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COVID-19 PANDEMIC - Specific COVID-19 Benefits - AG Report
COVID-19 PANDEMIC - Specific COVID-19 Benefits - AG Report
PANDEMIC
REPORT 10
Conclusion 33
Introduction
Background
Responding to the
COVID‑19 pandemic
10.3 Like all Canadians and Canadian businesses, the federal public
service delivering the COVID‑19 benefit programs had to overcome
its own pandemic challenges. For example, federal workplaces had to
adjust operations to have hundreds of thousands of employees switch
quickly to working from home while continuing to deliver all other
programs and services that are part of regular government operations.
Roles and
responsibilities
The audit also focused on whether the department and the agency
• managed the COVID‑19 programs efficiently
• measured their administrative effectiveness
10.14 More details about the audit objective, scope, approach, and
criteria are in About the Audit at the end of this report.
10.18 The department and agency did not develop rigorous and
comprehensive plans to verify the eligibility of recipients. We found that their
post‑payment verification plans did not include verifying payments made
to all identified recipients at risk of being ineligible for all COVID‑19 benefit
programs. Given the limited pre‑payment controls and the early decision
to focus on post‑payment verifications, we expected the department and
the agency to perform extensive post‑payment verifications to identify
payments made to ineligible recipients.
March 2020 September 2020 October 2020 October 2021 May 2022
Canada Emergency
Wage Subsidy
Canada Emergency
Response Benefit*
Canada Recovery
Sickness Benefit
Canada Recovery
Caregiving Benefit
Canada Recovery
Benefit
Canada Worker
Lockdown Benefit
Application received
Automated system
pre-payment controls
Application rejected:
Accepted
End of process*
Payment issued
Notification sent to
recipient of amount owing*
Collection measures
(if necessary)
Payment recovered
End of process
What we found
Context
10.27 Along with the benefit programs for individuals, the government
introduced COVID‑19 support for employers, including the Canada
Emergency Wage Subsidy. This program’s objective was to
• help employers retain their employees during the pandemic
• ensure that workers were able to count on a source of income
despite some sectors of the economy being shut down
• encourage employers to rehire workers who were laid off as a result
of the pandemic
• help position employers to resume normal operations more easily
when economic activity fully resumed
Analysis to support
this finding
Economic rebound
Exhibit 10.4—After a 17% reduction in 2020, economic activity bounced back to its pre-COVID-19
level by November 2021
Gross domestic product
in billions of 2012 dollars
Start of the COVID-19 November
pandemic, March 2020 2021
$2,100
$2,000
$1,900
$1,800
$1,700
April 2020
$1,600
$1,500
$0
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jun
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022
Source: Statistics Canada data, released August 31, 2022
10.29 With health measures put in place to limit the spread of the
virus that causes COVID‑19, many Canadians transitioned to working
from home. Others were unable to work. This explained a reduction
in the number of hours worked and highlighted the importance of
these programs supporting workers who lost income. Hours worked
diminished by 28% between February and April 2020 (Exhibit 10.5)
but returned to their pre‑COVID‑19 level by May 2021. The most
significant impacts were concentrated in the service sector, such as
accommodation and food services, where non‑essential business
activities were closed and where physical distancing and alternative work
arrangements were more difficult or impossible.
1 Gross domestic product—The total value of goods and services produced in a year.
Also commonly referred to as GDP, it is 1 of the indicators traditionally used to measure
the size of the economy.
Exhibit 10.5—After a major decrease between February and April 2020, the number of hours
worked went back to pre-COVID-19 level as of May 2021, with some service industries still affected
110
100
90
80
70
60
50
40
30
0
Jan Mar May Jul Sept Nov Jan Mar May Jul Sept Nov Jan Mar May Jul
2020 2020 2020 2020 2020 2020 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022
Total employed, all industries Accommodation and food services Other services (except public administration)
Note: We used Statistics Canada data and established an index number (January 2020 = 100, which is a statistical technique for measuring
changes in the magnitude of a group of related variables) to measure the change from a point in time. “Other services” include activities not
classified to any other sector, such as personal care services, funeral services, and car repair and maintenance. For a complete definition, see
Statistics Canada.
Source: Statistics Canada
10.31 Statistics Canada data also showed that workers with relatively
lower income were among those who received the most benefit
payments, which compensated their loss of income. For families with the
lowest level of income, their combined income from employment, private
pensions, and investments—known as market income—decreased
on average by $700 (or 18%) between 2019 and 2020. However, when
we combined this income with government transfers (cash benefits
such as child benefits, tax credits, as well as emergency response and
recovery benefits for 2020)—known as after‑tax income—we saw an
annual income increase of $2,900 (or 16%) in the same period. Although
individuals from all income groups observed a growth of this income, the
increase was substantial for lower‑income families (Exhibit 10.6).
20%
16%
15%
10%
8%
7%
5% 5%
5%
2%
0%
0%
–2% –2%
–3%
–5%
–10%
–10%
–15%
–18%
–20%
Lowest Second Third Fourth Fifth All
quintile* quintile quintile quintile quintile income
Income group
Note: An income quintile is a measure that divides the population into 5 income groups (from lowest
income to highest income) so that approximately 20% of the population is in each group. Market income
is employment income and private pensions plus income from investments and other market sources.
After-tax income is the total of market income and government payments, less income tax. For 2020,
government transfers included emergency response and recovery benefits.
The exhibit above illustrates that people in the lowest quintile were those who had the highest decrease in
their market income. It also illustrates that COVID-19 benefits represented a higher proportion of the total
after-tax income for the people in the lowest quintile.
Source: Statistics Canada
What we found
Analysis to support
this finding
35
29.9%
30
25
20
15
10
0
Persons in groups Indigenous Persons not
designated as people designated as a
visible minorities visible minority and
not Indigenous
Note: Federal COVID-19 benefits include the Canada Emergency Response Benefit, the Canada Emergency
Student Benefit, the Canada Recovery Benefit, the Canada Recovery Caregiving Benefit, the Canada
Recovery Sickness Benefit, and a 1-time payment made to Canadians with disabilities.
Source: Statistics Canada
Exhibit 10.8—The trend in the number of people receiving benefits aligned with the level of severity
of COVID-19–related restrictions
Number of Stringency
recipients index
16,000,000 80
14,000,000 70
12,000,000
60
10,000,000
50
8,000,000
40
6,000,000
30
4,000,000
2,000,000 20
0 0
15 March 15 April 15 May 15 June 15 July 15 August 15 September
2020 2020 2020 2020 2020 2020 2020
Number of Stringency
recipients index
1,400,000 80
1,200,000 70
1,000,000 60
800,000 50
600,000 40
400,000 30
200,000 20
0 0
27 Sept 27 Oct 27 Nov 27 Dec 27 Jan 27 Feb 27 Mar 27 Apr 27 May 27 Jun 27 Jul 27 Aug 27 Sept
2020 2021
Note: The stringency index measures the severity of policies governments put in place to protect people against the transmission of COVID-19. A
higher index score indicates a higher level of COVID-19–related restrictions on individuals and employers. Values shown for the stringency index
are averages of the daily scores for the 2-week periods for the programs.
Source: Stringency index—Bank of Canada; number of recipients based on data provided by the Canada Revenue Agency and Employment and
Social Development Canada
10.44 Statistics Canada also reported that there were fewer business
closures for those businesses that received the Canada Emergency
Wage Subsidy. Among the businesses that received the subsidy, 10.3%
of them closed by February 2022 compared to 32.8% of businesses that
did not receive the subsidy. However, these closure patterns could not
be interpreted as reflecting the impact of the Canada Emergency Wage
Subsidy because pre‑existing and other emergency support government
programs were running at the same time to support businesses through
the pandemic. Therefore, we could not conclude on the impact of the
subsidy on business resilience.
10.45 We found that the Canada Revenue Agency did not have the data
needed to measure the effectiveness of the Canada Emergency Wage
Subsidy. For example, the application form did not require employees’
social insurance numbers. These employees were supposed to be the
ultimate beneficiaries of this program through their employers. Without
data, we could not accurately determine
• the exact number of employees who benefited from this program
• whether employees remained working for the same employers,
changed to another employer, or moved to work in another sector
• the exact number of employees who were rehired (as the program
aimed to encourage employers to rehire workers who were laid off
as a result of the pandemic)
What we found
10.48 We found that the government was aware from the onset of
the pandemic that the introduction of COVID‑19 benefits to individuals
would create a disincentive to work for some recipients. Employment
and Social Development Canada announced changes to the Canada
Emergency Response Benefit program to counter the disincentive.
Analysis to support
this finding
Context
What we found
10.64 Despite the fact that the Canada Revenue Agency and
Employment and Social Development Canada added some pre‑payment
controls over time, there were still eligibility criteria for each program
for which no pre‑payment controls were implemented. We found that
$4.6 billion was overpaid to ineligible recipients. We also estimated that
at least $27.4 billion was paid to recipients that have an indicator of
ineligibility and should be investigated further.
Exhibit 10.9—Benefit and subsidy amounts paid to ineligible recipients or recipients that should be
investigated further
Total
Benefit program and amounts paid to ineligible
Program requirement not met or at payment
recipients or recipients that should be
risk of not being met1 amount
investigated further
(in billions)
Overpayments to ineligible recipients $4.6
10.74 We found that the Canada Revenue Agency did not have
timely and sufficient data in its systems to reliably assess the Canada
Emergency Wage Subsidy eligibility criteria at the time of application.
In the absence of real‑time data, we found that the agency did not use
the available GST/HST information to assess the eligibility criteria for
demonstrating revenue decline.
10.75 GST/HST filing requirements are not in real time and may
be submitted monthly, quarterly, or annually. This meant the agency
could only do analyses after businesses submitted GST/HST returns,
which was not in time to assess employers applying for the subsidy.
After the subsidy ended, we analyzed the GST/HST return filings the
agency received throughout 2020 and 2021. We estimated $15.5 billion
in benefits were paid to recipients whose GST/HST filings did not
demonstrate a sufficient revenue decline to be eligible for the subsidy.
A more definitive estimate of payments to ineligible recipients and
amounts to be recovered by the government will be determined only after
the agency has completed its post‑payment verifications.
10.83 At the time of our audit, limited progress had been made. The
agency planned to develop a business case in 2024 to request additional
funding for a real‑time e‑payroll system. According to the agency’s
plan, the project was facing delays—for example, the period for official
consultations was initially set to end in March 2022 but was extended to
March 2023.
Context
Employment and Social Development Canada and the Canada Revenue Agency were
planning to do few post‑payment verifications
What we found
Analysis to support
this finding
Incomplete post‑payment verification plans and delays in conducting
verifications for individuals
10.95 Such delays mean that the department and the agency will face
significant challenges completing all of their verifications before the
expiry of the legislated time frames for most of the individual benefits.
Given that payments for some of the individual benefit programs started
in spring 2020, and considering the delays in starting post‑payment
verifications, there is limited time left to conduct post‑payment
verifications of cases that do not represent suspected fraud or
misrepresentation. Even for cases of fraud or misrepresentation, for
which the timeline is extended to 72 months, a significant amount of
time has already elapsed and both the department and the agency have
just started the post‑payment verifications.
10.99 In our opinion, the department and agency had not adopted a
rigorous and comprehensive approach to post‑payment verifications
considering the limited pre‑payment controls and the decision made at
the onset of these programs to focus on verifying eligibility of recipients
after payment. We believe that the low number of post‑payment
verifications planned was insufficient to address all payments at risk
of being ineligible. Given the limited pre‑payment controls in place, we
expected the department and the agency to conduct extensive and
comprehensive post‑payment verifications.
The Canada Revenue Agency began the process of verifying the eligibility of recipients of the Canada
Emergency Wage Subsidy in August 2020.
In phase 1 of its post‑payment verification plan, the agency selected a total of 730 audits with $1.5 billion in
subsidies paid from eligibility periods 1 to 4. Employers to be verified were selected in several ways: through
data analytics, manual identification during pre‑payment controls, and random selection. This phase included
a limited sample number in order to gain insights and develop a more thorough audit program for the next
phase.
Phase 2 verifications began in May 2021. Audits were selected based almost entirely on data analytics
(using risk indicators identified in phase 1) and manual identification during pre‑payment controls. A total
of 2,770 audits with $10.7 billion in subsidies paid were selected for phase 2 verifications.
As of May 2022, 712 (98%) of phase 1 verifications had been completed. Of completed verifications, 42%
resulted in adjustments totalling $81.5 million (6% of the amounts audited). Phase 1 verifications took an
average of 341 days to complete. Given the complexity of some audits, 18 were still in progress for phase 1.
As of May 2022, only 487 (18%) phase 2 verifications had been completed, while 49% were in progress
and 33% were not started. Of the completed verifications, 61% resulted in adjustments totalling $40 million
(13% of the amounts audited). Phase 2 verifications took an average of 195 days to complete.
The agency is planning to conduct an additional phase of verifications depending on the outcomes of current
phases and the availability of resources. Considering the above, the agency is at risk of not completing
phase 2 and any additional phase within the time frames referred to in paragraph 10.102.
While the number of employers selected for verification in the first 2 phases totalled approximately 0.8% of
the unique recipients, the value of subsidies being verified represented about 12% of the value of Canada
Emergency Wage Subsidy paid.
(See Part 2 of this report for a breakdown of Canada Emergency Wage Subsidy recipients and verifications by
business size.)
What we found
10.104 At the time of the audit, we found that it was too early
to assess with certainty the unrecoverable amounts related to
the COVID‑19 programs we audited given the limited number of
post‑payment verifications and collection activities completed.
Context
Analysis to support
this finding
10.111 At the time of the audit, the agency’s collection activities for the
individual benefit programs were limited to responding to calls received
from recipients wanting to repay or make payment arrangements for
COVID‑19 amounts owed. We found that no other collection actions
occurred because very few notices were sent to recipients, with the
exception of Employment Insurance Emergency Response Benefit
lump‑sum advance payments, for which all notices had been sent
to individuals.
Unrecoverable amounts
10.117 We did not carry out additional audit procedures on the cases
identified above because they were being internally reviewed or were
already referred to law enforcement for investigation.
10.118 When the agency and department have exhausted all avenues
of collection, the amount still owed on cases that could not be collected
will be reported either as write‑offs5 each year in the Government of
Canada’s consolidated financial statements, or in volume 3 of the Public
Accounts of Canada6 under loss of public money. At the time of our
audit, the agency had not reported any write‑off amount or loss of public
money related to COVID‑19 benefits. The department had reported
$9.7 million for 2020–21 and $75,000 for 2021–22 as written‑off, and
had also reported $7.6 million for 2021–22 in the public accounts as a
loss of public money.
10.119 We found that it was too early to assess the total potential
unrecoverable amounts related to COVID‑19 programs that we audited
given the limited number of post‑payment verifications and collection
activities completed. It will take many years to have an accurate and
complete summary of unrecoverable amounts.
Conclusion
10.120 We concluded that COVID‑19 programs offered quick financial
relief to individuals and employers. In this way, they prevented an
increase in poverty and income inequalities and helped the economy
bounce back from the effects of the pandemic.
Objective
10.A.2 Individuals could apply for the benefit either through the Canada
Revenue Agency or through Employment and Social Development
Canada. The applications for the benefit received by Employment and
Social Development Canada were known as the Employment Insurance
Emergency Response Benefit.
Support to recipient
Exhibit 10.A-1—Summary of pre-payment controls for eligibility criteria for the Canada Emergency
Response Benefit (CERB) and the Employment Insurance Emergency Response Benefit (EI-ERB)
CERB— EI‑ERB—
Eligibility criteria1 Pre‑payment control Pre‑payment control
applied applied
2 3
Is a resident in Canada
10.A.12 However, the department’s and agency’s systems did not track
all the applications they automatically stopped. As a result, we could
not determine the effectiveness or the number of applications stopped
by these controls. We also noted that several payments were made to
ineligible recipients despite those additional pre-payment controls.
10.A.13 Finding. Over the course of the program, the Canada Revenue
Agency added a control related to the minimum $5,000 earning criterion.
• Starting in July 2020, the agency stopped some applicants from
receiving benefits who did not appear to meet the income eligibility
criterion and asked them to provide additional information to
confirm eligibility.
• In fall 2020, the agency reviewed benefit payments made and
identified over 1 million recipients that did not appear to meet the
income eligibility criterion. Instead of stopping these applicants
from receiving benefits as soon as they were identified, the agency
chose to contact approximately 440,000 of those individuals via
letters to inform them of the program eligibility criteria. In our view,
these 440,000 recipients, whom the agency estimated received
$5.8 billion in payments, should have stopped receiving payments as
soon as they were identified. See our recommendation in Part 1 at
paragraph 10.101.
Summary information
Number of unique
Total amount
recipients
(in billions)
(in millions)
Days (average)
Assumptions
Post-payment
verifications and
collection
Collection work status
Demographic
information
Prince Edward
Island
Alberta 32,589
999,850 261.9
9,242.2
Unknown* Unknown*
191,867 $329.7
Female Female
4,076,879 $37,229.8
$74,815.2
8,510,452 million
Male Male
4,241,706 $ 37,255.7
Unknown*
Unknown* $313.5
189,236
65+ age
65+ age $6,642.1 $74,815.2
721,487 8,510,452 35–44 age 35–44 age
million $15,387.6
1,696,397
55–64 age
55–64 age $12,600.0
1,414,444
45–54 age 45–54 age
1,455,064 $13,119.4
* Unknown means that gender, age, or province of residence was either missing or not specified in the information provided by the Canada
Revenue Agency.
Note: Dollars in the exhibit are rounded.
Source: Data provided by the Canada Revenue Agency and Employment and Social Development Canada
Objective
Support to recipient
Exhibit 10.B-1—Summary of pre-payment controls for eligibility criteria for the Canada
Recovery Benefit
2
Is a resident in Canada
Is present in Canada
Summary information
Days (average)
Assumptions
10.B.13 Applicants had to attest that they were a resident and present
in Canada to be eligible for the benefit. We identified recipients who
had both their home and their mailing addresses on record at the
Canada Revenue Agency as being outside of Canada. We considered
them as recipients of payments that should be investigated further to
confirm eligibility.
Post-payment
verifications and
collection
Collection work status
Demographic
information
Prince Edward
Island
Alberta 5,922
309,923
64.0
3,354.1
Unknown* Unknown*
$2.0
203
Female Female
1,094,272 $11,565.5
$25,568.3
2,299,522 million
Male Male
1,205,047 $14,000.8
45–54 age
420,653 45–54 age
$5,017.5
35–44 age 35–44 age
486,358 $5,360.2
* Unknown means that gender, age, or province of residence was either missing or not specified in the information provided by the
Canada Revenue Agency.
Note: Dollars in the exhibit are rounded.
Source: Data provided by the Canada Revenue Agency
Objective
Support to recipient
Exhibit 10.C-1—Summary of pre-payment controls for eligibility criteria for the Canada Recovery
Caregiving Benefit
2
Is a resident in Canada
Is present in Canada
Summary information
Days (average)
Other instances of payments to recipients that should be investigated further1 excluded from the total
above (as at 31 March 2022)
Assumptions
10.C.11 Applicants had to attest that they were a resident and present
in Canada to be eligible for the benefit. We identified recipients who
had both their home and their mailing addresses on record at the
Canada Revenue Agency as being outside of Canada. We considered
them as recipients of payments that should be investigated further to
confirm eligibility.
Post-payment
verifications and
collection
Collection work status
Demographic
information
Nunavut
Number of recipients Total amount (in millions)
4,074
Northwest
36.7
Territories
2,399 Total recipients by province and territory
20.5 557,617 (including 60 unknown*)
3,819.9 (including $0.3 unknown*)
Yukon
809 Quebec
5.7 99,712
504.4
Newfoundland
and Labrador
British 7,082
Columbia 51.8
46,542
323.4
Prince Edward
Island
Alberta 1,322
76,994
6.9
522.3
Unknown* Unknown*
12 $0.1
Female Female
357,079 $2,443.5
$3,819.9
557,617 million
Male Male
200,526 $1,376.3
Unknown* Unknown*
12 $0.1
Female Female
357,079 $2,443.5
$3,819.9
557,617 million
Male Male
200,526 $1,376.3
* Unknown means that gender, age, or province of residence was either missing or not specified in the information provided by the Canada
Revenue Agency.
Note: Dollars in the exhibit are rounded.
Source: Data provided by the Canada Revenue Agency
Objective
Support to recipient
place was not available at the time payments were being issued. As with
other COVID-19 programs, the emphasis would be put on post-payment
verification to confirm the eligibility of recipients.
Exhibit 10.D-1—Summary of pre-payment controls for eligibility criteria for the Canada Recovery
Sickness Benefit
2
Is a resident in Canada
Is present in Canada
Summary information
Days (average)
See paragraphs 10.D.9–10.D.11, which explain how we determined our findings of payments to recipients that either were
1
ineligible or should be investigated further. These results specific to the Canada Recovery Sickness Benefit are included in the
overall findings from Part 1, Exhibit 10.9.
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our finding to
2
exclude duplicates.
Amounts of benefit repayments was provided by the Canada Revenue Agency but could not be audited because of a lack of
1
detailed and disaggregated reporting data. See our finding in Part 1, paragraph 10.112.
Assumptions
10.D.11 Applicants had to attest that they were a resident and present
in Canada to be eligible for the benefit. We identified recipients who
had both their home and their mailing addresses on record at the
Canada Revenue Agency as being outside of Canada. We considered
them as recipients of payments that should be investigated further to
confirm eligibility.
Post-payment
verifications and
collection
Demographic
information
Nunavut
2,105
Number of recipients Total amount (in millions)
Northwest
2.7
Territories
1,913 Total recipients by province and territory
2.4 1,132,254 (including 190 unknown*)
1,214.9 (including $0.2 unknown*)
Yukon
932 Quebec
1.0 215,760
213.0
Newfoundland
and Labrador
British 12,814
Columbia 13.9
132,108
141.3
Prince Edward
Island
Alberta 4,059
194,904
$3.8
209.7
Unknown* Unknown*
99 $0.1
Female Female
570,863 $603.6
$1,214.9
1,132,254 million
Male Male
561,292 $611.2
Unknown* Unknown*
99 $0.1
Female Female
570,863 $603.6
$1,214.9
1,132,254 million
Male Male
561,292 $611.2
* Unknown means that gender, age, or province of residence was either missing or not specified in the information provided by the Canada
Revenue Agency.
Note: Dollars in the exhibit are rounded.
Source: Data provided by the Canada Revenue Agency
Objective
Support to recipient
Exhibit 10.E-1—Summary of pre-payment controls for eligibility criteria for the Canada Worker
Lockdown Benefit
2
Is a resident in Canada
Is present in Canada
4
Is not receiving benefits under other programs
Summary information
Days (average)
Assumptions
10.E.13 In order to apply for a benefit, some applicants had to attest that
they had not quit their employment. To expedite payments, applicants
were not required to submit a record of employment (ROE) to receive
the benefit, as is typically the case when receiving regular Employment
Insurance benefits. Employees whose ROE includes their status as
having quit are usually not able to receive Employment Insurance
benefits unless Employment and Social Development Canada performs
validation activities to determine that benefits should be paid to them.
Employers continued to submit ROEs to the department as required.
investigated further given that this information has not been validated
to confirm its reliability. The department collects the ROE information
to manage regular Employment Insurance benefits. At the time of our
audit, the department had not shared this information with the Canada
Revenue Agency.
Post-payment
verifications and
collection
Collection work status
Demographic
information
Exhibit 10.E-3—Demographic information about recipients of the Canada Worker Lockdown Benefit
(as at 31 March 2022)
Nunavut
Northwest
259 Number of recipients Total amount (in millions)
0.5
Territories
276
0.5 Total recipients by province and territory
450,743 (including 4 unknown*)
811 (including $0.1 unknown*)
Yukon
90 Quebec
0.2 106,314
177.8
Newfoundland
and Labrador
British 4,552
Columbia 8.3
31,282
53.0
Prince Edward
Island
Alberta 1,401
30,718 2.3
61.8
Unknown* Unknown*
47 $0.1
Female Female
225,884 $383.3
$811.0
450,743 million
Male Male
224,812 $427.6
* Unknown means that gender, age, or province of residence was either missing or not specified in the information provided by the Canada
Revenue Agency.
Note: Dollars in the exhibit are rounded.
Source: Data provided by the Canada Revenue Agency
Objective
Summary information
Assumptions
Eligibility and
pre‑payment controls
Automated risk The agency’s systems assessed Risk indicators included the following:
assessment application information to
• employer included on various high risk lists
determine if certain risk indicators
maintained by the agency
existed. Applications without
risk indicators were approved • application received above a specific dollar
automatically. All others were value
redirected for manual review.
• reasonableness of number of employees
and remuneration compared to previous
T4 summaries
• changes in direct deposit or address
information after 15 March 2020 or the last
claim
Manual review The agency performed manual Different groups within the agency developed
validations of high risk files. their own manual review processes to review the
following:
• most aspects of the application information
for reasonableness
• the history of the employer for any previous
compliance issues
1
Employers whose applications were denied at this stage could contact the agency and be placed manually on a valid business
number list to allow them to submit their application in exceptional circumstances).
Exhibit 10.F-5—Summary of eligibility criteria, pre-payment controls, and audit findings for the
Canada Emergency Wage Subsidy program
Eligible employer The Canada Revenue Agency Although this control was generally well
automatically compared the designed, the operating type code list
operating type code of the applicant was not aligned with employers eligible
to a list of acceptable codes to for the subsidy. For example, the list
validate the applicant was an eligible could not identify employers controlled
employer. Operating type codes by public institutions, which were
are numbers attributed to every ineligible for the subsidy. The agency
employer to describe the type of identified this concern and updated
operations (for example, a hospital or pre-payment controls in late 2020. The
a financial institution). agency estimated that, prior to that
date, approximately $73.5 million were
paid to 136 employers that the agency
suspects were ineligible. The agency is
currently reviewing these 136 entities as
part of its post‑payment audits.
Revenue decline There was no automated See paragraphs 10.F.7–10.F.12 for details.
pre‑payment control used to test this
eligibility criterion.
Post-payment
verifications and
collection
Post-payment verification and collection work status
3
Amounts of benefit repayments were provided by the agency but could not be audited because of a lack of detailed and
disaggregated reporting data. See our finding from Part 1, paragraph 10.112.
All work in this audit was performed to a reasonable level of assurance in accordance with the
Canadian Standard on Assurance Engagements (CSAE) 3001—Direct Engagements, set out by
the Chartered Professional Accountants of Canada (CPA Canada) in the CPA Canada Handbook—
Assurance.
The Office of the Auditor General of Canada applies the Canadian Standard on Quality Control 1
and, accordingly, maintains a comprehensive system of quality control, including documented
policies and procedures regarding compliance with ethical requirements, professional standards,
and applicable legal and regulatory requirements.
In conducting the audit work, we complied with the independence and other ethical requirements of
the relevant rules of professional conduct applicable to the practice of public accounting in Canada,
which are founded on fundamental principles of integrity, objectivity, professional competence and
due care, confidentiality, and professional behaviour.
In accordance with our regular audit process, we obtained the following from entity management:
• confirmation of management’s responsibility for the subject under audit
• acknowledgement of the suitability of the criteria used in the audit
• confirmation that all known information that has been requested, or that could affect the
findings or audit conclusion, has been provided
Employment and Social Development Canada confirmed that the audit report is factually accurate.
The Canada Revenue Agency confirmed that the audit report is factually accurate with the exception
of our estimate of payments that require further investigation for the Canada Emergency Wage
Subsidy estimated at $15.5 billion. The agency disagreed with our use of monthly GST/HST
information to assess the revenue decline criteria of the subsidy program. We used this information
because monthly revenue information was not gathered upon application. Based on the results
of the limited post-payment verifications completed to date, the agency’s view was that ineligible
subsidy payments will be significantly lower than our estimate.
Audit objective
• whether the Canada Revenue Agency and Employment and Social Development Canada
managed the COVID‑19 programs efficiently and measured their administrative effectiveness.
Furthermore, the audit will examine whether programs’ objectives were achieved and provided
value‑for‑money outcomes
The audit scope included the Canada Revenue Agency and Employment and Social Development
Canada and covered the benefits and programs listed above.
This audit included the following 3 lines of enquiry for all the benefits and programs subject to
the audit:
• Compliance. This line of enquiry provided assurance that recipients of COVID‑19 benefits met
the eligibility criteria, according to the programs’ requirements, and that the payments made
were accurate.
• Recovery of ineligible payments. This line of enquiry examined the post‑payment verification
plans and processes in place as well as the actions undertaken to recover in a timely way
payments made to ineligible recipients and overpayments.
• Efficiency, measures of effectiveness, and outcomes. This line of enquiry examined the
efficiency of the agency’s and department’s management of the programs under audit, as well
as the means to measure the effectiveness of the programs’ delivery.
The audit also sought to determine whether the programs provided value‑for‑money outcomes by
analyzing various metrics and statistics. The assessment of value‑for‑money outcomes is not the
responsibility of the Canada Revenue Agency.
Criteria
We used the following criteria to determine the following:
• whether the Canada Revenue Agency and Employment and Social Development Canada,
according to their roles and responsibilities, ensured that COVID‑19 benefit payments were
accurate, paid to eligible applicants, and undertook timely procedures to recover payments
made to ineligible recipients and overpayments
• whether the Canada Revenue Agency and Employment and Social Development Canada
managed the COVID‑19 programs efficiently and measured their administrative effectiveness.
Furthermore, the audit will examine whether programs’ objectives were achieved and provided
value‑for‑money outcomes
Criteria Sources
Compliance • Taxpayer Bill of Rights, Canada Revenue Agency
The Canada Revenue Agency and Employment • Related Amendment to the Canada Recovery
and Social Development Canada ensured that Benefits Regulations, An Act to provide further
COVID‑19 benefits payments were accurate and support in response to COVID‑19
that recipients met eligibility criteria.
• Canada Worker Lockdown Benefit Act
• Canada Recovery Benefits Act
• Canada Emergency Response Benefit Act
• Income Tax Act
• Employment Insurance Act
Recovery of ineligible payments • Related Amendment to the Canada Recovery
Benefits Regulations, An Act to provide further
The Canada Revenue Agency and Employment and
support in response to COVID‑19
Social Development Canada have developed and
are implementing post‑payment verification plans • Income Tax Act
and processes and are taking timely actions to
• Canada Worker Lockdown Benefit Act
recover payments made to ineligible recipients and
overpayments. • Canada Recovery Benefits Act
• Canada Emergency Response Benefit Act
• Employment Insurance Act
• Taxpayer Bill of Rights, Canada Revenue Agency
Efficiency, measures of effectiveness, and • Related Amendment to the Canada Recovery
outcomes Benefits Regulations Income Tax Act, An Act to
provide further support in response to COVID‑19
The Canada Revenue Agency and Employment
and Social Development Canada managed the • Policy on Results, Treasury Board.
COVID‑19 programs efficiently and measured their
• Canada Worker Lockdown Benefit Act
administrative effectiveness.
• Canada Recovery Benefits Act
Employment and Social Development Canada
monitored, analyzed, and reported on policy • Canada Emergency Response Benefit Act
outcomes for the benefits covered by this audit,
• Employment Insurance Act
with the exception of the Canada Emergency
Wage Subsidy. • Income Tax Act
• Transforming Our World: The 2030 Agenda for
Sustainable Development, United Nations
The audit covered the period from 15 March 2020 to 30 September 2022. This is the period to which
the audit conclusion applies. However, to gain a more complete understanding of the subject matter
of the audit, we also examined certain matters that preceded the start date of this period.
We obtained sufficient and appropriate audit evidence on which to base our conclusion
on 1 November 2022, in Ottawa, Canada.
Audit team
This audit was completed by a multidisciplinary team from across the Office of the Auditor General
of Canada led by Mélanie Cabana, Principal. The principal has the overall responsibility for audit
quality, including conducting the audit in accordance with professional standards, applicable legal
and regulatory requirements, and the office’s policies and system of quality management.
Recommendation Response
10.47 In the administration of future programs, the Agreed. As the administrator of future government
Canada Revenue Agency should engage with its programs, the Canada Revenue Agency will
partners, such as Statistics Canada and relevant continue to engage with program departments to
departments, to ensure it collects pertinent data discuss the data required to measure and report
from applicants to better monitor and measure the on the effectiveness of these programs, as well
effectiveness and outcomes of programs. as the framework to exchange this information in
a timely and secure manner. While the program
departments are responsible for measuring and
reporting on the outcome of initiatives under their
responsibility, the agency will be an active partner,
supporting them in their data needs.
10.78 In order to improve the efficiency of the tax Agreed. The Canada Revenue Agency continuously
and programs administration and to follow good strives to enhance its program administration
practices, the Canada Revenue Agency should through the review of new international best
assess the value of implementing a real‑time practices. The agency is already advancing its
business revenue data requirement. understanding of real‑time business revenue data
requirements to support program administration
and increase business efficiencies. Within its
legislative authority, the agency will assess the
value of implementing a real‑time business
revenue data requirement, including the necessary
infrastructure analysis, completion of a cost
benefit analysis, and required policy and legislative
changes to implement such a requirement.
Recommendation Response
10.101 The Canada Revenue Agency and Partially agreed. Employment and Social
Employment and Social Development Canada Development Canada and the Canada Revenue
should Agency have ensured that their plans include both
reconciliation activities such as the collection
• update their post‑payment verification plans
of lump‑sum payments as well as post‑payment
to include all activities to identify payments
verifications of potentially ineligible applicants.
to ineligible recipients of COVID‑19 benefit
As part of their integrity work, the department
programs, taking into account the legislated
and agency have assessed all COVID‑19 benefit
time frames
programs against the eligibility criteria and will
• increase the extent of post‑payment leverage a risk‑based approach to verifications that
verifications for COVID‑19 benefit programs focuses on the highest risk files and the greatest
for individuals to include all cases identified as dollars at risk.
being at risk of being ineligible
The department and the agency were provided
funding by the government to conduct risk‑based
post‑payment verifications at a level that balances
the number of resources required to investigate a
potentially ineligible recipient against the amount
paid to an individual. It would not be cost effective
nor in keeping with international and industry
best practices to pursue 100% of all potentially
ineligible claims. This approach is evergreen, and
will be adapted as the circumstances warrant.
10.115 To improve the usefulness of information Agreed. The Canada Revenue Agency has
and the transparency of COVID‑19 reporting, continually enhanced its systems since it began
the Canada Revenue Agency should improve its the administration of COVID‑19 benefits for
information collection and reporting capabilities individuals and subsidies for businesses in an
to accurately report for each benefit program iterative fashion. This includes enhancements
how much has been collected for each individual to support post‑issuance compliance, reporting,
and business. and collection activities. As part of this ongoing
process, the agency will continue its efforts to
accurately report how much has been collected for
each COVID‑19 benefit and subsidy program.