COUNCILLORS have been warned about claiming benefits amid controversy over payments worth £19,000 to a Sinn Féin representative.
The Social Security Agency (SSA) urged councillors to meet their responsibilities to ensure the "protection of public funds and to avoid unwanted criticism".
It comes after a Sinn Féin councillor in Derry faced benefit fraud charges after claiming jobseeker's allowance despite receiving a council wage.
However, Colin Kelly was acquitted in July after a court heard how his salary was paid straight to Sinn Féin.
In a letter to the Northern Ireland Local Government Association (Nilga), SSA chief executive Tommy O'Reilly said councillors claiming benefits must declare all paid and unpaid work.
"Failure to give accurate information to obtain a social security benefit and to notify the department promptly when or if circumstances change may constitute a criminal offence and lead to criminal proceedings," he said.
Mr O'Reilly asked Nilga to alert all councillors to his letter, which was uncovered by The Irish News through a freedom of information request.
"Compliance with these responsibilities will help to ensure the protection of public funds and to avoid unwanted criticism for individuals, and the local government institutions," he wrote in late August.
Councillors receive on top of expenses a basic allowance of £14,200.
In July the judge in Mr Kelly's case said Sinn Féin should consider repaying the debt after hearing he had no "card, no chequebook, no access at all" to the account.
Sinn Féin has declined to pay for the benefits claimed, with its solicitor saying that Mr Kelly is instead making regular repayments to SSA.
The Department for Social Development has refused to say at what rate Mr Kelly is currently repaying the benefits.
However, the court was told Mr Kelly had been paying back £85 a month since the start of this year.
It means it would take Mr Kelly more than 19 years to pay back the benefits worth around £19,000.
TUV leader Jim Allister has described Sinn Féin's attitude on the matter as "utterly appalling", saying the party could repay the money "without difficulty".
He also criticised DUP minister Mervyn Storey's "softly, softly approach" towards Sinn Féin.
The dispute comes amid an Audit Office probe after The Irish News revealed in September that nine Sinn Féin Derry councillors had their wages paid directly into a party bank account.
Payments worth more than £140,000 were going straight into the same account – including a council carer's allowance being claimed for childcare by Mr Kelly.
Sinn Féin initially defended the arrangement, but recently the councillors have changed to use individual accounts.
Environment minister Mark H Durkan has said he will discuss with council chief executives whether new laws are needed on councillor allowances and expenses.
