GardaÍ are close to completing a criminal investigation into how a manager in Fás was allegedly able to defraud the state agency of €622,000 over a five-year period without being detected.

It is understood the individual involved could face a prison sentence if convicted. He worked in the Corporate Affairs section which has been the subject of a number of separate investigations into financial irregularities.

Those investigations finally led to the resignation of then director general of Fás Rody Molloy over all-expenses-paid trips he took with his wife to Florida. Greg Craig, then director of Corporate Affairs, was suspended for a number of months last year. Craig has since been reinstated in Fás.

Last week, the comptroller and auditor general, John Buckley, published the second of three reports into the state-funded agency detailing how it lavished over €48m on advertising and promotion between 2002 and 2008.

The sum included €600,000 spent on TV adverts that were never broadcast and €9,200 on a car for a prize in a draw that never took place.

The €622,000 fraud currently being investigated by gardaí is "more serious than anything that has emerged to date" in Fás, according to sources. It is understood gardaí were keen to omit as much detail of the suspected fraud as possible from Buckley's report lest it compromise their investigation.

The alleged fraud involved the individual producing 47 false invoices for promotional goods and services to Fás which were then processed and paid by the agency to a phantom company set up by the individual manager.

Buckley said Fás was "unable to provide evidence of any goods or services having been supplied for those payments". "The recorded transactions for which the payments had been made were all initiated by the completion of a 'request for purchase' form. Most of these forms had been approved by a manager in the Corporate Affairs section."

But it is still unclear from Buckley's brief report how such a massive fraud, which relied on the state agency paying up for services without ever checking if that service was delivered, could have gone on for so long without being discovered.