Inspectors have criticised the quality of casework carried out by the Crown Prosecution Service (CPS) in the south east.
Financial management was also found to be poor in the area which employs dozens of staff in Brighton.
But in the report by the CPS Inspectorate the governance of the south east area was found to be fair.
The report said: “The area’s leaders and managers have had to cope with a culture of poor performance, a lack of engagement historically with stakeholders, increasing levels of budget overspend and a challenging criminal justice landscape both locally and nationally.
“Staff morale had fallen to a low point.
“It was clear to inspectors that the CCP (chief crown prosecutor) was confronted with significant challenges as soon as she was appointed at the start of 2014.
“For example, the area’s estate had to be rationalised, reductions in staff numbers had to be achieved and a more inclusive corporate style of leadership was required to change the culture from separate local units to one south east area with consistent practices and common aims.
“In some respects, progress has been achieved towards meeting these challenges but the task is far from complete. This progress has been recognised in this report by rating governance as fair.
“Although recent data suggests that performance in many respects has shown a more positive trend, our findings from examining case files and processes were that casework quality was poor.
“Of most concern was the area’s financial management which we also assessed as poor.
“The size of the budget overspend, made up principally of additional prosecution costs, was not realised until late in 2014 when a grip on financial matters began to take hold.
“The area cannot afford to relax its grip on budgetary controls now introduced.”
A formal review of accounting processes is expected to take place by the end of September after a £2.4 million overspend in the past financial year.
Although staff numbers have fallen from more than 360 to about 260 in three years, more jobs are at risk as the CPS south east area aims to save a further £1.3 million this year.
The report also said: “There have been high levels of staff sickness absence throughout the area so that the average exceeded the national figure of 9.7 days by one percentage point.
“A more robust approach to individual performance management is urgently required.
“The prosecution costs budget was significantly overspent in 2014-15, partly due to an average cost per case figure of £1,289.00 which exceeded the national average by almost 20 per cent.
“Unless this figure is reduced spending is not likely to be brought under control.”
The chief crown prosecutor for the south east Jaswant Narwal said: “None of what is set out in the Inspectorate report comes as a surprise to us as these issues had already been identified and acted on by senior managers.
“In the time since I have been here we have made a number of positive changes to ensure we are delivering an effective and efficient service.
“We know we are going in the right direction as in recent months that has been evidenced by a positive trend in our performance.
“We will be taking the Inspectorate’s recommendations on board and will be building on the work we have already undertaken.
“It is encouraging the inspectors feel there is effective leadership in place which will stand us in good stead.
“Our staff have had to deal with huge changes as the criminal justice system has undergone important reforms.
“Despite that, they all recognise that every case they deal with has a victim at the heart of it and they are determined to do the best they can for them.
“The inspectors recognise it is critical we work with our partners in the criminal justice system, primarily the police in Kent, Surrey and Sussex and the court service, as without their support we cannot deliver the high-quality service that victims and witnesses rightly expect from us.
“In particular, we will be working closely with the police to improve the quality of files we receive from them, as this was something identified in the Inspectorate’s report.
“A great deal has already been put in place over the last few months to ensure that we have the solid foundations in place to build on so that the south east’s performance can improve.
“We do recognise there is still a lot of work to do.”