The Audit Commission today issued a public interest report declaring an acute trust had “failed to meet its statutory financial duty” to break even over the five-year period ending last March.

The commission issued the public notice reporting Barking, Havering and Redbridge University Hospitals Trust under section eight of the Audit Commission Act.

District auditor and author of the report Jon Hayes said: “The trust has consistently struggled to deliver agreed saving plans and there is not an embedded culture which recognises the importance of financial management.

“The trust will need to work with local partners to achieve a sustainable improvement in its financial position.”

The report said the trust’s existing recovery plan would need to be reviewed.

Chief executive John Goulston last week left BHR to take up a provider development role at NHS London.

He was replaced by Barnet and Chase Farm Hospitals Trust chief Averil Dongworth

The trust already reports to NHS London’s Challenged Trust Board that reported last year the north east London hospital had debts of £105m.

The CTB awarded the trust £3.2m last year to recruit more nurses and four conditions imposed by the Care Quality Commission were lifted in December.

The regulator said further action was needed on the way the trust dealt with – or failed to adequately prevent – patient pressure sores.

The Audit Commission report said: “Future CTB funding is predicated on the trust deficit not exceeding the limit agreed. It is now clear to me that the trust is highly unlikely to deliver the level of savings and efficiencies required.”

Local commissioners approved a decision last year to close emergency and maternity at King George Hospital, Ilford.

But a four-borough local authority overview and scrutiny committee on Tuesday referred the decision to the Independent Reconfiguration Panel.

Primary care trusts have already factored the closure into their savings plans for next year and have published breakdowns of the intended decommissioning of services at King George.

An Independent Sector Treatment Centre based at the trust is among the services facing being de-commissioned this year.

Mental health provider North East London Foundation Trust has previously expressed interest in acquiring one of BHR’s hospital sites.

David Wragg, BHR’s director of finance, said: “While we accept the Audit Commission’s findings, it is important to point out that there have been steady and continuous improvements in our financial position.

“We are confident that further significant progress will be made over the coming year, and we are still on target to achieve foundation trust status by 2014.

“The trust has reduced its recurring deficit every year since 2007-08, and will do so again this year. We have also improved our efficiency year-on-year.

“We are committed to continually improving patient care coupled with accelerating our efforts to cut temporary and agency staff costs and reducing patients’ length of stay.

“The board and the organisation as a whole is determined to continue its efforts to improve the care we offer our patients and the experience they have in our hospitals while successfully tackling our financial challenges.”