An internal audit lasting five weeks was launched at the branch in May and found a civil servant had made a series of irregular payments out of department funds.
But the employee at the centre of the allegations has since died.
A spokeswoman for the Department of Education confirmed an investigation was ongoing.
“The department did report concerns about a possible fraud to An Garda Síochána. The gardaí are investigating the matter,” she said.
It is unclear whether fraud squad officers can proceed with an investigation.
The Athlone branch of the Department of Education employs several hundred civil servants and looks after state examinations.