N.Y. Comp. Codes R. & Regs. tit. 9, § 1904.4 – Performance supervision.

(a) The corporation shall review at periodic intervals at least annually the performance of project recipients and local program administrators under their respective regulatory agreements with the corporation. At its discretion the corporation may also review the performance of subrecipients.
(b) During the construction phase of any project assisted by the trust fund, should the corporation determine that there is evidence of fraud or malfeasance by a project recipient, local program administrator or subrecipient in the performance of any aspect of the construction, conversion or rehabilitation work or payment process, the corporation reserves the right to recapture from the project recipient or local program administrator all funds awarded to that recipient or administrator under its regulatory agreement.
(c) Program recipients and local program administrators shall provide such periodic reports as the corporation may require to facilitate the evaluation process. The reports shall include, but shall not be limited to, the following items:
1. (1) progress of proposed construction, rehabilitation or conversion(s);
2. (2) the status of project operations; and
3. (3) annual audited financial statements in accordance with generally accepted auditing standards or such other financial reports as the corporation may require.
(d) Should the corporation find that there has been substantial nonperformance or default of the regulatory agreement for reasons other than those over which the project recipient or local program administrator has no effective control and such condition is not cured or remedied within a period of time (as established in the regulatory agreement or other instrument) after notice to the recipient of such finding, the corporation shall have the right to terminate or modify the regulatory agreement within a period of time (as established in the regulatory agreement or other instrument) after written notice has been given, or to withhold the release of funds. The local program administrator shall follow a procedure similar to that described in this subdivision to terminate or modify a contract with a subrecipient.