The ANO Schedule 8 list the priviliges of licences and ratings. There are now very few AFIs however; the Article states that: the holder of such a rating shall only give instruction under the supervision of a person present during the take off and landing at the aerodrome at which instruction is to begin and end and hold a pilots licence endorsed with a FI rating.
For the FI(R) rating it states that instruction shall only carried out under the supervision of the holder of a flight instructor rating, approved for this purpose.
What constitutes supervision? Well its down to what a court would consider reasonable if there was an accident. If the supervising FI was not in a position to "oversee" the AFI or FI(R) and stop them if they were doing something wrong, I doubt they would wish to be held responsible for the actions of the AFI/FI(R).