Serious shortcomings in financial management and controls were blamed for the situation in a report for the Department of Employment and Learning.

Centralising the recording of permanent staff costs at the expense of control and changing banks at a time when the college was already coping with a merger and new accounting system were also highlighted.

The report said: "We consider that the permanent members of the senior management team have shown resilience in the face of the contextual challenges facing the college and demonstrated best efforts and teamwork.

"However they have collectively presided over the emergence of a significant and apparently unexpected revenue deficit in 2007-08 and an unacceptable position of financial and management processes in the college leading to the commissioning of an efficiency review."

According to the efficiency review, in 2007/08 the college had a £6.7 million revenue shortfall. In the current financial year the college is working towards achieving a balanced budget.

"We have doubts about the college's ability to achieve such an outcome due principally to the late development of the college's budget in mid-December (2008), unrealistic expectations on savings, limited control of staff costs and the college's poor forecasting record," the report authors added.

Employment and Learning Minister Sir Reg Empey said whilst the financial performance of the college has been disappointing in recent years, it is in a financially healthy position and this review will provide a useful framework for its further development.

Marie-Thérèse McGivern, director and chief executive at the college, said the report had been embraced and issues identified acted on.