The King County Regional Homelessness Authority (KCRHA) has received the findings of a forensic audit conducted by Clark Nuber. Shortly after joining KCRHA, Dr. Kelly Kinnison identified the need for a clearer and independent understanding of the organization’s financial systems and conditions, particularly during its early formation. She requested this forensic audit to bring transparency to those issues and to establish a clear understanding of where improvements are needed.
The audit is focused on April 2021 – July 2025 and identified significant weaknesses in financial systems, internal controls, and reporting practices during that time. These are serious issues we must address, and we are acting with urgency to do so.
“KCRHA’s early financial systems had significant gaps and still needs improvement,” said Dr. Kinnison. “The audit did not find evidence of fraud or misuse of funds, but it does make clear that we have work to do — and we are already moving quickly to continue to strengthen controls, improve accountability, and ensure this organization operates at the highest standard.”
The issues identified relate to how financial information was tracked, reconciled, and reported — not to funds being diverted from their intended purpose. The dollar amounts referenced in the audit reflect accounting and reconciliation gaps that must be corrected, not funds that were lost.
KCRHA was created during a period of extraordinary challenge — in the midst of a global pandemic, with a newly formed regional structure and evolving governance, and the rapid formation and scaling of a new public agency. Those conditions contributed to gaps in financial systems and processes that were not sufficient for the scale and complexity of this work. That context does not excuse the findings, but it helps explain how they developed.
Since that time, KCRHA has made meaningful progress. Governance has been restructured, core operations are functioning more effectively, and financial practices have improved. In the past 18 months, invoicing is now completed on time with significantly improved accuracy, regular monthly financial close processes have been implemented, and stronger oversight and controls have been established for spending, including purchase cards. At the same time, the audit makes clear that additional work is required, and we are committed to continuous improvement of KCRHA.
In coordination with the City of Seattle and King County, we have begun implementing immediate actions to strengthen financial controls, improve accountability and reporting, and address the highest-risk areas identified in the audit. This includes focused efforts to reconcile outstanding balances, strengthen approval and documentation processes, improve cash management, and establish clearer financial oversight.
We will provide a detailed response to our funders in the coming days, followed by a comprehensive corrective action plan with clear timelines and accountability measures. We are committed to transparency and to demonstrating measurable progress. Addressing homelessness at a regional scale requires strong coordination, accountability, and continuous improvement. We are committed to doing that work, in partnership with our governing board, our funders, and the communities we serve.
In the meantime, KCRHA’s mission continues. Every day, thousands of people across the region are supported through outreach, shelter, and housing programs funded and coordinated through this system. That work is ongoing and uninterrupted.
Below are answers to some initial questions that may arise from this audit announcement.
Q&A
Did the audit find missing money?
No. The audit did not find evidence of fraud or misuse of funds. The amounts being referenced reflect accounting and reconciliation gaps, particularly from earlier periods. Since then, we’ve strengthened core financial processes — including more accurate invoicing, regular monthly close processes, and improved oversight — and we are continuing to address the remaining issues identified in the audit.
How do you explain the $8 million that can’t be reconciled?
The $8 million reflects accounting and reconciliation gaps — not funds that were lost or diverted — particularly from earlier periods when systems and processes were not strong enough. Since then, we’ve made significant improvements — invoicing is now being completed on time and with much greater accuracy, and we’ve implemented regular monthly hard close processes. We also have a dedicated effort underway to reconcile those remaining balances and ensure this is fully addressed going forward.
Why should the public trust KCRHA with taxpayer money?
Public trust is critical, and this audit makes clear where we need to improve. It also confirms that funds were used to support services for people experiencing homelessness. Over the past 18 months, we’ve strengthened core financial practices — including more accurate invoicing, regular monthly close processes, and stronger oversight of spending — and we are continuing to build on that work.
Is this a failure of leadership?
The audit identifies serious weaknesses in financial systems and controls, particularly during the agency’s early formation. Since that time, governance has been restructured and we have made meaningful improvements. We are accountable for addressing what remains, and that is exactly why CEO Kinnison requested the audit and what we are focused on now.
Should KCRHA be dismantled?
The focus should be on strengthening the regional system, not abandoning it. KCRHA coordinates services for tens of thousands of people across the region, braiding federal, state, and local funding. The audit identifies areas that need improvement, and we are actively addressing them. Disrupting the system would not solve those issues — improving it will.
Why did this happen in the first place?
KCRHA was created rapidly during a period of significant disruption — during the pandemic, with a new regional structure and evolving governance. That contributed to gaps in financial systems and processes. The audit clarifies those issues, and we are addressing them directly.
Are problems still happening now?
The audit makes clear that some issues remained as of mid-2025. We have made progress since then, but additional work is needed now that we have the data from this audit. That’s exactly what we are focused on right now — priorities for strengthening systems and controls to ensure consistent, reliable operations within our operational constraints.
What are you doing right now to fix this?
We have already begun implementing immediate actions in response to issues surfaced while working on the audit, including strengthening financial controls, improving documentation and approvals, and addressing reconciliation issues. That includes focused work on outstanding balances and more disciplined financial processes. As always, we are working closely with the City and County and will provide a detailed corrective action plan with clear timelines in the coming weeks.
What about the negative cash position and interest costs?
This reflects a combination of the funding model — where providers are paid before reimbursement — and earlier gaps in invoicing and cash management processes. Those gaps contributed to delays and a negative cash position. Over the past year, we’ve significantly improved invoicing timeliness and accuracy and implemented more disciplined financial procedures, including regular monthly close processes. We’re now focused on strengthening cash forecasting and working with our funders to reduce that exposure going forward.
Did KCRHA overspend its budget?
The audit identifies areas where spending exceeded approved budget parameters, and we take that seriously. Some of that was driven by structural costs, such as interest tied to the funding model, and one-time investments — including upgrading from an insufficient contract management system to a more effective Salesforce-based platform. At the same time, our budget controls were not strong enough in earlier periods. We’ve since implemented stronger oversight and approval processes, including tighter controls on purchasing cards and spending, and are continuing to strengthen budget discipline going forward.
Were internal controls inadequate?
Yes — the audit identifies weaknesses in internal controls, particularly in earlier periods of rapidly standing up the organization. We’ve already taken steps to strengthen those controls — including improved oversight of purchase cards, stronger documentation requirements, and more structured financial processes — and we are continuing to build on those improvements.
Is anyone being held accountable?
Accountability starts with acknowledging the issues and taking corrective action. We requested this audit, we are being transparent about the findings, and we are implementing specific changes to strengthen controls, oversight, and financial discipline going forward.
Will services be impacted?
No. Services continue uninterrupted. Providers across the region are continuing to serve people every day, and that work remains our top priority.
Are you saying the media is wrong about missing money?
We understand how the numbers in the audit can be misinterpreted. What the audit itself makes clear is that these are accounting and reconciliation issues, not evidence of funds being lost or misused. Our focus is on correcting those issues and strengthening our systems.
Why did leadership request this audit?
Shortly after joining KCRHA, our CEO identified the need for a clear and independent understanding of the organization’s financial systems, particularly during its early formation. As a career civil servant and steward of public funds, she requested this audit to bring transparency to those issues and to establish a clear path forward for strengthening controls and accountability.
What happens next?
We are providing an initial response to the City and County in the coming days and will follow up with a comprehensive corrective action plan. We are committed to transparency, to working in close partnership with our funders, and to demonstrating measurable progress.
