The Financial Reporting Council (FRC) has taken charge of a regulatory inquiry into alleged accounting irregularities at Manchester City.
The UK audit regulator confirmed in a letter to the House of Commons Business, Culture, and Sport Committee that it assumed “regulatory consideration” of the case from the Institute of Chartered Accountants in England and Wales on 30 September.
The FRC said no formal investigation had been opened, but confirmed it was examining the matter.
The move follows the independent commission’s finding that Manchester City breached all charges brought against it in relation to the Premier League’s financial regulations between the 2009-10 and 2017-18 seasons.
The commission ruled that the club had artificially inflated its financial position by more than £900m. Manchester City has appealed against the verdict, describing it as containing “material errors of law, principle and fact and is unsafe”.
The FRC has more resources and wider powers to impose sanctions if it establishes that accounting rules were broken. It typically oversees accounting standards at major organisations, including listed public companies, although football clubs do not normally fall within its remit.
Its inquiry can examine the conduct of BDO, Manchester City’s auditors, and whether the audit was carried out in accordance with the relevant rules.
The regulator may also take action against individuals, including directors or employees of the Etihad club, provided they belong to professional accountancy bodies.
BDO is the fifth-largest accounting firm in the UK and describes itself as a market leader in football. It advises more Premier League and Championship clubs than any other firm.
The independent commission’s report said Manchester City had given its auditors a “misleading impression” of a scheme designed to conceal the origin of shareholder funds put into the club. It also concluded that the auditors were “unaware” of the scheme.
Liam Byrne, chair of the House of Commons Business, Culture, and Sport Committee, has called for the FRC to be given stronger powers to investigate similar cases.
Writing on X, Byrne 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.
“This raises serious questions about the powers available to hold companies and directors to account.
“The government has a responsibility to explain why reforms to close these gaps were abandoned – and what will now be done to strengthen accountability.”
BDO declined to comment.
