FRC leads inquiry into Manchester City accounting irregularities

The Financial Reporting Council has taken over the regulatory case into Manchester City's accounting, as the club appeals a separate Premier League commission verdict.

The Financial Reporting Council has assumed control of the probe into accounting issues at Manchester City. The UK audit regulator took charge of the matter from the Institute of Chartered Accountants in England and Wales on 30 September.

While no formal investigation has been opened, the FRC is now directing inquiries. It confirmed this action in correspondence with the House of Commons Business Select Committee. The regulator has more extensive resources and authority to impose penalties if wrongdoing is uncovered, and it can review the actions of the club's auditors, BDO.

Premier League charges confirmed

This step comes after a separate, independent commission previously ruled Manchester City was responsible for 114 breaches of Premier League financial rules. That commission, looking at seasons from 2009-10 to 2017-18, determined the club overstated its financial health by more than £900m. It said Manchester City presented a 'misleading impression' of an arrangement meant to hide the source of shareholder funding to its auditors.

Appeal process underway

Manchester City is challenging that ruling. The club has stated it will appeal, contending the finding includes 'material errors, of law, principle and fact and is unsafe'. This appeal is happening at the same time as the FRC's new probe.

Liam Byrne, chair of the business select committee, spoke about the FRC's role. "The regulator's letter exposes gaps in its ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules," Byrne said. He added that it "raises serious questions about the powers available to hold companies and directors to account."

He also mentioned that the FRC's letter shows it has not yet obtained all required evidence from the club, and its capacity to investigate people is constrained by jurisdictional limits. The committee is now weighing whether to request more evidence on the issue.

The news comes as Pep Guardiola's team keeps a flawless beginning to the Premier League season, leading the league table with 21 points from seven victories. They are three points ahead of Arsenal and next play Aston Villa on 24 October in their next fixture. The club's recent performance includes four wins from its last five games in all tournaments, featuring a 5-1 win over AEK Athens this week, where four goals were scored in a commanding 27-minute period. The FRC's inquiry proceeds as Manchester City gets ready for that Villa Park match.