VICTORIA -- B.C.'s auditor general is disputing the province's annual deficit report by arguing the books should be in the red by another $520 million.

Finance Minister Kevin Falcon says B.C. has a smaller than forecast deficit of $1.84 billion and that the majority of that cost is to repay Ottawa for the harmonized sales tax transition.

But auditor general John Doyle says the government did not follow accepted Canadian accounting principles that, if used, would boost the figure to more than $2.3 billion.

Doyle says the Finance Ministry needs to substantially improve how it charts the deficit and the government could have easily fixed the latest financial statements.

The ministry disagrees with the discrepancy, saying the auditor general's suggestions don't reflect how accounting has been done in the past or how other jurisdictions, such as Alberta, keep their records.

Doyle's major issue relates to how the government accounts for royalty credits earned by natural gas producers.