Manchester City’s ongoing case with the Premier League has now seen the UK’s audit and independent football regulator launch an inquiry over the matter.
Manchester City is the subject of an accounting inquiry from the UK’s audit regulator amid its guilty verdict of 114 charges for breaching the Premier League’s financial regulations.
In a letter sent to the House of Commons, the Financial Reporting Council revealed the UK audit regulator has opened inquiries into the ongoing case to assess accounting irregularities.
No formal investigation has started, but the council could open one if it finds irregularities in the club’s accounts, or if it suspects misconduct by Manchester City’s auditor BDO.
Per the independent commission’s 40-page guilty verdict findings, it was deemed Manchester City inflated its sponsorship revenues by up to £830m from secret funding by the club’s controlling owner, Abu Dhabi United Group (ADUG), from 2009 to 2018.
The commission deemed this gave a “misleading impression” of the club’s accounts, submitted through annual financial statements, which auditors such as BDO must assess. So far, the Premier League commission has stated its belief Manchester City auditors “were unaware” of these inflated commercial deals.
The Financial Reporting Council has the powers to open up an investigation if its “regulatory consideration” inquiries deem it necessary.
If the council finds BDO violated England and Wales auditing regulations, it does have the authority to sanction leading individuals at the club, but not Manchester City itself.
The club is currently appealing the guilty verdict issued on 29 September, believing the commission’s findings made “material errors of law, principle and fact.”
Manchester City’s appeal will reportedly provide “irrefutable evidence” against the inflated sponsorship findings by arguing that sponsorship revenue came from Abu Dhabi government grants.
What powers does the independent football regulator have over City?
Another regulator that could become involved with the Manchester City case is the new Independent Football Regulator (IFR).
The IFR’s Chair, David Kogan, spoke to Gary Lineker on an episode of the Rest is Football podcast, and while he did not comment specifically on the ongoing case due to the appeal, he did reveal the IFR’s powers include investigating and potentially removing football owners.
Kogan said he and the IFR cannot intervene until all the redacted findings from the initial commission’s report have been released, and the outcome of the appeal has been revealed. It can then make its own investigation, specifically against the ownership and the leading executives at Manchester City.
“Ultimately we do have a role,” said Kogan.
“We would judge against the tests of ownership and senior directors and judge the actions against those individuals. We will look at the individuals who’ve given evidence. We will look at the individuals involved with the club and we will take a judgment call.
“We have the power to ask an owner to step away from a club if we believe that they run a club in a way that is neither fit fair or done with property.”
Kogan also spoke to Lineker regarding the IFR’s recently published ‘State of the Game’ report, which revealed 94% of English football clubs are running on losses and technical insolvency, painting a damning picture of financial distress throughout the football pyramid.
