Internal audits help protect taxpayer money. LAHSA hasn’t finished any in years

L.A.’s homeless services agency has not completed any internal audits in years — and one that was started two years ago is still incomplete because management is taking months to provide responses, officials said Monday.

The delayed audit has been looking into why the L.A. Homeless Services Authority, known as LAHSA, failed to spend $7 million in federal dollars it was granted to house and serve people in need. The roughly six-page audit report hasn’t been released because it’s missing LAHSA management responses that were requested over two months ago, officials said.

Internal audits are considered critically important to protecting taxpayer dollars at every level of government. L.A. County auditors, for example, issued about 100 reports in a recent fiscal year.

“ We haven’t gotten anything,” said Erum Shahnawaz, LAHSA’s chief internal auditor, referring to the lack of response from LAHSA management at a meeting of the agency’s audit committee on Monday.

“That’s the only thing that's holding us from issuing the final report,” Shahnawaz said of the underspending audit.

That audit is examining a repeat problem. A previous, external audit in January 2022 found LAHSA had left $3.5 million in federal grants on the table by not using them.

Shahnawaz flagged management’s delays to the LAHSA Commissioner Justin Szlasa, Szlasa said. He chairs the commission’s audit committee, and has repeatedly called out LAHSA executives’ delays in providing information about taxpayer spending over the past year.

“ I've been trying to intervene and use whatever I can to try to help provide support,” said Szlasa as he described his attempts to get the auditor the answers needed to complete the report.

Szlasa was appointed to the commission by L.A. County Supervisor Kathryn Barger.

 “It shouldn't take us two months to receive a…management response to an internal audit,” Szlasa said at Monday’s meeting. He said the industry standard for internal audits is eight or nine weeks from start to finish. That compares to the two years — and counting — for LAHSA’s federal underspend audit.

“We haven't had a single internal audit completed here in the last couple of years, which is nuts,” Szlasa added. He called for internal audits to happen much more frequently.

Long delays to LAHSA audits also are not new. In November 2024, the county issued a widely-seen audit that included findings that LAHSA was failing to complete internal audits.

Half of LAHSA’s governing commission is appointed by L.A. Mayor Karen Bass and half appointed by each of the five county supervisors. Bass is also the only elected official on the commission. She served on the audit committee for several months last fall. Records show she was absent for all of the meetings during that time.

Janine Lim, LAHSA’s deputy chief financial officer, said management’s responses to the audit on underspending haven’t been provided yet because LAHSA leadership did not have clearly defined roles for who is supposed to coordinate responses to internal audits.

“ We need to work on clarifying that role internally,” Lim said.

 “The last two months have been probably some of the most stress-filled two months that we've had at LAHSA,” said Paul Rubenstein, chief of staff to LAHSA CEO Gita O’Neil, pointing to mass layoffs.

Szlasa said there’s not that much in the audit for management to respond to.

“It's like, six pages or less,” he said.

Szlasa said  another option is to “just say we've asked management for responses and we're awaiting management response. We can publish the results.”

In response, Shahnawaz said that if management doesn't have an updated timeline for a response, then she’ll go ahead and issue the report without the response.

Once they floated that idea, Lim committed to providing the responses by next Tuesday.

LAHSA’s leadership has downsized the internal audit team — dropping from a staff of three to just one in the agency’s proposed budget up for approval Friday.

Delays in getting access to financial records

The delayed responses from management are not the only thing that’s been slowing down audits, Szlasa said at the meeting.

LAHSA policy, approved by its governing commission, says internal auditors are “ authorized to access all organizational records, personnel, and systems necessary for conducting audits,” he said.

But the auditor has faced challenges in actually getting that access, Szlasa said — including delays in being allowed to view LAHSA’s databases that show contracts and financial payments.

 ”We finally were granted access, but it wasn't, it wasn't easy, it wasn't immediate. It was slow,” Szlasa said.

Many failed outside audits

The delays on the internal audit come even after LAHSA failed multiple external audits in recent years, which have found the agency — overseen by city and county elected officials — has neglected to properly track billions of dollars in spending.

Largely in response to earlier audits, L.A. County supervisors pulled funding from LAHSA and are having the county instead oversee it directly. L.A.’s mayor and City Council have continued to have LAHSA manage the city’s homeless spending while the council delays plans to start studying a possible plan to transition away city tax dollars.

Signatures under scrutiny

LAHSA is also in the midst of a different internal audit — expected to finish in late August or early September — examining whether top officials followed requirements when signing contracts and letting others sign. It was launched in the wake of LAist reporting that found LAHSA’s then-CEO Va Lecia Adams Kellum’s signature finalized a $2.1 million contract with her husband’s employer.

LAist also discovered Adams Kellum’s signature, as LAHSA’s CEO at the time, finalized a quarter-million-dollar contract between LAHSA and a longtime service provider she led up until two months earlier.

That contract was signed so soon after she left the service provider — St. Joseph Center — that the contract paperwork still listed her as one of St. Joseph Center’s points of contact and authorized signers.

She is currently under a state ethics investigation into whether her actions were an illegal conflict of interest.