We audited the City of Los Angeles Housing Department (Department) as a result of an earlier audit of its HOME Investment Partnerships Program (HOME) rehabilitation program, which detected problems with the Department's monitoring of HOME-assisted rental units. Our audit objective was to determine whether the Department complied with HOME affordability monitoring and inspection requirements regarding HOME-assisted rental units. We found the Department did not comply with HOME affordability monitoring and inspection requirements for its HOME-assisted rental housing. It failed to maintain the required tenant eligibility information for 26 HOME-assisted rental housing projects totaling nearly $38 million. In addition, it did not maintain complete tenant eligibility information for 27 tenants living in seven projects, resulting in $103,693 in unsupported costs. Further, it did not ensure that its contractor conducted occupancy monitoring as required. Finally, the Department failed to inspect HOME-assisted rental housing projects when required and ensure local housing code regulations were met. Improvements on controls would ensure that $226,483 in funds could be put to better use. We recommend that HUD require the Department to properly support or repay from nonfederal funds more than $38 million in unsupported expenses, and establish and implement more effective procedures and controls.