St George's Hospital has been reported to the Secretary of State for failing to balance its books - despite the trust's chief executive David Astley claiming the hospital was in surplus in May.

The Audit Commission (AC) report was presented to St George's Trust (SGT) at a board meeting last week. It said: "On 18 June I referred a matter to the Secretary of State under section 19 of the Audit Commission Act 1998 in relation to the failure of the trust to meet its statutory cumulative break even duty by the 31 March 2008."

Reporting on the finanancial "turnaround" in May Mr Astley, said: "This year-end surplus is excellent that we are in control of our finances we are well on the road to making it a better hospital."

Ian Perkin, a former finance director of SGT said the finances were a "shambles".

Mr Perkin, who worked at the Tooting hospital from 1986 to 2002, and was financial director from 1990 to 2004, said: "The report of the AC and the latest published financial report by SGT's new finance director does of course give the complete lie to David Astley's remarks that St George's is no longer living beyond its means and is in control of its finances.

"In a private sector business, shareholders would be demanding his resignation after making statements like he did about St George's having turned the financial corner, only to find out so soon that the statements were misleading.

"Once again St George's patients and staff will have to bear the pain of further cost reductions. What a complete shambles."

A spokeswoman at SGT said: "The District Auditor (DA), who must legally make this notification, has looked at a five-year period from 2003/04 when St George's first recorded a loss."

The DA noted in 2007/08 St George's made a £5m surplus, and in the letter to the Department of Health says: "Since 2005/06, the trust has made positive efforts to address its financial difficulties; in particular, the Financial Turnaround programme has led to significant cost reductions."

Ian Hart, chairman of Wandsworth Council's Health Overview and Scrutiny Committee said: "The committee is obviously very disappointed that the SGT failed to meet its statutory cumulative break even duty by the 31 March 2008.

"However, we are aware the St George's have now employed a full-time financial director and have put plans in place to control their future spending.

"It must also be noted that the Government's method of NHS funding really hasn't helped situation at St George's either."

SGT said the AC report would not affect its application for Foundation Trust status - which rewards hopsitals a greater autonomy over finances.