Disclosure of provisions, contingent assets and liabilities in local governments of brazilian capitals: analysis from the perspective of institutional theory

Abstract

This research aims to analyze the relationship between the institutionalization process of NBC TSP 03 and the disclosure of provisions, contingent assets and liabilities from the perspective of Institutional Theory in local governments in Brazilian capitals. Through a descriptive study and a quantitative approach, the explanatory notes for the period from 2014 to 2019 of the 26 Brazilian capitals were evaluated, in addition to the content of two mandatory financial statements established by Law 4,320/64, namely: Budget Balance; and Balance Sheet. A logistic regression was also carried out in order to verify the relationship between the edition of the standard and the variables: budgetary income per capita, own income per capita, asset size, transfers received and indebtedness. The study findings show that there were advances in the implementation of the NBC TSP 03 in the analyzed municipalities in the period between 2017 and 2019, however, it was not possible to verify the joint institutionalization within the scope of these entities. Only the city halls of the cities of Rio de Janeiro and Salvador declared to have implemented the practice; however, in the financial statements analyzed, the capital of Bahia did not highlight which criteria were used to recognize, evidence and measure these items. These findings corroborate the studies by França et al. (2016) and de Nascimento et al. (2019), on the incipient disclosure of this equity information. It is concluded that the criteria for recognizing provisions, assets and contingent liabilities, even after the edition of NBCS TSP 03, have still been based on subjective aspects, contrary to good accounting practice and harming the appropriate decision-making process involving these amounts.