The state is looking at reports of misspent or lost money in Louisville's city Housing and Family Services Department.

Over the last couple of weeks the Department of Housing and Family Services has been under scrutiny, most of it involves financial issues.  Now the state auditor is getting involved.

Last week, Kimberly Bunton resigned her position as director of the city's housing department, after it was learned she gave her mother almost $2,000 of taxpayer money.

Metro Mayor Jerry Abramson said he was disappointed.  Bunton was already under scrutiny for the way her department was being run.  Metro Council members were looking at reports of millions of dollars in housing grant money lost or unclaimed.

"The state auditor talked to the mayor on Monday and made it clear to him she thought it would be a good idea for the state to look into the issues," said Chad Carlton, the mayor's spokesman.

In a letter sent to Metro Mayor Jerry Abramson, state auditor Crit Luallen says, her investigation is under way.

"Recent news of fiscal irregularities in the Metro Department of Housing and Family Services, combined with several unresolved issues that have been identified in previous audits over the last four years, have put us in the position of having the responsibility really to come back in and perform an independent state audit of this department," said Luallen.

There is already an ongoing city audit, an outside accounting firm is conducting the city's annual audit, and Metro Police are investigating Kimberly Bunton.

The state auditor says her investigation could last several months, and her office can refer anything that points to criminal wrongdoing to the attorney general, state police or the FBI.

"There will be changes over the next several months, to make sure policy and procedures are in place that meet with HUD guidelines, to meet with all the standards that we gathered from talking with auditing agencies and give the public confidence," said Carlton.

Luallen says audits conducted by the state for fiscal years 2004 and 2005 raised concerns about the administration of funds and similar concerns were raised in 2006 and 2007.