FRC Takes Over Regulatory Review of Manchester City Accounting from ICAEW, Raising Questions About Auditor BDO's Conduct
The Financial Reporting Council (FRC) confirmed in a letter to the House of Commons business select committee that it took over 'regulatory consideration' of the Manchester City accounting case from the Institute of Chartered Accountants in England and Wales (ICAEW) on 30 September 2026. No formal investigation has commenced, but the FRC is actively making inquiries. The move follows Manchester City being found guilty by an independent commission of breaches of the Premier League's financial regulations between the 2009-10 and 2017-18 seasons, including by artificially inflating the club's financial position by more than £900 million. Manchester City is appealing the commission's verdict, arguing it contains 'material errors, of law, principle and fact and is unsafe'. The FRC's involvement is significant because it has greater resources and powers than the ICAEW to apply sanctions if it finds evidence of violations. The FRC can examine the conduct of Manchester City's auditors, BDO (described as the UK's fifth-biggest accounting firm and a self-described market leader in advising Premier League and Championship clubs), to assess whether the audit was carried out in line with professional standards. The independent commission found that the club gave a 'misleading impression' of the scheme used to disguise the origin of shareholder funds to its auditors, who were 'unaware' of the scheme. Liam Byrne, chair of the business select committee, flagged gaps in the FRC's ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules, calling on the government to explain why reforms to close those gaps were abandoned.
Why this matters
This case tests the outer limits of the FRC's jurisdiction: it is designed to oversee accounting standards at listed public companies and major institutions, not football clubs, and its involvement here reflects the exceptional scale and complexity of the alleged accounting irregularities. The £900 million figure alleged by the independent commission is very large, and the potential for BDO to face sanctions over its audit conduct has implications for the broader audit market and for any firm advising sporting or private entities on financial reporting. The select committee's flagging of jurisdictional gaps, particularly the FRC's inability to compel evidence from the club or pursue non-member directors, signals a potential push for legislative reform of the FRC's powers.
On the Ground
The FRC's inquiries will generate regulatory defence work for BDO and potentially for individual accountants who are members of professional bodies. Manchester City will need specialist regulatory and public law advice on engaging with the FRC process and managing the parallel Premier League appeal. Sports law, regulatory investigations, and white-collar defence practices are all activated. A trainee on this matter would assist with skilled persons report coordination, prepare regulatory notification drafts, and build chronology and disclosure bundles to support the client's engagement with the FRC's information-gathering process.
Interview prep
Question you might get
“What are the limits of the FRC's powers in a case like Manchester City, and what reforms might be needed to make audit enforcement effective in contexts outside listed public companies?”
Sign up free to see the full answer
A model answer you can lift into an interview — how to frame this story for a partner.
Sign up freeMy notes
saved