Auditor general finds 52% of businesses surveyed that received COVID-19 funding were ineligible

A new report from Alberta's auditor general says it's possible thousands of small and medium-sized businesses received COVID-19 relief money when they weren't eligible for it.

The report, released Wednesday, states the auditor general can't conclude that a majority of Small and Medium Enterprise Relaunch Grant Program (SMERG) recipients were eligible for the program.

The program, run by the Ministry of Jobs, Economy, and Northern Development, allotted $670 million for businesses, cooperatives and non-profits that faced restrictions or closures from public health orders and lost revenue due to the pandemic.

In order to qualify, applicants needed to ensure they were eligible and supplement their applications with documents to prove eligibility.

Among its findings, the audit reviewed 1,055 of 101,762 approved applications finding 52 per cent of them were ineligible for the grant.

Robert Driesen, assistant auditor general, said there needs to be better monitoring to ensure the money is distributed properly and businesses in need are receiving grants.

"It's understandable why they did that, because of the pandemic. But that does create a lot more risk because you're now asking for people to verify that they really were eligible after they've already given them the money."

Driesen said the province focused more on providing money to applicants rather than thoroughly reviewing documentation and eligibility. 

"Because of COVID and the desire to get the money out quickly, they didn't follow the standard process," Driesen said.

"They got the applications in, they asked people to assert that they were eligible and they gave them the money and then the process was to later go and check and get the information from them to verify they actually were eligible."

The assessed ineligible recipients represented a benefit overpay of more than $5 million, the report notes. 

The audit report revealed the department sent letters to ineligible applicants telling them they have 30 days to repay the funds or make other arrangements. Otherwise, the file would be sent to Alberta Crown Debt Collections.

So far, the department said it has recovered $562,000.

Brian Jean, minister of jobs, economy and northern development, said in a statement that it was important to get money to businesses as fast as possible. 

"Public health measures hurt many businesses, so it was critical that this grant was released without delay to help business owners keep their businesses afloat and protect peoples' livelihoods.

We have learned lessons from the incredibly quick and largely effective roll out that will inform government programs going forward, " the statement read.

Amy Glena, the owner of Ponytails and Horseshoes hair salon in Edmonton, said her business received SMERG but it took much longer than the three to six weeks wait time she was promised.

The audit also noted the long wait time as one of the province's shortcomings in distributing the grant. 

Auditor General Doug Wylie said another audit report in June focused on the lack of transparency on COVID-19 relief programs and said this report featured the same issues. 

"We identified back then and essentially we're repeating again here is that we felt the government could do a better job of reporting back to Albertans on what was actually accomplished through those programs, not just what was spent but actually what was achieved," Wylie said.