CANBERRA, June 14 (Xinhua) -- The Australian National Gallery (NGA), home to one of the country's premier art collections, is at "major risk" of insolvency, according to an auditor's report released late Wednesday.

The audit into the management of collections at the NGA suggested cash flow issues were putting the gallery's assets, worth 4.5 billion U.S. dollars, in jeopardy.

The Australian National Audit Office (ANAO) found in February that the NGA's "planned conservation activities exceed the current resources allocated by management" and that the gallery's strategic direction was poor.

The report found that the 3.4 million-U.S. dollar sculpture Habakuk, by Max Ernst, was "unsafe" outside the gallery - where it had been moved in 2016 - but it was not returned inside until February 2018, despite warnings.

The NGA in Canberra collects emblematic paintings such as Sidney Nolan's Ned Kelly series, a major collection of watercolors by Albert Namatjira and Jackson Pollack's Blue Poles.

But the condition of the gallery's storage facilities posed a potential risk to the collection, according to the A-NAO report.

"The condition of the NGA's storage arrangements and backlog of remedial work present a risk to workplace health and safety and to the optimal maintenance of the collection if not addressed and resourced in a timely manner," the report said.

The gallery has played down the ANAO's findings, with Assistant Director Adam Worrall saying they are not a surprise and they are already working on some of the changes recommended.

"There's never been an issue with solvency at the gallery, and it's not a secret that the NGA and many arts organizations in this country are grappling with budget issues," he said on Thursday.

"It was added to the risk register so that it was something that everyone in the institution would be aware of when we were doing our forward planning."

The rate of damages and other incidents spiked in 2015-2016 and 2016-2017 at the gallery, from 53 incidents in 2014-15, up to 167 in the following year and 171 in 2016-17.

A rehang of artwork, vandalism in the sculpture garden and weather events contributed to the increase.

Just under 10 percent of the incidents were caused by water damage, both to works on display and in storage.

The gallery has also used government funding that was meant to be used for acquiring and maintaining new works to prop up its operating budget.

The report comes just two weeks before incoming director Nick Mitzevich is due to take on the helm of the institution.