Auditors have warned a south Wales council that its financial position is precarious and urgent and decisive action has to be taken to turn the position around.

A leaked copy of the district auditor's report said the next 18 months will be crucial to the authority's future.

The report is hard-hitting and leaves councillors and officers in no doubt of the position.

Auditors warn hard and difficult decisions can no longer be put off.

In the red

This year the council is set to overspend by £5m - cuts of £10m will be needed next year.

The council is the only one in Wales to go into the red after using up all its reserves.

The auditor criticised weaknesses in the authority's financial systems and warned that the Direct Labour Organisation - which has been losing millions of pounds - still represents a key risk to the financial stability of the council.

The report praised the efforts made in the last six months and said there were signs of improvements, but the financial position was still a major concern.

Serious

In April last year, the district auditor made 60 recommendations to tackle the financial problems, but in October he warned that not enough had been done.

RCT Council leader Pauline Jarman admitted then that the situation was serious.

But she said new financial procedures had been put in place and further planned cuts in spending would drastically reduce the council's deficit.

In September, Assembly First Secretary Alun Michael refused to bail out the council and said it seemed to be heading in the right direction to tackle the financial crisis.