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2.0 Background

An overpayment is any amount paid to a beneficiary to which there is no entitlement, or which exceeds entitlementFootnote 3. Overpayments are established as receivables by Veterans Affairs Canada (VAC) and are “debts to the Crown”. Under its requirementFootnote 4 for prudent management of receivables, the Department is responsible for identifying, managing, and resolving overpayments. An overpayment may be recovered, remitted, or written-off. Recovery is normally the first course of action. A remission is the cancellation or forgiveness of an overpayment. Overpayments may be written-off when all reasonable collection action has been taken and there is no possibility of foreseeable collectionFootnote 5.

VAC is responsible for disbursing funding, based on legislative/regulatory entitlement, to Veterans and related beneficiaries. In 2012-13, VAC provided $3.2 billion in program funding to Veterans and their families. In this same period, total annual gross receivables (overpayments and other receivables) were $25.5 million, of which $20.9 million were outstanding program overpayments (a decrease from $22.3 million in 2011-2012).

This audit looked at the overpayments related to four programs: Disability Award, Disability Pension, War Veterans Allowance, and Earnings Loss. At March 31, 2013, there was $20.6 million in overpayments related to the four programs included in the scope of the audit. The $20.6 million accounted for 81% of the Department’s total annual gross receivables of $25.5 million.

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