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King County Recorder’s Office mishandled $7M over 6 years, audit finds

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(The Center Square) – A recent audit from the King County Auditor has found that the King County Recorder’s Office mishandled around $7 million since 2018.

The King County Recorder’s Office is responsible for tax collection of home sales, marriage licenses, and recording real estate sales and mortgages.

The office handled over $1 billion in real estate excise taxes on behalf of districts across Washington and King County. The latest audit found that the office did not take sufficient steps to ensure its financial reporting was reliable, resulting in greater risk for undetected fraud and uncollected revenue.

Auditors reviewed data from 2018 through 2023 and found errors allocating nearly $7 million to the wrong customer accounts and overbilling invoice customers by more than $1 million over that time span. According to the audit, these errors took place amid unclear roles and responsibilities, information silos, and outdated procedures that limited accountability.

The audit also reviewed a sample of electronic deposits made by three high-volume nongovernmental customers and found that KCRO entered the wrong customer’s name on five deposits. As a result, this incorrectly reduced one customer’s account by $6.8 million and incorrectly increased the accounts of two other customers by $4.5 million and $2.3 million.

A customer email helped the Auditor’s Office become aware of nine account credits KCRO entered without a corresponding bank deposit, and one omitted despite its deposit into the bank. These errors raised the customer’s account balance by about $550,000.

The King County Auditor’s Office made 17 recommendations to the KCRO, including specific control activities to increase the accuracy of financial data and revenue collection, ways to improve documentation of roles and responsibilities related to financial oversight, and increase the use of available data and resources to proactively prevent and detect errors.

KCRO responded to the flagged issues presented by the audit, stating that it would implement new actions: apply deposits to the correct customer accounts, remove duplicate charges, and update transactions with missing information.

“The KCRO is committed to ensuring statutorily required, timely recording of multi-million dollar real estate transactions continues,” King County Chief Operating Officer Dwight Dively said in a letter to the King County Auditor. “The KCRO is moving expeditiously to complete its work on these 17 recommendations.”