Dundee City Council must change its approach to meet the "big challenges" ahead, a report has warned.
The Accounts Commission said the council needed to look at other ways of delivering services in the face of significant public spending cuts.
Commission chairman John Baille said the council should "embed an attitude of continuous improvement".
But the report also said services in the city had improved since the last study five years ago.
And it noted there was evidence that more people in Dundee were satisfied with the council's performance now.
The commission said a good relationship between the council and community planning partners was having a positive effect on the quality of services like education and crime prevention.
Areas such as child protection and housing, where there have previously been significant concerns, were being tackled as a priority, the report said.
Mr Baillie said: "We see encouraging signs which we hope result in the council being better placed to improve and ensure best value and we welcome the positive effect that the recently appointed chief executive is having.
"However, there has been over-reliance on inspection to drive improvement and change has been too slow in other areas.
"We are also concerned to note that there has been little progress in implementing a previous recommendation to stop the practice of having all councillors sit on all committees, because this does not encourage independence and improved scrutiny."
Council leader Ken Guild said the council had acted "quickly and positively" to address concerns over child protection and housing.
He added: "There are many positive comments throughout the report about improving performance but we recognise that these are not universal and there are still important areas that we need to concentrate on."