Procedure to be followed on receipt of audit report.

(1) On receipt of the audit report sent under section 11, the Executive authority shall, within a period of two months, either remedy the defects or irregularities, if any, pointed out therein and place the audit report together with a statement of action taken or place the audit report together with a statement of action proposed to be taken thereon before a meeting of the governing body of the authority concerned. The Executive authority shall also, within a month from the date of the said meeting, send to the Director a report of having remedied the said defects or irregularities or submit any explanation in regard to such defects or irregularities. (2) On receipt of such report or explanation, the Director may,— (a) accept the report of having remedied the defects or irregularities or the explanation in regard thereto and drop the objection; or (b) hold that any or all of the defects or irregularities pointed out in the audit report have not been remedied. (3) The Director shall, within two months from the date of receipt of the report or explanation, or if no such report or explanation is received, on expiry of the total period of three months referred to in sub-section (1), pass an order thereon. If the Director holds that any defect or irregularity pointed out in the audit report has not been remedied, he shall state in the order,— (a) whether the defect or irregularity can be regularised and, if so, by what method; or (b) if the defect or irregularity cannot be regularised, whether they can be condoned and, if so, by what authority; and (c) whether the amount to which the defect or irregularity, relate to, in his opinion, be charged and, if so, against whom. (4) The local authority or the authority, body or institution which administers the local fund shall publish in its next administrative report, extract of the defect or irregularity, if any pointed out in the audit report, the explanation, if any, given by the Executive authority under sub-section (1) and the order passed thereon by the Director under sub-section (3) and shall also keep the same open to inspection for the public at its office for a period of one month from the date of the receipt of the order of the Director. (5) Nothing in this section or section 12 shall preclude the Director, at any time, from bringing to the notice of the Government for such action as may be necessary, any information which appears to the Director to support a presumption of criminal misappropriation or fraud or, which, in his opinion, deserves special attention or immediate investigation.