Audit Rules of the Bundesrechnungshof (Germany's Supreme Audit Institution)

effective from 19 November 1997

as amended 29/30 Aug. 2005, 13 Dec. 2007 and 4 Sept. 2012 as last amended by Board decisions on 5 September 2013

-2-

CONTENTS

Part I

General provisions

Article Article Article Article Article Article Article Article Article Article Article Article Article

Purpose of the Audit Rules Audit authority Audit objectives Audit criteria Audit scope Policy decisions Confidentiality Data privacy and information security Rights of third parties Secrecy of deliberations Documentation Audit guide and other guidance Liaison with audit units

1 2 3 4 5 6 7 8 9 10 11 12 13

Part II

Audit planning

Article Article Article Article Article Article Article Article

Analyses of tasks and risks Audit plans Selection of audit assignments Description of audit assignments in the annual audit programme Audit types Involvement of internal and external bodies Annual audit planning procedures Planning horizontal audit work

14 15 16 17 18 19 20 21

-3-

Part III

Preparation and conduct of an audit mission

Article Article Article Article Article Article Article Article Article

Allocation of functions in carrying out the audit Audit strategy Reliance on external experts Audit notification Start of field work Conduct of field work Audit access and cooperation Claims for damages, reimbursement or other claims Completion of field work

22 23 24 25 26 27 28 29 30

Part IV

Reporting

Article Article Article Article Article Article Article Article

Preliminary audit report Internal audit memo and distribution list Initiation of the contradictory procedure Conduct of the contradictory procedure Final version of the preliminary audit report Audit conclusion Evaluation of audit work Follow-up

31 32 33 34 35 36 37 38

Part V

Audit of individual accounts and aggregate annual accounts

Article 39 Article 40 Article 41

Observations on the aggregate annual accounts Audit of individual accounts Audit of the aggregate annual accounts

-4-

Part VI

Reports and Advice

Article Article Article Article Article Article Article Article Article Article Article Article Article Article Article

Reporting Subject of the annual report Contents of the annual report Format and structure of the annual report Procedure for compiling the annual report Briefing notes announcing proposed items for the annual report Views of the body concerned Draft to be submitted to the board Distribution and publication of the annual report Parliamentary debate on the annual report Conclusions from the annual report Advice on the basis of audit findings (art. 88(2) FBC) Reports on matters of particular importance (art. 99 FBC) Other statutory reports Advisory work as part of preparing and adopting the federal budget

42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

Part VII

Reporting audit findings to other stakeholders

Article 57 Article 58 Article 59

Information of the Budget Committee Information requests of a parliamentary investigation committee Information of authorities responsible for the prosecution of offences Requests for administrative and judicial assistance Provision of information to other stakeholders

Article 60 Article 61

Part VIII Cooperation with other external audit institutions Article 62 Article 63 Article 64

Cooperation with the State Courts of Audit Cooperation with the European Court of Auditors Cooperation with other government audit bodies

-5-

Audit Rules of the German SAI (Germany's Supreme Audit Institution)

Pursuant to Article 14(1) subs. (5) German SAI’s Act 11 July 1985 (Federal Law Gazette I pp. 1445 seq.), the German SAI's Board adopted the Audit Rules set forth below:

Part I General provisions

Article 1 Purpose of the audit rules (1) These Audit Rules set forth the principles and procedures that shall govern the missions performed by the German SAI and its regional audit offices in compliance with their mandate. The purpose of the Audit Rules is to ensure the consistent application of criteria and procedures. (2) The Audit Rules provide guidance for preparing and conducting audits and for reporting on the audit results (art. 13(3) German SAI's Standing Orders). In complying with the Audit Rules, auditors need to pay due regard to the specific requirements posed by the case under audit. The Audit Rules shall apply accordingly to the German SAI's regional audit offices subject to the specific regulations issued for these. (3) Details of procedure may be adopted by the Board or any other relevant decision-making body within the German SAI. (4) The President of the German SAI’s task in his/her capacity as Federal Performance Commissioner are laid down in separate guidelines that are not part of the Audit Rules.

-6Article 2 Audit authority (1) Subject to the pertinent statutory provisions, the German SAI's audit mandate covers 1. 2. 3.

4. 5. 6.

all federal government departments and bodies, federal off-budget funds and federal trading funds (art. 88(1) Federal Budget, FBC); federal public law bodies (arts. 111, 112 FBC), including enterprises having that legal form (art. 112(2) FBC). public law bodies within the meaning of art. 55(1) Budgetary Principles Act (BPA) incorporated under the authority of any of the federal states, where such bodies receive federal grants or guarantees under any statutory provision or where in agreement with the German SAI, the respective body's charter provides for audit by the German SAI; private-law bodies under specific circumstances (art. 104 FBC); the management of federal government shareholdings in private-law enterprises (art. 92 FBC); other institutions where the law so provides (e.g. art. 53 Members of Parliament Act, art. 21(2) Political Parties Act, art. 26(3) German Central Bank Act).

(2) The German SAI may audit bodies outside the federal government level, where they manage part of the federal budget or have expenses reimbursed from the federal exchequer, where they manage federal funds or assets, or where they receive grants from the federal exchequer (art. 91(1) subss. 1-3 FBC). The same shall apply accordingly to private-law bodies in which the federal government (including its off-budget funds) directly or indirectly holds a majority interest, where these bodies do not operate in a competitive market. The same applies where, in accordance with the legal instruments under which they operate, their activities entirely or predominantly serve a public purpose and where they receive budget funds or guarantees from the federal government or any federal off-budget fund (art. 91(1) subs. (4) FBC). Audited body refers to the federal government body that is responsible for the budget area concerned. (3) Where the bodies under paragraph (2) of this article transfer funds to third parties, the German SAI may conduct audit work at these bodies (art. 91(1) sent. 2 FBC).

-7-

(4) Where the federal government grants loans from federal budget funds or provides sureties, guarantees or other warranties, the German SAI shall have the right of access to the bodies concerned to satisfy itself that they have put into place adequate safeguards designed to avert federal budget losses to the detriment of the federal government. Also the German SAI may examine where the eligibility criteria for entitlement to federal government grants have been met (art. 91(3) FBC). (5) Where the federal government is the majority shareholder of a private-law enterprise (art. 53 BPA), the German SAI may, in the course of auditing the federal government's management of its shareholding under (1) subs. (5) of this article seek information directly from the enterprise. To this end, the SAI may examine the operations, the books and the records of the enterprise (art. 54 BPA). The right of access set forth in sent. 1 of this paragraph is valid only where it has been provided for in the enterprise's memorandum or articles of association (art. 54 BPA, art. 66 FBC).

Article 3 Overall goals of the SAI’s mission (1) Audit work shall serve to generate significant findings about the financial management of federal departments and bodies and other audited bodies as stated under art. 2(1). Audit work is also designed to ensure the regularity, compliance and efficiency of public sector management and to enhance public sector performance and avoid any shortcomings. (2) The German SAI shall supports Parliament in the exercise of its power over the budget and in its decision on granting discharge to the federal government in respect of its financial management. The German SAI shall help to provide to the two Houses of Parliament a reliable overview of federal financial management, reveal the causes and impacts of major weaknesses and develop proposals to address any problems stated. (3) In performing its functions, the German SAI shall use human and other resources so as to generate maximum benefit for the federal government level.

-8Article 4 Audit criteria (1) The audit criteria shall comprise economy, efficiency and effectiveness and the regularity and compliance of government operations and transactions. (2) The audit criteria of regularity and compliance regard the respect of legislative regulations and other rules that provide the basis for disbursements, the collection of revenues and the commitment of funds. Furthermore, these criteria cover the arithmetical accuracy of revenues and expenditures, assurance that they are duly supported by vouchers and stated in the accounts in compliance with financial management provisions and principles. (3) Performance auditing shall look into whether the optimum ratio between the objective pursued and the resources utilised has been sought and obtained. It shall cover the effectiveness and appropriateness of government operations and transactions including target achievement (effectiveness or programme results audit). It shall also study whether the input of resources has been kept to the minimum needed to achieve the preset objectives (principle of economy).

Article 5 Audit scope As a matter of principle, the audit covers all government operations and transactions that have a financial impact. Such financial impact is deemed to exist where the federal administration has made a decision that may lead to revenue or expenditure. The German SAI is free to restrict audit work to audit samples and may leave specific accounts unaudited (art. 89(2) FBC).

Article 6 Policy decisions (1) Where the audit findings concern policy decisions, the German SAI shall point out that it refrains from any evaluation of policy and restricts its role to informing and advising the authorities to which the report is addressed. In

-9doing so, the German SAI may draw attention to audit findings that have a bearing on the rationale for policy decisions or on the impact of such decisions. (2) The German SAI may recommend legislative amendments, where it has detected evidence that applicable legal provisions have or may have effects not desired by legislators. The same applies where the legislator's objectives have been or can be achieved in a more efficient way.

Article 7 Confidentiality The German SAI shall not disclose any information obtained in the course of audit work, except where disclosure is warranted for purposes of reporting (art. 42(1) subss. 1 and 2) and/or by virtue of statutory provisions (arts. 33, 36, 57-64).

Article 8 Data privacy and information security (1) Personal data and other sensitive or secret data may be used only to the extent that the German SAI considers them necessary for carrying out its mandate. (2) The German SAI shall ensure that applicable provisions on data privacy and on professional or official secrets are complied with. For this purpose, the German SAI shall adopt a relevant rule to protect personal data and shall put into place the arrangements needed to protect audit evidence collected from unauthorised access. (3) The German SAI's Members, auditors and other staff shall comply with the Security Regulations for Federal Departments and Bodies. (4) Where the German SAI uses classified information, the subsequent procedure shall be governed by classification rules. Any decision to depart from that principle shall be made by the relevant panel in consultation with the body that has provided such information. Sent. 1 of this paragraph shall not apply

- 10 where the German SAI processes information received in a way justifying a different classification.

Article 9 Rights of third parties (1) The German SAI shall design audit procedures so as to ensure adequate protection of the rights of third parties affected by audit activities. Such third parties may be individuals or corporate bodies that are not covered by the German SAI's audit mandate but are mentioned in the management letter, audit report or annual reporting item because they are involved in government operations. In specific cases, staff of bodies under audit or concerned by the collection of audit evidence may be treated like third parties. (2) As a matter of principle, the German SAI's management letters, audit reports and annual reporting items shall not include third parties' names or other characteristics by which they can be identify. Exceptions shall be admissible, where the closer description of a third party is necessary. In such cases, the third party's interest in not being identify shall be taken into account as appropriate. (3) In the cases referred to in (2) sent. 2 of this article, the German SAI shall give a fair hearing to the third parties concerned, where the audit findings imply findings or evaluations that may be disadvantageous to them or and are used for reporting to Parliament. The same shall apply where there is a high likelihood that the findings will become known to the general public. In exercising professional judgement, the auditors shall observe the principle of commensurability i.e. the adverse effect a third party is likely to suffer as a result of disclosure needs be duly weighed against the possible benefit of disclosure. (4) Decisions about testimonial hearings, the procedure and timing is made by the relevant panel. (5) In the circumstances described in (3) of this article the German SAI shall inform third parties of the audit evidence and conclusions concerning them. The German SAI shall give third parties the opportunity to state their case

- 11 within a reasonable period of time. The German SAI shall notify the body responsible of the initiation of such testimony. (6) Where it appears appropriate to the German SAI, it may delegate the testimony to the body responsible. This applies especially to cases where, as a result of such delegation, an unreasonably large input of resources can be avoided and a proper testimony can be ensured. (7) The result of the testimony shall be used as an input for the German SAI's further decision-making. Where necessary, the German SAI shall give the body responsible an opportunity for comment.

Article 10 Secrecy of deliberations The deliberation of any matter by the decision-making bodies of the German SAI shall be governed by confidentiality. The secrecy shall be safeguarded during the entire of decision-making process.

Article 11 Documentation (1) Documentation shall consist of project documentation as stated in (2) and (3) of this art. and product documentation as stated in (4) and (5) of this art. (2) Project documentation shall record the audit evidence found and the audit stages. It need be sufficiently meaningful and clearly structured so as to enable experienced auditors having no prior knowledge of the audit mission to get a quick grasp of its status and, where necessary, to pursue the work or components without any significant delay. (3) Project progress shall be recorded in the NSI-PLUS system that provides up-to-date information. Furthermore, the auditors shall ensure, by means of electronic storage or by keeping files that additional information relevant to the project is made available in a clearly presented form. This shall apply especially to records that support the findings.

- 12 -

(4) Project documentation shall reference and provide access to the full texts of the final audit report (art. 35), annual reporting items (art. 43), reports pursuant to art. 88(2) FBC (art. 53) and special reports (art. 54). The results of the work done by the Federal Performance Commissioner and the related expertise shall also be documented. Additional key findings developed by the German SAI may be included in the documentation, where they are significant for the performance of the German SAI’s functions. (5) The audit units shall make the said documents and other key materials available for product documentation. As a matter of principle, all staff of the German SAI may access this documentation. (6) More detailed provisions shall be set out in a documentation directive.

Article 12 Audit guide and other guidance (1) These Audit Rules shall be supplemented by an Audit Guide providing for recommendations and instructions on mission performance. (2) The relevant panels shall issue additional guidance useful for simplwhereying work or ensuring the consistency of audit methodology and audit criteria. Such guidance shall be made available to other panels and regional audit offices. The Board may adopt guidance, especially on significant cross-cutting matters. Article 13 Liaison of audit units Audit units shall inform each other of all matters within their jurisdiction in an appropriate and timely manner. This especially refers to horizontal audit planning (art. 21), audit notification (art. 25 et seq.) and to audit findings.

- 13 -

Part II Audit planning

Article 14 Analyses of tasks and risks (1) Audit planning shall ensure the effective performance of the German SAI’s functions. To provide a sound basis for this, the German SAI does task analyses and risk analyses. (2) The audit units shall periodically analyse the areas that come under their audit remit by systematically taking stock of topics and key matters to be audited and identifying audit fields (analysis of tasks). Based on the potential audit topics identify in the various audit fields, they shall define and assess the risks to federal financial management (risk analysis). They shall take regard to the conclusions developed by task analyses and risk analyses when selecting the audit topics for audit planning. (3) During the financial year, the panels and auditors shall gather suggestions, recommendations and ideas regarding potential audit tasks.

Article 15 Audit plans (1) Annual audit programmes shall include both audit tasks the panels intend to perform themselves in the next calendar year and tasks assigned to the regional audit offices' issue areas. Audit tasks include audits and other projects to which staff and time resources are allocated in the audit programme. The issue areas shall participate in audit planning (art. 20(3). (2) The individual audit programmes shall be merged into an overall audit programme for the German SAI. The overall audit programme shall be made available to all audit units. (3) When adopting the annual audit programme the relevant panels may draft an audit strategy covering several years (medium-term audit planning).

- 14 -

Article 16 Selection of audit assignments (1) The German SAI shall select the audit assignments to be included in the audit programme. In doing so care shall be taken to ensure that the results provide an overview over the areas that come under its audit mandate and that gaps in audit coverage are avoided. Another selection criterion is the likelihood of audit work to generate findings relevant for Parliament and the government. In the selection process, the panels shall take into account the results of the task analyses and risk analyses. (2) The German SAI shall do audit work in a timely manner. Less recent facts may be taken into account mainly, where this is warranted by the conclusions for and impacts on future financial years. Special focus shall be placed on audits that address matters of major funding impact or may generate findings of a representative nature beyond individual cases. Another selection criterion is the risk and frequency of errors found in the operations to be studied. (3) In planning and conducting audit work, the panels take regard to parliamentary requests for audit and advice. (4) The panels shall consider horizontal audit topics, focal points and recommendations of the Board.

Article 17 Description of audit assignments in the annual audit programme (1) Each audit assignment set forth in the annual audit programme shall include at least the following components: 1. 2. 3. 4. 5.

audit matter, name of auditors and, where applicable, of the Audit Director or the official assigned lead responsibility (art. 22) likely duration of audit work, assistance of regional audit offices, involvement of other stakeholders (art. 19)

- 15 6.

budget items, where any and where visible.

(2) The following elements shall be added no later than on completion of the audit strategy (art. 23) in the course of detailed audit planning: 1. 2. 3. 4.

type of audit (art. 18), body subject to audit location or body where the field review is conducted, miscellaneous (such as foreign travel and reliance consultants).

on

external

(3) Where an audit assignment from the previous financial year has not yet been concluded, the assignment shall be transferred to the next year's audit programme. (4) Paragraph 1 of this article shall apply accordingly to other projects. (5) Audit assignments in the audit programmes providing for the delegation of audit tasks to the regional audit offices’ issue areas shall also mention any reservations made by German SAI panels on being involved in the audit work or on matters requiring their consent. This shall also apply where the head of a regional audit office is to lead an audit mission.

Article 18 Audit types (1) Audits of the following types shall be conducted by the German SAI: selective audits, horizontal audits, preliminary audits, follow-up audits and general audits. (2) Selective audits involve in-depth examinations designed to gather evidence on a particular aspect of the audit matter. (3) Horizontal audits study a specific subject across a representative selection of government bodies to develop audit findings on a defined area of government operations and transactions.

- 16 (4) Preliminary audits (audit surveys) are the German SAI's tool for obtaining insights into certain problem areas, procedures or developments. Such audits do not aim at providing a final overall view of government operations and transactions. This audit type is a good tool to prepare for new audit missions. (5) The purpose of follow-up is to identify whether the appropriate authorities have acted on the audit findings of the German SAI or on parliamentary resolutions. (6) General audits serve to obtain a comprehensive overview of the audited body's financial management.

Article 19 Reliance on internal and external bodies (1) In the course of annual audit planning, decisions shall be made about whether other stakeholders shall be involved in the performance of audit tasks. Such bodies may include regional audit offices, other audit units and audit support units, but also other government audit bodies, such as the German state courts of auditors and the European Court of Auditors. (2) Where one audit unit's annual audit planning includes assignments that overlap with other audit units' responsibilities, the audit units concerned shall be informed prior to 1st November each year. In addition, the provisions on liaison of panels within the German SAI shall apply (art. 15 Standing Orders).

Article 20 Annual audit planning (1) The Audit Director and the auditors shall make arrangements for compiling the annual audit programme. (2) The panel shall develop suggestions on suitable audit matters for the next financial year and include them in the draft audit unit's annual audit programme. The panel shall submit the draft in accordance with the schedule of responsibilities to either the President or Vice-President by 15 November each year for decision-making by relevant the panel of three members.

- 17 -

(3) The audit units shall ensure timely coordination of their audit programmes with those of the regional audit offices. For this purpose, the relevant audit unit and the issue area concerned shall jointly discuss the audit programme. At this discussion, audit tasks shall be selected in which the issue areas shall assist and others that the issue areas shall carry out on their own. (4) Modifications of the current audit programme shall be documented in the NSI-PLUS planning and steering system. The decision about cancelling an audit exercise or including a new audit exercise in the audit programme shall be made by the panel of three members. Other changes shall be adopted by the panel of two members.

Article 21 Planning horizontal audit work (1) Those audit units in charge of horizontal audit work (art. 5(2) subs. 2a Standing Orders) or which carry out horizontal audits by virtue of their fundamental tasks (art. 5(2) item 2b Standing Orders), shall coordinate their audit planning with the other audit units concerned by the audit task. A joint approach may be agreed upon. A panel responsible for a horizontal matter shall notify the otherwise relevant panels (art. 5(2) subs. 1 Standing Orders) of its proposed audit work prior to 1st September each year. Any differences of opinion shall be settled in accordance with art. 5(3) Standing Orders. (2) For coordination purposes, the audit assignment shall be described as precisely as possible. Where the bodies where field work shall be conducted cannot be designated by 1st September, all panels on whose remit the audit may touch shall be involved. The panels informed in accordance with this rule shall communicate audit findings and other relevant information including information about audits which they have planned themselves. (3) Within four weeks, the other panels whose support is sought shall notify any objections to the proposed audit. The objecting panels shall give the reasons for any such objection. They may suggest forming an audit group pursuant to arts. 2(2) sent. 2, 10 German SAI Act and arts. 12 and 16 Standing Orders. Once an audit project has been duly coordinated, the precedence rule of art. 5(3) sent. 1 Standing Orders shall apply.

- 18 -

Part III Preparation and conduct of an audit mission

Article 22 Allocation of functions in audit missions (1) On the basis of the decisions adopted by the relevant panel, audit work shall be managed by the Audit Director. For this purpose, the Audit Director shall also participate in preparing (art. 23) and performing audits, especially field work (arts. 26 and 27), final discussions (art. 30) and the final evaluation (art. 37). The Audit Director shall make sure that the procedure and milestones laid down in the audit strategy are adhered to (real-time evaluation). (2) The auditors shall collect audit evidence that is relevant in accordance with the audit strategy (art. 27). Based on this evidence, they shall draft the preliminary audit report (arts. 31, 35). (3) Where several auditors are involved in an audit, one of them can be assigned lead responsibility. The individual assignments shall be laid down in the audit strategy. (4) In the case of audit projects pursuant to art. 12a Standing Orders, an audit manager shall be appointed team leader. Para. 3 sent. 2 of this article shall apply accordingly. (5) Where audit assignments have been delegated to regional audit offices, the Director of the office concerned or the head of the issue area concerned shall perform the tasks described in (1) of this article, without prejudice to the provisions of art. 7(3) sent. 1 Standing Orders. He/She shall participate in an audit mission in their role as auditor, having lead responsibility where applicable.

- 19 -

Article 23 Audit strategy (1) To arrange for an audit mission, the auditors shall liaise with the audit leader to develop an audit strategy setting out the audit work to be done. The decision about the audit strategy shall lie with the panel. (2) The audit strategy shall list the bodies to be audited and other stakeholders at which audit evidence shall be collected (if any). For this purpose and to avoid overlaps in the timing of field work, the audit inventory kept within NSIPLUS shall be used and supplemented as appropriate. (3) In particular, the audit strategy shall include information on -

data available and data needed on the audit matter; suspected weaknesses; timing of audit work and milestones; nature and scope of the matters to be audited; audit methods; audit criteria; allocation of work to audit teams ; the need to rely on internal and/or external expertise

- involvement of other audit institutions;

- audit risks threatening successful audit work.

Article 24 Reliance on external experts (1) The German SAI may rely on experts (art. 94(1) FBC). External professional expertise may be sought, in particular, where the German SAI's own human resources are not adequate in terms of staff numbers and specialised skills to gather audit evidence on or efficiently evaluate individual technical matters of a highly complex nature. (2) The relevant panel shall specify the tasks to be performed by the expert well before placing any contract. The audit unit shall ensure coordination of the expert's work with its own audit work.

- 20 -

Article 25 Audit notification (1) The German SAI shall on a timely basis send a notification letter to the body to be audited. Furthermore, it may send the audit notification to the bodies affected by the collection of audit evidence (field work) and to any relevant superior or supervisory authorities. Audit notification may be omitted, where it might jeopardise the purpose of the audit. (2) The notification letter shall include - a description of the audit topic, - the proposed start of field work, - the name and official title of the audit team leader and of the designated team members, - the request to support the auditors and to provide the facilities and equipment needed for their audit work. The letter may also include - advice on the documents to be kept ready for auditing and, as appropriate, the request to prepare the documents in line with the audit purpose. - the confirmation that any other stakeholders have been notified of the audit. (3) The relevant panel shall instruct the auditors to collect audit evidence. (4) The audit panels and issue areas in charge shall inform one another of the audit notification.

Article 26 Start of field work (1) When starting field work, an introductory meeting shall be held with the head of the body concerned, his/her deputy or with another official in charge. At this meeting, the audit topic and audit objectives shall be explained, and

- 21 information shall be given about the nature and extent of support required from the body under audit to ensure a smooth conduct of audit work. (2) The audit leader shall take part in the introductory discussion of major audit missions or where his/her official presence is expedient for any other reason.

Article 27 Conduct of field work (1) In the course of field work, the auditors shall, in compliance with the audit strategy, develop all the findings needed for assessing the audit matter. The auditors are in charge of collecting relevant, accurate and complete audit evidence (art. 22, 2). (2) The auditors shall also take note of any evidence that may be outside the scope the audit but may still be relevant for mission performance of the German SAI. The auditors shall report to the audit leader, on a timely basis, on any significant findings and on any reportable condition suggesting a need to depart from the audit strategy. Major modifications shall be subject to a decision by the relevant panel. (3) Where, in the course of field work, the auditors become aware of any alleged criminal offence or disciplinary offence that may have occurred, they shall without delay inform the audit leader before discussing the reportable condition with the body responsible. The panel shall decide on the next steps to be taken. (4) The auditors shall monitor full receipt of requested documents, of information sought and access to electronic files. They shall make sure that documents no longer needed are returned. The auditors shall certify upon request which documents have been used for audit work, provided that such request has been made for sound reasons. (5) The audit leader shall participate in field work where necessary. When doing so, he/she shall manage field work. (1),(2) and (4) of this art. shall apply accordingly.

- 22 (6) Mere desk work conducted at the German SAI's own premises shall be the exception rather than the rule. Where desk work is carried out, art. 27 (1),(2) and (3) shall apply accordingly.

Article 28 Audit access and support (1) Where necessary, the auditors shall, when requesting information and/or documents, state that the German SAI considers such information and or documents necessary for carrying out the audit. There is no further need for the auditors to justify requests for information or documents. This also applies to access to electronic files. (2) The German SAI may demand that documents or information requested be developed or arranged in the format it requests provided that complying with the request does not represent an incommensurate burden within the context of the audit objectives. (3) The duty to provide documents also includes the duty to draw them up, where their non-existence is contrary to good practice. (4) The body responsible shall provide information and/or requested also in cases where they are classified.

documents

(5) Where the body responsible refuses to comply with its obligations described in art. 28 paragraphs (1) to (4), the auditors shall without delay inform the audit leader. The relevant panel shall decide on further action.

Article 29 Claims for damages, reimbursement or other claims (1) Where, in the German SAI's opinion, a claim for damages (art. 98 FBC) or any other claim (such as reimbursement pursuant to art. 49a(1) Administrative Procedure Act) shall be pursued, the German SAI shall notify the body responsible of such claim. Notification is particularly urgent where there is the risk that a claim may lapse due to expiry of a statutory limitation period or a

- 23 term of preclusion. This is also the case where any delay in making the claim is likely to jeopardise the evidence required to assert it. (2) Where field work generates evidence suggesting the existence of claims within the meaning of art. 29(1), the auditors, shall obtain the audit leader's approval. Then he/she shall urge the body responsible to consider making the claim and, as appropriate, to take steps to enforce it. The panel shall decide on further action.

Article 30 Completion of field work (1) Upon completion of field work, the audit findings shall be discussed with the body responsible in a final meeting. To prepare for the meeting, a document stating the facts and figures for discussion may be developed and communicated to the body responsible. The body responsible may either be the body subject to audit, the body affected by field work or, the body having oversight. Where possible, these bodies shall be represented at the discussion by their chief executive or by any other responsible senior officer. (2) The purpose of the final discussion is to inform the audited body about the findings. The purpose is also to learn the opinion held by the body responsible about the findings and to explain the next steps in the audit procedure. An additional purpose is to establish the relevant facts beyond controversy. (3) The discussion shall be conducted by the audit leader who shall be assisted by the auditors in charge. The auditors may be tasked to conduct the discussion. The audit leader may task them to declare minor problems as being resolved, especially where remedial action has been taken or promised by the body responsible. (4) The results of the discussion shall be recorded in the audit note unless they have to be dealt with in the preliminary audit report. (5) Where a regional audit office has been tasked to conduct an audit mission, upon completion of field work, the relevant panel shall be notified well in advance of the upcoming discussion to be able to participate in it.

- 24 -

Part IV Reporting

Article 31 Preliminary audit report (1) Once the collection of audit evidence has been completed, the auditors shall without delay draft a preliminary audit report in close liaison with the leader of the audit. (2) The preliminary audit report shall state those audit findings relevant for assessing the performance, regularity and compliance of government operations. (3) The preliminary audit report shall separately state the audit evidence generated and the resulting conclusions and recommendations (audit findings). Particular care shall be taken to make sure that the report is readily understood by and tailored to the needs of the report users. (4) As a rule, the preliminary audit report shall be preceded by an executive summary presenting the key audit findings. In order to enhance the impact of the preliminary audit report, overarching conclusions can be presented in a final section. (5) The facts and figures shall be presented in such detail as to clearly communicate the message and to underpin the German SAI’s conclusions. These conclusions need to express an assessment of the conditions found that provides the basis for the recommendations generated. Where possible, the criteria and benchmarks on which the conclusions are based shall be mentioned or explained in the draft report. Special mention shall be made of any claims for damages or reimbursement etc. which in the German SAI’s opinion needs to be asserted or considered (art. 29). (6) No preliminary audit report is needed in cases where no major shortcomings have been found or where minor shortcomings have been discussed with the audited body and have been declared resolved as stated

- 25 under art. 30(3). Where a preliminary audit report is waived, the audited body shall be notified that the audit has been concluded. Other stakeholders may also be notified as appropriate.

Article 32 Internal audit memo and distribution list (1) The internal audit memo reflects decision-making within the German SAI. It also includes information not dealt with in management letter but significant for current or future audit work or to be put on record for other reasons. The audit memo shall be complemented as necessary to reflect the further audit procedure. It may be produced by means of the information available in the NSI-PLUS system. (2) The audit memo serves to record the key steps of the audit procedure, in particular whether the audit has been carried out as determined in the audit strategy; the stakeholders with which the findings have been discussed (art. 30); which audit findings shall not be followed up or be followed up during subsequent audits; any reasons for waiving a preliminary audit report as stated under art. 31(6). The audit memo shall also indicate as to whether and why co-signing by other panels is required (art. 15 German SAI Standing Orders) and also whether other panels shall be informed about the audit findings. (3) The panels shall state how to handle the audit findings in a distribution list with instructions for further internal procedure.

Article 33 Start of the contradictory procedure (1) After decision-making by the panel, the German SAI shall send the preliminary audit report to the bodies mentioned in (2) and (3) of this article

- 26 and shall start the contradictory procedure. The recipients may comment on the audit findings developed by the German SAI. In particular, they shall inform the SAI about the steps that they have taken or intend to take. A reasonable time limit shall be set for body comments. As a rule, the commenting period shall not exceed three months. Until the contradictory procedure has not been concluded, the audit findings presented in the preliminary audit report are still provisional. (2) The preliminary audit report shall be addressed to the bodies directly affected by the audit findings. This includes the audited body and its relevant supervisory body. It may also involve the body responsible for preparing and promulgating legal regulations or for taking supervisory action. Where preliminary audit reports include findings that are of fundamental nature or have a major financial impact, they shall also forwarded to the Federal Ministry of Finance (art. 96(2) FBC). (3) Bodies at which the German SAI has done field work (e.g. pursuant to art. 91(1) FBC, art. 54(1) BPA), shall be given the opportunity to comment on the audit findings that concern them, where this is expedient or required. Article 9 paragraphs (3) to (7) shall apply accordingly. (4) Subject to the conditions stipulated in Part VII and VIII, the preliminary audit report may be communicated to the relevant bodies during the contradictory procedure, where the panel considers this necessary for special reasons.

Article 34 Conduct of the contradictory procedure (1) The auditors shall analyse the comments made by the recipient of the preliminary audit report. The auditors shall compare these comments with the audit findings developed by the German SAI and check whether the comments may require modifications in the facts and figures stated, in the conclusions drawn or the recommendations made. (2) Any differences in the facts shall possibly be discussed with the body responsible. Any differences in opinion on the conclusions drawn or objections against recommendations shall be evaluated.

- 27 -

Article 35 Final audit report (1) The panel shall finally establish the audit findings pursuant to art. 96 (4) FBC (adoption of the preliminary audit report) unless it is pursued further in the reporting procedure (art. 42). Partial results may be finally established in a separate exercise. (2) For this purpose, the auditors shall draft the final version of preliminary audit report on the basis of its previous version (art. 31) and results of the contradictory procedure (art. 34). This final version presents audit evidence and the conclusions drawn and recommendations made by

the the the the

German SAI. It also includes the responsible bodies’ comments on all major matters and the final evaluation of the objections raised and matters pointed out. Art. 31 paragraphs (3) to (6) shall apply accordingly. (3) The panel shall inform the audited body what steps (if any) it intends to take regarding recommendations on which no agreement has been reached. Article 36 Conclusion of the audit (1) Where audit findings have been resolved, the panels shall notify the bodies involved (art. 34). These shall also be informed of any proposed reporting pursuant to arts. 88(2), 97 and 99 FBC or pursuant to other provisions on reporting. (2) The auditors responsible shall ensure that all documents on the audit matter and the conduct of the audit mission that may be relevant after the conclusion of the audit shall be incorporated into the file pertaining to the audit assignment. (3) Where a regional audit office inform the relevant audit unit conclusion. The relevant audit involved in the audit exercise of audit.

has carried out the audit assignment, it shall of the definite result (art. 35) and audit unit shall inform the regional audit office the definite result and the conclusion of the

- 28 -

Article 37 Evaluation of audit work Once audit work is concluded, the relevant audit leader shall evaluate the course of the audit and its results together with the audit team to develop lessons learnt for future audits. The evaluation shall cover all stages of the audit and shall be appropriately documented. Article 38 Follow-up To enhance audit effectiveness the German SAI shall follow-up on its audit recommendations. It shall ask the audited body what action it has taken in response to the agreed recommendations and, where appropriate, shall require relevant evidence. The findings thus generated may motivate reporting to Parliament (art. 42) or a follow-up. The relevant panel shall decide about the conduct, nature and timing of follow-up.

Part V Audit of individual accounts and aggregate annual accounts

Article 39 Observations on the aggregate annual accounts (1) The audit of individual accounts and of the aggregate annual accounts provides the basis for the reporting items on the federal annual accounts included in the German SAI's annual report as stated in art. 44 (1)and (2). The audit units shall audit individual accounts and the aggregate annual accounts within the scope of their respective audit mandate. They shall discuss any weaknesses found with the bodies concerned as stated under art. 34(1). Where the relevant panel has developed results which in its opinion shall be

- 29 included in the reporting items mentioned in sent. 1 of this paragraph, it shall communicate such results to the panel in charge of fundamental financial audit matters. (2) This panel may prescribe the details of procedure to be followed in communicating such results. (3) The regional audit offices shall perform the tasks assigned to them as part of auditing individual accounts and the aggregate annual accounts.

Article 40 Audit of individual accounts The audit of individual accounts is designed to verify that revenues and expenditures are duly supported by vouchers. This audit shall generally be restricted to samples.

Article 41 Audit of the aggregate annual accounts (1) The audit of annual accounts shall cover the audit of the aggregate budget account and the aggregate capital account. This audit mission serves to verwherey compliance with the Budget Act and the Budget Estimates. (2) The audit of the budget account is designed to verify compliance with the provisions of budgetary law, especially concerning excess and extra-budgetary expenditures (art. 112 German Constitution, art. 37 FBC); commitments of future years’ budget funds (arts. 16 and 38 FBC); carry-over of unexpended balances (arts. 19 and 45 FBC); use of expenditures eligible for virement (art. 46 FBC); compliance with imposed spending cuts; release of blocked budget funds (arts. 36 and 41 FBC). (3) The purpose of the audit of the capital account is also to verify compliance with the regulations made by the Federal Ministry of Finance in agreement with the German SAI (art. 73(1) FBC).

- 30 -

Part VI Reports and advice

Article 42 Reporting (1) Reporting to the two Houses of Parliament and the Federal Government shall comprise the, 1. annual report according to art. 97 FBC, 2. reports on matters of special significance in accordance with art. 99 FBC, and 3. advice based on the lessons learnt from audit work (art. 88(2) FBC). (2) Where the law so provides, the German SAI shall report to other decisionmaking bodies (art. 55) (3) Reporting under paragraph (1) of this article shall safeguard the rights of third parties (art. 9) and comply with data privacy requirements (art. 8). Confidential information and secrets of enterprises established under private law, especially industrial and commercial secrets may not be published (art. 395(2) Public Stock Corporation Act). Findings on classified matters and other matters where a public discussion seems not appropriate shall be reported separately to Parliament.

Article 43 Subject of the annual report (1) The annual report sets forth audit findings that may be of significance for assessing federal financial management including special funds. In addition to the budget and capital accounts prepared by the Federal Ministry of Finance, the German SAI’s annual report provides the basis for Parliament’s decision to grant discharge to the Federal Government. Apart from that, it assists Parliament in exercising its oversight over budget implementation and provides

- 31 advice on matters with a bearing on the federal budget and federal public finance in general. (2) The annual report shall also deal with audit findings on public-law bodies (arts. 111 and 112 FBC, art. 55 BPA) and private-law bodies (art. 104 FBC) that have major bearing on the federal budget or may in any other way be of importance for decisions of the report users. (3) The annual report may also include information on the German SAI and the Federal Performance Commissioner’s activities in their advisory roles.

Article 44 Contents of the annual report (1) The annual report shall contain audit findings of examinations into the federal accounts relating to the financial year for which parliamentary discharge shall be granted. Irrespective of the financial year audited the annual report shall also set out significant findings about federal financial management (specific audit findings). (2) Apart from stating the facts and figures of the financial accounts, reporting shall include a substantive discussion of aspects such as excess and extrabudgetary expenditures and their justification (art. 37 FBC), trends of unused appropriations (art. 45 FBC), compliance with statutory savings requirements (e.g. overall reductions in expenditure and established posts), management of commitment authorisations (art. 38 FBC) and general developments in public finance. (3) Where possible, reporting on specific audit findings shall address matters of current importance. Other matters may be addressed in detail where they are likely to be of future relevance or impact. (4) The annual report shall evaluate matters of financial importance and findings of a representative nature or those concerning matters of general interest.

- 32 (5) To the extent needed, the annual report shall place focus on the audit scope and the significance of the shortcomings found such as the frequency of occurrence against the number of cases tested. (6) The decision as to whether audit findings are of significance in the sense of art. 97(1) FBC, shall be guided by reflections on the interests of federal legislators as potential report users and of the general public.

Article 45 Format and structure of the annual report (1) As a rule, each annual reporting item shall contain the audit findings, the German SAI's evaluation and the pertinent comments made by the officials responsible of the body audited. The reporting items shall also indicate the final evaluation by the German SAI of the views of the audited body and recommendations on how to address the problems stated (if any). Each item shall be preceded by a short summary highlighting the subject matter. Where the comments of the audited body responsible do not concur with the audit findings, the German SAI shall state the reasons for objecting to these comments. (2) As a rule, the names of administrative bodies at federal and state level shall be disclosed in the reporting item. (3) The final evaluation and recommendations for improvement shall indicate whether legal action to recover damages or disciplinary action has been or shall be considered. (4) The Corporate Services Panel shall ensure that the annual reporting items are worded in accordance with coherent audit standards and shall issue detailed provisions to that effect.

Article 46 Procedure for compiling the annual report (1) The Board shall decide on the contents of the annual report (art. 14(1) subs. 2 German SAI Act). The relevant Audit Director shall be rapporteur on

- 33 the Board. The Audit Director of the Corporate Services Unit shall act as corapporteur. (2) To prepare for compiling the annual report briefing notes shall be developed on the proposed reporting items (art. 47). Then the draft reporting items shall be communicated to the audited body or other body responsible, requesting it to comment on the matter (art. 48). Finally the revised and complemented draft item shall be submitted to the Board (art. 49). The drafts of the individual reporting items shall be are adopted by the relevant panels of three members. (3) Where a reporting item also affects the remit of another panel, the relevant panel needs to be consulted. Disagreements between panels on how to proceed shall be promptly referred to the Board for resolution. (4) The Corporate Services Panel may issue detailed guidance on the procedure for compiling the annual report.

Article 47 Briefing notes announcing proposed items for the annual report The Corporate Services Panel shall invite the panels to communicate, within a certain time frame, summaries of the subjects of proposed reporting items and proposals for collective reporting items. It shall inform the panels of the briefing items. The panels shall examine as to whether there are any overlaps with their proposed items, whether audit findings are available that permit cross-cutting assertions or whether similar audit findings are available to be jointly reported upon. Where appropriate, the panels concerned shall agree on how to proceed and shall inform the Corporate Services Panel accordingly.

Article 48 Comments of the body responsible (1) Copies of draft reporting items shall be forwarded to the bodies responsible for comment. The draft needs to contain all material findings relevant for the reporting item.

- 34 (2) In the transmittal letter, the German SAI shall state that the attachment is merely a draft reporting item and that the final report version is reserved for formal decision by the German SAI. The German SAI shall also make clear that, where no objections are raised within a certain time frame, it shall assume the facts to be accurate and complete and the comment of the department audited to be presented fairly.

Article 49 Draft to be submitted to the board (1) Once the comments of the body audited or responsible have been received, the relevant panel shall supplement the draft reporting item, completely and substantively stating the relevant modifications and adding a final assessment. (2) The relevant panel of three members shall transmit its supplemented reporting item to the panel responsible for audit and reporting guidance. The draft of a proposed resolution for the Public Accounts Committee shall be included. (3) The Corporate Services Panel shall discuss any further proposals on the contents and the structure of the text with the panel responsible and shall incorporate the results of the discussions into the draft to be submitted to the Board. Where after the discussion differences of opinion persist as to the facts and figures presented, the draft shall be submitted to the Board in the version which the panel responsible for the subject matter deems to be correct. The Corporate Services Panel may submit an alternative version. In order to inform the Board, the proposed resolutions for the Public Accounts Committee and the summary of each reporting item shall be attached to the reporting items to be incorporated into the annual report.

Article 50 Distribution and publication of the annual report (1) The German SAI shall submit the annual report simultaneously to the two Houses of Parliament and to federal government. It shall be published in the Federal Gazette. Except for cases under (2), the annual report shall be published the German SAI in the internet immediately after receipt. The

- 35 President of the German SAI shall present the annual report to the general public at a press conference. (2) Reporting on secret matters or other matters not appropriate for public discussion shall be submitted in a separate report under art. 97 (4) FBC to the Presidents of the two Houses of the Federal Parliament, the Federal Chancellor and the Federal Ministry of Finance.

Article 51 Parliamentary debate on the annual report (1) To prepare for the deliberations of the Public Accounts Committee, the German SAI shall submit to the Committee an updated summary of and proposed resolutions on each annual reporting item (art. 49(3) sent. 3). The panels responsible shall collaborate with the Corporate Services Panel in collating the relevant documents . (2) The names of those institutions or officials not disclosed in the annual report shall be expressly stated in the working paper. Where confidentiality is required, the working paper shall be classified as "to be dealt with in confidential sessions" and, where appropriate, shall bear a note stating the duty to observe secrecy (art. 8). (3) The panels responsible attend Public Accounts Committee sessions to provide testimony to the Committee on reporting items from their audit area. Where in exceptional cases no member of the panel responsible can attend the meetings, a deputy shall be designated to stand in. As a rule, the Audit Director of the Corporate Services Unit shall attend all Public Accounts Committee sessions. (4) When departmental committees of Parliament discuss the German SAI's reporting items, one member of the panel responsible shall be present at their technical meetings. Para. 3 sent. 2 shall apply accordingly. The relevant official shall be informed of the current status of affairs in good time before the committee meeting. (5) Where German SAI representatives attend meetings of the Upper House of Parliament paragraph (4) shall apply accordingly.

- 36 -

(6) Where the Public Accounts Committee discusses a report that it has requested after receiving the annual report or that the German SAI has submitted to it in addition to the annual report, paragraphs (3) and (4) of this article shall apply accordingly.

Article 52 Conclusions from the annual report (1) The German SAI shall monitor as to whether the responsible bodies have drawn the necessary conclusions from the annual report and from the results of parliamentary debate. The panel responsible reports to the panel for audit guidance and reporting once specific reporting duties to the German SAI have been complied with and the requirements the Public Accounts Committee has imposed have been met. (2) Follow-up audits shall be done as appropriate after a certain lapse of time see art. 18(5). Where follow-up reveals that the responsible body e.g. has failed to comply with the decisions made by Parliament, and has not addressed the problems stated or implemented the audit recommendations, these matters shall again be taken up in the annual report.

Article 53 Advice based on lessons learnt from audit Findings (art. 88(2) 2 FBC) (1) On the basis of lessons learnt from previous audit work, the German SAI may advise both Houses of the Federal Parliament, the Federal Government and individual federal ministries on financially major transactions and important legislation to be enacted. Where the German SAI gives advice to Parliament, it shall inform the Federal Government at the same time. (2) The report shall be drafted in compliance with the principles on compiling the annual report laid down in art. 45. The provisions laid down in arts. 31 to 36 shall apply accordingly.

- 37 (3) The panel responsible shall decide upon reports submitted pursuant to paragraph (1) of this article. Where these reports are addressed to legislative bodies, the Corporate Services Panel shall be involved. (4) Each relevant panel shall provide testimony to the Budget Committee on the reports under (1) of this article. This shall also apply to reports addressed to or dealt with by a different parliamentary committee. Article 54 Reports on matters of particular importance (art. 99 FBC) (1) Apart from annual reporting, the German SAI may at any time inform the legislative bodies and the Federal Government of any matters of particular importance. Where the German SAI reports to Parliament, it shall at the same time inform the Federal Government (art. 99 FBC). The purpose of such special reports is to communicate audit findings that serve to provide information and advice to the legislative bodies and the Federal Government on financial management and other matters to be decided by these authorities. This type of reporting shall be opted for where it appears appropriate to inform the general public. (2) The decision about such reporting pursuant to art. 99 FBC lies with the Board (art. 14(1) subs. 2 German SAI Act). (3) The German SAI shall publish its reports on matters of particular importance on the internet immediately after communicating them to the parliamentary bodies.

Article 55 Other statutory reports (1) The Board shall decide about any other reports submitted by the German SAI under a statutory mandate in connection with the discharge procedure of off-budget funds, public-law bodies or other bodies (art. 14(1) subs. 2 FBC) or a committee set up by the Board. The procedure set out in art. 46(1), (3) and (4), art. 48, and art. 53(4) shall apply accordingly.

- 38 -

(2) In cases that come under art. 10a(2) FBC, the German SAI shall inform the Confidential Committee, the responsible supreme federal authority and the Federal Ministry of Finance about the result of its audit of the annual accounts and of financial management.

Article 56 Advisory work as part of preparing and adopting the federal budget (1) In connection with the preparation of the federal budget estimates, the German SAI provides advice to the Federal Government, the Lower House of Federal Parliament and the Upper House of Federal Parliament as appropriate. It shall participate in the budget negotiations of the requesting federal department with the Federal Ministry of Finance and in the discussions held by the relevant rapporteurs of the Budget Committee with the Federal Ministry of Finance and requesting federal departments and meetings of the Budget Committee. (2) To prepare for the budget negotiations and the discussions with the rapporteurs of the Budget Committee, the German SAI shall review the preliminary estimates and draft budgets submitted to it pursuant to art. 27 (29) FBC especially under the criteria of consistence and validity of the underlying assumptions, comparing them with its own lessons learnt from previous audit work. Where necessary, the German SAI shall request additional information from the responsible department or the Federal Ministry of Finance. (3) As a matter of principle, the Audit Director in charge shall take part in the discussions with the rapporteurs of the Budget Committee in his/her capacity as 'authorised Member' pursuant to art. 9(2) and art. 14(3) Standing Orders. As a rule, the Audit Director shall also participate in the budget negotiations between the Ministry of Finance and the requesting departments on their budget estimates. An auditor may also be authorised to perform this function as appropriate.

- 39 -

Part VII Reporting audit findings to other stakeholders

Article 57 Reporting to the Budget Committee (1) As a matter of principle, the German SAI shall provide information to Parliament only once audit findings have been discussed with the auditee or any other body responsible. (2) The German SAI may communicate audit findings not yet fully discussed with the body responsible he German SAI has particular reason to regard this as necessary (art. 96(1) sent. 2 FBC). As a rule, such particular reasons exist in cases where preliminary results are urgently needed as a basis for parliamentary decision-making or where such results have leaked to the general public prematurely. (3) The decision to what extent preliminary audit findings shall be released lies with the relevant panel. In making its decision, the panel has to weigh the interests of the Budget Committee, of the department or body concerned and of the German SAI, taking due regard to the specific circumstances of each individual case. The panel responsible for the subject matter in question shall notify the department or body concerned about providing information to the Budget Committee. (4) In the cases coming under paragraph (2) of this article, the Budget Committee shall be informed about the current status of the audit procedure. Where appropriate, the Budget Committee shall also to be informed of doubts about the accuracy and completeness of the findings reported, of any substantive matters not yet clarified and of the German SAI's opinion about the significance and impact of the audit findings reported. (5) The Corporate Services Panel shall be involved in the procedure. The panel shall settle the details of the procedure.

- 40 -

Article 58 Information requests of a parliamentary investigation committee (1) Where an investigation committee of the Lower House of n Parliament (art. 44 Basic Law) has resolved to take evidence within the purview of art. 96 Penal Code, the German SAI shall submit any relevant reports and audit files requested under such resolution where these may serve as evidence. This shall not apply to documents that violate the principle of secrecy of deliberations applicable within the German SAI (art. 10). (2) Where according to the German SAI’s view the prerequisites for making a statement under art. 96 Penal Code are met, it shall base its decision on the comments received from the responsible department or body. In all other cases, it shall inform the responsible department or body in a timely manner. (3) The German SAI shall provide information to the parliamentary investigation committee only where the investigation committee has taken the necessary steps to protect the rights of third parties and to ensure compliance with the requirements of data privacy and information security. Where the relevant documents include evidence about facts to be kept secret (such as by virtue of statutory provisions on tax secrecy and social security secrecy or the classification of documents), the German SAI shall obtain confirmation, prior to forwarding the documents, that the investigation committee has taken the necessary steps. (4) The relevant panel shall decide on submissions pursuant to paragraph (1) of this article after discussing the matter with the panel in charge of corporate services. Art. 57(5) shall apply accordingly.

Article 59 Information of public prosecution services (1) The German SAI may communicate audit findings to the authorities responsible for prosecuting criminal offences, where it deems this to be necessary (art. 96(1) sent. 2 FBC).

- 41 -

(2) The German SAI is under a general obligation to provide information or documents requested by the public prosecution service pursuant to Articles 96 and 161 of the Code of Criminal Procedure. Exceptions from this obligation include cases where the compliance with such request would 1. 2.

harm the public interest of the Federal Republic of Germany or one of its constituent states, seriously jeopardise or hamper the performance of public tasks.

(3) Decisions about communications within the meaning of (1) of this article and about requests within the meaning of (2) of this article shall be made by the relevant panel in liaison with the Corporate Services Panel.

Article 60 Requests for administrative and judicial assistance (1) The German SAI may communicate audit findings to judicial courts and bodies where it deems this to be necessary (art. 96(1) sent. 2 FBC). This shall also include communicating audit findings to staff of federal bodies with a view to provide access to audit results on overarching and cross-cutting matters. The decision shall be made by the relevant panel. (2) The decisions about requests for judicial or administrative assistance and shall be made by the relevant panel. (3) Communications within the meaning of paragraph (1) of this article and requests within the meaning of paragraph (2) of this article shall be processed in liaison with the Corporate Services Panel.

- 42 -

Article 61 Provision of information to other third parties (1) The German SAI may grant third parties access to final audit results (art. 96(4) sent. 1 FBC) and to audit reports pursuant to art. 88(2) 2 FBC once parliamentary deliberation has been concluded (art. 96(4) sent. 2 FBC). (2) The decision about whether and to what extent access shall be granted under paragraph (1) of this article lies with the relevant panel. When making this decision, the panel shall especially consider whether its decision adequately complies with the principle of transparency. The procedure for this decision-making shall be settled separately. (3) The Corporate Services Panel shall be involved.

Part VIII Cooperation with other external audit institutions

Article 62 Cooperation with the state courts of auditors (1) The German SAI shall cooperate with the courts of auditors of the federal states in a spirit of trust while maintaining its and respecting their independence and paying due regard to the respective ambits of responsibility. (2) Where the audit matter or collection of audit evidence is within the jurisdiction of several courts of auditors, they shall share information on audit planning and audit findings (art. 56(3) BPA) in order to avoid audit gaps and the duplication of work. (3) Decisions about agreements on joint audits or on the delegation of audit functions (art. 93(1) FBC) shall be made by the relevant panel in liaison with the Corporate Services Panel. These agreements shall be signed by the SAI’s President.

- 43 (4) The German SAI shall provide the courts of auditors of the federal states with further details about the way in which it carries out its mandate where this has been agreed upon, has been provided for in joint declarations or is otherwise expedient. (5) Subject to an understanding with the relevant court of auditors, the German SAI may use audit findings received in its preliminary audit reports and reports. Article 63 Cooperation with the European Court of Auditors (ECA) (1) The German SAI and the ECA shall cooperate in a spirit of trust and within the framework of their competence while maintaining their independence (art. 287(3) TFEU). The German SAI's responsibilities are subject to national law. (2) The German SAI may communicate final audit findings and reports finally deliberated by Parliament to the ECA. of its own accord or at the request of the ECA (art. 96(4) sentences 1 and 2 FBC)preliminary audit findings may be communicated to the ECa if the German SAI deems this to be necessary (art. 96(1) sent. 2 FBC). (3) The German SAI may reach an agreement with the ECA on conducting individual audits or commissioning audit work or carrying out joint audits (art. 93(2) FBC). Such agreement shall be fixed in writing. The use of the audit findings shall be specified in writing no later than at the beginning of the audit. Joint audits shall be taken into consideration especially in cases where audit findings cannot be generated in a different manner. (4) The decision on working together with the ECA under (2) and (3) of this article is made by the relevant panel of three members. The German SAI’s EU Membership Panel shall participate in the procedure. It may decide upon details of cooperating with the ECA (art. 15(3) Standing Orders).

- 44 Article 64 Cooperation with other government audit bodies (1) Within the scope of its mandate and on the basis of agreements, the German SAI may, while maintaining its independence, work with other supreme national audit institutions and with external audit bodies of international organisations. (2) The details of cooperation and the use to be made of joint audit findings shall be determined by agreement. Art. 63 paragraphs (2) to (4) shall apply accordingly. (3) Where the German SAI cooperates with another EU member SAI and where the subject of the audit is the management of EU funds, the EU Membership Panel shall be involved.