The public and politicians were left with "a distorted picture created by the MTA to make it easier to push through an increase," Hevesi said.

Agency officials disputed the accusations Wednesday and said they would provide a detailed rebuttal at an afternoon press conference with Executive Director Katherine Lapp.

"We categorically deny that there are two sets of books," MTA spokesman Tom Kelly said.

Hevesi said he got the internal books by subpoena and said they showed the agency had moved $512.5 million from its 2002 accounts onto the books for 2003 and 2004. As a result, a potential 2002 surplus of $537 million shrank to $24.6 million, the audit says. Similar accounting moves turned a 2003 surplus of $83 million into a $236 million deficit, Hevesi said.

"Our review proves that, in fact, the MTA has a culture of secrecy, arrogance, lack of accountability and contempt for the public," he said.

The MTA had repeatedly said it faced massive deficits while it was arguing for the fare hike, which was approved in March.

The approved changes raise one-way bus and subway rides by 50 cents to $2 starting May 4. They also increase commuter rail line fares and tolls at bridges and tunnels.

Hevesi said the increase may or may not have been necessary this year, but debt payments due next year would make higher fares in 2004 unavoidable.

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A separate, city audit of NYC Transit, which runs city bus and subway service under the MTA, also found concealment of funds and overstatement of expenses in the hundreds of millions of dollars, city Comptroller William C. Thompson Jr. said Wednesday.

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Thompson asked the MTA to reevaluate its fare increase in light of the audit, he said.