The Office of the Auditor General of Canada says the federal government wrote off billions of dollars last year in COVID-19 benefits that it no longer expects to see repaid.
The federal government is trying to recoup payments made to Canadians during the COVID-19 pandemic in cases where it determines someone was overpaid or was ineligible for the benefit.
But when the government expects not to be paid back, it writes off the debt and strikes it from its ledgers.
Audits of the government’s consolidated financial statements for the last fiscal year show Ottawa wrote off $4.5 billion tied to COVID-19 benefits — up sharply from $26 million the previous year.
The government’s financial statements for 2025-26 were published on Friday — a day after Ottawa tabled its 2026 federal budget — as part of its annual public accounts.
Auditor General Karen Hogan’s office also released its commentary that day on the government’s previous fiscal year.
Hogan warned that Ottawa is also expecting a larger portion of business loans from the pandemic will not be repaid.
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The government’s allowance for potential losses on loans through the Canada Emergency Business Account, or CEBA, increased to $5.6 billion in the last fiscal year, up from $5.4 billion previously. That’s out of a total of $7.2 billion in outstanding loans.
Businesses could get nearly a third of the value of their interest-free CEBA loans forgiven if they repaid before the applicable deadline, which the government extended twice. But if they hadn’t paid back the amount by then, the loans started to accrue interest.
The final due date for all CEBA loans is at the end of next month.
Hogan’s office flagged a number of other outstanding issues from the government’s last fiscal year.
The government failed to meet its promise to clear the backlog of pay issues related to the former Phoenix pay system that were more than a year old. While the number of outstanding issues has trended lower, there were still more than 110,000 transactions awaiting processing for more than a year as of March 31, 2026.
“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 audit read.
The auditor general also has been raising red flags for more than two decades about the ability of the Department of National Defence to keep track of its inventory. A promised bar code system to keep track of assets is still five years away, the office noted last week.
Errors in the quantities and valuations of the assets resulted in a $751 million understatement of the department’s deficit for the last fiscal year, the audit showed.
Other issues identified by the auditor general touch on Crown corporations, and a lack of risk management, board oversight and overall performance measurement and reporting.
© 2026 The Canadian Press
