The change in the accounting policy allowed the company, formerly Railtrack, to report a £295 million pre-tax profit for the year to March 2002, six months after Stephen Byers forced the company into administration.

The NAO’s verdict on the change will be presented to the House of Commons by mid-July. The report is expected to rekindle concerns over how the railways are accounted for in the public books.

Another set of railway accounts, for the 12 months to March 2003, will be published by the Office of the Rail Regulator (ORR) in the next few weeks and is expected to give a more “realistic” picture of Network Rail’s financial position.

Network Rail’s change in policy means that tracks and stations have been revalued on the basis of their present value, against the previous policy, which used historic values. This lowered the depreciation charge by £1.6 billion for the year to 2002. After a profit on the sale of properties and a tax charge, the profit and loss account was flattered by £1.1billion.

Ron Henderson, the finance director of Network Rail, defended the change. He said: “The directors consider that it gives a much clearer and more accurate economic assessment to the value of the business of the network as an asset. (The change) is also mindful of proposed amendments to UK accounting standards.”

But Tim Collins, the Shadow Transport Secretary, said the change in policy was worrying. He said: “If the goal posts can be shifted once, they can be shifted again. Each year we could see attempts to hide real losses by various accounting techniques.”

A spokesman for the ORR said: “What they have done is fully consistent with UK GAAP (generally accepted accounting principles), but for this company to report an accounting profit or loss does not reflect the realities.”