UK audit regulator weighs Manchester City investigation after Premier League ruling

The UK’s Financial Reporting Council is examining whether findings about Manchester City’s finances justify a formal investigation into the club’s statutory audit. That could bring the work of its external auditor, BDO LLP, under scrutiny, but no formal FRC investigation had begun as of 20 October, the BBC reported. [1] [2]

In a letter dated 14 October, FRC chair Dame Jayne-Anne Gadhia said the regulator was considering the Premier League commission’s published findings for their possible relevance to City’s accounts and audits. The FRC took over regulatory consideration of the audit from the Institute of Chartered Accountants in England and Wales on 30 September. BDO declined to comment to the BBC. [1] [2]

The Premier League said its independent commission found that City broke financial rules across nine seasons, from 2009/10 to 2017/18. According to the league, the commission found arrangements designed to inflate revenues and reduce costs by more than £900m, and concluded that the club filed misstated accounts while concealing its true finances from auditors and football regulators. Those findings do not establish that BDO breached auditing standards. [3]

City says it lodged an appeal on 1 October. It maintains that it is innocent and that the commission’s decision contains material errors. The FRC says the appeal does not prevent its preliminary enquiries, although it will take its progress into account. [4] [1]

The FRC can assess whether the audit met the standards applicable at the time. A separate route could cover the conduct of City directors or employees who belong to a relevant professional accountancy body; it does not automatically extend to every director or to the club itself. The regulator’s next decision is whether there are sufficient grounds to open a formal investigation.