10 Non-exchange transactions are transactions where WHO receives value from another entity without directly giving approximately equal value in exchange.
20 The main sources of non-exchange revenue for WHO include but are not limited to:
- Assessed contributions: Revenue from contributions from Member States and Associate Members is recorded annually at the beginning of the year as per the assessments approved by the Health Assembly. Half of the total biennial assessments are recorded as revenue in each of the two years.
- Voluntary contributions: Revenue from voluntary contributions is recorded when a binding agreement is signed by WHO and the contributor. Where there are "subject to" clauses in an agreement, WHO does not control the resource and does not record the revenue and amount receivable until the cash is received. Where there are no payment terms specified by the contributor or payment terms are in the current accounting year, revenue is recognized in the current period. Where payment terms specify payment after the year end, the amount is reported as deferred revenue. Where the start date of the contract is after 31 December, revenue is recognized in the future accounting year.
30 Donors may attach stipulations to a contribution. The nature of the stipulation (in a donor agreement), whether it is considered as a condition or a restriction, is essential for the recognition of revenue. A condition includes a performance obligation imposed by the donor and requires the return of part (or all) of the contribution if the obligation is not met, while a restriction does not require the return of part (or all) of the contribution in the event of non-compliance with the stipulations.
40 In determining whether a stipulation is a condition or a restriction, the following are considered:
- The obligation for WHO to return part of, or the entire, contribution, if it is not used as specified in a written agreement, is essential.
- The ability of the donor to enforce WHO's obligation to return part (or all) of the contribution, if the condition is not met.
- The expected performance and the monitoring of that performance, the nature or quantity of goods and services to be provided, and, if relevant, the period and geographical region in which the performance is to occur should be clearly specified.
- The past experience with the donor with regard to the enforcement of WHO's obligation to return the contribution when breaches of conditions have occurred.
50 Substance rules over form in assessing whether a stipulation is a condition or a restriction. The mere specification in an agreement of a condition for WHO is not, in itself, enough to cause a stipulation to be considered as a condition.
60 The requirement to refund unused balances is not to be considered as a condition.
70 In some cases, an asset may be transferred subject to the stipulation that it be returned to the donor if a specified future event does not occur. In these cases, a return obligation does not arise until such time as it is expected that the stipulation will be breached and a liability is not recognized until the recognition criteria for the liability has been satisfied.
80 Based on WHO's experience, there have been a few, if any, signed agreements where the donor does not pay the agreed amount or in which WHO refunded the donor due to the inappropriate use of funds (i.e. the conditions in the agreement are violated). In addition, refunds are less than 1% of total voluntary contributions. Considering the above, stipulations placed on contributions from donors are considered to be restrictions and not conditions, and as such, no amounts are deferred based on stipulations contained in the donor agreement.
