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Kay Scheller

Dear readers,

We are all facing an unprecedented and challenging situation. The Covid-19 pandemic seriously impacts on both our personal and working lives. State, society and economy have dedicated enormous efforts to limit the spread of the coronavirus.

The federal government has taken a determined approach to quickly respond to the crisis and has launched emergency assistance programmes and temporary aid schemes to help mitigate the pandemic's impact on health, economy and society. Beyond any reasonable doubt, these aid programmes are urgently needed. However, they should be limited to what is necessary: addressing the Covid-19 emergency situation. The various government programmes in the range of billions of euros will have a major impact on the federal budget and the federal government's ability to act over many years to come.

In the current situation, we must make sure that citizens can place trust in a workable external audit function. In line with strict hygiene requirements, we continue fulfilling our constitutional duties of auditing, reporting and advising even in times of the coronavirus pandemic. Our key audit questions are especially topical right now: In what cases did the federal government spending not comply with applicable regulations or the value-for-money principle? In what cases has government failed to collect funds due? In what fields should government initiate systemic changes to enhance efficiency and effectiveness?

These are the questions we address also in our 2020 annual report. We include audit findings in our annual report that are relevant for the granting of discharge by parliament to the government. These cases cover topics such as deadweight effects and poorly defined requirements of grant programmes, IT, procurement, and declining tax revenues and fees.

What really counts is that government acts on our findings. Government may take major steps leading the way out of this severe crisis. Our annual report makes recommendations to help address shortcomings or use the funds more efficiently and effectively.

Our annual report fosters parliamentary control over government action, which is a core principle of the separation of powers. At the same time, the facts and figures we provide in our report to the general public help shape public opinion on government action.

To live up to this responsibility, we need to scrutinise relevant audit fields. We need full access to any pertinent information, records and vouchers we require for audit work to collect all audit evidence and draw meaningful audit conclusions. This is also true for the use of federal government funds at federal state level as some reporting items clearly illustrate: The government co-funded investments made by local governments. However, for most of these investments no capital expenditure appraisals had been carried out. Also, government could not provide assurance that the funds granted to the federal states had achieved their goals. This poses the risk that federal grants worth billions of euros are not used efficiently and effectively.

Already in November 2020, we analysed Germany’s current fiscal situation, the sustainability of public finance, and federal budget trends. We provided our advice to parliament during the budget cycle and published our findings in a report. The findings stated in this report are not included in our annual report. We criticised the magnitude of new borrowing which exceeds by far the level of funding needed to cope with the crisis. Instead of drawing on its reserves, the government shifted future expenses to off-budget funds and again declared an emergency. At the same time, government is facing a number of other fiscal challenges such as demographic change, climate protection or the expansion of the digital and analogue infrastructure.


We will closely monitor how government addresses these issues. Citizens can trust in an effective audit institution that serves as a watchdog of government action.

Bonn, December 2020

Kay Scheller


President of the Bundesrechnungshof

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