UK audit watchdog takes over Manchester City accounting inquiries
The Financial Reporting Council, the UK's audit regulator, said it had taken over "regulatory consideration" of accounting irregularities at Manchester City from the Institute of Chartered Accountants in England and Wales on 30 September and confirmed in a letter to the House of Commons business select committee that it is leading inquiries into the case.
No formal investigation has begun but the FRC is making inquiries into the matter, which follows an independent commission finding Manchester City guilty of all charges relating to breaches of the Premier League's financial regulations between the 2009-10 and 2017-18 seasons, including that the club artificially inflated its financial position by more than £900m; Manchester City are appealing the commission's verdict.
The FRC said it has greater resources and wider powers than the original regulator and can apply sanctions if it finds evidence of violations; it routinely oversees accounting standards at larger institutions such as listed public companies but does not normally regulate football clubs.
Among the powers available to the FRC is the ability to examine the conduct of BDO, Manchester City's auditors, to determine whether the audit complied with the rules, and to impose sanctions on individuals connected to the club where those people are members of professional accountancy bodies.
BDO is described in the correspondence as the UK's fifth-biggest accounting firm and the firm has said it is a market leader in football, advising more Premier League and Championship clubs than any other accounting firm.
The independent commission that investigated Manchester City said the club gave a "misleading impression" of the scheme used to disguise the origin of shareholder funds injected into the club to its auditors, who were "unaware" of the scheme.
Manchester City have said they will appeal against the commission's decision, arguing that it contains "material errors, of law, principle and fact and is unsafe".
Liam Byrne, chair of the House of Commons business select committee, wrote on X that "The regulator's letter exposes gaps in its ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules. "This raises serious questions about the powers available to hold companies and directors to account. "The government has a responsibility to explain why reforms to close these gaps were abandoned - and what will now be done to strengthen accountability."
