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 confidentally report the circumstances, in writing to the Executive authority (ie. 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.
  2. When a fraud or misappropriation has been fully investigated by the auditor, he shall submit a complete report on the case to the Director, who shall send copies thereof either to the Controlling authority or the Government as the case may be:

Provided that where the Executive Authority {President/Vice President, Chairman/Vice Chairman etc.) or the Head of Office of a local authority is involved or there are grounds for suspecting his complicity in the fraud or misappropriation or the serious irregularities, neither the preliminary nor the complete report shall be sent to any of these officers.