Recorder’s Office: Better Financial Oversight Will Reduce Risk

The King County Recorder’s Office (KCRO) has not taken sufficient steps to ensure the accuracy and completeness of its financial data. As a result, it is at a greater risk for uncollected revenue, non-compliance, and potential fraud. For example, in a review of data from 2018 through 2023, we found errors that applied nearly $7 million in prepaid account deposits to the wrong customer accounts and overbilled invoice customers by more than $1 million. KCRO does not closely monitor prepaid accounts, increasing the risk for outstanding payments and impermissible credit to private parties. The office does not review invoices for accuracy, increasing the likelihood that customers receive bills with missing and duplicate transactions. In addition, the office did not send unpaid accounts to collections for returned checks, reducing revenue, and inappropriately applied expired tax exemptions, increasing the risk that a few customers paid less in taxes than they owed.

Several factors contribute to the persistence of these issues. For one, the Records and Licensing Services Division that oversees KCRO did not document clear roles and responsibilities for financial oversight. The complexity of the work done at KCRO contributed to the siloing of information and lack of clarity. Also, turnover in a key fiscal position slowed process improvements. Gaps in financial procedures reduced accountability, efficiency, and effectiveness, while limited use of data hindered operational improvement.

We make recommendations for specific control activities to increase the accuracy and completeness of financial data and revenue collection. We also make recommendations 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 is a section in the Department of Executive Services’ Records and Licensing Services Division. In 2022, it collected more than $1 billion in Real Estate Excise Tax (REET) to pass on to state and local governments. The same year, the office collected $18 million in revenue for King County’s General Fund. County revenue is largely made up of fees for collecting REET (73 percent) and recording official documents (22 percent). KCRO recorded nearly 300,000 documents in 2023, an average of more than 1,100 documents a day. Because of the volume of transactions it processes, it is essential that KCRO collects revenue timely, accurately, and completely to ensure King County achieves its strategic goals of best run government and financial stewardship.