The NAO will conduct its probe following changes to Network Rails’ accounting policy, which allowed the company to report a pre-tax profit of £295m for the year to March 2002, just six months after former transport secretary put predecessor Railtrack into administration.
According to The Times, a depreciation policy flattered the company’s financial position by more than £1bn.
The watchdog will report on Network Rail to the House of Commons in mid-July, and is expected re-ignite concerns about how the railways are accounted for in the public books.
In March, the Treasury chose to include the government guaranteed Network Rail borrowing of £21bn in the 2005 whole government accounts.
Sir John Bourn, head of the National Audit Office, has indicated his belief that borrowings by Network Rail should be included in government debts.
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