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The ex-post and corrective nature of external auditing and the lack of effective ex-ante preventive mechanisms are particularly problematic in the context of a politicized bureaucracy lacking self- control and in which impunity prevails. Financial laws and control systems are either circumvented or lack the necessary supplementary legislation to be effectively enforced. Procedural uncertainties and ambiguities, for instance in the certification of public accounts, allow room for interpretation, delays and dilution. The weakness of the AGN is a reflection of broader dysfunctions in public management, in particular the nature of economic policymaking and the absence of a professional civil service (Rodríguez 2002). Human resource management in the public sector remains a critical hindering factor. The absence of a specialized ‘corps d’état’ in the AAA has precluded the emergence of an ‘esprit de corps’ within the agency, as in Brazil or Chile. Half of the staff of the AGN is under short-term contracts.

The core dysfunction of the system of fiscal control is therefore not to be found in intrinsic flaws in the AGN’s institutional design, but rather in its inadequacy to the Argentine public sector (Abuelafia et al. 2005). The problem does not lie with existing legal provisions, but in their effective application and the incentives of those tasked with enforcing them (Fadel 2002; World Bank 2001). As Berensztein et al. (2000:2) argue, ‘the problem of lack of transparency does not reside in the nature or characteristics of the mechanisms of control theoretically in place, but the fact that they are not used.’

Ultimately, political economy factors explain why, while it was conceptually sound, the model of external auditing introduced in 1992 has failed in practice. It might have been preferable to opt for second-best options of workable systems that could have been gradually improved and fine- tuned. Thus, while technical solutions and organizational reforms can help improve the AGN’s performance, the absence of political incentives to make it work hampers its ultimate effectiveness. As Rodríguez and Bonvecchi (2006) note, the main problem is political, residing in the skewed incentives of legislators to effectively exercise control and hold government to account. Consequently, only greater political competition is likely to improve the fate of the AGN’s audit work. In fact, the review of public accounts progressed most when the opposition had expectations to gain power (1991-93 and 1997-1999).

Brazil: The promise of reform and the limits of control

Rouba, mas faz (he steals but gets things done). Slogan of a former mayor of São Paulo during an electoral campaign in the 1950s, cited in Laranjeira 1999.

The experience of the Brazilian Tribunal de Contas da União (TCU) contrasts with that of the Argentine AGN. While Argentina exemplifies the failure of radical reform through a change of audit model, Brazil illustrates the promises of gradual reform through piecemeal adjustments in the audit system. However, as in Argentina, the case of Brazil also shows the limits of fiscal control imposed by the wider political economy in which the system of external auditing is embedded. While the Brazilian TCU enjoys greater independence than the AGN, its relations with the legislature and the judiciary are marked by important dysfunctions that undermine its effectiveness.

Institutional profile

The TCU is an institution deeply anchored in the Brazilian political landscape, with a solid reputation, significant resources and recognized technical capacity. The TCU’s effectiveness is reflected in the aggregate index of institutional effectiveness in Figure 3 which ranks it as the best


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