OTTAWA -- The inability of Veterans Affairs to spend $1.13 billion over the last eight years should have come as no surprise to the Harper government, which was warned two years ago that the department was struggling to forecast the future needs of its clients.

In defending the amount of funding "lapsed" by the department since 2006, Veterans Affairs Minister Julian Fantino and Prime Minister Stephen Harper say it's impossible to know how many veterans and their families will request death and disability benefits in any given year.

Indeed, buried deep in auditor general Michael Ferguson's fall 2012 report was a warning that Veterans Affairs was producing inaccurate forecasts of future client needs that were based on historic data, rather than current information.

The same report also took aim at the case management and referral system for operational stress injury clinics, which was the focus last month of the government's much-hyped $200-million overhaul.

The 2012 audit, which made headlines by documenting the plight of 8,000 medically discharged soldiers, offers a useful road map to understanding the misfires and blunders on the veterans file this fall.

With the House of Commons poised to rise for the holidays, a tentative step towards repairing the political damage emerged Wednesday: Veterans Affairs is hiring dozens of new front-line staffers in as many as 50 cities across the country.

Some of those jobs are thought to be associated with the Nov. 23 announcement of new satellite clinics, but additional bodies would also help blunt criticism that the Conservatives have cut too deeply in critical areas.

It was revealed earlier this week that the biggest job cuts in the department occurred in the disability awards branch, which was singled out in Ferguson's latest report for addressing the mental health claims of ex-soldiers too slowly.

That same branch has been chronically unable to spend its budget. In 2013-14, Veterans Affairs as a department lapsed a total of $133 million.

"What governments typically do -- what we always do, what preceding governments have done -- is you tend to over-estimate the amount to make sure you don't fall short during the year," Harper said on Nov. 24 at an event in London, Ont.

"That is a process we will continue."

Yet, in 2012, Ferguson wrote that the department wasn't collecting enough information "to consistently assess trends and provide forecasts" and that it "relied on historical data" instead of current trends.

"We noted that past Veterans Affairs forecasts did not take into account information about the increasing number of Canadian Forces members with mental health issues, such as post-traumatic stress disorder," the audit said.

The department acknowledged the criticism and pledged to do better.

The 2012 audit also went on to warn that the department's signature initiative of empowering front-line case managers to make decisions faster -- part of the so-called red-tape reduction plan -- was creating confusion and uncertainty.

"Veterans Affairs service delivery staff told us of their concern about the lack of a formalized departmental process for identifying and dealing with the many changing policies, procedures, and guidelines pertinent to their work," said the audit, released in October 2012.

"Some felt that there was no cohesive understanding at Veterans Affairs of what case management means, and that the roles and responsibilities of case managers and other staff were not clearly defined."

The audit was taking place at the same time government was slashing nearly 900 jobs throughout the entire department.

It's no wonder the government is facing a crisis with veterans, said Liberal veterans critic Frank Valeriote: they were trying to re-engineer a department and cut it at the same time, a formula for chaos.

"When you make cuts you have to be surgical about it," Valeriote said.

"The 2012 auditor general's report is entirely consistent with what we've seen in the latest auditor general's report, and it's clear they don't care about the impact their actions are having on our veterans."

Senior managers received bonuses for implementing the cuts, added Valeriote, who described the planned hiring of new front-line veterans staff as "nothing more than political damage control."