The Financial Reporting Council has taken over the investigation into Manchester City’s accounting practices following allegations that the club inflated its financial position by more than £900 million. The FRC informed the House of Commons Business, Culture, and Sport Committee in a letter that it assumed regulatory responsibility from the Institute of Chartered Accountants in England and Wales on 30 September.
No formal investigation has commenced yet, but the FRC is actively reviewing the case. This move comes after an independent commission found Manchester City guilty of breaching Premier League financial regulations between the 2009-10 and 2017-18 seasons. The club is appealing the verdict, describing it as containing “material errors of law, principle and fact and is unsafe”.
The commission’s report detailed how Manchester City artificially inflated its financial position by over £900 million through schemes designed to disguise the source of shareholder funds. It found that the club’s auditors were given a “misleading impression” and were “unaware” of the mechanisms used to hide these injections. The auditors in question are BDO, the UK’s fifth-largest accounting firm, which claims to be a market leader in football and advises more Premier League and Championship clubs than any other firm.
The FRC’s involvement marks a significant escalation. It has broader powers than the previous regulator and can impose sanctions if it finds evidence of wrongdoing. While the FRC typically oversees accounting standards at large public companies, it rarely intervenes in football clubs’ affairs. The council can also investigate BDO’s conduct to determine whether the audit complied with professional standards.
The FRC can sanction individuals connected to the club, including directors or employees, if they hold membership in professional accountancy bodies. Liam Byrne, chair of the House of Commons Business Select Committee, responded to the FRC’s letter by calling for stronger regulatory powers. He wrote on X that the regulator’s current limitations “expose gaps in its ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules.”
Byrne added that the situation raises “serious questions about the powers available to hold companies and directors to account.” He urged the government to explain why prior reforms aimed at closing these regulatory gaps were abandoned and what steps will be taken to strengthen accountability moving forward.
Manchester City has declined to comment extensively beyond its announcement of the appeal. BDO also declined to comment on the matter.
The case places the spotlight on football clubs’ financial transparency and the role auditors play in verifying accounts in the sport. The FRC’s investigation could set a precedent for how similar cases are handled in future.
According to Joy Online.
