Orkney Islands Council is "an effective and improving authority", the inspectorate has concluded.
With exam results well above the national average as well as a strong commitment to social inclusion and an emphasis on pupils' all-round achievement, HMIE has awarded the island education service 10 "good" ratings out of the 11 quality indicators; the other, mechanisms for consultation, was judged to be "very good".
While it is not a separate indicator, the provision of continuing professional development for teachers and non-teaching staff was also found to be very good.
The top score for consultation was awarded despite only 52 per cent of heads believing that the authority consulted them effectively. And barely a majority of school boards - 55 per cent - felt that consultation gave them influence over educational policies.
Despite these responses, the inspectorate took the unusual step of setting them aside and relying on its own findings which pointed to many opportunities for schools to let their views be known.
The directorate and senior staff gave "significant personal commitment" to regular attendance at school board meetings, and councillors were actively involved in consultation, the report states.
Inspectors acknowledged the demands placed on the council by widely scattered communities.
Leslie Manson, director of education, and his "highly regarded and industrious" team, were said to place a high priority on consultation. This gave "a sense of ownership" of what the authority was about - 87 per cent of heads and 82 per cent of school board chairpersons said it communicated its vision for the service successfully.
Mr Manson is described as "highly respected" and inspectors praised his direct involvement with schools, particularly in analysing pupil attainment with headteachers and observing teaching. "These activities had given him a good grasp of standards and quality across the authority," the report states.
But the department's staffing levels left something to be desired, HMIE found, with too much time spent on operational rather than strategic management. Senior officials were sometimes required to engage "in a relatively high degree of crisis management": two assistant directors of education had been forced to act as temporary heads in a couple of schools "at significant cost to their own professional development".
The council has now taken action to improve staffing. Inspectors said this was essential if senior officials were "to engage in appropriately challenging activities and achieve a greater impact on the quality of education in schools".
Staffing problems also took a toll on secondary schools where the quality and effectiveness of the support provided was "variable". This was partly due to problems the authority had in attracting teachers, which took up a disproportionate amount of directorate time and diverted attention from other matters.
Among five points for action is the need for the department to take a hard look at the effectiveness of its contribution to continuous improvement.
Alistair Buchan, the council's chief executive, turned some of the criticisms to advantage. "In my view, any fair assessment of performance looks at the resources in place along with the results achieved," Mr Buchan said. "When you take into account our comparatively low levels of management and administrative staff, this achievement can be regarded, in all fairness, as outstanding."