The UK audit regulator has confirmed it is leading inquiries into accounting irregularities at Manchester City.
The Financial Reporting Council confirmed in a letter to the House of Commons Business, Culture, and Sport Committee that it had taken over “regulatory consideration” of the case from the Institute of Chartered Accountants in England and Wales on 30 September.
No formal investigation has started, but the FRC is investigating the case.
This follows an independent commission finding Manchester City guilty of all charges relating to breaches of the Premier League’s financial regulations between the 2009-10 and 2017-18 seasons, including artificially inflating the club’s financial position by more than £900m. City are appealing the verdict.
The FRC has greater resources and powers to impose sanctions if it finds evidence of violations. It routinely oversees accounting standards at bigger institutions such as listed public companies, but not football clubs.
The FRC can investigate the conduct of BDO, Manchester City’s auditors, to determine whether the audit complied with the rules.
It can also sanction individuals, such as directors or employees of the Etihad club, if they are members of professional accountancy bodies.
BDO is the UK’s fifth-biggest accounting firm, but claims to be a market leader in football, advising more Premier League and Championship clubs than any other firm.
The independent commission that investigated Manchester City found that the club gave its auditors a “misleading impression” of the scheme used to disguise the origin of shareholder funds injected into the club, and that the auditors were “unaware” of the scheme.
Manchester City said it will appeal the commission’s decision, arguing it contains “material errors of law, principle and fact and is unsafe”.
Liam Byrne, chair of the business select committee, called for greater powers for the FRC to look into similar cases.
He wrote on X: “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.