The Federal Court of Accounts is the external control institution of the federal government that supports the National Congress with the mission of overseeing the budget and the financial execution of the country and contributing to the improvement of Public Administration for the benefit of society.
TCU’s goal is to be a reference in promoting an effective, ethical, responsive and responsible Public Administration.
The Federal Court of Accounts is responsible for accounting, financial, budget, performance and property oversight of public bodies and entities of the country as for their legality, legitimacy and best value.
According to article 71 of the Federal Constitution of Brazil, the National Congress, with the aid of TCU, exercises the external control . TCU is responsible for evaluating and judging the accounts of administrators and of other individuals responsible for federal public money, assets and values. TCU also evaluates and judges the accounts of those who have caused loss, misappropriation or other irregularity resulting in losses to the public treasury.
To control is to oversee the activities of individuals or agencies so that their activities do not deviate from predefined rules. To control is to prevent, provide guidance, evaluate, and recommend improvements. To control is to act preventively, and not only punish.
The constitutional and exclusive mandates of TCU are established in article 33, paragraph 2, articles 70, 71, 72, paragraph 1, article 74, paragraph 2 and article 161, sole paragraph, of the Federal Constitution of Brazil.
More than 100 years of the Government Audit history in a few words:
The Portuguese discovered Brazil in 1500. As a colony of Portugal, Brazil featured the same control used by our explorers: A Casa dos Contos, which had the responsibility to oversee the collection of all kinds of resources used to guarantee the payment of taxes. Later on, it became the Erário Régio (Royal Treasure). The Royal Treasure was a Portuguese institution responsible for managing the public accounts, which included a national government accountability. In 1808, when the Portuguese Court moved to Brazil, the headquarters of the Royal Treasure was established in Rio de Janeiro, capital of Brazil at that time.
Since Brazil’s independence, in 1822, it was clear the need to control public budget, however; this was only accomplished after the Proclamation of the Republic, in 1889. From that point on, the idea that “government resources should be used for the benefit of the people, and the government must be held accountable for their expenditures” was starting to flourish.
In November 1890, Deodoro da Fonseca, the first President of the Republic, appointed the jurist, journalist and ambassador Ruy Barbosa, to the position of Minister of Finance. He defined the Federal Court of Accounts (Brazil) as:
"A judicial body set amid the administration and the Legislature which may wield its vital activities within the constitutional tasks. It should act autonomously, with attributions to review and adjudicate, and with protection assured against any and all threat."
The Federal Court of Accounts was established, then, in 1891.
Nevertheless, control the public budget can often create some embarrassment to the rulers, limiting the intensions and preventing that personal and partisan interests interfere with government results. For this reason, Floriano Peixoto, the second President of the Republic, committed on reformulating the prerogatives of the Court of Accounts, forwarded to Serzedello Corrêa, his Minister of Finance at the time, a draft of decrees diminishing the attributions of the Court. A man of elevated moral principles and public service spirit, Serzedello Corrêa chose to resign from office and issued the following comment:
"Whenever Your Excellence is within the law and the Constitution, the Court follows your orders. Whenever Your Excellence is outside the law and the Constitution, the Court is above you. We may not reform it. The legislative authorizations, put into practice, become final and, by law, the Executive may no longer amend them. If Your Excellence wishes to reformulate the Court, then dismiss me, and let my successor advance such act."
Today, his brave attitude and public spirit are still a major example to the population.
For a very long time, The Federal Court of Accounts (Brazil) had its power of controlling the public expenses diminished little by little. However, one a notorious episode happened in 1937, during President Getúlio Vargas mandate. The court issued a contrary legal opinion to the annual accounts of the Federal Government. Despite that, the Congress approved the accounts. Minister Francisco Thompson Flores, rapporteur of the legal opinion, was dismissed from his duties in the Court and never went back to the institution.
In 1946, the new Brazilian Constitution started a new democratization process and granting the individuals liberty rights. This lasted until 1964, when the military government changed again the Constitution and the President started to legislate through decrees. It was during this period that the new TCU’s Organic Law was stablished.
With the new Federal Constitution, in 1988, when the Brazilian citizens could get involved in the elaboration process, the mandates were amplified. They evolved to a new set of attributions, leading the Court to play an important role in monitoring fiscal management, and being both independent and part of the Legislative branch of Brazil .
Among the many attributions ascribed to the Court, the following are worth mentioning: overseeing the implementation, by federal agencies, of the objectives established by the Budget Guidelines Act (Lei de Diretrizes Orçamentárias - LDO). Besides that, the states are held accountable for compliance with the established limits for overall indebtedness and expenditures with personnel by the Branches of the state, and oversees the procedures applied, whenever necessary, for returning expenditures to the established limits.
The Court is also responsible for acting in a preventive capacity, alerting agencies and branches of the government when these are near their corresponding limits for expenditures and indebtedness. It also acts as serving notice of facts that may jeopardize compliance with the cost limits or results of government programs, as well as circumstantial evidence of irregularities in budgetary management. Additionally, it counts on the citizen participation, through its Ombudsman.
Structure
Atributions
The Brazilian Federal Court of Accounts´ official mandates are established under articles 33, § 2, 70, 71, 72, § 1, 74, § 2, and 161, sole paragraph, of the Federal Constitution. The following is a summary of such attributions.
To evaluate the accounts reported annually by the President of the Republic (art. 71, I).
To evaluate the legality of personnel admission and selection processes, and of grants of civilian and military retirements and pensions (art. 71, III).
To conduct inspections and audits, on its own initiative or as requested by the National Congress (art. 71, IV).
To audit national accounts of supranational corporations (art. 71, V).
To audit the use of Federal funds transferred to the States, the Federal District, or the Municipalities (art. 71, VI).
To report to Congress on audits conducted (art. 71, VII).
To apply sanctions and to demand remedy of illegalities and irregularities in conduct and in contracts (art. 71, VIII to XI).
To audit the application of subsidies and of revenue waivers (art. 70).
To issue conclusive findings regarding non-authorized expenditures as requested by the Permanent Joint Committee of Senators and Representatives (art. 72, § 1).
To investigate accusations brought forth by any citizen, political party, association, or union, regarding irregularities and illegalities (art. 74, § 2).
To establish the coefficients of participation of States, the Federal District, and Municipalities in Federal resources as well as to inspect the delivery of said resources to state and municipal governments. (art. 161, sole paragraph).
Other duties are attributed to the Brazilian Federal Court of Accounts by regular legislation. Some of these are: to judge complaints filed by bid participants, or anyone under a bid contract, or by any individual or legal person, regarding irregularities practiced with regards to the Bidding and Contracting Law; to monitor and inspect the privatization processes; to create and maintain a homepage for the publication of data and information related to public accounts, and to monitor compliance with the norms established under the Fiscal Responsibility Act, which include examining and issuing a legal opinion regarding the accounts presented by the agencies of the Legislative and Judiciary Branch, as well as by the Public Prosecutor's Office."
How it works
Those responsible for federal public funds, assets, and valuables are required to annually submit their accounting to adjudication by the Court, as a form of rendering of accounts.
In addition to this annual obligation, those accountable are subject to special, unscheduled rendering of accounts in the event of failure to comply with the obligation to report, failure to demonstrate ongoing proper application of funds transferred by the Union, the occurrence of embezzlement or misappropriation of public funds, assets or valuables, or the practice of any illegal, illegitimate or ill begotten financial action that results in losses to the public treasury.
The settlement of accounts, the inspections conducted by the Court, and other matters brought to its deliberations give rise to actions at law. The ministers are responsible for examining the actions at law, presenting their corresponding vote and submitting their proposed decision to the appreciation of their peers.
Examination of actions at law and submission of proposed judgments may also be performed by the auditors. In the event of their acting in lieu of a minister, they may also exercise their right to vote.
Jurisdiction
Meeting Room in the Office of the President at the Court's headquarters, in Brasília
Under the Federal Constitution, the Court has jurisdiction over any individual or public or private legal entity who uses, raises, guards, manages, invests or administers federal public funds, assets and valuables or those which are under Union responsibility. Those who take on pecuniary obligations on behalf of the Union are likewise under its jurisdiction.
Also included are those who cause loss, misplacement or other form of irregularity that result in losses to the public treasury.
The jurisdiction of the Court also includes those responsible for private corporate entities eligible for receiving para-fiscal contributions and deliver services of public or social interest, as well as those who are required to report to it, or whose acts may be subject to its inspection, as mandated by law.
Its jurisdiction also includes those responsible for the application of funds transferred by the Union, whether by agreement, common accord, settlement, or other similar instruments, to States, the Federal District, or Municipalities.
The Court and society
It is a complex challenge to strengthen public control over governmental expenditures, encouraging citizens to become more involved as agents of accountability in public management. The TCU is making investments in transparency, in public events to promote civic engagement throughout Brazil, and in new technologies to facilitate public participation, such as mobile applications.
The Brazilian Federal Constitution establishes that any citizen has the legitimate right to denounce irregularities and illegalities before the Court. In addition, the Public Bidding Law provides that any participant in the bidding process – natural person or legal entity – may bring to the Federal Court of Accounts-Brazil a petition regarding irregularities in the application of the Law. In recent years, the number of cases brought forth has grown significantly, demonstrating the strengthening of the relationship between the Court and society.
The TCU offers general information to the citizens about its decisions or regulations through several online channels, such as e-mail or apps for mobiles and tablets. The Court has also developed the concept of Civic Cloud, with a long-term citizenship vision that aims to strengthen social control and to improve the TCU’s actions as an external audit organization.
