RegulationCorporate GovernanceUK faces ultimatum on audit of EU funds

UK faces ultimatum on audit of EU funds

EC warns Department for Communities and Local Government that it must sort out auditing of EU regional development spending

The UK’s Department for Communities and Local Government (DCLG) has been
warned by the European Commission that it must sort out shortcomings in its
auditing of European Union regional development spending in England or risk aid
payments being suspended.

A formal note from the EU’s regional policy directorate general, headed by
commissioner Danuta Hübner, has given Whitehall six weeks to say how the problem
will be fixed.

A spokesman told Accountancy Age the problem lies with the certification by
English regional government offices of projects financed by European Regional
Development Funds, which pumped E2bn (£1.34bn) into the UK in 2005. ‘We have to

be sure all the correct controls are made and executed before, during and
after the spending,’ he said.

A DCLG spokesman admitted there were problems: ‘We are having intensive and
constructive dialogue with the Commission about their concerns.’ But he said
that these talks had lasted for months and agreement had yet to be struck over
what should be done.

The Commission remained hopeful a suspension could be avoided: ‘We have good
cooperation between the Commission and UK authorities,’ said its spokesman.

The issue could prove embarrassing for both the EU and the UK government. The
EU is putting pressure on Westminster, after years of qualified European
accounts.

Complaints were recently made that national governments took little
responsibility for auditing EU money arriving from Brussels.

This resulted in Treasury minister Ed Balls stating that the UK would take
the lead in auditing EU accounts in Britain by making the National Audit Office
sign off on a new statement to be made by government on all European spending in
the UK.

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