PracticeAuditBrussels and Edinburgh in funding dispute

Brussels and Edinburgh in funding dispute

Brussels and Edinburgh are at loggerheads in a row over the auditing of Objective One funding for aid projects in the north of Scotland between 1994 and 1999.

Link: Tenon boosts Scottish partner numbers

An audit report by a team from the Directorate General for Regional Policy headed by Margaret Butler published on the internet by the Scottish Executive raises several questions over potentially ineligible expenditure totaling £21.1m out of about £240m from the European Regional Development Fund.

One of its main findings was: ‘The failure by the Scottish Executive and the Highlands and Islands Programme Partnership to hold details of the recipients of the aid schemes indicates serious deficiencies in the efficient management and monitoring of these projects.’

The report claimed that: ‘The control checks were not carried out at the level of final recipient in the case of aid schemes or where the final recipients were private companies.’

It said no opinion could be given about a further £29.5m of expenditure, and complained in detail that tendering requirements were not complied with, adequate supporting documentation was not retained, audit trails were ‘complicated and difficult to reconcile’, ineligible running costs and fees had been charged and there were deficiencies in measures to promote aid schemes.

Schemes criticised included a controversial £14.8m Cairngorm funicular railway, schemes linking remote islands by constructing causeways, bridges and ferry terminals, sewerage and waterworks, roads and business support projects.

In their reply, also placed on the internet, the Scottish Executive accepted details of final recipients of aid should be advised to and retained by the partnership, but questioned whether their absence represented a serious weakness.

Its response claimed there had been no requirement for all the bodies concerned to be subject to a systems audit, but a sample had been visited by Audit Services and visits to final beneficiaries had included a detailed check of grant claims.

The executive complained that much of the further information demanded by the auditors had already been supplied.

Officials went further and criticised the audit team for ignoring information they were given and misunderstanding the way the process worked, with final schemes supervised not by the partnership but by local authorities or other sponsoring public bodies.

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