Shrewsbury and Telford Hospitals Trust is �19m in debt. The Strategic Health Authority (SHA) ordered a report into its inaccurate financial forecasts.

It criticised the trust's former finance director Martin Herd for using bizarre explanations.

The trust said a new management team has been working on the suggestions.

The trust was unable to pay its bills when it ran out of money in March.

It had predicted it would break even and it was only later that the full extent of the crisis emerged.

The trust and its staff fully cooperated with the inquiry and accepts the recommendations made Mr Tom Taylor, chief executive of the Shrewsbury and Telford Hospital NHS Trust

Mr Herd has now been reported to his accountancy body.

He resigned in July to "develop his career elsewhere" and a new interim finance director was appointed in August.

The report, released on Thursday, also describes the management style of Phil Homer, the trust's former chairman, as "unhelpful".

Mr Homer also resigned in July because he said he could not support proposals being made to alter paediatric services at the hospitals.

He had been the chairman of the trust since it was formed through the merger of the Princess Royal Hospital in Telford and the Royal Shrewsbury Hospital in 2003.

Avoid publicity

The report said he had made a "grave misjudgement" in appointing Andrew Pritchard as acting chief executive.

Under the guidance of former chief executive Neil Taylor and Mr Homer, the report said tough decisions were avoided, especially those that would upset senior doctors and a culture of constructive challenge was discouraged which led to the acceptance of "financial fantasy".

Mr Homer is criticised for wanting to avoid adverse publicity at all costs.

In total, the report makes 35 recommendations all of which have been accepted.

The SHA will monitor their implementation paying particular attention to financial management, monitoring, budgetary controls and management culture.

Tom Taylor, the trust's chief executive said: "The trust and its staff fully cooperated with the inquiry and accepts the recommendations made.

"Work has already begun following the introduction of a new management team including myself and a new finance director and this can be built upon so the trust can continue to provide a health service that the people of Shropshire deserve and can trust."