American Journal of Industrial and Business Management, 2013, 3, 43-51
http://dx.doi.org/10.4236/ajibm.2013.36A006 Published Online October 2013 (http://www.scirp.org/journal/ajibm) 43
Organizational Learning of Controllers and Controlled
Agencies: Innovations and Challenges in Promoting
Accountability in the Recent Brazilian Democracy
Cecília Olivieri1, Marco Antonio Carvalho Teixeira2, Maria Rita Loureiro2, Fernando Abrucio2
1School of Arts, Sciences e Humanities, University of São Paulo, São Paulo, Brazil; 2Public Management Department, Getulio Var-
gas Foundation, São Paulo, Brazil.
Received August 28th, 2013; revised September 30th, 2013; accepted October 8th, 2013
Copyright © 2013 Cecília Olivieri et al. This is an open access article distributed under the Creative Commons Attribution License,
which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
ABSTRACT
This paper analyzes a case of organizational learning in the Ministry of Social Development and Fight against Hunger.
This organizational learning process was generated from demands that were external to the organization and it was pos-
sible thanks to the way in which Ministry’s departments interacted with the governmental internal control agency (Of-
fice of the Comptroller General), and thanks to the Ministry’s specific conditions, both organizational and contingent.
This paper demonstrates that build ing dialogue in the pro cess of auditing an d inspection led to improvement in the co n-
trol process and also in public policy management. Both the Office of the Comptroller General and the Ministry of So-
cial Development underwent learning processes. Office’s analysts needed to learn the working and implementation
logic of a new policy in social development area (the Unified Social Welfare System), and the Ministry employees
needed to produce rules and administrative procedures to support the inspection, as well as review con cepts and proce-
dures involved in Ministry’s relationship with municipalities.
Keywords: Organizational Learning; Gov ernmental In ternal Control Agency; Auditing and Inspection
1. Introduction
The goal of the research from which this paper originated
was to analyze the impact of the Brazilian government’s
agency in charge of internal control on public policy
management. The investigation was guided by two di-
mensions: promoting both governmental accountability
and efficiency in public policy implementation. The re-
search’s theoretical frameworks therefore came from
literature on political accountability and on governmental
controls, examining how institutio nal arrangements work
to hold politicians and bureaucrats accountable for the
results of public policies [1].
One of the unexp ected results, however, was identified
as an abundant process of organizational learning, which
we describe in this paper, and for which analysis we turn
to the theoretical framework of [2].
In this introduction, we briefly describe the recent
transformations undergone by the Brazilian political and
administrative system and highlight the advances in so-
cial areas, given that our analysis covers the relationship
between the controlling agency and the Ministry in
charge of social welfare policies.
The Brazilian political system has endured profound
institutional transformations since the country’s rede-
mocratization and approval of the democratic Constitu-
tion of 1988. As of then, our press is free, our political
parties compete and our elections are regular and fair in
Legislative and Executive Powers at all three levels of
government: federal, state and municipal1. In addition,
popular participation mechanisms were broadened and
deepened through collegiate forums such as councils and
conferences, and institu tions promoting transparency an d
accountability of governmental actions were strength-
ened.
In the areas of education, health and social welfare, the
restructuring and broadening of public policies, in accor-
dance with the constitutional principles of universal and
free service, were a great deal responsible for the social
1Brazil is the only federative country in the world with three levels o
f
p
olitically autonomous government levels, as per article 1st of the 1988
Constitution.

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability i n t h e Recent Brazilian Democracy
44
advances of the last 20 years, which promoted social
inclusion of a large contingency of people until then not
attended by public services.
Despite such improvement, there are still many chal-
lenges to overcome in order to consolidate Rule of Law
in the country. In the field of public safety and guaran-
teeing human rights, for instance, we must progress in
eradicating police violence against the poorer population.
In the judicial arena, we must increase people’s access
and reduce the duration of litigations. In politics, we are
still struggling with corruption and clientelism practices
in dealing with public goods.
In this paper’s specific case of interest, there are two
institutional advancements in the Brazilian democratic
order that are worth noting. First, the institutionalization
of the system of checks and balances, encompassing not
only the traditional agencies of external control, such as
the Brazilian Court of Audit (TCU—Tribunal de Contas
da União), but also creating a new agency that centralizes
internal control of federal public administration, the
Office of the Comptroller General (CGU—Controladoria
Geral da União), which became the Executive Power’s
agency in charge of policies for promoting transparency
and fighting corruption. The second advancement in-
volves the creation of new governmental agencies in
charge of social policies, such as the Ministry of Social
Development and Fight against Hunger (MSD—Mini-
stério do Desenvolvimento Social e Combate à Fome),
and the reorganization of social welfare programs, which
explain the improvement of social indicators on one hand
and, on the other, suggest the existence of organizational
learning and innovation processes.
MDS was created in 2004, in the second year of the
Lula administration, with the purpose of integrating po li-
cies for social welfare, hunger combatting and income
transference. Its main programs are currently the Family
Allowance Program (PBF—Programa Bolsa Família)
and the Unified Social Welfare System (SUAS—Sistema
Único de Assistência Social).
PBF is an income transference program for families in
vulnerable situations, and which seeks to increase family
access to basic social rights by means of the imposed
conditions for continuing to receive the benefit: children
are required to attend school and family members are
required to present themselves at health and social wel-
fare offices. It was launched in 2003, as a result of the
Lula administration’s strategy of cen tralizing the existing
poverty reduction policies, characterized by fragmenta-
tion and weak results. Over the last years, the program’s
management mechanisms were improved (such as the
Cadastro Único—Single Enrollment, an informatized
system of enrolling current and future beneficiaries),
presently counting over 20 million low-income families,
of which 13.4 million receive PBF.
In addition, PBF requires a great deal of political and
institutional articulation, as it is jointly executed by the
three federative levels. The federal government is re-
sponsible for resources and regulation, and the states and
municipalities for selecting beneficiaries (according to
federal directives), for enrolling them in the system and
for monitoring their compliance with the imposed condi-
tions. In this way, the Cadastro provides all three gov-
ernment levels with information, new due to its scope
and up-to-date status, on the social and economic condi-
tions of benefited families (housing, sanitation, income,
employment etc.) and on their access to the services set
forth as imposed conditions in education, health and so-
cial welfare [3].
In the case of education, there are approximately 17
million children and teenagers in PBF with school atten-
dance being monitored. Most (86.67%) attend elemen-
tary school, which corresponds to 40% of all enrollments
at that level of schooling. Regarding the imposed condi-
tions in the field of health, approximately 6 million chil-
dren (up to the age of 7) and 14 million women (fro m 14
to 44 years of age) are served. In social welfare, the
Child Labor Eradication Program (PETI—Programa de
Erradicação do Trabalho Infantil) covers over 800 thou-
sand beneficiaries, of which approximately 90% are in
the PBF public. Given that many families have benefici-
aries monitored in more than one field, there are millions
of citizens served by health, education and social we lfare
policies in a priority manner [3].
SUAS was structured from 2005 onwards, by MDS, as
a way of overcoming the former standard of providing
social services (characterized by the philanthropic nature
of the activities and by clientelism practices) and one of
its main goals is to organize social services into a net-
work of protection for families benefited by income
transference programs. It is a decentralized system of
producing social welfare actions, structured as deter-
mined by the new Organic Law of Social Welfare
(LOAS—Lei Orgânica de Assistência Social, of 1993),
which is deemed a great advancement for defining social
welfare as a right of the citizen, and not as charity.
Among its principles are transparency and universal ac-
cess to the social welfare benefits, services and programs,
and its implementation strategy essentially involves co-
operation between the three federative levels, since the
federal government is in charge of financing and regu-
lating the service and the states and municipalities are in
charge of its financing and execution.
As previously indicated, these recent initiatives by
democratic governments in Brazil have considerably im-
proved social conditions in the country. Although there
are still almost 40 million Brazilians living in poverty
conditions—20% of the coun try’s population, since 2001

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability in the Recent Brazilian Democracy 45
the income of the poor grew almost three times more
(8%) than the national average (2.7%) and almost four
times more than that of the rich (1.5%) and social ine-
quality—one of the highest in the world—began to
slowly fall: the Gini index decreased from 0.535 in 2004
to 0.509 in 2009 [4]. Most of the responsibility for this
reduction is attributed to employment revenues and sala-
ries (66%), but the income transference programs,
headed by the Bolsa Família, contributed with 17%, a
greater proportion than trad itional welfare benefits wh ich
contributed approximately 15% [5].
This paper seeks to examine the organizational learn-
ing processes resulting from the relationship established
between CGU and MDS. Such approach is quite innova-
tive in this area of Brazilian public administration, not
just because of the focus on relationships between gov-
ernmental management and control, but equally from the
point of view of organizational studies.
The following text is thus organized: initially we pre-
sent the characteristics of the Brazilian system of checks
and balances and the role of CGU in promoting govern-
mental accountability and transparency; in the second
part, we analyze documents related to SUAS implemen-
tation and inspections, and data obtained in interviews
with employees directly involved in inspections from
CGU and the National Secretariat for Social Welfare
(SNAS—Secretaria Nacional de Assistência Social).
Analysis of the relationship between CGU and MDS’s
SNAS allowed for a discussion of the factors that pro-
moted or hindered organizational learning in those agen-
cies. Such learning may be defined as a double-loop,
since SNAS altered rules and procedures of the SUAS
implementation process. There are also suggestions of
deuterolearning process, given that SNAS intends to
create its own mechanisms of inspecting public policies,
with the purpose of producing information on the SUAS
implementation that may be useful in new processes for
improvin g pol icy management.
Among the results of this analysis, we have found that
factors promoting organizational learning included the
collaboration relationship established between CGU
analysts and SNAS employees during the inspection
process and certain institutional and political traits of
MDS, among which its low level of institutionalization,
the availability of high-level personnel and their open-
ness to the culture of public policy evaluation. Special
merit may be attributed to this Ministry’s privileged po-
sition before others, given its responsibility for imple-
menting a program, Bolsa Família, it is essential to en-
sure political legitimacy for the President of the Repub-
lic.
In our conclusions, we indicate that CGU’s work pro-
motes organizational learning in the public agencies, it
inspects factors such as those agencies’ low level of in-
stitutionalization, the relative weakness of corporative
interests from its bureaucracy or from social groups re-
lated thereto and CGU’s own work seems to have accel-
erated the learning process.
2. CGU in the Brazilian Governmental
Accountability System and Municipality
Monitoring
The control of government is one of the normative re-
quirements for proper functioning of representative de-
mocracy and public bureaucracy; therefore, it is expected
that government agents’ actions and the results of their
policies be liable to permanent monitoring and sanctions.
The actions of elected politicians, appointed high-level
managers and career employees must be subjected to
inspection mechanisms. Thus, the institutions created to
ensure control of the government are based on the checks
and balances between th e Powers: these are independent,
but must mutually control one another to avoid power
abuse and to promote exercise of the government pub-
licly and for the pub lic2.
In Brazil, the 1988 Constitution reinforced the power
of control agencies as g u ardians of legality an d probity in
public management, slowly unleashing modernization
processes in their internal organizational structures aim-
ing at better qualifying them for their constitutional at-
tributions. Several agencies and entities are in charge of
controlling Brazilian Federal Public Administration (FPA),
forming a complex system. According to article 70 of the
Federal Constitution, control is divided into external and
internal. The former is exercised by the National Con-
gress and the latter by “the internal control system of
each Power”, with the CGU centralizing such system in
the Executive Power. National Congress relies on the
Brazilian Court of Audit (TCU) for external control,
which corresponds to the “accounti ng courts” m odel.
Working in parallel to th ese agencies d irectly occu pied
with monitoring and audit activities are institutions that
participate in other steps resulting of the monitoring and
aud it processes, especially in cases where irregularities
and frauds are uncovered, such as police investigation and
criminal prosecution, which befall to the Federal Police,
the Public Prosecutor’s Office and the Judicial Power3.
2As per [6], control of government agents is a crucial dimension of a
democratic order: “If men were angels, no government would be nec-
essary. If men were ruled by angels, the government would not need
internal and external controls. Dependence upon the people is un-
doubtedly the primary control on the government, but experience has
taught humankind that additional precautions are necessary”.
3Recent studies have shown significant transformations in the country’s
control agencies since redemocratization, such as the courts of audit
([7,8]), and have equally highlighted the political role played by others,
such as the Public Prosecutor’s Office [9] and the Federal Secretariat o
f
Internal Control [10].

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability i n t h e Recent Brazilian Democracy
46
As control institutions were strength ened, the adminis-
trative reforms undergone by the country during the
1990s also placed the issues of public policy managerial
efficiency and performance in the national agenda. Con-
trol agencies, especially TCU and CGU, took on sup-
porting (and sometimes leading) roles in demanding pub-
lic policy complian ce with the principles of legality, pro-
bity and efficiency. Recent studies suggest that inspec-
tion and auditing processes carried out by control agen-
cies ended up working as powerful instruments to pro-
mote transparency, accountability and quality in public
management.
CGU gained enormous relevance in the last years due
to the increase in its inspection and auditing activities
and to the new association of said activities with proc-
esses of promoting transparency and quality in public
management. These changes are due to the internal con-
trol system restructuring process, initiated with the crea-
tion of the Federal Secretariat of Intern al Control (SFC—
Secretaria Federal de Controle Interno) in 1994 and con-
solidated with the creation of CGU in its current format
in 2003.
CGU was created in 2002, as Office of Internal Affairs
(Corregedoria), and in 2003 it was changed to Office of
the Comptroller General. Since then, it has been within
the structure of the Republic’s Presidency, thus occupy-
ing a supervision position with regard to the Ministries,
and is responsible for technical supervision and norma-
tive guidance of the four agencies that comprise the fed-
eral government’s integrity systems:
 Federal Secretariat of Internal Control, in charge of
the Internal Contro l System,
 Office of Internal Affairs, through the Corrections
System,
 Office of the Ombudsman-General (Ouvidoria Geral
da União), through the ombudsman units, and
 Secretariat for Preventing Corruption and Strategic
Information, through the function of preventing and
fighting corruption in th e Executive Power.
The Federal Secretariat of Internal Control carries out
activities of evaluating government program executions
and verifying legality of budget, asset and financial
management of the Federal Executive agencies. Decen-
tralized control actions, or monitoring use of federal
funds by the state and municipalities, are carried out by
Regional Comptroller Offices (CRU—Controladorias-
Regionais da União), which are CGU agencies existing
in all states of the federation.
The Office of Internal Affairs supervises investigation
of responsibilities for managers’ administrative irregu-
larities in the Federal Executive agencies, application of
the corresponding sanctions and replacing any losses to
the public treasuries. The Office of Internal Affairs is
responsible for the activity of correction, that is, to re-
press and prevent losses to public assets by means of
investigations, inspections and disciplinary administra-
tive procedures to verify the responsibility of public
agents.
The Office of the Ombudsman-General regulates and
organizes ombudsman activities in the Federal Executive,
and receives citizen manifestations on the rendering of
public services, directing them to the responsible agen-
cies and seeking solutions for the issues presented.
The Secretariat for Preventing Corruption and Strate-
gic Information aims to promote transparency in public
management and develop preventative projects to inhibit
and dissuade corruption.
CGU is, therefore, the Brazilian federal government
agency that centralizes internal control of public admini-
stration, carrying out insp ection and auditing activities of
all its agencies and including agencies from other federa-
tive levels, such as states and municipalities, when these
receive federal funds. In the last two decades, the volume
of federal resources transferred to municipalities has
grown, especially for execu ting federal public policies in
social areas. As most Ministries do not have structures
dedicated to monitoring and evaluating public policies,
CGU’s work has been an important instru ment in verify-
ing the execution of such federal funds transferred to
municipalities.
Based on such inspection and auditing, CGU produ ces
reports on the execution of governmental programs that
promote a level of transparency previously unheard of in
Brazilian public management, and proposes organiza-
tional changes to the inspected agencies, aiming at in-
creasing the efficiency of public policy implementation
and therefore of management quality.
Audits are carried out in two stages: the first occurs in
Brasília, when the CGU team goes to the Ministry to
analyze the aspects of the federal program through which
federal funds are transferred to municipalities; the second
occurs in the municipalities receiving federal funds, in-
spected by the CGU analyst teams that work in the states.
Given the unfeasibility of inspecting the over 5500 mu-
nicipalities, they are selected by lottery, and approxi-
mately 200 municipalities are selected each year. Up to
2009, approximately 1 800 municipalities were inspected,
which corresponds to 32% of the total. In this way, CGU
builds an evaluation of policy operations not only at the
ministerial level (on the policy management instruments
at the federal level), but also at the implemen tation level,
that is, in the municipalities, analyzin g how the resources
are actually used. CGU’s analyses on policy implementa-
tion in municipalities are sent to the corresponding Min-

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability in the Recent Brazilian Democracy 47
istry, so that it can the usually necessary measures re-
garding adjustments in regulations and correcting prob-
lems, frauds or inefficiency.
CGU’s reports on inspecting federal policies in mu-
nicipalities are published in CGU’s website and consti-
tutes one of the first Brazilian experiences of public dis-
closure of federal government activities with great re-
percussion in the media and among those involved (the
municipalities). Actually, disclosing the reports was part
of the inspection program’s own strategy. Its purpose
was not only to publish state actions, but also to gen erate
among the unselected/uninspected municipalities a will-
ingness to manage federal funds with more efficiency
and probity, in face of their apprehension at becoming
the object of inspection activities. In any case, disclosing
such reports bears fruit such as transparency (in this case,
CGU’s inspection activities and the management activi-
ties of the inspected municipalities) and generation of
information that is relevant from the point of view of
social control (society obtained access to documents with
information on the public management of their munici-
pality, not divulged by their corresponding executive
governments) and from the point of view of scientific
knowledge (several academic papers were based on the
data series supplied by the reports)4.
Finally, it is important to note that the information
generated in these CGU inspections had never been pro-
duced, in most cases, even for the Ministries that imple-
ment the inspected federal policies, since most of them
do not have a system for monitoring their own policies.
This is the case of the Ministry of Social Development,
which is in charge, as mentioned, for implementing the
federal governments social welfare policy and has as one
of its goals to restructure social welfare policy in states
and municipalities. It does this by means of regulating
welfare actions and transfer of resources for such actions
to be carried out by municipal public agents or private
agents hired by the municipalities.
3. Organizational Learning from Inspection
and Auditing Processes: The Case of the
Ministry of Social Development
The exchange between the MDS’s National Secretariat
for Social Welfare (SNAS) and CGU began in 2004,
when the basic rules for the Unified Social Welfare Sys-
tem (SUAS) were being prepared. SUAS articulates
means, efforts and resources to execute social welfare
programs, services and benefits, thus organizing the sup-
ply of social welfare in all of Brazil, promoting social
protection and well-being to families, children, teenagers
and youths, people with disabilities, senior citizens—in
short, to all who need it. One of SUAS’ main regulations
are the Basic Operational Rules (NOB/SUAS—Normas
Operacionais Básicas), which govern the System’s de-
centralized administration, the relationship between the
three government levels and how public resources are
applied.
Since SUAS was a new and recently implemented
policy, CGU began to require that the Ministry send the
program’s more detailed regulations, based on which it
would inspect the municipalities. In such monitoring
processes, meetings are required between CGU analysts
and managers from the Ministries in charge of the in-
spected program, mainly in two moments: the first occurs
before the municipalities are inspected so that CGU can
learn the characteristics of the policy as designed by the
Ministry. The second moment of interaction between
CGU and the Ministry occurs after inspection and in-
volves the Ministry’s validation of the report prepared by
CGU. In this second phase, discussions are often deeper
and more conflicted, for they involve defining the rec-
ommendations the Ministry must follow to correct the
program’s gaps and inefficiencies found by CGU’s in-
spection. Since CGU annually holds new lotteries and
inspects new municipalities (those previously selected
may be drawn again), the recommendations of the pre-
vious year’s report and whether or not they were imple-
mented are discussed each year, which is another source
of potential divergence between the Ministry and CGU.
In the case of SUAS, the relationship between CGU
and the Ministry became a quite close “two-way street”:
it meant learning for both CGU analysts and SNAS man-
agers. This sort of relationship is very rare, for in most
cases the Ministry is deeply resisting of the recommen-
dations put forth by the controlling agency and the latter
is reluctant to alter its internal auditing processes to the
programs’ particulars.
According to the interviewees, this relationship meant
a very fruitful interaction and a great learning process for
MDS and CGU. Although it was not an entirely harmo-
nious process, since there were conflicts and disagree-
ments, it ended up producing cooperative relationships,
4Examples of papers based on data from CGU’s reports: Analysis o
f
irregularities in FUNDEF’s municipal administration: verifications o
f
the inspection program by public lotteries by the Office of the Com-
p
troller General (Marcos Mendes, Transparência Brasil, 2004); Expos-
ing Corrupt Politicians: The Effects of Brazil’s Publicly Released Au-
dits on Electoral Outcomes (Ferraz, C. and Finan, F., Quarterly Journal
of Economics, 2009), Electoral Accountability and Corruption: Evi-
dence from the Audits of Local Governments (Ferraz, C. and Finan, F.,
American Economic Review, 2010), and Law Enforcement and Local
Governance in Brazil: evidence from random audit reports (Zamboni
Filho, Yves and Stepha n Litschig, Mimeo, 2006).
in which both parties (CGU analysts and Ministry man-
agers) sought to build understanding and pursue the
common goal of promoting quality in the SUAS imple-
mentation.

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability i n t h e Recent Brazilian Democracy
48
The interactions between CGU and SNAS generated
mutual efforts to understand the demands and form of
working of each institution, allowing for organizational
changes especially in MDS. CGU analysts demanded
that SNAS prepare regulations on the program’s specifics
and service production indicators so that they could in-
spect the municipalities. This required SNAS to seek
qualification to produce the information and to create a
specific team to deal with matters and proceedings re-
lated to inspection. This team is occupied with receiving
and centralizing the demands of the controlling agencies
(CGU and TCU), distributing them within the Ministry to
prepare the response, collecting information from the
municipalities about the problems identified in the in-
spection and responding to the controlling agencies.
SNAS, on the other hand, demanded that CGU analysts
understand the SUAS specifics and the new logic of ren-
dering social welfare services and consequently accepted
new forms of service inspection.
It is important to note that this learning process is not
set forth in CGU’s inspection rules. It arose from practi-
cal experience, by means of building room for dialogue
in the inspection process, greater in scope than that set
forth in the rules. Although there are mandatory meetings
to be held between the CGU and Ministry teams, in the
SUAS case this required greater mutual willingness and
understanding. And it depended not only on holding the
joint meetings foreseen in the rules, but also on building
a relationship of mutual understanding over the years.
This relationship was not set forth in the formal rules,
and its creation and effectiven ess relied on the reciprocal
will and willingness of the actors involved.
Through such a dialogue, a reciprocal organizational
learning process can be experienced: the auditors learned
about the SUAS regulations and parameters, which are
different from those established in other social policies;
on the other hand, the managers learned more about their
own policy in their effort to present the program’s logic
and characteristics and justify their choices before the
CGU analysts.
The analysts’ learning occurred in single-loop, in that
they did not review their working procedures and rules,
but merely took the policy’s specifics and the structure of
the Ministry in question into consideration in the inspec-
tion process. Although they spen t more time in the SNAS
audit than usual, this did not entail rev ising their working
procedures or instr uments.
The MDS managers’ learning, on the other hand, oc-
curred in double-loop, and may be described in three
dimensions: creating regulations, restructuring proce-
dures for policy implementation and organizational re-
structuring. Let us look at each of these learnings more
closely.
MDS’ first learning dimension—the creation of SUAS
regulations by SNAS—ensued in good part from CGU’s
demands for more detailed rules about the program’s
execution, in order to inspect it in the municipalities. In
this way, CGU forced the Secretariat to define regula-
tions (ordinances, decrees, law projects) with greater
speed than it thought necessary. MDS interviewees re-
ported that they always perceived CGU as very interested,
requiring information on the program’s functioning to be
able to perform the monitoring in the field and reading
the Ministry’s documents to be able to guide municipali-
ties in implementing the new policy.
Naturally, CGU’s attribution of requiring that the pro-
gram rules be clearly defined was initially felt as an en-
cumbrance by the managers, for it demanded that they
respond in a timeframe that was different from the one
defined or desired by the managers. They slowly under-
stood the importance of such requirements to qualify the
program itself. One factor mentioned by the interviewees
for the good relationship in this process was maintaining
the same leader in the CGU team of analysts during all
years of the program’s closer inspection, thus ensuring
that the knowledge accumulated during the learning
process was not lost.
The second dimension of MDS’ learning involved the
restructuring of the policy’s implementation procedures.
As CGU pointed out problems in SUAS implementation
in municipalities, SNAS had to revise the regulations and
the incentive an d control mechanisms over the municipal
executive powers. Since most Brazilian Ministries do not
have their own systems of monitoring and evaluation, the
information produced by CGU in monitoring the mu-
nicipalities are essential for the Ministries that implement
programs in a decentralized manner to know what hap-
pens at the other en d of the system.
These requirements initially caused a good deal of
stress at SNAS, for it needed to interrupt its working rou-
tine to prepare responses to CGU’s demands. Over time,
the managers realized that CGU’s demands brought
MDS important information about the program’s execu-
tion that would otherwise not reach the Ministry. In this
way, they began to see that the information produced by
the CGU audits helped MDS to have a general view of
the policy’s functioning and of its problems on a national
scale, and therefore helped the Ministry to improve the
program’s management quality.
In addition, since CGU analysts are “external” agents
for the Ministry and therefore have an “outside” view,
they can help the managers to identify gaps not foreseen
by the policymakers. This difference in perspectives may
generate many divergences and some conflict between
analysts and managers, but it can also be a source of mu-
tual learning. This occurred in the issue of local level

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability in the Recent Brazilian Democracy 49
government corruption and the Ministry’s responsibility
for controlling the municipalities that receive transfers.
Initially, the managers thought that CGU analysts wor-
ried far too much about frauds. Indeed, CGU analysts are
biased to identify gaps and errors, while managers priori-
tize the policy’s functioning, assuming those involved
will adhere to legal principles and regulations.
As reported by an MDS interviewee, however, it was
only after the CGU inspections that he realized the “mu-
nicipalities are not always honest”. This means that the
Ministry must indeed worry ab out irregularities that may
occur in the program’s execution. Creating a new and
well-meaning policy is not en ough; there is also need for
monitoring, control and punishment mechanisms. This
generated a clear perception on the part of the managers
of the importance of CGU’s work, thus changing their
initial standing on the agency’s work. This relevance
occurs not only in identifying and correcting irregulari-
ties, but also contributes to improve the policy’s quality
at the Ministry, state and municipal levels.
Finally the third dimension of learning for MDS oc-
curred at the level of organizational changes. CGU’s de-
mands ensuing from inspecting the municipalities re-
quired the Secretariat to qualify itself in order to interact
with the controlling agencies, and, for that purpose,
SNAS created a specific team to deal with matters related
to inspection. This team receives and centralizes de-
mands from the controlling agencies, distributes them
within the Ministry to produce responses and collects
information from the municipalities about the problems
identified in the inspection. In fact, the Secretariat estab-
lished a specific office dedicated to handling all matters
related to inspection and interactions with all SNAS de-
partments. Creation of this office helped improve the
directives defined by the Secretariat regarding munici-
palities. It was in this process that CGU’s work led
SNAS to qualify itself considering both the program’s
management (more clearly defining its implementation
rules) and its internal organization (structuring a team
and specific procedur es to organize responses to the co n-
trolling agencies).
Interviewees highlighted that in this process of creat-
ing new structures and the corresponding need for more
employees and resources, CGU’s demands helped the
Secretariat to require institutional support from the Min-
istry in the form of organizational resources, in order to
fulfill the goals of the policies and programs and respond
to the controlling agencies’ demands. In other words,
CGU’s audits became a support for managers to demand
from their superiors the necessary resources, such as
personnel hiring and institu tional reorganization, in order
to solve problems in the policy’s execution. This can be
seen as a singular aspect of this organizational learning
experience: one external organization encourages another
to learn and as a result of such learning there is a change
in its own structure.
In the MDS case, there was another fact in its favor:
that the Ministry managed the Bolsa Família, one of the
most important social programs of the Lula administra-
tion and responsible for a significant part of the then
President’s political legitimacy and high popularity, ac-
cording to opinion surveys made in the country. For this
reason, this Ministry had greater ease in obtaining finan-
cial resources and hiring qualified personnel. Among the
employees brought to MDS an d SNAS were members of
the career of Specialists in Public Policy and Govern-
mental Management, known as EPPGG (Especialistas
em Políticas Públicas e Gestão Governamental). This
career was created in the 1990s for the purpose of sup-
plying the federal government with highly qualified per-
sonnel, specialized in management, without being per-
manently allotted to a specific Ministry. Since they may
be requested by any Ministerial office, they are very dis-
puted. Another trait of members of this career is that they
perceive public policy evaluation as an essential factor
for the quality of state work, which concept is relatively
new and little disseminated in the co un try [11 ]. Given th e
administration’s priority for social policies, MDS was
able to recruit several EPPGGs, which reinforced its
management capacity.
Finally, it is important to note the likelihood of more
organizational changes occurring, for MDS intends to
create a specific agency to develop and manage the
SUAS internal monitoring processes. In other words, the
Ministry wishes to produce internally the information
that CGU currently produ ces through municipality moni-
toring, which will require the creation of new structures
and processes. MDS this intends to ensure that it contro ls
the production of information that is essential to the effi-
ciency of its policy implementations.
To sum up, the concrete results of these learning proc-
esses were improvement of SUAS management and of
CGU’s audits. The elements needed for this learning to
occur were:
 Joint meetings between analysts and managers to
discuss SUAS inspection aspects.
 Willingness of professionals to understand the view
and position of their counterparts from the other in-
stitution.
 Availability for building the relationship of under-
standing (primarily by maintaining th e inspection and
secretariat team leaders in their respective positions),
so as to ensure that individuals’ acquired knowledge
would stay in the organization.
 Low institutionalization of SUAS and MDS, which
were created less than 10 years ago and are being

Organizational Learning of Controllers and Controlled Agencies: Innovations and Challenges in
Promoting Accountability i n t h e Recent Brazilian Democracy
50
structured (which implies the need for establishing
rules and agencies and, at the same time, the lack of
crystalized practices and institutions).
 MDS’ privileged position regarding other Ministries
in the “competition” for organizational resources.
The first three elements refer to traits that can be pro-
moted and disseminated by means of creating organiza-
tional incentives to such behavior. The last two elements,
on the other hand, are contingent factors that cannot be
repeated at other organizations, and which absence in-
creases the need to reinforce organizational incentives.
The main element that hindered learning in this case
was the divergence of views between CGU analysts and
MDS managers, which took time to be reduced. It is, to
some extent, a natural factor in the life of organizations,
which create their own culture and vision regarding their
work.
Finally, this learning process may be leading to the
creation of a deuterolearning process, since MDS intends
to create its own structures for monitoring its policies.
Monitoring activity by MDS tends to generate informa-
tion and capacity for the Ministry to, by itself, identify
policy gaps and correct them, and the evaluation proc-
esses may become instruments through which the or-
ganization learns to learn [12].
4. Conclusions
In the analyzed case, organizational learning was gener-
ated from demands that were external to the organization
(CGU’s inspection in SUAS) and it was possible thanks
to the way in which CGU and MDS interacted (joint
meetings with the purpose of seeking understanding) and
to MDS’ specific conditions, both organizational and
contingent.
This paper demonstrates that building a dialogue in the
process of auditing and inspection led to improvement in
the control process and in public policy management.
Both CGU and MDS underwent learning processes.
CGU analysts needed to learn the working and imple-
mentation logic of a new policy such as SUAS, and MDS
employees needed to produce rules and administrative
procedures to support the inspection, as well as review
concepts and procedures involved in MDS’ relationship
with municipalities.
On the part of MDS, the learning was adapting itself in
order to be able to precisely define the information
needed for the program’s implementation and inspection;
on the part of the control agents, it was understood as a
new policy, with a new dynamic and new form of im-
plementation. There were conflicts in that process, for
the views of MDS and CGU did not always coincide or
easily fit together. But, over time, both parties were edu-
cated, and room for understanding was built and could be
Table 1. Organizational learning in new public agencies in
democratic Brazil.
CGU Learning (single loop)SNAS/MDS Learning ( Double loop)
 Learning about the
particulars of the inspected
policy and the structure of
the Ministry in charge of it.
 Creation of new regulations
pertaining to execution of SUAS.
 Restructuring of the policy’s
implementation processes,
especially mechanisms of
incentive and control over
municipal executive powers.
 Organizational changes: creation
of a team to handle matters related
to inspection.
used to discuss new programs. The history of dialogue
and building understanding makes it easier, for both sides,
to build new understandings.
Table 1 summarizes the learning processes described
above.
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