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favor more pro-active interventions seeking to improve public management and influence public policies, beyond simply checking the regularity of public spending. In recent years, it has sought to follow-up on audit recommendations more systematically and ensure that audit findings result in concrete changes in administrative practices (TCU 2000a, 2000b). In terms of financial impact, the TCU measures the savings it generates, both through corrective and preventive measures. In 2002, it imposed administrative sanctions for a total of US$350 million, compared to US$166 million in 2001 and US$37 million in 2000. The TCU also calculates the impact of its ‘decisions that resulted in potential savings for the treasury’ (TCU 2003:25) at US$1.5 billion in 2002.

However, the main benefits from fiscal oversight are the actual improvements in public sector governance, for example by redressing irregularities in public procurement, including overpricing, or correcting deficiencies in the management of external debt. Performance audits have often resulted in significant improvements in service delivery. Auditors do recognize that performance auditing allows for a more productive and, ultimately, effective engagement with the bureaucracy than the inquisitorial approach of ex-post compliance auditing. The TCU has also contributed to improving control systems in federal programs, for example in the conditional cash transfer program Bolsa Familia.

Incidentally, while inspections and audits are among the most effective and most publicized activities of the TCU, they only absorb a limited portion of its resources, 17% and 5% in 1997 and 1998, respectively. Most resources are devoted to routine activities. The judgment of the accounts of public administrators (‘tomadas e prestação de contas’) absorbed over 50% of its resources in 1998 (TCU 1999). The average time for rendering audit judgments is between 10 and 14 months, which conforms to international standards (TCU 2000c). However, most of these routine checks, which must follow the same rigid court-type procedures, detect few irregularities, usually concur with those performed by internal control units, and are appealed in the courts.

Thus, a more selective approach to external auditing, based on the identification of risk areas and informed by internal audit’s opinions might yield important efficiency gains, as the TCU recognized in a recent review (TCU 2000b). The TCU could improve its effectiveness by being more selective, abandoning its tedious routine compliance control, and embracing more actively ex-ante performance auditing, especially as internal control systems are gradually strengthened under the Controladoria-Geral da União (CGU).

Institutional trajectory

The institutional trajectory of the TCU is punctuated by gradual reforms and successive adjustments within the system of financial oversight and fiscal control. These reforms have nevertheless significantly altered its institutional profile. However, they have generated confusion regarding the location and role of the TCU in the architecture of the state and the system of checks and balances. The TCU emerged from the executive’s concern with controlling government finances, to become a quasi-administrative court with functional ties to the judiciary, yet constitutionally placed under the purview of the legislature.

There have been three main waves of reform in the TCU, a first wave in the 1930s and 1940s, a second one in the 1960s and a third one in the late 1980s. Reforms in 1934 entrusted the TCU with verifying the legality of public procurement, with a brief interlude during the Estado Novo dictatorship (1937-45). Since 1946, public contracts only take effect if they have been previously registered by the TCU. The denial of a registration shall suspend the execution of a contract until the legislature has ruled on the matter. The 1946 Constitution introduced the obligation for the TCU to render a prior opinion or judgment on the public accounts that the President submits annually to the legislature.


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