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

(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 as he considers necessary depending upon the magnitude of such defalcation or loss: Provided that nothing in this section shall prevent the local authority from taking criminal proceedings against any person suspected of, or involved in, any defalcation or loss of money or stores, where such a course is considered expedient.