1.0 Executive Summary

The purpose of this audit is to provide assurance that departmental activities with respect to the processing of overpayments are in compliance with policies, procedures, and regulations. The audit reviewed the overpayments of four programs: Disability Award, Disability Pension, War Veterans Allowance, and Earnings Loss.

An overpayment is any amount paid to a beneficiary to which there is no entitlement, or which exceeds entitlement and are "debts to the Crown". Veterans Affairs Canada is required^{Footnote 1} to pursue and collect any outstanding amounts of overpayments.

The total annual gross receivables (overpayments and other receivables), as of March 31, 2013, reported by VAC in the 2013 Public Accounts of Canada was $25.5 million. Of that amount, there is $20.9 million in program overpayments, of which $20.6 million is for overpayments related to the four programs in this audit’s scope.

Within the four programs, the auditors reviewed a sample of 155, out of a total of 8,007, overpayment transactions generated during 2012-2013 and found that 75% of the overpayment amounts that formed the audit sample were recovered. However, there are a number of aged^Footnote2 overpayments ($9.8 million), outstanding for up to 15 years, where no funds have been collected.

Overall results

The audit team determined that departmental activities related to the processing of overpayments were “Generally Acceptable”. Overpayments in aged receivables require attention and business processes need to reflect the operating environment. Oversight, monitoring, and reporting of overpayments should also be improved to ensure effective management of receivables and to determine and address systemic issues.

Recommendations

R1

It is recommended that the Director General, Finance Division, actions outstanding overpayments in aged receivables. (Critical)

R2

It is recommended that the Director General, Service Delivery and Program Management Division, in collaboration with the Director General, Finance Division, and the Director General, Centralized Operations Division, ensures documented, updated and integrated business processes exist for the actioning of overpayments. (Essential)

R3

It is recommended that the Director General, Finance Division, in collaboration with the Director General, Service Delivery and Program Management Division, and the Director General, Centralized Operations Division, improves the reporting, monitoring, and oversight of overpayments. (Critical)

Chief Audit Executive's Signature

Kim Andrews
Acting Chief Audit Executive

Date
January 9, 2014

The Audit Team consisted of:

• Jonathan Adams, Audit and Evaluation Director
• Karen Walsh, A/Audit and Evaluation Director
• Vaughn Horton, Audit and Evaluation Manager
• Lana Wright, A/Audit and Evaluation Manager
• Sivajan Nagulesapillai, Audit and Evaluation Officer
• Jean-Pierre Goudreau, Audit and Evaluation Officer