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We audited the Housing Authority of City of Los Angeles’ legal services due to a hotline complaint alleging that the Authority did not properly procure its legal services and alleging questionable legal expenses that violated U.S. Department of Housing and Urban Development (HUD) requirements.  Our audit objective was to determine whether the Authority procured, contracted, and managed its legal services in compliance with HUD requirements.

The allegations about procurement had some merit.  While we did not find issues with the Authority’s competitive procurements, the Authority did not always follow HUD requirements and its intergovernmental agreement when it managed its legal services with the City of Los Angeles.  From July 1993 to June 2018, the Authority did not obtain the required board-approved annual amendments, which would have allowed increased attorney rates for legal services as required by its intergovernmental agreement.  In addition, it did not perform the required annual cost analyses for its intergovernmental legal services agreement with the City.  We attributed these conditions to the Authority’s lack of oversight to ensure compliance with HUD requirements and its intergovernmental agreement.  Of the $983,670 in reviewed legal expenses, the Authority did not ensure that $793,101 in legal services was cost beneficial.

We recommend that the Director of HUD’s Los Angeles Office of Public Housing require the Authority to (1) provide documentation to show a cost savings benefit for $793,101 in legal services billed by the City and (2) follow intergovernmental agreements to ensure it’s in compliance with the requirements.