LA’s main homelessness agency is at risk of blowing federal audit deadline, auditor warns

L.A.’s main homeless services agency is at risk of blowing a federal deadline to turn in a required audit of its financial records after executives were far behind schedule in providing necessary documents, according to the lead outside auditor.

The federally-required review — known as a single audit — is one of the most important oversight checks of the L.A. Homeless Services Authority. Every year, LAHSA must hire an outside firm to determine whether the agency is accurately tracking and reporting what happens with taxpayer funds it manages. Turning it in late, or having significant negative findings, can jeopardize an organization’s federal funding.

The audit of LAHSA’s last fiscal year is due March 31, nine months after the fiscal year ended.

While government clients on that fiscal calendar would typically turn over their records to auditors by last December, LAHSA staff had failed to do so until March, lead auditor Justin Measley told LAHSA’s audit committee last Wednesday.

He said the timeline for reviewing the documents was now unusually compressed, and that the firm was doing everything it can to try to meet the deadline.

“It is possible that [LAHSA’s audit] will not meet the March 31st deadline,” Measley told the audit committee. “ It's been a few years of this sort of delay with LAHSA."

On Friday, however, LAHSA executives said the audit is on track to meet the March 31 deadline.

“We have submitted all required documentation” to the auditors and “the field work has been completed,” Janine Lim, LAHSA’s deputy CFO, told the commission’s finance committee. “At this time, we do not anticipate any issues with meeting that timeline or allowing sufficient time for review."

Lim has been stepping into her boss’ role as the top finance official for the last several weeks, while CFO Janine Trejo has been on an extended leave. The reasons for her leave have not been made public, nor has the timing of how long she’s been out.

Even after Lim’s presentation, LAHSA Commissioner Amy Perkins said she doubts the audit will be done by the deadline.

“Based on everything I know and have seen, this is very unlikely,” she said in a statement Friday.

In response to a request to LAHSA CEO Gita O’Neill for comment, LAHSA spokesperson provided a statement Thursday that the audit is “on track” to meet the deadline.

“LAHSA has provided financial and organizational documentation to our external auditors, despite a key mid-level leadership transition that required adjustments to the document-gathering timeline,” the statement provided by spokesperson Paul Rubenstein said. “As the audit nears completion, LAHSA remains committed to being a responsible steward of public funds, and we expect the audit to be completed on time.”

Auditor raised concerns in January, February and March

Measley, LAHSA’s lead contracted auditor, told the auditing committee on Wednesday that LAHSA executives had agreed in October to provide the documents by Jan. 15. LAHSA staff then confirmed multiple times in December and January that they were on track to do so, he said.

But LAHSA blew that deadline, Measley said, adding that auditors gave multiple extensions.

Measley said the records were still not provided as of March 3, even after he raised concerns about the timing with O’Neill and LAHSA’s governing commission chair, Amber Sheikh, during a meeting in early February.

On March 3, the audit firm contacted LAHSA’s governing commission about the overdue documents, Measley said.

“I felt like I exhausted my ability to work solely within management, and I needed to alert governance of the delays, which is when I sent the letter of the potential for LAHSA to not meet its regulatory deadline,” Measley told the audit committee.

In a statement, Sheikh said she met with the auditor in early February “as part of the standard annual single audit process.”

“They shared that some steps were slightly behind schedule, but they did not express concern about delivering the audit on time,” Sheikh said.

Juistin Szlasa, LAHSA’s audit committee chair, said he was not informed of any problems with the audit until March 3, despite them being flagged nearly a month earlier to O’Neill and Sheikh.

Szlasa expressed concern about the remaining timeline, saying the agency’s governing commission would still need time to review the draft audit once it’s ready and ask questions before it’s finalized. He said the draft audit should be circulated at least a week before it’s finalized.

“I don’t see how this is going to happen in a way that makes sense,” he said during Wednesday’s meeting. “I’m very disappointed,” Szlasa said. He did not fault the auditors, who he said were handling the review “with integrity and care.”

The mayor’s take

L.A. Mayor Karen Bass is the only elected official on LAHSA’s governing commission, and was one of the three members of its audit committee from Aug. 22 until Jan. 23, which overlapped with the first few months of the audit. She did not attend any of the committee's four meetings during that time, according to official records.

Bass did not respond to an interview request through a spokesperson.

“Mayor Bass has been a champion for reforming L.A.’s broken homelessness system, and wants this audit done,” a statement provided by Ilana Morales, the mayor’s spokesperson, said. “She is tasking the City’s appointed LAHSA commissioners to work closely with the agency’s leadership to get this moving. After years of increases before she took office, Mayor Bass brought homelessness down, and she will not let bureaucratic failures stand in her way.”