FRC takes over Manchester City accounting inquiry from ICAEW

The UK audit regulator, the Financial Reporting Council (FRC), has confirmed it is leading inquiries into accounting irregularities at Manchester City, taking over regulatory consideration from the Institute of Chartered Accountants in England and Wales (ICAEW) on 30 September. No formal investigation has started, but the FRC is making inquiries.

  • Regulator: Financial Reporting Council (FRC)
  • Subject: Manchester City accounting irregularities
  • Transfer date: 30 September (from ICAEW)
  • Status: No formal investigation started; inquiries ongoing
  • Context: City found guilty of Premier League financial breaches (2009-10 to 2017-18), appealing verdict

What was 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."

— Liam Byrne, chair of the business select committee, writing on X

Byrne's comments highlight concerns over the FRC's authority to compel evidence and sanction individuals not bound by professional accountancy bodies. His call for government explanation adds political pressure.

The FRC's greater resources and powers compared to the ICAEW mean it can apply sanctions if violations are found, but gaps remain in compelling evidence from the club and pursuing directors outside its disciplinary rules.

The numbers

  • £900m: Amount by which Manchester City artificially inflated their financial position, according to the independent commission.
  • 2009-10 to 2017-18: Seasons covered by the Premier League financial regulation breaches.
  • 30 September: Date FRC took over regulatory consideration from ICAEW.

Why the FRC is now involved in Manchester City's accounting case

The FRC routinely oversees accounting standards at bigger institutions such as listed public companies, but not football clubs. Its decision to take over the case from the ICAEW signals a more robust approach. The FRC can look into the conduct of BDO, Manchester City's auditors, to ask whether the audit was in line with the rules. It can also apply sanctions to 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 found that the club gave a "misleading impression" of the scheme used to disguise the origin of shareholder funds to its auditors, who were "unaware" of the scheme. This puts BDO's audit under scrutiny.

Manchester City have said they will appeal against the commission's decision, arguing that it contains "material errors, of law, principle and fact and is unsafe". The appeal is ongoing.

Talking points

  • Should the FRC have the power to compel evidence from clubs and sanction directors, or is the current framework too weak?
  • Does the FRC's involvement increase the likelihood of sanctions against individuals at Manchester City?
  • Is BDO's position as a football audit specialist now untenable given the commission's findings?
  • Why did the government abandon reforms to close regulatory gaps, as Liam Byrne suggests?

What happens next

Manchester City's appeal against the independent commission's verdict is ongoing. The FRC's inquiries could lead to a formal investigation and potential sanctions against the club, BDO, or individuals. The government faces pressure to explain abandoned reforms and strengthen accountability. The business select committee will likely continue to scrutinise the FRC's powers.

Frequently asked questions

What is the FRC investigating at Manchester City?

The FRC is making inquiries into accounting irregularities at Manchester City, having taken over regulatory consideration from the ICAEW on 30 September.

Has a formal investigation started into Manchester City's accounts?

No formal investigation has started, but the FRC is making inquiries into the case.

What did the independent commission find regarding Manchester City's finances?

The commission found Manchester City guilty of breaching Premier League financial regulations between 2009-10 and 2017-18, including artificially inflating the club's financial position by more than £900m.

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