Defalcation or loss in money or stores to be reported by the Executive Authority

Whenever any defalcation or loss in money or stores of local authority is discovered the fact shall be promptly reported by the Executive Authority to the Director and to the Controlling authority or the Government, as the case may be, giving in detail the circumstances which led to such defalcation or loss. Explanation: -

1. (1) In this sub-section Controlling Authority means the Head of the Department concerned or the Officer empowered to countersign the Grant-in-aid Bill.
2. (2) On receipt of a report under sub-section (1), the Director shall immediately conduct or cause to be conducted a special audit of the accounts of that Local Authority: Provided that nothing in this section shall prevent the Local Authority from taking criminal proceedings against any person suspected of, involved in, any defalcation or loss of money or stores, where such a course is considered expedient.