Council Working Group for the
Elaboration of the Draft Strategic Plan
and the Draft Financial Plan, 2008-2011
Document: WG-SP-FP-06/41
14 August 2006
English
GENEVA, 14 AND 15 SEPTEMBER 2006
Elaboration of the Draft Financial Plan 2008-2011
Introduction
Section A of this document provides comments and detailed information with regard
to the specific options for reducing expenditure contained in Section II of the Annex
to document WG-SP-FP/39 on the report of the fifth meeting of the Council Working
Group for the elaboration of the draft Financial Plan 2008-2011. Further, Section B
provides comments to Section II of the Annex of the same document on additional
expenditure to be taken into consideration. An additional item “Reserve for staff
installation and repatriation” has been included. Section C addresses the request by
the Working Group on the breakdown of the costs of outputs. Tables with appropriate
supporting data and figures are inserted where appropriate.
Annex 1 includes a glossary of terms utilized in financial planning and budgeting for
ease of clarification and understanding.
A
Some options for reducing expenditure (reference document WG-SPFP/39, annex, part II):
1.
Identify duplications (functions, activities, workshops, seminars) and
centralize finance and administrative tasks.
Reference is made to Annex H in document C06/56 on the report by the Chairman of
the Standing Committee on Finance to the Plenary meeting, and the replies of the
Secretary-General to the questions of the Reflection Group and of the United States
on the draft Financial Plan 2008-2011.
The comments of the ITU Secretariat to the contribution from Australia (WG-SP-FP06/32) are given in document WG-SP-FP-06/41, Annex 2.
The issue of the centralization of finance and administrative tasks is being reviewed
by the New Efficiency Committee (NEC). However, any potential savings could only
be realized in the long term. See the report to the Council 2006 on the activities of the
Union, in particular the efficiency measures and the NEC (document C06/35,
paragraphs 135 to 140). http://www.itu.int/md/S06-CL-C-0035/en
Possible savings: Unable to quantify.
31/05/2016
-22.
Coordination and harmonization of seminars and workshops in order to
avoid duplication of the subjects covered and to optimize the Secretariat
attendance.
The coordination and harmonization of seminars and workshops is a necessity. The
experience shows that the objectives and scope of work are not duplicating, and
therefore it is rather difficult to be able to identify possible areas of cost savings.
However, there may be some room for improving the organizational aspects.
See the comments of the ITU Secretariat to the contribution from Australia (WG-SPFP-06/32) in document WG-SP-FP-06/41, Annex 2.
Possible savings: None could be identified.
3.
Coordination with the Regional Organizations in view to share the
available resources of the regional organizations and minimizing the costs of
participation (workshops, seminars, preparatory meetings for world
conferences).
In the past regional organizations have cooperated with ITU in promoting regional
presence at world conferences. It is not likely that regional organizations would be
expected to share costs of organizing and hosting ITU conferences as they have to
fund their own preparatory activities, and therefore cost reductions cannot be foreseen
in this area.
The ITU has been coordinating with regional and sub-regional organizations in a
number of different areas. Past efforts to have regional and sub-regional organizations
share financially in the organization and hosting of ITU events, and vice-versa, have
however been met with limited success.
Possible savings: Opportunities for potential savings resulting from sharing
resources with regional and sub-regional organizations will be explored as
appropriate.
4.
Possible savings taking into account the natural attrition (opportunity for
keeping vacant positions unfilled and for the redeployment of staff).
A lapse factor of nine months in recruitment delays is already applied to all posts due
to be vacant following the retirement of their incumbents, except for D positions. A
possible extension of these recruitment delays has also been considered, with the
result that some of these posts are planned to be kept vacant until the end of the period
2008-2011. These measures are additional to the staff reductions already implemented
in the past years. Operational efficiency would suffer by leaving positions vacant for
too long, and further reductions in staff resources would lead to certain activities
being discontinued. The tables in paragraph 4.3 of document C06/23 illustrate clearly
the significant efforts made since the 2002-2003 budget. Table 1 below indicates the
number of ITU staff due to retire during the period 2008-2011.
Possible savings: The possibility for reducing costs is not linked to the natural
attrition but rather to the programme of activities.
5.
Reduction in the cost of documentation of conferences and meetings by :
-35.1
Requesting at the time of registration whether paper copies are
required
5.2
How many copies are needed within the maximum number
decided by the Plenipotentiary Conference or by Council.
5.3
Maximum sets to be determined up to 3 per delegation.
5.4
Reduce the number of paper copies sent to administrations;
currently 5 sets. Could be reduced to 2 or 3 sets maximum.
Major conferences and meetings already apply such efficiency measures. Yet, the
amount of savings which could be achieved by limiting the distribution of paper
copies is considered low.
Reductions in the cost of documentation are among the measures being considered by
the New Efficiency Committee.
Possible savings: Possible savings are considered to be limited, as they apply to the
reprography services only. They would be more substantial if the translation and
composition activities would be affected. Planned amounts for 2008-2011 can be
found in table 11 (see option 8). The documentation volumes since 2000-2003 are
given in the following table 2.
6.
Consideration of savings in languages (translation, interpretation) for
study group meetings and publications.
Documentation is the main activity affected by the issue of languages. In this respect,
it should be argued that Resolution 115 on “the use of the six official and working
languages of the Union on an equal footing’ should be applied flexibly in that the
decision to translate documentation in any language should be determined by the
respective governing body of the sector subject to recommendation from the study
groups themselves.
Reports to Council from the Secretary General and from the Sector Advisory Groups
in documents C05/14 and C05/15 provide information on the use of languages.
ITU-T registration forms stipulate that interpretation will be provided only upon
request. For ITU-T Study Group meetings, interpretation is only provided for the last
Plenary meeting (one day), with the exception of Study Groups 2 and 3 which deal
largely with regulatory and policy issues. Therefore, only 20 days are foreseen with
interpretation against about 145 Study Group working days by year.
Table 3 above indicates the estimated costs of the activities related to the production
of documents and of the interpretation services as provisionally planned for the period
2008-2011. The cost of document production is planned based on foreseen outputs. If
these are modified, planned documentation volumes may have to be adjusted and the
resulting costs are affected.
-4-
Table 4 above shows some examples of publication stock movements in 2004-2005
where there is overstocking or under-selling related to different languages.
Table 5 above shows the Radio Regulations as one example of publication stock
movements in the 2004-2005 period. Please note that in the period concerned there
were no ACR editions of the Radio Regulations.
Table 6 above shows ITU-T Recommendations stock movements in the 2004-2005
period. This table gives details for each language edition of both copies entered into
stock and of copies sold.
Possible savings: Subject to strategic considerations and decisions.
7.
Implementation of activities of WSIS through staff redeployment within
the existing resources.
See document WG-SP-FP-06/40 on the WSIS implementation plan within ITU.
Possible savings: According to the discussion in the Working Group, the possibility
to absorb the WSIS activities within the existing resources was suggested. Such a
prioritization would be detrimental to other activities. Possible savings would
amount to CHF 3.8 million as indicated in document WG-SP-FP-06/27 (item 10).
8.
Full breakdown of the costs of Study Groups, Working Parties,
Task Groups and providing statistics on participation (Member States, Sector
Members).
Breakdown of the costs of the ITU-T, ITU-R and ITU-D Study Groups by Study
group is provided in the following table 7 below, based upon previous experience and
current trends. The split between direct and indirect costs can be found under section
C of this document.
Statistics on participation to ITU-T Study groups and working party for the study
period from end 2004 up to end of June 2006 are specified in table 8 below.
-5Statistics on participation to ITU-R meetings in 2004 and 2005 are specified in the
following table 9.
Information on participation to the ITU-D Study groups in 2004-2005 is given in the
following table 10.
The basis upon which the draft financial plan has been prepared with respect to
conferences and meetings is provided in the following table 11.
Possible savings: Subject to strategic considerations and decisions.
9.
Limit the number of study groups meetings and their duration.
 Concerning ITU-R only 15 days of interpretation per year are planned for all
the study groups. Moreover more than 300 days for the WPs and TGs are
foreseen each year, without interpretation and with the documentation in only
one language.
 Limiting the duration of ITU-T Study group meetings would lead to basically
no saving since the major part of the costs of Study Group is linked to
interpretation, which is provided only one day per meeting, and the translation
of approved texts. Reducing the number of meetings in ITU-T would severely
undermine ITU-T's role as the pre-eminent standards organization. The ITUT's NGN Focus Group met every two to three months, and ITU-T's NGN
Global Standards Initiative continues to meet every three months; the IPTV
Focus Group is meeting every three months. This is what the ever faster
moving market of technological change demands.
 BDT has only two Study Groups. Following Decision 6 of Marrakesh, which
aimed to take measures that would see savings in language-related
expenditures, the length of BDT SG meetings was subsequently reduced in
two stages over the past two biennia:
- from 5 to 4 days in accordance with TDAG recommendation of March 2003
- from 4 to 3 days for 2006 in accordance with TDAG recommendation of
December 2005
Possible savings: Subject to strategic considerations and decisions.
10.
Limit the number of days of Advisory groups to 3 days per year
maximum. Additional meetings may be held on cost recovery basis, i.e. costs are
financed by the requesting Sectors.
The scope for possible savings covers mainly the interpretation services and the
fellowships (where applicable).
-6Possible savings: An estimated CHF 0.5 million in savings could be achieved over
the 2008-2011 plan period by limiting the duration of meetings to three days per
year.
11.
Elimination as much as possible of physical meetings of the working
groups of the Council.
The major part of the costs of holding Council working group meetings is in respect
of interpretation services.
Possible savings: In case of no interpretation, an estimated CHF 0.5 million in
savings could be achieved over the 2008-2011 period.
12.
Reduction of WRC to 18 days maximum taking into account the scope
and complexity of the agenda.
Any tentative reduction which would depend on the agenda of the conference should
be carefully considered, as a limited duration of the conference would result in a more
intensive programme schedule and in an increase of overtime work and night
sessions. The financial impact would therefore not be as anticipated.
Possible savings: A reduction of 8 days, from 26 to 18 days, would generate some
savings estimated at CHF 0.5 million (about 20%).
13.
Cancellation of regional preparatory meetings for the WTDC (CHF
1,106,000), for the WTSA (CHF 353,000), except for Africa region.
 There is no regional preparatory meeting for the WRC.
 Concerning the WTDC, this proposal is in contradiction with Resolution 31 of
WTDC-06, which specifically instructs the Director of the BDT “to organize,
within the financial limitations established by the Plenipotentiary Conference,
one regional development conference or preparatory meeting per region…”.
The ITU membership clearly expressed its views on this matter during the
WTDC-06 in Doha, and only the ITU membership can decide to reverse its
previous decision in this matter.
 Concerning WTSA, this proposal is in contradiction with Resolution 43 of
WTSA-04 which specifically instructs the Director of TSB “to organize,
within the financial limitations established by the Plenipotentiary Conference,
one regional preparatory meeting per region. WTSA preparatory meetings
reduced to the Africa region and to the attendance to Regional organization
sessions for other regions would cost CHF 120,000 instead of the CHF
353,000 forecasted for the full organization of one regional preparatory
meeting per region as requested by WTSA Resolution 43 (Florianópolis,
2004).
Possible savings: CHF 806.000 in respect of the regional preparatory meetings for
the WTDC and CHF 233.000 in respect of the regional preparatory meetings for
the WTSA.
14.
Identification of the level of achievement of the different programmes in
view to utilize these resources for other new activities.
The identification of the level of achievement of the BDT programs and activities
was, to a large extent, carried out by the recently concluded WTDC-06. Indeed, the
WTDC-06 carried out an extensive assessment of the six major BDT Programs, as
well as of the various special initiatives, and decided to include these in the Doha
-7Action Plan for the next 4-year period. The WTDC-06 also proposed, for each
program and special initiative, an initial estimate of the funding which would be
required over the next 4-year period, and proposed additional funding for new
activities.
Possible savings: n/a.
15.
For new programmes or those having additional financial resources
implications, a “value-added impact statement” should justify how the proposed
programs differ from current and/or similar programs to avoid overlap and
duplication.
It should be stated from the outset that there are very few new programs or existing
programs having additional financial resource implications in the draft Financial Plan
2008-2011.
WTDC-06 adopted, through Resolution 17, one major new Programme, which is
entitled Regional Initiatives, which did not exist before, and for which the proposed
expenditure, over the next four years, is CHF 4.5 million, or CHF 1.125 million per
year, which corresponds roughly to CHF 45,000 per regional initiative per year.
WTDC-06 also expanded the former Special Program for LDCs, which will now also
cover Small Island Developing States, and Emergency Telecommunications. WTDC06 proposed, in its Estimation of Costs for the Doha Action Plan, roughly CHF 1
million, over the 4-year period, or CHF 250,000 per year, to cover activities targeted
towards Small Island Developing States and Emergency Telecommunications.
Finally, WTDC-06 proposed one additional special initiative (for People with
disabilities), the proposed expenditures of which will be absorbed within the existing
BDT budget.
Possible savings: n/a.
16.
New Programme for Regional initiatives in the Doha Action Plan: CHF 1
million instead of CHF 4.5 millions (for one pilot project for all regions).
This proposal is in contradiction with WTDC-06 Resolution 17, which agreed to a list
of 25 priority initiatives, 5 per region, to be carried out by the BDT. These 25 regional
initiatives are listed and briefly described in the annex to Resolution 17. Furthermore,
in the Report of the Budget Control Committee of the WTDC-06, which was
approved by the WTDC-06 Plenary, an estimation of Costs for the Doha Action Plan
was submitted to and approved by the WTDC-06 Plenary. This estimation provides
for expenses totaling CHF 4.5 million for Regional Initiatives, covering the period
2007- 2010. As mentioned in option 13 above, the ITU membership clearly expressed
its views on this matter during WTDC-06, and only the ITU membership can decide
to reverse its previous decision in this matter.
Possible savings: CHF 3.5 million in cost reduction.
17.
Information requested on the allocation of resources for regional
initiatives, programmes and assistance to members as well as results of the
WTDC and Doha Action Plan.
The requested information on the allocation of resources for the Doha Action Plan
was raised, during the June meeting of the Council Working Group, when
consideration was being given to Table 4 of document WG-SP-FP-06/29, entitled
“Assessment Matrix between Objectives and Outputs”.
-8Two issues were raised at that time:
 The amounts listed, under Sector Objectives, for each of the ITU-D outputs,
needed to be explained. A new and revised table has been prepared (See table
15 under section C). This new table provides, for each ITU output, the
requested breakdown between direct costs, indirect costs and full costs of
outputs.
 The 13th ITU-D output, entitled “Assistance to Members”, was not well
understood, as it appeared to be duplicative of some of the other twelve
outputs. The BDT Secretariat was requested to provide clarifications on this
particular point in a contribution to the next CWG meeting.
In the original submission of ITU-D outputs to the Council Working Group on the
Strategic Plan and the Financial Plan, as well as to the 2006 session of the Council,
the ITU-D had proposed a list of 21 outputs. The CWG and the Council were of the
view that the list of outputs was too long, and decided to reduce the total number of
outputs from 21 to 13. In order to capture the outputs which were being left off the
ITU-D list of outputs, the following originally proposed outputs were merged into
Output #13, entitled Assistance to Members: Gender Issues, Youth initiatives,
Assistance to Indigenous Peoples, Assistance to People with disabilities, direct Adhoc Assistance for the Regions, funds-in-Trust/UNDP Projects, TELECOM Surplus
Projects, and ITU-D Publications.
Possible savings: n/a.
18.
Regional presence: Review the cost of the regional presence both in the
regions and at the Headquarters and reorganize the regional offices.
Table 12 provides an overview of the current resources relating to Regional Presence.
The CWG may wish to note that, within the context of Marrakesh Resolution 25
(2002), entitled Strengthening of the regional presence, the upcoming Plenipotentiary
Conference will be called upon to review, revise and update Resolution 25. It may
therefore be more appropriate to defer consideration of the re-organization of regional
presence to the Antalya Plenipotentiary Conference.
Possible savings: See the levels of planned resources in the following table 12.
19.
The proposed P5 position of youth and gender coordinator is not needed;
further it should not be devoted to gender issues but to all new initiatives and it
should be funded within the existing resources.
BDT agrees with this proposal put forward by the delegation of Romania, and
withdraws its request for the addition, in the draft Financial Plan, of a new P-5 post
responsible for gender matters.
Possible savings: The impact is a cost reduction of CHF 1 million.
20.
Travel on duty: limit the time on mission, limit the participation to
meetings and benefit from reductions in air ticket prices.
The New Efficiency Committee has already established guidelines in view to reduce
the costs of travels on missions. These are being implemented.
-9Possible savings: The draft Financial Plan as presented in document WG-SP-FP06/27 already contains a cost reduction in travels on duty of CHF 1 million (item
17). See also following table 13 on the budget by category since 2000-2003.
21.
Requested information on Decision 6, Table B of PP-02 on the
implementation of the reductions for the Financial Plan 2004-2007 and on the
same basis proposals to balance the Financial Plan (see Annex C, document 71,
PP-02).
A comparison of the budget by section between 2000-2003, 2004-2007 and 20082011, is given in the following table 14.
Decision 6, Table B, section 4:

Staffing:
Staff costs and other staff costs are some CHF 9 million lower when comparing
the current 2004-2007 financial plan ( 2004-2005 actual and 2006-2007 budget)
with the previous 2000-2003 financial plan (2000-2001 actual and 2002-2003
budget). According to Decision 6 the net result of the salary increase and
exchange rate effect of CHF 16.3 million and of the across-the-board cost
reduction by 5% of CHF 24.9 million is CHF 8.6 million.

Doc. 71, Annex C
Item 1: PP-06 is reduced to three weeks as compared to four weeks for PP-02.
Budgeted costs are CHF 0.6 million lower in 2006 than in 2002. PP-10 is planned
at the same level as PP-06.
Item 5: Councilor travel costs have been reduced in accordance with the restrictive
measures taken by PP-02. The daily subsistence allowance rates have increased
between 2000-2003 and 2004-2007. The actual costs for 2004-2005 and the
budgeted costs for 2006-2007 are in total CHF 0.9 million lower than the actual
costs for 2000-2003.
Item 9: 50% reduction of all meetings by 1 day, except for RRC. The comparison
of expenditure between the2000-2003 and the 2004-2007 plan periods shows the
reductions made, which primarily results from a decrease in the length of
conferences/meetings.
Item 11: Summary records have been abolished except for plenary sessions of
treaty conferences and RRB, leading to savings of about CHF 1.8 million. Planned
costs in this respect are estimated at CHF 0.7 million for the 2008-2011 period.
Item 12: Print on demand: The print-runs have been progressively reduced during
the last years. In many cases, Recommendations in languages other than English
- 10 are only printed according to the level of the demand. It should be noted that a
proposal to introduce a “print-on-demand” system would require a substantial
investment.
The operational costs of the reprography services have declined progressively
from CHF 17.5 million in 2000-2001 to CHF 14.4 million in 2002-2003 and to
CHF 12.1 million in 2004-2005.
Item 14: Travel rules have been modified as from November 2002, so that
economy measures could be implemented, resulting in estimated savings with
respect to regular air fares of nearly 30% in 2003 and of around 50% in 2004 and
2005. ITU continued to negotiate additional agreements with the most used
airlines in order to obtain further savings. ITU also changed its travel agency in
2004.
Item 15: Travel expenditure (mission expenses and daily subsistence allowance)
have declined by over 20%, from a total of approximately CHF 20 million in
2000-2003 plan (2000-2001 actual and 2002-2003 budget) to CHF 13 million in
2004-2007 (2004-2005 actual and 2006-2007 budget).
Policy Forum: No appropriation in 2004-2007.
RRB: Total costs for 2004-2007 (2004-2005 actual and 2006-2007 budget)
amount to CHF 1.8 million as against CHF 3 million in the draft 2004-2007
financial plan (C02/98), or a reduction of CHF 1.2 million. The proposed level of
appropriations for 2008-2011 of CHF 2.4 million is due to a higher number of
meetings and to an anticipated increase in the need for interpretation (8 meetings
in 2008-2009 and 7 in 2010-2011 as against seven in 2004-2005 and six in 20062007).
22.
Proposals on improvement of the forecast on expenditure and
introduction of results-based management (see Document WG-SP-FP-06/37).
These proposals will be considered. In accordance with Article 12, paragraph 6 of the
Financial Regulations, quarterly reports on the implementation of the budget are being
produced, with expenditure forecasts included. The importance of forecasting income
and expenditure levels is recognized. Yet, it is difficult to make accurate projections.
B
Additional expenditure to be taken into consideration:
1.
Inclusion in the Financial Plan of an estimate of the resources needed for
the implementation of the International Public Sector Accounting Standards
(IPSAS).
Provision to be determined.
2.
Consideration of inclusion of themes on the awareness of the need for
Electromagnetic Compatibility (EMC) in one/any of the periodic seminars e.g.
BR biennial seminar (see document WG-SP-FP-06/38).
Additional information is necessary in order to be able to determine the financial
impact of this option.
- 11 -
3.
Reserve for staff installation and repatriation
In its report to Council 06 on the 2004-2005 accounts (document C06/90), the
External Auditor is recommending to raise the budget provision of 3% of the staff
expenditure to replenish the reserve for staff installation and repatriation in view of
the growing level of financial liabilities. The impact of an increase of the rate from
3% to 4% is estimated at CHF 3.7 million over the fours years plan period.
C
Costs of outputs
Costs are allocated to outputs in accordance with the approved cost-allocation
methodology (Decision 535).
Table 15 above provides details of the costs of outputs as specified in document WG-SPFP-06/33. It gives a breakdown of the total costs for each intersectoral and Sector output,
between the direct costs, consisting of planned expenditure, documentation costs and
other services costs, and the indirect costs. In addition, the full costs of each sectoral
output is attributed to the respective sector’s objectives as per tables 4.1, 5.1 and 6.1 of
the draft Strategic Plan (document C06/DT/10(rev2) http://www.itu.int/md/S06-CL060419-TD-GEN-0010/en , and each intersectoral output to the intersectoral objectives as
per table 7.1 of the same document.
1.
Planned expenditure: Planned expenditure corresponds in financial accounting
to the nine categories of expenditure as specified in Financial Rule 6.1 (staff costs;
other staff costs; travel on duty; contractual services; rental and maintenance;
materials and supplies; acquisitions; public and internal services utilities; audit and
inter-agency fees and miscellaneous.).
2.
Documentation costs: Documentation services encompass 13 individual
activities, including mainly translation, typing and reprography. Documentation costs
are allocated on the basis of the number of pages processed.
3.
Costs of other services: Two types of invoicing are included in the costs of
other services: volume-based activities, other than documentation services, charged
on the basis of planned volumes, such as the number of employees; and time-based
activities, charged on the basis of the planned effort, expressed in time, necessary to
provide the requested services.
4.
Indirect costs: Indirect costs or remaining costs are distributed to outputs using
a key. They are the portion of the total costs of activities that is not absorbed by direct
invoicing. Under the principle of full costing, all costs of the cost centres are allocated
to outputs. The distribution is done on a pro-rata basis of the activity costs allocated
directly to outputs. The remaining costs of departments of the General Secretariat are
distributed to all outputs, while the remaining costs of the Bureaux are allocated only
to their respective outputs and to the intersectoral outputs.
5.
Total costs: The total of the above reflect the full costs of outputs.
- 12 -
Annex 1
Glossary of terms:
Term
A
Accounts
Definition
The complete records of the financial operations of the
organization.
Activity
Activities are various actions/services of a department, or a
Sector Bureau (cost centre) for transforming resources (input)
into outputs. They are regular operational tasks performed by
the staff members in their daily operations. An activity can
stand alone or can be an element of a comprehensive business
process. The set of activities of a department should represent
the services the department offers inside or outside the
organization to its different clients. General activities apply to
all ITU. Specific activities apply only to the particular
department or Sector Bureau which offers the services in
question.
Actual
This corresponds to the expenditure or income incurred and
recorded in the accounts during a given financial period.
Actual costs
Actual costs are understood to be the costs actually incurred
during a certain period, as opposed to the
planned/expected/budgeted costs shown in a budget.
Consequently, such costs are only known at the end of the
period. These costs, either direct or indirect, are related to the
activity concerned through the application of a costing
methodology over a certain period.
Aggregated outputs
Aggregated outputs may be sub-divided into more detailed
outputs. Although the term "output" is commonly used for both,
the draft budget for 2006-2007 is presented at the level of
aggregated outputs. Detailed outputs are used at the level of
actuals, in particular for the time-tracking system.
Allocation
Allocation is a set of techniques for transferring budget amounts
(budgeting) or actual amounts (cost accounting) from one cost
centre to another or to cost objects, by either direct allocation
(direct costs) or indirect allocation (indirect costs). Typically in
ITU, the allocation of costs serves to identify the costs of
outputs.
Appropriation
The amount(s) adopted by the Council for specific purposes, for
a given financial period. Obligations and expenditures are
incurred against the appropriation for the purposes specified
and up to the amount(s) adopted. The appropriations do not
confer the right to commit.
- 13 -
Arrears
B
Biennial budget
Amount due to ITU by Member States and Sector Members for
more than one financial year, in respect of assessed
contributions.
The ITU budget covers a two-year period. The 2006-2007
budget will begin on 1 January 2006 and end on
31 December 2007. The budget is funded principally by
membership contributions, but also by cost recovery, sales of
publications and other sources of income. The Council
establishes the biennial budget within the framework of the
four-year financial plan.
Budget
A plan in financial terms, for carrying out programmes of
activities during a specific period. Three different budgets are
prepared, all reconciled in terms of budget amounts: a financial
budget (budget for resources such as staff and external
services), a results-based budget (budget for activities and
outputs), and a strategic budget (budget for Sector and overall
ITU objectives). Both results-based budgeting and strategic
budgeting essentially generate "allocated budgets", i.e. derived
from allocation of the original budget numbers for staff and
other expenses.
Budget estimates
Estimates of the cost of proposed activities and the revenues to
finance them for a given financial period prepared for
submission to the appropriate approving authority.
Budget, regular
The budget for which funds are appropriated by the Council and
which is financed by Member State and Sector Member
assessed contributions and by miscellaneous income (cost
recovery, interest), as distinct from the budget financed from
extrabudgetary resources, e.g. voluntary contributions.
Budgeting
Budgeting is the process of coordinating objectives and
activities of an organization through the definition and
integration of formalized finance-related plans (budgets).
Budgeting requires the integration of financial items into
different budget-related cost objects.
Buildings Maintenance
Fund
This is a special fund to cover the cost of major repair or
maintenance works on the buildings of the Union (Article 22 of
the Financial Regulations).
C
Cancelled special arrears
account
Capacity
A special arrears account is cancelled when the debtor fails to
comply with the repayment schedule, thus abolished. See also
Resolution 41 (Rev. Marrakesh, 2002) of the Plenipotentiary
Conference.
Capacity represents the availability of staff or other resources of
a cost centre to provide services. Time-related capacity is
measured using units such as work-months, days or hours. In
- 14 practice, different capacity figures are used. The work-capacity
of an employee is the gross number of working days he/she
offers within a year, allowing for vacation and legal holidays.
Eliminating non-service times, such as
education/sickness/special leave, etc., the average net capacity
can be derived. Time tracking keeps track of the actual use of
capacity for service and non-service activities. Capacity can
also be volume-based, and measured, for instance, in number of
pages (e.g. for a translator). The capacity is used to calculate the
tariff or unit rate of an activity.
Commitment
An engagement involving a liability against resources of the
current and one or more future financial periods.
CO-SAP
The controlling or cost-management module of the SAP system.
CO is used to support the allocation process controlling and
reporting of costs.
Cost
A cost is a charge or a sum of charges attributed to a cost
centre, to the delivery of a product or service, and to an output.
It is defined according to the application domain of calculation
(activity, product, cost object etc.), the content (cost elements to
be taken into account, totally or partially), and the time period
of measurement.
Cost accounting
Cost accounting is posting, calculating and reporting all
processes relating to primary and secondary costs. The rules
governing the evaluation, calculation and allocation of costs
within cost centres and cost objects are set by the cost
accounting methodology. To integrate volume and time-related
actuals, cost accounting is interlinked with the time-racking
(TTS) and the Document Production (DPS) systems. Cost
accounting is supporting tracking, recording, allocating and
analysing of costs associated with activities and outputs, and in
relation to the cost plan (variances).
Cost centre
The cost centre is the smallest organizational unit within a
controlling area where costs can be planned and controlled and
for which accountability is clearly established. Generally, a cost
centre represents a unit within a department.
Cost driver
A cost driver is a factor that causes or drives costs of an
activity. The difference between drivers and keys relates to the
degree to which the factor reflects the actual volume of work
consumed by a specific cost object. Drivers may also be called
"intelligent keys". Drivers are used as basis for allocating costs
to outputs (in the cost-allocation methodology, the main driver
is time: the costs of a cost centre are allocated via activities to
outputs based on the time spent).
Cost element
A cost element classifies the organization's consumption of
production factors, expressed in terms of financial value. A
primary cost element corresponds to an expenditure item in the
chart of accounts (e.g. travel, salary etc.). Secondary cost
- 15 elements are used for allocating internal services or to reallocate
costs between cost centres and/or cost objects.
Cost increase
Cost increase includes cost variations due to:
 inflation/price-index variations;
 variations in the USD/CHF exchange rate;
 variations in the conditions of employment in the UN
common system, as compared with the conditions that
prevailed for the preceding budget.
Cost object
Cost objects are cost collectors other than cost centres to
identify the costs of outputs. Cost objects may have primary
costs and are charged with secondary costs for received services
and/or by re-allocation of costs.
Cost planning
Cost planning is the process of allocating planned costs to the
different cost objects. Cost-centre planning (including the
planning of activity costs) and output cost planning are the most
important elements of cost planning. Cost planning estimates
the volume and costs of required resources according to the
planned work programme of the cost centre. Thus, capacity
considerations are far more important in cost planning than in
financial budgeting.
Cost recovery
In the context of the Union’s budget process, cost recovery
refers to recovery by the Union of specific costs incurred in the
implementation of a particular product or service. These
products or services are provided to a third party outside the
ordinary budget of the Union. Only the costs attributable to the
product or service in question can be recovered. This concept
aims solely to recover the costs incurred, and as such differs
from the policy of “profit-oriented pricing”.
ITU applies cost-recovery principles to a number of different
products and services. Cost recovery is pursuant to Resolution
91 (Minneapolis, 1998) of the Plenipotentiary Conference.
Cost recovery, full
Direct and indirect costs attributable to a particular product or
service are recovered in full, i.e. at 100%.
Cost recovery, income
Income received or accrued during a financial period from
recovering the costs of a particular product or service and which
increases existing net assets.
D
Decentralization
Direct costs
General term for a transfer of authority and/or responsibility for
performing a function from high-level management to lower
level units or from centralized services to users.
These are costs readily associated with a particular cost centre
or an output (product or service) and directly attributed to the
activities undertaken to deliver these products or services. Costs
directly allocated using cost drivers (for a volume-based
allocation) and hours (capacity) (for a time-based allocation)
- 16 are also considered as direct costs.
In the approved methodology, direct costs also include primary
costs which are directly assigned to a cost centre or an output
(e.g. interpretation costs for the Council) and secondary costs
which are directly allocated to a cost centre or an output, via the
allocation of activities (e.g. number of printed pages, or number
of Finance Department staff hours dedicated to Council).
E
Exhibition Working
Capital Fund
Upon closure of each world and regional TELECOM exhibition
organized by the Union, its financial result (surplus income or
excess expenditure) is transferred to this fund. Part of this fund
has been transferred to the TELECOM surplus programme fund
to pay for the costs incurred by the Union in support of that
programme (cost recovery).
Expected results
Expected results should reflect the desired outcome of
activities. They should be linked, where applicable, to the
underlying objectives of the strategic plan. Expected results
may be expressed as a quantitative standard, value or rate
leading to the fulfilment of a certain objective. They can also be
expressed in terms of quality and timeliness. From the
specification of expected results, key performance indicators
can be derived in order to quantify and measure results.
Expenditure
Expenditure for a financial period is the sum of the cash
disbursements and valid unliquidated obligations made against
the appropriations for the period. When the accounts are kept on
an accrual basis (which is the case of ITU), the term designates
amounts recorded in a given period, whether paid or unpaid.
Extrabudgetary resources
Financial resources made available to the organization for
financing an activity specifically agreed to by the parties
concerned, from sources other than the regular budget (e.g.
UNDP, UNFPA, etc.).
F
Financial period
A period of time that normally covers two consecutive calendar
years (starting with an even-numbered year) as specified in
Article 5 of the Financial Regulations
Financial plan
The financial plan covers a four-year period, coinciding with
the biennial budget. Decision 6 (Marrakesh, 2002) sets the
financial plan of the Union for the period 2004 to 2007.
Financial Regulations, ITU
The ITU Financial Regulations are a legal administrative
document governing management and control of the finances of
the Union.
Financial reporting
Financial reporting discloses information about the financial
aspects of business operations in terms of financial accounting,
and is closely related to the underlying organization-specific
and international accounting standards. In a narrow sense, it
- 17 focuses on balance-sheet and profit and loss statement issues
and related analyses (i.e. P&L statement, accounts payable /
receivable and other sub-items, assets and liabilities, cash flow
statement, etc.).
Fixed costs
Fixed costs are costs that do not vary as the volume of the
related activity changes. Monitoring the level and structure of
fixed costs is highly important, especially for capacity and
resource management, since fixed costs cannot be easily
adjusted with changes in the activity volume. As fixed costs
may also be interpreted as "contract-based costs", a variation or
reduction of fixed costs requires additional analysis and
management decisions in terms of rescinding or modifying the
underlying contract.
The notion of fixed cost relates to the portion of costs which is
not dependent of the level of activity but linked to the resource
structure of the Union.
Forecast
Forecasting is a planning technique to calculate projections of
the presumed evolution of actual figures within and/or beyond
the respective budget planning period. The most important
objective of a forecast (e.g. budget forecast, income forecast) is
to provide a clear business outlook for management enabling
timely and appropriate actions.
FTE
Full-time equivalent, i.e. capacity of a staff member working
full time.
Full costing
Full costing is a cost-accounting system where the cost is not
split into fixed costs and variable costs but allocated as a whole.
The RBB budget for 2006-07 is based on the full costing
principle.
Fund for the
development of
information and
communication
technologies
Established in 1997, this special account is credited with funds
transferred from the Exhibition Working Capital Fund. It is
used to finance technical cooperation projects.
G
Goals
Growth, real rate of
Goals refer to the Union’s high-level targets to which the
objectives of the Sectors and the ITU General Secretariat
contribute, directly or indirectly. These relate to the whole of
ITU.
The rate of increase in the budget determined after excluding
increases due to inflation foreseen for the ensuing financial
period, increases or decreases due to depreciation or
appreciation in the value of the United States dollar, and
variations due to statutory staff cost increases. This notion
contrasts with the idea of nominal growth, which simply
compares absolute budget levels irrespective of the different
- 18 price levels or rates of exchange in each period.
Growth, zero nominal
I
Indirect costs
Nominal growth analysis refers to the comparison of two
figures, calculating the nominal difference between the two.
Zero nominal growth means no change in the nominal figure
between the two. If the two figures are expressed in relation to
two distinct times, the real value can be different (lower or
higher) even if the figures are nominally the same (zero
difference or zero nominal growth), depending on the discount
rate (inflation or deflation rate).
Indirect costs are costs that cannot or not easily be identified as
being consumed by a particular cost object. As the exact
volume is not known, they are allocated indirectly by using
keys.
Information
Communication
Technology Fund
The ICTC fund was established by Resolution 1173 adopted by
Council-01. Its purpose is to meet the costs of procurement and
development of major IT systems (hardware, software,
consulting), covering both new systems and the replacement
and upgrading of existing systems (Article 23 of the Financial
Regulations).
Internal order
Internal order is an SAP-related term. It represents a specific
cost collector and can be used as such for different objects such
as investment orders, maintenance orders, outputs (ITU’s
approach) or projects (e.g. IS implementation projects). Internal
orders can be grouped by hierarchies to represent the different
aggregated outputs.
ITU Centenary Prize Fund
This fund was created in 1978, by Council Resolution 816. It
aimed, inter alia, to reward persons who distinguished
themselves in the field of telecommunications. In 1992, by
Resolution 1027, the Council decided to make use of this fund
for modernizng the library.
K
Key
Key performance
indicators
L
Limit on contributory unit
Keys are measures that allow an allocation of indirect costs
from one cost object to another. Keys are "proxy measures", as
they do not reflect the exact cost behaviour of the underlying
object. Keys are used to allocate remaining costs to outputs.
Key performance indicators (KPIs) are the criteria or features
used to measure the achievement of outputs, which in turn serve
to fulfil the various objectives defined in the strategic planning
process. These indicators can be qualitative, quantitative, or
both. They are designed to provide a scale against which to
measure and show progress towards producing outputs and
achieving objectives.
Ceiling which the value of the contributory unit must not
- 19 exceed.
M
Mission
O
Objectives
Operational plan
Outputs
P
Planned expenditure
The mission of a Sector or of the ITU General Secretariat
describes its main overall function, as set out in the ITU
Constitution and Convention.
Objectives refer to the specific purposes and aims of individual
Sectors and of the ITU General Secretariat. They describe the
expected results to be achieved in a given period.
The operational plans of the three Sectors and the General
Secretariat play a critical role in linking the strategic and
financial plans of the Union. They are prepared annually,
covering the subsequent year and the following three-year
period. The Council approves the four-year rolling operational
plans.
Outputs refer to the final products or services delivered by the
ITU (e.g. deliverables of a programme). Outputs can be those of
individual Sectors or Union-wide intersectoral products and
services. Outputs are cost objects and are represented in the
SAP cost accounting system by internal orders.
Planned expenditure is expenditure that is directly assigned to
cost centres and outputs. It represents the resources that are
necessary for their basic functioning. In financial accounting,
planned expenditure corresponds to the nine categories of
expenditure identified in Rule 6.1 of the Financial Rules.
Planning
Planning is the process of developing objectives according to
decisions and resolutions and their financial implications. In
practice, strategic planning - with a clear emphasis on the
overall vision, mission and strategic objectives - and operational
planning are the most important cornerstones of planning.
Under a top-down approach, the planning process becomes
more and more detailed. It is not unusual for operational
planning - for each sector of the organization - to be
differentiated into income planning, investment planning,
expense / cost planning and head-count planning for the staff
resources required.
Price increase
Any increase in the cost of resources or services arising from
changes in prices (inflation rates, salary increases, market price
increases) with no change in the actual volume of the resource
.
R
Re-costing
A technique for achieving comparability between two budgets,
whereby the additional costs resulting from inflation or
statutory increases in staff costs during the current financial
period are added to the initial estimated cost of activities or
- 20 services proposed for the immediately following period. A
comparison with the budget of the ensuing financial period then
reflects the rate of real growth.
Remaining costs
Remaining costs are the residual costs that it was not possible to
allocate directly to outputs. These costs relate to own
consumptions and any costs of internal services received from
other departments and Bureaux. Keys are used to allocate these
remaining costs indirectly to the outputs.
Reserve Account
A Reserve Account is maintained in accordance with Article 33
(No. 485) of the Convention and with Article 27 of The
Financial Regulations.
Reserve for debtors’
accounts
A provision for debtors’ accounts is maintained in order to
provide a more correct valuation of the arrears shown as assets
in the balance sheet of the Union. The interest on arrears
charged to the debtors' accounts is also credited to this account.
The assets on a debtors' account can only be used to write off
non-recoverable debts to the Union. Any write-off requires a
specific decision of the Council. Reference: Artcicle 26 of the
Financial Regulations.
Reserve for installation
and repatriation
A provision for staff installation, change of duty station and
repatriation, the accounts of which shall show the following
amounts: on the credit side, a percentage, set by the Council, of
the remuneration of staff other than those engaged for
conferences and other short-term service; on the debit side,
payments actually made to cover removal and travel costs on
appointment, change of duty station or separation from service,
installation and repatriation grants, grants on death, termination
indemnities, accrued paid annual leave. Reference: Artcicle 25
of the Financial Regulations.
Results-based budgeting
Results-based budgeting (RBB) is the programme budget
process in which (a) the programme is formulated in order to
meet a set of predefined objectives and expected results; (b) the
expected results justify resource requirements, which are
derived from and linked to outputs produced to achieve the
expected results; and (c) actual performance in achieving results
is measured by key performance indicators.
S
Salary scale
There are two salary scales: one for the Professional and higher
categories and one for the General Service category.
The Professional and higher categories salary scale is
recommended by the International Civil Service Commission
(ICSC) and approved by the United Nations General Assembly
once a year, effective 1 March of the following year. The scale
indicates the gross salary including staff assessment (internal
tax) and net salary after staff assessment.
For the General Service category in Geneva, the scale is
recommended by the International Civil Service Commission
- 21 (ICSC) and implemented and updated by the Secretary-General
once a year. The scale indicates the gross salary including staff
assessment (internal tax), gross pensionable salary for pension
purposes, net salary after staff assessment and net pensionable
salary.
Secondary cost
Costs for providing internal services that are charged directly
using drivers (time or volume) or indirectly using keys (pro-rata
basis) to a cost centre or an output. In ITU, secondary costs are
typically allocated on the basis of activities (e.g. using TTS),
with remaining costs allocated on the basis of keys.
Service-level agreement
A service-level agreement (SLA) is a bilateral contract between
a service provider and a service receiver (inside or outside the
organization). The objective of an internal SLA is to optimize
the type and quality of internal services and to ensure they are
adapted to real needs and to the achievement of objectives. An
SLA template describes the service concerned in terms of
business expectations, such as planned volume and price, which
may be the subject of a negotiation process between the two
parties, and of the service characteristics (service components,
expected results, related key performance indicators, etc.).
Special arrears account
An account established to reflect arrears for which an
agreement has been reached with the respective debtor,
including on a schedule for repayment. Any new special arrears
account is opened only after such an agreement has been
concluded with the Secretary-General. See also Resolution 41
(Rev. Marrakesh, 2002) of the Plenipotentiary Conference.
Special Fund for Technical
Cooperation
The Special Fund for Technical Cooperation is credited with
voluntary contributions to meet the telecommunication needs of
developing countries and urgent requests for assistance they
submit to the Union.
Strategic budgeting
Strategic budgeting is a bottom-up process, which extends the
results-based budgeting process upwards by establishing the
linkage with strategic planning. As strategic planning and the
setting of strategic priorities is often related to objectives, total
budgeted amounts for each of the objectives, through the
identified outputs, provides valuable information. By linking
outputs, Sector objectives and overall objectives, the budget
numbers per (aggregated) output can be rolled up to the level of
objectives.
Strategic plan, ITU
The strategic plan of the Union, covering a four-year period, is
the main instrument embodying the Union's strategic vision. It
is approved by the Plenipotentiary Conference. The current
strategic plan, contained in Resolution 71 (Rev. Marrakesh,
2002), covers the period 2004-2007.
Support cost
Costs associated with and incurred in supporting technical
cooperation projects or trust-fund activities.
- 22 T
Trust fund
U
United Nations exchange
rate
V
Variable costs
Account established with specific terms of reference or under
specific agreements, to record receipts and expenditure of
voluntary contributions for the purpose of financing wholly or
in part the cost of activities consistent with the organization’s
aims and policies. The Union is accountable for these funds. It
is also responsible to donors for the use of their contributions
under trust-fund arrangements, but it may assume no additional
financial liability through such arrangements without the prior
agreement of the appropriate governing organ.
The official monetary exchange rate between the US dollar and
other currencies used by the United Nations for all financial
transactions.
Variable costs are costs that vary with increases / decreases in
volume of activity. The classification of costs into variable and
fixed costs does not only take into consideration their
relationship to changes in volume of activities, but also to the
period of cost accounting. To ensure a coherent classification,
the cost-accounting period (normally one year like the general
ledger) has to match the budgeting period, which in the case of
the ITU is biennial. All costs that can be influenced within this
period will be considered as variable costs. Although, in the
ITU context, a relatively large proportion of costs are fixed
costs, individual fixed costs still have to be analysed to
determine whether they can nonetheless be reduced within the
period, for example by rescinding the underlying contract (work
contract, lease contract, etc.). Accordingly, all standard
reporting on variable costs should be interpreted very carefully.
Any portions of fixed costs for which no mid-term or long-term
commitments or obligations are undertaken (e.g. funded vacant
posts) are considered as variable costs.
Variances
Variances are the difference between planned and actual data.
They are used in results-based budgeting and cost controlling
for all major controlling objects (cost centre, activity, output,
but also expected results for objectives and goals). Variances
can be caused by different reasons (e.g. price variance, resource
variance, volume variance). Variances are flagged by standard
reporting within the information system, so appropriate actions
can be proposed to management to improve critical situations.
Voluntary contribution
Subject to its acceptance by the Union and, if applicable, the
recipient country, a contribution (outside the regular budget) in
cash or in kind, which may include funding of conferences,
meetings and seminars, expert services, training services,
fellowships, equipment or any other related services or
requirements.