Belfast Metropolitan College was left almost £7m in the red after poor bookkeeping, it has emerged.
Serious shortcomings in financial management and controls were blamed in a scathing report for the Department of Employment and Learning.
A college spokeswoman said the report had been embraced and issues identified acted on.
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 £6.7m 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.
"Some of the initiatives being taken by the college are ambitious and their implementation will need careful monitoring."
The 111 page dossier made 72 recommendations.
Clear leadership and responsibility for curriculum planning should be put in place, it 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.