Inter-American Development Bank publishes case study on Continuous Payroll Audit

Since 2015, the Federal Court of Accounts (TCU) has been carrying out the Continuous Payroll Audit, or FCFP. The goal is to audit and monitor the resources spent on public administration payrolls to ensure they are used pursuant to the legislation that regulates the remuneration of active and retired public servants and pensioners. The audit has been carried out by the TCU since 2015 and by the end of 2021 it had identified more than 400,000 irregularities. The action results in accumulated annual savings of BRL 2 billion to public coffers.

The Inter-American Development Bank (IDB) turned the Brazilian Court of Accounts’ initiative into a technical note. The case study will be used as a reference for Supreme Audit Institutions (SAIs) of other countries seeking to combat fraud and corruption. 

Before 2015, the TCU carried out payroll audits of one to ten units under its jurisdiction or agencies per year. In 2021 alone, in the 7th FCFP cycle, the TCU audited payrolls of 594 federal organizations and provided information on 39 different types of irregularities, generating savings of BRL 405 million (0.1%) of the total payrolls audited. Since the beginning of the FCFP, the Court’s work has already generated accumulated savings of about BRL 2 billion to public funds.

“The IDB publication goes beyond the federal public administration and spreads across audit bodies in other countries, serving as inspiration for cross-referencing databases in the personnel area. It is also an incentive for internal teams to increasingly improve their work, to think of new possibilities and process improvements. It can also be a reference for other departments within the Court itself,” says the deputy head of the Audit Department for Personnel (AudPessoal), Helton Onesio de Souza.

How the Continuous Payroll Audit (FCFP) works

Given the size and complexity of Brazilian public service payrolls, the continuous audit system has been improved since its development. “We were able to create a platform that facilitates the manager’s work. Through it, the TCU reports the evidence of irregularities detected in the payroll, the legal provisions potentially violated and the possible suggestions for procedures to correct the flaws. All communication between the Court and the manager is made through the system, which speeds up the monitoring and necessary analysis. The FCFP has the characteristic of bringing the Court closer to managers so that they have elements to help solve the problems”, explains Souza.

Each FCFP cycle lasts one year, beginning in April and ending in March. The basic audit process has four steps: gathering data; applying audit trails and analyzing the data; seeking clarification on irregularities from the units under jurisdiction; analyzing the clarifications provided by these units; and drafting the audit report. 

Data are extracted from three main databases: the Integrated Personnel Management System (Siape); the Extra-Siape (database of payrolls of Government entities that do not follow the Siape system); and the Annual Social Information Report (Rais).  State and local information can also be obtained through a cooperation agreement with audit bodies from these spheres of government.

With the databases obtained, the programs explore, in an automated way, 39 audit trails to identify irregularities. The possible flaws can arise due to several reasons: discrepancies in the data in relation to information that should be consistent, illegal payments, and irregular accumulation of job positions, for example. Payroll irregularities can be based on a possible inconsistency or derive from intentional behavior.

Each audit trail is documented, specifying the legal criteria on which it is based, the analysis procedure and the technical procedure for conducting the analysis. From 2015 to 2021, 415,125 irregularities were identified. Of this total, 45.8% are illicit accumulations of job positions, pensions; 32.1% relate to individuals who received payments to which they were not entitled; 7.6% are inconsistencies in personnel records; and 4.5% correspond to violations of the salary cap.

Once the data is obtained and analyzed, the next phase is to bring the detected evidence to the attention of the units under TCU’s jurisdiction so that they can clarify the evidence of irregularities or take corrective action. On average, the response rate from the contacted units between 2015 and 2021 was 50%. In 2020, the rate was 33% and in 2021, or 42%. 

Of the answers received, on average 40% referred to indications that were confirmed and regularized. On the other hand, about 36% were inconsistent, that is, indications of irregularities that were not confirmed. 

2015   Data and clarifications were still received in spreadsheet form. 

2017   Implementation of systems to receive data automatically and better manage irregularity cases. 

2018   Change enables monthly receipt of data and payrolls, making the process continuous as opposed to examining a given point in time at one moment in the year. 

2019   Development of management information dashboards, allowing easier access to information and progress markers on individual issues. 

2020   Deployment of tools to carry out automated analysis of clarifications provided by agencies.

 2021   Intensified communication to initiate corrective actions by agencies experiencing ongoing irregularities. 

Click here to access the IDB publication in Portuguese, English and Spanish.