Auditor General: Ottawa Wrote Off $4.5B in COVID Benefits

The federal government wrote off $4.5 billion in COVID-19 benefits last year that it no longer expects to see recovered, Global News reported.

Audits of Ottawa’s consolidated financial statements for the previous fiscal year reveal that the total jumped sharply from $26 million the year before. The figures were published on Friday as part of the annual public accounts, just a day after the federal budget was tabled.

The Office of the Auditor General of Canada states that the government continues trying to recoup overpayments made to ineligible Canadians. When officials determine a debt will not be repaid, the ledger entry is struck out. Auditor General Karen Hogan released her office’s commentary on the same day as the financial statements.

Hogan warned that Ottawa expects a larger portion of pandemic-era business loans to default. The allowance for potential losses on Canada Emergency Business Account loans rose to $5.6 billion in the last fiscal year, according to CTV News. That figure increased from $5.4 billion previously out of $7.2 billion in total outstanding loans.

Businesses could receive forgiveness for nearly a third of their interest-free loans if they repaid by the deadline, which the government extended twice. Loans that remained unpaid past that date began accruing interest. The final due date for all CEBA loans arrives at the end of next month.

The auditor general flagged several other outstanding administrative issues from the previous fiscal year. The federal government failed to meet its promise to clear a backlog of pay transactions related to the former Phoenix pay system that exceeded one year of age, Global News reported.

More than 110,000 transactions awaited processing for over a year as of March 31, 2026. CTV News noted the audit warning: These issues need to be addressed to support timely and accurate pay to employees as the government prepares to transition to a new pay and benefits system called Dayforce beginning in July 2027.

The Office of the Auditor General also raised concerns regarding the Department of National Defence and asset tracking. The department has faced scrutiny for more than two decades regarding its inventory management. A promised bar code tracking system remains five years away from implementation, according to Global News.

Errors in asset quantities and valuations led to a $751 million understatement of the department’s deficit for the last fiscal year. Additional audit findings point to Crown corporations exhibiting a lack of risk management, board oversight, and performance reporting.