Pandemic Loan Program Lacked Oversight to Ensure ‘Value for Money’: Auditor General

Auditor General of Canada Karen Hogan speaks during a press conference at the National Press Theatre in Ottawa, on March 19, 2024. The Canadian Press/Spencer Colby

The federal government’s pandemic business loans program lacked the oversight to ensure “value for money,” says Canada’s auditor general, who found that the agency in charge of the program gave out loans to ineligible recipients in some cases.

Export Development Canada (EDC) gave out $3.5 billion in loans to ineligible recipients as part of the Canada Emergency Business Account (CEBA) program, says the report from Auditor General Karen Hogan released on Dec. 2.

Hogan said while EDC acted “quickly” to establish the program, which provided $49.1 billion in loans to help almost 900,000 small businesses during pandemic closures, the program was improperly managed and in total 9 percent of loans were given to ineligible businesses.

Hogan’s report criticized EDC for relying on sole-source contracts with one vendor without having strong checks and balances. The report said the vendor, Accenture, was given too much control over key aspects of the contracts, such as the pricing and scope of work.

Hogan also said EDC failed to “exercise basic controls in contract management,” such as by ensuring that the amounts paid to the company aligned with the work that had been performed. “This meant that value for money was compromised,” the report said.

The report was critical of Accenture being given hourly contracts instead of fixed price contracts, which eliminated an incentive for the company to finish tasks quicker, or using fewer resources. The report added that some contracts also did not have penalties for cases where work wasn’t performed to the appropriate standards.

The report noted that when Accenture ran an informal selection process to find a vendor to run an accounting system to track CEBA loans and collections, it ultimately recommended one of its own subsidiaries, despite there being other vendors that met the technical requirements. EDC accepted this recommendation, which the report called a “conflict of interest that EDC did not manage.”

Accenture did not respond to The Epoch Times’ request for comment before publication time.

The report also criticized Finance Canada and Global Affairs for not providing the appropriate oversight to ensure the CEBA program was managed properly, and said neither department took accountability for the program and left many “basic program elements” delayed or incomplete.

“Further, the Department of Finance Canada did not provide effective oversight of EDC’s administrative spending. No overall spending limits were set, and it did not challenge administrative spending on the program,” the report said.

Responses to Report

In response to the report, EDC said in a statement that it was “very proud” of what the program was able to accomplish for small businesses during the pandemic “with no precedent or instruction manual to follow.”

EDC also acknowledged it was “important to take stock of what worked well and what could have been done better.”

EDC said they agreed to all of the auditor general’s recommendations except for one to “explore options to recoup partial loan forgiveness” impacting 3 percent of loans, saying this would be “challenging and may also come at significant cost.”

Hogan said she was concerned with the EDC only “partially” agreeing to consider all options to recover loans, comparing it to the Canada Revenue Agency’s response to the auditor general’s report on the Emergency Wage Subsidy Program in 2022, which found $4.6 billion of overpayments were made to ineligible recipients.

“I’m concerned that there is a resistance to want to follow up on recovering funds, and if the government doesn’t want to do that, they should just be transparent with Canadian taxpayers,” she said.

The federal finance department said in a press release that CEBA was a “critical lifeline” for nearly a million small businesses, and that while the auditor general’s report provided useful recommendations, it failed to “properly acknowledge that CEBA was designed and delivered during a global pandemic.”

“Within less than two weeks, the federal government stood up new, emergency support for 898,000 small businesses across the country. This was a historic, national effort, at a time of crisis, to support our small business owners and their employees,” they said.

The Conservative Party said in a release on the AG report that the CEBA program was “yet another billion-dollar boondoggle,” and evidence that Prime Minister Justin Trudeau had “lost control of his spending.”