Fife Council has warned further job cuts are inevitable as it continues its battle to balance the books.
Almost 2,400 local authority jobs were earmarked for the axe between 2011 and 2018 as part of efforts to find a massive £77 million of savings. Of those, 1,894 posts were released by April this year.
But financial watchdog Audit Scotland has said those cuts alone are not enough to close the budget gap.
There are tough decisions ahead for the council, which must ensure key services are maintained.
The warning follows an acknowledgement by Edinburgh City Council that it may have to cut more than the 2,000 jobs already announced, while North Lanarkshire Council has outlined proposals to shed more than 1,000 jobs.
Both announcements have been described as devastating by unions.
Fife Council leader David Ross has blamed cuts in funding from central government for the predicament facing councils across Scotland.
In its annual report, to go before the authority’s standards and audit committee on Tuesday, Audit Scotland said: “The scale of the financial challenge facing the council means that a further reduction in the workforce is probable as these reductions alone are not sufficient to close the projected budget gap over the period to 2018/19.
“The decision to approve applications is likely to become tougher as the workforce shrinks and the potential impact on service delivery is amplified.”
The body said effective workforce management is essential and stated: “A workforce strategy is key to setting out how the council will ensure it has appropriately-skilled people in place to deliver its services.”
Mr Ross confirmed the council is considering further job losses.
“We are facing £77m of cuts over three years,” he said. “If we are going to make that level of savings, it will inevitably involve a further reduction in staff. How we approach that, we have yet to agree. There are a number of options and we are exploring all those options.”
The council is in close talks with unions about how to minimise the impact of the cuts on staff.
Audit Scotland said Fife Council has sound financial management arrangements but stated: “Councils face rising demands for services and continued funding pressures alongside managing major reforms in welfare and health and social care.”