The report by German newspaper Handelsblatt says that the cheat software was created to combat restrictions introduced in 2001 by European law, which aimed to limit nitrogen oxide emissions to 0.5g/km.
However, Audi did not implement the illegal software, which was instead adopted by Volkswagen in 2005 when it failed to bring nitrogen oxide levels below the legal limit.
Handelsblatt also revealed that US law firm Jones Day, which is currently investigating the Volkswagen emissions scandal, is expected to launch a full report by the end of April.
Volkswagen is also due to release details of how it plans to operate in the future by the end of this week.
Last month, the US Federal Trade Commission (FTC) announced that it will sue Volkswagen for misleading customers with its ‘Clean Diesel’ advertising.