As a result of successive reforms, the location of the TCU in the state apparatus and its insertion into the system of fiscal control has become ambiguous, reflected in a confusion of roles (as a quasi-judicial body or a legislative institution) and tensions in approaches (between compliance and performance auditing). Britto (2001) argues that the TCU is neither an auxiliary institution to the legislature (in the sense of being hierarchically subordinated to the legislature), nor an administrative court per se (in the sense of rendering self-binding judgments as the court of last instance in administrative matters).
In terms of its relations with the legislature, former auditor-general Guimarães Souto (2002) recognizes that a more efficient relationship with the legislature would improve the TCU’s effectiveness, in particular in risk areas such as public procurement. This review suggest that a hindering factor resides in the lack of political incentives of legislators to exercise responsible oversight, rather that the lack of technical capacities of the TCU to audit public finances. Ultimately, the analysis demonstrates that the means (technical capacities) and motives (political incentives) for legislative oversight are intrinsically linked.
In terms of the TCU’s relations with the judiciary, the combination of quasi-judicial functions (through the judgment of accounts) and managerial functions (through operational auditing) in the same oversight agency is tricky. These two functions require cultures of control that are radically different, if not contradictory. Thus, the TCU finds itself facing a critical choice: either its judicial functions are transferred to the judiciary, ending the conflict of competence and the duplication of processes, or it becomes an administrative court in its own right. The TCU has thus far pursued the latter strategy, with limited results, however.
In terms of the TCU’s relations with the bureaucracy, this analysis suggests that the gradual transition from a prosecutorial approach to a managerial approach to external auditing could yield important results. As the role of the TCU gradually shifts from that of a judge to that of an advisor, its impact on bureaucratic behavior increases. Indeed, the bureaucracy tends to respond more positively to performance auditing than compliance control.
These limitations notwithstanding, the case of the TCU illustrates the benefits of a gradual approach to reform. Such adjustments can significantly alter the model of external auditing, such as with the abandonment of ex-ante controls in 1967 or the rapprochement with the legislature in 1988. As Speck (2000:53) observes, ‘the model of external audit agencies is influenced more by historical traditions than legal purism.’ Reform initiatives continue to abound, from both within and outside the TCU. In 2001-02, President Fernando Henrique Cardoso sought, unsuccessfully, to modify the mode of designation of auditors-general to give the executive greater leverage.34 At the end of 2002, there were no less than 46 different proposals to reform the system of fiscal control, at both the federal and state levels (Rocha 2003). In 2003, there were 23 proposals for constitutional amendments and 25 other legislative reform proposals related to the TCU, on issues such as changing the nomination process, increasing the court’s jurisdiction, and revisiting its institutional links with the legislature’s CMO.
These attempts reflect both a general dissatisfaction with current arrangements, and the difficulty of pushing through reform from the outside of the TCU. They also reveal that, while challenging to achieve, reforms do occur and tend to stick once adopted. Following a series of corruption scandals in the federal government, the internal control system was revamped in 2001, leading to the creation, in 2002, of the Corregedoria-Geral da União (CGU) whose role is to assist the
34 These included proposals for fixed, non-renewable mandates of six years for the ministers, with nominations of three ministers occurring every two years, a revision of the nomination criteria and procedures, and a strengthening of social control and transparency mechanisms.