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We completed a financial review of the Housing Authority of the County of Los Angeles' (Authority) Section 8 program. We initiated the review in response to several citizen complaints alleging mismanagement, waste, and abuse of U. S. Department of Housing and Urban Development (HUD) Section 8 funding, including the use of Section 8 funds to pay the costs of non-Section 8 programs. Our objective was to determine the validity of the above allegations and to determine whether the Authority managed and spent its Section 8 funds in accordance with HUD rules and regulations. We found that the Authority did not properly manage its Section 8 funding in fiscal years 2005 and 2006 and over-allocated more than $5 million in indirect administrative expenses to its Section 8 Assisted Housing program (of which only $2.1 million was charged to an allowable source of reserve funds). We recommend that the Director of HUD's Los Angeles Office of Public Housing require the Authority to repay the Section 8 program from nonfederal funds, $2.9 million of the $5 million in over-allocations that were charged to restricted funds.