# Power of Central Government to Direct Special Audit - Section 77
## When can Special Audit be Ordered?
CG can order a special audit where it is of the opinion that:
1. Affairs of the MSCS are not being managed as per:
- self-help and co-operative principles, OR
- sound business principles; OR
2. The MSCS is being managed in a manner likely to cause serious injury to the interests of trade or industry; OR
3. The financial position of the MSCS is such as to endanger its solvency.
## Shareholding Restriction (Pre-Condition)
CG shall order special audit only if the Central Government or State Government (either by itself or both together) hold 51% or more of the paid-up share capital in such MSCS.
## Who Conducts the Special Audit?
CG may appoint:
- A Chartered Accountant, OR
- The MSCS's existing statutory auditor himself
to conduct the special audit.
## Powers, Duties & Report
- The special auditor has the same powers and duties as the regular auditor of the MSCS.
- Key difference: Instead of making his report to the members, the special auditor makes his report to the Central Government.
## Action by Central Government
- CG may take such action as it considers necessary on the report.
- If CG does not take any action within 4 months from date of receipt of report, it shall send to the MSCS a copy of the report along with its comments.
## Expenses of Special Audit
- Determined by CG (final and binding).
- Paid by the MSCS.
- In default, recoverable from MSCS as an arrear of land revenue.