Methodology for Studying the Principles of Financial Control

Introduction

The methodology for researching the application of the principles of financial control is dependent on the established stages of their application. The methodology consists of approaches that express the established and predetermined research tasks and are closely related to them. Through the chosen methodology, in addition to examining the efficiency and effectiveness of the applied principles of financial control, the control activity of the inspectors will also be evaluated.

The proposed methodology for researching the principles of financial control, which is based on the methodology for researching the impact of the regulatory impact of the PFIA and Regulations for the Implementation of the PFIA, will contribute to the clarification of a number of control problems. The regulatory impact actually represents a simultaneous impact of both the regulatory requirements and the rules of conduct that are regulated in the relevant act. The regulatory impact on the part of those in power is manifested in the control processes, and in these processes the effect of the normative acts themselves is also manifested. It is the duty of PFIA, after the entry into force of a normative act that affects the inspection activity of the Agency, to verify the results established by the amendment or adoption of the relevant act. In the event of inconsistencies between the regulated norms and principles in an amended or adopted new normative act with the requirements of a higher-level act, it is required, according to the Act on Normative Acts, to notify the body that is authorized to cancel or make the necessary corrections in the relevant act.

Regulatory Impact Assessment (RIA) was first introduced in the UK and was originally developed to assess policy in order to present the best policy decisions, as well as to assess the impact of different policy options regarding the costs, benefits and risks of proposed policies. Initially, the aim of regulatory impact assessment was to examine whether regulatory initiatives had an impact on business, charities and voluntary organizations (Paradis, 2006).

The methodology for determining the regulatory impact, adopted according to the implementation of the Phare project BG-0103.01 “Strategic planning and coordination”, the Consortium “Sema-Agrer-ENA” and the administration of the Council of Ministers of the Republic of Bulgaria, includes the following elements:

• 1.

  SWOT analysis (strengths, weaknesses, opportunities, threats)

• 2.

  Standard cost analysis

• 3.

  Cost-benefit analysis

• 4.

  Cost effectiveness analysis

• 5.

  Multiple criteria analysis

• 6.

  Risk analysis

• 7.

  Comparative analysis

SWOT analysis was first introduced by Kenneth Andrews at the 1963 Business Policy Conference at Harvard University. Initially, this analysis was based on scoring and structuring knowledge about the current state and future trends of an organization (Ehrmark, 2011).

The abbreviation SWOT, which K. Andrews introduced back in 1963, is still an acronym for the words Strengths, Weaknesses, Opportunities and Threats. Therefore, as a rule, the SWOT analysis can be applied to study the strengths and weaknesses of the regulatory impact, and also with its help can analyze the capabilities of the control body itself and the threats from the environment that exist and can have an impact on the activity of the controllers. We also believe that the development of this method for choosing a control strategy was influenced by the scientific achievements of Heinz Weihrich, who in 1982 in his article “The TOWS Matrix - A Tool for Situational Analysis” proposed the SWOT analysis to be presented in the form of a matrix. N. Weihrich assumes that this matrix is the conceptual framework of system analysis. With its help, it is easier to compare the external threats and opportunities related to the internal weaknesses and strengths of a given organization (Weihrich, 1982). According to the researcher, the SWOT matrix is built over a certain period of time, thus making it possible to track changes in the dynamically changing environment when building and choosing strategies.