NSW Treasurer and State Member for Manly, Mike Baird.

Filling in the gaps ... Mike Baird will be forced to explain a $3 billion accounting discrepancy. Photo: Gary Heery

FOUR months after the NSW Treasurer, Mike Baird, was embarrassed by the discovery of a $1 billion error in last year's budget, the full extent of the accounting mistakes underpinning it have been revealed.

The latest report of the NSW auditor-general, Peter Achterstraat, shows state government agencies and departments made errors worth more than $3 billion when they handed over their books to him last July after the 2011-12 budget. The net value of state assets was misvalued by $1.28 billion while net income was out by $2 billion.

The $3 billion worth of errors was far larger than the $200 million recorded in 2011.

However, Mr Achterstraat said this was largely because of the incorrect valuation applied to the state's investment in Snowy Hydro Limited and infrastructure assets related to earthworks within Roads and Maritime Services.

His report said there were 1265 errors in 2012, nine more than the previous year. Of those, 37 errors were worth more than $20 million each. The errors caused Mr Achterstraat to revise the government's budget estimate for 2011-12 from a deficit of $337 million to a surplus of $680 million in November.

Mr Achterstraat said the revelation of errors worth more than $3 billion in his latest report does not change the revised budget position. On Tuesday, Mr Baird announced that cabinet had endorsed measures to rectify the significant number of errors recorded each year.