How many times you could you excuse your subordinate fault without bringing it to the knowledge of higher authority or law enforcing agent?

THREE TIMES

- FIRST WARNING

- SECOND WARNING

- FINAL EXCUSE

It depends on the Gravity of the Issue,If its Harmful to the Organization you should report to the concerned Authorities immediately.Your relationship is less important vis a vie the Organization.

It depends on your relation with the subordinate. On professional front if it is affecting your performance too, then I think you should definitely escalate it.