The UK’s Financial Reporting Council (FRC) has taken over inquiries into alleged accounting irregularities at Manchester City following an independent commission’s findings that the football club breached Premier League financial regulations. The regulator confirmed it assumed responsibility for reviewing the case on September 30, although a formal investigation has not yet begun.
The development follows a commission ruling that Manchester City breached financial regulations between the 2009-10 and 2017-18 seasons, including artificially inflating its financial position by more than £900 million. The club has appealed the verdict, arguing that the findings contain material errors of law, principle, and fact.
FRC Takes Over Review of Manchester City’s Accounts
The Financial Reporting Council confirmed in a letter to the House of Commons business select committee that it had assumed regulatory consideration of the case from the Institute of Chartered Accountants in England and Wales (ICAEW). The FRC normally oversees accounting and auditing standards at major institutions, including publicly listed companies, rather than football clubs.
The regulator is examining whether there are grounds to investigate BDO, Manchester City’s external auditor, over its handling of the club’s financial accounts. It can assess whether BDO complied with professional auditing standards and take disciplinary action if violations are established.
The FRC also has authority to sanction directors and employees who belong to recognized professional accountancy bodies. However, its powers to compel evidence from football clubs and investigate individuals outside those bodies remain limited.
Independent Commission Found Misleading Financial Reporting
The independent commission found that Manchester City used arrangements that concealed the origins of shareholder funding and created a misleading picture of its financial position. According to the findings, the club provided information that gave its auditors an inaccurate understanding of the arrangements.
The commission concluded that BDO was unaware of the scheme used to disguise shareholder contributions. BDO is the UK’s fifth-largest accounting firm and says it advises more Premier League and Championship clubs than any other accountancy firm.
Manchester City has rejected the commission’s findings and maintains that its financial arrangements complied with the relevant regulations. In its appeal against the Premier League verdict, the club argues that the decision contains substantial factual and legal errors and should not stand.
Lawmakers Call for Greater Audit Regulator Powers
Liam Byrne, chair of the House of Commons business select committee, has called for stronger regulatory authority following the FRC’s confirmation of its involvement. He said the case exposed limitations in the regulator’s ability to obtain evidence from football clubs and pursue directors who fall outside its disciplinary jurisdiction.
Byrne also questioned why the government had abandoned reforms intended to address those regulatory gaps. He called on ministers to explain what measures would be introduced to improve corporate accountability.
The FRC has greater enforcement resources than the ICAEW and could impose financial penalties or professional sanctions if a formal investigation establishes misconduct. However, the regulator has not announced whether its preliminary inquiries will lead to disciplinary proceedings.
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