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Federal Court of Accounts - Brazil (TCU)

The Fiscal Responsibility Law

The Fiscal Responsibility Law (Lei de 10-The Fiscal Responsibility Law - constitui__o.pngResponsabilidade Fiscal – LRF) is an important statute in the Brazilian legal framework, passed in 2000, that provides orientation and guidelines for budgetary and financial affairs at the three levels of government. It contains conditions for public debt assumption, loan guarantees, budget deficits and tax exemptions and limits government expenditures, in particular with employees. It also mandates that certain documents related to accounting and planning must be published by governments periodically, to ensure the transparency of public accounts. Finally, the law carries clear penalties for non-compliance.

This law assigned to the Federal Court of Accounts (TCU) and local courts of accounts a set of attributions, leading the Court to play an important role in overseeing fiscal management. The most remarkable of TCU’s attributions within the scope of the LRF are:

i) oversight of federal bodies on the implementation of the objectives established by the Budgetary Guidelines Act (Lei de Diretrizes Orçamentárias - LDO);

ii) oversight of expenditures for compliance with established limits; and

iii) oversight of procedures for returning expenditures back to their established limits.

The Court is also responsible for alerting bodies and branches of government when they approach the respective limits for expenditures or indebtedness. The TCU also alerts when governmental actions may jeopardize compliance with expected results of official programs or when they may not match budgetary management.