The doubling of the Abbey Theatre's debt from €0.9 million to €1.85 million was due to a systems failure, according to the chairwoman of the theatre.
Speaking this morning, Eithne Healy said: "We have been aware for a long time that we have systemic problems and we are dealing with them".
During an interview on RTÉ radio, she said: "Nothing was new to us this week except the size of the loss. . . . The board have taken decisive action to make sure it doesn't happen again."
"The board have now commissioned an independent consultant to review the Abbey's accounting and financial control systems," she added.
During the preparation of draft annual accounts earlier this week, it was discovered that the theatre's financial reporting system was underrecording the emerging deficit for 2004. The deficit had been expected to be €0.9 million but in fact is likely to be about €1.85 million.
Managing director Brian Jackson resigned, and artistic director Ben Barnes stepped aside during the week.
The chairwoman of the Arts Council, which channels funds to the Abbey, said she was "deeply concerned" at the crisis in the Abbey.
Ms Olive Braiden said in a statement: "We were advised of recent developments at a meeting with the Chair of the Abbey on 11th May, and we are awaiting an urgent financial report on the situation. In the meantime, we are in ongoing discussions with the Abbey."
The Labour Party's spokesman on the arts, Jack Wall, said the news was "merely the latest in a long line of embarrassments for the theatre. These embarrassments are both self-inflicted and the result of ongoing Government dithering over a new location for the National Theatre.
"The National Theatre, which has been responsible for some of the greatest works in theatrical history, and which should be the pride of the Irish arts world, is becoming a joke."
Ms Healy also confirmed that the site offered to the Abbey Theatre by the Dublin Docklands Authority is on the northside of the river Liffey.
Staff from the authority have been holding talks with the Office of Public Works (OPW) and the Department of the Arts about the site, and are to put forward final proposals about the site in the coming weeks.
It is now the only site being actively examined by the OPW as the Carlton site on O'Connell Street, seen by many as one of the best potential sites for the National Theatre, is unlikely to be available in the short term as cases over its control and ownership are still before the courts.
