2.0 Background

An overpayment is any amount paid to a beneficiary to which there is no entitlement, or which exceeds entitlement^{Footnote 3}. Overpayments are established as receivables by Veterans Affairs Canada (VAC) and are “debts to the Crown”. Under its requirement^{Footnote 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 collection^{Footnote 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.