What the FRC Review of Manchester City’s Accounts Examines

What is the FRC examining at Manchester City?

The Financial Reporting Council (FRC) is the UK regulator responsible for overseeing auditors, accountants and actuaries. It has confirmed that it is making inquiries into accounting irregularities connected with Manchester City. The regulator has not, however, started a formal investigation. That distinction matters: inquiries are a preliminary step, not a finding that anyone broke accounting rules ¹.

The FRC says it can look at the conduct of BDO, the firm that audits Manchester City, and consider whether the audit was carried out in line with the rules. An audit is an independent examination of financial statements. The inquiry is therefore about the work of the auditor and the adequacy of that scrutiny, rather than simply a repeat of the Premier League’s case against the club ¹.

The FRC took over what it called regulatory consideration of the matter from the Institute of Chartered Accountants in England and Wales (ICAEW) on 30 September. The information provided does not set out a timetable for the inquiries or say what evidence has been reviewed so far ¹.

How is the accounting review different from the Premier League case?

The Premier League case concerns whether Manchester City breached the league’s financial regulations over the seasons from 2009–10 to 2017–18. The BBC report says an independent commission found the club guilty of charges relating to those rules, including allegations that the club artificially inflated its financial position by more than £900 million. Manchester City is appealing that verdict ¹.

The FRC’s role is different. It can examine whether BDO’s audit met professional requirements. It can also consider the conduct of individuals who are members of professional accountancy bodies, including directors or employees of the club, and has powers to impose sanctions if it finds evidence of violations ¹.

That does not mean the FRC is deciding the Premier League case, nor does a Premier League finding by itself establish that BDO or any accountant breached professional rules. The two processes ask different questions and are conducted by different bodies. The sources do not establish what conclusions either process will ultimately reach ¹.

Why has the regulator become involved now?

The reporting links the FRC’s inquiries to questions raised after the Premier League case. Labour MP Liam Byrne wrote to the FRC chair asking why the audit and regulatory system had not uncovered the alleged misstatements. The regulator confirmed its role in a letter to the House of Commons business select committee ¹².

The FRC regularly oversees accounting standards at larger institutions, including listed public companies, but does not routinely oversee football clubs, according to the BBC report. It has greater resources and stronger sanctioning powers than the body that previously had regulatory consideration of the matter. Those powers do not mean it has already found a breach ¹.

The available reporting describes the change in responsibility and the questions prompting scrutiny. It does not publish detailed findings about what the audit did or did not detect. The regulator’s inquiries are meant to consider that issue; the sources do not provide an answer in advance ¹².

Could Manchester City or BDO face sanctions?

The FRC can impose sanctions if it finds evidence of violations, including sanctions against certain individuals who belong to professional accountancy bodies. It can also examine BDO’s audit work. But the existence of those powers is not evidence that a sanction will be imposed, and no sanction from this accounting review is reported in the sources ¹.

The FRC’s inquiries are not the same as a formal investigation, and the sources do not say that the regulator has reached a conclusion about the club, BDO or an individual. The Premier League verdict is also being appealed, so the outcome of that separate process remains unresolved in the cited reporting ¹.

What should readers watch for next?

The key developments would be confirmation that the FRC has opened a formal investigation, publication of any findings, or an announcement of sanctions. The available sources report none of those outcomes so far. They also do not give a timetable for when the inquiries might progress ¹.

For now, the clearest description is that the UK audit regulator is making inquiries into the accounting and audit issues, while the Premier League case follows its own appeal process. These are connected by the questions raised about the club’s financial reporting, but they are not one combined inquiry ¹².