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Annual Reports - Background

Germany’s Supreme Audit Institution (SAI) audits the entire financial management of the Federal Government including federal off-budget funds and industrial or trading funds (Art. 88.1 German Federal Budget Regulations). Where the result of its audit may be significant for granting discharge to the Federal Government in respect of the budget and capital accounts, the SAI reports to the two Houses of Parliament (Art. 97.1 German Federal Budget Regulations).

According to Art. 97.2 German Federal Budget Regulations, special emphasis is put on the following questions:

  • Do figures stated in the budget and capital accounts tally with those stated in the relevant accounting documents? Are revenue and expenditure duly backed up by vouchers?
  • In what significant cases did the audited federal departments and agencies not comply with the underlying rules and principles of financial management?
  • What are the key results of the audit on the Federal Government’s management of its shareholdings in businesses incorporated under private law?
  • What future action do auditors recommend?

The annual report deals with the Federal Government’s revenue and expenditure, assets and liabilities. The report may address all measures that have a financial impact on the federal budget.

When reporting on our audit findings, we also comment on the trend in federal financial management. Moreover, we provide key financial data and information on individual departmental budgets. The purpose of our departmental budget items is to increase transparency for parliament and understanding of the general public and to place our audit work in the relevant financial management setting.

In our capacity as external audit body, we do not evaluate policy decisions that comply with the law as it stands. For instance, it is not our task to assess the merits of paying certain grants. Nevertheless, we can audit and report on whether the facts and assumptions on which the policy decision is based are accurate and whether the grant-funding has led to the intended outcomes. We may recommend legislative amendments, if our audits have generated information indicating that existing legislation does not lead to the outcomes intended by the Legislature.

Thus, we meet our statutory duty to point out in our annual report what action to recommend for the future (Art. 97.2 item 4 German Federal Financial Regulations). We thereby also comply with the Parliament’s request to inform the Parliamentary Appropriations Committee about audit findings that are of importance for proposed legislative projects.

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