From AudiWorld.com Audi Wiki
Rear Pads: 1 hour. Need jack, stand, rubber gloves, 16/17mm ratchet (for lug bolts), flat head or puller tool (for lug bolt caps), 15mm wrench, 13mm wrench or socket, turkey baster or something similar, VAG COM, large c-clamp, mineral spirits or brake cleaner, rag, battery charger, pads, replacement caliper self-locking bolts and anti-rattle clips.
1) Hook up a battery charger.
2) Turn on car accessory and cycle parking brake on first then off.
3) With car now off hook up VAG cable to car and computer. Turn ignition/accessories on (car not running) and open VCDS software.
4) Go to "Select" module, then "53-Parking Brake," then "Basic Settings-04" type in "007" in the "Group" section and press "go." You will hear the e-brake retracting for about 5-10 seconds. Exit to the main screen but keep the software open. You will get a beep and some blinking on the dash saying parking brake malfunction. Don't worry. The pic below shows the screen in VCDS but I have value "006" in as I took the pic after I was done. Value 006 is to close the e-brake not open so make sure you put in "007" in this step and "006" in step 14.
5) Loosen lug bolts while car is still on the ground.
6) Jack up the car and take off wheel on one side, place stand underneath and also place wheel underneath exhaust as you can use this to set the caliper on.
7) Grab your 15mm wrench and 13mm wrench/ratchet (ratchet is easier). Remove the two self-locking caliper bolts.
8) Take off caliper and sit it on your wheel
9) Remove old pads and clips and hit the caliper (both sections) with some mineral spirits (suggested by audi) or brake cleaner. The rotor wear limit is 20mm. Mine were 21mm.
10) Replace the old anti-rattle clips with new ones (part no. 1K0-615-231-B) and make sure they snap into place on both sides of rotor then pop in the new pads. You need two per side for a total of four. If you don't have replacements just give the old ones a good cleaning.
11) Take a c-clamp and push the piston back enough so the caliper will fit over the pads. You may want to remove the brake reservoir cap along with a little fluid (especially if at the max mark). Doing so will allow the piston to move and ensure that there's not too much fluid/pressure in the reservoir. In my case, I knew that my reservoir was at the max level before starting so I had to remove about 4 syringes full.
12) Replace the 13mm self-locking bolts with new ones (part no. N-010-241-24). You need to order two per side for a total of four. Torque to 35nm. If you don't have them you definitely need to buy some loctite (non-permanent type) and put around the ends of the bolts.
13) Put the wheel back on and repeat on the other side. Lug bolt torque I believe is 110ft/lbs.
14) Go back to VCDS software and go to "Select" module, then "53-Parking Brake," then "Basic Settings-04" type in "006" in the "Group" section and press "go." You will hear the e-brake closing for about 5 seconds. You will then hear another 1-2 seconds of noise as the piston adjusts.The value in VCDS should automatically switch to "001". Close the software and disconnect cable.
15) Cycle the e-brake on and off and the malfunction light will go off.
16) Test drive and your good to go. Probably want to go easy on the brakes for 5k miles or so. No more squealing for me :D!!!