The Taoiseach, Brian Cowen, has said information provided yesterday by the board of FÁS needs to be investigated.
Mr Cowen also said he approved of the decision by Tánaiste Mary Coughlan to review the terms of the retirement agreement for the former head of the body, Rody Molloy.
Yesterday, FÁS chairman Peter McLoone said the board was never told that expenditure procedures in some areas were out of control.
This evening, Mr Cowen said the deal made at the time of Mr Molloy's departure from the State training agency was in accordance with public sector norms.
However, he added that the Government was seeking legal advice.
In a statement tonight, the Department of Enterprise Trade and Employment said Mr Molloy had agreed a severance deal broadly in line with the arrangements to which he was entitled, and therefore it had not sought legal advice about possible legal acton by him.
It added that concern over legal action was not the deciding factor.
Meanwhile, Mr Molloy has tendered his resignation as chairman of the board of the Institute of Public Administration.
IPA Director-General John Cullen confirmed to RTÉ News that he received a call from Mr Molloy in which he informed him that he was tendering his resignation.
Mr Cullen said Mr Molloy did not give any reasons for his decision.
The board of the IPA is to meet in the coming days to consider the matter.
The IPA is a State body involved in training and education of those involved in the sphere of public administration. Founded in 1957, it was made into a company limited by guarantee in 1963.
It derives 80% of its income from its activities, and receives the remaining 20% by way of a grant from the Department of Finance. This year, the department will give the IPA €3.7m.
Greens demand answers
The Minister for Justice, Dermot Ahern, has said the Cabinet never discussed the proposed settlement for Mr Molloy at any stage and he learned the details of the amount Mr Molloy was being paid through the media.
He said, even though they were aware Mr Molloy was exiting, the Cabinet was not meeting on the day Mr Molloy resigned and therefore could not deal with the issue.
Mr Ahern said the issue of Mr Molloy's pension was a matter for the accounting officer of the department and the officials. He said the Tánaiste had then to make a political judgement in the midst of a crisis based on the advice that she got and the criticism of her had been unfair.
The leader of the Green Party and Minister for the Environment, John Gormley, has said he has full confidence in the Tánaiste.
Mr Gormley said he and the Minister for Communications, Energy and Natural Resources, Eamon Ryan, had not been aware of the severance deal prior to its approval.
Earlier, Mr Gormley's party colleague Senator Dan Boyle said Ms Coughlan had questions to answer in relation to Mr Molloy's resignation package.
The Public Accounts Committee heard yesterday that Mr Molloy received a pension increase worth up to €1m, as well as other payments.
Shortall criticises 'cosy' relationship
Labour TD Roisin Shortall has described as 'far too cosy' the relationship between the Department of Enterprise, Trade and Employment and FÁS.
Ms Shortall, who is a member of the Public Accounts Committee, claimed Mr Molloy's severance package was 'a grubby deal made behind the scenes'.
She described the decision by the Tánaiste to review the increased pension entitlements given to Mr Molloy as a 'clear case of trying to bolt the stable door long after the horse has bolted'.
A spokesman for the Tánaiste said the review had been initiated following information that overspending at FÁS was deliberately withheld by management from the board of directors at the State training agency.
The information was made public yesterday by Niall Saul, an employers' representative on the board of FÁS.
The spokesperson said that the Tánaiste has sought legal advice on the matter and will be considering its implications.
The spokesperson confirmed that the Department of Enterprise, Trade & Employment did not seek legal advice at the time that Mr Molloy's severance deal was being negotiated.
Yesterday, the Dáil Public Accounts Committee was told that Mr Molloy was willing to resign only if he got a 'golden handshake'.
The Committee was told Mr Molloy got an additional sum of between €80,000 and €90,000 in his pension package, over and above what he was entitled to.
The Secretary General of the Department of Trade & Enterprise, Sean Gorman, told the Committee that Mr Molloy's pension had been increased to give him credit for another four-and-a-half-years' service, despite the fact that he resigned.
