Dry rot is a potential cause of structural damage and is more dangerous than the wet rotting fungus because of its ability to spread through materials other than timber too. It could be identified by square cracks, mushroom colored skin, brittleness and damp odour. The foremost thing to treat dry rot or avoid it is removal of moisture. Also since it could spread from timber to timber, the effected one should always be replaced with another.
A proper fungicide could be of some help too, by going inside the timber and preventing it to rot. Also, the dampness around the timber should be identified and the sources eliminated.
The rotten part should be removed by cutting or scrubbing in case of a wall and the fungicide should be sprayed to prevent the spread. Areas where the fungus was identified and scrubbed should be repainted after applying a coat of zinc oxychloride plaster which will prevent fungal growth.