UK audit regulator probes Manchester City accounting

The Financial Reporting Council (FRC) has told the House of Commons business select committee that it has taken over “regulatory consideration” of Manchester City’s accounting case from the Institute of Chartered Accountants in England and Wales as of 30 September. While a formal investigation has not yet begun, the FRC is already conducting inquiries.

The move follows an independent commission’s finding that Manchester City breached every charge related to the Premier League’s financial rules for the 2009‑10 to 2017‑18 seasons, including inflating the club’s financial position by more than £900 million. The club is appealing the verdict.

The FRC, which normally monitors accounting standards for large listed companies rather than football clubs, has broader resources and stronger powers to impose sanctions if violations are confirmed. It can examine the conduct of BDO, the auditors of Manchester City, to determine whether the audit complied with required standards, and it may sanction individual directors or employees of the Etihad club who belong to professional accountancy bodies.

BDO, the United Kingdom’s fifth‑largest accounting firm, describes itself as a market leader in football, advising more Premier League and Championship clubs than any other firm. The independent commission concluded that the club gave auditors a “misleading impression” of a scheme used to disguise the source of shareholder funds, and that the auditors were “unaware” of the scheme.

Manchester City has announced it will appeal the commission’s decision, arguing that the ruling contains “material errors, of law, principle and fact and is unsafe”. Liam Byrne, chair of the business select committee, urged the FRC to be given greater powers to tackle similar cases. In a post on X he wrote: “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.

Related: “Man City confirm appeal against guilty verdict,” published 2 October.