GERMANY

Annex: Legal Authority

Basic Law of 23 May 1949 (BGBl. p. I)
as amended on 27 October 1994 (BGBl. I, p. 3146)

Extract

(1) The Federal Ministry of Finance shall render an annual account of all receipts and payments, as well as all assets and liabilities, and shall submit it to both Houses of Parliament within the following financial year in order to obtain grant of discharge for the Federal Government.

(2) The Bundesrechnungshof, whose Members shall enjoy judicial independence, shall audit the account and examine the performance, regularity and compliance of financial management. It shall report annually directly to both Houses of Parliament as well as to the Federal Government. In all other respects, the powers of the Bundesrechnungshof shall be determined by federal legislation.

Budgetary Principles Act of

19 August 1969 (BGBl. I 1969, p. 1273)
as amended on 29 July 1994 (BGBl. I, p. 1890)

Extract

(1) A territorial entity which holds the majority of shares in a private-law enterprise, or which itself has at least one quarter of the shares and together with other territorial entities holds the majority, may require the enterprise

1. to have included as part of the audit of annual accounts, a check that it has been properly managed;

2. to commission the auditors to show in their report

a) the development of net worth and earnings, and the liquidity and profitability of the enterprise,

b) transactions entailing loss and the causes of such losses, where these transactions and causes significantly affected net worth and earnings,

c) the causes of any annual net loss shown in the profit and loss account;

3. to transmit to such entity without delay, the auditors' report and also the group auditors' report should the enterprise be obliged to draw up group accounts.

(2) In applying the provisions of Paragraph (1) above, shares held by any separate property fund of the territorial entity shall also be regarded as shares held by that territorial entity. Shares held by enterprises in respect of which the territorial entity enjoys the rights established by Paragraph (1) above shall also be treated as shares held by the territorial entity concerned.

(1) In cases falling under Section 53 above, a provision may be included in the memorandum (articles of association) by a three-quarters majority of the shareholders represented, to the effect that the audit authority of the territorial entity concerned may obtain information directly, in order to clarify issues arising from an audit under Section 44 above, and to this end examine the operations, the books and the records of the enterprise.

(2) The above shall be without prejudice to any right of direct access to information afforded to the audit authority before the entry into force of this Act.

(1) The Bundesrechnungshof or the appropriate State Court of Audit shall examine the financial management of any body incorporated under public law which is not a territorial entity, a local authority grouping, an association of territorial entities or local authority groupings, nor a religious society within the meaning of Article 137 Section 5 of the German constitution of 11 August 1919, provided that such entity receives from the Federation or a federal state any grants, the reason for or amount of which is governed by law, or that the Federation or federal state is required by statute to give guarantees. The same shall apply where, with the consent of the Audit Court, examination is provided for in the charter. This shall be without prejudice to any other audit rights established under Section 48 above.

(2) The provisions of Section 53 above shall also apply to enterprises having the legal form of a corporate body under public law, irrespective of the size of the interest held by the Federation or federal state, unless such enterprises are exempt from examination by the audit authority (cf. Section 48, Paragraph (2) sentences 2 and 3).

(1) Where the supreme authorities of a territorial entity issue or interpret general regulations relating to the management of budget funds or affecting the revenues or expenditures of another territorial entity, the audit authority of the latter territorial entity shall be notified accordingly without delay.

(2) Where parts of a territorial entity's budget are implemented by external agencies, the audit authority for the territorial entity must be consulted before such agencies issue administrative rules for the implementation of the budget code or corresponding legislation applicable to the territorial entity.

(3) Where a territorial entity implements parts of the budget of, receives reimbursement of outlays from, or administers funds or property of another territorial entity, it shall be obliged to carry out to such extent a Pre-Audit as may be statutorily required within the jurisdiction of that territorial entity. In doing so, it shall duly apply the relevant regulations applicable to the entity concerned, provided that no other arrangements have been made with the responsible audit authority.

Federal Budget Code

19 August 1969 (BGBl. I, p. 1284)
as amended on 22 September 1994 (BGBl. I, p. 2605)

Extract

Part V
Audit

(1) Subject to the provisions set out below, the Bundesrechnungshof shall examine the entire financial management of the Federation, including its Separate Property Funds and undertakings.

(2) On the basis of its audit findings, the Bundesrechnungshof may advise both Houses of the Federal Parliament, the Federal Government and individual federal ministries. Where the Bundesrechnungshof gives advice to Parliament, it will inform the Federal Government at the same time.

(1) The Bundesrechnungshof shall examine

1. receipts, payments, commitments to incur expenditure, assets and liabilities,

2. measures with expenditure or revenue implications,

3. provisional account entries for receipts and disbursements,

4. the employment of funds allocated for independent administration (self-administered funds).

(2) The Bundesrechnungshof may restrict the audit scope and refrain from auditing specific accounts at its discretion.

The audit shall examine whether the regulations and principles of correct financial management have been observed, and in particular whether

1. the Budget Act and the adopted Estimates have been adhered to,

2. receipts and payments have been properly substantiated and supported by vouchers, and whether both budget and capital accounts have been properly prepared,

3. funds are administered efficiently and economically,

4. functions might be performed with fewer human or material resources, or more effectively by other means.

(1) The Bundesrechnungshof shall be entitled to audit bodies outside the federal administration if they

1. implement parts of the federal budget or have expenses reimbursed by the Federation,

2. administer federal funds or assets,

3. receive grants from the Federation, or

4. are bodies incorporated under private law, directly or indirectly majority-owned by the Federation and/or any of its separate property funds, are not exposed to competition, and if - pursuant to their specified objective - are engaged, entirely or for the most part, in the provision of public services or have been set up for that purpose, and receive for that purpose appropriated federal funds or guarantees from the Federation or one of its separate property funds.

The Bundesrechnungshof may also extend its examinations to any third parties to whom such funds are passed on by the said bodies.

(2) The audit shall cover the proper and sound management and use of funds. In the case of grants, it may extend to the financial management of the recipient's other resources in so far as this is deemed necessary by the Bundesrechnungshof for the purpose of its examination.

(3) Where the Federation has granted loans out of budget funds, or has provided sureties, guarantees or other warranties, the Bundesrechnungshof may carry out examinations with the parties concerned to ascertain whether adequate steps have been taken to safeguard federal interests, or whether requirements for recourse against the Federation were fulfilled.

(4) In the case of the bodies incorporated under private law mentioned in Paragraph (1) sentence 1 item 4 hereof, the audit shall cover the entirety of the financial management of the body concerned. If such incorporated body is a business, the audit shall be conducted according to commercial principles. The pre-audit office established in the sponsoring federal department or separate property fund shall assist the Bundesrechnungshof with its audit. Section 94 Paragraph. 1 and Section 95 hereof shall apply accordingly.

(1) The Bundesrechnungshof shall examine, with due regard to commercial principles, the management of the Federation's direct or indirect shareholdings in private-law enterprises.

(2) Paragraph (1) applies in like manner to commercial or industrial cooperatives of which the Federation is a member.

(1) Where both the Bundesrechnungshof and a State Court of Audit are responsible for the audit, this should be carried out jointly. Unless examination by the Bundesrechnungshof is prescribed by the first sentence of Article 114, Paragraph (2) of the Basic Law, the Bundesrechnungshof may agree to transfer any of its audit functions to the State Courts of Audit. The Bundesrechnungshof may also agree to take over audit functions from the State Courts of Audit.

(2) Subject to agreement with foreign, supranational or international audit authorities, the Bundesrechnungshof may issue or accept commissions to carry out individual audit assignments, or it may take over audit duties on behalf of supranational or international institutions, if empowered to do so by international treaties, intergovernmental agreements or by the Federal Government.

(1) The Bundesrechnungshof shall determine the timing and nature of the audit and shall arrange for any necessary on-the-spot investigations to be carried out by its authorised officers.

(2) The Bundesrechnungshof may call on the assistance of experts.

(1) Documents which the Bundesrechnungshof deems necessary for carrying out its functions must on request be sent to it within a set period or presented to its authorised officers.

(2) The Bundesrechnungshof and its authorised officers shall have access to any information they require.

(1) The Bundesrechnungshof shall communicate the audit findings to the appropriate agencies for comment within a period to be set by it. It may also communicate them to other agencies and to the Appropriations Committee of the Federal Parliament where it deems this to be necessary. It may also communicate them to other agencies and to the Appropriations Committee of the Bundestag where it deems this necessary for particular reasons.

(2) The Bundesrechnungshof shall inform the Federal Minister of Finance of any audit results of fundamental importance or of considerable financial significance.

(3) Where claims of the Federation have been dealt with in audit examinations, the administration may renounce such claims only after prior consultation with the Bundesrechnungshof. The latter may waive its right to be consulted.

(1) The Bundesrechnungshof shall compile, in the form of annual observations for the two Houses of Parliament, the results of its audit in so far as these may be significant for the grant of discharge to the Federal Government in respect of the budget and capital accounts. The Bundesrechnungshof shall submit these observations to the two Houses of Parliament and the Federal Government.

(2) The observations shall state in particular

1. whether the amounts stated in the budget and capital accounts tally with the ledgers and whether audited receipts and payments are properly supported by vouchers,

2. in which significant instances the regulations, rules and principles of financial management have not been observed,

3. which criticisms of substance have arisen from the audit of state participation in enterprises with independent legal status,

4. what action is recommended for the future.

(3) The observations may include statements relating to subsequent or previous financial years.

(4) Observations on matters which are to be kept confidential shall be submitted to the Presidents of the two Houses of Federal Parliament, to the Federal Chancellor and the Federal Ministry of Finance.

Where, in the opinion of the Bundesrechnungshof, a claim for damages should be pursued, it shall notify the agency concerned without delay.

The Bundesrechnungshof may at any time inform the two Houses of Parliament and the Federal Government of matters of particular importance. Where the Bundesrechnungshof reports to Parliament, it shall at the same time inform the Federal Government.

(1) The government authorities shall carry out pre-audits in respect of

1. receipts, payments, commitments to incur expenditure, assets and liabilities,

2. measures with expenditure or revenue implications,

3. provisional account entries for receipts and disbursements,

4. the employment of funds allocated for independent administration (self-administered funds).

(2) The pre-auditing functions shall be incumbent on Pre-audit offices. These offices shall be established, and their local responsibilities determined, by the appropriate federal ministry acting in agreement with the Bundesrechnungshof.

(3) Each Pre-audit office shall be integrated into the authority within which it is established. It should be directly subordinate to the head of such authority or, in the case of supreme federal authorities, to an officer appointed by him for that purpose.

(4) In discharging their audit functions, Pre-audit offices are subject only to the professional and technical guidance of the Bundesrechnungshof.

(5) Heads of Pre-audit offices shall be appointed and recalled in agreement with the Bundesrechnungshof. The head of the Pre-audit office concerned shall be consulted prior to any assignment or recall of Pre-audit officers. Where the head of a Pre-audit office objects to such assignment or recall, and where his objections are not removed, an understanding must be brought about with the Bundesrechnungshof.

(6) Each Pre-audit office shall submit to the Bundesrechnungshof the results of its pre-audit, together with the necessary certificates and comments.

(7) The Bundesrechnungshof may agree to a restriction of pre-audit exercises.

(8) The Federal Government shall arrange for further details in agreement with the Bundesrechnungshof.

The accounts of the Bundesrechnungshof shall be examined by the two Houses of Parliament, who shall both grant discharge.

(1) The Bundesrechnungshof shall be notified without delay whenever

1. supreme federal authorities issue or interpret general regulations or rules relating to the management of federal budget funds or affecting the Federation's receipts and payments,

2. administrative bodies or federal undertakings affecting the federal budget are established, substantially altered or discontinued,

3. direct federal interest in enterprises or indirect interest within the terms of Section 65, Paragraph (3) is established, substantially altered or discontinued,

4. agreements affecting the management of federal budget funds are concluded between the Federation and a body outside the federal administration or between supreme federal authorities,

5. supreme federal authorities adopt organisational or other measures that may have major financial implications.

(2) If the Bundesrechnungshof so requests, it must also be notified of regulations or interpretations of the kind referred to in Paragraph (1), sub-Paragraph 1, above that are issued by any other federal agency.

(3) The Bundesrechnungshof shall be entitled to comment at any time on the measures referred to in Paragraphs (1) and (2) above.

(1) The Bundesrechnungshof shall be consulted prior to the issue of administrative regulations or rules concerning the implementation of the Federal Budget Code.

(2) Administrative regulations or rules within the meaning of Paragraph (1) above shall include general instructions on the operation of cash offices including paying points, as well as on accounting and the recording of assets and liabilities.

(3) The responsible federal ministry should consult the Bundesrechnungshof before a decision is taken on passing or amending budgetary or accounting regulations and rules relating to supranational or international organisations of which the Federal Republic of Germany is a member.

(1) The Bundesrechnungshof shall examine the financial management of private-law entities where

1. they receive statutory grants from the Federation, or where the latter is obliged by law to grant guarantees, or

2. they are administered solely or predominantly by the Federation or by a person appointed by it, or

3. it has been agreed with the Bundesrechnungshof that an examination should be carried out by the latter, or

4. they are not enterprises and where, with the agreement of the Bundesrechnungshof, their charter provides for examination by the latter.

(2) The provisions of Paragraph (1) shall apply to assets held in trust by the Federation.

(3) Where the Federation is entitled to more than one fourth of the profits of an enterprise in which it is not a shareholder, the Bundesrechnungshof shall examine the financial statements and business management to ascertain whether the Federation's interests have been duly safeguarded in accordance with applicable regulations.

Part VI
Federal Public-Law Entities

(1) The provisions of

1. Sections 106 to 110, and

2. Sections 1 to 87

shall apply to public-law bodies established and controlled under federal law, except where otherwise provided by statute or delegated legislation.

(2) With the agreement of the Federal Ministry of Finance and the Bundesrechnungshof the responsible federal ministry may permit exceptions to the provisions set forth in Paragraph (1) above, if this does not affect any substantial financial interest of the Federal Government.

(1) The managing board of a federal public law body must adopt a budget before the beginning of each financial year. The budget must include all revenue expected in the course of the financial year, the probable expenditure and any authorisations for future commitments that may be required, and must balance in revenue and expenditure. The budget may include only such expenditure and authorisations for future commitments as are necessary for the fulfilment of the tasks of the entity in question.

(2) Where the body has in addition to a managing board a special decision-making organ that is charged with deciding on or approving important administrative matters or supervising the management of the entity, the budget shall be adopted by this decision-making organ. The managing board shall submit the draft budget to the decision-making organ.

Where a federal public-law body is entitled to levy charges or contributions on its members, the amount of such charges or contributions for the new financial year shall be determined together with adopting the budget.

The budget of federal public law bodies and the charges or contributions fixed by them must be approved by the responsible federal ministry. In addition, the resolution fixing the charges or contributions must be approved by the Federal Ministry of Finance. The budget and the resolution fixing the charges or contributions must be submitted to the responsible federal ministry not later than one month before the beginning of the financial year. The budget and the resolution can come into force only at the same time.

(1) At the end of the financial year, the managing board of the respective federal public law body shall render accounts.

(2) Notwithstanding examination by the Bundesrechnungshof pursuant to Section 111, the accounts shall be audited by the body designated by law or in the charter. Any provision in the charter on how to carry out the audit is subject to the approval by the responsible federal ministry in agreement with the Federal Ministry of Finance and the Bundesrechnungshof. Paragraphs (1), (6) and (7) of Section 100 shall apply accordingly.

(3) Discharge shall be granted by the responsible federal ministry in agreement with the Federal Ministry of Finance. Where a special decision-making organ exists, such body shall grant discharge; the discharge granted being subject to approval by the responsible federal ministry and the Federal Ministry of Finance.

Where, in the case of entities incorporated and controlled under federal public law, it is not practical for such entities to base their financial management on the recording or prediction of cash payments and receipts as they fall due, they shall draw up budgets in accordance with the 'accruals concept' and related principles of private-sector accounting. Where their accounting follows the commercial double-entry system, they shall draw up annual accounts and an annual report in accordance with the first sentence of Section 264(1) of the Commercial Code.

(1) The Bundesrechnungshof shall examine the financial management of federal public law bodies. Sections 89 through 99, 102 and 103 shall apply accordingly.

(2) With the agreement of the Federal Ministry of Finance and the Bundesrechnungshof, the responsible federal ministry may permit exceptions to the provisions of Paragraph (1) above in respect of federal public law bodies in so far as this does not affect any substantial financial interest of the Federal Government. This shall be without detriment to any exceptions previously permitted.

(1) Only Section 111 shall be applicable to institutions established and controlled under federal law which are responsible for statutory health, long-term care, accident and pension insurance, including pension insurance for farmers, and only where such institutions are entitled by federal law to receive grants in aid from the Federal Government, or where the Federal Government is obliged by law to grant guarantees. Section 111 shall be applicable to associations of the social insurance institutions designated in the first sentence of this Paragraph, whatever their legal form, where members of such associations are subject to audit by the Bundesrechnungshof. The provisions of this Code shall not be applicable to any other associations within the social insurance sector.

(2) Section 65 (1) 3 and 4 and (2), (3) and (4), Section 68 (1) and Section 69 shall apply accordingly, and Section 111 shall apply directly to enterprises whose legal form is that of a federal public law body irrespective of the interest held by the Federal Government. Sections 53 and 54 of the Budgetary Principles Act and Sections 65 to 69 of this Code shall apply accordingly to enterprises whose legal form is that of a private-law entity and in which the enterprises designated in the first sentence of this Paragraph hold a direct or indirect majority interest.

Part VII
Separate Property Funds

Parts I to IV, VIII and IX of this Code shall apply to separate property funds of the Federal Government except where otherwise provided by statute or delegated legislation. The Bundesrechnungshof shall examine the financial management of separate property funds; Part V of this Code shall apply accordingly.

Part VIII
Grant of Discharge

(1) The Federal Ministry of Finance shall render an annual account of all receipts and payments, as well as of all assets and liabilities, and shall submit it to the two Houses of Parliament within the following financial year in order to obtain grant of discharge for the Federal Government (Article 114, Paragraph (1) of the Basic Law). The Bundesrechnungshof shall report to both Houses of Parliament as well as to the Federal Government.

(2) The Bundestag shall, with due regard to the comments of the Bundesrat, ascertain the substantial matters and shall decide on the action to be taken.

(3) Specific matters may be referred back to the Bundesrechnungshof for clarification.

(4) The Bundestag shall set a date by which the Federal Government must report to the two Houses of Parliament on the action taken. Where such action has failed to achieve the desired result, either House may take up the matter again.

(5) Either House may expressly disapprove of specific matters under scrutiny.

Bundesrechnungshof Act

11 July 1985 (BGBl. I 1985, p. 1445)

Extract

The Bundesrechnungshof shall be a supreme federal authority and as an independent institution of financial control shall be subject only to the law. Within the context of its statutory functions, the Bundesrechnungshof shall provide assistance to the Federal Parliament and the Federal Government in finding their decisions.

(1) The Bundesrechnungshof shall have its headquarters in Frankfurt am Main. It may establish branch offices. [Section 7 para 1 of the Act of 26 April 1994 implementing the Resolution of the German Bundestag of 20 June 1991 for Completion of the Unification (Berlin/Bonn Act, BGBl I p. 918 et seq.) modified Section 2 Paragraph 1 to read as follows: "The Bundesrechnungshof shall have its headquarters in Bonn. Its headquarters will be relocated from Frankfurt am Main to Bonn as soon as the decision on the relocation of the seat of the Federal Government has been implemented]

(2) The Bundesrechnungshof shall be composed of audit divisions and audit units. Audit groups may be established to carry out particular functions. There shall be a separate Presidential Division responsible for the general office services.

(1) The President, the Vice-President, the heads of audit divisions and audit units shall be Members of the Bundesrechnungshof.

(2) The President and the Vice-President shall be appointed as temporary civil servants for official terms of twelve years, but not beyond the end of the month in which civil servants reach their statutory retirement age. The President and the Vice-President shall retire after their tenure of office. In all other respects, the provisions of the Act on the Federal Civil Service concerning the civil servants appointed for life, with the exception of the provisions on the service careers and the probationary periods, shall be applied accordingly.

(3) The Members must be qualified for a senior service career. In addition, they should have wide-ranging professional experience. The President or the Vice-President and at least one third of the other Members must be qualified to hold judicial office. An appropriate number of the Members should be trained economists or engineers.

(4) The Members of the Bundesrechnungshof shall enjoy judicial independence (Article 114, Paragraph (2), sentence 1 of the Basic Law). The regulations governing independence and disciplinary action relating to judges of the federal supreme courts shall be applied accordingly. Section 48, Paragraphs (2) and (3) of the Law on the German Judiciary shall be applicable.

The Bundesrechnungshof shall also employ the necessary number of senior auditors (administrative grades) and auditors (higher executive grades), as well as other staff.

(1) Upon the proposal of the Federal Government the two Houses of Parliament shall elect the President and the Vice-President, respectively, without debate. The German Bundestag shall elect by the majority vote of its members in a secret ballot. The Federal President shall appoint those chosen. They must not be re-elected.

(2) The Federal President shall appoint

1. the other Members of the Bundesrechnungshof upon the proposal of its President

2. any other officers of the Bundesrechnungshof upon the proposal of its President unless the latter has been given authority for appointment.

Prior to submitting his proposals under Sub-paragraph 1 above, the President shall consult the standing committee of the Senate of the Bundesrechnungshof (Section 13, Paragraph (2)).

(1) The President shall represent the authority. He shall be responsible for the general management of the Bundesrechnungshof and shall have legal oversight.

(2) In performing the statutory functions incumbent on the President, his deputy shall be the Vice-President or, if the latter is prevented, the most senior head of division. In cases of equal seniority, the elder head of division shall deputise. In the cases of Section 9, Paragraph (1), sentence 2 and Section 11, Paragraph (2) the President shall deputise for the Vice-President. In the Senate, the Vice-President shall be substituted in accordance with the third part of sentence 1 and with sentence 2 above.

(3) The other Members shall assist the President in the performance of his functions. Such assistance must not prevent them from pursuing their original duties as Members of the Bundesrechnungshof unless they otherwise agree, and their judicial independence must not be impaired.

(1) Prior to the beginning of the financial year and in agreement with the standing committee of the Senate, the President shall assign specific duties to the divisions and audit units and shall designate the Members who shall head the divisions and audit units.

(2) Prior to the beginning of the financial year, the President shall decide on the allocation of audit officers and other staff to the audit units. At the request of the appropriate colleges or divisional senates, the decision of individual cases shall be subject to the approval of the standing committee of the Senate.

(3) During the financial year the President may, with the approval of the standing committee of the Senate, make or change any decision in accordance with Paragraph (1) or (2) if a vacancy is to be filled or if the proper conduct of business so demands.

(4) In cases of doubt, the President shall decide which particular audit unit or divisional senate is to take responsibility. Paragraph (2), sentence 2 shall apply accordingly.

(5) The President shall, by agreement with the Vice-President, determine for the following financial year those divisions in which he himself or the Vice-President will participate in the decision-making of colleges and divisional senates. The same shall apply where the need for such determination arises in consequence of decisions made in accordance with Paragraph (3) during the financial year.

The decisions of the Bundesrechnungshof shall be made by the President (Section 19, sentence 1 no. 2), the colleges (Section 9), the audit groups (Section 10), the divisional senates (Section 11), and the Senate (Section 13).

(1) Any sectional college shall consist of the appropriate Senior Audit Director and the appropriate Audit Director of the particular audit unit (college of two). The President or the Vice-President shall join this college if one of them or a member of the college of two considers this necessary (college of three).

(2) In individual cases, any college may authorise one of its members to decide on his or her own.

In agreement with the standing committee of the Senate, the President may establish audit groups to carry out special assignments. Sections 7, 9, 14 Paragraph (1), Sub-paragraphs 3 and 4, as well as Section 15, Paragraph (2) and Section 16, Paragraphs (1) and (3) shall apply accordingly.

(1) Senates shall be established for each division and shall consist of the Senior Audit Director as chairman, the Audit Directors of the division and the Audit Director of an audit unit outside the particular division. The Audit Director of the other audit unit as well as his substitute shall be appointed by the President in accordance with the standing orders.

(2) The President or the Vice-President may join any divisional senate. In this case he shall take the chair.

The divisional senates shall decide

1. on requests made under Section 14, Paragraph (1), Sub-paragraphs 3 and 4, as well as on cases of Section 17, Paragraph (1), sentence 2;

2. at the request of a Member if a college fails to reach an agreement or if a matter is of special importance;

3. on matters assigned to them under the standing orders, or by the Senate.

(1) The Senate shall consist of the President as chairman, the Vice-President, the Senior Audit Directors and three Audit Directors. Where functions peculiar to the Bundesrechnungshof are involved, the Senate shall be joined by the Audit Director responsible in accordance with the schedule of responsibilities (rapporteur) and the Audit Director of another audit unit (co-rapporteur). The three Audit Directors and their substitutes as well as the co-rapporteur shall be designated by the President in accordance with the standing orders.

(2) The Senate shall establish a standing committee. This shall consist of the Vice-President as well as of two Senior Audit Directors and two Audit Directors who are designated, together with their substitutes, with regard to their seniority and in accordance with the standing orders. The President shall be entitled to participate in the committee's deliberations.

(3) The Senate may establish other committees by a two-thirds majority vote of its members and commission them to discuss or decide on specific subject matters. Each committee must comprise at least one of the three Audit Directors. Paragraph (1), sentence 2 shall apply; the designation of the co-rapporteur is incumbent on the chairman of the committee.

(1) The Senate shall decide

1. on such matters as are laid down in Section 17, Paragraph (1), sentence 4; Section 18, Paragraph (2), sentence 2, and Section 20, Paragraph (1);

2. on the drafting of the observations under Section 97 of the Federal Budget Code, on reports under Section 99 of the Federal Budget Code and on other statutory reports unless such decisions are delegated to divisional senates by virtue of the standing orders; in the cases of Section 19, sentence 1, no. 1, the decision shall be incumbent on the college of three, and in the case of Section 19, sentence 1, no. 2 on the President;

3. at the request of a divisional senate or at the request of a college on such projected missions of audit or advisory action envisaged as may affect several divisions, or on matters of general policy;

4. at the request of the appropriate divisional senate or college where it is intended to depart from decisions made either by a divisional senate or the Senate, and where such decisions are being upheld on seeking reappraisal; the same shall apply to any departure from the decision made by a college with regard to its responsibility for matters of general or fundamental policy;

5. on the proceedings and principles to be followed in work planning, auditing, provision of advice and reporting.

(2) The President may also refer other matters to the Senate or consult it prior to making his own decisions.

(1) The colleges shall make their decisions by unanimous vote.

(2) The divisional senates and the Senate shall decide by the majority vote of their respective membership. In the case of a tie, the chairman shall have the casting vote.

(1) In so far as an Audit Director is prevented from performing his duties over more than a short period of time, the President may, after consulting the standing committee of the Senate, commission any officer of non-Member status to act in the Audit Director's place during the time of the latter's prevention, or for any other period of time he may determine. The same shall apply during such time as the established post of an Audit Director is vacant. Section 3, Paragraph (3), sentence 1 shall be applicable to the officer so commissioned.

(2) Paragraph (1) sentences 1 and 3 shall apply accordingly if an Audit Director is prevented from participating in his divisional senate's decision-making process.

(3) During the term of his commission, the officer shall have the status of a Member of the Bundesrechnungshof.

(1) No Member of the Bundesrechnungshof shall be permitted to exercise his or her functions if and when there is good reason for doubting his or her impartiality. The decision on whether this is the case shall be incumbent on the divisional senate to which the Member concerned belongs. Section 16, Paragraph (2) shall not be applicable. If the Member concerned is to be excluded from a decision to be made by the appropriate audit group or by the Senate, the decision on the exclusion shall be incumbent on the latter. The Member concerned may not participate in that decision. No other Member shall substitute for him in this regard.

(2) The Members of the Bundesrechnungshof must refrain from dealing with matters in which they themselves or their relatives as defined by Section 20, Paragraph (5) of the Act on Administrative Law and Procedure have been involved or for which they themselves or their relatives are responsible.

(3) Paragraph (1) sentence 1 and Paragraph (2) shall apply accordingly to audit officers and other staff acting within the functions of the Bundesrechnungshof. The decision on whether there is good reason for doubting their impartiality shall be incumbent on the appropriate college or the Members of the appropriate audit group.

(1) Formal disciplinary proceedings against a Member of the Bundesrechnungshof and inquiries as defined by Section 66 of the Law on the German Judiciary, in so far as they concern a Member of the Bundesrechnungshof, shall be subject to the jurisdiction of the Federal Disciplinary Court. In respect of the President and the Vice-President of the Bundesrechnungshof, the right of application vested in the supreme government departments under Sections 63 Paragraph (2) and 66, Paragraph (3) of the Law on the German Judiciary shall be exercised by the President of the German Bundestag or the President of the Bundesrat.

(2) The non-permanent assessors of the Disciplinary Court must be Members of the Bundesrechnungshof. They shall be designated for a period of five years by the Presidium of the Federal Court of Justice and in order of nomination by the Senate.

(3) The proceedings in the Disciplinary Court shall be subject to the provisions of the Law on the German Judiciary.

Where in accordance with Section 10a of the Federal Budget Code the budget provides that the audit incumbent on the Bundesrechnungshof should be carried out either

1. by the appropriate college with the active participation of the President or the Vice-President, or

2. by the President alone or, if his post is vacant, by the Vice-President,

the divisional senates and the Senate shall not be responsible. In the cases governed by sentence 1 no. 1, other officers may be summoned to assist. The college of three Members decides by majority vote.

[The Bundesrechnungshof's Standing Orders as of 21 December 1987 have been published in the Federal Gazette BAnZ 1988 no. 66a.]

(1) The Senate shall adopt and issue standing orders for the Bundesrechnungshof. These standing orders shall set out the arrangements provided for in Section 11, Paragraph (1) sentence 2 and in Section 13, Paragraph (1) sentence 3 as well as Paragraph (2) sentence 2. The standing orders may also specify organisational and procedural details for the Bundesrechnungshof, in particular arrangements for

1. the temporary substitution of the Senior Audit Directors and Audit Directors,

2. the establishment and organisation of audit groups (Section 2, Paragraph (2), sentence 2),

3. the decision-making process in the bodies concerned,

4. guidance for the pursuance of auditing and advisory projects in so far as these activities may affect several divisions.

(2) The standing orders shall be duly notified to the two Houses of Parliament and the Federal Government.

Railways Reorganisation Act

of 27 December 1993 (BGBl. I p. 2378)

Extract

[Articles 2 and 5 of this Act are intended to implement the Council Directive 91/440/EEC of 29 July 1991 on the Development of the Community's Railways (OJ No. L 237 p.25.)]

The Bundestag has passed the following Act with the consent of the Bundesrat.

Article 1
Act for the Amalgamation and Restructuring of the Federal Railways

The Bundesrechnungshof shall audit the financial management of the Federal Railway Assets Fund. Part IV of the Federal Budget Code shall be applied accordingly.

Article 2
Act for the Incorporation of Deutsche Bahn Aktiengesellschaft as a Public Limited Company (Deutsche Bahn Incorporation Act)

(1) The audit of the federal participation in Deutsche Bahn Aktiengesellschaft and in the companies established by spinoff pursuant to Section 2 Paragraph (1) or Section 3 Paragraph (3) shall be governed by Section 92 of the Federal Budget Code.

(2) In connection with the audit of subsidies granted under this Act or the Federal Railway Lines Improvement Act to Deutsche Bahn Aktiengesellschaft and to the companies established by spinoff pursuant to Section 2 Paragraph (1) or Section 3 Paragraph (3), the Bundesrechnungshof has the rights stipulated in Section 91 Paragraph (2) sentence 1 of the Federal Budget Code. The responsible federal Pre-Audit offices have similar audit authority. These provisions on audit authority shall in no way affect any other audit rights the Bundesrechnungshof may have in respect of other subsidies.

Act concerning the Reorganisation of Posts and Telecommunications (Posts and Telecommunications Reorganisation)

of 14 September 1994 (BGBl. I S. 2325)

Extract

Article 1

Law concerning the Establishment of a Deutsche Bundespost Federal Posts and Telecommunications Agency (Federal Posts and Telecommunications Agency Act)

Chapter VI
Economic Management

(1) The Management Board shall draw up for each financial year an annual financial statement and a status report based on the principles of commercial law. The annual financial statement shall consist of the balance sheet, the profit and loss account and the notes to the financial statements. The annual financial statement shall require approval in accordance with Section 7(1).

(2) The annual report shall include the annual financial statement and the status report of the Federal Agency. The annual report shall be submitted to the Administrative Board and to the Federal Ministry of Posts and Telecommunications.

(1) The annual financial statement and the status report of the Federal Agency shall be examined by auditors designated by the Federal Ministry of Posts and Telecommunications.

(2) The Bundesrechnungshof shall examine the budget management and the economic management of the Federal Agency according to Section 111(1) of the Federal Budget Code, whereby Section 100 of the Federal Budget Code shall be applied accordingly. The Management Board shall submit to the Bundesrechnungshof the annual financial statement, the status report and the auditors' report. The Bundesrechnungshof shall transmit its audit report to the Management Board, the Administrative Board and the Federal Ministry of Posts and Telecommunications.

(3) Taking into account the reports from the auditors and the Bundesrechnungshof, the Administrative Board shall rule on discharge of the Management Board. Such resolution on discharge shall require approval in accordance with Section 7(1). Such discharge shall not entail any waiver of claims for damages.

Statutes of the Deutsche Bundespost Federal Posts and Telecommunications Agency

(1) Being under the responsibility of the Federal Republic of Germany, the Agency shall be subject to its legal and substantive supervision. Supervisory authority shall be by the Federal Ministry of Posts and Telecommunications.

(2) The economic management of the Agency shall be subject to auditing by the Bundesrechnungshof.

(9) The supervisory authority may attend meetings of the Administrative Board. It may also call in other members of the federal government or their authorised agents. The Bundesrechnungshof shall be entitled to send a representative to meetings of the Administrative Board.

(10) The Chairman of the Administrative Board shall duly inform the Management Board, the supervisory authority and the Bundesrechnungshof of each meeting and send the agenda along with all other documents required.

IV. Economic Management

(1) The Management Board shall draw up for each financial year an annual financial statement and a status report based on the principles of commercial law.

(2) The annual financial statement shall consist of

- the balance sheet;

- the profit and loss account; and

- the notes to the financial statements.

(3) The annual financial statement and the status report shall be drawn up und submitted to the auditors within the first three months of each financial year.

(4) The auditors shall be designated by the supervisory authority.

(5) Upon receipt of the auditors' report, the Management Board shall submit forthwith to the Administrative Board for adoption the said report together with the annual financial statement and the status report.

(6) The annual financial statement shall be adopted by the Administrative Board and submitted to the supervisory authority for approval.

(7) The annual report, which comprises the annual financial statement and the status report, shall be submitted to the Administrative Board and to the supervisory authority.

(1) Taking into account the reports from the auditors and the Bundesrechnungshof, the Administrative Board shall rule on discharge of the Management Board. The Administrative Board shall inform the supervisory authority of the resolution passed and submit the reports together with a statement on the matter.

(2) Such discharge shall not entail any waiver of claims for damages.

(3) Such discharge shall be submitted to the supervisory authority for approval.

Article 3
Law concerning the Transformation of the Deutsche Bundespost Enterprises into the Legal Structure of Stock Corporation (Stock Corporation Transformation Act)

(1) The legal relations of the stock corporations shall be determined within the framework of this Act by the Articles of Incorporation.

(2) The Articles of Incorporation shall be adopted as an Annex to this Act.

(3) The amount of share capital of the stock corporations specified in Section 5(1) of the Articles of Incorporation shall be examined, on the date of registration of the companies, and, where necessary, adjusted by the Federal Ministry of Posts and Telecommunications. Any changes shall be published in the Federal Law Gazette. Section 23(1) sentence 1 of the Stock Corporation Law shall not apply at the time of registration of the stock corporations.

(4) Amendments to the Articles of Incorporation shall be made in accordance with the provisions of the Stock Corporation Law.

Annex with reference to Section 11 (2)

Articles of Incorporation of Deutsche Post AG

VII. Bundesrechnungshof

The Bundesrechnungshof shall have powers in accordance with Section 54 of the Law on Budgetary Principles.

Articles of Incorporation of Deutsche Postbank AG

VII. Bundesrechnungshof

The Bundesrechnungshof shall have powers in accordance with Section 54 of the Law on Budgetary Principles.

Articles of Incorporation of Deutsche Telekom AG

VII. Bundesrechnungshof

The Bundesrechnungshof shall have powers in accordance with Section 54 of the Law on Budgetary Principles.

Article 13
Repeal of Previous Legal Provisions and Promulgation of Transitional Provisions

The Management Board of the respective successor company shall draw up an annual financial statement and a status report for the financial year 1994 applying Section 44 of the Deutsche Bundespost Constitution Act accordingly. Audit and discharge of the Management Board shall be effected by applying Section 45 of the Deutsche Bundespost Constitution Act accordingly. The Bundesrechnungshof shall submit a joint audit report on all annual financial statements for 1994 to the Federal Ministry of Posts and Telecommunications which shall rule on discharge taking the audit reports of the auditors and the Bundesrechnungshof into consideration.