The Financial Reporting Council (FRC) has launched preliminary inquiries into alleged accounting irregularities involving Manchester City, following findings that the Premier League club breached financial regulations.
According to the BBC on Tuesday, the regulator disclosed in a letter to the House of Commons Business, Culture, Energy and Sport Committee that it assumed responsibility for the case from the Institute of Chartered Accountants in England and Wales on September 30.
The FRC said it was conducting inquiries but had yet to open a formal investigation.
The development comes after an independent commission ruled that Manchester City were guilty of all charges relating to breaches of Premier League financial rules between the 2009-10 and 2017-18 seasons.
The commission found that the club had artificially overstated its financial position by more than £900 million. However, Manchester City are challenging the ruling, arguing that it contains “material errors of law, principle and fact and is unsafe.”
The FRC has broader investigative resources and enforcement powers than the previous regulator, allowing it to scrutinise whether BDO, the club’s auditors, complied with professional auditing standards.
READ ALSO: Premier League Confirms Manchester City Guilty Of Financial Breaches
It can also impose disciplinary sanctions on individuals, including directors and employees who belong to recognised professional accountancy bodies.
In its findings, the independent commission said Manchester City had created a “misleading impression” about an arrangement allegedly designed to conceal the source of shareholder funding, leaving its auditors “unaware” of the scheme.
BDO, the United Kingdom’s fifth-largest accounting firm, is a major provider of auditing services in football. It advises more clubs across the Premier League and Championship than any other accounting firm.
Reacting to the FRC’s letter, Liam Byrne, chair of the business select committee, raised concerns about limitations in the regulator’s authority.
In a post on X, 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.”