Los Angeles, CA – The Los Angeles Homeless Services Authority (LAHSA) is facing renewed scrutiny following a federal audit that uncovered "significant" inaccuracies in its financial statements and critical deficiencies in internal controls. The audit findings, presented in a draft report, indicate that LAHSA, which managed over $800 million in public funds last fiscal year, missed its March 31, 2026, deadline for submission to the federal government, potentially jeopardizing future federal funding. This comes amidst growing concerns about the agency's financial oversight and accountability.
The audit, conducted by an external firm to meet federal requirements, highlighted that LAHSA's financial statements initially contained substantial errors requiring late adjustments. Auditors identified a "significant deficiency" in the agency's internal controls, which are designed to prevent financial inaccuracies and fraud. The accounting failures contributed to delays in completing the audit, a recurring issue that has drawn criticism from local officials and a federal judge.
L.A. County supervisors previously voted to withdraw over $300 million in annual funding from LAHSA, shifting it to direct county management starting July 1, 2025, citing persistent audit problems. Supervisor Kathryn Barger stated that "LAHSA’s inaction and inability to meet its audit deadline is inexcusable." The City of Los Angeles is also considering similar actions to shift homelessness funding away from the agency, though Mayor Karen Bass has urged caution to avoid disrupting services for unhoused individuals.
Adding to the financial concerns, auditors discovered that LAHSA failed to disclose millions of dollars in payments to a service provider whose executive was married to former CEO Va Lecia Adams Kellum. This "related party" transaction, which auditors learned about through media reports, is now subject to an ongoing conflict of interest investigation by state authorities. The agency also faces a $75 million commitment in non-cancelable long-term leases for its master leasing program, which is reportedly "significantly underwater financially" and creates an annual $10 million budget deficit.
The issues echo long-standing criticisms of LAHSA's financial management. U.S. District Judge David O. Carter, overseeing a major homelessness lawsuit, has expressed "grave doubts" about oversight efforts, noting that nearly two decades of audits have failed to bring meaningful change. As Kevin Dalton stated in a recent tweet, > "After a federal audit, it turns out that the Los Angeles Homeless Services Authority is still hemorrhaging taxpayer dollars, nobody really knows where it’s going, but rest assured nobody’s really looking for it either…"
LAHSA interim CEO Gita O’Neill acknowledged the auditors' recommendations and stated her team is working to implement them, hoping to submit the final audit report soon. However, the consistent findings of poor fiscal monitoring and accountability continue to fuel calls for significant reforms in how Los Angeles manages its substantial homelessness budget.
