Oxforshire County Council is wide open to fraud because of serious flaws in its financial management, independent investigators have warned.

"Major financial weaknesses" have been uncovered that pose the risk of "misappropriation" of council taxpayers' money and other assets.

The investigation into how £1m was "lost" and a total of £11m was not properly accounted for within the social and health care directorate is continuing by another team of outside experts.

This marathon operation is expected to run for another eight months, sparking fears that council taxpayers in Oxfordshire will be hit extra hard in their pockets next spring to pay for the overall financial mess.

"I am deeply concerned about the impact this is going to have on taxpayers next year," said councillor Barbara Gatehouse, the Labour representative for Blackbird Leys and a former Lord Mayor of Oxford.

"To say that the council's finances are a mess is an understatement and the public is going to have to pay for it through their pockets," she said.

"The public will be paying to rectify a disaster, rather than the money going to frontline services and the vulnerable people who need help."

County Labour leader Liz Brighouse endorsed her group's fears that council taxpayers would take a "bashing" in order to underwrite the cost of righting the "disaster", although it was impossible to quantify the likely additional hike on taxes above inflation.

The review of the council's financial management, undertaken by RSM Robson Rhodes, started in May after a decision to investigate was taken by the executive committee following a furore over the hole in the social and health care accounts.

Overall, Robson Rhodes found the council's financial management arrangements were "below standard".

They reported in their summary: "We found a number of serious weaknesses in certain areas and have concluded that the council's financial management arrangements need to be materially strengthened.

"The major weaknesses identified are in the foundations of good financial management, namely sound systems of internal financial control.

"These weaknesses do not help the council's budgetary control and financial planning arrangements, which in turn impact on the council's financial standing and its ability to achieve effective use of resources."

Just as disturbing is the conclusion that the inspectors are unsure whether measures being taken by the council will correct the chaos.

"In our view, it is too early to conclude whether additional resources the council has invested in its financial function during 2004/05 will have the required effect," said Robson Rhodes.

The council's financial systems and controls were deemed "seriously below" standard, with the risk of "misappropriation of funds or assets", plus "unauthorised or inappropriate use of public funds or assets".

However, the investigators did believe that there was "clear leadership" from councillor Keith Mitchell, the Conservative leader, and the "key senior officers".

Mr Mitchell said: "We wanted a very tough report from experts that did not pull any punches.

"That is exactly what we have in this report, which gives us valuable help in dealing with the problems we had already identified.

"There has been an immense amount of work going on behind the scenes since these problems came to light.

"The council's aim is to become an excellent authority.

"We still have much to do.

"However, there is a steely determination to see this through."

In reply to the Labour group's fear of a big financial burden facing taxpayers, Mr Mitchell said that the cost to the council's balances of the "recent problems" would be around £3m - offset by the £1.2m recovered from "originally unaccounted funds".

Balances were therefore just under £2m lower as a result, he claimed.

But Mrs Brighouse believed the financial disarray was continuing and said: "We have consistently called for a separate committee to look after audit procedures as well as tighter controls on authorisation of expenditure and how money is moved from one budget to another."