Financial supervision encompasses a range of actions conducted by specially authorised bodies and individuals to ensure compliance with legislative requirements, norms, and rules established by the state, as well as by owners and participants in financial relations. Its objective is to identify potential financial offences and implement measures to rectify them.
Financial control is a component of the broader oversight of an economic entity’s activities and is, therefore, considered one of the management functions.
In the contemporary legal context, the terms “financial control” and “financial supervision” are often used interchangeably. However, the former generally refers to periodic monitoring, while the latter indicates continuous monitoring and review.
Elements of financial supervision
Financial supervision is a multifaceted phenomenon comprising the following main elements:
- subjects of supervision: relevant regulatory authorities;
- objects of supervision: organisations of various property types engaged in economic activities;
- the subject of supervision: the financial activities of the entity;
- legal framework: laws and regulations governing financial supervision;
- forms of supervision: preliminary, current, and subsequent;
- methods: techniques and methods of control, including analysis, examination, inspections, monitoring, audits, and others;
- control result: reports, acts, and conclusions containing the findings of the supervision.
There is also a classification of types of financial supervision. It is customary to distinguish:
- state control: includes customs, banking, insurance, currency, and other types of control;
- control by higher authorities;
- internal supervision by special bodies of a business organisation;
- independent external audit;
- public control.
The organisation and conduct of financial control are based on the principles of legality, independence, impartiality, transparency, planning, and orderliness (systematicity).
Objectives of financial control
In general, the tasks of financial supervision align with its objectives. These are typically divided into two groups:
- Checking the maintenance of legality: This includes ensuring compliance with financial discipline and the powers of officials, verifying that transactions adhere to legal norms, and ensuring the accuracy of accounting and documentation.
- Checking the interests of the owner: This involves assessing the efficiency of fund management, controlling the safety of property, and evaluating pricing policies.
Depending on the timing of implementation, control can be categorised as operational, planned, or sudden.
