The UK's audit regulator has taken over inquiries into accounting irregularities at Manchester City, the Financial Reporting Council said in a letter to the House of Commons business select committee. The FRC assumed "regulatory consideration" of the case from the Institute of Chartered Accountants in England and Wales on 30 September. No formal investigation has started, but the FRC is making inquiries into the matter.
The move follows Manchester City's conviction by an independent commission on all charges relating to breaches of the Premier League's financial regulations between the 2009-10 and 2017-18 seasons. The commission found that the club artificially inflated its financial position by more than £900m. Manchester City has said it will appeal the verdict, arguing that the commission's decision contains "material errors, of law, principle and fact and is unsafe".
The FRC has greater resources and powers than previous regulators handling the case, allowing it to apply sanctions if evidence of violations emerges. The regulator can examine whether BDO, Manchester City's auditors, complied with audit rules. The independent commission found that the club gave a "misleading impression" of the scheme used to disguise the origin of shareholder funds to its auditors, who were "unaware" of the scheme.
BDO is the UK's fifth-biggest accounting firm and claims to be a market leader in football, advising more Premier League and Championship clubs than any other firm. The FRC can also apply sanctions to individuals such as directors or employees of Manchester City if they are members of professional accountancy bodies. The regulator routinely oversees accounting standards at listed public companies, but not typically football clubs.
Liam Byrne, chair of the business select committee, called for greater powers for the FRC to investigate similar cases. He said the regulator's letter "exposes gaps in its ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules". He added this "raises serious questions about the powers available to hold companies and directors to account" and called on the government to explain why reforms to strengthen accountability were abandoned.