2020
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2020 Annual Report - Key issues

Reporting item No. 1 - Findings on the federal annual accounts for FY 2019

When auditing the annual accounts of the federal government for FY 2019, the German SAI did not find any material differences between the figures stated in the accounts and those in the underlying records. 1.55 per cent of the accounting entries were not properly supported by vouchers and receipts. Since the governing conditions have consistently been favourable, the federal budget closed with a structural surplus which will be the last for the time being. From the year 2020, the constitutional debt rule will be put to a severe test.

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Reporting item No. 2 - EU trust funds: high burden, little transparency and not really more rapid than other EU emergency response

The European Union has not managed to make the EU trust funds an instrument to raise more funds or implement programmes much more rapid than with other EU emergency response schemes.

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Reporting item No. 3 - Efficient refugee integration programmes require reliable partnerships across all government levels

The multitude of integration programmes impairs the efficiency and effectiveness of social and labour-market integration of refugees.

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Reporting item No. 4 - Finance Ministry fails to evaluate its HRM system thus impeding the entire federal IT consolidation project

The Finance Ministry has chosen not to analyse the strengths and weaknesses of the HRM system operated by the federal fiscal administration. If any such conclusions were available they could help enhance the governmental IT consolidation project.

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Reporting item No. 5 - Millions of revenue foregone since the Economic Ministry has failed to collect fees on defence export controls

The Economic Ministry does not charge administrative fees for processing defence export applications, although it has projected annual fee revenues between €5 to 10 million.

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Reporting item No. 6 - €150 million disability inclusion initiative II: Unclear funding guidance of the Labour Ministry puts additional jobs at risk (equalisation fund)

The Federal Ministry of Labour and Social Affairs refuses to clearly define the funding guidelines for the federal inclusion initiative II. In doing so, the Ministry jeopardises the creation of new jobs for severely disabled people.

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Reporting item No. 7 - Avoid a multi-million burden on the pension fund –Labour Ministry needs to act promptly

The Foreign Pension Act serves to ensure old-age pension entitlements for expellees and ethnic German immigrants such as (late) resettlers. The Foreign Pension Act places a multi-million liability risk on the federal budget.

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Reporting item No. 8 - Amend biased insurance requirements of artists’ social security scheme

The requirements of the artists’ social security scheme give preferential treatment to those insured compared to other classes of insured people.

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Reporting item No. 9 - Absence of adequate controls in the artists’ social security fund places a burden on the state and businesses

The artists’ social security fund has no adequate control mechanisms in place to verify the data provided by the insured. As a result, no assurance can be provided on whether the requirements for compulsory insurance are still met.

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Reporting item No. 10 - Rail transport disrupted by extreme weather during winter - Transport Ministry fails to act

Each and every year, extreme weather conditions considerably impact the rail services provided by the German railways company (Deutsche Bahn). The Transport Ministry tolerates this situation although in its owner function, the federal government is also responsible for the commercial activities of Deutsche Bahn.

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Reporting item No. 11 - Federal Armed Forces should decommission ageing tankers

The Navy’s fuel transport tankers have been in service for over 40 years. The technical conditions of these tankers led to halting or curtailing operations and lengthy retrofitting periods at shipyards. These circumstances caused maintenance costs to soar. The obsolete tankers present considerable environmental hazards.

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Reporting item No. 12 - Patchy data in the logistics system impair operational readiness of the Federal Armed Forces

For many years, the Armed Forces have failed to remedy the lack of information in their IT logistics system. This impairs operational readiness.

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Reporting item No. 13 - Initial training for helicopter crews: Doubts over usefulness of 60 new multi-role helicopters worth €2 billion

When procuring multi-role helicopters, the Armed Forces failed to ensure that such helicopters could usefully and effectively close the gap in pilot training aboard battlefield helicopters.

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Reporting item No. 14 - Shared federal and state government funding: Environment Ministry does not enough to verify use of funds

Jointly with individual federal states, the Federal Ministry of the Environment, Nature Conservation and Nuclear Safety grant funded innovative environmental technology projects. Since the Ministry has accepted separate statements on the use made for federal and state funds it is not in a position to fully verify the use of funds made.

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Reporting item No. 15 - Federal grants of €150 million largely failed to meet the target of promoting climate-friendly cooling systems

The Environment Ministry funded the use of climate-friendly cooling systems with €150 million. Generally, the programme led to sizeable deadweight effects. The Ministry neither funded as many facilities as intended nor put the funding to efficient and effective use. 

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Reporting item No. 16 - Recommendations not implemented: Family Ministry has neglected internal audit for a number of years

The Federal Ministry for Family Affairs, Senior Citizens, Women and Youth does not rely on internal audit as an effective governance instrument.

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Reporting item No. 17 - Promotion of childcare: Federal co-funding worth billions of euros continued since no programme evaluation has been conducted

The government cannot provide assurance that the grants worth €4.4 billion to expand and maintain childcare places have achieved their goals. Nevertheless, the government intends to provide additional funds of €1 billion as part of the Covid-19 stimulus programme.

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Report item No. 18 - Incorporate value-for-money principle into federal grant rules

In 85 per cent of local government investments funded from the federal budget and audited by the German SAI no capital expenditure appraisal had been carried out. This poses the risk that federal grants towards investments in municipal infrastructure are not used efficiently.

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Reporting item No. 19 - No evaluation in place: Long-standing and unresolved questions as to the impact of the corporate interest restriction rule

For many years, the corporate interest restriction rule provided for in corporate income taxation has not been evaluated by the Finance Ministry although parliament demanded to do so.

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Reporting item No. 20 - Risk of uneven taxation: Finance Ministry should urge for using uniform tax inspection methods

To avoid uneven business taxation, the Federal Ministry of Finance should urge for the nation-wide and uniform use of quantitative methods in computer-based tax inspections.

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Reporting item No. 21 - Address gap in the taxation of interest payable pending legal action and late payment interest

At this point of time, the fiscal administration is not in a position to verify whether the recipients of interest payable pending legal action and late payment interest properly disclose this income in annual tax returns.

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