Victoria is the only known place in the world to use an approach that writes off billion-dollar public assets still being used, the state's top auditor says.
Auditor-General John Doyle is concerned the state government has failed to properly justify why it has written off more than 1000 public school buildings, worth almost $1.6 billion.
Mr Doyle says there is no evidence to support the decision, which affected schools that had recently received significant state and federal taxpayer investment.
Yet he argues the move will significantly reduce funding for upgrading those schools, which have been determined as "partly obsolete".
"I'm saying conservatively I can't find sufficient evidence to support the write-down," he told reporters on Thursday.
"My simple question is this: how can a department of state invest that much money and then write it off from assets that are still functioning as schools?
"The approach is unique. I've found no jurisdiction right across the world that actually follows this."
Mr Doyle said the government did the write-down on the basis that it concluded seven out of every 10 Victorian schools had buildings that are partly obsolete.
But those schools were continuing to deliver educational outcomes for Victoria, he said.
However, Department of Treasury and Finance secretary David Martine and Department of Education and Early Childhood Development secretary Richard Bolt defended the methodology used in the 2013/14 annual financial report.
They said they firmly believe the valuation of school assets is fully in line with Australian accounting standards, and backed by the state's valuer-general and external accounting expert advice.
The valuation issue also did not impact on funding provided for school upgrades, they added.
Mr Doyle said one of the consequences of the write-down is that there are less funds for the school upgrade program, estimated to cost about $50 million a year.
An auditor-general report last year found the maintenance of school assets was well behind and there was inadequate investment to maintain them properly.
Victorian Greens leader Greg Barber said the approach aimed to make the budget bottom line look better.
"In essence, the Department of Education is saying if a classroom is unused due to low enrolments, even if it has been recently refurbished, it can be written down as an asset, making the budget bottom line look better than it is."
But he added public schools, students and teachers should not be used as an accounting exercise.
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