(The Center Square) – A new state audit of the King County Regional Homelessness Authority found financial statements off by over $30 million, but the agency claims auditors did not review the final version of the statements.
The Office of the Washington State Auditor looked at KCRHA for 2024. Its audit found internal control deficiencies that allowed for misstatements in its financial statements. More specifically, the agency did not dedicate an adequate amount of time and resources to perform a thorough review before submitting the financial statements to the State Auditor’s Office.
The agency’s financial statements’ material errors included deferred inflows of resources on the balance sheet being overstated by $37 million, an understated fund balance totaling $37.12 million, net receivables overstated on the balance sheet by $17.62 million, and unearned revenues being overstated by $17.7 million.
KCRHA is a quasi-government agency that acts on behalf of King County and Seattle to distribute funding to programs addressing homelessness in the region. The agency’s expenditures in 2024 totaled $193.8 million
During the review of its annual financial statement, KCRHA noticed its initial version included incompletely reviewed account balances. In order to correct the flagged errors, the agency conducted a manual reconciliation and submitted the final financial statements minus any misstatements.
“The noted under/overstated balances simply reflect the difference between the initial and the final versions of the financial statements,” KCRHA wrote in its response. “The timing between the two sets of financials was due to the manual reconciliation processes and thus prone to human error, which extended the efforts needed for preparation and reviews.”’
The audit notes that KCRHA ultimately corrected these misstatements.
While the agency’s financial statements were ultimately corrected before being finalized, KCRHA is still actively evaluating its workflow processes to improve performance. KCRHA plans to enhance its financial closing procedures and reporting protocols further to improve review timing.
“This rigorous review and strengthened oversight will be implemented to minimize the risk of material errors,” KCRHA wrote in the audit.
KCRHA Communications Director Lisa Edge told The Center Square that in March, KCRHA’s Governing Board approved an interfund loan with King County and continues to have ongoing discussions with Seattle partners to address the cash flow challenges highlighted in the state audit findings.
The Office of the Washington State Auditor will review the corrective action taken during its next audit.
