Ottawa wrote off 4.5 billion dollars in COVID-19 financial relief during the previous fiscal year, jumping sharply from 26 million dollars the year before, according to federal audits released on Friday.
The Office of the Auditor General reported that the federal government abandoned efforts to recover billions in pandemic aid when repayments were no longer expected. Consolidations of the federal financial statements for the fiscal year show the massive leap in uncollectible funds as Ottawa closes out its emergency ledger.
Public accounts released on Friday followed the tabling of the 2026 federal budget by one day. Auditor General Karen Hogan published her commentary on the government’s previous fiscal year alongside the documents.
Hogan warned that the government also expects defaults on a larger share of business loans issued during the public health crisis. Risk provisions for potential loan defaults under the Canada Emergency Business Account rose to 5.6 billion dollars in the last fiscal year, compared with 5.4 billion dollars previously.
Outstanding loans under the program still total 7.2 billion dollars. Enterprises had the option to secure a write-off of nearly one-third of their interest-free loans by repaying the balance before designated deadlines.
| Financial Metric | Previous Fiscal Year | Latest Fiscal Year |
|---|---|---|
| COVID-19 Relief Write-Offs | $26 million | $4.5 billion |
| CEBA Loan Loss Provisions | $5.4 billion | $5.6 billion |
| Outstanding CEBA Loans | — | $7.2 billion |
Hogan’s office detailed several persistent administrative failures across federal operations during the audit cycle. The government failed to fulfill commitments to eliminate backlogs of payroll errors stemming from the legacy Phoenix pay system that had persisted for over a year. While the volume of open cases has declined, more than 110,000 files remained stalled for over 12 months as of March 31, 2026.
A promised barcode system designed to track assets is still five years away from deployment, the office noted. Errors in asset quantities and valuations caused the department to understate its deficit for the past fiscal year by 751 million dollars, according to the audit findings.
Additional findings from the auditor general target crown corporations, highlighting weak risk management protocols, insufficient board oversight, and broad deficits in performance measurement and reporting. The federal administration continues to review overpayments made to individuals during the pandemic, pursuing recovery when recipients are found ineligible or over-entitled. However, when recovery prospects fade, the obligations are formally removed from government accounting books.
The final repayment window for all remaining Canada Emergency Business Account loans closes at the end of next month. Borrowers who missed prior deadlines faced the imposition of standard interest charges on the remaining balances.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
