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Executive Summary

An overpayment occurs when benefits are paid to a beneficiary who has no entitlement or when benefits have been paid in excess of entitlement. Once an overpayment has been detected, Finance Division can collect, write-off, forgive or remit the overpayment. A remission is the cancellation of or release from an otherwise enforceable debt, tax, fee or penalty. A remission may occur under the following circumstances:

  • the overpayment cannot be recovered within the reasonably foreseeable future;
  • the administrative costs of recovering the overpayment are likely to equal or exceed the amount to be recovered;
  • the repayment of the overpayment would cause undue hardship to the person or a beneficiary; or
  • the overpayment is the result of an administrative error, a delay or an oversight on the part of an officer or employee of the federal public administration.

For the year ended March 31, 2011, Veterans Affairs Canada approved 134 remissions totaling $763,865. Remissions can occur due to overpayments in various programs at Veterans Affairs Canada, including Disability Pensions, Disability Awards, Veterans Independence Program, War Veterans Allowance and Earnings Loss. Overpayments are usually caused by an unreported change in marital status, unreported income, or an unreported change in living accommodations. Remissions for Veterans Independence Program and War Veterans Allowance, which are administered in the field, are processed by the Kirkland Lake Regional Office. All other remissions are processed in Head Office.

The purpose of this audit was to provide assurance that Veterans Affairs Canada’s current process for remissions is in compliance with Treasury Board policy. In addition to interviews, walkthroughs and documentation review a random sample of 50% of the remissions processed were examined. The scope of this audit covered all remissions reported in the 2010/2011 Public Accounts.

Audit Opinion

In the opinion of the audit team the internal controls, governance and risk management framework relating to the Audit of Remissions were determined to require improvement. The audit results identified that all remissions reviewed were appropriate; however, the majority of remissions were not supported with sufficient documentation on file or processed in a timely manner.

Recommendations

Recommendation 1: It is recommended that the Director General, Finance Division, streamline the remission process for low dollar overpayments. (Essential)
Corrective Action to be taken OPI (Office of Primary Interest) Target Date
The Finance Directorate in Kirkland Lake will use VAC 515 form instead of VS 1004 form. This will allow the Finance Directorate in Kirkland Lake to close out the year with the existing procedures and complete the work in progress with the same form. Payments and Collections Management April 2012
Remissions of a similar nature under $1,000 will be grouped together when there are several to be processed in the same time period. These remissions will be approved on one form. Payments and Collections Management May 2012
Recommendation 2: It is recommended that the Director General, Finance Division, provide direction regarding when to consult with program staff for all high dollar remissions. (Essential)
Corrective Action to be taken OPI (Office of Primary Interest) Target Date
Corporate Accounting will provide, on behalf of the Director General Finance, direction as to when consultation with program staff is required. Corporate Accounting April 2012
Recommendation 3: It is recommended that the Director General, Finance Division, ensure sufficient documentation exists with the document approving the remission placed on the Veteran’s file. (Critical)
Corrective Action to be taken OPI (Office of Primary Interest) Target Date
Direction will be provided as to what documents relevant to the overpayment analysis and remission should be available in the Veterans file. This will provide an auditable paper trail ensuring the Finance Directorate is in compliance with the Financial Administration Act and Treasury Board guidelines. Corporate Accounting May 2012
Recommendation 4: It is recommended that the Director General, Finance Division, process the backlog of remissions in a timely manner. (Essential)
Corrective Action to be taken OPI (Office of Primary Interest) Target Date
Backlog of remissions will be reviewed to identify the remissions by program and age and reason for the remission. Priority will be given to processing the older files in order to ensure backlog is addressed within the upcoming fiscal year. Payments and Collections Management May 2012
Charlottetown will continue to ensure remissions are processed on a timely basis. Payments and Collections Management

Corporate Accounting
Continuous
Recommendation 5: It is recommended that the Director General, Finance Division, monitor all remissions for systemic errors so that timely corrective action can be taken. (Essential)
Corrective Action to be taken OPI (Office of Primary Interest) Target Date
Systemic errors will be brought to the attention of the responsible program managers and staff with count by root cause. Corporate Accounting April 2012

Statement of Assurance

In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support, with a high level of assurance, the accuracy of the audit opinion provided in this report. This audit opinion is based on a comparison of the situation at the time of the audit and the pre-established audit criteria that were agreed on with management. The audit opinion is only applicable to the entity, process and system examined. The evidence was gathered in compliance with Treasury Board policy, directives, and standards on internal audit and the procedures used meet the professional standards of the Institute of Internal Auditors. The evidence has been gathered to be sufficient to provide senior management with a high level of assurance on the audit opinion.

Chief Audit Executive’s Signature

Original signed by
Murielle Belliveau
Chief Audit Executive
Veterans Affairs Canada

Date
May 3, 2012

The audit team consisted of the following persons:

Jonathan Adams, Audit Audit & Evaluation Director
Bob Parsons, Audit & Evaluation Manager
Lana Wright, Audit & Evaluation Officer

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