Participation Programme and Fellowships 6 605 3 257 – 9 862 4 892 4 970
Total, Part II.C 6 605 3 257 – 9 862 4 892 4 970
TOTAL PART II 192 645 5 155 11 149 208 949 189 740 19 209
PART III – CORPORATE SERVICES        
A. Human resources management 11 826 (6) 15 11 835 11 219 616
B. Financial management 5 355 15 – 5 370 5 363 7
C. Management of support services 14 079 (341) – 13 738 13 019 719
D. ICT infrastructure and operations 2 313 11 – 2 324 2 320 4
E. Management of security and safety 4 924 30 – 4 954 4 605 349
F. Administration and management – 646 – 646 92 554
TOTAL, PART III 38 497 355 15 38 867 36 618 2 249
TOTAL, PARTS I-III 252 810 10 164 11 164 274 138 248 951 25 187
Reserve for After-Service Health Insurance
long-term liability (ASHI) 1 641 – – 1 641 1 641 –
PART IV – LOAN REPAYMENTS FOR THE RENOVATION
OF THE HEADQUARTERS PREMISES & THE IBE BUILDING 6 093 937 – 7 030 7 026 4
PART V – ANTICIPATED COST INCREASES 2 356 (1 787) – 569 – 569
TOTAL APPROPRIATION 262 900 9 314 11 164 283 378 257 618 25 760
Note: the budget and accounting basis is different. This Statement of Comparison of Budget and Actual amounts is prepared on the budget basis.
1. Between year transfers do not require approval from the Governing Bodies as they do not modify the biennial appropriation lines.

39
 VI. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – REPORTING ENTITY
The United Nations Educational, Scientific and Cultural
Organization (UNESCO) was created in London on 16
November 1945 by governments of the States Parties to
contribute to peace and security by promoting collaboration
among the nations through education, science and culture
in order to further universal respect for justice, for the rule
of law and for human rights and fundamental freedoms
which are affirmed for the peoples of the world, without
distinction of race, sex, language or religion, by the
Charter of the United Nations Organization. As one of the
specialized agencies referred to in Article 57 of the Charter
of the United Nations Organization, the provisions of Articles
104 and 105 of that Charter concerning the legal status of
that Organization, its privileges and immunities, apply in the
same way to UNESCO.
UNESCO is governed by a General Conference, consisting of
the representatives of its Member States, which determines
the policies and main lines of work of the Organization.
The Executive Board, which consists of 58 Member States
elected by the General Conference, takes, in accordance
with the decisions of the General Conference, all necessary
measures to ensure the effective and rational execution of
the programme of work by the Director-General.
Financial period
In accordance with Article 2 of the Financial Regulations,
the financial period for budget estimates consist of two
consecutive calendar years beginning with an even-
numbered year. The consolidated financial statements are
prepared on an annual basis.
Presentation and Functional Currency
The presentation currency of the consolidated reporting
entity is in United States (US) dollars which is also the
functional currency of UNESCO, parent of the group. Further
information on functional currency of the consolidated
components of the group can be found in note 2.2 below.
2.2 CONSOLIDATION
UNESCO
Included within the scope of consolidation for the
preparation of the UNESCO financial statements are
UNESCO headquarters, field offices, liaison offices, a centre,
one Maison de la paix and category 1 institutes.
Institutes
Category 1

The Organization has its Headquarters located in Paris,
France. It is also composed of 49 field offices located
around the world, four liaison offices in Geneva, New York,
Addis Ababa and Brussels, and nine category 1 institutes,
one centre and one Maison de la paix (Bujumbura) spread
worldwide which specialize in the fields of competency of
UNESCO.
UNESCO enjoys privileged tax-exemption; as such the
Organization’s assets, income and other property are exempt
from all direct taxation.
UNESCO’s category  1  institutes are an integral part of
UNESCO. The institutes build scientific capacity in Member
States, essentially in developing countries. UNESCO has the
power to govern their financial and operating policies. They
are considered to constitute standalone entities. Category 1
institutes meet the definition of a controlled entity under
IPSAS and therefore are consolidated in the UNESCO
financial statements.
Category 1 institutes consolidated in the financial statements
along with their locations and functional currencies are as
follows:

NOTE 2 – SIGNIFICANT Institute Location

Func-
tional
ACCOUNTING POLICIES Currency
UNESCO International Institute for Paris (France), USD
2.1 BASIS OF PREPARATION AND Educational Planning (IIEP) Buenos Aires
PRESENTATION (Argentina) and
Dakar (Senegal)
Basis of preparation
UNESCO International Bureau of Geneva USD
The consolidated financial statements have been prepared
Education (IBE) (Switzerland)
on an accrual and going concern basis in accordance with
the requirements of International Public Sector Accounting UNESCO Institute for Lifelong Hamburg EUR
Standards (IPSAS) and comply with the UNESCO Financial Learning (UIL) (Germany)
Regulations.
UNESCO Institute for Information Moscow USD
The accounting policies set out below have been applied Technologies in Education (IITE) (Russian
consistently in the preparation and presentation of these Federation)
financial statements.
UNESCO International Institute for Addis Ababa USD
Capacity-Building in Africa (IICBA) (Ethiopia)

40

Func-
Institute Location tional
Currency
UNESCO International Institute for Caracas USD
Higher Education in Latin America (Venezuela)
and the Caribbean (IESALC)
International Centre for Theoretical Trieste (Italy) EUR
Physics (ICTP)
UNESCO Institute for Statistics Montreal USD
(UIS) (Canada)
Mahatma Gandhi Institute New Delhi USD
of Education for Peace and (India)
Sustainable Development (MGIEP)
The controlled entities are fully consolidated from the
date which control is transferred to UNESCO. They are
de-consolidated from the date that control ceases. Inter-
UNESCO transactions, balances and unrealized gains and
losses on transactions between members of the UNESCO are
eliminated in full. The accounting policies of the controlled
entities are consistent with the policies adopted by UNESCO.
Category 2
Category 2 institutes and centres are not legally part of the
Organization. These institutes and centres are associated
with UNESCO through formal arrangements approved by
the General Conference (171 EX/18, page 17). They are
selected upon proposal by Member State(s), based on the
strength of their specialization in one of UNESCO’s fields of
competence. Through capacity-building knowledge sharing
and research, they provide a valuable and unique contribution
to the implementation of UNESCO’s strategic programme
objectives for the benefits of Member States. Category II
Institutes do not meet the definition of a controlled entity
under IPSAS and therefore they are not consolidated in the
UNESCO financial statements.
Other Organizations
UNESCO Staff Savings And Loan Service (USLS)
The USLS was created in 1954 as the UNESCO credit
union. The object of USLS is to provide the possibility to its
members on a mutualist basis of investing their savings and
of borrowing money for suitable purposes. The UNESCO
Staff Savings and Loan Service Fund, is established as a trust
fund, under Financial Regulation 6.5.
USLS is operated for the benefit of its members. The net
profit remaining after providing for the reserve is allotted to
the payment of interest to the depositors. A statutory reserve
is established for the purpose of compensating for any loss
sustained in the operations of USLS. UNESCO is considered
to exercise significant influence in relation to USLS, notably
through its representation on the Board of Management, and
its right of veto over decisions of the Board of Management.
UNESCO does not control USLS and is not responsible to
CONSOLIDATED FINANCIAL STATEMENTS
compensate any losses encountered by the Fund. UNESCO
has not used its right of veto in 2018 or 2017. No interest
in USLS is recorded in the UNESCO consolidated financial
statements.
2.3 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions carried out during the financial
year are converted into US dollars using the United Nations
Operational Rate of Exchange (UNORE) prevailing at the date
of the transaction. The UNORE approximate market rates.
Non-monetary items that are measured in terms of historical
cost or fair value in a foreign currency are translated using
the UNORE prevailing at the date of the initial transaction
or when the fair value was determined. Monetary assets
and liabilities that are denominated in foreign currencies are
translated into US dollars at the exchange rate prevailing
on the date of the statement of financial position. Foreign
exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the
Statement of Financial Performance.
Foreign exchange gains and losses resulting from the
consolidation of controlled entities with a different functional
currency are recognized as a separate component of net
assets/equity.
On the statement of comparison of budget and actual
amounts for the regular budget (Statement V), expenses
incurred in euros are presented using a fixed budget rate to
the US dollar set for the budgetary period.
2.4 SEGMENT REPORTING
A segment is a distinguishable activity of UNESCO for which
it is appropriate to separately report financial information.
At UNESCO, segment information is based on the principal
activities and sources of financing of the Organization. As
such, UNESCO reports separate financial information for
four segments: the General Fund (GEF), Other Proprietary
Funds (OPF), Programme Fiduciary Funds (PFF) and Staff
Fiduciary Funds (SFF). Each segment is defined as follows:
• General Fund (GEF) includes both the General and
Working Capital Funds set up in accordance with
Financial Regulations 6.1 and 6.2. This segment
has been established for the purpose of accounting
for the expenditure of the regular programme
appropriation voted by the General Conference of
UNESCO for a given financial period.
• Other Proprietary Funds (OPF) include revenue-
generating activities, management costs for special
accounts and trust funds, the Staff Compensation
Fund, the Terminal Payments Fund, and
Headquarters-related special accounts. The funds
have been established in accordance with Financial
Regulation 6.5 and normally have individual special
financial regulations.
41
 CONSOLIDATED FINANCIAL STATEMENTS
• Programme Fiduciary Funds (PFF) includes Institutes,
special accounts and trust funds set up in accordance
with Financial Regulation 6.5. This segment carries out
extra-budgetary programme activities in accordance
with the respective agreements signed between
UNESCO and donors or other legal authority. The
resources of each fund in this segment can only be
used for the purposes for which the respective fund
has been established.
• Staff Fiduciary Funds (SFF) is the segment that has
been established for the benefit of UNESCO’s staff
members, namely through the Medical Benefits Fund
(MBF), the UNESCO Restaurant Service (URS) and the
UNESCO Day Nursery and Children’s Club (UNC). The
resources of each fund in this segment can only be
used for the purposes for which the respective fund
has been established.
2.5 FINANCIAL ASSETS
UNESCO’s financial assets include: cash and cash equivalents,
short term investments; long term investments, accounts
receivable from exchange and non-exchange transactions
and other receivables.
Financial assets within the scope of IPSAS 29 Financial
Instruments: Recognition and Measurement are classified as
financial assets at fair value through surplus or deficit, loans
and receivables, held-to-maturity investments or available-
for-sale financial assets, as appropriate. UNESCO determined
the classification of its financial assets at initial recognition.
The subsequent measurement of financial assets depends
on their classification. The classification depends on the
purpose for which the financial assets are acquired, and is
determined at initial recognition and re-evaluated at each
reporting date.
(a) financial assets classified as loans and receivables
(L&R) are non-derivative financial assets with fixed
or determinable payments that are not quoted in an
active market. They are initially measured at fair value
plus transaction costs and subsequently recorded
at amortized cost using the effective interest rate
method.
(b) Fair value through surplus or deficit financial assets
(FVTSD) are so designated on initial recognition
by management or are held for trading. At initial
recognition, they are measured at fair value and
any transaction costs are expensed. Subsequently,
they are measured at their fair values at each
reporting date and the resulting gains or losses on
re-measurement are recognized in the Statement of
Financial Performance.
(c) Held-to-maturity financial assets (HTM) consist of
financial assets with fixed or determinable payments
and fixed maturity that UNESCO has the intention
and ability to hold to maturity. After their initial
recognition at fair value plus transaction costs, they
42
are measured at amortized cost using the effective
interest rate method.
The following table presents the classification and
measurement of UNESCO’s financial assets:
Subsequent
Financial assets Classification
Measurement
Cash and cash L&R Amortized cost
equivalents
Short term investments L&R, FVTSD Fair value or
Amortized cost
Long Term investments HTM, FVTSD Amortized cost
Accounts receivable
from exchange L&R Amortized cost
transactions
Accounts receivable
from non-exchange L&R Amortized cost
transactions
Other receivables L&R Amortized cost
Impairment of financial assets
UNESCO assesses at each reporting date whether there is
objective evidence that a financial asset is impaired. A financial
asset or a group of financial assets is deemed to be impaired
if, and only if, there is objective evidence of impairment as
a result of one or more events that has occurred after the
initial recognition of the asset (an incurred “loss event”) and
that loss event has an impact on the estimated future cash
flows of the financial asset or the group of financial assets
that can be reliably estimated. Evidence of impairment may
include the following indicators:
• The debtors or a group of debtors are experiencing
significant financial difficulty
• Default or delinquency in interest or principal
payments
• The probability that debtors will enter bankruptcy or
other financial reorganization
• Observable data indicates a measurable decrease in
estimated future cash flows (e.g. presence of arrears,
economic conditions that correlate with defaults)
Financial assets carried at amortized cost
For financial assets carried at amortized cost, UNESCO
first assesses whether objective evidence of impairment
exists individually for financial assets that are individually
significant, or collectively for financial assets that are not
individually significant. If UNESCO determines that no
objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, it includes
the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment.
Assets that are individually assessed for impairment and for
which an impairment loss is, or continues to be, recognized
are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been
incurred, the amount of the loss is measured as the difference
between the assets carrying amount and the present value
of estimated future cash flows (excluding future expected
credit losses that have not yet been incurred). The present
value of the estimated future cash flows is discounted at the
financial asset’s original effective interest rate. If a loan has
a variable interest rate, the discount rate for measuring any
impairment loss is the original effective interest rate.
The carrying amount of the asset is reduced through the
use of an allowance account and the amount of the loss
is recognized in surplus or deficit. Loans together with the
associated allowance are written off when there is no realistic
prospect of future recovery and all collateral has been
realized or transferred to UNESCO. If, in a subsequent year,
the amount of the estimated impairment loss increases or
decreases because of an event occurring after the impairment
was recognized, the previously recognized impairment loss is
increased or reduced by adjusting the allowance account.
If a write-off is later recovered, the recovery is credited to
finance revenue in surplus or deficit.
2.6 FINANCIAL LIABILITIES
UNESCO’s financial liabilities include Accounts payable,
transfer payable, borrowings and other liabilities.
The measurement of financial liabilities depends on their
classification.
(a) Financial liabilities at fair value through surplus or deficit
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through surplus or deficit.
(b) Financial liabilities classified as amortized cost are,
after initial recognition, measured at amortized cost
using the effective interest method. Gains and losses
are recognized in surplus or deficit when the liabilities
are derecognized as well as through the effective
interest method amortization process. Amortized cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the effective interest rate.
UNESCO has classified all its financial liabilities as amortized
cost and are therefore, measured at amortized cost.
2.7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand and short-
term, highly liquid investments that are readily convertible
to known amounts of cash and subject to an insignificant
risk of changes in value. Cash and cash equivalents held in
a fiduciary capacity (Programme Fiduciary Funds and Staff
Fiduciary Funds) that can only be used for a specific purpose
are considered as restricted. Financial instruments classified
as cash equivalents include saving accounts and short-term
deposits with a maturity of three months or less from the
date of investment.
CONSOLIDATED FINANCIAL STATEMENTS
2.8 ACCOUNTS RECEIVABLE FROM NON-
EXCHANGE TRANSACTIONS, RECEIVABLES
FROM EXCHANGE TRANSACTIONS AND
OTHER RECEIVABLES
Receivables are initially measured at fair value and then,
their carrying value adjusted for any allowance for estimated
irrecoverable amounts. An allowance is established when
there is objective evidence, based on a review of outstanding
amounts at the reporting date, that UNESCO will not be
able to collect all amounts due according to the original
terms of the receivables. In establishing the allowance
for assessed contributions, the fair value of receivables is
calculated as the estimated discounted cash flows arising
from receivables to be collected in the future. The level of
account receivable related to voluntary contribution do not
require a discounting.
Receivables are classified into current and non-current on
the basis of the expected amounts to be received. In the case
of assessed contributions receivables, they are classified as
current unless the Member States enters into an arrangement
to defer the payment of the receivable amount.
2.9 ADVANCE PAYMENTS
AND ADVANCE RECEIPTS
Advance payments
UNESCO advances funds to third parties under non-exchange
contracts for the delivery of UNESCO’s programmes and
activities. Such transfers to third parties are treated as
Advance Payments if the conditions on the transferred assets
are not fulfilled at the reporting date.
Advance receipts
A liability is recognized for amounts received from donors
where no binding agreement is in place at the time of
the receipt of the asset from the donor. This is mainly
common under Framework Agreements and other voluntary
contributions where funds can be received before agreement
is reached on the allocation of the contribution received
from the donor. Assessed contributions received prior to the
commencement of the relevant specified budget year are
recorded as an asset and a corresponding advance receipt
liability is recognized.
2.10 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (PP&E) is carried at cost
less accumulated depreciation and impairment. Heritage
assets are not recognized in the financial statements, but
appropriate disclosure is made in the notes to the accounts.
Additions
The cost of an item of PP&E is recognized as an asset if it is
probable that future economic benefits or service potential
associated with the item will flow to UNESCO and the cost of
the item can be measured reliably. In most instances, an item
of PP&E is recognized at its cost. When an asset is donated, it
is recognized at fair value as at the date of acquisition.
43
 CONSOLIDATED FINANCIAL STATEMENTS
Disposals
Gains and losses on disposal are determined by comparing
the proceeds with the carrying amount of the asset, and are
included in the Statement of Financial Performance.
Subsequent costs
Costs incurred subsequent to initial acquisition are capitalized
only when it is probable that future economic benefits
or service potential associated with the item will flow to
UNESCO and the cost of the item can be measured reliably.
Depreciation
Depreciation is provided on a straight-line basis on all PP&E
other than land, at rates that will write off the cost of the
assets over their useful lives. The useful lives of major classes
of assets have been estimated as follows:
DEPRECIATION PERIOD – PROPERTY, PLANT & EQUIPMENT
Communications 4 years
and IT equipment
Vehicles 5 years
Furniture and fixtures 5 years
Other equipment 5 years
Buildings 15-50 years
Land N/A
Buildings are analysed by components and different
depreciation periods are applied as follows: foundations and
walls – 50 years; other structural components – 30 years;
fittings – 15 years; technical installations – 25 years. The
residual values and useful lives of assets are reviewed and
adjusted, if applicable, at each financial year-end.
Impairment
The carrying values of fixed assets are reviewed for
impairment if events or changes in circumstances indicate
that the book value of the asset may not be recoverable. If
such an indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of impairment
loss if any. Any provision for impairment is included in the
Statement of Financial Performance.
2.11 INTANGIBLE ASSETS
UNESCO currently only recognizes software as intangible
assets, as it is not considered probable that significant future
economic benefits from copyrights and intellectual property
will flow to UNESCO.
Intangible assets are carried at cost less accumulated
amortization and impairment. Intangible assets are
capitalized in the financial statements.
44
Software acquisition and development
Acquired computer software licenses are capitalized based
on costs incurred to acquire and bring to use the specific
software. Costs that are directly associated with the
development of software for use by UNESCO are capitalized
as an intangible asset. Direct costs include the software
development employee costs and overhead which can be
directly attributed to preparing the asset for use.
Amortization
Amortization is provided on a straight-line basis on all
intangible assets of finite life, at rates that will write off
the cost or value of the assets over their useful lives. The
useful lives of major classes of intangible assets have been
estimated as follows:
AMORTIZATION PERIOD – CLASS OF INTANGIBLE ASSET
Software acquired separately 5 years
Software internally developed 5 years
Licenses and rights 2-6 years (or period of license or right if shorter)
2.12 EMPLOYEE BENEFITS
UNESCO recognizes the following categories of employee
benefits:
• short-term employee benefits;
• post-employment benefits;
• other long-term employee benefits; and
• termination benefits.
Short-term employee benefits
Short-term employee benefits are expected to be settled
within 12 months of the reporting date and are measured
at their nominal values based on accrued entitlements at
current rates of pay. Short-term employee benefits comprise
first-time employment benefits (assignment grants), regular
monthly benefits (wages, salaries, allowances) compensated
absences and other short-term benefits (education grant,
home leave, etc.).
An expense is recognized when employees render service
to the Organization and a liability is recognized for any
entitlement that has not been settled at the reporting date.
Post-employment benefits
The UNESCO’s post-employment benefits are comprised of
the after-service health insurance (ASHI). This is considered
a defined benefit plan. The liability recognized for these
plans is the present value of the defined benefit obligations
at the reporting date. The ASHI liability is calculated by an
independent actuary using the Projected Unit Credit Method.

Interest cost and current service costs are recognized on
the consolidated statement of financial performance as a
component of employee benefit expenses. Actuarial gains
or losses arising from changes in actuarial assumptions or
experience adjustments are directly recognized in net assets.
The current portion of this post employment benefit is
presented in the current liabilities portion of the consolidated
statement of financial position.
United Nations Joint Staff Pension Fund (UNJSPF)
UNESCO is a member organization participating in the
United Nations Joint Staff Pension Fund (UNJSPF), which
was established by the United Nations General Assembly
to provide retirement, death, disability and related benefits
to employees. The Pension Fund is a funded, multi-
employer defined benefit plan. As specified in 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 which
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 the current and former employees of
other organizations participating in the 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. UNESCO and the UNJSPF, in line
with the other participating organizations in the Fund, are
not in a position to identify UNESCO’s proportionate share
of the defined benefit obligation, the plan assets and the
costs associated with the plan with sufficient reliability for
accounting purposes. Hence, UNESCO has treated this
plan as if it were a defined contribution plan in line with
the requirements of IPSAS 39 Employee Benefits. UNESCO’s
contributions to the plan during the financial year are
recognized as employee benefit expenses in the Statement
of Financial Performance.
Other long-term employee benefits
Other long-term employee benefits are benefits which are
expected to be settled more than 12 months after the end of
the reporting period. This is comprised of accumulated leave,
repatriation grants and Italian end of service entitlements.
The liability recognized for these plans is the present value
of the defined benefit obligations at the reporting date. The
liability are calculated by an independent actuary using the
Projected Unit Credit Method.
Interest cost, current service costs and actuarial gains or
losses arising from changes in actuarial assumptions or
experience adjustments are recognized on the consolidated
statement of financial performance.
The current portion of these other long term benefits are
presented in the current liabilities portion of the consolidated
statement of financial position. The current portion is
determined as the largest amount between the amounts
CONSOLIDATED FINANCIAL STATEMENTS
due to be settled within twelve months after the reporting
date or the amount for which UNESCO does not have an
unconditional right to defer settlement of the liability for at
least 12 months.
Termination benefits
Termination benefits generally include indemnities for
voluntary redundancy, and are expected to be settled within
12 months of the reporting date.
2.13 PROVISIONS AND CONTINGENT
LIABILITY
Provisions are recognized for future expenditure of uncertain
amount or timing when there is a present obligation (either
legal or constructive) as a result of a past event, it is probable
that expenditure will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. Provisions are not made for future operating
losses. Provisions are measured at the present value of the
expenditures expected to be required to settle the obligation.
The increase in the provision due to the passage of time is
recognized as interest expense.
Contingent liabilities are disclosed where a possible obligation
is uncertain but can be measured, or where UNESCO has a
present obligation but cannot reliably measure the possible
outflow of resources.
2.14 REVENUE RECOGNITION
Non-exchange revenue
Revenue from non-exchange transactions is measured based
on the increase in net assets recognized. Where the full
criteria for recognition of an asset under a non-exchange
agreement are not fulfilled, a contractual right may be
disclosed.
Revenue from non-exchange transactions
• Assessed contributions
Assessed contributions are assessed and approved
for a two year budget period. The amount of these
contributions is then apportioned between the two
years for invoicing and payment. Assessed contributions
are recognized as revenue at the beginning of the
apportioned year in the relevant two year budget period.
• Voluntary contributions
Voluntary contributions and other transfers which are
supported by enforceable agreements are recognized as
revenue at the time the agreement becomes binding and
when control over the underlying asset is obtained, unless
the agreement establishes a condition on transferred
assets that requires recognition of a liability. Conditions
are imposed by donors on the use of contributions,
and include both a performance obligation to use the
donation in a specified manner, and an enforceable
return obligation to return the donation if it is not used
in the specified manner. The amount recognized as a
45
 CONSOLIDATED FINANCIAL STATEMENTS
liability is the best estimate of the amount that would
be required to settle the obligation at the reporting
date. As UNESCO satisfies the conditions on voluntary
contributions through performance in the specified
manner, the carrying amount of the liability is reduced
and an amount of revenue equal to that reduction is
recognized.
Voluntary contributions such as pledges and other
promised donations which are not supported by binding
agreements are recognized as revenue when received.
• In-kind contributions
In-kind contributions of goods that directly support
approved operations and activities and can be reliably
measured, are recognized and valued at fair value. These
contributions include the use of premises and utilities. In
the case of the use of premises, the contribution value
is based on the commercial rate for renting the building.
In-kind contributions of services, such as the services of
volunteers, are not recognized.
Exchange Revenue
Other sources of revenue from exchange transactions are
measured at the fair value of the consideration received
or receivable and are recognized as goods and services are
delivered.
2.15 EXPENSES
Under accrual accounting, expenses are decreases in
economic benefits or service potential during the reporting
period in the form of outflows or consumption of assets
or incurrences of liabilities that result in decreases in net
assets/equity. Expenses are recognized when the transaction
or event causing the expense occurs, and the recognition
of the expense is therefore not linked to when cash or its
equivalent is received or paid.
Expenses from non-exchange funding agreements are
recognized when the funding is legally in force, except
where the agreement establishes a condition on transferred
assets. In such cases, expenses are recognized as services are
performed and the condition on transferred assets fulfilled
consistent with the terms of the agreement. Advance
payments are amortized based on objective evidence to
reflect the risk of non-recovery. Where revenue is recognized
from in-kind contributions, a corresponding expense is also
recognized in the financial statements.
2.16 ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES
Accounts payable are financial liabilities for goods and
services that have been received by UNESCO and invoiced
but not yet paid by the reporting date.
Accrued liabilities are financial liabilities for goods and
services that have been received by UNESCO and which
have neither been paid for nor invoiced to UNESCO at the
reporting date.
46
2.17 LEASES
Lease agreements entered into for equipment or office
premises are classified as operating leases as these
arrangements do not transfer substantially all of the risk and
reward of ownership.
2.18 BUDGET COMPARISON
UNESCO’s budget and accounting basis differ. Though
UNESCO presents an integrated budget framework, the
regular budget component under the General Fund is
considered as the Approved Budget within the definition of
IPSAS 24.
The General Fund is established for the purpose of
accounting for the expenditure of the regular programme
appropriation voted by the General Conference of UNESCO
for a biennium of two consecutive calendar years beginning
with an even-numbered year. It is financed from assessed
contributions from Member States. Appropriations are
available for obligation during the budget financial period to
which they relate and for a further twelve months.
The General Fund budget is approved on a modified cash
basis, whereby receipts are budgeted when it is planned that
cash will be received and expenditures are budgeted when it
is planned that payments will be made.
NOTE 3 – ACCOUNTING
ESTIMATES, ASSUMPTIONS
AND JUDGEMENTS
The preparation of financial statements in accordance
with IPSAS requires to make judgments, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the end of the year. However,
uncertainty about these assumptions and estimates could
results in outcomes that require a material adjustment to the
carrying amount of the assets or liabilities affected in future
periods.
The areas where estimates, assumptions or judgement are
significant to UNESCO’s consolidated financial statements
include, but are not limited to: employee benefits, provisions
for litigation, fair value of financial instruments, and the
useful lives of Property, plant and equipment. Changes in
estimates are reflected in the year in which they become
known.
Judgements
UNESCO Staff Savings and Loan Services (USLS) is excluded
from the UNESCO consolidated financial statements.
Management’s judgement is that USLS is not considered
to be a controlled entity, as UNESCO does not govern the
financial and operating policies of USLS, and does not
benefit from its activities.

UNESCO leases the land for its headquarters sites at Place de
Fontenoy and Rue Miollis from the host government. Under
the lease agreements, the lease terms are for 99 years, and
can be renewed for unlimited subsequent periods of 99 years.
UNESCO pays a nominal amount in rent for the use of the
land. Given that the agreements effectively grant UNESCO
the right to use the land at the two sites in perpetuity for
a nominal rent, it is considered appropriate to recognize
the land as an asset in the UNESCO’s consolidated financial
statements – see Note 11 Property, Plant & Equipment. The
land was accounted for as a non-exchange transaction. The
lease is subject to restriction which we consider unlikely to
occur as the UNESCO has no plans to change locations. This
Management judgement has a significant impact on the
consolidated financial statements.
Estimates and assumptions
UNESCO based its assumptions and estimates on parameters
available when the consolidated financial statements were
prepared. However, existing circumstances and assumptions
about future developments may change due to market
changes or circumstances arising beyond the control of
UNESCO.
Below is a list of key assumptions:
(a) Fair value estimations – Financial instruments
Where the fair value of financial assets and financial liabilities
recorded in the statement of financial position cannot be
derived from active markets, their fair value is determined
using valuation techniques including the discounted cash
flow model. The inputs to these models are taken from
observable markets where possible, but where this is not
feasible, judgment is required in establishing fair values.
Judgment includes the consideration of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions
about these factors could affect the reported fair value of
financial instruments. More details on fair values of financial
instruments are disclosed at Note 24.
(b) Useful lives of Property, plant and equipment
The useful lives of Property, plant and equipment are
assessed using the following indicators to inform potential
future use, value from disposal and impairment:
• The condition of the asset based on the assessment of
experts employed by UNESCO;
• The nature of the asset, its susceptibility and adaptability
to changes in technology and processes;
• The nature of the processes in which the asset is
deployed;
• Availability of funding to replace the asset; and
• Changes in the market in relation to the asset
Note 2.10 provides information on the determined current
useful lives.
(c) Provisions for litigation
Provisions were raised and management determined an
estimate based on the information available. Provisions
CONSOLIDATED FINANCIAL STATEMENTS
are measured at the management’s best estimate of the
expenditure required to settle the obligation at the reporting
date, and are discounted to present value where the effect
is material. Additional disclosure of these estimates of
provisions is included in Note 22.
(d) Employee benefits
The cost of employee benefits are determined using actuarial
valuations which involves making various assumptions that
may differ from actual developments in the future. These
include the determination of the discount rate, future salary
increases, mortality rates and future cost increases. Due to
the complexities involved in the valuation and its long-term
nature, an employee benefit liability is highly sensitive to
changes in these assumptions. All assumptions are reviewed
at each reporting date. Details about employee benefits are
provided in Note 13.
NOTE 4 – ACCOUNTING
STANDARDS ISSUED
Accounting standards adopted during the year
• IPSAS 39 Employee Benefits: the standard which replaces
IPSAS 25-Employee Benefits was issued in July 2016
with effective date of 1 January 2018. The standard
prescribes the accounting and disclosure requirements
for employee benefits. It requires an entity to recognize
a liability when an employee has provided service in
exchange for employee benefits to be paid in the future
and an expense when the entity consumes the economic
benefits or service potential arising from service provided
by the employee. This new accounting standard had no
impact on the consolidated financial statements other
than modified disclosures.
• IPSAS 21: the standard addresses the impairment of
non-cash generating assets and the recognition of
impairment losses and criteria for reversing impairment
losses on these assets. This amendments to the standard
did not have an impact on UNESCO consolidated
financial statements.
• IPSAS 26: the standard defines the procedures to be
applied to determine whether a cash-generating asset
has been impaired, to recognize the corresponding losses
and to recover depreciation charges. However, the scope
of IPSAS 26 excludes the financial instruments covered
by IPSAS 29 (Financial Instruments, Recognition and
Measurement). This amendments to the standard did
not have an impact on UNESCO consolidated financial
statements.
Accounting standards issued and to be adopted at a
later date
• IPSAS 40 Public Sector Combinations: the standard,
issued in January 2017, prescribes the principles,
accounting and disclosure requirements of a public sector
combination and its effects. A public sector combination
is the bringing together of separate operations into one
47
 CONSOLIDATED FINANCIAL STATEMENTS

public sector entity. The standard is effective for annual $6.1 million was reclassified within the operating activities to
reporting period beginning on or after 1 January 2019. adjust for the non-cash nature of end of year revaluations.
UNESCO believes that the adoption of this standard
Notes to the financial statements: Compared to the previous
will not have an impact on the consolidated financial
year, the presentation of the Notes to the financial statements
statements.
have been re-arranged to enhance the readability of the
• IPSAS 41 Financial Instruments: the standard, issued
consolidated financial statements. In addition, comparative
in August 2018, establishes the principles for financial
information is now provided for multiple notes (Segment
reporting of financial assets and financial liabilities for
information – Note 26, Employee future benefits – Note 13
the assessment of the amounts, timing and uncertainty
and various other). The most significant changes are as
of an entity’s future cash flows. The standard is effective
follow:
for annual reporting year beginning on or after 1 January
2022. UNESCO has not yet assessed the impact of the • Accounting estimates, assumptions and judgements:
adoption of the standard. Information on UNESCO’s estimates has been added
detailing the source of estimates and the assumptions
that management has to make to complete the
NOTE 5 – CHANGES IN ACCOUNTING consolidated financial statements (Note 3).
• Financial assets and financial liabilities: Required
POLICIES AND NOTE DISCLOSURES disclosures for all types of financial assets and financial
In order to comply with IPSAS requirements, adjustments liabilities have been added (Note 2.5).
have been made to UNESCO’s accounting policies as well • Financial instruments: The fair value, the carrying amount
as the presentation and disclosure of the 2018 consolidated and the fair value hierarchy as well as results of sensitivity
financial statements. As a result, certain 2017 figures have analysis and additional disclosure regarding risk and
been restated to conform to the current year presentation. capital management are now disclosed. (Note 24).
The main adjustments to the financial statements and • Accounting standards issued: The notes to the financial
accompanying notes are as follows: statements now provide information on the new
standards adopted or to be adopted. They also provide
(a) Change in accounting policy
management’s progress in evaluating the new standards
UNESCO’s accounting policy prior to the current financial applicability and the potential impact of these standards
year stated that it was using a cost model for its Property, on UNESCO’s consolidated financial statements, see
plant and equipment. In practice, land and buildings Note 4.
were carried at fair value using a revaluation model and a
revaluation was to be performed every five years. During
the year, Management has made the choice to change its NOTE 6 – CASH AND CASH
accounting policy from using the revaluation model to the EQUIVALENTS
cost model for its land and buildings. Management believes
that the cost model will produce more reliable information  Expressed in ‘000 US dollars 31/12/2018 31/12/2017
for the users of the financial statements.  
The application of this new accounting policy has been Cash 30 255 44 999
applied retrospectively which entails to reverse the Cash in hand 27 12
revaluations amounts accounted for to date. This change Current accounts 30 228 44 987
in accounting policy has no impact on the consolidated Cash Equivalents 150 667 169 605
financial statement as past revaluation of land and building
Sight/Saving accounts 75 667 119 605
has not produce any change in the carrying amount of lands
and buildings since the adoption of IPSAS in 2010.
Short-term deposits 75 000 50 000
Total cash and
(b) Presentation and disclosure adjustments 180 922 214 604
cash equivalents
Employee benefits: The classification of employee benefits
into current and non-current has been reviewed and
As at 31 December 2018, $105.6 million (2017 – $133.6
adjusted. As a result, comparative amounts have also been
million) of cash and cash equivalents is considered restricted
reclassified to ensure comparability. For 2017, an amount
cash.
of $41.4 million was moved from employee benefits non-
current to current.
Cash flow: The presentation of the cash flow has been
changed to better reflect the effect of foreign exchange
rates on operating activities in the consolidated statement of
cash flow. As a result, comparative amounts have also been
reclassified to ensure comparability. For 2017, an amount of

48
 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – INVESTMENTS Investments are made in Exchange Traded Funds classified

at fair value through surplus or deficit. Although these
investments are designated for this purpose, and are not
Expressed in ‘000 US dollars  31/12/2018 31/12/2017
available for funding current operations, the investments are
 
not subject to separate legal restrictions and do not qualify
Current portion
as Plan Assets as defined in IPSAS 39, Employee Benefits.
Loans and receivables
Term deposits 422 002 331 419
Term accounts 31 530 75 185 NOTE 8 – ACCOUNTS RECEIVABLE
Fair value through surplus FROM NON-EXCHANGE
or deficit TRANSACTIONS
Brazilian Government Treasury 55 262 66 591
Bills (up to 365 days)
Expressed in ‘000 US dollars 31/12/2018 31/12/2017
Held to maturity    
Assessed contributions
Bonds 1 001 – 652 482 592 857
(current)
Total current portion 509 795 473 195
Assessed contributions
2 124 2 554
(non-current)
Non-current portion
Held to maturity Gross assessed
654 606 595 411
contributions
Bonds 1 880 1 607
Allowance for assessed
Fair value through surplus (627 263) (559 138)
contributions (current)
or deficit
Allowance for assessed
Fixed income ETFs 7 127 – (490) (565)
contributions (non-current)
Equity ETFs 6 778 – Net assessed contributions 26 853 35 708
Total non-current portion 15 785 1 607 Voluntary contributions
3 300 1 675
Total investments 525 580 474 802 (current)
Voluntary contributions
– –
Investments classified under loans and receivables are mainly
(non-current)
term deposits with an initial maturity of more than three Total accounts receivable
months but less than one year and term accounts which are (non-exchange 30 153 37 383
investments that may be realized within 12 months. These transactions)
financial instruments are held with international banking Current portion 28 519 35 394
groups which are assigned deposit ceilings in accordance
Non-current portion 1 634 1 989
with the Investment Policy of UNESCO.
Net accounts receivable
The UNESCO Brasilia Office (UBO) invests in floating-yield (non-exchange 30 153 37 383
Brazilian Government Treasury Bills (“Letra Financeiro transactions)
do Tesouro”) with a maturity up to 365 days through a
dedicated fund in accordance with the Investment Policy of Assessed contributions receivable represent uncollected
UNESCO. This investment vehicle is classified at fair value revenues committed to UNESCO by Member States and
through surplus or deficit and amounts to $55.3 million as Associate Members for completion of the programme
at 31 December 2018. of work. Non-current assessed contributions are those
The investment portfolio of the Nessim Habif Trust Fund contributions which are due more than 12  months after
consists of held-to-maturity bonds that are categorized the reporting date. This relates to payment plans agreed.
under the current and non-current portions depending on The allowance for assessed contributions is calculated by
the residual maturity of each bond. In accordance with the providing against the entire balance of unpaid instalments
Financial Regulation concerning the Nessim Habif Fund due under payment plans.
(61 EX/38), the capital of the fund should be invested in Outstanding assessed contributions from current and past
industrial securities either in Switzerland or in the United years as well as deferred amounts under payment plans are
States of America. discounted to their present value based on the year in which
The investment portfolio of the After-Service Health they are expected to be received.
Insurance (ASHI) Programme is invested in accordance
with the UNESCO ASHI Fund Investment Policy Statement.

49
 CONSOLIDATED FINANCIAL STATEMENTS

Expressed in ‘000 US dollars 31/12/2018 31/12/2017 NOTE 9 – ADVANCE PAYMENTS

   
Arrears not under payment Expressed in ‘000 US dollars 31/12/2018 31/12/2017
   
plans:
1988-2009 3 179 3 180 Advances to staff 3 631 3 857
2010-2011 79 192 79 192 Activity financing advance 419 591
2012-2013 162 793 163 496 payments
2014-2015 162 887 163 926 Implementing partner 15 644 14 716
advances
2016-2017 158 139 –
Participation Programme 4 915 9 465
2018 67 829 – advance payments
  634 019 409 794 Other advance payments 6 360 6 214
Other current assessed
18 463 183 063 Total advance payments 30 969 34 843
contributions
Gross assessed
652 482 592 857
contributions (current) Advance payments on non-exchange contracts (Financing
Allowance for arrears (627 263) (559 138) Activity Contracts, Implementation Partnership Agreements/
Intergovernmental Body Allocation contracts and
Net assessed contributions
25 219 33 719 Participation Programme) relate to transfers made to third
(current)
parties where the conditions on the transferred assets are
   
yet to be accepted by UNESCO as fulfilled as at 31 December
Gross assessed contributions
2 124 2 554 2018.
(non-current)
Discount for non-current
(490) (565)
assessed contributions
Net assessed contributions
NOTE 10 – OTHER RECEIVABLES
1 634 1 989
(non-current)
     Expressed in ‘000 US dollars 31/12/2018 31/12/2017
Total net assessed
26 853 35 708 VAT receivables 2 534 3 151
contributions
Accrued interests 3 928 3 682
Specific allowance for an amount of $621.7 million (2017: Other 4 085 7 192
$553.8 million) has been made against contributions due Gross other receivables 10 547 14 025
from two States (Israel and the United States of America) Allowance for doubtful
who have withdrawn as Member States of UNESCO effective (2 892) (2 892)
accounts
31 December 2018.
The allowance for arrears increased by $68.1 million mainly Net other receivables 7 655 11 133
due to unpaid assessed contributions from the United States
of America ($71.8 million) and Israel ($1.4 million) and a The VAT receivables relate to value-added tax (VAT)
working capital fund refund to the United States of America recoverable from fiscal authorities. Other is principally
and Israel (-$6.7 million). A Member State’s outstanding reimbursable income taxes from Governments amounting
assessed contributions are never written off even if the to $3.2 million (2017: $4.3  million) and UNDP accounts
Member State withdraws from the Organization. balance of $0.7 million (2017: $2.4 million).
Accrued interests are earnings from investments and cash
equivalents that have been recognized but not yet received
by UNESCO at the reporting date and are expected to be
realized within 12 months.

50
 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – PROPERTY, PLANT AND EQUIPMENT (PP&E)

Comms Furniture Other
Expressed in ‘000 US dollars Land Buildings & IT Vehicles and 2018
equipment
equipment fixtures

1 January 2018  
Cost 254 713 383 156 27 023 8 177 3 928 7 994 684 991
Accumulated depreciation – (109 748) (21 267) (6 612) (2 918) (6 735) (147 280)
Carrying amount 254 713 273 408 5 756 1 565 1 010 1 259 537 711
 

Movements 12 months to
 
31 December 2018
Additions – – 2 164 856 198 404 3 622
Disposals – – (2 128) (468) (57) (697) (3 350)
Disposals depreciation – – 2 042 455 57 692 3 246
Depreciation – (13 722) (2 535) (723) (304) (534) (17 818)
Exchange adjustments cost – – (203) (12) (36) (132) (383)
Exchange adjustments depn – – 170 9 29 127 335
Adjustments cost – – (272) 100 (749) 757 (164)
Adjustments depn – – (7) (99) 682 (684) (108)
Movements 12 months
– (13 722) (769) 118 (180) (67) (14 620)
to 31st December 2018
 

31 December 2018  
Cost 254 713 383 156 26 584 8 653 3 284 8 326 684 716
Accumulated depreciation – (123 470) (21 597) (6 970) (2 454) (7 134) (161 625)
Carrying amount 254 713 259 686 4 987 1 683 830 1 192 523 091

Comms Furniture Other

Expressed in ‘000 US dollars Land Buildings & IT Vehicles and 2017
equipment
equipment fixtures

1 January 2017  
Cost 254 713 383 156 24 710 8 422 3 657 8 067 682 725
Accumulated depreciation – (96 025) (20 321) (6 696) (2 975) (6 824) (132 841)
Carrying amount 254 713 287 131 4 389 1 726 682 1 243 549 884
 

Movements 12 months to
 
31 December 2017
Additions – – 3 417 476 782 523 5 198
Disposals – – (1 985) (861) (575) (897) (4 318)
Disposals depreciation – – 1 861 820 432 866 3 979
Depreciation – (13 723) (2 339) (656) (336) (511) (17 565)
Exchange adjustments cost – – 416 23 53 287 779
Exchange adjustments depn – – (336) (20) (28) (255) (639)
Adjustments cost – – 465 117 11 14 607
Adjustments depn – – (132) (60) (11) (11) (214)
Movements 12 months
– (13 723) 1 367 (161) 328 16 (12 173)
to 31st December 2017
 

31 December 2017  
Cost 254 713 383 156 27 023 8 177 3 928 7 994 684 991
Accumulated depreciation – (109 748) (21 267) (6 612) (2 918) (6 735) (147 280)
Carrying amount 254 713 273 408 5 756 1 565 1 010 1 259 537 711

51
 CONSOLIDATED FINANCIAL STATEMENTS

As at 31 December 2018, UNESCO holds fully depreciated PP&E which is still in use for a gross value of $26.3 million (2017:
$26.6 million).
The carrying value of UNESCO buildings is detailed in the following table:

Description Opening carry Depreciation Additions Closing carry value

value for period for period
Expressed in ‘000 US dollars 01/01/2018     31/12/2018
7 Place Fontenoy 151 820 (7 660) – 144 160
1 Rue Miollis 108 969 (5 645) – 103 324
Apartment place Vauban 4 892 (117) – 4 775
IBE buidling Geneva 6 467 (270) – 6 197
Ocampo Villa Buenos Aires 1 260 (30) – 1 230
Total 273 408 (13 722) – 259 686

Heritage assets
UNESCO also has a significant number of “Works of Art” (also referred to as heritage assets), including paintings, statues and
various other objects, which have been mainly donated by governments, artists and other partners. An internal fund has been
set up to cover accidental damage to these works, which have a considerable intrinsic value.

NOTE 12 – INTANGIBLE ASSETS

Expressed in Software Software Software
‘000 US dollars Internally Externally Work in 2018
developed developed Progress

As at 1 January 2018        
Cost 19 632 903 30 20 565
Accumulated depreciation (19 539) (755) - (20 294)
Carrying amount 93 148 30 271
Movements 12 months to 31 December 2018
Additions – 161 138 299
Disposals – – – –
Disposals depreciation – – – –
Depreciation – (64) – (64)
Adjustments cost (100) 100 (26) (26)
Adjustments depreciation 7 (8) – (1)
Total movements 12 months (93) 189 112 208
As at 31 December 2018
Cost 19 532 1 164 142 20 838
Accumulated depreciation (19 532) (827) – (20 359)
Carrying amount – 337 142 479

As at 31 December 2018, UNESCO holds fully depreciated intangibles assets which are still in use for a gross value of $20.3
million (2017: $20.1 million).

52
 CONSOLIDATED FINANCIAL STATEMENTS

Expressed in Software Software Software

‘000 US dollars Internally Externally Work in 2017
developed developed Progress

As at 1 January 2017        
Cost 19 532 745 – 20 277
Accumulated depreciation (19 532) (682) – (20 214)
Carrying amount – 63 – 63
Movements 12 months to 31 December 2017
Additions 100 158 30 288
Disposals – – – –
Disposals depreciation – – – –
Impairment – – – –
Depreciation (7) (73) – (80)
Total movements 12 months 93 85 30 208
As at 31 December 2017
Cost 19 632 903 30 20 565
Accumulated depreciation (19 539) (755) – (20 294)
Carrying amount 93 148 30 271

NOTE 13 – EMPLOYEE BENEFITS

31/12/2018 31/12/2017
Expressed in ‘000 US dollars Actuarial UNESCO (Restated
Total Note 5
valuation valuation
  
Payroll and reimbursements – 7 063 7 063 7 191
After Service Health Insurance 12 831 – 12 831 11 922
Accumulated annual leave 19 194 11 19 205 19 424
Repatriation benefits 460 – 460 1 380
Italian end of service benefit 7 742 – 7 742 8 724
Employee benefits (current) 40 227 7 074 47 301 48 641
After Service Health Insurance 752 273 – 752 273 747 006
Repatriation benefits 26 156 – 26 156 25 093
Employee benefits (non-current) 778 429 – 778 429 772 099
Total employee benefits 818 656 7 074 825 730 820 740

Employee benefits – current
Current or short-term employee benefits include payroll
and allowances, education grant, home leave, accumulated
annual leave (AAL), Italian end-of service benefit (SPS), as
well as the current term portion of the after-service health
insurance and repatriation grants.
Notwithstanding that AAL and SPS are fully included in short
term as required by the standards since UNESCO does not
have an unconditional right to defer settlement of the liability
for a least 12 months, expected payments in the next year
are anticipated to be K$319 for AAL, and K$704 for SPS.
Accumulated annual leave (AAL) – UNESCO staff can
accumulate unused annual leave up to a maximum of 60
working days. On separation from UNESCO, staff members
are entitled to receive a sum of money for AAL that they hold
at the date of separation.
Italian end-of-service benefit (SPS) – The Italian end-of-service
benefit (known as “liquidazione”) is a separation lump sum
payable to local General Service staff working for UNESCO
in Italy. The amount of the payment is based on the number
of completed years of service at the time of separation from
UNESCO.
Employee benefits – non-current
Non-current employee benefits relate to post-employment
and other long-term employee benefits. These include
After-Service Health Insurance and the long-term portion of
repatriation benefits.

53
 CONSOLIDATED FINANCIAL STATEMENTS

After-Service Health Insurance (ASHI) – UNESCO operates
the ASHI scheme, which is a defined employee benefit plan.
Under the scheme, staff retiring from UNESCO, who have
reached their fifty-fifth birthday and who have completed
at least ten years of participation in the Medical Benefits
Fund as at the date of their separation, may opt to remain
(indefinitely) in that Fund as an associate participant with
UNESCO continuing to participate in the funding of their
contributions. UNESCO performs annually both a long-term
projection and an actuarial valuation of the ASHI scheme to
measure its employee benefits obligation.
Repatriation benefits – A staff member who has completed
one year of continuous service outside the country of his/her
recognized home is entitled upon separation from UNESCO
to a repatriation grant payable on the basis of completed
years and months of qualifying service outside the country
of his/her recognized home. For eligible staff members hired
after 1 July, 2016 the grant is payable starting on five years
of expatriate service according to the current scale. Staff
members are also entitled to travel and removal costs for
repatriation on separation from UNESCO.
Actuarial valuations
An actuarial valuation was carried out to calculate the
UNESCO’s estimated liability related to AAL, SPS, ASHI and
repatriation grants. The following assumptions and methods
have been used to determine the value of these benefits as
at 31 December 2018:

Assumptions Used for ASHI Plans:

Discount rate 3.15% – for the ASHI under the Medical Benefit Fund – the rate used is based on the
Mercer Yield Curve as of 31/12/2018 (2.90% at 31/12/2017)
2.20% – for the ASHI under the ICTP Plan – the rate used is based on the Mercer Yield
Curve as of 31/12/18 (2.10% at 31/12/2017).
In addition, to be in accordance to the Mercer Yield Curve, the discount rate is based on
the plan duration and benefit currencies.
The discount rate for ASHI has been determined for each major currency in which UNESCO
incurs liabilities (USD and euros). The final rate was then determined by averaging the
different discount rates, weighted by the benefit payments in the different currencies.
Medical Healthcare trend 4.55% – for the ASHI under the Medical Benefits Fund – the rate is a weighted average
based on claim costs (4.35% at 31/12/2017).
2.75% – for the ASHI under the ICTP Plan (2.65% at 31/12/2017).
Inflation rate 1.75% (1.75% at 31/12/2017).
Mortality Tables 2017 United Nations generational and in-service mortality tables (2017 United Nations
generational and in-service mortality tables).
Pension and salary increase 2% (2% at 31/12/2017).
Retirement Age Age 65 for all employees.
Percentage of eligible staff who It is assumed that 100% of staff eligible to benefit from the ASHI after service actually
benefit from the ASHI after claim their entitlement (100% at 31/12/2017).
service
Turnover Based on a study of UNESCO’s turnover rates from 2015 to 2017.
ASHI Plan duration (for discount 21 years – for the ASHI under the Medical Benefit Fund – (26 years at 31/12/2017)
rate justification purposes) 20 years – for the ASHI under the ICTP Plan – (20 years at 31/12/2017).

54
 CONSOLIDATED FINANCIAL STATEMENTS

Assumptions Used for Annual Leave, Repatriation Grant and Italian end of service benefit:

Discount rate 1.75% – the rate used is based on the Mercer Yield Curve as of 31/12/2018 with a
maturity around 10 years (1.60% at 31/12/2017).
Inflation rate 1.75% (1.75% at 31/12/2017).
Pre-retirement Mortality Tables 2017 United Nations in-service mortality table for annual leave and repatriation grant;
and A62D ISTAT table for Italian end-of-service benefit (2017 United Nations in-service
mortality table for annual leave and repatriation grant; and A62D ISTAT table for Italian
end-of-service benefit in 2017).
Salary increase rate 2% for annual leave and Italian end-of-service benefit; and for repatriation grant a linear
increase from 1% to 1.75% from 2017 to 2027 and 1.75% per year in 2028 and beyond
(1.75% at 31/12/2017).
Retirement Age Age 65 for all employees for all benefits except for SPS.
For SPS the retirement age is as follow:
60 years old for people hired before 01/01/1990
62 years old for people hired between 01/01/1990 and 31/12/2013
65 years old for people hired after 01/01/2014
Turnover Based on a study of UNESCO’s turnover rates from 2015 to 2017.
Repatriation benefits It is assumed that 80% of staff eligible for repatriation benefits on leaving actually claim
their entitlement (80% at 31/12/2017).
Repatriation Travel and Removal are estimated at US $6,605 for staff members without
dependent and $8,014 for staff members with at least one dependent ($6,605 and $8,014
respectively at 31/12/2017).
Accumulated annual leave As the accumulation of annual leave by employee historically remains stable year on year,
it is assumed that the total accumulated balance is a long-term employee benefit taken
by staff members on separation from UNESCO.

The following tables and text provide additional information and analysis on employee benefit liabilities calculated by actuaries:

Italian end
Repatriation Total
 Expressed in ‘000 US dollars ASHI AAL of service
benefits 2018
benefit

Defined benefit obligation 758 928 19 421 26 455 8 724 813 528
beginning of the year
Movement for period
ended 31/12/2018
Service cost 30 953 1 058 985 591 33 587
Interest cost 21 709 304 411 130 22 554
(Actual gross benefits payments) (9 627) (735) (900) (1 625) (12 887)
Actuarial (gain) / loss (36 217) (411) (302) 311 (36 619)
Foreign exchange difference (642) (443) (33) (389) (1 507)

Defined benefit obligation

765 104 19 194 26 616 7 742 818 656
31/12/2018

55
 CONSOLIDATED FINANCIAL STATEMENTS

Italian end
Repatriation Total
 Expressed in ‘000 US dollars ASHI AAL of service
benefits 2017
benefit

Defined benefit obligation 767 046 18 845 26 235 8 740 820 866
at 31/12/2016
Movement for period
ended 31/12/2017
Service cost 24 045 960 1 233 672 26 910
Interest cost 23 452 261 369 119 24 201
(Actual gross benefits payments) (9 852) (1 668) (1 535) (1 084) (14 139)
Actuarial (gain) / loss (47 843) 586 43 (964) (48 178)
Foreign exchange difference 2 080 437 110 1 241 3 868

Defined benefit obligation

758 928 19 421 26 455 8 724 813 528
31/12/2017

The actuarial gain of $36.2 million relating to ASHI were recognized through net assets/equity in the Statement of Financial
Position and in the Statement of Changes in Net Assets/Equity. The other actuarial gain of $402 thousands were recognized
through the Statement of Financial Performance.
The annual expense amounts recognized in the Statement of Financial Performance are as follows:

Italian end
Repatriation
 Expressed in ‘000 US dollars ASHI AAL of service 2018 2017
benefits benefit

Service cost 30 953 1 058 985 591 33 587 26 910

Interest cost 21 709 304 411 130 22 554 24 201
Total expenses recognized for
52 662 1 362 1 396 721 56 141 51 111
year ended 31/12/2018

Sensitivity analysis
Assumed healthcare cost trends and discount rate have a significant effect on the amounts calculated for the ASHI liability and
expenses. A one percentage point change would have the following effects:

After-Service Health Insurance – healthcare cost trends Medical cost trend Medical cost trend Medical cost trend
(excluding ICTP) rate 3.55% rate 4.55% rate 5.55%
Expressed in ‘000 US dollars      
       
Defined benefit obligation as at 31/12/2018 571 693 753 423 997 694
% Variation (24.1%) – 32.4%
Normal cost 18 816 28 219 42 190
% Variation (33.3%) – 49.5%

After-Service Health Insurance – Discount rate Discount rate Discount rate Discount rate
(excluding ICTP) 2.65% 3.15% 3.65%
Expressed in ‘000 US dollars      
       
Defined benefit obligation as at 31/12/2018 832 621 753 423 682 088
% Variation 10.5% – (9.5%)
Normal cost 32 732 28 219 24 346
% Variation 16.0% – (13.7%)

56

After Medical Insurance Plan – healthcare cost trends –
ICTP
Expressed in ‘000 euros
Defined benefit obligation as at 31/12/2018
% Variation
After Medical Insurance Plan – Discount rate – ICTP
Expressed in ‘000 euros
Defined benefit obligation as at 31/12/2018
% Variation
The expected contribution of UNESCO in 2019 to the ASHI
plan is $12.8 million which represents expected gross benefit
payments for the year.
The expected contribution of UNESCO in 2019 to the
accumulated annual leave, repatriation defined benefit and
SPS plans is respectively $0.3 million; $0.5 million and $0.7
million, which represents expected benefit payments for the
year.
United Nations Joint Staff Pension Fund (UNJSPF)
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 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 UNESCO’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 biennial cycle, a roll forward of the participation data
as of 31 December 2013 to 31 December 2016 was used by
the Fund for its 2016 financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
Medical cost trend Medical cost trend Medical cost trend
rate 1.75% rate 2.75% rate 3.75%
     
7 996 9 214 10 700
(13.2%) – 16.1%
Discount rate 1.70% Discount rate 2.20% Discount rate 2.70%
     
10 120 9 214 8 393
9.8% – (8.9%)
The actuarial valuation as of 31 December 2017 resulted
in a funded ratio of actuarial assets to actuarial liabilities,
assuming no future pension adjustments, of 139.2%
(150.1% in the 2016 roll forward). The funded ratio was
102.7% (101.4% in the 2016 roll forward) 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 2017, 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 plan. 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.
Should Article 26 be invoked due to an actuarial deficiency,
either during the ongoing operation or due to the termination
of the UNJSPF pension plan, deficiency payments required
from each member organization would be based upon the
proportion of that member organization’s contributions to
the total contributions paid to the Fund during the three
years preceding the valuation date. Total contributions paid
to the UNJSPF during the preceding three years (2015, 2016
and 2017) amounted to $6,931.39 million, of which 2,26%
was contributed by UNESCO.
During 2018, contributions paid to UNJSPF amounted to
$37  million (2017:  $35.4  million). Expected contributions
due in 2019 are approximately $39 million.
Membership of the Fund may be terminated by decision of
the United Nations General Assembly, upon the affirmative
recommendation of the Pension Board. A proportionate share
of the total assets of the Fund at the date of termination shall
be paid to the former member organization for the exclusive
benefit of its staff who were participants in the Fund at that
date, pursuant to an arrangement mutually agreed between
the organization and the Fund. The amount is determined
by the United Nations Joint Staff Pension Board based on an
actuarial valuation of the assets and liabilities of the Fund on
the date of termination; no part of the assets which are in
excess of the liabilities are included in the amount.
57
 CONSOLIDATED FINANCIAL STATEMENTS

The United Nations Board of Auditors carries out an annual

audit of the UNJSPF and reports to the UNJSPF Pension
NOTE 16 – ADVANCE RECEIPTS
Board and to the United Nations General Assembly on the
Expressed in ‘000 US dollars 31/12/2018 31/12/2017
audit every year. The UNJSPF publishes quarterly reports
   
on its investments and these can be viewed by visiting the
Framework agreements 22 311 26 973
UNJSPF website.
Other voluntary contributions 18 587 25 870
received in advance
NOTE 14 – TRANSFERS PAYABLE Assessed contributions
received in advance
3 253 33 635

Expressed in ‘000 US dollars 31/12/2018 31/12/2017 Other advance receipts 723 1 381

Interest payable to donors
Other transfers payable
Total transfers payable
NOTE 15 – VOLUNTARY
CONTRIBUTIONS WITH CONDITIONS
Expressed in ‘000 US dollars
14 007 14 497 Total advance receipts 44 874 87 859
1 095 2 268
UNESCO recognizes as a liability amounts received under
non-exchange contracts where a binding agreement is not
15 102 16 765
considered to be in place yet. This is relevant to Framework
Agreements, where funds can be received before an
agreement is reached on the allocation of the contribution,
and on voluntary contributions received with restrictions.
31/12/2018 31/12/2017
NOTE 17 – BORROWINGS

Monetary voluntary Expressed in ‘000 US dollars 31/12/2018 31/12/2017

contributions with conditions 96 114 72 015    
(current) IBE building loan 131 132
Phase II Belmont plan loan 4 925 7 070
In-kind voluntary contributions
123 260 Current portion of
with conditions (current) 5 056 7 202
borrowings
Voluntary contributions
96 237 72 275 IBE building loan 269 393
with conditions (current)
In-kind voluntary contributions Phase II Belmont plan loan 2 974 8 109
52 182
with conditions (non -current) Long-term portion of
3 243 8 502
Voluntary contributions with borrowings
52 182
conditions (non-current) Total borrowings 8 299 15 704
Total voluntary
contributions with 96 289 72 457 Borrowings are recognized in the financial statements at
conditions amortized cost with values based on cash flows discounted
using a discount rate of 1.95% (Phase II Belmont plan loan)
Monetary voluntary contributions with conditions arises and 3.00% (IBE building loan).
when funds are received from a donor and UNESCO is yet to The maturity analysis of the IBE building and Phase II Belmont
meet the condition stipulated in the agreement. The in-kind plan loans is as follows:
relates to a loan given to UNESCO where the donor pays the
interest associated with the loan.
IBE Phase II
31/12/2018 building Belmont TOTAL
loan plan loan
 Expressed in ‘000 US dollars
Within three months – 1 527 1 527
Later than three months 131 3 398 3 529
and not later than
one year
Later than one year and 269 2 974 3 243
not later than five years
Total borrowings 400 7 899 8 299

58
 CONSOLIDATED FINANCIAL STATEMENTS

IBE Building cultural purposes, and for paying subscriptions to institutions

UNESCO received loans from the Property Foundation for
International Organizations (FIPOI) of Switzerland for the
balance of CHF (Swiss francs) 4.4 million to partly finance
the purchase of buildings for the UNESCO International
Bureau of Education (IBE). Following a renegotiation of the
payment schedule in December 1997, it was agreed to fix
the amount of the loan outstanding as of 1 January 1998
at CHF3.2 million ($2.3 million) repayable in equal annual
instalments of CHF0.1 million from 1998 until 2021, with a
final payment of CHF0.02 million in 2022.
and university registration fees. UNESCO undertakes to
reimburse suppliers accepting these coupons in payment of
their invoices. If the recipient of the coupons does not use
them, they can send them back for a cash reimbursement
or for exchange with coupons bearing a new validity date.
The current coupon validity period is 15 years, however if
expired unused coupons are sent to UNESCO, replacement
coupons will be issued. Unredeemed coupons are classified
between current and non-current based on amounts
expected to be redeemed within the next 12 months.

Phase II Belmont Plan Provision for litigation movements

By 32 C/Resolution 74, the General Conference had
“authorized the Director-General to contract an interest- Expressed in ‘000 US dollars 31/12/2018
free loan of €79.9 million with a lender chosen by him in
cooperation with the Government of France and to take As at 1 January 2018
into account the necessity of making provision in future Current portion 1 252
budgets for the funds required for reimbursement of the Non-current portion –
sums borrowed”.
Total 1 252
An agreement was signed on 23 March 2004 between
UNESCO, the Caisse des Dépôts et Consignations (CDC) and Movements during the year (119)
the Government of France for the interest-free loan which As at 31 December 2018
would be drawn in five yearly instalments from 2004 to
Current portion 1 133
2008 and repaid over eight biennia starting in 2006.
Non-current portion –
The loan repayments are fully guaranteed by the Government
of France. Total 1 133

NOTE 18 – OTHER LIABILITIES

Expressed in ‘000 US dollars 31/12/2018 31/12/2017
   
Unredeemed coupons – 78
Provision for litigation 1 133 1 252
Other current liabilities 11 271
Unpaid claims from MBF 3 613 4 006
Outstanding invoices due
1 943 1 907
to claim administrator
Payable to donors 3 239 3 285
Deferred income 930 708
UN invoice 148 297
Others 267 1 068
Other current liabilities 11 273 12 601
Unredeemed coupons 5 891 5 841
Other non-current liabilities 5 891 5 841
Total other liabilities 17 164 18 442

The UNESCO coupons programme provides private

individuals, institutions or Member States with the possibility
of buying, with their local non-convertible currencies,
coupons denominated in US dollars and guaranteed by
UNESCO. Coupons are used for the purchase of books,
publications and material for educational, scientific or

59
 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 – NET ASSETS/EQUITY

 Expressed in ‘000 US dollars 01/01/2018 Surplus/ Other Distribution Distribution 31/12/2018
Opening (Deficit) for adjustments of exchange of actuarial
balance the period to reserves difference gains / losses
through
reserves
           

General Fund Reserves (211 681) (25 526) (140) – 33 436 (203 911)
Working Capital Fund 31 223 – (6 600) – – 24 623
Restricted Reserves 438 013 27 344 (3 750) (9 899) 2 781 454 489
Currency Exchange Reserves – – (9 899) 9 899  – –
Actuarial gains / losses through reserves – – 36 217 – (36 217) –
Total reserves and fund balances 257 555 1 818 15 828 – – 275 201

Reserves under the main operations of the Organization
financed from Member States assessed contributions are
classified as General Fund reserves.
Working capital Fund corresponds to advances from Member
States as determined by the General Conference.
Restricted reserves refer to results from operations under
Programme Fiduciary Funds, Other Proprietary Funds and
Staff Fiduciary Funds. The use of such reserves is either
determined by specific financial regulations or agreements
signed with donors.
Currency exchange reserves are exchange differences arising
from the presentation into USD of the financial statements
of consolidated entities whose functional currencies are
different from USD.
Actuarial gains and losses reserves arise from the valuation
of long term employee benefits such as after-service
health insurance. Since 2017, these two reserves are been
distributed between the Restricted and General Fund reserve,
which constitute the Organisation’s main reserves.

NOTE 20 – REVENUE
Expressed in ‘000s US dollars 31/12/2018 31/12/2017

Total assessed contributions 336 171 316 327

Voluntary contributions
Monetary voluntary contributions 261 477 235 570
Inter-organization funds 23 533 12 640
In-kind voluntary contributions 11 725 13 068
Total voluntary contributions 296 735 261 278
Other revenue producing activities
Revenue producing activities 7 154 6 667
Income from services rendered 15 676 13 109
Total other revenue-producing activities 22 830 19 776
Other/miscellaneous revenue
Other operating gains 1 504 1 959
Contributions to MBF 12 094 11 692
Total other/miscellaneous revenue 13 598 13 651
Foreign exchange gains – 23 579
Total finance revenue 14,497 13 811
Total revenue 683 831 648 422

In-kind contributions include the use of field office and
institutes premises for no or nominal rent, and free utilities,
maintenance and communications. In the case of the use of
premises, the contributions value is based on the commercial
rate for renting the building. In-kind contributions for
premises are estimated at $11.5 million (2017: $12.2 million).
Revenue producing activities for $7.1 million include
principally sales income from the UNESCO Restaurant Service
for $6.1 million (2017: $5.2 million).
Income from services rendered of $15.7 million relates
principally to rental services of UNESCO’s and Institutes’
premises and facilities for $15.5 million (2017: $12.8 million).

60
 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 – EXPENSES

Expressed in ‘000 US dollars 31/12/2018 31/12/2017

Employee benefit expenses

International & National staff 234 290 223 699
Temporary staff 33 294 33 136
Other personnel costs 68 002 61 632
Total employee benefit expenses 335 586 318 467

Consultants, external experts and mission costs

Consultants 35 329 35 750
Staff mission costs 13 387 12 690
Delegates & external individuals missions 1 401 1 017
Other contracts 2 463 3 325
Total consultants, external experts and mission costs 52 580 52 782

External training, grants and other transfers

Financial contributions 14 315 9 135
Grants and fellowships 10 467 10 339
External training and seminars 20 512 21 283
Total external training, grants and other transfers 45 294 40 757

Supplies, consumables and other running costs

Communications 3 620 3 628
Equipment 8 908 11 719
Leases 16 593 17 937
Utilities 5 383 5 538
Maintenance and repairs 8 367 8 526
Other supplies 6 461 7 336
Total supplies, consumables and other running costs 49 332 54 684

Contracted services
Contracted research 1 086 2 859
Contracted seminars and meetings 3 512 4 603
Contracted document production 404 469
Other contracted services 99 137 112 239
Total contracted services 104 139 120 170

Depreciation and amortization

Depreciation 17 818 17 565
Amortization 64 80
Total depreciation and amortization 17 882 17 645

Allowance for assessed contribution 68 051 77 393

Total other expenses 825 1 479

Total foreign exchange losses 3 655 –
Total finance costs 4 669 4 793
Total expenses 682 013 688 170

61
 CONSOLIDATED FINANCIAL STATEMENTS
21.1 EMPLOYEE BENEFITS EXPENSES
International & National staff expenses include salaries, post
adjustments, entitlements and pensions and health plan
contributions for Professional and General Service category
staff. This line also includes movements in the actuarial
liability for Accumulated Annual Leave and Repatriation
Benefits. Temporary staff expenses include all costs relating
to the employment of temporaries and supernumeraries.
Other personnel costs include reimbursement of medical
claims and the movement in the ASHI actuarial liability where
this is recognized in the Statement of Financial Performance.
This line also includes staff travel expenses which are not
related to mission costs (home leave, family visit, education
grant, interview, separation).
21.2 CONSULTANTS, EXTERNAL EXPERTS AND
MISSION COSTS
Consultants expenses represent the cost of contracting
consultants, including insurance and travel expenses. Staff
mission costs are the mission and training costs for UNESCO
staff, temporaries and supernumeraries. These concern
principally travel and per diem expenses. Delegates & external
individuals missions are expenses for travel and per diem of
representatives, delegates, individuals and others (i.e. non-
staff). Other contracts concern principally interpreter fees.
21.3 EXTERNAL TRAINING, GRANTS
AND OTHER TRANSFERS
Financial contributions include contributions made to
United Nations joint activities, publications, conferences and
programme activities. Grants and fellowships include study
grants, fellowships, subventions, sponsorships and grant-in-
aid. Expenses for external training and seminars are mainly
travel and per diem costs for participants.
21.4 SUPPLIES, CONSUMABLES AND OTHER
RUNNING COSTS
Communications expenses concern mainly telephone
and postal/freight costs. Equipment expenses represent
equipment purchases and costs during the year, which do
not meet the criteria for capitalization as PP&E or Intangible
Assets. Leases represents primarily premises rental cost. This
line includes the expense which corresponds to the in-kind
voluntary contribution for premises provided to UNESCO at
no or nominal cost. Maintenance and repairs expenses are
mainly those incurred in relation to UNESCO premises. Other
supplies include office supplies and notably supplies for the
UNESCO Restaurant Service.
21.5 CONTRACTED SERVICES
Contracted services represent expenses where UNESCO
has engaged a third party to perform work on behalf of
UNESCO. Major categories of these types of arrangements
include research, seminars and meetings and document
62
production. Significant amounts fall within the category
other contracted services. It should be noted that under
certain arrangements, especially non-exchange contracts
with not-for-profit organizations and government ministries
for the implementation of activities under UNESCO’s mission
and mandate, contracts are established which cover several
types of services and work which cannot be easily allocated
to a single category of contracted services.
21.6 DEPRECIATION AND AMORTIZATION
Depreciation is the expense resulting from the systematic
allocation of the depreciable amounts of property, plant
and equipment (PP&E) over their useful lives (see Note 11).
This relates principally to UNESCO buildings. Amortization is
the expense resulting from the systematic allocation of the
amortizable amount of intangible assets over their useful
lives (see Note 12).
21.7 ALLOWANCE FOR ASSESSED
CONTRIBUTIONS
This amount corresponds to the allowance for unpaid
Member States contributions.
21.8 OTHER EXPENSES, FOREIGN EXCHANGE
AND FINANCE COSTS
Finance costs of $4.7 million principally include the calculated
interest cost of $0.3 million which corresponds to the in-kind
revenue recognized for the value to UNESCO of not paying
loan interest on the Phase II Belmont plan loan and the IBE
building loan (see Note 20 Revenue) as well as the payment
of investment interest to donors for $3.5 million.
NOTE 22 – CONTINGENT LIABILITIES,
COMMITMENTS AND CONTRACTUAL
RIGHTS
22.1 CONTINGENT LIABILITIES
22.1.1 As at 31 December 2018, 49 employment cases
were pending before the Labour Courts in Brazil.
The total amount claimed in the pending cases is
approximately $0.5 million (2017 – $0.9 million).
The Organization, at this time, cannot provide an
estimate as to the outcome of the above lawsuits nor
can it determine the likelihood or the amount of loss
or legal costs associated with the outcome.
22.1.2 Discussions between UNESCO, IESS and the
Ecuadorian Ministry of Foreign Affairs are ongoing to
address two service contract holders who brought up
case against UNESCO with the Institutto Ecuadoriano
Seguridad Social (IESS) of Ecuador. This case concerns
social security contributions for service contract
holders. Outcomes are not determinable at this time.

22.1.3 Staff members have also lodged complaints which
are pending before the UNESCO Appeal Board or
the International Labour Organization Administrative
Tribunal. It is highly unlikely that UNESCO would
incur financial liabilities for these outstanding cases
estimated at $2.1 million (2017: $2.3 million).
The amounts above have not been recognized in the
consolidated financial statements
22.2 COMMITMENTS
UNESCO enters into operating lease arrangements for the
use of field office and Institute premises, and for the use
of photocopying and printing equipment. Future minimum
lease rental payments for the following years are:
Expressed in ‘000 US dollars 31/12/2018 31/12/2017
Within one year 1 254 1 449
Later than one year and not 1 421 2 129
later than five years
Later than five years – –
Total operating lease
2 675 3 578
commitments
Operating lease arrangements for field office premises can
generally be cancelled by providing notice of up to 90 days.
Individual operating lease agreements for photocopiers at
headquarters generally made under the auspices of the
overall long term supply agreements.
22.3 CONTRACTUAL RIGHTS
Under a number of existing voluntary contribution
agreements, UNESCO will gain control of the voluntary
contribution asset (contributions receivable) if certain
stipulations set out in the agreement are met. Until the
stipulations are met, these contractual rights are not
recognized in the Statement of Financial Position. As at
31 December 2018, there are voluntary contributions with
an approximate value of $268.8 million (2017 – $127.8
million) under existing agreements where it is considered
probable that UNESCO will meet the stipulations set out in
the agreement.
NOTE 23– APPROVED BUDGET
The General Conference set $653 million as the level for
assessed contributions from the 195 Member States for the
2018-2019 biennium. However, as a result of the decision
of two Member States to suspend the payment of their
contributions, the General Conference approved a budget
expenditure plan of $518 million, thus aiming to reduce the
approved biennial budget by 20.7% (or $135 million).
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018, the allotment
including authorized transfers and additional appropriations
amounted to $285.3 million (see Statement V).
The original budget of $262.9 million for the year is adjusted
for authorized transfers, additional appropriations and carry
over funds from the previous year, to arrive at the final
budget for the year. The authorized transfers of $11.3 million
represent the transfer of funds between the two years of
the budget. The additional appropriations of $11.2 million
are voluntary contributions received to support directly the
programmes and activities of the regular programme.
23.1 BUDGET RECONCILIATION
UNESCO reports bi-annually to the Executive Board on
the status of the budget implementation through the
Management Chart.
The budget and the accounting bases differ. The financial
statements include all controlled entities for the financial
year from 1 January 2018 to 31 December 2018 and a
classification based on the nature of expenses is used in
the Statement of Financial Performance. The financial
statements differ from the budget, which deals with receipts
and expenditures relating to General Fund assessments
only and classifies expenses by programmes. The budget
is prepared on the modified cash basis and the financial
statements on the accrual basis. Under the budget, assessed
contributions to be received in Euros and the corresponding
expenditure are translated into US dollars at the Constant
Dollar Rate (CDR). In the financial statements assessed
contributions received in Euros and their corresponding
expenditure are translated into US dollars using the United
Nations Operational Rate of Exchange prevailing at the date
of the transaction.
A Statement of Comparison of Budget and Actual
Amounts for the General Fund is provided in these financial
statements (see Statement V). Reconciliations between the
actual amounts on a comparable basis as presented in the
Statement of Comparison of Budget and Actual Amounts
and the actual amounts in the financial statements for the
twelve months ended 31 December 2018 are presented in
this Note.
In order to reconcile the budget actual amounts to the
financial statements (Cash Flow Statement and Statement
of Financial Performance), differences between the budget
scope and financial statements scope and budget reporting
and financial statements presentation have to be taken into
account.
(a) Reporting scope (entity) differences
The budget concerns receipts and expenditures relating
to General Fund assessments only. The Financial
Statements include all UNESCO controlled entities, and as
such include results for all Funds and the non-budgetary
result for the General Fund. Details of the results of the
Other Proprietary Funds, Programme Fiduciary Funds
63
 CONSOLIDATED FINANCIAL STATEMENTS

and Staff Fiduciary Funds are shown in Note 26 Segment
Information.
(b) Basis adjustments
The budget is prepared on the modified cash basis.
The financial statements are prepared on a full accrual
basis in compliance with IPSAS requirements. In order
to reconcile the budgetary result to the Cash Flow
Statement, the non-cash elements such as unliquidated
obligations and non-received assessed contributions are
removed as basis differences. The principal adjustments
impacting the reconciliation between the budget and the
Statement of Financial Performance are as follows:
• Capital expenditures capitalized and depreciated
over useful life under accrual accounting (generally
recorded as current year expenses in the budget);
• Under IPSAS, the UNORE is applied as opposed to
the CDR;
• Under accrual accounting, employee benefit liabilities
are reported in the Statement of Financial Position,
and movements in liabilities impact the Statement of
Financial Performance;
• Unliquidated obligations are included in budget
reporting but are not recognized under accrual
accounting.
(c) Timing differences
The budget and the financial statements both represent
the year to 31 December 2018. As such there are no
timing differences in the reconciliation.
(d) Presentation Differences
Presentation differences concern differences in the
format and classification schemes in the Statement of
Cash Flow and the Statement of Comparison of Budget
and Actual Amounts.

23.2 RECONCILIATION: SURPLUS WITH BUDGET RESULT ON MODIFIED CASH BASIS

31/12/2018
Expressed in ‘000 US dollars  
Surplus per Statement of Financial Performance 1 818
a) Scope differences
OPF surplus (1 385)
PFF deficit (22 579)
SFF surplus (3 380)
Subtotal (27 344)
GEF deficit (25 526)
b) Accounting basis adjustments
Revenue
Constant Dollar adjustment (5 870)
Budgetary allotment adjustment (54 210)
Foreign exchange gain and other non-budgetary income (14 547)
(74 627)
Expenses
Employee benefits 43 377
Constant Dollar Adjustment 3 232
Foreign exchange losses 2 246
Prior year budgetary expenses 4 144
Allowance for unpaid Member States' contributions 68 052
Disbursement relating to 38 C/5 surplus allotted in 2019 5 014
Fixed assets addition, depreciation and amortization 14 986
Renovation loan repayment (7 026)
134 025
c) Budget basis adjustment
Unliquidated obligations (8 112)
Total adjustments 51 286
Budget result on modified cash basis 25 760

64
 CONSOLIDATED FINANCIAL STATEMENTS

23.3 RECONCILIATION: BUDGETARY RESULT WITH NET CASH FLOW

Operating Investing Financing

31/12/2018 Expressed in ‘000 US dollars Total
activities activities activities

Actual net surplus as per the Statement of

– – 25 760
Comparison of Budget and Actual Amounts
Unliquidated obligations 8 283 – – 8 283
Basis differences Unreceived contributions for year (89 349) – – (89 349)
Other basis differences 49 597 – – 49 597
Presentation difference 8 474 (1 316) (7 158) –
Budgetary result with cash basis 2 765 (1 316) (7 158) (5 709)
Timing differences – – – –
Entity differences 36 762 (63 936) – (27 174)

Actual amount in the Statement of Cash Flow 39 527 (65 252) (7 158) (32 883)

23.4 UNLIQUIDATED OBLIGATIONS

Expressed in US dollars 31/12/2018 31/12/2017

   
General Fund
Commitment portion 8 283 5 723
Accrual portion 2 187 2 419
Unliquidated obligations 10 470 8 142

Other Proprietary Funds

Commitment portion 3 214 1 700
Accrual portion 961 769
Unliquidated obligations 4 175 2 469

Programme Fiduciary Funds

Commitment portion 63 695 63 625
Accrual portion 7 286 10 175
Unliquidated obligations 70 981 73 800
Total unliquidated obligations 85 626 84 411

For budgetary purposes UNESCO records “unliquidated

obligations”. Unliquidated obligations include both budget
commitments which have not yet given rise to the delivery
of a service at the reporting date, and real accruals for goods
and services received but not yet invoiced/settled. Budget
commitments are not recorded in the financial statements
whereas real accruals are recognized in accordance with
IPSAS.
GEF unliquidated obligations, except those related to
renovation costs, are included in the actual amounts of the
General Fund budget expenditure as at 31 December 2018.
The table above provides the split of unliquidated obligations
between commitments and accruals for goods and services
received not yet invoiced and travel costs.
NOTE 24 – FINANCIAL RISK
MANAGEMENT
Exposure to credit, liquidity, currency and interest rate
risk arises in the normal course of UNESCO’s operations.
The following information presents information about
UNESCO’S exposure to each of the above risks, policies and
processes for measuring and managing risk, and UNESCO’s
management of capital. There has been no changes in the
policies and procedures used to manage risk.
In January 2018, the first investments were made for the
After-Service Health Insurance Special Account in accordance
with the Investment Policy Statement of the ASHI Fund which
is based on the results of an asset and liability management
study.

65
 CONSOLIDATED FINANCIAL STATEMENTS
In general, UNESCO’s risk management policies along with
its Investment Policy and Financial Rules and Regulations
aim to minimize potential adverse effects on the resources
available to UNESCO to fund its activities.
The primary objective of UNESCO’s Investment Policy is the
preservation of the value of resources of the Organization.
Within this general objective the principal considerations for
investment management are, in order of priority, security of
principal, liquidity, and rate of return.
On the other hand, the strategic objective of the investment
portfolio related to the After-Service Health Insurance is to
mitigate the volatility of the net liability in the long run.
UNESCO has an Investment Committee comprising senior
management representatives and external member(s) that
advise the Chief Financial Officer on investment and cash
management policy of UNESCO, on overall investment
strategy and on related risk management.
24.1 FAIR VALUE OF FINANCIAL ASSETS
AND LIABILITIES
Fair values and fair value hierarchy
UNESCO uses the following valuation technique hierarchy
for determining and disclosing the fair value of financial
instruments:
Classification Hierarchy
Financial assets
Investments L&R Level 1
Investments HTM Level 1
Investments FVTPL Level 1
Total
Financial liabilities
Borrowings Amortized cost Level 2
Transfers between levels of the fair value hierarchy are
recognized at the end of the reporting year during which the
change has occurred. There were no movements between
levels in the fair value hierarchy during the year.
24.2 CREDIT RISK
Credit risk is the risk of financial loss to the Organization
if customers or counterparties to financial instruments fail
to meet their contractual obligations. It mainly arises from
UNESCO’s cash and cash equivalents, financial investments,
and receivables.
Investments, cash and cash equivalent
UNESCO utilizes credit ratings from the three leading credit
rating agencies, Moody’s, Standard & Poor’s and Fitch, to
evaluate credit risk on its financial instruments.
66
• Level 1: Quoted (unadjusted) prices in active markets for
identical assets or liabilities;
• Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities,
either directly or indirectly; or
• Level 3: Techniques which used inputs that have a
significant effect on the reordered fair value that are not
based on observable market data.
The fair value of cash and cash equivalents, Short term
investments, Receivables: non-exchange transactions,
receivables from exchange and current non-exchange
transactions and other receivables approximate their
recorded carrying amount due to their short term nature.
The fair value of accounts payables, transfer payables
and other current liabilities and voluntary contributions
approximate their recorded carrying amount due to their
short term nature.
The following table shows the carrying amounts and fair
values of investments and borrowings including their levels
in the fair value hierarchy:
Carrying amount Fair  value
2018 2017 2018 2017
453 531 406 604 453 441 406 359
2 881 1 607 2 864 1 601
69 168 66 591 69 167 66 591
525 580 474 802 525 472 474 551
8 299 15 704  8 299  15 704
UNESCO holds more than 150 bank accounts in more than
50 countries that expose the organization to default risk. To
mitigate this risk, UNESCO has internal guidelines such as
minimizing the balances on its current accounts and operating
with strong international banking groups whenever possible.
The investment management function is centralized at
UNESCO headquarters whereas field offices and institutes
are not permitted to engage in investing.
In accordance with its Investment Policy, UNESCO applies
limits on investment counterparty exposures to mitigate
credit risk. These limits are based on the several criteria
including a minimum long-term rating of A-, a minimum
short-term rating of A-1 and all investment counterparties
should be established in a country with a long-term rating of
at least AA-. All investments were compliant with UNESCO’s
Investment Policy.
 CONSOLIDATED FINANCIAL STATEMENTS

The Investment Policy provides an exception to the in Brazilian Government Treasury Bills up to one year. The
aforementioned credit ratings for UNESCO Brasilia with credit risk associated with these investments is the sovereign
significant cash balance in Brazilian Real that can be invested risk of Brazil which is rated BB as at 31 December 2018.

Money market Investments

Credit rating Cash & cash instruments clas- at fair value Bonds held
Expressed in 2018 2017 Variation
equivalent sified as loans & through surplus to maturity
‘000 US dollar receivables and deficit

AAA 5 000 59 000 – – 64 000 70 000 (6 000)

AA 50 000 278 000 – 2 881 330 881 252 619 78 262
A 120 215 116 237 – – 236 452 295 253 (58 801)
BBB 4 793 – – – 4 793 3 132 1 661
<BBB 424 – 55 262 – 55 686 67 063 (11 377)
Not rated 490 295 13 905 – 14 690 1 339 13 351

Total 180 922 453 532 69 167 2 881 706 502 689 406 17 096

Receivables the assets of UNESCO’s field offices, centres and institutes

Receivables are mainly from sovereign Member States. An
allowance is established when there is objective evidence,
based on a review on outstanding amounts at the reporting
date that a State will not comply with the original terms of
the receivables.
The credit risk exposure related to receivables are not material
as contributions are primarily from governments and related
bodies.
worldwide is mitigated by maintaining a minimum level of
cash or other assets in local currencies at any time.
Foreign currency risk related to UNESCO’s extrabudgetary
activities is managed through individual project budget
planning for foreign currency expenditure.
The currency risk on Brazilian Real is limited by the fact that
UNESCO Brasilia’s functional currency is Brazilian Real and its
revenue and expenditure are also in the same currency.

24.3 LIQUIDITY RISK 24.5 INTEREST RATE RISK

Liquidity risk is the risk that UNESCO might not have
adequate funds to meet its obligations as they fall due. The
Organization ensures on the basis of cash flow forecasts that
it has sufficient cash on demand to meet expected operating
expenses.
As at the year-end, UNESCO’s cash and cash equivalents
and short-term investments amount to $690.7 million which
is substantially more than the current liabilities equaling
$238.1 million. Therefore, the Organization is not exposed
to a significant liquidity risk.
24.4 FOREIGN EXCHANGE RISK
Foreign exchange risk is the risk that the fair value of a
financial instrument fluctuates due to changes in foreign
exchange rates. UNESCO is exposed to foreign exchange risk
on revenues and expenses denominated in foreign currencies,
predominately Euros along with minor exposure to other
currencies. A 1% increase/decrease in exchange rate would
not have a material impact on the financial statements.
The Split Assessment system, whereby the Organization
receives a portion of assessed contributions in euros in order
to cover expenses which are denominated in that currency, is
a means of ensuring that most of the exposure to exchange
fluctuations between euros and US dollars is mitigated.
On the other hand, the foreign exchange risk related to
Interest rate risk arises from the effects of market interest
rates fluctuations on the fair value of financial assets and
liabilities and/or on future cash flows. The Organization is
mainly exposed to interest rate risk on its financial interest-
bearing assets.
UBO’s Brazilian Treasury Bills that are carried at fair value
through surplus and deficit are floating rate debt securities.
UNESCO’s surplus/deficit would be negatively impacted in
case of decreasing BRL interest rates.
Investments classified as held-to-maturity, cash equivalents
and investments classified as loans and receivables are not
marked to market. Therefore, surplus/deficit reported in
UNESCO’s financial statements is not impacted by immediate
changes in interest rates. However, at maturity of these
financial instruments a lower re-investment rate may have a
significant impact on the reported surplus and deficit.
A 1% increase/decrease in interest rates would not have a
material impact on the financial statements.
UNESCO is mainly exposed to re-investment risk. Therefore, a
sensitivity analysis measuring the impact of changing interest
rates on surplus and deficit assuming a change in interest
rate levels as at the end of the reporting year would not
show any significant risk.

67
 CONSOLIDATED FINANCIAL STATEMENTS
The Investment Committee regularly follows up that the rate
of return of investments is in line with the benchmarks set
up in the Investment Policy.
24.6 CONCENTRATION RISK
The concentration risk of UNESCO is mitigated by the
counterpart and country limits established by the Investment
Policy of UNESCO.
The maximum exposure to any single banking group is
limited to 7% or 10% of UNESCO’s internally managed
investment portfolio depending on the financial rating of
the counterpart.
Furthermore, the exposure to a specific country should not
exceed 25% of the portfolio, except for France as the host
country of the organization that has a limit of 35% with a
condition that 10% of these 35% is allocated in instruments
that are cashable within three business days.
All investments were compliant with UNESCO’s Investment
Policy (IP).
24.7 CAPITAL MANAGEMENT
UNESCO defines the capital that it manages as the aggregate
of its net assets which is comprised of accumulated balances
and reserves. UNESCO’s objectives in managing capital are
to safeguard its ability to continue as a going concern to
fund its asset base and to fulfil its mission and objectives as
established by its Member States and donors. The UNESCO’s
overall strategy with respect to capital management
includes the balancing of its operating and capital activities
with its funding on a biennial basis along with its expense
requirements in US dollars against its euros revenue from
Member States’ assessments.
UNESCO manages its capital structure in light of global
economic conditions, the risk characteristics of the underlying
assets and working capital requirements. UNESCO manages
its capital by reviewing on a regular basis the actual results
against the budgets approved by Member States.
NOTE 25 – RELATED PARTY
DISCLOSURES
25.1 GOVERNING BODIES
UNESCO is governed by a General Conference, consisting of
the representatives of the Member States of the Organization.
Entitlements
Compen­sation Pension
Number (Allowances
and Post and Health
of individuals Adjustment Grants and
Plans
Subsidies)
Expressed in ‘000 US dollars
30 3 948 897 1 126
The UNESCO-owned apartment at the Place Vauban, Paris, France is put, rent-free, at the disposal of the Director-General.
The Director-General has not used the apartment during the current financial year.
68
Representatives of Member States are appointed separately
by the Government of each Member State. They do not
receive any remuneration from the Organization and are
not considered as key management personnel of UNESCO
as defined under IPSAS. The President of the General
Conference receives a representation allowance during his/
her term of office as President.
The General Conference elects the 58 Member States, which
form the Executive Board. The Executive Board assures the
overall management of UNESCO and meets twice a year. The
Organization pays for travel costs, subsistence allowance and
office expenses to cover costs incurred by the representatives
of the Member States in the execution of their duties as
Members. The Chairman of the Executive Board receives a
representation allowance during his/her term of office as
Chairman.
25.2 KEY MANAGEMENT PERSONNEL
Key management personnel of UNESCO are the Director-
General, the Deputy Director-General, the Assistant Directors-
General and the Directors of the Corporate Services as they
have the authority and responsibility for planning, directing
and controlling the activities of UNESCO.
The aggregate remuneration paid to key management
personnel includes: net salaries, post adjustment,
entitlements such as representation allowances and other
allowance, grants and subsidies, and employer pension and
health insurance contributions.
Key management personnel qualify also for post-employment
benefits, such as after-service health insurance, repatriation
benefits and payment of unused annual leave. The actuarial
assumptions applied to measure such employee benefits are
disclosed in Note 13.
Key management personnel are ordinary members of
UNJSPF with the exception of one staff member who does
not participate in to the Fund. Amounts paid by UNESCO
in lieu of contributions to the plan, which represents
15.8% of the pensionable remuneration, are included
in total remuneration. Advances are those made against
entitlements in accordance with Staff Rules and Regulations.
Loans granted to key management personnel are those
granted under Staff Rules and Regulations. Advances
against entitlements and loans are widely available to all
UNESCO staff.
Outstanding
Reimbur­
Total advances
Outstanding sement of
Remuneration against
loans US Income
2018 entitlements
Tax
Ed Grant
5 971 145 9  -
 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 26 – SEGMENT INFORMATION

26.1 FINANCIAL POSITION BY SEGMENT – 2018
Inter-fund TOTAL
Expressed in ‘000 US dollars GEF OPF PFF SFF balances UNESCO
           

ASSETS
Current Assets
Cash and cash equivalents 75 280 35 922 52 286 17 434 – 180 922
Short-term investments 294 50 000 431 971 27 530 – 509 795
Accounts receivable (non-exchange
24 433 – 4 086 – – 28 519
transactions)
Receivables from exchange transactions 64 871 742 320 (316) 1 681
Inventories – 298 21 48 – 367
Advance payments 12 954 554 17 209 854 (602) 30 969
Other receivables 2 213 9 883 4 825 366 (9 632) 7 655
Total current assets 115 238 97 528 511 140 46 552 (10 550) 759 908
Non-current assets
Accounts receivable (non-exchange
1 634 – – – – 1 634
transactions)
Long-term loans – 208 – – (208) –
Long-term investments – 13 905 1 880 – – 15 785
Property, plant and equipment 517 944 2 388 2 488 271 – 523 091
Intangible assets 179 – 300 – – 479
Total non-current assets 519 757 16 501 4 668 271 (208) 540 989
TOTAL ASSETS 634 995 114 029 515 808 46 823 (10 758) 1 300 897
LIABILITIES
Current Liabilities
Accounts payable (exchange
3 732 1 939 11 744 965 (142) 18 238
transactions)
Employee benefits 30 686 2 262 13 533 820 – 47 301
Transfers Payable 876 6 14 220 – – 15 102
Voluntary contributions with conditions 123 – 96 114 – – 96 237
Advance receipts 5 847 181 38 507 513 (174) 44 874
Borrowings current portion 5 056 – – – – 5 056
Other current liabilities 4 057 602 11 284 5 564 (10 234) 11 273
Total current liabilities 50 377 4 990 185 402 7 862 (10 550) 238 081
Non-current Liabilities
Employee benefits 760 611 3 619 14 199 – – 778 429
Voluntary contributions with conditions 52 – – – – 52
Borrowings long-term portion 3 243 – – 208 (208) 3 243
Other non-current liabilities – 5 891 – – – 5 891
Total non-current liabilities 763 906 9 510 14 199 208 (208) 787 615
TOTAL LIABILITIES 814 283 14 500 199 601 8 070 (10 758) 1 025 696
NET ASSETS (179 288) 99 529 316 207 38 753 – 275 201
NET ASSETS/EQUITY
Reserves and fund balances (179 288) 99 529 316 207 38 753 – 275 201
NET ASSETS/EQUITY (179 288) 99 529 316 207 38 753 – 275 201

69
 CONSOLIDATED FINANCIAL STATEMENTS

26.2 FINANCIAL PERFORMANCE BY SEGMENT – 2018

Inter-fund TOTAL
Expressed in ‘000 US dollars GEF OPF PFF SFF transactions UNESCO
           
REVENUE
Assessed contributions 332 389 – 3 782 – – 336 171

Voluntary contributions 18 339 1 493 276 903 – – 296 735

Other revenue producing activities 9 14 640 1 769 6 403 9 22 830

Other / miscellaneous revenue 787 2 361 248 23 886 (13 684) 13 598

Finance revenue 1 308 4 302 8 390 497 – 14 497

Inter-segment transfers 11 132 52 379 15 047 172 (78 730) –

Total revenue 363 964 75 175 306 139 30 958 (92 405) 683 831

EXPENSES
Employee benefit expenses 194 363 43 860 88 266 22 986 (13 889) 335 586

Consultants, external experts and

12 041 4 307 37 903 - (1 671) 52 580
mission costs

External training, grants and other

32 599 449 26 299 - (14 053) 45 294
transfers

Supplies, consumables and other

20 916 8 718 21 241 2 446 (3 989) 49 332
running costs

Contracted services 14 393 3 636 85 405 681 24 104 139

Depreciation and amortization 15 445 1 078 1 259 100 – 17 882

Allowance for assessed contributions 68 051 – – – – 68 051

Other expenses 19 426 177 203 – 825

Foreign exchange losses 2 248 294 100 1 131 (118) 3 655

Finance costs 902 17 3 719 31 – 4 669

Inter-segment transfers 28 513 11 005 19 191 – (58 709) –

Total expenses 389 490 73 790 283 560 27 578 (92 405) 682 013

SURPLUS (DEFICIT) FOR THE YEAR (25 526) 1 385 22 579 3 380 – 1 818

Note that some internal activities lead to accounting transactions that create inter-segment assets, liabilities, revenue and
expenses. Inter-segment transactions are reflected in the Statement of Financial Position by Segment and Statement of Financial
Performance by Segment to accurately present these financial statements.

70
 CONSOLIDATED FINANCIAL STATEMENTS

26.3 FINANCIAL POSITION BY SEGMENT –- 2017

TOTAL
Inter-fund UNESCO
Expressed in ‘000 US dollars GEF OPF PFF SFF balances (Restated
Note 5)
           
ASSETS
Current Assets
Cash and cash equivalents 80 989 72 975 44 524 16 116 – 214 604
Short-term investments 251 25 914 422 344 24 686 – 473 195
Accounts receivable
32 945 – 2 449 – – 35 394
(non-exchange transactions)
Receivables from exchange
32 747 303 568 (97) 1 553
transactions
Inventories – 306 21 44 – 371
Advance payments 13 067 232 20 497 1 231 (184) 34 843
Other receivables 4 035 10 118 5 799 799 (9 618) 11 133
Total current assets 131 319 110 292 495 937 43 444 (9 899) 771 093

Non-current assets
Accounts receivable
1 989 – – – – 1 989
(non-exchange transactions)
Long-term investments – – 1 607 – – 1 607
Property, plant and equipment 532 235 2 780 2 535 161 – 537 711
Intangible assets 231 – 40 – – 271
Total non-current assets 534 455 2 780 4 182 161 – 541 578

TOTAL ASSETS 665 774 113 072 500 119 43 605 (9 899) 1 312 671

LIABILITIES
Current Liabilities
Accounts payable and accruals
5 153 1 832 15 191 1 070 (97) 23 149
(exchange transactions)
Employee benefits 30 111 2 418 15 283 829 – 48 641
Transfers Payable 2 212 19 14 534 – – 16 765
Voluntary contributions with conditions 260 – 72 015 – – 72 275
Advance receipts 37 366 341 50 039 113 – 87 859
Borrowings current portion 7 202 – – – – 7 202
Other current liabilities 3 498 1 237 12 354 6 220 (10 708) 12 601
Total current liabilities 85 802 5 847 179 416 8 232 (10 805) 268 492

Non-current Liabilities
Employee benefits 751 746 3 579 16 774 – – 772 099
Voluntary contributions with conditions 182 – – – – 182
Borrowings long-term portion 8 502 – – – – 8 502
Other non-current liabilities – 5 841 – – – 5 841
Total non-current liabilities 760 430 9 420 16 774 – – 786 624

TOTAL LIABILITIES 846 232 15 267 196 190 8 232 (10 805) 1 055 116

NET ASSETS/EQUITY (180 458) 97 805 303 929 35 373 906 257 555

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 CONSOLIDATED FINANCIAL STATEMENTS

26.4 FINANCIAL PERFORMANCE BY SEGMENT – 2017

Inter-fund TOTAL
Expressed in ‘000 US dollars GEF OPF PFF SFF transactions UNESCO
           
REVENUE
Assessed contributions 312 554 – 3 773 – – 316 327

Voluntary contributions 17 479 3 813 240 595 – (609) 261 278

Other revenue producing activities 26 12 408 1 801 5 721 (180) 19 776

Other / miscellaneous revenue 845 3 009 698 22 977 (13 878) 13 651

Foreign exchange gains 18 911 613 948 3 186 (79) 23 579

Finance revenue 397 4 729 8 325 360 – 13 811

Inter-segment transfers 132 27 824 11 644 – (39 600) –

 
Total revenue 350 344 52 396 267 784 32 244 (54 346) 648 422
 
EXPENSES  
Employee benefit expenses 204 466 21 058 84 297 22 024 (13 378) 318 467

Consultants, external experts

16 018 3 775 35 611 – (2 622) 52 782
and mission costs

External training, grants

24 852 675 27 068 – (11 838) 40 757
and other transfers

Supplies, consumables and other

26 428 8 430 23 244 1 828 (5 246) 54 684
running costs

Contracted services 19 825 2 959 96 715 689 (18) 120 170

Depreciation and amortization 15 285 910 1 386 64 – 17 645

Allowance for assessed contributions 77 393 – – – – 77 393

Other expenses 748 243 248 240 – 1 479

Finance costs 729 14 4 040 10 – 4 793

Inter-segment transfers 814 36 20 394 – (21 244) –

Total expenses 386 558 38 100 293 003 24 855 (54 346) 688 170

SURPLUS (DEFICIT)
(36 214) 14 296 (25 219) 7 389 – (39 748)
FOR THE YEAR

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 Bureau of Financial Management
United Nations Educational,
Scientific and Cultural Organization
7, place de Fontenoy,
75352 Paris 07 SP, France