The National Gallery of Australia believes it has turned a corner following a fresh funding injection, after an audit found cash-flow problems could potentially endanger its art collection.
The Canberra gallery, which is home to the national collection of works of art, has almost $6 billion in assets.
However, an auditor-general report released on Wednesday said solvency had this year been added to the NGA's strategic risk register as a "major risk".
As well the NGA had "used injections of equity, designed for the purchase and maintenance of the artworks, for operating costs".
And the gallery's financial situation had "significantly impacted" on building maintenance.
"The storage and display of its collection in less than optimal accommodation is a risk to both the artwork and to the NGA's reputation," the report said.
The report recommended improvements to financial management, a long-term storage solution for the collection and spending on critical building works.
NGA Assistant Director Adam Worrall accepts there are improvements to be made in the management of its collection, pointing to various measures already underway.
However, the gallery insists its collection is not - and has never been - at risk.
The NGA is being given $21.5 million over the next four years to be used in capital projects, including building and security works.
It is expected to finish this financial year with a $500,000 cash surplus.
Mr Worrall says there has never been any issue with insolvency in relation to the gallery.
"It was added to the risk register so that everyone in the gallery should be aware of it when doing forward planning," he said.
"It's really something that any responsible business should do. It's never been an issue and is not an issue for the future."
The audit also found recent stocktakes had been unable to locate a number of artworks held by the gallery.
"As at January 2018, the NGA had 809 items that were recorded as 'to be located' in their (collection management system), which indicates that the NGA has legacy data issues to investigate."
Mr Worrall said the data issues arose when the entire collection was transferred to electronic files in the 1980s.
"When the gallery was being built and was about to open in the 1970s, these works marked as 'to be located' have never been sighted in the history of the NGA," he said.
"It is simply a matter of correcting the database to reflect that reality."
The gallery said in response to the report it would put in place a multi-year financial plan to improve its ratio of expense to revenue.
It would also ensure the acquisitions budget funds were only used for that purpose and address other concerns raised in the report.
Australian Associated Press