The Charity Commission has censured the Tate Gallery for buying works of art by its own trustees.
The Upper Room comprises 13 paintings of rhesus monkeys
The body, which regulates charities in England and Wales, said it was "very disappointed" gallery bosses had not asked its permission first.
The artworks include Chris Ofili's The Upper Room, bought for £600,000, and two pieces by sculptor Bill Woodrow.
Tate director Sir Nicholas Serota has accepted the criticisms and attributed the error to "a general oversight".
"It appears that no one at the Tate was aware that we should have been seeking permission of the Charity Commission," he said.
The Upper Room - a series of 13 paintings of rhesus monkeys displayed on elephant dung supports - was bought in 2004 while Ofili was on the Tate's board of trustees.
Charity Commission chief executive Andrew Hind said its investigation into the sale had revealed "serious shortcomings".
"In any charity we would be concerned that such basic matters were neglected," he continued.
"But in a charity of the size and stature of the Tate we are very disappointed."
The commission ruled the Tate could keep the paintings but should ask for permission before buying any further works from its serving trustees.
In 2005 the Tate admitted it made a "technical error" by seeking a £75,000 grant from the National Art Collection Fund to go towards the Ofili purchase.