It is believed that the Accounts Commission will call for urgent action from ministers in order to continue the plan to extend free childcare.
The First Minister, Nicola Sturgeon, had promised to extend childcare from 600 hours to 1,140 for three and four-year-olds - as well as eligible
two-year-olds - by 2020.
The report also criticises ministers for not giving councils enough time to deal with the proposed changes.
Scottish Tory education spokesman Liz Smith said that the report is ‘exposing the failures of the SNP policy on childcare’.
"Providers and councils have no idea of whether the current investment is delivering value for money and parents are left frustrated because the current system is still not delivering the flexibility they need.
"This is a very serious wake-up call for the SNP."
Councils expect the childcare plans to cost £1billion by 2021/22. The SNP Government estimated £840m. Councils estimate a need for 12,000 members of staff with the Government falling significantly shorter with estimates between 6,000 and 8,000.
Accounts Commission chairman Dr Graham Sharp said:
"The scale of change needed over the next two years is considerable and there are significant risks that councils will be unable to deliver that change in the time available.
"There is now an urgent need for plans to be finalised."
Caroline Gardner, Auditor General for Scotland, said:
"The Scottish Government was not clear enough about what the expansion of funded hours in 2014 was expected to achieve.’
Childcare Minister Maree Todd said:
"Despite the scale of the challenge, we remain on track to deliver 1,140 hours by 2020."