This article starts from the perspectives of market failure and regulatory failure, elaborating on the theoretical logic of financial supervision through the analysis of dimensions such as monopoly, information asymmetry, and externalities. Simultaneously, it conducts an in-depth analysis of the reasons for regulatory failure, including lack of intention, lack of capability, and pro-cyclical effects. Therefore, to ensure the effectiveness of regulation, third-party organizations need to independently constrain it. As an integral part of the party and state supervision system, the National Audit Office, with its unique governance advantages, effectively plays the role of a financial guardian through independent functional design, routine supervision mechanisms, and cross-cutting supervision content. This research provides a theoretical interpretation of the functions of the National Audit Office in economic examinations.

Luo Xiaodan. Financial Audit Supervision: Theoretical Interpretation of Advantages. Academic Journal of Humanities & Social Sciences (2024) Vol. 7, Issue 1: 123-129. https://doi.org/10.25236/AJHSS.2024.070119.

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