The Garda Ombudsman has been asked to investigate financial irregularities at the force's training college.
Garda Commissioner Noirin O'Sullivan said the controversy around the Garda College at Templemore was referred to the watchdog after she was given a private briefing from auditors within the force.
An internal audit of financial and accounting practices in Templemore has uncovered dozens of bank accounts, a €5 million surplus and investment policies related to the college.
The leasing out of land, some money being spent on entertaining and retirement gifts, as well as a transfer of €100,000 to the Garda Boat Club, is also being investigated by the Dail's Public Accounts Committee.
Before the committee, Ms O'Sullivan said the funding model at Templemore was "complex and complicated" and clearly did not meet modern standards.
After a briefing from the head of the internal Garda audit section on Friday, she said she requested a written report on the issues over the weekend and was now referring the controversy to the Garda Ombudsman.
Olaf, the European anti-fraud agency which investigates fraud against the EU budget, corruption and serious misconduct within European institutions, has also been notified.
The Department of Justice has been told of the revelations.
Ms O'Sullivan, who first became aware of concerns about financial irregularities at Templemore two years ago, said there was "a very significant difference" in the report she has just received and "broader" issues flagged in 2015.
"This is a very specific issue and [there is] reasonable cause to suspect that fraud has been committed in relation to an account," she told the committee.
"That is why the matter was referred to the Garda Ombudsman yesterday, to examine the report and make further inquiries to see if a criminal offence has been committed."
Ms O'Sullivan said it would be a "huge concern" if any law has been broken.
The suspected fraud was referred to the watchdog under Section 41 of the Garda Siochana Act, which requires the Garda Commissioner to keep the government informed of any significant matters of public interest within the force.
A bank account at the centre of the newly-launched investigation was held at Cabra, north Dublin – not far from Garda headquarters in Phoenix Park.
It was an official Garda account, rather than a personal account, opened in 1999 and closed in 2010.
Ms O'Sullivan refused to identify the signatories to the account, but said a retired senior officer was one, whose rank would identify the person if revealed.
Those involved were entitled to due process and fair procedure, she said.
The money in the account was from the European Union.
At its "height or peak" sums in excess of 90,000 euro were involved, the Garda chief said.
Marc MacSharry, a member of the Public Accounts Committee, said the revelations were "very conveniently kicked into" the Garda Ombudsman on Monday, restricting what the committee could inquire into.
"It's on the never-never," he said. "God knows who will be on the Public Accounts Committee when the information comes out."
But Ms O'Sullivan denied any attempt to stymie the committee.
"Under no circumstances was this matter referred to the Garda Ombudsman to keep it from public view or the view of this committee," she said.