(1) On receipt of a report under section 293, the Municipal Commissioner or Chief Officer shall remedy any defects or irregularities which may have been pointed out in the report, and shall, within two months of the receipt of the report, 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 municipal council. He shall also, within three months of the receipt of the report, send to the Controller, State Accounts Department, intimation of his having remedied the defects or irregularities, if any, pointed out in the report, or shall, within the said period, supply the Controller, State Accounts Department, any further explanation in regard to such defects or irregularities as the municipal council may wish to give.

(2) On receipt of such intimation or explanation the Controller, State Accounts Department may, in respect of all or any of the matters discussed in the report, -

(a) accept the intimation or explanation given by the Municipal Commissioner or Chief Officer 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 Controller, State Accounts Department, shall send a report of his decision to the Commissioner within one month of the date of the receipt by him of the intimation or explanation of the Municipal Commissioner or Chief Officer referred to in sub-section (1) or in the event of the Municipal Commissioner or Chief Officer 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 Municipal Commissioner or Chief Officer. If the Controller, State Accounts Department, 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 regularised 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.

(4) The municipal council concerned shall include in its next administration report, such portions of the report under section 293 as deal with defects and irregularities failing 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 Controller, State Accounts Department thereon under subsection (3). Such report of defects and irregularities and explanation shall be open to the inspection of the public at the office of the municipal council for a period of one month from the date of their receipt.

(5) Nothing in this section shall preclude the Controller, State AccountsDepartment, at any time from bringing to the notice of the Commissioner, for such action as the Commissioner may consider necessary, any information which appears to him to support a presumption of criminal misappropriation or fraud or which in his opinion deserves special attention or immediate investigation.