Following an independent review by a well-known international accounting firm, the Los Angeles Homeless Services Authority on Friday reaffirmed plans to modernize financial operations in an effort to end chronic failures managing contractors and the joint city-count agency’s finances.
As LA County and city officials over the last few years have initiated steps to break away from LAHSA, the fiscal review by KPMG earlier this year found that delayed payments to contracted service-providing organizations stemmed from a combination of interconnected operational issues rather than any single underlying cause, according to LAHSA officials. KPMG reviewers also identified opportunities to improve workflow efficiency, reduce administrative bottlenecks, strengthen cash management practices and modernize financial systems.
Officials said LAHSA has already implemented many of the firm’s recommendations.
“The KPMG review provides valuable validation of challenges we have already identified and begun addressing,” Interim LAHSA CEO Gita O’Neill said in a statement. “The report also offers a roadmap for continued improvements that will strengthen our financial operations, support our provider partners, and ensure public funds are administered effectively and responsibly.”
KPMG auditors specified organizational and operational factors that primarily caused LAHSA’s problems — complicated administrative and contractor workflows, manual as opposed to automated work “processes,” the complexity of dealing with multiple funding sources and the underutilization of data systems that could help improve operations.
LAHSA officials said many of the report’s recommendations align with corrective actions that LAHSA is already doing or is starting to implement:
- “Launching a payment backlog reduction strategy and clearing outstanding payables;
- “Better coordinating with funders to improve cash flow and pay providers on time;
- “Implementing new financial reporting tools and dashboards to improve visibility into operational performance;
- “Strengthening invoice processing and monitoring procedures;
- “Improving communication and guidance for contracted service providers;
- “Working towards standardizing processes and increasing accountability across departments;” and
- “Accelerating financial reconciliation and reporting to make data more accurate and timely.”
The audit report also identified several long-term opportunities for modernizing the agency’s financial protocols.
LAHSA officials said they are developing improved reporting tools to help management and staff track the agency’s finances, service-provider payments and funding activities in real time. The accounting upgrades are expected to reduce reliance on manual reporting, improve decision-making and increase transparency for funding providers, elected officials, LAHSA contractors and the public.
“We have a clear roadmap for strengthening LAHSA’s financial operations and improving the experience of the providers who deliver critical services throughout Los Angeles County,” O’Neill said. “We’re implementing substantial process improvements that will help us manage public resources more efficiently and effectively.”
LAHSA also is seeking to hire a firm to help guide implementation of the KPMG’s longer-term recommendations, including “systems integration, workflow redesign, automation, and financial operations modernization,” according to the agency.
The deadline for prospective accounting firms was June 26.
“LAHSA administers significant public funding supporting homelessness programs and contracted services throughout the City of Los Angeles,” according to the agency’s “Request for Qualifications” document. “To support enhanced fiscal management, operational efficiency, accountability, and long-term financial sustainability, LAHSA seeks to engage an independent accounting firm with demonstrated expertise in governmental financial operations, accounting systems implementation, public-sector fiscal controls, operational stabilization, and embedded financial operations support services.
“The selected contractor is expected to serve as an embedded operational partner supporting the implementation of improved financial systems, strengthened accounting processes, enhanced cash management practices, improved payment processing workflows, and effective day-to-day fiscal administration.”
Criteria for choosing a firm include:
• “Relevant governmental and operational accounting experience;
• “Quality of implementation-oriented operational approach;
• “Demonstrated cash management and AP/AR expertise;
• “Staffing qualifications, embedded support capability, and executive financial leadership;
• “Systems implementation and finance transformation capability;” and
• “Cost proposal.”
More about the Independent Fiscal Management RFQ is on LAHSA’s website, lahsa.org/news?article=1075-2026-independent-fiscal-management-rfq&ref=funding.
On Aug. 13, a federal Judge ordered the U.S. Department of Housing and Urban Development to restore funding for homelessness programs in Los Angeles County.
Judge David O. Carter ruled that HUD’s suspension in June of $240 million for the LA Homeless Services Authority and remedial measures against the Los Angeles Continuum of Care weeks before grant deadlines was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” under the Administrative Procedure Act.
The court sided with LAHSA’s argument that the Trump administration was attempting to bypass local planning and set funding priorities for the Los Angeles region violated clear legal requirements under the HEARTH Act, which places local homelessness strategy and prioritization with officials in regional communities through the continuum of care system.
HUD Secretary Scott Turner posted on X that the Trump administration would “fight this legally,” adding that “The court ordered HUD to send tens of millions of dollars directly to LAHSA, an organization that has proven to be incompetent with YOUR tax dollars. The money that YOU worked hard to earn!”
In another X post Friday, Turner said, “LAHSA is on notice — not another dime until they show the money actually helps people toward recovery and self-sufficiency. We’re putting results first.”
