The FAI has been warned it will lose its State funding on a long-term basis if it insists on appointing current directors to a new board.
It comes as it emerged yesterday that Uefa is funding the organisation.
Sport Ireland and members of the Oireachtas Committee on Sport yesterday backed a call by Sports Minister Shane Ross for current FAI president Donal Conway to withdraw his nomination to take on the role for another year.
"The State has made it clear that unless the stable is cleared, there will be no funding. We are withholding our grant until we are sure that the FAI are governed properly," Sport Ireland's Kieran Mulvey told the Oireachtas committee.
The FAI was repeatedly told that the re-election, unopposed, of Mr Conway as FAI president would not be acceptable.
State funding for the FAI will not be back in place until the end of the year, adding to the financial burden on the association which already needs Uefa funding.
The FAI, which holds a critical EGM on Saturday ahead of an AGM a week later, was not represented at that hearing.
Committee chairman Fergus O'Dowd TD revealed he'd been contacted by Mr Conway, who had requested a private briefing.
But Mr O'Dowd refused and insisted that any meeting would be on the record.
"This has to be up-front, transparent and accountable, I said no," said Mr O'Dowd, who added that, acting on a request from the Soccer Writers' Association of Ireland (SWAI) and the Association of Sports Journalists in Ireland (ASJI), he would write to the FAI to ask that the media have full access to the EGM and AGM.
"There is an oversight role to be played by Oireachtas committees, but equally there is an oversight role done by the media.
"They have to be allowed to do their job," said TD Catherine Murphy.
The financial state of the FAI was laid bare in the three hours which followed.
Sport Ireland revealed it had struggled to appoint someone to carry out an investigation into the FAI as firms feared "reputational damage" from being involved, before Belfast firm KOSI was appointed, its probe to be completed by September.
Sport Ireland said it was "disappointed" to be told by the FAI at a meeting last week that Mr Conway, a board member since 2005 and president for 12 months, was being nominated for the post again, and that one of the three candidates for vice-president was the current holder of that role, Noel Fitzroy.
John Treacy, Sport Ireland's CEO, said hiring ex-FAI staffer Noel Mooney as interim general manager was a "missed opportunity".
Fianna Fail TD Marc MacSharry said holding an AGM where accounts would not be presented was "a major problem" and he called for the EGM and AGM to be delayed for four months.
"To be pressing ahead with such a level of rule changes is madness in the extreme without having the detail that has to come," Mr MacSharry said.
Aidan Horan, chair of the Governance Review Group, claimed that the recommendation that at least one current board member stays on would help with "inside relationships and corporate memory".
"Having transition is safer than having none at all," he added.
But Tuesday's letter from Minister Ross was a game-changer as Sport Ireland called for Mr Conway to drop out of the race.
"I think the minister is right, and that it is time for the entire board to step aside, a clean sweep is probably best," Mr Treacy said afterwards.
"They've taken steps forward, they've taken steps back, and they've scored own goals along the way."