Significance and Role of Control Bodies in the Banking System of the Republic of Srpska

Abstract

The establishment of open financial markets and the provision of financial services outside national borders determined the establishment of international standards in certain segments of banking operations and the obligation to adapt national banking regulations to the requirements of removing administrative restrictions on the freedom of movement of capital and establishing mechanisms that will ensure the safety and stability of the banking system. The aforementioned requirements determined the regulation of the banking system in market-oriented countries and countries that were undergoing or are still in the process of transition. In order to preserve the stability of the banking system, prudential control is particularly important, as one of the basic elements of security regulation, which aims to ensure the stability and security of the banking system, reduce the possibility of risk in the operations of financial organizations that make up the structure of the banking system, and provide appropriate protection to investors and users of banking services. In this sense, a special accent in the regulation of modern banking systems was emphasized in the establishment of a supervisor for the banking system, who directs and improves the work of banks, controls the legality of work and maintains the prescribed standards in work, the establishment of institutional control, which is realized in a combination of the system of internal control and internal audit and, extra-institutional control, which is recognized as external audit. The aim of this work is to investigate the importance and role of control bodies in the banking system of the Republic of Srpska, which operate according to the methodology of the supervision of the banking system, which is entrusted to the Banking Agency of the Republic of Srpska, the control bodies of the bank and the non-institutional control of the financial operations of financial organizations in the structure of the banking system, which is performed by an external auditor.