A review of the financial positions of all seven universities has been launched by the Higher Education Authority (HEA).
The review will be conducted by a working group of financial experts and accountants.
Sources say the review has been prompted by criticism from within the Department of Education and Science that the universities are not using their funds efficiently.
The Minister, Mr Dempsey, will be briefed on the progress of the review. In recent months, he has expressed some unease about what is seen as the poor level of accountability in some universities.
Mr Dempsey is known to be particularly concerned about the freedom enjoyed by some academic staff and the lack of class contact time for students on some courses.
In a letter to university heads, the HEA, which advises the Minister on higher education, says the investigation will be "an in-depth review of the overall financial position of each university, including level of debt, assets, reserves and a review of the financial position of pension funds".
About €630 million in public funding is allocated to the seven universities each year.
University heads have welcomed the review. One source said: "This is an opportunity to clarify the real budgetary pressures on all of us; it will show there is very little fat in the system."
The Government's recent decision to impose an effective 10 per cent cut in day-to-day university spending has led to tensions between the colleges and the Department. According to education sources, some senior figures in the Department believe the universities could be run in a more cost-effective way.
The HEA initiative is intended to clarify the precise financial position of all seven universities.
The working group is chaired by Mr Tom Boland, the HEA chief executive. It also includes Mr John Donnelly, chairman of HVB Ireland, Mr Tom O'Higgins, former president of the Institute of Chartered Accountants, and Mr Jim Port, managing director of the UK-based JM Consulting.
The HEA says the review will examine the audited financial statements of each college and it will also examine "additional financial information in relation to ancillary activities not included in the audited statements", where this is relevant. This would include funds secured from campus companies. The review will examine financial statements over the past five years. The HEA says the working group will "place the findings of the review in an international context".
The review will propose new policy guidelines, allowing the universities to plan their affairs in a strategic manner. In recent years, the colleges have complained about the stop-go nature of funding and the lack of coherence in policy.
According to the HEA letter, the review will also deal with the "perception" that the universities have "built up financial reserves".
The HEA has requested full financial information by the end of this month. It says it hopes the review process will feed into the Estimates process late this year.
