Belfast Metropolitan College has been told to improve its financial management after it ran up a deficit of almost £7m.
A report, commissioned by the Department for Employment and Learning, detailed "significant weaknesses" in financial controls.
A firm of consultants has been employed to draw up a recovery plan for NI's largest further education college.
The college said it embraced and welcomed the findings of the report.
Published on Wednesday, the report made 72 recommendations to improve financial performance.
A newly appointed director has said around a third have already been implemented and that the deficit has already been reduced from £6.7m at the end of 2007/08.
However the report stressed that it was concerned the college, which has 50,000 enrolments this year, would not be able to balance its books.
It states: "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.
"Some of the initiatives being taken by the college are ambitious and their implementation will need careful monitoring."
Marie-Therese McGivern, director and chief executive at the college, said the report had been embraced and issues identified acted on.
"Over the years, with recommendations from inspection reports, we have consistently worked hard at what we do," she said.
"We are committed to improving what we do and this review forms part of this commitment.
"Throughout this review period, Belfast Metropolitan College has continued to deliver high quality teaching and training to meet the skills demand from local businesses to aid the recovery of the Northern Ireland economy."
Employment and Learning Minister Sir Reg Empey described the financial performance as "disappointing" but said the college was now in a financially healthy position and had increased its number of students.