Elected members have been warned the council could be subject to clawback of “substantial amounts” of EU funding.
Head of Shetland Islands Council’s finance department Jamie Manson told councillors there was a risk of the EU claiming back money provided to Shetland if auditors were dissatisfied about the way funds were being used.
He was speaking during Wednesday’s audit committee meeting after chairman Allison Duncan raised questions after members were presented with an annual governance statement.
The South Mainland councillor spoke after a report presented by Mr Manson which stated no formal framework was in place to specifically mitigate the risks associated with EU funding compliance.
Failure to comply with EU rules for ongoing and completed projects “may result in financial clawback,” the report said.
The meeting heard an action plan was being developed in the hope that remedial actions could be progressed.
“Will projects be subject to clawback and could it cost the council a substantial amount of money?” Mr Duncan asked.
Mr Manson warned EU funding “of any flavour” was “incredibly complicated”, adding the time that records needed to be retained was “incredibly long”.
“Yes, there is a risk we could be subject to clawback,” he said.
Mr Manson added that, while there were not many projects likely to be liable to clawback, the biggest one was the college, which had “already taken a financial hit”.
He said the action plan would study the risks in more detail.
“The flip side is that as the UK has left the EU we are in a very limited or impossible position on accessing EU funding in the future.”
The issue was highlighted as members discussed a series of annual governance and audit reports.
The meeting started about half an hour after its scheduled time because of IT problems associated with virtual meeting software brought in to help maintain social distancing measures.