SERIOUS DIFFERENCES developed between the audit committee of the board of Fás and the assistant director general in charge of human resources and organisational affairs in the wake of an internal audit inquiry.

At one stage the chairman of the audit committee, Niall Saul, told assistant director Christy Cooney that if he did not comply with committee requirements, the committee would seek a full board meeting to deal with the issue.

The differences concerned what should be done in the wake of a special audit inquiry that discovered a range of apparent breaches of procurement rules and other matters at the corporate affairs division in Fás.

Mr Saul told Fás director general Rody Molloy in February 2007 that the committee believed a thorough investigation into the matters uncovered should be conducted. Mr Molloy had already told the committee he had referred the matter to Mr Cooney.

The committee sought the terms of reference for the investigation they believed was needed, and said the inquiry should be conducted by a senior executive. The correspondence on the matter has been seen by The Irish Times.

In March, Mr Cooney replied to the letter sent to Mr Molloy and told Mr Saul that he valued "the committee's observations, but insofar as the taking of any further action [is concerned] this is a matter for human resources. Having said that, let me assure the committee that, given the nature of the findings by internal audit, appropriate action will be taken and indeed I have already put this process in train."

Mr Saul wrote back to Mr Cooney the next day telling him the committee had considered his letter and took a different view.

"We have received an audit report which appears to identify potentially serious breaches of public sector procurement procedures (which are governed by law), and other important compliance and control mechanisms, by a senior executive of the organisation. We have requested an investigation process be put in place to comprehensively examine the issues involved . . .

"The approach you now propose does not meet the requirements of the audit team."

Mr Saul said the committee believed its requirements must be fulfilled if it was to fulfil its remit.

He advised Mr Cooney that if the committee did not receive confirmation of his compliance with its requirements, "we will have no option but to escalate this matter to board level".

Later, Mr Cooney wrote to Mr Saul saying he had no issue with most of the committee's concerns but "I have a fundamental issue with your committee overseeing the disciplinary process".

Early in April Mr Molloy wrote to Mr Saul and assured him he and his colleagues took internal audit reports very seriously and that processes were in place "to ensure that findings are dealt with".

Earlier this month, Mr Cooney told the Dáil Committee of Public Accounts the only investigation set up by Fás in the wake of the internal audit was a disciplinary investigation.