Wanganui Collegiate School was more than $320,000 in debt at the end of 2016, and the auditor-general had issues with its banking arrangements and unauthorised borrowing.
But after two successive audits suggested the school had financial difficulties, Collegiate says it is now back in the black.
"The school's financial position is sound," Collegiate board of trustees chairman Martin Gray and board member Brad Gay said in a joint statement last week.
"The ministry's comments were in relation to the board's financial position at December 2016.
"The school board was established at the time of integration and is pleased to report the draft financial results for the year ending December 2017 are in the black."
They said the positive result came on the back of a number of years of prudent financial management.
"The school has invested heavily in new classroom ergonomic equipment, new computers, maintenance of the integrated buildings and necessities of modern learning resources.
"With much of this classroom investment being completed, the school has reviewed the costs required to run the school in an efficient manner. This, coupled with the increasing roll, has seen finances return to the black."
The auditor-general's report — released last month — found the school had a working capital deficit of $323,457 at December 2016.
Ministry of Education spokeswoman Katrina Casey said the board of trustees was receiving a high level of reporting from its management team to better inform its financial decision-making.
"We have made the school aware of our expectation that they act in a fiscally responsible manner," Ms Casey said.
The audit report included the fact the board failed to notify the ministry it was borrowing a sum of money, which involved repayments of interest and capital more than 10 per cent of the board's operational activities grant for the year.
The school borrowed $143,855 in an unauthorised manner, the report said.
"We became aware that Wanganui Collegiate board exceeded this in 2016 when they filed their annual report. We are working with the board to ensure this does not happen again," Ms Casey said.
"The board will submit their 2017 annual report in June," Ms Casey said, "at which time we will review their financial management practices and situation".
She said the ministry was providing support to the board.
The banking arrangement issues were due to some parents continuing to pay their fees/donations to the proprietor's bank account after integration and there being a delay in redirecting those funds to the board.
Mr Gay and Mr Gray said the 2016 results reflected a time when the school was investing heavily.
"Now, at the start of 2018/end of 2017, we are seeing the results of this investment."
They said the full board-audited financial statements would be available in May on the school's website for review.
When former Collegiate principal Chris Moller, resigned mid-way through last year, he said:.
"The school roll has grown significantly, and I am confident I can leave the school on a sound footing and in good shape for its next phase."