9. Report of non-compliance with requisition.- If a notice under clause (a) or clause (b) of sub-section (1) of Section 11 is not complied with, within the period specified therein the auditor shall send the papers to his Controlling authority, with a brief statement of facts, for further action.
10. Penalty for disobeying requisition under Section 11.- The proceedings in a court of law against an employee of a local authority/local fund for imposing the punishment referred to in section 12 of the Act shall be initiated by the auditor who is in charge of audit of accounts of the institutions concerned. For initiating the proceedings, such officer shall file a Written statement of facts constituting the offence before the court having jurisdiction over the area in which the headquarters of the institution concerned is situated. The show cause notice under Section 12 of the Act shall be issued by the officer who is in charge of audit of accounts of the institution concerned but who shall not be below the rank of a Deputy Director. The show cause notice issued under Section 12 shall be in Form IV appended to these rules.
11. Objection statement and replies thereof.- (1) All enquires which are necessary for the auditor to make in the course of audit and all remarks shall be made through an objection statement in Form V appended to these rules.
(2) The auditor shall issue such objection statements with his dated signature day by day, as the audit proceeds and shall obtain an acknowledgement from the Head of Office of the local authority/local fund with date of receipt.
(3) The auditor shall as far as practicable, issue separate objection statements for each department of the local authority/local fund so that the department concerned can proceed to take action as soon as objection statement is received:
Provided that the procedure in sub-rules (1) and (2) above shall be relaxed in the case of Municipalities, Panchayats and other local bodies, where only local audit is conducted.
(4) The objection statements, shall be returned within the time specified by the auditor with dated signature of the Head of Office of the local authority together with an explanation to the objection, or a statement of the action taken or proposed to be taken to settle the objections raised and, where necessary, shall also contain replies to the enduires made by the auditor.
(5) On receipt of the replies to the points raised by the auditor, he shall, wherever, necessary re-issue for further action, any items on which final or sufficient action hasnot been taken or on which enduires made have not been satisfactorily answered. Such re-issue shall be marked for further "remarks' in the objection statement in Form V.
(6) All objection statements issued during the course of audit shall be returned to the auditor within the time specified irrespective of the question whether all the objections have been fully answered or not.
12. Manner of Report of fraud or misappropriation or serious irregularities.- (1) When a fraud 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 (i.e. President, Vice-president, Chairman or Vice Chairman of the local authority, as the case may be) and also to the Director of Local Fund Audit.