A report into the financial running of the local authority found it delivered a good standard of services, particularly in education.

However the watchdog said it has “significant concerns” that the council has relied too heavily on small-scale savings projects, reducing services and increasing charges, saying the approach is inadequate to ensure that service standards are maintained and improved.

Difficult working relationships and political tensions between councillors have led to a lack of proper scrutiny over the past two years. New arrangements are now in place but the council needs to show that they are working effectively.

Douglas Sinclair, chair of the Accounts Commission, said: “Falkirk Council needs to do a great deal to provide assurance that it can deal with the financial challenges ahead.

“It must commit to a more ambitious financial plan that clearly sets out its priorities and how spending reductions will impact on services, and the people who use them. There needs to be better leadership to achieve this, and councillors must fully engage with the new scrutiny arrangements, which will be essential when difficult decisions inevitably need to be made.”

Falkirk Council said the Accounts Commission report highlighted the good quality of services delivered in the area.

Councillor Craig Martin, leader of Falkirk Council, said: “The council will consider the report shortly and prepare an improvement plan which will take us forward and address the issues raised by the Accounts Commission.

“However the financial challenges facing the council cannot be underestimated. Members need to work together to explore all possible ways in which our budget can be balanced.

“We are fully confident that we can work across the board to ensure that we address the challenges highlighted by auditors most of which are common to all councils in Scotland.”

The Commission has asked the Controller of Audit for an update on the council’s progress by the end of 2016.