Trust chief executives and finance directors are reluctant to publish bad financial forecasts for fear of losing their jobs.
A survey of NHS finance professionals by the Chartered Institute of Management Accountants found nearly a third had quoted different figures to their board than to their strategic health authority or Monitor.
The report, which draws on previous research as well as its survey of 100 finance professionals most in primary care or acute trusts calls for more 'honesty' in forecasting.
'Understandably, they may delay bad news for as long as possible, ignoring worsening overspends to date and hoping for miracles,' it says.
Accurate financial forecasting is crucial to ensuring trusts stay debt-free, but it can be tactical or dogged by politics, says the institute, which examined the state of financial forecasting in 2005-06.
More than a quarter of those surveyed said predictions they made in December 2005 were found to be more than half a million pounds out when compared with 2005-06 accounts.
In-year Forecasting in the NHS says: 'The NHS financial regime and the way strategic health authorities and the Department of Health manage the NHS don't always encourage accurate forecasting.'
Steven Bliss, chair of CIMA's NHS group, said there was anecdotal evidence to suggest NHS finance professionals were under pressure to mask potential deficits and forecast what people wanted to hear.
Former NHS finance director Noel Plumridge confirmed it had happened to him.
'It's quite common for any forecast that doesn't show break-even to be returned to an organisation with a question on what they are going to about it,' he said.
The report includes a checklist of best practice. Mr Bliss said some of the issues highlighted in the report had since been addressed by the DoH, including an onus on trusts and SHAs to have the same figures.
Mr Plumridge said he feared the pressure was still on because breaking even is a requirement for trusts wanting foundation status.
Keith Wood, chair of the Healthcare Financial Management Association's financial management and research committee, said there had been major improvements in financial forecasting in the NHS.
He added: 'Forecasting is not a precise science and is impacted by a number of external factors.'