An audit by the Los Angeles Homeless Services Authority found that lax accounting procedures led to a failure to recover millions of dollars in contractor cash advances and pay other contractors on time, even when funds were available.

LaHSA, a joint city-county powers agency, failed to establish formal agreements on how and when advances should be repaid, did not always keep records of capital advances, and did not could not provide an accurate list of all contracts and their execution dates, the county auditor said. Comptroller Oscar Valdez wrote in the Verification of 57 pages released Tuesday evening.

The audit found that LAHSA recovered only $2.5 million of $50.8 million in Measure H Fund advanced in the 2017-18 fiscal year, and as of July, $8 million remained outstanding from county, city and state program advances made from 2016-2023.

In a sample of contracts, auditors found that LAHSA understated amounts awarded to two grantees by $505,591 and lacked supporting documentation for approximately $5 million advanced to five grantees.

LAHSA officials rejected several findings. In a pre-emptive response, LAHSA CEO Will Lecia Adams Kellum told reporters last week that most of the findings related to the activities of previous administrations and that she had already identified many accounting problems since her appointment in March 2023. She said she was working to resolve them.

Adams Kellum said she welcomes the audit to see if the agency is “on the right track to improve the system we already have in place, and to let us know more about what’s missing.”

She said she was happy to learn that the areas of concern were things she was well aware of as a former director of service provider Center Saint-Joseph and that she had come to LAHSA to address them.

“Most of these audits cover periods prior to my arrival at LAHSA. So it’s important that I get that baseline, see what those key issues are and if we’re on the right track to improve the system. We already have it in place and to let us know more what is missing,” she said.

The agency said many of the problems arose during a period of rapid growth amid the COVID pandemic, when it was under intense pressure to establish life-saving services.

Notably, the agency said it was honoring its operating agreement with the county that did not require it to recoup the $50.8 million.

LAHSA asked the auditor-monitor to drop several of the 16 findings and reduce others from a high priority to a lower priority.

The auditor left his report intact but included LAHSA’s comments. “Given the significant public funds advanced and still outstanding to subrecipients, it is essential that LAHSA implements our recommendations to ensure that public funds are properly accounted for and protected,” the auditor-controller said.

The county audit, ordered by the Board of Supervisors in February, is separate from aAudit of the City of Los Angeles Homelessness Programs conducted under the auspices of the Federal Court as part of the LA Alliance for Human Rights’ lawsuit against the city and county.

But this ties in with issues raised by the court-appointed auditors.

At a hearing in October, Diane Rafferty of auditing firm Alvarez & Marsal, told the court that preliminary field work revealed “inconsistencies in the services offered due to a lack of clear standards.”

For example, she said, “for service providers, there is no consistent definition of what is storage, what is a shower, what is a hot meal …and it is ultimately the service provider who defines these definitions for the people they’re serving.