The firearm was discharged while being examined by two forensic officers at Gayfield Square police office in Edinburgh in April.
No-one was hurt in the incident but an investigation has found it was both "preventable and negligent".
The Police Investigations & Review Commissioner (PIRC) said that in future advice should be sought from the Explosives Ordnance Department when dealing with an unfamiliar firearm.
The home-made weapon, described as "non-conventional", was seized during an operation by Police Scotland officers.
It was discharged unintentionally while being examined by a team from the Scottish Police Authority (SPA) at about 10.50am on April 14.
The incident was referred to PIRC, who interviewed the ballistics experts and the officers involved in the seizure of the firearm.
The commissioner said Police Scotland did not share information that they held on the firearm, including how it operated, with the SPA team.
The officers who arranged its transportation and examination did not comply with standard operating procedures and it should not have been physically examined at the scene or moved "due to its unfamiliar design and uncertainty regarding its stability", PIRC ruled.
Instead, authorised firearms officers should have kept control of it until it had been made safe or passed onto an appropriate expert.
The report said: "Police Scotland's practice and procedures in respect of firearms safety, while stringent in respect of conventional known firearms, do not provide officers with enough specific guidance on the course of action they should take in the event that a non-conventional or unfamiliar firearm cannot be made safe."
Addressing the SPA, the commissioner said the examination of a non-conventional firearm in a room with a fabricated wooden door and two Perspex skylights was "questionable".
"The precise nature and volatility of all firearms must be determined before arrangements are made for transportation to the appropriate location for full forensic examination," the report said.
"The PIRC recommends that Police Scotland and the Scottish Police Authority review their practice and procedures for examining, making safe and transporting non-conventional or unfamiliar firearms."