Structure
Jurisdiction
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.
Back to top
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.
Back to top
Mandates
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).
- In cases of illegality of expenditures or irregularities of accounts, apply to the responsible parties the sanctions provided for in the legislation (art. 71, VIII to XI).
- To audit the application of subsidies and of revenue waivers (art. 70).
- To issue conclusive pronouncements 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."
Back to top
Purpose
The Federal Constitution of Brazil establishes that public sector organizations and entities are subject to the internal control of each branch of government, as well as to the external control exercised by the National Congress, with the support of the Federal Court of Accounts (TCU – Brazil). The TCU conducts accounting, financial, budgetary, performance and equity audits and inspections to verify the legality and legitimacy of governmental actions, as well as the application of subventions, subsidies and exemptions.
Furthermore, based on the principle of submission to internal and external controls, article 70 of the Brazilian Constitution states that any individual or entity that uses, raises, custodies, manages, invests or administers federal public funds, assets and equities must report to the Court. The funds under Federal responsibility, or which represent pecuniary obligations on behalf of the Federal Government (e.g. loans and loan guarantees against the Federal Government), are also subject to this rule, falling under the TCU’s jurisdiction.
Thus, public sector external audit is the responsibility of the Legislative Branch, represented by the National Congress, in a joint action of the Lower and Upper Houses (the Chamber of Deputies and the Senate). The National Congress is assisted by TCU in discharging this duty and, as a result, the Court becomes the Union's operational body of external audit par excellence.
The constitutionally established internal and external controls are the instruments available to the Brazilian State to promote and encourage transparency, probity, and efficiency in the administration of the res publica. These controls notwithstanding, judicial cases for damages or improper conduct are always possible, in the legal court system.
Back to top
Functions
The core functions of the Brazilian Federal Court of Acounts may be divided into the following: inspection, consultation, information, adjudication, sanction, correction, normative and ombudsman. Additionally, some of its activities are of an educational nature.
Back to top
Inspecting Function
This responsibility entails survey, auditing, inspection, follow-up and monitoring activities pursuant to its external control attribution. It involves an evaluation of the legality of acts that grant retirements and pensions, and the selection of personnel for Federal Public Service, as well as the inspection of revenue waivers and of administrative acts and contracts, in general.
Back to Functions
Consultative Function
The consultative responsibility is conducted through the preparation of previous and individualized opinions, essentially technical in their nature, on the rendering of accounts performed annually by the heads of the Executive, Legislative, and Judiciary and of the Federal Department of Justice, in order to provide Congress with subsidies for its adjudication of such accounts, as is its attribution.
It also includes the examination of inquiries submitted by authorities entitled to formulate them, who posit questions about legal and normative provisions related to matters under the responsibility of the Court.
Back to Functions
Information Function
The information responsibility is exercised by providing information requested by the Congress, by one of its Chambers, or by their Committees, with respect to the verification activities conducted by the Court. It also includes presenting, to the appropriate Branch, findings of irregularities or abuses, as well as submitting quarterly and annual activity reports to Congress.
Back to Functions
Judicative Function
According to the Constitution, the Court audits and judges the accounts of administrators and others in charge of public funds, assets and valuables pertaining to the direct or the indirect administration, including foundations and institutions created and maintained by the Federal Public Authority, as well as the accounts of those who may cause loss, misplacement or other irregularity that results in losses to the public treasury.
In response to requests by a Joint Committee of Senators and Representatives, the Court also issues conclusive opinions about suspicion of unauthorized expenditures. On finding these to be improper, it proposes their cessation to the Congress.
Approximately 2,600 federal organizations and entities regularly submit their accounting to the Court's evaluation. Additionally, with respect to funds supplied by the Federal government, the Municipalities, States, and the Federal District are also under the Court's jurisdiction. These add up to over 5,600 units.
Accounts may be found to be:
Regular – when they reflect exactly the accounting documents and demonstrate the legality, legitimacy and financial soundness of the acts of the party in charge. In such cases, the Court awards a statement of full compliance.
Regular with reservations – when the accounts contain inappropriate characteristics or any type of fault that does not result in loss to the public treasury. In this case the Court declares approval of the responsible party and routinely directs same to correct the faults.
Irregular – when one of the following instances is confirmed: failure to submit accounting for approval; performance of an administrative act that is deemed illegal, illegitimate, unsound or not in compliance with legal or statutory norms; losses to the public treasury resulting from illegitimate or unsound administrative act and embezzlement or misappropriation of public funds, assets or valuables.
When accounts are deemed irregular and an amount is owed, the Court demands that the responsible party pay the debt updated according to inflation, with applicable fines added.
By decision of the Electoral Justice, the party responsible for an account deemed irregular may become ineligible for running for an elective office.
The Court's judgment determining a debt and application of a fine constitutes a legally enforceable debt.
Whenever accounts are judged irregular as a result of loss to the public treasury due to embezzlement or misappropriation of public funds, goods, or valuables, the Court refers the case, with corresponding documentation, to the Federal Department of Justice to commence applicable civil and criminal proceedings.
The Brazilian Federal Court of Accounts holds exclusive authority over evaluating and judging the accounting of those who have responsibility for public funds and its decisions are not subject to review by any other institution, Branch of government, or jurisdiction, except in the event of a nullifying act resulting from a serious formal breach or confirmed illegality, in the exclusive judgment of the Supreme Court of Brazil.
Back to Functions
Sanctioning Function
Sanctions are applied to those responsible for illegalities in expenditures or irregularities in accounts according to the sanctions established by the Organic Law of the Court (Law nº 8443/1992).
Singularly or cumulatively, such sanctions may entail: (1) application of a fine upon the public agent in an amount proportional to the loss caused to the public treasury provided that the penalty is not greater than the amount of the loss; (2) sanction to fine the person responsible for accounts judged to be irregular, for an irregular, illegitimate, or financially unsound act, for refusal to submit to a directive or determination of the Court, for obstruction of the free conduct of inspections or audits, and for concealment of a process matter, document or information; (3) barring the responsible person from holding a special advisory position or function within the public administration, for a period of five to eight years; (4) declaring the responsible person unfit due to lack of integrity to participate, for up to five years, in bidding processes conducted in the public administration sphere.
Back to Functions
Corrective Function
Upon discovering an illegality or irregularity in any public organization or entity's administrative act, the Court sets a deadline for it to comply with the law.
If an administrative act is in question, and there is no compliance, the Court orders the cessation of such act. If a contract is in question, it is under the Congress' authority to cause those so entitled to take the necessary legal steps to cease and curtail the act. In the event Congress or those so entitled fail to implement the necessary measures within ninety days, the decision is taken by the Court.
Back to Functions
Normative Function
The Court's prerogatives established by law give it the power to issue normative instructions and acts (that is, generating the obligation of compliance under penalty), regarding matters within its jurisdiction and attributions and the production of the actions at law to which it is entitled.
Back to Functions
Ombudsman Function
This function represents the possibility for the Court to receive denunciations and petitions regarding irregularities and illegalities brought to it by those responsible for internal controls, or by authorities, common citizens, political parties, associations, or labor unions. This function is therefore of utmost importance in strengthening the rights of citizens and in defending the collective interest. It also plays an important role in encouraging collaboration with the implementation of control.
Back to Functions
Educational Function
The Brazilian Federal Court of Accounts performs its educational function by teaching best practices in management, through the publication of workbooks and manuals, sponsorship of seminars, meetings and gatherings of an educational nature, through its participation in lectures, conferences, and workshops, and also when it recommends the implementation of certain practices as a result of its operational audits.
The educational character is also present when sanctions are applied to those responsible for irregularities or practices that result in loss to the public treasury, because such penalties act in a way that inhibits and discourages such practices.
Back to Functions
