Sport Ireland has said the FAI "did not sufficiently explain" the circumstances of the €100,000 loan from FAI Chief Executive John Delaney to the association.
The criticism of the FAI comes in a statement, seen by RTÉ News, that is due to be delivered by Sport Ireland's Chief Executive John Treacy at a meeting of the Oireachtas Transport, Tourism and Sport Committee tomorrow afternoon.
Last month, Mr Delaney confirmed he gave the association a €100,000 loan to help it through what he said was a short-term cash flow problem.
In a statement on behalf of Mr Delaney, the FAI said the "bridging loan" was given in April 2017 and repaid in full to Mr Delaney in June of that year.
Sport Ireland, the statutory body with responsibility for the development of sport, is due before the Oireachtas committee to discuss governance, oversight and scrutiny.
The statement outlines that, after media reports about the €100,000 loan, Minister for Sport Shane Ross requested Sport Ireland to write to the FAI President on 19 March seeking urgent clarification from the FAI board on the circumstances of the loan and its repayment.
Sport Ireland also sought an explanation on why it was "not notified at any stage in 2017 about any apparent deterioration in the FAI's financial position, which is a requirement of the Terms and Conditions of Grant Approval".
The statement continues: "Sport Ireland received a response from the President of the FAI, which acknowledged the loan of €100,000 to the FAI by its then Chief Executive.
"However, the contents of the FAI letter did not sufficiently explain the circumstances of this loan and its repayment, nor fully address the matter of compliance with Sport Ireland's Terms and Conditions of Grant Approval."
On Monday 25 March, Sport Ireland wrote to the FAI President again seeking further clarification on the circumstances of this loan.
More detail was also requested by Sport Ireland in order to assess compliance with the terms and conditions of grant approval.
Sport Ireland also sought re-confirmation that all State funding provided to the FAI has been spent for the purposes intended and in accordance with approved submissions.
No reply to the second letter has been received from the FAI.
Sport Ireland is also expected to raise concerns about the changes to the senior management structure at the FAI when the body appears before the Oireachtas committee tomorrow.
The statement adds: "Following the prior release of the FAI's statement on the senior management structure and on March 25th, Sport Ireland received a letter from the new FAI interim Chief Executive, Rea Walshe, outlining structural changes within the organisation on the back of a review of its senior management structure.
"The letter outlined that the board of the FAI had commissioned a review by independent consultant Jonathan Hall & Associates and had adopted its recommendations. It stated that the Chief Executive Officer, John Delaney, had moved to a new position of Executive Vice-President with immediate effect, giving an overview of this specific defined role. The letter also confirmed that Ms Walshe had been appointed as interim Chief Executive with immediate effect.
"Notwithstanding a media release from the FAI on Saturday, 23rd March, the letter of 25th March was the first occasion on which Sport Ireland was formally notified of the review of the organisation's senior management structure, and the creation of the new role of Executive Vice-President.
"Sport Ireland was not consulted on the commissioning or the preparation of the report. Sport Ireland has not received a copy of the report."
The statement also outlines that Sport Ireland's primary aim and responsibility is the security of, and return of, investment for the approximately €2.9m in Exchequer funding invested in the FAI on an annual basis.
It states: "To that end, Sport Ireland is satisfied that effective control mechanisms and frameworks are in place with regard to our investment in the FAI.
"Sport Ireland is satisfied that our funding invested in the FAI is fully accounted for and expended on the purpose for which it was intended.
"This is verified on an annual basis by our financial controller based on reviews of the FAI's financial statements and signed auditor statements stating that all our grant was expended for the purposes for which it was intended."
Report into FAI governance set to be published this week
A report by Sport Ireland into governance in the FAI is likely to be published later this week, Minister for Transport, Tourism and Sport Shane Ross has told the Dáil.
He said recent media reports have raised "serious concerns around governance and financial controls" and that Sport Ireland is engaged with the organisation to clarify these matters.
"When the necessary clarifications have been received, Sport Ireland will report to me. In the interest of due process and natural justice it is important that Sport Ireland's engagement with the organisation would be given the necessary time to ensure that all matters are thoroughly addressed by the organisation.
"I do not wish to comment today on any possible outcome of this ongoing process. However I can say that we will be publishing the material that I receive from Sport Ireland. I expect to hear from Sport Ireland this week, and I will be publishing that material as soon as possible, most likely by the end of this week".
Minister Ross also said the FAI was not compliant with the Government's code of conduct on term limits for board members.
He added: "It is to me a compelling case that has been made over years that those who are not abiding by the Government's rules that funding should be withheld".
"We're giving a little bit of time for some of them, maybe quite a large number of them, to get their corporate governance in order. But by 2021, if they are not, funding should be withheld," he said.
Additional reporting: Mary Regan