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Audit: L.A. housing authority plagued by bad financial management

November 8, 2012 | 11:58 am

Los Angeles City Controller Wendy Greuel

Los Angeles’ housing authority, which runs on about $1 billion a year in taxpayer funds, is plagued by bad financial management that exposes it to “questionable practices and poor decisions,” according to an audit released Thursday by City Controller Wendy Greuel.

Greuel launched the audit last year amid an outcry over lavish taxpayer funded restaurant tabs for agency officials and a $1-million plus payout for its fired executive director. The agency is responsible for sheltering about 60,000 of the city's neediest residents.

A previous audit found instances of fraudulent spending by some agency officials. This audit, which looked at the agency’s financial controls, did not uncover any wrongdoing. But it did find that despite the agency’s hefty budget and a history of scandal going back decades, agency officials have done little to make sure the agency’s money is properly spent or accounted for.

Financial oversight was so lax, the audit found, that the board of commissioners that oversees the agency did not receive any financial statements or budget status reports during 2011 or the early part of 2012, except for one oral report last spring that contained little financial information. The proposed budget that was presented to the board in 2012 was not balanced and contained contradictory statements.

The audit also found the agency’s list of assets contained at least $100 million worth of property that had been disposed of or was “nonexistent,” including refrigerators and stoves that had been purchased in the 1970s.

The agency did not always follow its own rules when it came to awarding contracts to vendors, in one case allowing someone to sit on a bid selection panel after he had declared he had a conflict of interest.

The agency also was very loose when it came to handing out tens of thousands of dollars to resident groups at the city’s housing projects. The audit found three out of seven of these groups had had their tax-exempt status suspended and several had not had elections for officers in years despite federal policies calling for them to do so.

“Every dollar that is not accounted for or is misspent by management is one dollar less that can go to providing housing” for the city’s poorest residents, Greuel, a candidate for mayor, said in a statement. “It is past time for [the agency] to get its fiscal house in order.... The city cannot afford to continue spending its housing dollars irresponsibly.”


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Photo: Los Angeles City Controller Wendy Greuel in April. Credit: Mark Boster / Los Angeles Times