TORONTO

With the stroke of a pen, Ontario’s debt jumped by $10.7 billion on Monday.

A standoff, quietly brewing behind the scenes for weeks between the province’s auditor general and the Ministry of Finance, has ended with the government grudgingly declaring the increase in net debt. The new numbers also mean Ontario’s deficit increased $1.5 billion in 2015-16.

“The government believes it is in the public interest to release its financial information now since we are six days past the legislative deadline,” Treasury Board President Liz Sandals said of the surprise move Monday, almost a week after it was to table audited financial statements for the previous fiscal year. The government blew the deadline last week to file the paperwork, raising questions from the opposition.

These new debt and deficit totals come as the government argues with auditor general Bonnie Lysyk over accounting rules surrounding two of Ontario’s largest public pensions — the Ontario Teachers’ Pension Plan and the Ontario Public Service Employees Union Pension Plan. Since 2001, the government says, it has listed the fund assets in its year-end statements.

But the AG warned the government this year that she disagreed with the practice because it had no actual means to access the cash in each fund, and instructed it should no longer list the billions in each fund as assets.

During a hastily arranged technical briefing and press conference Monday, the government said it will ask for an independent, third-party review of the accounting practice. But in the meantime, it released unaudited financial statements from 2015-16.

“The current auditor general has accepted this treatment for the last two years, resulting in unqualified or clean audit opinions,” Sandals said.

In a statement Monday afternoon, Lysyk says she is “disappointed” the government released the financial statements without her opinion.

“This is the first time in the history of Ontario that the statements have been released without the audit opinion,” she said.

Sandals and Finance Minister Charles Sousa met with Lysyk on Monday morning to discuss the issue but ducked questions about whether they had informed her that they were going public about the dispute.

“We told her we had an urgent need to get the information out,” Sandals said.

Progressive Conservative finance critic Vic Fedeli accused the government of having an $11-billion budget hole and trying to do an “end-run” around the auditor to spin it. The press conference showed the Liberals are in “full-blown panic mode,” he added.

“They’ve come up with one-time version of what they’re allowed to do,” Fedeli said. “That is unacceptable, unparalleled, and really tells you the true state of the finances here in the province of Ontario.”

NDP critic Catherine Fife said the government move sets a “dangerous precedent” of bypassing an independent officer of the legislature when disputes arise.

ONTARIO’S ACCOUNTING SQUABBLE BY THE NUMBERS

$10.7 billion: The amount added to the debt.

$1.5 billion: The amount added to the deficit in 2015-16.

14: The number of years the government says this accounting practice has been in place.

$8.5 billion: The projected deficit in the 2015-16 budget.

$5 billion: The deficit in the actual 2015-16 budget.

$305.2 billion: The total net debt.

sjeffords@postmedia.com

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