(i) the local authority shall furnish to the Examiner of Local Fund Accounts, the Accountant General, the Government and the authority authorised under Rule 6, all information which they may require regarding its funds and regarding the expenditure of the loan;
(ii) the accounts of the local authority in respect of the loan amount shall be open to audit by the Accountant General;
(iii) If the Government or the authority authorised under Rule 6 considers that the local authority has failed to comply with any of the conditions prescribed in respect of the loan or with any of the requirements of these rules it shall be lawful for them to order that no further payments shall be made on account of such loan and that any amount advanced with interest thereon shall be repaid immediately.
16. Control and inspection of works and accounts.- The Government shall make such provisions as they may deem necessary
(a) for ascertaining and Securing that the money borrowed is duly applied to the purpose for which it has been borrowed, and that the unexpended balance of the loan is not employed otherwise than in accordance with these rules.
(b) Where the loan is taken for any of the purposes specified in Clauses (i), (ii), (iii), or (iv) of sub-section (1) of Section 3 of the Act for the proper inspection of the work to be carried out:
Provided that every such work and the accounts connected therewith shall be open at all times to the inspection of-
(1) the officers of the Engineering Departments of the Government not below the rank of an Executive Engineer exercising jurisdiction over the area in which the work is executed;
(2) any person who may be authorised to inspect the accounts of the local authority, and
(3) any other person specially authorised by the Government in this behalf.
17. Procedure on attachment- When the Government decide to attach any funds under Section 4 or under Section 6 of the Act, the following procedure shall be observed, namely:-
(a) the Government shall issue a notice to the local authority prohibiting the collection or management of Such funds by the local authority, and vesting the administration thereof in such officer as the Government may appoint. The Government shall cause such notice to be published in the Government Gazette, and in such other manner as it may deem fit within the local limits of the area subject to the control of the local authority;
(b) the officer appointed by the Government under Section 4 or under Section 6 of the Act shall pay the moneys collected or received under such attachment to the lender, or in the case of a Government loan, into the Government Treasury;
(c) the said officer shall, prepare the accounts of money So Collected and of the cost of collection in such form as the Government may, from time to time, direct. He shall deliver a copy of the accounts to the local authority and shall cause a copy to be published in the Gazette.
18. Procedure in respect of unexpended balances of loans.- If, on the completion of the work or the closing of the account of the transaction for which a local authority has borrowed money, the Government is satisfied that the whole of the money has not been spent on the purpose of Which it was borrowed it shall proceed as follows, namely:-
(a) in the case of a Government loan - The Government shall direct that the unexpended balance shall be forthwith repaid to the Government, and the principal of the debt reduced by an equivalent amount. The Government may direct such variation as it may consider necessary on this account in the instalments fixed for the liquidation of the loan.
(b) In the case of a non-Government loan - the Government may direct that the unexpended balance shall be utilised in the reduction in any way of the debt of the local authority.