(1) On receipt of a report under section 8, the Chairman shall remedy any defects or irregularities which may have been pointed out in the report, and shall place the report, together with a statement of the action taken or proposed to be taken thereon and an explanation in regard thereto before a meeting of the local authority. He shall also, within three months of the receipt of the report, sent to the [Director] intimation of his having remedied the defects or irregularities, if any, pointed out in the report, or shall, within the said period, supply the [Director] any further explanation in regard to such defects or irregularities as the local authority may wish to give.
(2) On receipt of such intimation or explanation the [Director] may, in respect of all or any of the matters discussed in his report;
(a) accept the intimation or explanation given by the Chairman and withdraw the objection, or
(b) direct that the matter be re-investigated at the next audit or at any earlier date, or
(c) hold that the defects or irregularities pointed out in the report or any of them have not been removed or remedied.
(3) The [Director] shall send a report of his decision to the Controlling Authority within one month of the date of the receipt by him of the intimation or explanation of the Chairman referred to in sub-section (1) or, in the event of the Chairman failing to give such intimation or explanation, on the expiry of the period of three months mentioned in the said sub-section and shall forward a copy of such report to the Chairman. If the [Director] holds that any defects or irregularities have not been removed or remedied he shall state in the report whether, in his opinion, the defects or irregularities can be regularized and, if so, by what method; and if they do not admit of being regularised, whether they can be condoned and, if so, by what authority. He shall also state whether the amounts to which the defects or irregularities relate should, in his opinion, be surcharged or charged and, if so against whom:
Provided that in the case of reports on the accounts of such local authorities as are specially notified by the State Government in this behalf the report referred to in this sub-section shall be submitted by the [Director] to such officer, being the Head of a Department, as the State Government may direct. Such officer shall take such action as may be necessary regarding any defects or irregularities falling under clause (c) of sub-section (2) which may have been brought to notice in the report. If he is of the opinion that the amounts to which any such defects or irregularities relate should be surcharged or charged, he shall forward the report to the Controlling Authority with his recommendation in that behalf.
(4)The local authority concerned shall publish in its next administration report such portion of the report under Section 8 as deal with defects and irregularities falling under clause (c) of sub-section (2), together with the explanation thereof, if any, given under sub-section (1), and the final report of the [Director] thereon given under sub-section (3). Such report of defects and irregularities, explanation and final report shall be open to the inspection of the public at the office of the local authority for a period of one month from the date of their receipt.
(5) Nothing in this section or in Section 9 shall preclude the [Director] at any time from bringing to the notice of the Controlling Authority for such action as the Controlling Authority may consider necessary, any information which appears to the [Director] to support a presumption of criminal mis-appropriation or fraud or which in his opinion deserves special attention or immediate investigation.