The NSW budget has been approved despite "significant uncertainties" that could require the government to spend billions on public transport over the next decade.
Auditor-General Margaret Crawford signed off on the state's finances on Friday, after delaying budget approval due to "significant accounting issues... which may impact the Treasury and Transport clusters".
She was basing her evaluation on draft figures that had yet to be finalised.
Ms Crawford on Friday said she was now of the opinion the financial statements "presents fairly the financial position, financial performance and cash flows" of the government, however she notes there are still "significant uncertainties" about the Transport Asset Holding Entity.
The state-owned corporation was set up to own transport assets including railways and trains, which Transport for NSW entities pay to use.
Treasury secretary Michael Pratt told a parliamentary inquiry into TAHE in December it "was created to pursue government policy on micro economic reform to bring about the most optimal structure for the management of transport assets", rejecting claims of "accounting trickery" as "false narratives".
Treasurer Matt Kean welcomed the approval of the state's finances and says many teams "worked through the many complex accounting standards, including the accounting treatment of various state owned corporations" of which TAHE is one.
He says the auditor-general's approval shows the government's accounts truly and accurately reflect the state's financial position.
Opposition Treasury spokesman Daniel Mookhey says TAHE has evolved from the "budget con" it always was into a "full-blown budget disaster".
"Taxpayers will have to plunge even further into debt to stop TAHE from unravelling the state's finances," Mr Mookhey says.
TAHE expects to achieve a net profitability before tax by the end of the next financial year, at which point it can start paying dividends back to the government or reinvest in more assets.
The government's half-yearly budget review provided another $1.1 billion to TAHE's "key customers" - being Transport for NSW agencies - through until June 30, 2025.
Ms Crawford says the expenditure review committee has been told about another $4.1 billion required for the six years up to 2031, but that hasn't been included in government budget figures yet.
Her report also notes that "a significant portion of the required returns are earnt" after 2031.
A meeting between TAHE and its "key customers" took place in December where the entity signalled its "intention to negotiate higher access and licence fees to deliver on shareholder's expectation of a return of 2.5 per cent and includes proposed indicative future access and licence fees".
The expected annual return rate increased from 1.5 per cent, four days before the meeting was held.
The return is expected to be earnt over the next 33 years, covering the estimated remaining useful lives of TAHE's assets.
Ms Crawford says there's a risk funding to the operators won't be sufficient to pay enough in access and licence fees to meet TAHE's profit projections and the higher access and licence fees are not yet reflected in any binding contracts.
Australian Associated Press