The UK's audit regulator has confirmed it is investigating accounting irregularities at Manchester City. The Financial Reporting Council (FRC) stated this in a letter to the House of Commons Business Committee, according to the BBC.
The FRC noted in the letter that on 30 September it took over the "regulatory consideration" of the case from the Institute of Chartered Accountants in England and Wales. A formal investigation has not yet been launched, but the regulator is examining the circumstances of the case.
Manchester City was found guilty on all counts of the charge sheet before an independent panel for breaching Premier League financial regulations between the 2009/10 and 2017/18 seasons. The charges included artificially inflating the club's financial position by more than £900 million. The club has announced it will appeal the ruling.
The independent panel that examined the case determined that the club gave its auditors a "misleading impression" of a scheme used to conceal the origin of shareholder funds invested in the club, of which the auditors were unaware. Manchester City announced it would appeal the panel's decision, claiming it contains "material errors in law, principle and fact, and is unsafe".
The FRC has greater resources and powers to impose sanctions if it finds evidence of breaches. The regulator normally oversees accounting standards for larger institutions such as public limited companies, but not football clubs. It can investigate the work of BDO, Manchester City's auditor, to determine whether the audit complied with the rules. It can also impose sanctions on individuals, such as directors or employees of the club at the Etihad, if they are members of professional accounting bodies. BDO is the fifth largest accounting firm in the United Kingdom, but claims to be the market leader in football, advising more Premier League and Championship clubs than any other firm. BDO declined to comment on the case.
Liam Byrne, chair of the business committee, called for greater powers for the FRC in similar cases. On the social media platform X, he wrote that the "regulator's letter reveals gaps in its ability to force a club to provide evidence and prosecute directors who are outside its disciplinary rules". He added that this "raises serious questions about the powers to hold companies and directors to account". "The government has a responsibility to explain why reforms to close those gaps were abandoned and what will now be done to strengthen accountability," Byrne said.
