(1) The department will conduct on-site monitoring reviews of the qualifications of authorized local agencies. In conducting such reviews, the department will consider the program's history of prior program compliance. On-site review will be conducted to determine program compliance and may include:

(a) a file review of ten percent or more of completed participant applications;

(b) review of procedures for secure storage of coupons, participant agreements, and other documents with identifying information;

(c) review of procedures and documentation of coupon distribution, accountability, and redemption.

(2) When disqualifying a local agency under the SFMNP, the department will provide the local agency with written notice not less than 30 days in advance of the pending action. The notice must include an explanation of the reasons for disqualification, the date of disqualification, and, except in cases of the expiration of a local agency's agreement, the local agency's right to appeal as set forth in 7 CFR 249.16. The notice will ensure that the action is not in conflict with any existing written agreements between the department and the local agency.