Senior managers at the University of Cumbria underestimated its deficit for last year by almost £4 million, Times Higher Education has learnt.
The university board's strategy and resources committee has heavily criticised managers for providing incorrect information.
Minutes from a 2009 board meeting say the committee "expressed strong concern over the financial management information and stressed that this situation could not be allowed to continue".
Managers originally forecast a deficit of £3.8 million for 2008-09, but had to revise it to £7.7 million after it emerged that some income targets would not be met and too much had been spent on student bursaries.
In addition, it was discovered that the full costs of a voluntary severance scheme and professional fees on estates had not been taken into account.
By way of explanation, Cumbria's acting director of finance said that the position on bursaries and income targets was "complex and did not emerge until late in the day".
Vice-chancellor Peter McCaffery, who joined the university last July, said the director of finance Peter Armer had been on long-term sick leave from spring 2009 and had since left.
The Higher Education Funding Council for England has seconded two managers to the university: a head of finance, Stephen Avery, and a head of human resources and change management, John Parr.
Professor McCaffery said: "I could have kept Hefce at arm's length; instead I chose to seek support in addressing a serious financial situation.
"There were issues around capability and capacity in the finance division. Stephen Avery has restored confidence at board level."
Cumbria's senior management is currently facing an internal review, and the vice-chancellor is consulting on plans to remove a layer of middle management, including heads of school, and merge the faculty of arts, faculty of science, natural resources and business, and faculty of social science and sport.
This would streamline the institution's management, he said.
Trevor Curnow, the University and College Union branch secretary, said members were concerned that poor internal information had led to poor decision-making. "The university has not been floored by a natural catastrophe," he said.
"There is a widespread feeling that those who got us into this mess are not being held sufficiently accountable."