LOCAL authorities have been heavily criticised for their handling of expenditure on several EU funded projects. A new report has said that costs overran on several projects and local authorities' reporting of expenditure "appeared inadequate".

The report, compiled by the Comptroller and Auditor General's Office, examined the effectiveness of evaluations of spending programmes under the Regional Development Fund measures for 1989-1993. It focused on six programmes which accounted for £2.54 billion.

One of the programmes examined, water and sanitary services cost £222 million and was 50 per cent funded by the EU. The report says there was considerable difficulty introducing a suitable system to manage and control the programme.

The Comptroller's report says there are no reporting requirements which compelled local authorities to report expenditure at a particular time, rather the authority applied for a grant draw down when substantial expenditure was incurred.

It says that, although the Department of the Environment monitored contract costs closely, items such as resident engineers' salaries, administration and miscellaneous costs appeared to be responsible for substantial increases. "In some cases additional cost classifications were introduced without explanations," the report says.

"In the cases examined, it appears that local authorities were usually slow or failed to break down expenditure under general headings," it says.

The report says local authorities generally failed to alert the Department where the total final cost of schemes was expected to be in excess of the amount predicted at the tendering stage, until the initial grant allocation had been absorbed. It also notes that revised cost estimates at this stage could also be understated.

However, the report notes that, last year, local authorities were notified of revised financial and monitoring arrangements for schemes and these are now in place.

The report also says that, up to last August, some £7 million had not been claimed from the EU under a programme designed to boost tourism. It says there appeared to be an insufficient number of staff allocated to administering the programme.

The report also contains criticism of industrial development agencies' handling of another EU supported programme, designed to help Irish companies investigate and acquire new technology. It says that only £1.56 million was spent under this measure against estimated expenditure of more than £9 million. The report says one of the reasons for this was that the agencies imposed a strict interpretation of what comprised technology acquisition.