The Audit Commission has praised South Kesteven District Council's finance team in the challenging financial year of 2011/12.
In its annual audit letter the commission told the council 'you have made proper arrangements to secure economy, efficiency and effectiveness in your use of resources'.
Despite a reduction in local government funding of £2.4m over two years since 2009/10, the council has aimed to provide value for money services in the financial squeeze through a range of cost reduction and efficiency programmes.
Initiatives have included sharing senior officer posts and responding to the customer consultation findings undertaken in summer 2010.
SKDC's resources and assets portfolio holder Cllr Mike Taylor said: "The Audit Commission's comments show our commitment to using every penny carefully and providing value for money services for the community.
"We are working as hard as ever to reduce overheads and back office costs to respond to the grant cuts."