Man City In Fresh Trouble As FRC Probes £900 Million Accounting Scandal

The United Kingdom (UK’s) Financial Reporting Council (FRC) has begun making inquiries into alleged accounting irregularities involving Manchester City, following findings that the club breached Premier League financial rules.

Naija News reports that the regulator confirmed that it took over the case from the Institute of Chartered Accountants in England and Wales on September 30.

According to the BBC, the FRC disclosed this in a letter to the House of Commons Business, Culture, Energy and Sport Committee on Tuesday.

Although no formal investigation has been opened, the council is examining the case to determine whether further regulatory action is necessary.

The development follows a ruling by an independent commission that found Manchester City guilty of all charges relating to breaches of Premier League financial regulations between the 2009/2010 and 2017/2018 seasons.

The commission concluded that the club had artificially inflated its financial position by more than £900 million.

However, Manchester City is appealing the verdict, arguing that it contains “material errors of law, principle and fact and is unsafe.”

The FRC has more resources and stronger powers than the previous regulatory body. It can examine whether BDO, the club’s auditors, carried out its work in line with professional rules.

The regulator can also impose sanctions on directors, employees and other individuals who fall under the disciplinary rules of professional accountancy bodies.

The independent commission had earlier found that Manchester City gave a “misleading impression” of a scheme allegedly used to hide the origin of shareholder funds.

It also concluded that the arrangement left the club’s auditors unaware of the scheme.

BDO, the UK’s fifth-largest accounting firm, is a major player in football auditing. It has advised more Premier League and Championship clubs than any other accounting firm.

Meanwhile, chairman of the House of Commons Business Select Committee, Liam Byrne, has raised concerns about the FRC’s ability to hold companies and their directors accountable.

In a post on 𝕏, Byrne said the regulator’s letter exposed gaps in its powers, particularly its ability to compel Manchester City to provide evidence and pursue directors who fall outside its disciplinary rules.

He wrote, “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.”