COVID-19 PANDEMIC - Specific COVID-19 Benefits - AG Report

COVID-19
PANDEMIC
REPORT 10
Specific COVID-19 Benefits

2022
Reports of the Auditor General
of Canada to the
Parliament of Canada
Independent Auditor’s Report
Performance audit reports
This report presents the results of a performance audit conducted by the Office of the Auditor General of Canada (OAG)
under the authority of the Auditor General Act.
A performance audit is an independent, objective, and systematic assessment of how well government is managing its
activities, responsibilities, and resources. Audit topics are selected on the basis of their significance. While the OAG may
comment on policy implementation in a performance audit, it does not comment on the merits of a policy.
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• establish audit objectives and criteria for the assessment of performance
• gather the evidence necessary to assess performance against the criteria
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assessed performance
Performance audits contribute to a public service that is ethical and effective and a government that is accountable to
Parliament and Canadians.
This publication is available on our website at www.oag-bvg.gc.ca.

Cette publication est également offerte en français.
© His Majesty the King in Right of Canada, as represented by the Auditor General of Canada, 2022.
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The content of this publication has not been approved by the United Nations and does not reflect the views of the United
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Cat. No. FA1-27/2022-1-10E-PDF
ISBN 978-0-660-46281-3
ISSN 2561-343X
Cover photo: Banana Oil/Shutterstock.com and Andrey_Popov/Shutterstock.com

Table of Contents
Part 1—Key Findings 1

Introduction 1
Background.............................................................................................................................................1
Focus of the audit...................................................................................................................................3
Findings and Recommendations 4

Outcomes and effectiveness...................................................................................................................5
COVID‑19 programs supported Canada’s economic recovery................................................................... 7
COVID‑19 benefits went to people and employers in the economic sectors
most impacted by the pandemic................................................................................................................ 11
Employment and Social Development Canada adjusted benefit programs
to try to address disincentives to work...................................................................................................... 16
Program delivery and controls..............................................................................................................18

The trade‑off between expediency and confirming eligibility resulted
in payments to ineligible recipients............................................................................................................ 19
Post‑payment verification and collection..............................................................................................25

Employment and Social Development Canada and the Canada Revenue Agency
were planning to do few post‑payment verifications................................................................................ 25
The Canada Revenue Agency performed limited collection activities on COVID‑19 programs............ 30
Conclusion 33
Reports of the Auditor General of Canada Report 10 | iii

to the Parliament of Canada—2022
Part 2—Additional Information and Findings on Specific COVID-19
Programs 35
A—Canada Emergency Response Benefit 35
B—Canada Recovery Benefit 45
C—Canada Recovery Caregiving Benefit 52
D—Canada Recovery Sickness Benefit 59
E—Canada Worker Lockdown Benefit 66
F—Canada Emergency Wage Subsidy 74
About the Audit 82
Recommendations and Responses 86
Reports of the Auditor General of Canada Report 10 | iv

Part 1—Key Findings
Introduction
Background
Responding to the
COVID‑19 pandemic
10.1 In March 2020, Canada faced the global coronavirus disease

(COVID‑19) pandemic. To protect Canada’s population and help prevent
the spread of the disease, all levels of government asked Canadians
to isolate and many employers in Canada to close their doors to
face‑to‑face services or to adopt a work‑from‑home model when
possible. These prevention efforts resulted in business closures and
slowdowns, which led to reduced working hours or unemployment for
many Canadians.
10.2 To minimize the impacts of the COVID‑19 pandemic on

the health of Canada’s population, businesses, and economy, the
Government of Canada announced emergency income support
programs for Canadian residents and employers in Canada. The federal
public service was mandated to develop, implement, and deliver the
new COVID‑19 benefit programs, which were unprecedented in size and
urgency. Federal organizations responded by relying on their existing
systems and processes, which were repurposed to deliver the new
COVID‑19 benefit programs. Within weeks, many programs were up and
running. Historically, programs of this size would have taken months, if
not years, to roll out.
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.
10.4 The original programs were expected to last only a few

months. However, additional waves of the pandemic occurred, and
the government extended existing programs and introduced new
support programs. This, in turn, necessitated flexibility and changes
to program plans, as benefit payments were made well into 2022. For
benefits to individuals, recipients could receive only 1 COVID‑19 benefit
per period, while employers had access to multiple emergency relief
programs simultaneously.
Reports of the Auditor General of Canada Report 10 | 1

10.5 To simplify and accelerate the application process for

COVID‑19 benefits, both Employment and Social Development Canada
and the Canada Revenue Agency—the federal organizations delivering
the programs—relied on applicants’ attestations of eligibility. This
allowed the government to meet 1 of its goals to quickly get financial
support into the hands of those affected by the pandemic. In so doing,
the government accepted the risk that some recipients might not be
eligible for benefits received. Some pre‑payment controls were built into
program designs to confirm eligibility. However, the department and
agency made an early decision to put more effort into reviewing eligibility
after payments were issued and recovering overpayments or payments
to ineligible recipients.
Previous audit work and

a new act
10.6 The Office of the Auditor General of Canada has conducted

numerous performance audits related to COVID‑19, including 2 audit
reports in spring 2021 on specific benefit programs: Report 6—Canada
Emergency Response Benefit and Report 7—Canada Emergency
Wage Subsidy.
10.7 On 17 December 2021, An Act to provide further support in

response to COVID‑19, also known as Bill C‑2, received royal assent.
This act served to extend or create specific benefits and programs
related to COVID‑19. The act also required that the Office of the
Auditor General of Canada complete a performance audit of specific
COVID‑19 benefits during the first year after Bill C‑2 came into force, so
no later than 17 December 2022, and submit a report to the Speaker of
the House.
10.8 As required by the act, we audited the following

COVID‑19 benefit programs for individuals:
• Canada Worker Lockdown Benefit
• Canada Recovery Benefit
• Canada Recovery Sickness Benefit
• Canada Recovery Caregiving Benefit
• Canada Emergency Response Benefit, including the Employment
Insurance Emergency Response Benefit
10.9 We also audited, as required by the act, the following

COVID‑19 program for employers:
• Canada Emergency Wage Subsidy
10.10 Additional information and some of our findings on each

program are provided in Part 2 of this report.

Roles and
responsibilities
10.11 Employment and Social Development Canada. The department

is responsible for
• policy development and program design of the COVID‑19 benefits
for individuals
• administration of the Employment Insurance Emergency Response
Benefit, including accepting applications, verifying and validating
the eligibility of applicants, authorizing payments, and preventing
non‑compliance
10.12 The Canada Revenue Agency. The agency is responsible for

• administration, on behalf of Employment and Social Development
Canada, of the other COVID‑19 benefit programs for individuals and
the Canada Emergency Wage Subsidy, which included accepting
applications, verifying and validating the eligibility of applicants,
authorizing payments, and preventing non‑compliance
• collection of overpayments and payments made to ineligible
recipients for all benefit programs for individuals and employers
Focus of the audit

10.13 This audit focused on whether Employment and Social
Development Canada and the Canada Revenue Agency
• ensured that COVID‑19 benefit payments were accurate and paid to
eligible applicants
• undertook timely procedures to recover overpayments and
payments made to ineligible recipients
The audit also focused on whether the department and the agency
• managed the COVID‑19 programs efficiently
• measured their administrative effectiveness
Finally, the audit examined whether the programs achieved their

objectives and provided value‑for‑money outcomes.
10.14 More details about the audit objective, scope, approach, and
criteria are in About the Audit at the end of this report.

Findings and Recommendations

Overall message
10.15 With its response to the COVID‑19 pandemic, the Government of

Canada set an objective of helping Canadians as quickly as possible. The
COVID‑19 emergency programs that we audited achieved that objective.
They quickly offered financial relief to individuals and employers, prevented
a rise in poverty, mitigated income inequalities, and helped the economy to
recover from the effects of the pandemic.
10.16 To expedite issuing payments, the Canada Revenue Agency

and Employment and Social Development Canada relied on personal
attestations. They decided early on to focus less on confirming the eligibility
of applicants up front and more on reviewing eligibility after payments
were issued and recovering overpayments or payments made to ineligible
recipients. The risk that some recipients might not be eligible for benefits
they received made verifying eligibility after payment all the more important.
10.17 We found that the department and agency’s approach to limit

pre-payment controls, as well as the lack of timely data at the time of
application, resulted in a significant amount of payments made to recipients
who were ineligible or whose eligibility needs to be verified. We found
$4.6 billion of overpayments made to ineligible recipients of benefits for
individuals. In addition, we estimated that at least $27.4 billion of payments
to individuals and employers should be investigated further. A more
definitive estimate of payments made to ineligible recipients and amounts
to be recovered by the government will be determined only after the agency
and the department have completed their post-payment verifications.
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.
10.19 There have also been delays in conducting post‑payment

verifications and the collection of amounts owing has just started.
The department and agency are at risk of not completing all planned
post‑payment verifications within the applicable timelines. This means they
may be unable to identify and recover amounts owing. According to the
information provided by the department and agency, they have recuperated
approximately $2.3 billion.

Outcomes and effectiveness

Context
10.20 The Government of Canada’s COVID‑19 benefit programs were

put in place to support Canadians and Canadian businesses throughout
the pandemic. Exhibit 10.1 shows when the benefits included in this
audit were available to individuals and employers in Canada, including all
extension periods.
Exhibit 10.1—Periods of availability of COVID-19 benefit programs
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
* Includes the Employment Insurance Emergency Response Benefit
10.21 Exhibit 10.2 shows the total benefit payments made to recipients

for each COVID‑19 subsidy and program.
Exhibit 10.2—Payments to recipients for COVID‑19 benefit programs
COVID‑19 benefit program Total payments at program end (in millions)
Canada Emergency Wage Subsidy $100,738

Canada Emergency Response Benefit and Employment $74,815
Insurance Emergency Response Benefit
Canada Recovery Benefit $28,390
Canada Recovery Caregiving Benefit $4,370
Canada Recovery Sickness Benefit $1,500
Canada Worker Lockdown Benefit $914
Total $210,727
Note: Programs ended on different dates, and applications could be submitted for a specific time period once a benefit program
ended. This exhibit reflects all payments made for the Canada Emergency Wage Subsidy up to May 2022 and for each benefit
program for individuals up to July 2022.
Source: The Canada Revenue Agency and Employment and Social Development Canada

10.22 Exhibit 10.3 provides a simplified overview of the application

process for the COVID‑19 subsidy and benefit programs.
Exhibit 10.3—Simplified COVID-19 benefit application process for individuals and employers
Application received
Automated system
pre-payment controls
Application automatically Application identified for Application rejected as

approved manual review ineligible
Application rejected:
Accepted
End of process*
Payment issued
No post-payment verification Post-payment verification
Result—adjustment required Result—no adjustment
Notification sent to
recipient of amount owing*
Collection measures
(if necessary)
Payment recovered
End of process
* If applicant disagrees with decision, a recourse process exists.

COVID‑19 programs supported Canada’s economic recovery
What we found
10.23 We found that the COVID‑19 programs achieved their objective

to help Canada avoid a more severe contraction of the economy and the
social consequences of, for example, a significant increase in poverty.
This financial support allowed the economy to rebound and return to its
pre‑pandemic level.
10.24 The analysis supporting this finding discusses the

following topics:
• Economic rebound
• Mitigation of poverty and income inequality
Why this finding matters
10.25 This finding matters because it is important that the government

demonstrates that the COVID‑19 benefit programs supported Canadians
and employers in need.
Context
10.26 The objective of the COVID‑19 benefit programs for individuals

was to directly support individuals who lost income as a result of the
COVID‑19 pandemic. For example, the programs were intended to help
affected workers meet their financial obligations while reducing the
disease’s toll on individuals and the health care system.
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
10.28 Statistics Canada reported that between February and

April 2020, Canada’s gross domestic product1 decreased, after adjusting
for inflation, by $350 billion—a 17% reduction in economic activity. But
by November 2021, 20 months after the beginning of the pandemic,
economic activity was back to its pre‑pandemic level (Exhibit 10.4). In
terms of magnitude, the reduction of gross domestic product caused by
the pandemic was thus not comparable to the most recent economic
recession of 2008–09.
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
Evolution of hours worked using

January 2020 = 100 as the baseline
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
Mitigation of poverty and income inequality
10.30 Statistics Canada data revealed that without benefit programs,

the poverty rate in Canada would have reached 11.6% in 2020, more
than 5 percentage points higher than the observed 6.4% rate. This data
showed that the COVID‑19 benefits had a notable impact on preventing a
spike in the poverty rate in 2020.
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).

Exhibit 10.6—Annual after-tax income increased among the

lowest‑income earners between 2019 and 2020 due to government
payments for COVID-19 benefits
Percentage change
in average annual income, Market income After-tax income
between 2019 and 2020
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.

10.32 According to Statistics Canada, from 2019 to 2020, the median

income2 of combined employment, pensions, and investments for
Canadians declined by $1,600. However, the median government
transfers doubled from $8,200 to $16,400. This was due mainly to
COVID‑19 income support programs. Overall, these increases in
government transfers to households exceeded losses in wages and
Goal 1: End poverty in all its
forms everywhere
salaries and self‑employment income. This income compensation
Source: United Nations through the COVID‑19 programs helped to financially support the
population.
10.33 These findings are aligned with the government’s targets

regarding 2 United Nations’ sustainable development goals—Goal 1,
No Poverty, and Goal 10, Reduced Inequalities. Thus, we found that the
COVID‑19 benefits under audit for individuals contributed to reducing
poverty and inequalities in Canada in 2020.
Goal 10: Reduce inequality
within and among countries
Source: United Nations
COVID‑19 benefits went to people and employers in the economic sectors most

impacted by the pandemic
What we found
10.34 We found that individuals from the groups most impacted

by the pandemic were able to benefit from the programs. Women,
visible minorities, Indigenous groups, and youth aged 15–24 accessed
programs at slightly higher rates than other groups did. In addition, we
found that benefit payments supporting individuals were made in a
timely manner, particularly during periods of public health restrictions.
10.35 Regarding the Canada Emergency Wage Subsidy, we found that

it supported employers in sectors that suffered the biggest employment
declines. However, it was difficult to assess the impact of the program
and how effectively the program met its objectives because of the
limited information employers were required to provide upon application.
For example, the program did not require employers to submit any
information on rehiring.

following topics:
• Benefits paid to the most-impacted Canadians
• Unclear impact on business resilience
• Missing data for assessment of Canada Emergency Wage
Subsidy effectiveness
2 Median income—The amount that divides the income distribution into

2 equal groups.

10.37 This finding matters because it is important that the government

demonstrates that the COVID‑19 benefit programs—which cost
Canadians about $211 billion—supported Canadians and employers that
were in need.
Analysis to support
this finding
Benefits paid to the most-impacted Canadians
10.38 We found that COVID‑19 programs for individuals provided

income support to a large number of people who lost their jobs or had
their working hours significantly reduced because of the pandemic.
Based on available data from Statistics Canada, mostly on the Canada
Emergency Response Benefit, we calculated the following:
• 41.7% of recipients were household major income earners
(3.46 million people)
• almost 25% of recipients were sole income earners in their
household (1.9 million people)
• 69% of women working in the accommodation and food sector
received the Canada Emergency Response Benefit (while women
represented 56% of the people employed)
10.39 We also found, based on Statistics Canada information, that a

higher proportion of workers who were visible minorities or Indigenous
received the benefits compared to those who were not members of a
group designated as a visible minority or Indigenous (Exhibit 10.7).
10.40 In the case of the Canada Emergency Response Benefit, we

also noted that workers in groups designated as a visible minority or
Indigenous received benefits for slightly more weeks than those who
were not. For instance,
• people who identify as a visible minority received the benefit
for 18.5 weeks on average (compared to 16.2 weeks for people who
did not identify as visible minorities)
• Indigenous people received the benefit for 17.4 weeks on average
(compared to 16.8 weeks for non‑Indigenous workers)

Exhibit 10.7—A higher proportion of people in visible minority and

Indigenous groups received benefits than in groups not designated
as such
Percentage of recipients
in each identified group
45
40.9% 40.5%
40
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.
10.41 We found that Canadians received benefits in a timely manner,

notably during lockdown periods. The number of recipients of the
benefits was aligned with the severity of public health restrictions
in response to COVID‑19, as measured by the stringency index3
(Exhibit 10.8). For the Canada Emergency Response Benefit and the
Canada Recovery Benefit, the more severe the health restrictions, the
higher the number of recipients. However, as illustrated in the case of
the Canada Recovery Benefit, we noted that, starting in June 2021, the
number of recipients diminished less quickly with the lifting of restrictive
public health measures, showing that individuals did not return to work.
3 Stringency index—A measure of the severity of policies governments put in place to

protect people against the transmission of COVID‑19 (for example, school and workplace
closures, stay‑at‑home requirements, and restrictions on travel) tracked over time
throughout the country. 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.

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 recipients Stringency index
Canada Emergency Response Benefit and Employment Insurance

Emergency Response Benefit—Stringency index
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
Canada Recovery Benefit—Stringency index
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
10.42 With regard to COVID‑19 support for employers, we also found

that the Canada Emergency Wage Subsidy went to sectors in need.
Employers and sectors that suffered the biggest employment decline
from the introduction of the lockdowns used the Canada Emergency
Wage Subsidy the most. About 36% of all active employer businesses

received the subsidy. According to Statistics Canada, the top 3 industries

that received the subsidy as at June 2021 were
• accommodation and food services (66% of businesses in
this industry)
• arts, entertainment, and recreation (56% of businesses in
this industry)
• manufacturing (55% of businesses in this industry)
Unclear impact on business resilience
10.43 According to Statistics Canada data released in June 2022, the

number of active businesses went back to the pre‑pandemic level in
October 2021. However, the influence of the Canada Emergency Wage
Subsidy in this resilience is unclear because the businesses that existed
pre‑pandemic were different from the businesses that existed as of
October 2021.
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.
Missing data for assessment of Canada Emergency Wage

Subsidy effectiveness
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)

10.46 Sound management of public funds requires that data collection

and analysis be a key aspect of program administration. In our view,
this missing data highlights a broader issue of missed opportunities
to assess the effectiveness of programs, in this case the Canada
Emergency Wage Subsidy.
10.47 Recommendation. In the administration of future programs,

the Canada Revenue Agency should engage with its partners, such
as Statistics Canada and relevant departments, to ensure it collects
pertinent data from applicants to better monitor and measure the
effectiveness and outcomes of programs.
The agency’s response. Agreed.
See Recommendations and Responses at the end of this report for

detailed responses.
Employment and Social Development Canada adjusted benefit programs to try to

address disincentives to work
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.
10.49 We also found that some lower‑income recipients of the benefits

replaced their previous annual earning by more than 100% using the
Canada Emergency Response Benefit and by 119% by staying on the
Canada Recovery Benefit for all periods. The government assessed
the impact and took steps to mitigate these issues. These included
introducing incentives to get more people working, especially when the
economy was reopening.

following topic:
• Benefits’ disincentive to work
10.51 This finding matters because, at a time when businesses

needed employees, some employees had more income by receiving the
COVID‑19 benefits than they would have had by rejoining the workforce.

Analysis to support
this finding
Benefits’ disincentive to work
10.52 We found that Employment and Social Development Canada

did an analysis in June 2020 on the impact of the Canada Emergency
Response Benefit on the labour market and made changes to the
program. Early on in the pandemic, employers in some sectors
were having difficulty finding workers, which was confirmed in the
department’s analysis that the Canada Emergency Response Benefit had
created a disincentive to work. This benefit was developed to encourage
people to stay at home while public health restrictions were in place. The
program as initially administered did not allow recipients to have other
earnings while receiving benefits. In mid‑April 2020, the department and
agency began administering the program so as to allow workers to earn
a maximum of $1,000 while still being eligible to receive benefits if they
met other program eligibility criteria.
10.53 We looked at the department’s analysis of challenges to the

labour market created by the benefits programs. The department’s
analysis showed the following:
• Individuals in the lower income brackets—earning less than $500 per
week—represented the largest number of applicants to the Canada
Emergency Response Benefit.
• The amount of benefit they received could impact their return
to work since they could receive an equal or greater income
without working.
10.54 The department’s analysis also determined that people whose

pre‑pandemic weekly earnings were $500 or less represented 44% of
individuals that lost their employment between February and April 2020.
However, between April and May 2020, only 11% of people earning
$500 or less returned to work. In our view, the department’s analysis
showed that the Canada Emergency Response Benefit created a
disincentive to go back to work, especially for more than one third of
applicants who earned less than $500 per week. For them, the Canada
Emergency Response Benefit represented more than 100% of income
replacement. This may explain why approximately 2 million people
stayed on the benefits for all 7 periods for a total of 28 weeks.
10.55 The Canada Emergency Response Benefit ended in

October 2020. The Canada Recovery Benefit succeeded that program
for Canadians without Employment Insurance insurable hours. It had
the same benefit amount as the Canada Emergency Response Benefit
but did not necessarily limit earnings to $1,000. The Canada Recovery
Benefit could be collected for a maximum of 54 weeks. For applications
for a benefit period beginning before 18 July 2021, the maximum benefit
was $500 per week for the first 42 weeks. After this, and as a means to

encourage people to return to work, the benefit amount was reduced to

$300 per week. These changes applied to new claimants for a benefit
period beginning on or after 18 July 2021.
10.56 As with the Canada Emergency Response Benefit, we found

that the lowest-income recipients of the Canada Recovery Benefit could
earn more from receiving the benefit than from working. Low-income
earners (with gross earnings of $20,000 or less per year) who received
the recovery benefit for all periods (54 weeks) effectively replaced their
annual income by 119%.
10.57 In our opinion, the ability for low‑income individuals to earn

more on the Canada Recovery Benefit represented a disincentive to work,
which impacted some labour markets at a crucial time when the need for
employees was trending upwards.
Program delivery and controls
Context
10.58 The urgency of responding to the impacts of the pandemic

meant that government programs that would normally have taken
months or years to design and implement had to be operational within
weeks. Although the original programs were expected to last only a
few months, additional waves of the pandemic led to the government
extending existing support programs and introducing new ones.
10.59 In our spring 2021 audits, Report 6—Canada Emergency

Response Benefit and Report 7—Canada Emergency Wage Subsidy, we
found that the design of COVID‑19 benefit programs relied on applicants
attesting to eligibility and on some automated and manual pre‑payment
controls. This decision allowed for quicker processing times, which, in
combination with the short turnaround time, also limited confirmation
of eligibility.
10.60 The Canada Revenue Agency and Employment and Social

Development Canada decided to put emphasis on verifying recipients’
eligibility after payment to compensate for the initial limited rigour at
the pre‑payment stage. This approach is consistent with best practices
promoted by the International Public Sector Fraud Forum and its
principles for fraud control in emergency management.

The trade‑off between expediency and confirming eligibility resulted in payments to

ineligible recipients
What we found
10.61 We found that Employment and Social Development Canada and

the Canada Revenue Agency’s approach to limit pre‑payment controls
and rely on applicants’ attestations to expedite payments meant that a
significant amount of payments were made to ineligible recipients or
to recipients with high risk indicators of ineligibility for the programs.
We found that the government made $4.6 billion of overpayments
to ineligible recipients. We also estimated that at least $27.4 billion
was paid to recipients that should be investigated further through
post‑payment verification4 to confirm eligibility.

following topics:
• Limited pre‑payment controls
• Limited performance standards and measures
• No real‑time business revenue data
• No real‑time payroll data
10.63 This finding matters because the benefit programs to individuals

and employers were significant emergency measures that, in order to
issue payments within days of receiving an application, relied upon the
good faith of Canadians and Canadian employers.
Analysis to support
this finding
Limited pre‑payment controls
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.
10.65 In estimating this amount, we used information available up to

March 2022. Much of that information was not available to the agency
and department when the payments were issued because it either was
not requested on the applications or was not readily available through
income tax return information. For example, the $5,000 income criterion
4 Post‑payment verification—Confirmation of eligibility and accuracy after the benefit

has been paid.

could be calculated using earnings from the 12 months prior to the

application date. This information was not available to the agency
and department unless they contacted the applicants, which would
have hindered payment expediency. In addition, during the pandemic,
the 2019 income tax return deadline was extended to June 2020, which
further delayed the availability of some of the information. Therefore, in
most instances, the available data we used in our assessment could not
alone confirm ineligibility. In most cases, only post‑payment verifications
can establish ineligible amounts, as recipients will need to be contacted
to provide additional information.
10.66 See Exhibit 10.9 for a summary of amounts paid to ineligible

recipients and recipients that should be investigated further. The exhibit
shows payments before individuals and employers repaid an estimated
$2.3 billon, as reported by the agency and the department.
10.67 We found that the agency added several pre‑payment controls

over the course of the COVID‑19 benefit programs for individuals.
For example, in July 2020, once most income tax information was
available, the agency implemented a check to verify that applicants
met the eligibility criterion of a minimum income threshold of $5,000.
If the criterion was not met, applicants were prevented from receiving
benefits until they provided more information to prove eligibility. While
the agency estimated that this pre‑payment control prevented billions in
benefit payments to ineligible recipients, we found that this control was
ineffective for the following reasons:
• The agency did not request additional information from every
identified applicant at risk of being ineligible as soon as they were
identified, but did so over many months.
• The agency was limited to using the tax information available at the
time, which alone could not confirm eligibility.
10.68 The agency stopped payments and requested additional

information from over 544,000 applicants. Based on our analysis
using 2019 to 2021 income tax information, we found an
additional 366,000 recipients that were not identified by the agency
and who did not appear to meet the income threshold of $5,000. These
should now be investigated further to confirm eligibility.
10.69 Regarding the Canada Emergency Wage Subsidy, we found

that the agency made few additions or improvements to pre‑payment
controls to address risks of ineligible payments. This was to maintain
the speed of processing applications. For example, prior to payment, the
agency did no automated validation of the revenue decline submitted by
applicants, which was an eligibility criterion. At a minimum, the agency
could have compared the submitted revenue decline against historical
goods and services tax/harmonized sales tax (GST/HST) data (even
if only on a sample basis). Also, instructions given to pre‑payment

reviewers were limited and relied on a reviewers’ discretion in accepting

or denying a claim. Multiple opportunities to improve pre‑payment
controls were available but not taken when
• the program was extended multiple times
• business intelligence tools were used in December 2020 to identify
risks and select recipients for post‑payment audits
• our 2021 audit of the Canada Emergency Wage Subsidy
recommended that available information should be better used to
improve controls
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
(in billions)
Overpayments to ineligible recipients $4.6
Individual benefit programs

• $3.1 billion paid to 1.8 million recipients • Recipients received an
advance lump‑sum overpayment
for EI‑ERB2
• $1.5 billion paid to 711,000 recipients • Recipients received more
than 1 benefit per period
Payments that should be investigated further $27.44
Individual benefit programs

• $8.3 billion paid to 627,000 recipients • Recipients earned
less than $5,000
• $3.8 billion paid to 1.4 million recipients • Recipients earned more
than $1,000 during a 4‑week
CERB period3
Canada Emergency Wage Subsidy
• $15.5 billion paid to recipients that should be • Recipients showed insufficient
investigated further revenue decline based on
GST/HST filing data
Total $32
1
See Part 2 of this report for more information on assumptions made for each program to determine these amounts as well as
information about additional payments to recipients that should be investigated further that are excluded from this exhibit.
2
For the Employment Insurance Emergency Response Benefit (EI-ERB) program, the lump‑sum payments issued to recipients
were not related to program requirements, and Employment and Social Development Canada knew it would need to recover
these overpayments.
3
. Program requirements are based on eligibility information as administered by Employment and Social Development Canada
and the Canada Revenue Agency at the time of program delivery. CERB is the Canada Emergency Response Benefit
4
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our finding of
$27.4 billion so that duplicates were excluded.

10.70 In addition to the $4.6 billion in overpayments and $27.4 billion

of payments that should be investigated further identified in Exhibit 10.9,
we found other limitations to pre-payment controls that suggest more
payments and recipients should be further investigated. In our opinion,
the $27.4 billion is the minimum amount that should be investigated.
Notably, the following examples were not included in the $27.4 billion
either because we could not quantify the amount or because the
information had not been validated to confirm its reliability:
• For the Canada Emergency Response Benefit program, we
identified 190,254 recipients who received $1.6 billion in payments
for which Employment and Social Development Canada has
information indicating recipients quit their employment. This
information needs to be verified, as quitting may have made them
ineligible for benefits. (See additional information on the Canada
Emergency Response Benefit program in Part 2 of this report.)
• For the Canada Emergency Wage Subsidy, as noted in our
spring 2021 Report 7—Canada Emergency Wage Subsidy, a lack of
detailed employee information (for example, not requiring social
insurance numbers on application forms) prevented the Canada
Revenue Agency from using a control that would have identified
instances of businesses inaccurately reporting information about
employees (number and remuneration) in their claim and employees
who were also claiming individual benefits.
10.71 Our recommendation for this area of examination is in

paragraph 10.101.
Limited performance standards and measures
10.72 We found that Employment and Social Development Canada

established performance standards by focusing solely on the speed
of payment. For all programs for individuals audited, we found that
payments were timely, usually within 4 days of the application being
received. We also found that the Canada Revenue Agency provided input
to the department regarding improving the administrative efficiency
of the programs. However, the department’s following performance
indicators were, in our view, simply volume metrics:
• total number of unique applicants for the stated benefit
• total number of approved applications for the stated benefit
• total gross dollar value of the stated benefit
10.73 We found that the department did not develop other

performance indicators to measure results related to the administrative
efficiency, effectiveness, and outcomes of the programs.

No real‑time business revenue data
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.
10.76 Other jurisdictions have implemented electronic invoicing and

reporting to collect sales tax information in real time. In Spain, the tax
administration receives real‑time data on sales from certain businesses.
In Quebec, the sharing of real‑time sales data is being implemented on
an industry‑by‑industry basis: for example, sales in the remunerated
passenger transportation sector are submitted to Revenu Québec as
they happen.
10.77 More broadly, real‑time GST/HST reporting could also

• reduce the reporting burden on businesses
• reduce errors and improve compliance on tax assessments
• help in informing, designing, and assessing public policies
10.78 Recommendation. In order to improve the efficiency of the tax

and programs administration and to follow good practices, the Canada
Revenue Agency should assess the value of implementing a real‑time
business revenue data requirement.

detailed responses.
No real‑time payroll data
10.79 We found that the Canada Revenue Agency and Employment

and Social Development Canada did not have a modern real‑time payroll
data requirement for businesses. Real‑time data could have been used

to assess program eligibility, calculate the benefit payment, and improve

the overall efficiency of managing the COVID‑19 programs as reported in
the above section on limited pre-payment controls.
10.80 Other jurisdictions have implemented systems and reporting

requirements to collect payroll information in a timely manner. We noted
that the United Kingdom and Ireland used their real‑time payroll data to
help manage their COVID‑19 benefits.
10.81 More broadly, real‑time payroll data could also

• reduce the reporting burden on businesses
• reduce errors and improve compliance on tax assessments
• help provide benefits for citizens that can adapt more quickly to
evolving situations (such as loss of employment)
• support the collection of timely data to better inform, design, and
assess public policies
• help the government to more efficiently and accurately manage the
benefits it provides to Canadians and Canadian businesses
10.82 We also noted that in 2017, the Employment Insurance Service

Quality Review recommended that Employment and Social Development
Canada engage with key stakeholders in the co‑creation of a real‑time
payroll information‑sharing solution. In the mandate letter to the Minister
of National Revenue in 2019, the responsibility to implement a voluntary,
real‑time electronic payroll system with an initial focus on small
businesses was transferred to the Canada Revenue Agency.
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.
10.84 Recommendation. In order to improve its efficiency of delivering

benefit programs, the Canada Revenue Agency, with the collaboration
of Employment and Social Development Canada, should pursue the
development and implementation of a real‑time payroll system with clear
timelines and deliverables.

detailed responses.

Post‑payment verification and collection
Context
10.85 The COVID‑19 benefit program design required Employment

and Social Development Canada and the Canada Revenue Agency to
rely on personal attestations and minimal controls to confirm eligibility
before issuing benefit payments. This meant that verifying eligibility after
payment became very important. As a result, the department and agency
developed plans to verify the eligibility of approved recipients.
10.86 According to legislation, for most COVID‑19 benefit programs,

verifications of eligibility must be completed within 36 months after the
benefits have been paid. If either the department or the agency suspects
that recipients misrepresented information, then the verification time
frame could be extended to a maximum of 72 months. To illustrate, for
a payment issued in October 2020, in the absence of misrepresentation
and other specific circumstances that could extend the timeline, the last
possible date to conduct a post‑payment verification is October 2023.
10.87 In 2020, for some of the COVID‑19 individual benefit programs,

the department identified eligibility criteria that would not be investigated
due to the subjective nature of the criteria, the difficulty of proving
eligibility after the fact, and the undue burden investigation could create.
Examples of eligibility criteria where no post‑payment verification would
be performed are if a recipient
• was caring for ill family members or in self‑isolation due
to COVID‑19
• stopped working due to school closures or daycare closures, or
voluntarily due to COVID‑19
Employment and Social Development Canada and the Canada Revenue Agency were
planning to do few post‑payment verifications
What we found
10.88 We found that Employment and Social Development Canada’s

and the Canada Revenue Agency’s plans for verifying eligibility of
recipients of benefits after payments for individual programs were
incomplete. These plans did not include post‑payment verification of all
the overpayments or payments to recipients that either were ineligible or
should be investigated further to verify eligibility.
10.89 In addition, the department’s and agency’s plans were not

aligned with the early decision to focus on verifying eligibility after
payment, given the low number of post‑payment verifications to be
performed. We also found that, as the COVID‑19 pandemic evolved, the

department and agency delayed their post‑payment verifications of

recipients’ eligibility. As a result, the department and agency are at risk of
not completing planned post‑payment verifications within the legislated
time frames.
10.90 We also found that for benefits to individuals, both the

department and the agency were delayed in conducting post‑payment
verifications and notifying recipients because of the need for
legislative changes.
10.91 The analysis supporting these findings discusses the

following topics:
Benefits for individuals:

• Incomplete post‑payment verification plans and delays in
conducting verifications for individuals
• Low percentage of post‑payment verifications to be performed on
programs for individuals
Benefits for employers:

• Risk that post‑payment verification will not be completed within the
legislated time frame
10.92 This finding matters because the government needs strong

post‑payment verifications to mitigate the risks created by the limited
pre‑payment controls. Post‑payment verifications are also important
because they are the means through which the government will confirm
whether recipients were eligible for the payments and will identify the
amounts to recuperate.
Analysis to support
this finding
Incomplete post‑payment verification plans and delays in conducting
verifications for individuals
10.93 In our spring 2021 Report 6—Canada Emergency Response

Benefit, we recommended that Employment and Social Development
Canada and the Canada Revenue Agency finalize and implement
their post‑verification plans for the benefit. At the time of the audit,
we found that this recommendation was not fully addressed, as both
organizations’ post‑payment verification plans were incomplete. For
example, the following were not included in the plan:
• The agency had identified more than 375,000 recipients for
follow‑up because they did not respond to a request for further
information regarding their eligibility.

• The department had identified more than 1.8 million recipients of

Employment Insurance Emergency Response Benefit lump‑sum
payments to be recovered.
10.94 We also found that for COVID‑19 benefit programs for

individuals, the agency and the department started post‑payment
verification of applicants’ eligibility later than stated in the timelines of
their initial plans. The following are examples:
• The agency was delayed in notifying individuals who received more
than 1 benefit during a benefit period because it was waiting for
legislative amendments. The amendments, which were passed
in June 2022 as part of the Budget Implementation Act, 2022,
No. 1, determined how amounts owed were to be calculated for
overpayments for this group of recipients. We also found that the
follow‑up on these overpayments had not been included in the
department’s and agency’s post‑payment verification plans.
• The department’s initial plan for post‑payment verifications for
the Employment Insurance Emergency Response Benefit was
scheduled to review 44,920 cases in 2021–22. However, the
post‑payment verifications only started in 2022–23.
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.
Low percentage of post‑payment verifications to be performed on

programs for individuals
10.96 Based on the information obtained during the audit and

the agency’s current plans, we estimated that approximately 12% of
individuals who received a benefit would be selected for post‑payment
verification. In addition, the agency identified $1.5 billion in payments
to recipients that received more than 1 benefit for the same period. The
agency planned to notify all of these recipients.
10.97 We noted that the Canada Revenue Agency started

post‑payment verification work on 1 specific criterion for the Canada
Emergency Response Benefit in January 2022 using data available
from their Business Intelligence Division. The agency identified
over 2.1 million recipients that potentially did not meet this eligibility
criterion. However, according to the post‑payment verification plan dated

April 2022, only 150,000 recipients of these 2.1 million recipients (or 7%)

would be selected for verification. As of 12 May 2022, the agency had
contacted around 104,000 recipients requesting additional information
but had to pause this work due to a recent decision of an appeal by an
Employment Insurance Emergency Response Benefit recipient. This
highlighted the need for analysis of the alignment of post‑payment
verification activities related to the Canada Emergency Response
Benefit and the Employment Insurance Emergency Response Benefit.
An additional 150,000 verifications are planned at a later date, across
all benefit programs for individuals. However, few details on those
additional verifications, such as the criteria to be verified, were included
in the agency’s plan.
10.98 For Employment and Social Development Canada, we

estimated that around 4% of individuals who received a benefit would
be selected for post‑payment verification. The department made
Employment Insurance Emergency Response Benefit payments to a
total of 3.7 million recipients. We found that the department’s most
recent post‑payment verification plan included verifying approximately
130,000 of these recipients. In addition, the department identified
$3.1 billion in Employment Insurance Emergency Response Benefit
lump‑sum payments. The department planned to notify all recipients of
these payments.
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.
10.100 According to the International Public Sector Fraud Forum, given

the limited ability to implement pre‑payment controls in an emergency
situation, it is important that verifications following payment are carried
out to uphold the stewardship of public funds. In addition, considering
the Treasury Board’s policy on financial management, organizations
should follow up and recover payments made in error. Therefore, we are
of the view that all cases identified as representing a risk of not meeting
program criteria must be followed up and verified for fairness to all
recipients and Canadians.
10.101 Recommendation. The Canada Revenue Agency and

Employment and Social Development Canada should
• update their post‑payment verification plans to include all activities
to identify payments to ineligible recipients of COVID‑19 benefit
programs, taking into account the legislated time frames

• increase the extent of post‑payment verifications for

COVID‑19 benefit programs for individuals to include all cases
identified as being at risk of being ineligible
The agency and department’s response. Partially agreed.

detailed responses.
Risk that post‑payment verification will not be completed within the

legislated time frame
10.102 While the post‑payment verifications for the Canada Emergency

Wage Subsidy started in August 2020, we found that the agency is at risk
of not being able to complete all the planned post‑payment verifications.
This is because of their complexity, as well as the significant amount
of time and effort required to conduct them. Subject to exceptions,
the agency normally has 36 or 48 months, depending on the type of
recipient, to complete the verifications. See Exhibit 10.10 for the status of
post‑payment verifications for the Canada Emergency Wage Subsidy.
Exhibit 10.10—Status of post‑payment verifications for the Canada Emergency Wage Subsidy
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.)

The Canada Revenue Agency performed limited collection activities on

COVID‑19 programs
What we found
10.103 We found that because of the delays in post‑payment

verification work, the Canada Revenue Agency’s collection activities were
at the early stages for the COVID‑19 programs we audited. The agency
had sent few notices of amounts owed, with the exception of notices
to recipients of lump‑sum advance payments, which were sent by
Employment and Social Development Canada. We also found that once
notifications were sent, the agency’s collection activities were limited to
answering incoming calls from individual recipients or employers. For
benefits to individuals, the information the department and the agency
provided showed that approximately $2.3 billion of ineligible payments
have been repaid: $1.35 billion as of July 2022 for Employment and
Social Development Canada, and $925 million as of June 2022 for
the Canada Revenue Agency. We were unable to audit the amounts
the agency received from individuals and businesses for each of the
COVID-19 programs under audit because the agency could not provide
detailed and disaggregated reporting data.
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.

following topics:
• Few cases in collection for most COVID‑19 benefit programs
• Unrecoverable amounts
10.106 This finding matters because undertaking collection activities

quickly will increase the chances of repayment and maximize the
recovery of overpayments and amounts paid to ineligible recipients. This,
in turn, will reduce the government’s loss of public funds.
Context
10.107 When a post‑payment verification is completed and results

in an amount to be repaid to the government, Employment and Social
Development Canada and the Canada Revenue Agency send notices to
advise the recipient of the amount to be repaid. Collection efforts can
then begin. The agency is responsible for collecting overpayments and
ineligible payments of COVID‑19 benefits to individuals and employers.

10.108 The agency told us that its COVID‑19 collections approach is

to be empathetic and client‑focused and to provide flexible payment
arrangements. The agency has different levels of collection actions:
• COVID‑19 payments in collection are first given to the agency’s
debt management call centre to give individuals time to proactively
pay their amounts owed. The call centre receives and makes
calls, sends reminders to individuals and businesses, and makes
payment arrangements.
• If individuals do not repay their amount owed in full or do not
contact the agency call centre to make a payment arrangement
within 90 days of the notice date, the agency can move to
enforcement actions. Examples of enforcement actions include
garnishing wages and bank accounts, putting liens on personal
property, and seizing and selling assets.
10.109 For most of the COVID‑19 benefit programs, the timeline to

collect an amount owed has been established in legislation at 6 years
from the date the notice is issued to the recipient of the amount owed or
when the debt became payable.
Analysis to support
this finding
Few cases in collection for most COVID‑19 benefit programs
10.110 We found that the delayed and slow progress of post‑payment

verifications for most COVID‑19 benefit programs limited the collection
work that could be done.
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.
10.112 For benefits to individuals, approximately $2.3 billion of

COVID‑19 benefit overpayments had been repaid by recipients. This
amount is composed of repayments of $1.35 billion as of July 2022 for
Employment and Social Development Canada and of $925 million as of
June 2022 for the Canada Revenue Agency. We were unable to confirm
the amounts the agency received from individuals and businesses for
each of the COVID-19 programs under audit because of a lack of detailed
and disaggregated reporting data. For example, the capabilities of the
agency’s information technology system were limited and could not
provide disaggregated information on amounts owed and amounts
repaid for each benefit program.

10.113 We also found that the agency’s information technology system

did not have the capability to apply future government payments
against a COVID‑19 benefit amount owed by an individual, whereas the
department’s system had this functionality. For example, the agency
could not apply income tax refunds or GST payments against the
amounts owed. Such a tool would help to support efficient collection
activities for high‑volume, low‑dollar value amounts. The agency told
us that it expected its system would have this capability by fall 2022,
but the current information provided did not have a specific time frame
for implementing this new functionality. In our view, implementing this
system function would increase the agency’s ability to collect amounts
owed by individuals for COVID‑19 benefits.
10.114 Recommendation. To increase the recovery of COVID‑19

amounts owed and reduce the administrative burden, the Canada
Revenue Agency should, before the end of December 2022, put
system functionalities in place to apply refunds against COVID‑19
amounts owed.

detailed responses.
10.115 Recommendation. To improve the usefulness of information and

the transparency of COVID‑19 reporting, the Canada Revenue Agency
should improve its information collection and reporting capabilities to
accurately report for each benefit program how much has been collected
for each individual and business.

detailed responses.
Unrecoverable amounts
10.116 Our findings above highlight the importance of post‑payment

verifications and of sending notifications of amounts individuals and
businesses owe the government as soon as possible so the collection
process to recuperate amounts can start. During the collection process,
situations may arise that limit recovery of amounts owed by businesses
and individuals (for example, bankruptcies, inability to repay, inability
to locate recipients, or potential fraudulent activities). During the audit,
we were told that Employment and Social Development Canada and the
Canada Revenue Agency had identified cases and referred some of them
to law enforcement for investigation:
• As of June 2022, the department identified approximately
13,000 cases of identity theft in Employment Insurance Emergency
Response Benefit payments worth $7.9 million.

• As of July 2022, the agency identified more than 23,000 cases of

identity theft in COVID‑19 benefit payments for individuals worth
$131 million.
• As of September 2022, the agency and the department had
identified employees that claimed COVID‑19 benefits.
• As of June 2022, for the Canada Emergency Wage Subsidy,
36 referrals worth $60 million were under criminal investigation
for suspicious activities, and payments to 179 business accounts
worth $39 million were identified as amounts paid as a result of
unauthorized access.
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.
10.121 Offering quick financial relief to individuals and employers, as

requested by the government, was made possible by the early decision
5 Write‑off—Cancellation of an amount owed, removal from official records,

and acknowledgement of the loss or failure to recover by reporting it in the financial
statements.
6 Public Accounts of Canada—The government’s annual report, which includes
the audited consolidated financial statements of the Government of Canada and other
unaudited financial information, such as the financial statements discussion and analysis
and supporting tables.

to rely on attestations and limited pre‑payment controls. However, we

found that this approach resulted in $4.6 billion of overpayments made
to ineligible recipients of benefits for individuals. We also estimated
that this resulted in at least $27.4 billion of payments that were made
to individuals and employers that should be investigated further to
verify eligibility. We concluded that the Canada Revenue Agency and
Employment and Social Development Canada did not manage the
selected COVID‑19 programs efficiently given the significant amount
paid to ineligible recipients, the limited adjustments as programs were
extended, and the slow progress on post‑payment verifications.
10.122 Finally, we concluded that the department and the agency

were not performing a sufficient number of post‑payment verifications
to be able to identify payments made to ineligible recipients. While,
the department and agency had received approximately $2.3 billion
in repayments, collection activities had only just begun and much
work remains once post‑payment verifications are completed. The
actions taken by the department and the agency to identify and recover
overpayments or payments made to ineligible recipients have not been
timely. Significant unrecoverable amounts are likely to materialize.

Part 2—Additional Information and Findings on

Specific COVID-19 Programs
A—Canada Emergency Response Benefit

Overview of the program
Objective
10.A.1 The purpose of the Canada Emergency Response Benefit

was to support individuals who lost income as a result of the
COVID-19 pandemic. That support was to
• help affected individuals meet their financial obligations
• allow individuals to stay home to help stop further spread
of the virus
• reduce the disease’s toll on individuals and the health care system
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.
10.A.3 In this report, we refer to the combined Canada Emergency

Response Benefit and Employment Insurance Emergency Response
Benefit as the Canada Emergency Response Benefit, unless there is a
need to distinguish between them.
Roles and responsibilities
10.A.4 Policy development and program design: Employment and

10.A.5 Administration: Employment and Social Development Canada

(Employment Insurance Emergency Response Benefit) and Canada
Revenue Agency (Canada Emergency Response Benefit)
Period of availability of the benefit
10.A.6 From 15 March 2020 to 3 October 2020

Support to recipient
10.A.7 The support was as follows:
Gross amount per week: $500.00
Tax withholding at source: None
Net amount per week: $500.00
Income tax impact: • Canada Emergency Response

Benefit: taxable through T4A slip
(RL-1 for Quebec residents)
• Employment Insurance
Emergency Response Benefit:
taxable through T4E slip (T4E(Q)
for Quebec residents)
Interest on erroneous payments None

or overpayment:
Program delivery and

controls
Eligibility conditions and pre-payment controls
10.A.8 The pre-payment controls were different—both in type of control

and in number of controls implemented—for the Employment Insurance
Emergency Response Benefit and the Canada Emergency Response
Benefit. As this was an emergency benefit, the program was designed
to rely on applicants’ attestation of eligibility, with limited pre-payment
controls. This was to allow benefits to be paid to Canadians as quickly as
possible. In addition, much of the information needed to put pre-payment
controls in place, such as income tax information, was not available at
the time payments were being issued.
10.A.9 Benefit applications were processed by either the agency

or department using different information technology systems.
Exhibit 10.A‑1 summarizes the controls implemented for pre-validation
of criteria for the Canada Emergency Response Benefit program. Some
eligibility criteria were not verified through pre-payment controls, as
shown in Exhibit 10.A-1. As with other COVID-19 programs, Employment
and Social Development Canada and the Canada Revenue Agency
decided to put the emphasis on post-payment verifications to confirm
the eligibility of recipients.

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
Is at least 15 years old at the time of application4
Earned at least $5,000 in the 12 months leading 5
up to the application or in 2019 from 1 of the

following sources:
• employment income
• self-employment income
• maternity and parental benefits from Employment
Insurance or a provincial plan
Did not quit or voluntarily cease their employment
Is affected by the COVID-19 pandemic in 1 of the

following ways:
• had work hours reduced because of the pandemic
and, as of mid-April 2020, does not expect to
receive more than $1,000 over a period of at least
14 consecutive days during the 4-week period the
application covers
• stopped working because of the pandemic for at least
14 consecutive days within the 4-week period the
application covers
• is unable to work because of the pandemic, including
because of the need to take care of a dependant
• received regular Employment Insurance or fishing
benefits for at least 1 week since 29 December 2019
and exhausted those benefits
Yes Partial No

1
This exhibit is intended to summarize some of the eligibility information as administered by Employment and Social
Development Canada and the Canada Revenue Agency at the time of program delivery. The complete list of detailed criteria is
included in the Canada Emergency Response Benefit Act and the Employment Insurance Act.
2
Control was limited to restricting applicants without a social insurance number.
3
Control was limited to redirecting applicants with selected types of social insurance numbers to contact Employment and
Social Development Canada.
4
This criterion was not required for all applicants for EI-ERB.
5
Control was limited as discussed in paragraphs 10.67 and 10.68 in Part 1 of our report.

Limited pre-payment controls
10.A.10 The following are additional examples supporting our finding

of limited pre-payment controls. These examples of pre-payment
controls that were added during the programs should be read with
paragraphs 10.67 to 10.70 in Part 1 of our report.
10.A.11 Finding. We found that the Canada Revenue Agency and

Employment and Social Development Canada added some pre-payment
controls throughout the Canada Emergency Response Benefit program.
Examples include the following:
• Days after the benefit program was launched, a pre-payment
control was put in place to prevent applicants from receiving more
than 1 benefit at the same time.
• In July 2020, the agency automatically stopped payments to
applicants once they had reached the maximum number of periods
allowable for the benefit.
• The agency and the department also increased pre-payment
controls by stopping applications considered high risk or suspicious.
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
10.A.14 Exhibit 10.A-2 summarizes information about the Canada

Emergency Response Benefit, including about payments, overpayments,
and payments to ineligible recipients or to recipients that should be
investigated further.

10.A.15 The payments identified in Exhibit 10.A-2 are based on the best

information available to the Canada Revenue Agency and Employment
and Social Development Canada as at 31 March 2022. Note that much
of the information was not available to the department and agency when
the payments were issued unless they contacted the applicants, which
would have hindered payment expediency. This was because it was not
requested on the applications and was not readily available through
income tax return information. For example, the $5,000 income criterion
could be calculated using earnings from the 12 months prior to the
application date. Additional information would be provided to the agency
or department if requested as part of post-payment verification work.
Exhibit 10.A-2—Summary information for the Canada Emergency Response Benefit program
Number of unique
Total amount
recipients
(in billions)
(in millions)
Recipients who received a benefit payment and 8.5 $74.8

total amount paid as at 31 March 2022
Days (average)
Amount of time between receipt of application and issuance of payment 3

(for Canada Revenue Agency–managed program only)
Overpayments or payments to recipients that either were ineligible

or should be investigated further1 (as at 31 March 2022)
Number of unique Total amount

Program requirement at risk of not being met
recipients (in billions)
Recipients earned less than $5,000 562,540 $5.2
Recipients received an advance lump-sum 1,845,073 $3.1

overpayment for the Employment Insurance
Emergency Response Benefit
Recipients earned more than $1,000 during 1,414,835 $3.8

a 4-week period2
Recipients received more than 1 benefit per period 655,066 $1.4
Total overpayments or payments to recipients 4,063,9653 $13.43

that either were ineligible or should be
1
See paragraphs 10.A.16–10.A.22, which explain how we determined our findings of overpayments or payments to recipients
that either were ineligible or should be investigated further. The results specific to the Canada Emergency Response Benefit are
included in the overall findings from Part 1, Exhibit 10.9.
2
Findings are based on eligibility information as administered by Employment and Social Development Canada and the Canada
Revenue Agency at the time of program delivery.
3
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our findings to
exclude duplicates.

Other instances of payments to recipients that should be investigated further1

excluded from the total above (as at 31 March 2022)

recipients (in millions)
Recipients quit their employment 190,254 $1,601
Recipients received duplicate benefit payment 692 $4.6
Recipients were incarcerated for the entire 1,522 $6.1

benefit period
Recipients did not reside in Canada 704 $3.3
Recipients were below 15 years old at the time of 434 $2.2

application2
Recipients were deceased 391 $1.2

1
See paragraphs 10.A.16–10.A.22, which explain how we determined our findings of payments to recipients that should be
All instances relate to payments made under the Employment Insurance Emergency Response Benefit.
2
Post-payment verifications and collections as at

June 2022 for the agency and July 2022 for the
recipients (in billions)
department
Amounts owed established following Unable to confirm Unable to confirm

post‑payment verification by the agency
Amounts owed established following Unable to confirm $3.2

post‑payment verification by the department
Benefit payments in collection 0 0
Benefit repayments for the agency and Unable to confirm $2.2

department1
Benefit repayments are unaudited—see paragraphs 10.A.27–10.A.28.

1
Assumptions
10.A.16 Below we list some assumptions and provide further

explanations on our findings of overpayments and payments to
recipients of the Canada Emergency Response Benefit that either
were ineligible or should be investigated further as summarized in
Exhibit 10.A-2. Given the assumptions used in our analysis, the amounts
reported in Exhibit 10.A-2 are the minimum amounts that should be
investigated further through post-payment verifications.

Amount paid to recipients who earned less than $5,000
10.A.17 To be eligible for the Canada Emergency Response Benefit,

most applicants had to have earned at least $5,000 in the 12 months
leading up to the application or in the 2019 calendar year. We performed
an analysis and relied on personal income tax returns filed by individuals
to assess if the eligibility criterion was met. We identified recipients
as ineligible or at risk of being ineligible if their combined 2019
and 2020 earnings (gross earnings for self-employed) were below
$5,000. A less conservative approach would have been to use an average
of the 2019 and 2020 earnings instead of combining them. This would
have led to an increase in ineligible recipients being identified in our
analysis.
Amount paid to recipients who received more than $1,000 during

a 4-week period
10.A.18 As of mid-April 2020, Employment and Social Development

Canada and the Canada Revenue Agency began to administer the
program to permit Canada Emergency Response Benefit recipients
to earn up to $1,000 during a 4-week period and still receive a benefit
payment. We performed our analysis in the same way that both the
department and agency administered this eligibility criterion at the
time of program delivery. In order to assess this eligibility criterion,
we relied on the disaggregated income information employers were
required to report on the employee’s T4 for 2020. The reliability of the
information included on the employee’s T4 will be determined only once
post-payment verification activities occur. Given that the additional
information on the T4 combined 2 benefit periods, it is impossible to
determine during which of the 2 periods the income was earned unless
additional information is obtained from the recipient.
10.A.19 For example, income earned during benefit period 1 and

period 2 were combined in the additional information reported on
box 57 of the T4. For the purpose of our audit, we performed an analysis
and made the presumption that all of the earnings in box 57 applied to
period 1. As a result, we identified the period 1 payment as ineligible and
the period 2 payment as eligible. A less conservative analysis would have
been to assume that the earnings in box 57 were earned equally between
benefit periods 1 and 2 and to deem both payments as ineligible. This
would have increased payments to ineligible recipients to $6.8 billion.
The results of the more conservative approach have been shown in
Exhibit 10.A-2.
Amount paid to recipients who quit their employment
10.A.20 In order to apply for a benefit, 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 Canada Emergency Response Benefit, as is typically the case

when receiving regular Employment Insurance benefits. Employees
whose ROE includes their status as having quit are usually unable 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.
10.A.21 For the purpose of our work, we considered the information

about ROEs to be an indicator of risk and payments that should be
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 agency.
Amount paid to recipients who did not reside in Canada
10.A.22 Applicants had to attest that they resided 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
Incomplete post-payment verification plans and delays in conducting

10.A.23 Finding. We found, as noted in Part 1 of this report, that

Employment and Social Development Canada’s and the Canada Revenue
Agency’s post‑payment verification plans were incomplete. The plans
did not include all the post-payment verification work. In addition, the
department and agency delayed their post-payment verifications.
10.A.24 We found that Employment and Social Development Canada’s

post‑payment verifications for the Employment Insurance Emergency
Response Benefit, initially planned to start in November 2021,
were delayed. The initial post-payment verification plan, dated
January 2021, covered a period of 4 years starting in 2021–22 and a
total of 157,000 verifications. The revised version of the plan included
fewer than 130,000 verifications starting in 2022–23 to be completed
by 2024–25. Issuance of post-payment verification letters started in
May 2022. As of August 2022, the department had no results to report
on its post-payment verifications.
10.A.25 We found that the Canada Revenue Agency’s post-payment

verification plan dated April 2022 focused mostly on the Canada
Emergency Response Benefit. It included 3 phases of review and a total

of 300,000 cases to be reviewed for all COVID-19 benefit programs

for individuals. After multiple delays, the agency started phase 1 of its
post-payment verification work for the Canada Emergency Response
Benefit in January 2022, using its Business Intelligence Division and
available data. We found that this work permitted the agency to identify
over 2.1 million cases where individuals had potentially received more
than $1,000 in employment and/or self-employment income during the
benefit period and could potentially be ineligible. From the 2.1 million
cases identified, the agency contacted only around 104,000 recipients
and asked them to provide additional information to confirm
eligibility. Only 10,743 (10.3%) replies were received by the agency as
of 12 May 2022.
10.A.26 In addition, as of August 2022, post-payment verification

work was ongoing related to individuals who were stopped from
receiving any further benefits and were asked by the agency to provide
additional information. For example, 475,495 individuals who received
$5 billion in Canada Emergency Response Benefit payments were
requested to provide additional information to confirm that they met the
$5,000 income threshold. The agency told us that it would complete any
remaining verifications as part of its post-payment verification work.
While the agency intended to perform post-payment verifications on
those payments, this work had not been included in its post-payment
verification plan.
Collection work status
10.A.27 Collection activities had not started on Canada Emergency

Response Benefit payments as of July 2022. The agency and
department respectively reported repayments of benefits of
approximately $2.2 billion composed of $1.3 billion as of July 2022 for
Employment and Social Development Canada, and $900 million as
of June 2022 for the Canada Revenue Agency. We were unable to
confirm the amounts the agency received from individuals for each
of the COVID-19 programs under audit because of a lack of detailed
and disaggregated reporting data. For example, the agency told us
that over 25,000 notices, totalling over $71 million, were issued as of
July 2022, but those numbers included the Canada Emergency Response
Benefit and other amounts owed that were not part of this audit. See our
recommendation in Part 1 at paragraph 10.115.
10.A.28 Similarly, while there is $3.2 billion of amounts owing following

post‑payment verifications (identified in Exhibit 10.A-2), we were unable
to confirm when the agency and department sent notifications to
recipients because of a lack of detailed and reliable reporting.

Demographic
information
Exhibit 10.A-3—Demographic information about recipients of the Canada Emergency Response

Benefit as at 31 March 2022
Nunavut
Number of recipients Total amount (in millions)
9,727
Northwest
92.3
Territories
11,235 Total recipients by province and territory
108.4 8,510,452 (including 211,306 unknown*)
74,815.2 (including $511.2 unknown*)
Yukon
8,687 Quebec
77.5 1,876,869
15,440.7
Newfoundland
and Labrador
British 109,732
Columbia 944.8
1,117,200
10,228.9
Prince Edward
Island
Alberta 32,589
999,850 261.9
9,242.2
Saskatchewan Nova Scotia

224,135 202,373
Manitoba New Brunswick
2,029.7 Ontario 1,811.2
258,168 156,163
2,260.7 3,292,418 1,320.2
30,485.5
Canada Emergency Response Benefit recipients by gender
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
Canada Emergency Response Benefit recipients by age group
25–34 age 25–34 age

0–24 age 2,032,570 0–24 age $18,069.0
1,001,254 $8,683.6
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

B—Canada Recovery Benefit

Objective
10.B.1 The Canada Recovery Benefit succeeded the Canada

Emergency Response Benefit and gave income support to employed and
self‑employed individuals who were directly affected by COVID-19 and
were not entitled to Employment Insurance benefits.
10.B.2 Policy development and program design: Employment and

10.B.3 Administration: Canada Revenue Agency
10.B.4 From 27 September 2020 to 23 October 2021
10.B.5 The support was as follows:
Gross amount per week: $500.00, reduced to $300.00 for

individuals who received payments
for a total of 42 weeks or applied
for the first time for a benefit period
beginning on or after 18 July 2021
Tax withholding at source: 10% ($50.00 or $30.00)
Net amount per week: $450.00 or $270.00
Income tax impact: Taxable through T4A slip (RL-1 for

Quebec residents)

or overpayment:

controls
10.B.6 For the Canada Recovery Benefit, several eligibility criteria

were not verified through pre-payment controls, as summarized
in Exhibit 10.B‑1. The program was designed to rely on applicants’
attestation of eligibility, with limited pre-payment controls. This was to

allow benefits to be paid to Canadians as quickly as possible. In addition,

much of the information that was needed to put pre-payment controls in
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.B-1—Summary of pre-payment controls for eligibility criteria for the Canada
Recovery Benefit
Eligibility criteria1 Pre-payment control applied
Has a valid social insurance number
2
Is present in Canada
Is at least 15 years old on the first day of the benefit period
Earned at least $5,000 in the 12 months leading up to the application or 3
in 2019 or 2020 (depending on the timing of the application) from 1 of

the following sources:
• maternity and parental benefits from Employment Insurance or
a provincial plan, or regular or special benefits from Employment
Insurance if the claim began on or after 27 September 2020
Is not receiving benefits under other programs
Is not required to isolate as a result of travel
Has met all conditions related to quitting or voluntarily ceasing to work
Filed a tax return4
Experienced a reduction of at least 50% of average weekly employment

or self-employment income during the period covered by the
application
Yes Partial No

1
This exhibit is intended to summarize some of the eligibility information as administered by the Canada Revenue Agency at the
time of program delivery. The complete list of detailed criteria is included in the Canada Recovery Benefits Act.
2
3
4
Filing of a tax return was required for some applicants starting in July 2021.

Summary information
10.B.7 Exhibit 10.B-2 summarizes information about the Canada

Recovery Benefit regarding payments to recipients that either were
ineligible or should be investigated further.
10.B.8 The payments identified in Exhibit 10.B-2 are based on

the best information available to the Canada Revenue Agency as
at 31 March 2022. We noted that much of the information was not
available to the agency when the payments were issued unless the
agency contacted the applicants, which would have hindered payment
expediency. This was because the information was not requested
on the applications and was not readily available through income tax
return information. For example, the $5,000 income criterion could be
calculated using earnings from the 12 months prior to the application
date. Additional information would be provided to the agency if
requested as part of post-payment verification work.
Exhibit 10.B-2—Summary information for the Canada Recovery Benefit
Number of unique Total amount net

recipients of taxes
(in millions) (in billions)
Recipients who received a benefit payment and 2.3 $25.6

Days (average)
Payments to recipients that either were ineligible or should be investigated further1

(as at 31 March 2022)
Total amount net

Number of unique
Program requirement at risk of not being met of taxes
recipients
(in millions)
Recipients earned less than $5,000 194,558 $2,147
Recipients received more than 1 benefit per period 68,095 $88
Total payments to recipients who were either 259,5022 2,2312

ineligible or should be investigated further
1
See paragraphs 10.B.9–10.B.13, which explain how we determined our findings of payments to recipients that either were
ineligible or should be investigated further. The results specific to the Canada Recovery Benefit are included in the overall
findings from Part 1, Exhibit 10.9.
2
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our finding to
exclude duplicates.

Other instances of payments to recipients that should be investigated further1 excluded

from the total above (as at 31 March 2022)

recipients of taxes
Recipients were below age 15 on the first day of 0 0

the benefit period
Recipients were not present in Canada 85 $368,100
Recipients quit their employment 64,922 $563,419,170
Recipient were incarcerated for the entire 384 $640,980

benefit period
Recipients were deceased 141 $360,810
Recipients received duplicate benefit payment 1,661 $4,003,740
Recipients failed to file a tax return 0 0

1
See paragraphs 10.B.9–10.B.13, which explain how we determined our findings of payments to recipients that should be
Post-payment verifications and collections Number of unique

Total amount
as at June 2022 recipients

post‑payment verifications
Benefit repayments1 Unable to confirm $44,685,717

1
Amounts of benefit repayments were provided by the Canada Revenue Agency but could not be audited because of a lack of
detailed and disaggregated reporting data. See our finding in Part 1, paragraph 10.112.
Assumptions
10.B.9 Below we list some assumptions and provide further

explanations on our findings of payments to recipients of the Canada
Recovery Benefit that either were ineligible or should be investigated
further, as summarized in Exhibit 10.B-2. Given the assumptions
used in our analysis, the amounts reported in Exhibit 10.B‑2 are
the minimum amounts that should be investigated further through
post-payment verifications.
10.B.10 To be eligible for the Canada Recovery Benefit, applicants

had to have earned at least $5,000 in the 12 months leading up to the
application or in the 2019 or 2020 calendar year, depending on the timing
of the application. We performed an analysis and relied on personal

income tax returns filed by individuals to assess if the eligibility criterion

was met. We identified recipients as ineligible or at risk of being ineligible
if their combined 2019 and 2020 earnings were below $5,000. A less
conservative approach would have been to use an average of the 2019
and 2020 earnings instead of combining them. This would have led to an
increase in ineligible recipients being identified in our analysis.
10.B.11 In order to apply for a benefit, applicants had to attest that

the Canada Recovery Benefit, as is typically the case when receiving
regular Employment Insurance benefits. Employees whose ROE includes
their status as having quit are usually unable 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.
10.B.12 For the purpose of our work, we considered the information

about ROEs as an indicator of risk and payments that should be
investigated further, given that the 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.
Amount paid to recipients who were not present in Canada
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
Post-payment
verifications and
collection

10.B.14 Finding. We found, during our review of the Canada Revenue

Agency’s post-payment verification plan, that the plan was incomplete.
It did not include all post-payment verifications the agency intended to
perform. For example, the plan excluded individuals who had already

received benefit payments and who were subsequently prevented from

receiving further benefits until they provided additional information
needed to assess their eligibility.
10.B.15 In addition, the post-payment verification plan was developed

based on eligibility criteria and not on individual programs. Therefore,
we could not find specific information related to post-payment
verifications for the Canada Recovery Benefit. The only information
the agency included in the post-payment verification plan was that
a total of 150,000 cases would be reviewed including the Canada
Recovery Benefit and the other COVID-19 programs for individuals.
The number of cases that will be reviewed for each of these individual
COVID-19 programs was not specified, nor was the time frame in which
they would be done.
Post-payment verification work status
10.B.16 As of August 2022, post-payment verification work for the

Canada Recovery Benefit was limited to individuals who were stopped
from receiving any further benefits as part of pre-payment controls
and were asked by the Canada Revenue Agency to provide additional
information. For example, 270,300 individuals who received $2.7 billion in
Canada Recovery Benefit payments were requested to provide additional
information to confirm that they met the $5,000 income threshold. The
agency told us that it would complete any remaining verifications as part
of its post-payment verification work.
10.B.17 Collection activities had not started on Canada Recovery

Benefit payments as of July 2022. The agency reported that repayments
of these benefits of approximately $44.7 million were received as
of 30 June 2022. We were unable to confirm the amounts the agency
received from individuals for each of the COVID-19 programs under audit
because of a lack of detailed and disaggregated reporting data. See our

Demographic
information
Exhibit 10.B-3—Demographic information about recipients of the Canada Recovery Benefit as

at 31 March 2022
Nunavut
Northwest
3,270 Number of recipients Total amount (in millions)
22.2
Territories
3,752
33.2
Total recipients by province and territory
2,299,522 (including 630 unknown*)
Yukon
2,308 Quebec
23.5 394,062
4,129.4
Newfoundland
and Labrador
British 26,713
Columbia 262.6
288,089
3,315.4
Prince Edward
Island
Alberta 5,922
309,923
64.0
3,354.1

64,305 52,983
643.9 Ontario 541.8
75,930 34,799
732.3 1,036,836
357.6
12,083.4
Canada Recovery Benefit recipients by gender
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
Canada Recovery Benefit recipients by age group
65+ age 0–24 age 65+ age 0–24 age

177,802 268,385 $2,250.6 $2,459.8
55–64 age 55–64 age

389,614 $4,866.6
25–34 age
25–34 age $25,568.3 $5,613.6
2,299,522 556,710 million
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.
Source: Data provided by the Canada Revenue Agency

C—Canada Recovery Caregiving Benefit

Objective
10.C.1 The Canada Recovery Caregiving Benefit gave income support

to employed and self-employed individuals who were unable to work
because they were caring for their child under 12 years old or a family
member who needed supervised care. This applied if the child's or family
member’s school, regular program, or facility was closed or unavailable
to them due to COVID-19 or if they were sick, self-isolating, or at risk of
serious health complications due to COVID-19.
10.C.2 Policy development and program design: Employment and

10.C.3 Administration: Canada Revenue Agency
10.C.4 From 27 September 2020 to 7 May 2022
10.C.5 The support was as follows:
Tax withholding at source: 10% ($50.00)

Quebec residents)

or overpayment:

controls
10.C.6 For the Canada Recovery Caregiving Benefit, several eligibility

criteria were not verified through pre-payment controls, as summarized
in Exhibit 10.C-1. The program was designed to rely on applicants’
attestation of eligibility, with limited pre-payment controls. This was to


Exhibit 10.C-1—Summary of pre-payment controls for eligibility criteria for the Canada Recovery
Caregiving Benefit
2
Earned at least $5,000 in the 12 months leading up to the application 3
or in 2019, 2020, or 2021 (depending on the timing of the application)

from 1 of the following sources:
• maternity and parental benefits from Employment Insurance or a
provincial plan
Is the only individual in the household to receive the benefit
Is not on paid leave from employer for the weeks covered by

the application
Is unable to work at least 50% of regular scheduled workweek for 1 of

the following reasons:
• caring for a child under 12 years of age
• caring for a family member who requires supervised care
Yes Partial No

1
2
3

Summary information
10.C.7 Exhibit 10.C-2 summarizes information about the Canada

Recovery Caregiving Benefit regarding payments to recipients that either
were ineligible or should be investigated further.
10.C.8 The payments identified in Exhibit 10.C-2 are based on

at 31 March 2022. Note that much of the information was not available to
the agency when the payments were issued unless the agency contacted
the applicants, which would have hindered payment expediency. This
was because it was not requested on the applications and was not
readily available through income tax return information. For example,
the $5,000 income criterion could be calculated using earnings from
the 12 months prior to the application date. Additional information
would be provided to the agency if requested as part of post-payment
verification work.
Exhibit 10.C-2—Summary information for the Canada Recovery Caregiving Benefit
Total amount net

Number of unique
of taxes
recipients
(in billions)
Recipients who received a benefit payment and 557,617 $3.82

Days (average)

Total amount net

Number of unique
recipients
(in millions)
Recipients earned less than $5,000 93,581 $879
Recipients received more than 1 benefit per period 11,532 $13
Total payments to recipients that either were 104,1152 $8912

1
See paragraphs 10.C.9–10.C.11, which explain how we determined our findings of payments to recipients that either were
ineligible or should be investigated further. The results specific to the Canada Recovery Caregiver Benefit are included in the
overall findings from Part 1, Exhibit 10.9.
2
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our finding so
that duplicates were excluded.

Other instances of payments to recipients that should be investigated further1 excluded from the total
above (as at 31 March 2022)

recipients of taxes
Recipients were incarcerated for the entire 143 $202,050

benefit period
Recipients were below age 15 on the first day 0 0

of the benefit period
Recipients received duplicate benefit payment 8 $18,000

1
See paragraphs 10.C.9–10.C.11, which explain how we determined our findings of payments to recipients that should be
Post-payment verifications and collections as at Number of unique

Total amount
June 2022 recipients


1
Amounts of benefit repayments was provided by the Canada Revenue Agency but could not be audited because of a lack of
Assumptions
10.C.9 Below we list some assumptions and provide further

explanations on our findings of payments to recipients of the Canada
Recovery Caregiving Benefit that either were ineligible or should
be investigated further, as summarized in Exhibit 10.C-2. Given
the assumptions used in our analysis, the amounts reported in
Exhibit 10.C‑2 are the minimum amounts that should be investigated
further through post-payment verifications.
10.C.10 To be eligible for the Canada Recovery Caregiving Benefit,

applicants had to have earned at least $5,000 in the 12 months leading
up to the application or in the 2019, 2020 or 2021 calendar year,
depending on the timing of the application. We performed an analysis
and relied on personal income tax returns filed by individuals to assess
if the eligibility criterion was met. We identified recipients as ineligible or
at risk of being ineligible if their combined 2019 and 2020 earnings were
below $5,000. A less conservative approach would have been to use an

average of the 2019 and 2020 earnings instead of combining them. This

would have led to an increase in ineligible recipients being identified in
our analysis.
10.C.11 Applicants had to attest that they were a resident and present
Post-payment
verifications and
collection

10.C.12 Finding. We found, during our review of the Canada Revenue

Agency’s post-payment verification, that the plan was incomplete.
10.C.13 In addition, the post-payment verification plan was developed

based on eligibility criteria and not on individual programs. Therefore, we
could not find specific information related to post-payment verifications
for the Canada Recovery Caregiving Benefit. The only information the
agency included in the post-payment verification plan was that a total
of 150,000 cases would be reviewed including the Canada Recovery
Caregiving Benefit and the other COVID-19 programs for individuals.
The number of cases that will be reviewed for each of these individual
COVID-19 programs was not specified, nor was the time frame in which
they would be done.
10.C.14 As of August 2022, post-payment verification work for the

Canada Recovery Caregiving Benefit was limited to individuals who
were stopped from receiving any further benefits as part of pre-payment
controls and were asked by the Canada Revenue Agency to provide
$888 million in Canada Recovery Caregiving Benefit payments were

10.C.15 Collection activities had not started on Canada Recovery

Caregiving Benefit payments as of July 2022. The agency reported that
repayments of approximately $8.3 million were received for the benefit
program as of 30 June 2022. We were unable to confirm the amounts
the agency received from individuals for each of the COVID-19 programs
under audit because of a lack of detailed and disaggregated reporting
data. See our recommendation in Part 1 at paragraph 10.115.
Demographic
information
Exhibit 10.C-3—Demographic information about recipients of the Canada Recovery Caregiving

Benefit (as at 31 March 2022)
Nunavut
4,074
Northwest
36.7
Territories
20.5 557,617 (including 60 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

31,568 13,583
273.5 36,488 Ontario 96.5
10,151
330.3 226,833 70.0
1,577.6
Canada Recovery Caregiving Benefit recipients by gender
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
Canada Recovery Caregiving Benefit recipients by age group
25–34 age 25–34 age

171,143 0–24 age $1,234.2
0–24 age $217.6
29,756
65+ age
65+ age
Reports of the Auditor General of Canada
2,424
$20.4 Report 10 | 57
to the Parliament of Canada—2022 55–64 age $3,819.9
55–64 age million
37,662
557,617 $262.3
76,994
6.9
522.3

31,568 13,583
273.5 Ontario 96.5
36,488 10,151 Specific COVID-19 Benefits
330.3 226,833 70.0
1,577.6
Canada Recovery Caregiving Benefit recipients by gender
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
Canada Recovery Caregiving Benefit recipients by age group
25–34 age 25–34 age

171,143 0–24 age $1,234.2
0–24 age $217.6
29,756
65+ age
65+ age $20.4
2,424
55–64 age $3,819.9

55–64 age million
37,662
557,617 $262.3
45–54 age 35–44 age 45–54 age 35–44 age

96,522 220,110 $659.2 $1,426.2
Revenue Agency.

D—Canada Recovery Sickness Benefit

Objective
10.D.1 The Canada Recovery Sickness Benefit gave income support

to employed and self-employed individuals who were unable to work
because they were sick or needed to self-isolate due to COVID-19 or
had an underlying health condition that put them at greater risk of
getting COVID-19.
10.D.2 Policy development and program design: Employment and

10.D.3 Administration: Canada Revenue Agency
10.D.4 From 27 September 2020 to 7 May 2022
10.D.5 The support was as follows:

Quebec residents)
Interest on erroneous payments or None

overpayment:

controls
10.D.6 For the Canada Recovery Sickness Benefit, several eligibility

in Exhibit 10.D-1. The program was designed to rely on applicants’
attestation of eligibility with limited pre-payment controls. This was to

Exhibit 10.D-1—Summary of pre-payment controls for eligibility criteria for the Canada Recovery
Sickness Benefit
2
Is unable to work at least 50% of regular scheduled workweek for 1 of

the following reasons:
• sick with COVID-19 or suspected COVID-19
• advised to self-isolate due to COVID-19
• has an underlying health condition putting them at greater risk of
getting COVID-19
in 2019, 2020, or 2021 from 1 of the following sources:

provincial plan
Is not on paid leave from employer for the period covered by

the application
Yes Partial No

1
2
3

Summary information
10.D.7 Exhibit 10.D-2 summarizes information about the Canada

Recovery Sickness Benefit regarding payments to recipients that either
were ineligible or should be investigated further.
10.D.8 The payments identified in Exhibit 10.D-2 are based on

readily available through income tax return information. Also, recipients
may have additional information that could confirm their eligibility. This
information would be provided to the agency if requested as part of
post‑payment verification work.
Exhibit 10.D-2—Summary information for the Canada Recovery Sickness Benefit

recipients of taxes
(in thousands) (in millions)
Recipients who received a benefit payment and 1,132 $1,215

Days (average)

Number of unique Total amount paid net of

recipients taxes (in millions)
Recipients earned less than $5,000 47,916 $46.6
Recipients received more than 1 benefit per period 11,909 $7.4
Total payments to recipients that either were 59,4272 $53.82

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.


Number of unique Total amount paid net

recipients of taxes

the benefit period
Recipients were incarcerated for the entire 39 $30,600

benefit period
Recipients received duplicate benefit payment 10 $12,600

1
See paragraphs 10.D.9–10.D.11, which explain how we determined our findings of payments to recipients that should be
Post-payment verifications and collections Number of unique

Total amount
as at June 2022 recipients

1
Assumptions
10.D.9 Below we list some assumptions and provide further

explanations on our findings of payments to recipients of the
Canada Recovery Sickness Benefit that either were ineligible or
should be investigated further, as summarized in Exhibit 10.D-2.
Given the assumptions used in our analysis, the amounts reported in
Exhibit 10.D‑2 are the minimum amounts that should be investigated
10.D.10 To be eligible for the Canada Recovery Sickness Benefit,

applicants were required to have earned at least $5,000 in the 12 months
leading up to the application or in the 2019, 2020 or 2021 calendar
year, depending on the timing of the application. We performed a
conservative analysis and relied on personal income tax returns filed
by individuals to assess if the eligibility criterion was met. We identified
recipients as ineligible or at risk of being ineligible if their combined 2019

and 2020 earnings were below $5,000. A less conservative approach

would have been to use an average of the 2019 and 2020 earnings
instead of combining them. This would have led to an increase in
ineligible recipients being identified in our analysis.
10.D.11 Applicants had to attest that they were a resident and present
Post-payment
verifications and
collection

10.D.12 Finding. We found, during our review of the Canada Revenue

It did not include all the post-payment verifications the agency intended
to perform. For example, the plan excluded individuals who had already
10.D.13 In addition, the post-payment verification plan was developed

based on eligibility criteria and not on individual programs. Therefore,
we could not find specific information related to post-payment
verification activities for the Canada Recovery Sickness Benefit.
The only information the agency included in the plan was that a total
of 150,000 cases would be reviewed including the Canada Recovery
Sickness Benefit and the other COVID-19 benefit programs for
individuals. The number of cases that will be reviewed for each of these
individual COVID-19 programs was not specified, nor was the time frame
in which they would be done.
10.D.14 As of August 2022, post-payment verification work for the

Canada Recovery Sickness Benefit was limited to individuals who were
stopped from receiving any further benefits as part of pre-payment
$122 million in Canada Recovery Sickness Benefit payments were


10.D.15 Collection activities had not started on the Canada Recovery

Sickness Benefit payments as of July 2022. The agency reported that
repayments of approximately $5.9 million were received for the benefit
program as of 30 June 2022. We were unable to confirm the amounts
the agency received from individuals for each of the COVID-19 programs
under audit because of a lack of detailed and disaggregated reporting
data. See our recommendation in Part 1 at paragraph 10.115.
Demographic
information
Exhibit 10.D-3—Demographic information about recipients of the Canada Recovery Sickness

Benefit (as at 31 March 2022)
Nunavut
2,105
Northwest
2.7
Territories
2.4 1,132,254 (including 190 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

46,424 27,396
52.4 59,735 Ontario 30.1
21,216
67.9 412,698
23.3
453.2
Canada Recovery Sickness Benefit recipients by gender
Unknown* Unknown*
99 $0.1
Female Female
570,863 $603.6
$1,214.9
1,132,254 million
Male Male
561,292 $611.2
Canada Recovery Sickness Benefit recipients by age group
Reports of the Auditor General of Canada 0–24 age Report 10 | 64

0–24 age
175,055
25–34 age $181.0 25–34 age
345,737 $373.1
65+ age 65+ age

$35.9
$3.8
209.7

46,424 27,396
52.4 59,735 Ontario 30.1
21,216
67.9 412,698
23.3 Specific COVID-19 Benefits
453.2
Canada Recovery Sickness Benefit recipients by gender
Unknown* Unknown*
99 $0.1
Female Female
570,863 $603.6
$1,214.9
1,132,254 million
Male Male
561,292 $611.2
Canada Recovery Sickness Benefit recipients by age group
0–24 age 0–24 age

25–34 age $181.0 25–34 age
175,055
345,737 $373.1
65+ age 65+ age

$35.9
32,903
$1,214.9
1,132,254 55–64 age million
55–64 age
$130.3
123,570
35–44 age 35–44 age

45–54 age 265,347
45–54 age $290.0
189,642 $204.6
Revenue Agency.

E—Canada Worker Lockdown Benefit

Objective
10.E.1 The Canada Worker Lockdown Benefit gave temporary income

support to employed and self-employed people who could not work due
to a COVID-19 lockdown. The benefit was available to them only when a
COVID-19 lockdown order was designated for their region.
10.E.2 Policy development and program design: Employment and

10.E.3 Administration: Canada Revenue Agency
10.E.4 From 24 October 2021 to 7 May 2022
10.E.5 The support was as follows:

Quebec residents)
Interest on erroneous payments or None

overpayment:

controls
10.E.6 For the Canada Worker Lockdown Benefit, several eligibility

in Exhibit 10.E-1. The program was designed to rely on applicants’
attestation of eligibility with limited pre-payment controls. This was to
much of the information that was needed to put pre-payment controls
in place was not available at the time payments were being issued. As

with other COVID-19 programs, the Canada Revenue Agency decided to

put the emphasis on post-payment verification to confirm the eligibility
of recipients.
Exhibit 10.E-1—Summary of pre-payment controls for eligibility criteria for the Canada Worker
Lockdown Benefit
2
Is at least 15 years old on the first day of the application period
in 2020 or 2021 from 1 of the following sources:

provincial plan
4
Has met all conditions related to quitting or voluntarily ceasing to work
Filed a 2020 tax return
Experienced a reduction of at least 50% of average weekly employment

or self-employment income during the period covered by the
application
Works or provides a service in a region designated as a COVID-19

lockdown region during the 1-week period covered by the application
Yes Partial No

1
time of program delivery. The complete list of detailed criteria is included in the Canada Worker Lockdown Benefit Act.
2
3
4
Control was paused during the program—see paragraphs 10.E.7–10.E.8.

Limited pre-payment controls
10.E.7 The following example supports our finding of limited pre-

payment controls. This summary should be read with paragraphs 10.67
to 10.70 in Part 1 of our report.
10.E.8 Finding. We found that the pre-payment control performed

to prevent applicants from receiving regular Employment Insurance
benefits from Employment and Social Development Canada and the
Canada Worker Lockdown Benefit at the same time was paused from
30 December 2021 to 31 January 2022 because of capacity issues. This
led to an increase in payments made to ineligible recipients. We noted
that 1,300 recipients of the Canada Worker Lockdown Benefit were paid
a total of $838,000 as a result of this pre-payment control being paused.
See our recommendation in Part 1 at paragraph 10.101.
Summary information
10.E.9 Exhibit 10.E-2 summarizes information about the Canada Worker

Lockdown Benefit regarding payments to recipients that either were
ineligible or should be investigated further.
10.E.10 The payments identified in Exhibit 10.E-2 are based on

readily available through income tax return information. For example,
the $5,000 income criterion could be calculated using earnings from
the 12 months prior to the application date. Additional information
would be provided to the agency if requested as part of post-payment
verification work.

Exhibit 10.E-2—Summary information for the Canada Worker Lockdown Benefit
Total amount net

Number of unique
of taxes
recipients
(in millions)
Recipients who received a benefit payment and 450,743 $811

Days (average)

Total amount net

Number of unique
recipients
(in thousands)
Recipients earned less than $5,000 1,692 $3,121
Recipients received more than 1 benefit for the 1,515 $892

same period
Total payments to recipients that either were 3,2052 $4,0122

1
See paragraphs 10.E.11–10.E.15, which explain how we determined our findings of payments to recipients that either were
ineligible or should be investigated further. These results specific to the Canada Worker Lockdown Benefit are included in the
overall finding from Part 1, Exhibit 10.9.
2
Some payments have been identified as ineligible in more than 1 program requirement. Therefore, we adjusted our findings so
that duplicates were excluded.

Number of unique Total amount paid net

recipients of taxes
Recipients quit their employment 11,719 $17,915,310
Recipients received duplicate benefit payment 0 0
Recipients were incarcerated for the entire period 3 $2,430
Recipients were not present in Canada 1 $540

the application period
Recipients failed to file a 2020 tax return 0 0

1
See paragraphs 10.E.11–10.E.15, which explain how we determined our findings of payments to recipients that should be

Post-payment verifications and collections as at Number of unique

Total amount
June 2022 recipients

Benefit repayments1 Unable to confirm $854,064

1
Assumptions
10.E.11 Below we list some assumptions and provide further

explanations on our findings of payments to recipients of the
Canada Worker Lockdown Benefit that either were ineligible or
should be investigated further as summarized in Exhibit 10.E-2.
Given the assumptions used in our analysis, the amounts reported in
Exhibit 10.E‑2 are the minimum amounts that should be investigated
10.E.12 To be eligible for the Canada Worker Lockdown Benefit,

applicants had to have earned at least $5,000 in the 12 months leading
up to the application or in the 2020 or 2021 calendar year, depending on
the timing of the application. We performed an analysis and relied on
personal income tax returns filed by individuals to assess if the eligibility
criterion was met. We identified recipients as ineligible or at risk of being
ineligible if their combined 2020 and 2021 earnings were below $5,000.
A less conservative approach would have been to use an average of
the 2020 and 2021 earnings instead of combining them. This would have
led to an increase in ineligible recipients being identified in our analysis.
10.E.13 In order to apply for a benefit, some applicants had to attest that
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.
10.E.14 For the purpose of our work, we considered the information

about ROEs as an indicator of risk and payments that should be

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.
10.E.15 Applicants had to attest that they were present in Canada to be

eligible for the benefit. We identified recipients who had both their home
and 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

10.E.16 Finding. We found, during our review of the Canada Revenue

10.E.17 In addition, the post-payment verification plan was developed

based on eligibility criteria and not on individual programs. Therefore, we
could not find specific information related to post-payment verification
for the Canada Worker Lockdown Benefit. The only information the
agency included in the post-payment verification plan was that a total
of 150,000 cases would be reviewed including the Canada Worker
Lockdown Benefit and the other COVID-19 benefit programs for
individuals. The number of cases that will be reviewed for each of these
individual COVID-19 programs was not specified, nor was the time frame
in which they will be done.
10.E.18 As of August 2022, post-payment verification work for the

Canada Worker Lockdown Benefit was limited to individuals who were
stopped from receiving any further benefits as part of pre-payment
$50 million in Canada Worker Lockdown Benefit payments were


10.E.19 Collection activities had not started on the Canada Worker

Lockdown Benefit payments as of July 2022. The agency reported that
repayments of the benefit of approximately $850,000 were received as
of 30 June 2022. We were unable to confirm the amounts the agency
received from individuals for each of the COVID-19 programs under audit
because of a lack of detailed and disaggregated reporting data. See our

Demographic
information
Exhibit 10.E-3—Demographic information about recipients of the Canada Worker Lockdown Benefit
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

189 7,608
0.3 Ontario 15.2
8,805 8,575
14.4 250,670
10.4
466.2
Canada Worker Lockdown Benefit recipients by gender
Unknown* Unknown*
47 $0.1
Female Female
225,884 $383.3
$811.0
450,743 million
Male Male
224,812 $427.6
Canada Worker Lockdown Benefit recipients by age group
0–24 age 25–34 age 0–24 age 25–34 age

77,512 106,736 $117.6 $180.8
65+ age 65+ age

25,453 $52.8
$811.0
450,743 million 35–44 age
$156.3
55–64 age 35–44 age 55–64 age
73,713 87,105 $149.2
45–54 age 45–54 age

80,224 $154.3
Revenue Agency.

F—Canada Emergency Wage Subsidy

Objective
10.F.1 The Canada Emergency Wage Subsidy was provided to eligible

employers for up to 75% of eligible remuneration. The objective of
the program was to help employers avoid layoffs and terminations by
keeping employees on their payrolls.
10.F.2 Administration: Canada Revenue Agency
Period of availability of the subsidy
10.F.3 The program started on 15 March 2020 and was extended

multiple times. The program ended on 23 October 2021, for a total
of 21 qualifying periods.
10.F.4 As of 24 October 2021, the Canada Emergency Wage Subsidy

was replaced with 2 new programs offering wage and rent support
to employers: the Tourism and Hospitality Recovery Program and the
Hardest-Hit Business Recovery Program. These newer programs were
not part of our audit.
Summary information
10.F.5 Exhibit 10.F-1 summarizes the total number and amounts of

applications received and approved for the Canada Emergency Wage
Subsidy program.
Exhibit 10.F-1—Summary information of applications for the Canada Emergency Wage Subsidy
Applications Number of Percentage of Amount Percentage of

processed applications total applications (in millions) total amount
Total applications 5,077,613 100% $102,249 100%

received
Total applications 5,069,698 99.8% $100,738 98.5%

approved
10.F.6 Exhibit 10.F-2 summarizes the number of unique Canada

Emergency Wage Subsidy recipients and the amounts that they
received. Over 98% of subsidies were paid to employers with fewer
than 100 employees. This represents 62% of the total dollar value of
paid subsidies. In comparison, employers with 100 or more employees
received 38% of the total dollar value of paid subsidies.

Exhibit 10.F-2—Breakdown of Canada Emergency Wage Subsidy recipients by employer size
Employer size Percentage of

Number of unique Percentage of Subsidy paid
based on number total subsidy paid
recipients total recipients (in billions)
of employees
0 to 5 253,231 56.62% $9.8 9.73%
6 to 19 140,609 31.45% $21.8 21.65%
20 to 99 46,409 10.38% $30.8 30.59%
100 to 499 6,154 1.38% $22.1 21.95%
500 to 999 462 0.10% $5.6 5.56%
1,000 to 4,999 260 0.06% $8.2 8.14%
5,000+ 24 0.01% $2.4 2.38%
Total 447,149 100% $100.7 100%
Note: Percentages are rounded.
Assumptions
10.F.7 Below, we list some assumptions we made in determining

payments made to employers that appear to have an insufficient revenue
decline and that should be investigated further.
10.F.8 As noted in Part 1, Exhibit 10.9, we estimated that total

payments of $15.5 billion were made to employers that had an indicator
of ineligibility based on the revenue decline criterion for the Canada
Emergency Wage Subsidy. In order to perform this analysis, we focused
on monthly goods and services tax / harmonized sales tax (GST/HST)
filers (Exhibit 10.F-3).
Exhibit 10.F-3—Canada Emergency Wage Subsidy recipients and GST/HST filing frequency
Percentage of subsidy Subsidy amount

Frequency of GST/HST filing
recipients received (in billions)
Monthly 20% $64.2
Quarterly 51% $26.7
Annually 20% $5.9
Non‑filers or exempt 9% $3.9
Total 100% $100.7

10.F.9 We were aware of a difference between the GST/HST reporting

periods and the subsidy’s claim periods. We used the recipients’ reported
GST/HST revenue in the month that had the largest number of
overlapping days with the subsidy program’s claim period. We compared
it with the reported GST/HST revenue in the prior reference period (the
month or average of months against which the revenue in the current
period is compared). In addition, our analysis excluded recipients that
did not file a GST/HST return.
10.F.10 We were aware of differences between the revenue reported

for GST/HST purposes and the specific definition of qualifying revenue7
according to the Canada Emergency Wage Subsidy. In addition,
employers could make use of choices to modify how they calculated
their qualifying revenue for their subsidy claim. These differences could
result in employers being eligible for the subsidy even if their GST/HST
reported revenue did not show the expected decline. However, we are of
the view that, in the absence of other sources of information, the revenue
reported on a GST/HST return could have been used as a source of data
to assess the reasonableness of the revenue decline claimed on the
application. This assessment could have been used for the purpose of
either halting future claims or identifying applicants for post-payment
verification.
10.F.11 Our analysis identified 51,049 employers that received

$9.87 billion in Canada Emergency Wage Subsidy payments whose
monthly GST/HST filings did not demonstrate a sufficient revenue drop
to be eligible for the subsidy. Based on monthly GST/HST data alone,
this represents 15.37% of payments made to monthly filers. It follows
logically that if this estimated potential ineligibility rate were applied to
the full population, this would amount to $15.5 billion of payments that
represent a risk of being ineligible. We noted that the Canada Revenue
Agency targeted Canada Emergency Wage Subsidy claimants with an
insufficient revenue drop based on GST/HST returns (as well as other
risk factors) when selecting claims for post-payment verification. See
Exhibit 10.F-6 for additional details on post-payment verification.
10.F.12 Our analysis of Canada Emergency Wage Subsidy payments

that should be investigated further based on GST/HST revenue decline
is an estimate. Actual ineligible amounts will only be determinable once
comprehensive post-payment verifications are completed.
7 Qualifying revenue—The inflow of cash, receivables, or other consideration arising in

the course of an eligible entity’s ordinary activities (generally, from the sale of goods, the
rendering of services, and the use by others of the eligible entity’s resources) in Canada in
a particular period.

Eligibility and
pre‑payment controls
10.F.13 In order to validate Canada Emergency Wage Subsidy

applications prior to issuing subsidy payments, the Canada Revenue
Agency applied a number of controls. In Exhibit 10.F-4, we have
outlined the controls the agency applied at various stages of the
validation process.
Exhibit 10.F-4—Stages of pre-payment controls for Canada Emergency Wage Subsidy applications
Stage Description Controls applied by the Canada Revenue Agency

Automated A series of automated validation Validation checks included confirming the
pre-validation controls were applied to the employer met the following criteria:
application. If the application did
• was an eligible employer type based on the
not pass, the applicant received a
business operating type code
denial message. If the application
passed, the applicant was • had an active business number as
permitted to enter information at 15 March 2020
related to the claim amount.
• had an active payroll account as
at 15 March 2020
• had no duplicate claims for the same period
• had no claims submitted after the 180-day
cut-off period
• had a valid business number1
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).

Assessment of pre-payment controls and audit findings
10.F.14 Exhibit 10.F-5 is a summary of the eligibility criteria for the

Canada Emergency Wage Subsidy that we tested as part of our audit, a
description of the Canada Revenue Agency pre-payment controls, and
our audit findings.
Exhibit 10.F-5—Summary of eligibility criteria, pre-payment controls, and audit findings for the
Canada Emergency Wage Subsidy program
Eligibility criteria Description of pre-payment controls Audit findings
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.
Eligible employees The agency performed a We performed a reasonableness test

(remuneration) reasonableness test by comparing and did not find significant instances of
remuneration claimed with historical overpayment on the basis of historical
payroll remittances. T4 summaries.
Active payroll The agency performed a validation We performed a targeted sample to

account as check to ensure the applicant assess this eligibility criterion and found
at 15 March 2020 had an active payroll account as that despite the inactive status of certain
at 15 March 2020. accounts, evidence of activity justified
the payments in the sample we selected.
See paragraph 10.F.15.
Application The system prevented an We noted that $100 million were paid

received within application from being submitted to applicants who submitted their
the 180-day after the 180‑day deadline. To application past the deadline. We
deadline be processed after this time, performed a targeted sample and found
an application required manual that in 20% of cases, the agency’s
approval. Each case was documentation on file lacked justification
evaluated individually. for the payment.
Note: This exhibit summarizes key eligibility information administered by the Canada Revenue Agency at the time of program
delivery. The complete list of detailed criteria is included in the Income Tax Act.

Missing up-to-date information on business status
10.F.15 Finding. Up-to-date information on business closures was

unavailable to the Canada Revenue Agency. This information would
have helped the agency assess the active status of employers and
improve the efficiency of the Canada Emergency Wage Subsidy program.
We found that 3,724 employers representing $564 million received
the subsidy while being registered inaccurately as inactive or closed
businesses in the agency’s system. This is a consequence of the agency
not having or updating its information on businesses that are inactive,
closed, non‑operating, or bankrupt. The consequence of outdated
account status information (that is, active versus inactive) reduced
the agency’s ability to efficiently deliver the Canada Emergency Wage
Subsidy program, as well as other programs for businesses.
Post-payment
verifications and
collection
Post-payment verification and collection work status
10.F.16 The Canada Revenue Agency used a risk-based audit selection

approach. Exhibit 10.F-6 shows that a higher percentage of claims and
claim values were being audited by the agency for employers with 100 or
more employees. A total of 0.8% of the unique recipients and 12% of the
value of the subsidy paid were being audited.

Exhibit 10.F-6—Allocation of the Canada Revenue Agency’s post-verification audits of the Canada

Emergency Wage Subsidy program by employer size
Number Value in millions

Employer size
Number of unique (percentage) of Subsidy paid (percentage) of
based on number
recipients unique recipients (in billions) the subsidy paid
of employees
under audit under audit
0 to 5 253,231 868 $9.8 $59.2

(0.34%) (0.60%)
6 to 19 140,609 662 $21.8 $103.0

(0.47%) (0.47%)
20 to 99 46,409 1,151 $30.8 $1,388.8

(2.48%) (4.51%)
100 to 499 6,154 553 $22.1 $3,317.9

(8.99%) (15.01%)
500 to 999 462 92 $5.6 $1,328.1

(19.91%) (23.72%)
1,000 to 4,999 260 85 $8.2 $4,350.1

(32.69%) (53.05%)
5,000+ 24 10 $2.4 $1,636.5

(41.67%) (68.19%)
Total 447,149 3,421 $100.7 12,183.6

(0.8%) (12%)
Note: Percentages are rounded.
10.F.17 Exhibit 10.F-7 summarizes information on the phases of

post‑payment verification and collections for the Canada Emergency
Wage Subsidy program. The Canada Revenue Agency was unable to
provide detailed and disaggregated data to confirm the total amounts
collected for the program. The agency’s reporting noted $76.7 million
currently in collections as of June 2022. We were unable to confirm
the amounts the agency received from employers for each of the
COVID-19 programs under audit because of a lack of detailed and
disaggregated reporting data. In addition, we have not audited the
amounts in collection resulting from post-payment verifications
shown in Exhibit 10.F‑7 because of the timing of the completion of the
post‑payment verifications.

Exhibit 10.F-7—Post-payment verification and collections for the Canada Emergency Wage

Subsidy program
Total claim amount

Status on post-payment as at 30 May 2022 Number of audits
(in billions)
Post-payment verification: Phase 11
Number of audit files 730 $1.52
Audits completed 712 $1.29
Audits still in progress 18 $0.22
Claims denied as a result of post-payment verification 298 $0.08
Post-payment verification: Phase 22
Number of audit files 2,770 $10.66
Audits completed 487 $0.31
Audits still in progress 2,283 $10.36
Claims denied as a result of post-payment verification 298 $0.04

Number of Total claim amount

Status on collection as of June 2022
employers (in millions)
Accounts in collections3 Unable to confirm $77
Repayments Unable to confirm Unable to confirm

Average file completion time in phase 1 was 341 days.
1
Average file completion time in phase 2 was 195 days.

2
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.
10.F.18 The agency told us that as of June 2022, 179 employers

were impacted by unauthorized account access. Of these, $72 million
in payments were prevented from being issued, $39 million were
paid in error, and $60 million worth of payments were under criminal
investigation. As a result of data issues and data being combined with
another subsidy program, the agency could not provide a clear total of
how many identity theft cases were identified for the Canada Emergency
Wage Subsidy program only. See our recommendation in Part 1 at
paragraph 10.115.

About the Audit

This independent assurance report was prepared by the Office of the Auditor General of Canada
on specific COVID‑19 benefits. Our responsibility was to provide objective information, advice,
and assurance to assist Parliament in its scrutiny of the Government of Canada’s management
of resources and programs, and to conclude on whether the specific COVID‑19 benefit programs
complied in all significant respects with the applicable criteria.
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
The objective of this audit was 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
The COVID‑19 benefit programs covered by this audit are the following:

• Canada Worker Lockdown Benefit
• Canada Recovery Benefit
• Canada Recovery Sickness Benefit
• Canada Recovery Caregiving Benefit
• Canada Emergency Response Benefit, including the Employment Insurance Emergency
Response Benefit
• Canada Emergency Wage Subsidy
Scope and approach
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.
The audit did not examine

• other COVID‑19 programs put in place by the federal government that are not identified in An Act
to provide further support in response to COVID‑19
• COVID‑19 provincial and municipal support programs offered to individuals, businesses,
and organizations

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
recover payments made to ineligible recipients and
overpayments. • Canada Recovery Benefits Act
• Canada Emergency Response Benefit 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
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,
with the exception of the Canada Emergency
Wage Subsidy. • Income Tax Act
• Transforming Our World: The 2030 Agenda for
Sustainable Development, United Nations

Period covered by the audit
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.
Date of the report
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.

Recommendations and Responses

In the following table, the paragraph number preceding the recommendation indicates the location
of the recommendation in the report.
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.
10.84 In order to improve its efficiency of Agreed. Budget 2021 announced funding of

delivering benefit programs, the Canada Revenue $43.9 million over three years, starting in 2020–21,
Agency, with the collaboration of Employment for the Canada Revenue Agency and Employment
and Social Development Canada, should pursue and Social Development Canada to develop
the development and implementation of a options for the implementation of an ePayroll
real‑time payroll system with clear timelines and solution for the Government of Canada that will
deliverables. increase the speed and accuracy of services
and benefits to Canadians. Now in its second
year, the current phase of the project will deliver
a fully costed implementation plan consisting
of 3 deliverables: a business case that will
recommend an ePayroll solution, supported
by a transformation blueprint and a project
management framework, with a view to moving to
the implementation phase beyond March 2024.

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.
10.114 To increase the recovery of Agreed. The functionality to automatically apply

COVID‑19 amounts owed and reduce the refunds from other tax lines (such as T2 income
administrative burden, the Canada Revenue tax, GST/HST, etc.) to Canada Emergency
Agency should, before the end of December 2022, Wage Subsidy debts has been operational
put system functionalities in place to apply refunds since the subsidy was first implemented.
against COVID‑19 amounts owed. Beginning 17 October 2022, the agency has had the
ability to apply T1 refunds to COVID‑19 individual
benefit debts. The functionality to apply GST
credits to COVID‑19 individual benefit debts is
currently planned for February 2023.
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.


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COVID-19

Specific COVID-19 Benefits

This publication is available on our website at www.oag-bvg.gc.ca.

Cover photo: Banana Oil/Shutterstock.com and Andrey_Popov/Shutterstock.com

Part 1—Key Findings 1

Focus of the audit...................................................................................................................................3

Findings and Recommendations 4

Program delivery and controls..............................................................................................................18

Post‑payment verification and collection..............................................................................................25

Reports of the Auditor General of Canada Report 10 | iii

B—Canada Recovery Benefit 45

C—Canada Recovery Caregiving Benefit 52

D—Canada Recovery Sickness Benefit 59

E—Canada Worker Lockdown Benefit 66

F—Canada Emergency Wage Subsidy 74

About the Audit 82

Recommendations and Responses 86

Reports of the Auditor General of Canada Report 10 | iv

Part 1—Key Findings

10.1 In March 2020, Canada faced the global coronavirus disease

10.2 To minimize the impacts of the COVID‑19 pandemic on

10.4 The original programs were expected to last only a few

Reports of the Auditor General of Canada Report 10 | 1

10.5 To simplify and accelerate the application process for

Previous audit work and

10.6 The Office of the Auditor General of Canada has conducted

10.7 On 17 December 2021, An Act to provide further support in

10.8 As required by the act, we audited the following

10.9 We also audited, as required by the act, the following

10.10 Additional information and some of our findings on each

Reports of the Auditor General of Canada Report 10 | 2

10.11 Employment and Social Development Canada. The department

10.12 The Canada Revenue Agency. The agency is responsible for

Focus of the audit

Finally, the audit examined whether the programs achieved their

Reports of the Auditor General of Canada Report 10 | 3

Findings and Recommendations

10.15 With its response to the COVID‑19 pandemic, the Government of

10.16 To expedite issuing payments, the Canada Revenue Agency

10.17 We found that the department and agency’s approach to limit

10.19 There have also been delays in conducting post‑payment

Reports of the Auditor General of Canada Report 10 | 4

Outcomes and effectiveness

10.20 The Government of Canada’s COVID‑19 benefit programs were

Exhibit 10.1—Periods of availability of COVID-19 benefit programs

* Includes the Employment Insurance Emergency Response Benefit

10.21 Exhibit 10.2 shows the total benefit payments made to recipients

Exhibit 10.2—Payments to recipients for COVID‑19 benefit programs

COVID‑19 benefit program Total payments at program end (in millions)

Canada Emergency Wage Subsidy $100,738

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10.22 Exhibit 10.3 provides a simplified overview of the application

Exhibit 10.3—Simplified COVID-19 benefit application process for individuals and employers

Application automatically Application identified for Application rejected as

No post-payment verification Post-payment verification

Result—adjustment required Result—no adjustment

* If applicant disagrees with decision, a recourse process exists.

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COVID‑19 programs supported Canada’s economic recovery

10.23 We found that the COVID‑19 programs achieved their objective

10.24 The analysis supporting this finding discusses the

Why this finding matters

10.25 This finding matters because it is important that the government