KCRHA forensic audit — $13M unaccounted, $44.7M negative cash position

A forensic audit found that Seattle and King County’s homelessness agency, the King County Regional Homelessness Authority (KCRHA), could not account for $13 million in public funds and was carrying a $44.7 million negative cash position — with no fraud found, but also no basic financial controls in place.

What happened

The City of Seattle and King County jointly commissioned an outside forensic review of the King County Regional Homelessness Authority (KCRHA) in August 2025. The accounting firm Clark Nuber P.S. conducted the review, which was released April 22, 2026, and covered KCRHA’s operations from mid-2021 through July 31, 2025.

The findings were stark:

• The agency was carrying a $44.7 million negative cash position as of July 31, 2025.
• An $8 million receivables balance could not be reconciled from available records — meaning no one could trace what happened to that money.
• A $4.26 million administrative operating deficit, including $1.27 million in interest charges the agency ran up by overdrawing its county investment pool account — charges that cannot be recovered.
• A $6.4 million unapproved programmatic overspend in 2025.

On top of that, KCRHA received $226.9 million in advance funding during the review period but had no system to track how those funds were actually spent.

The receipts

The Clark Nuber forensic evaluation (April 17, 2026) stated directly:

• “A receivables balance of $8 million could not be reconciled based on available records, indicating a potential need to write it off.”
• “An administrative operating deficit of approximately $4.26 million was identified, which includes approximately $1.26 million in interest charges that are not expected to be recovered.”
• “Significant exceptions and gaps were noted in the design and execution of internal controls.”
• “Roles and responsibilities related to financial leadership and oversight were not clearly defined.”

The audit did not find fraud. But it flagged gift cards, purchase cards, employee reimbursements, and user account permissions as four areas where fraud could happen without anyone detecting it — because the financial controls to catch it do not exist.

Status

KCRHA submitted an initial response on May 12, 2026. CEO Kelly Kinnison stated the agency would review each transaction to track down the $8 million in unreconciled funds. A full corrective action plan was due May 23, 2026, with follow-up reports due June 30 and July 31, 2026.

Multiple elected officials called publicly for the agency to be dissolved, including King County Councilmember Rod Dembowski, Seattle Councilmember Bob Kettle, and Seattle Mayor Katie Wilson. The KCRHA Governance Committee met April 25, 2026, to weigh next steps.

Why it’s in the registry

KCRHA managed roughly $800 million in public money over the four-year audit period. The audit found that basic accounting infrastructure — defined financial roles, a system to track how advance funds were spent, controls to catch improper purchases — was absent during that entire time.

This is not about one bad actor. It is a structural failure (meaning the problem is built into how the agency operates, not a one-off mistake): the governance structure split responsibility between the City and the County in a way that left neither accountable for the gap.

Reform implication

The audit’s findings — undefined financial roles, no internal control framework, and a negative cash position that persisted for 19+ months without anyone intervening — point to a governance design failure, not just management incompetence. Because oversight responsibility is split between Seattle and King County, neither city consistently held the agency to account.

Reform options include: (1) an independent Inspector General with cross-jurisdictional authority covering both KCRHA and its funders; (2) governance restructuring to put fiscal accountability in a single oversight body; or (3) dissolving the agency and folding its functions into a single jurisdiction that already has audit infrastructure, as proposed by Councilmember Dembowski and others. See [reform: independent_inspector_general] and [reform: cost_transparency_reporting].