The BBC reports that the UK's audit regulator has confirmed it is leading an examination into accounting irregularities concerning Manchester City Football Club.
In a letter sent to the House of Commons Business and Trade Select Committee, the Financial Reporting Council (FRC) confirmed that it took over "regulatory consideration" of the case from the Institute of Chartered Accountants in England and Wales (ICAEW) on September 30.
While a formal investigation has not yet been launched, the FRC has commenced preliminary inquiries into the matter. This follows an independent commission's ruling that Manchester City breached Premier League financial regulations between the 2009-10 and 2017-18 seasons, including artificially inflating the club's financial standing by more than £900 million. Manchester City are currently appealing that verdict.
Should evidence of wrongdoing emerge, the FRC possesses greater resources and broader authority to impose disciplinary sanctions. The watchdog typically oversees accounting standards at large entities, such as publicly listed companies, rather than football clubs. The FRC holds the statutory power to scrutinize the conduct of Manchester City's auditor, BDO, to verify whether its auditing work complied with regulatory standards.
The FRC could also sanction individual directors or employees of Manchester City if they hold memberships in recognized professional accountancy bodies. BDO is the UK's fifth-largest accounting firm but describes itself as the market leader in the football sector, advising more Premier League and Championship clubs than any other firm.
The independent commission investigating Manchester City found that the club concealed arrangements designed to disguise the true source of shareholder funding from its auditors, creating a "misleading impression" while leaving the auditors “entirely unaware.”
Manchester City stated they are appealing the commission's findings, arguing the decision was "materially flawed in law, principle and fact and reaches an unsustainable conclusion." Liam Byrne, chair of the House of Commons Business and Trade Select Committee, called for the FRC to be granted enhanced statutory powers to investigate cases of this nature.
Posting on social media platform X, he stated: "The regulator's letter exposes its lack of capacity to compel evidence from clubs or pursue directors outside its disciplinary reach. This raises acute questions about whether existing powers are adequate to hold companies and directors accountable. Ministers must explain why they dropped reforms to close these loopholes, and what they will do now to strengthen accountability."
