Canada's temporary foreign workers program is rife with oversight problems that appear to have allowed lower-paid international workers to take jobs that out-of-work Canadians could fill, the federal auditor general says.

Michael Ferguson's examination of the controversial program, part of a battery of spring audits tabled Tuesday, details a litany of problems.

Employers hired temporary foreign workers without first proving they had exhausted all options with the domestic workforce, Ferguson found. At times, requests for temporary help were approved for head-scratching reasons that officials didn't challenge.

Officials didn't use government data on Canada's labour market that could have helped to ensure employers were being truthful in their applications, the report says. Nor did officials effectively crack down on companies that were found to have run afoul of the rules.

Few on-site inspections or face-to-face interviews with the foreign workers themselves were conducted, it continues. Even when corrective action was recommended, it took months for all the necessary approvals.

In one case, a person was allowed to hire a caregiver for an elderly parent even though they had not tried to recruit a Canadian, as is required, because they wanted "someone who is trustworthy and with the ability to work without supervision."

The result is that some companies may have effectively built a business model on the program partly because officials failed to challenge obvious red flags auditors found in about 40 per cent of the cases reviewed.

"They were taking employers at their word. They weren't questioning the employers, the application that employers put forward to get approval to hire a temporary foreign worker," Ferguson told a news conference.

Ferguson's team also found that over 80 per cent laid off Canadian workers at companies in the fish processing sector were claiming employment insurance at the same time the companies were employing temporary foreign workers.

Some fish and seafood processing plants told officials that they needed temporary foreign workers because Canadians had quit their positions because of the conditions or difficulty of the work.

"If ever there were an abuse in the minds of Canadians that's a horror story, this is it," said NDP MP David Christopherson.

"The new government came in and said they were going to fix it, they were going to make things OK -- and what we're seeing here is they're still not there."

Labour Minister Patty Hajdu said the Liberal government plans to implement all of Ferguson's recommendations to beef up oversight of applications, enact stricter recruitment requirements for low-wage jobs, and enforcement activities like unannounced inspections. Hajdu blamed the Conservatives for problems outlined in Ferguson's review, which looked at data between 2013 and mid-2016.

"The temporary foreign worker program should be used as a last resort when businesses can't find qualified Canadians to fill those jobs," Hajdu said.

"We believe that every employer must comply with strict program rules before they can access a foreign worker and that's why we brought forward meaningful changes."

The previous Conservative government overhauled the program in 2014 in a bid to ensure the program worked as intended: to help companies fill job vacancies only when qualified Canadians couldn't be found for the work, and only when it didn't negatively affect the local labour market.

Between 2013 and 2015, the number of temporary foreign workers in Canada dropped from 163,000 to just over 90,000, a result of the 2014 changes and the economic downturn.

The Liberals plan to spend $304 million over five years to ensure employers comply with program rules, including new rules introduced late last year that include stricter recruitment requirements.

The Liberals also plan to eliminate fees for families looking to hire a foreign caregiver.

Ferguson's auditors note a problem with the caregiver program that spending alone may not be able to help.

The audit says that the caregiver stream of the program could be used as an immigration loophole for families to reunite in Canada, rather than fill a labour shortage.

The audit team said that a 2015 internal departmental report found such practices wouldn't constitute abuse, since there was no policy or regulations to addressed them.