Section 18 in Tamil Nadu Local Fund Audit Rules, 2016
18. Report of defalcation or misappropriation or serious irregularities.
(1)Any defalcation or loss in money or stores of any local authority or local fund caused due to misappropriation, theft or natural calamities detected by the Executive authority shall be reported to the Director within three days along with the details of defalcation and circumstances leading to the loss. The report shall be made to the Director or his subordinate officer in charge of audit of the institution.(2)(a)Special Audit of any local authority shall be taken up by the Director on receipt of report from the Executive authority;(b)In cases of defalcation or misappropriation or major irregularities found during audit and at the request of the administrative authority or controlling authority of any local authority or local fund also, the Director shall conduct special audit;(c)Special Audit shall also be taken up on the orders of the Government on any local authority or local fund by the Director;(d)The Director shall direct his subordinate officer to conduct this special audit and issue suitable orders regarding the conduct of special audit in each case.(3)When a defalcation or misappropriation is detected or may reasonably be inferred from any suspicious circumstances, or there is very strong evidence to raise suspicion thereof, or where any serious irregularity is noticed in accounts, the auditor shall at once confidentially report the circumstances, in writing to the Executive authority of the local authority as the case may be and also to the Director.(4)When a defalcation or misappropriation has fully been investigated by the auditor, he shall submit a complete report on the case to the Director.(5)The Director shall report to the Executive authority about the defalcation with a request to recover the loss caused to the local authority from the person responsible.(6)The Director shall also report to the controlling authority, the details of the amount defalcated or misappropriated and the persons responsible thereon with a request to recover the loss from the Executive authority or person responsible.(7)The controlling authority shall recover or cause to recover the loss from the Executive authority or official responsible for such loss by all possible means including initiating disciplinary action against the persons responsible for the loss and intimate the fact of recovery to the Director or Government.(8)The Director shall report to the Government also about the defalcation or misappropriation and the loss caused to the local authority or local fund, which in his opinion deserves special attention or immediate investigation as per sub-section (5) of section 13 of the Act:Provided that where the Executive authority or the Head of Office of a local authority is involved or there are grounds for suspecting his complicity in the defalcation or misappropriation or the serious irregularities, neither the preliminary nor the complete report shall be sent to any of these officers.(9)Wherein defalcation or misappropriation of revenue was reported by the controlling authority or Executive authority and that were found out in audit at a later date, the cause for such defalcation or misappropriation and the period of occurrence shall be verified by the Director or his subordinate officer. For this purpose, the Director shall or cause to verify or re-audit the records of the earlier years relating to such defalcation or misappropriation, the audit of which were already completed, as a special case.
