ANALYSIS OF PUBLIC COURT-ORDERED-DEBT DISCLOSURE: INFLUENCE OF LEGISLATION AND FUNDAMENTALS OF ACCOUNTING THEORY

Abstract

The purpose of the present study is to analyze the accounting disclosure of judicial payments warrants (precatórios, issued when governmental entities are found liable for pecuniary awards in lawsuits) according to accounting theory, and to verify if the current legislation interferes in the accounting treatment of these instruments. In this sense, we performed a documental and literature review about the legal framework and accounting procedures adopted, as well gathered data from the National Treasury Secretariat Data Collection System (SISTN) in the period 2004-2009 and consulted a study carried out by the Supreme Court (STF) in 2004. The study’s justification is based on the perception that over than a half of judicial payment warrants are not registered in the public accounts. Consequently, whereas these warrants (i) vested rights of the plaintiffs and (ii) debts of the public entity, the lack of accounting disclosure jeopardizes both the beneficiary, whose right is not reflected in the public accounts, thus casting doubt on the expectation to receive payment, and government managers and society, who do not have reliable information that allows effective management. The innovation of this paper consists of discussing identification of the appropriate moment of the generating event of the underlying debts and the proposal of disclosure considering the risk classification. In conclusion, the influence of the current legislation and the failure to observe accounting fundamentals are among the likely factors that have affected the proper accounting of judicial payment warrants within the Brazilian public administration.