We audited the Homelessness Prevention and Rapid Re-Housing Program (program) at the City of Los Angeles Housing Department (Department) because it was the second largest single program grant awarded within California under the American Recovery and Reinvestment Act of 2009 (Recovery Act). In addition, our audit is part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) national mandate to monitor grant activities funded by the Recovery Act. Our objective was to determine whether the Department was efficiently and effectively administering the grant funds in compliance with Recovery Act and other applicable requirements. Specifically, we wanted to determine whether the Department had adequate policies and procedures in place to ensure that program expenditures were supported with adequate documentation and subrecipients were monitored to ensure compliance with all applicable regulations. We found that the Department did not always efficiently and effectively administer the grant funds in compliance with the Recovery Act and other applicable requirements. It did not ensure that expenditures were supported with adequate source documentation. Further, its policies and procedures were not adequate to ensure that its subrecipients complied with contractual requirements, maintained source documents for program expenditures, and received adequate monitoring for compliance with Federal requirements.

We recommend that HUD require the Department to revise its policies and procedures to ensure that adequate source documentation is reviewed before disbursing program funds. We also recommend that HUD require the Department to enforce the Homeless Program services contract between itself and the Los Angeles Homeless Services Authority (Authority) to ensure that the Authority collects, reviews, and maintains adequate source documentation from all of its subrecipients, thereby reducing the risk of fraud, waste, and abuse. Further, we recommend that the Department revise its policies and procedures to ensure that the day-to-day activities of all subrecipients are monitored during the grant term to ensure compliance with Homelessness Prevention and Rapid Re-Housing Program requirements and other applicable Federal requirements.