Executive summary

Supreme audit institutions (SAIs) have a unique mandate in government for ensuring that policies are well-informed, coherent and forward-looking. In the last decades, many SAIs have embraced a role that goes beyond traditional oversight and holding governments accountable for public expenditures. These SAIs have become critical purveyors of insight and foresight for policy makers through new approaches to audits and advisory work. Their evolution reflects a drive towards more informed policy making, particularly within the Centre of Government (CoG), as well as evidence-based programme delivery to ensure citizens’ needs are met.

This report highlights opportunities for Brazil’s Federal Court of Accounts, the Tribunal de Contas da União (TCU), to strengthen its capacity to support good governance through its audits, evaluations, supervisory proceedings and co-ordination across the public sector. TCU is well-advanced in this area, yet opportunities remain for it to further integrate principles and concepts of good governance into its audits and other areas of work. Chapter 1 describes over-arching institutional challenges and actions TCU can take to lead by example and improve its own governance, including the following:

  1. 1.1. TCU could ensure that the formulation of its strategic plans enable it to tackle systemic and emerging risks to society over the medium and long-term;

  2. 1.2. TCU could continue strengthening its capacity and internal co-ordination to improve its horizontal view on cross-cutting issues and remain responsive to emerging risks; and

  3. 1.3. TCU could enhance its monitoring and evaluation techniques in order to generate, measure and communicate financial and non-financial impacts of cross-cutting audit activities.

Chapters 2 to 5, described below, look to TCU’s audit environment and illustrate how TCU could better support four governance areas that present some of the most pressing challenges for the Brazilian government, including: 1) creation of policy coherence, 2) strategic and sustainable budgeting, 3) internal control and risk management and 4) monitoring and evaluation.

Auditing for greater policy coherence and co-ordination across Brazil’s federal government

The size and complexity of Brazil’s government, which involves numerous entities with decision-making authority at the federal level, poses challenges to ensuring coherence and co-ordination in the formulation, implementation and evaluation of policies and programmes. The government has made some efforts to improve in this area, and TCU has looked at institutional mechanisms for promoting coherence and assessing the role of the CoG to strengthen coherence in government. Building on these efforts, OECD recommends the following:

  1. 2.1. TCU could more systematically assess institutional mechanisms for coherence, including the capacities of audited entities to constructively communicate and co-ordinate with entities relevant to the achievement of interrelated policy goals; and

  2. 2.2. TCU could develop a body of audit work to assess policy interactions and policy effects across government, beginning with a pilot review of fragmentation, overlap and duplication of programmes in key sectors.

Auditing for a more strategic and sustainable budget

The budget is a critical policy document, as it lays out objectives, multi-year priorities and resource allocations. In Brazil, policy makers in charge of proposed budgetary reforms, which focus on greater fiscal responsibility and limiting expenditure, will require objective information about the effectiveness and efficiency of policies and programmes. TCU has been active in this space, including audits of Brazil’s budget system. To help ensure a more sustainable and strategic budget in Brazil, the OECD recommends the following:

  1. 3.1. TCU could encourage more meaningful medium-term perspectives in the budget by (a) auditing overall performance of multi-year sectoral plans, and (b) highlighting key findings on the alignment of annual budgetary allocations with multi-annual priorities;

  2. 3.2. TCU could help to improve the reliability of evidence and information for making performance-based budgetary decisions through assessments of key areas, such as expenditure programmes funded by earmarks and the effectiveness of operational cost measurement;

  3. 3.3. TCU could enhance its contributions to the dialogue on fiscal discipline by periodically assessing in-year progress reports to discern how adjustments to fiscal targets and plans affect the achievement of goals; and

  4. 3.4. TCU could further assess whether adequate institutional procedures and safeguards are in place to ensure the quality, reliability and sustainability of budget forecasts and medium-term projections.

Auditing for a stronger internal control system and risk management function

A key function of good governance is an internal control system and risk management function that supports government in the achievement of its policy objectives. In Brazil, the internal control system is continually evolving, yet recent corruption scandals and places greater urgency for continued and lasting change towards a culture of integrity in the Brazilian government. To support a strong internal control system and risk management:

  1. 4.1. TCU could strengthen the effectiveness and consistency of internal control and risk management approaches across government by identifying and communicating systemic and high-risk areas for central entities to address;

  2. 4.2. TCU could induce managers to overcome implementation challenges for further institutionalising key risk management and control activities; and

  3. 4.3. TCU could strengthen the capacity of government to prevent fraud and corruption through audits and guidance that ensure the effectiveness of policies and use of tools, such as data analytics.

Auditing for more effective and efficient government-wide monitoring and evaluation

Monitoring and evaluation (M&E) is a management tool to create and use evidence for better policy making. M&E in Brazil is decentralised, and guidance has historically pertained to evaluations in the context of the multi-annual plan. The 2016 establishment of the Monitoring and Evaluation Committee of Federal Public Policies, is a step forward; however, there is still a need for more systematic and higher-quality information on the results of programmes. OECD recommends the following:

  1. 5.1. TCU could strengthen the effectiveness of M&E across government by further emphasising the role of the CoG and the need to further standardise results-based management;

  2. 5.2. TCU could induce improvements in institutional and programme evaluations by auditing entities’ readiness, capacity and indicators to manage for results; and

  3. 5.3. TCU could assess the communication and coordination mechanisms, including interoperability of information and data systems, to improve M&E of cross-cutting government policies and programmes.