A report published by the watchdog today looks at developments since a 2013 audit on how the council was meeting its statutory duty to deliver Best Value and continuous improvement.

The report says a lot of improvement activity is under way but it is too early to judge its longer term effectiveness. The council needs to improve in areas such as engaging with customers and its workforce.

In its findings, the Commission said it welcomed progress made in aligning strategic plans and priorities and the commitment of the new management team. However, councillors must now provide demonstrable leadership in agreeing and implementing a strategy to deliver £16 million in savings the council has to make by March 2018.

Douglas Sinclair, chair of the Accounts Commission, said: “Moray is moving in the right direction but needs to increase significantly the pace of change.

“Like all councils, Moray faces a big financial challenge. Councillors have the responsibility to make savings in the best interests of the people they represent whilst also ensuring they balance their budget.”

Chief executive of Moray Council, Roddy Burns, welcomed the findings.

“The council has come a long way since the last audit, and it’s encouraging to see this is acknowledged by the Accounts Commission”, he said.

“We have already put in motion measures to deal with the engagement issues raised by the auditors, and these are starting to bear fruit. The pace of change is gathering momentum, placing the council in a strong position to manage the difficult budget decisions ahead.”

In its findings, the Commission said it welcomed progress made in aligning strategic plans and priorities and the commitment of the new management team. However, councillors must now provide demonstrable leadership in agreeing and implementing a strategy to deliver £16 million in savings the council has to make by March 2018.

Leader of Moray Council, Cllr Stewart Cree, said: “I welcome the Accounts Commission report and the acknowledgement it contains of the work done in Moray Council to address the challenges of the future.

“I note and accept that, like every other Local Authority in Scotland, difficult decisions will have to be made to balance future budgets and I can see no realistic way of achieving this without a substantial reduction in service.

“All Councillors, of whatever political hue, will have to take a pragmatic view and recognise this reality in the budget setting process.

“We will also need the help of the other public services who work with us on the Community Planning Partnership and this report highlights the need for common ownership of the challenges facing our communities in the difficult economic times ahead.”

The Controller of Audit will continue to monitor progress through the annual audit process.