The British National Party could face prosecution for breaking the law over its accounting.
The anti-gay political party has until Friday to submit further details of its spending after auditors said they were not adequate.
It submitted accounts to the Electoral Commission but independent auditors Silver & Co said they did not give a “true and fair view” of its affairs.
The auditors wrote: “In our opinion it cannot be said that the accounts comply with the requirements of the Political Parties, Elections and Referendums Act 2000, as adequate records have not been made available.”
The BNP has been fined five times in two years for breaking rules on financial records. It was fined £1,000 last month by the Electoral Commission for submitting its 2008 accounts six months after the deadline.
The Electoral Commission requires all political parties with an income of over £250,000 to provide comprehensive accounts. It can bring criminal proceedings against parties which fail to comply.
Figures released by the commission this week showed the party had exaggerated its spending during the European elections, in which leader Nick Griffin and Andrew Brons won seats.
Griffin had claimed the party spent £500,000 but figures showed it had only spent £282,843.
He also claimed that 2008 was the most successful year in the party’s history. However, the accounts showed the BNP made a loss of more than £80,000 despite a rise in donations to £660,000.
A BNP spokesman said: “We do not have the resources of other political parties to get through the enormous amount of red tape that surrounds these tasks.
“We have now appointed a chartered accountant and we are hoping to have this year’s accounts signed off by February. We don’t expect to have a repetition of previous problems.”
The accounts also showed that as of December 31st 2009, the party had 9,801 members.
Last year, the party was forced to back down over its ban on non-white members.
The Equality and Human Rights Commission took legal action against it, accusing it of breaching race relations laws.
Along with its views on race, the party also believes homosexuality should be kept behind closed doors and should not be “promoted”.
Last year, PinkNews.co.uk exclusively reported that the BNP had drawn up a list of politicians from all three main parties describing a number of gay MPs as “buggers” and “criminals”, grouping them with convicted paedophiles.