If the executive director determines that a sponsoring organization is not in compliance with contract provisions of this chapter, the executive director shall suspend payments under the contract and shall file a report with the board and with the sponsoring organization of the reason for suspension of payments. The sponsoring organization may correct the state of noncompliance or may appeal the executive director's determination to the board at its next regular meeting. If the executive director finds that any claimed expenditures under the contract are not eligible under this chapter, the executive director shall deduct such amounts from the next request for payment. The sponsoring organization may, through the executive director, request a hearing on the executive director's decision before the board at its next regular meeting.