Sport Ireland will carry out a full and extensive audit of the FAI which will assess the association's "fitness to handle public funds".
KOSI Corporation Ltd has been appointed to carry out the audit. A team made up of senior auditors, including a forensic accountant, will begin work in the coming days.
"The audit will independently assess the expenditure of all Sport Ireland grant funding in accordance with the FAI’s approved submissions," a Sport Ireland statement said.
"It will also examine in detail the FAI’s wider financial administration and internal control environment, including an assessment of the FAI’s fitness to handle public funds."
The FAI and Sport Ireland met a delegation from UEFA on Tuesday to discuss governance issues at the FAI.
The FAI has been in turmoil since revelations of a €100,000 loan from former chief executive John Delaney to the organisation.
Sport Ireland has suspended government grants and auditors Deloitte have reported the FAI to the Companies Registration Office for failure to keep adequate accounting records.
Last week the Governance Review Group established by the FAI and Sport Ireland wrote to FAI members, sponsors and key stakeholders in Irish football inviting them to submit their ideas on the future of the game.
A draft report from the Group is expected by early June to facilitate rule changes ahead of the Association’s AGM in Trim at the end of July.
