President Rousseff to Defend Government’s Accounting Practices

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – President Dilma Rousseff has until Wednesday, July 22nd, to present her defense to the country’s audit court (Tribunal de Contas da União – TCU) of budget practices which could be construed as violations of the Brazil’s fiscal responsibility laws.

Auditors announced in June they were giving the Rousseff Administration a month to successfully explain the Administration’s accounting methods thus avoiding the recommendation by the agency of the rejection of the 2014 federal budget management.

It would be the first time in the history of Brazil that the TCU rejected an administration’s finance management since the agency began auditing the federal government.

The TCU is responsible for analyzing the accounts of the Executive Branch and passing on recommendations to Brazil’s Congress which then approves or rejects the administration’s finances for the previous year. The TCU found in April delays in the funds to be transferred from Brazil’s Treasury to public banks to pay for social programs such as the Bolsa Familia and unemployment benefits.

According to auditors the delay caused public banks to in reality lend the money to the Federal Government to pay for the programs, which is prohibited according to the law. The Rousseff administration is expected to argue that the transfer delays were legitimate and allowed in the accounting methodology, used by administrations since 2001.

On Monday, Rousseff met with cabinet members, chosen to present the government’s defense, as well as presidents of public banks, such as the BNDES (Brazil’s Development Bank), Banco do Brasil, Caixa Economica and the Central Bank to discuss the issue.

Analysts say the rejection of the government’s finances would be yet another blow to the Rousseff administration, weakened by a series of scandals and accusations of illicit money laundering.