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Auditors have said they are "extremely concerned" about Moray Council's financial situation.

The Accounts Commission said the local authority was failing to clearly identify savings to deal with its significant forecasted budget gap.

In a best value report it said it was concerned about the council's reliance on "unidentified savings" and added that the continued use of financial reserves was not sustainable.

The public spending watchdog also said the council needed to accelerate the pace and ambition of its plans to transform how it delivered services.

The auditors also highlighted high levels of borrowing for capital spending.

Moray Council has a minority administration formed of nine Conservative councillors.

Council leader Kathleen Robertson said the report was "difficult reading" but she welcomed the acknowledgement that improvements were being made in areas such as cross- party working.