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The UK’s audit watchdog, the Financial Reporting Council (FRC), has revealed that it is now overseeing inquiries into accounting irregularities connected to Manchester City Football Club. This handover of responsibility was confirmed in a letter addressed to the House of Commons business select committee, stating that the FRC took over from the Institute of Chartered Accountants in England and Wales on 30 September.
Although a formal investigation has yet to commence, the FRC is actively engaging in preliminary inquiries regarding the matter. These developments follow an independent commission’s ruling that found Manchester City guilty of multiple breaches of Premier League financial regulations covering the 2009-10 to 2017-18 seasons. The commission concluded that City had artificially inflated their financial position by more than £900 million. Manchester City has announced its intention to appeal the decision.
The FRC’s involvement marks a significant escalation, as it possesses enhanced resources and authority compared to previous overseers. Unlike the Institute of Chartered Accountants, the FRC routinely monitors accounting standards for large entities such as publicly listed companies, though it typically does not regulate football clubs. Its remit includes examining the conduct of BDO, Manchester City’s auditors, to determine if the audits complied with professional standards. The FRC also holds the power to sanction individuals, including directors or employees affiliated with professional accountancy organizations.
BDO, the UK’s fifth-largest accounting firm, claims to lead the market in advising football clubs, serving more Premier League and Championship teams than any other firm. The independent commission identified that Manchester City had provided a “misleading impression” to its auditors regarding a scheme that obscured the source of shareholder funds injected into the club. The auditors, according to the report, were “unaware” of this scheme. Liam Byrne, chair of the business select committee, has called for stronger powers for the FRC to address gaps in its ability to secure evidence from clubs and hold directors accountable. He emphasized that the government must clarify why previous reforms to strengthen regulatory powers were abandoned and what steps will now be taken to improve accountability. BDO has declined to offer any comment on the situation
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