Man City Faces New Financial Questions As UK Watchdog Examines Auditing Practices

The United Kingdom’s Financial Reporting Council (FRC) has commenced preliminary inquiries into alleged accounting irregularities involving Manchester City following findings that the Premier League club breached financial regulations. However, the regulator has not yet opened a formal investigation into the matter.

According to Bush Radio Academy, the FRC confirmed that it took over the case from the Institute of Chartered Accountants in England and Wales on September 30. The development was disclosed in a letter sent to the House of Commons Business, Culture, Energy and Sport Committee.

The inquiries follow a ruling by an independent commission that found Manchester City guilty of charges relating to breaches of Premier League financial regulations between the 2009/2010 and 2017/2018 seasons.

The commission concluded that the club had artificially inflated its financial position by more than £900 million through an arrangement allegedly designed to conceal the origin of shareholder funds. It also found that the scheme created a misleading impression of the club’s financial standing and prevented its auditors from becoming aware of the arrangement.

Manchester City has rejected the commission’s findings and filed an appeal, arguing that the judgment contains material errors of law, principle and fact and is therefore unsafe.

The FRC is now examining the case to determine whether further regulatory action is necessary. With broader powers and resources than the previous regulatory body, the council can assess whether BDO, the accounting firm responsible for auditing the club, conducted its work in accordance with professional standards.

The regulator also has the authority to impose sanctions on directors, employees and other individuals who fall within the disciplinary jurisdiction of professional accountancy bodies.

BDO, one of the United Kingdom’s largest accounting firms, plays a significant role in football auditing and has advised numerous clubs across the Premier League and Championship.

Meanwhile, Liam Byrne, chairman of the House of Commons Business Select Committee, has questioned whether the FRC possesses sufficient powers to hold companies and their directors accountable.

In a post on X, Byrne said the regulator’s letter highlighted gaps in its ability to compel Manchester City to provide evidence and pursue directors who fall outside its disciplinary rules.

He argued that the limitations raised serious questions about corporate accountability and called on the government to explain why proposed reforms intended to address the gaps had been abandoned.

Byrne also urged the government to clarify what measures would now be taken to strengthen the regulator’s powers and ensure that companies and their directors could be held accountable for potential financial misconduct.

The preliminary inquiries represent another development in the ongoing scrutiny of Manchester City’s financial practices, although no formal investigation by the FRC has been announced.