New Man City investigation set to be launched after MP highlighted major concern

Manchester City are set to be examined by an independent financial regulator after an MP submitted a formal request following their 115 charges case.

Last month, Man City discovered that they had been found guilty of the majority of the 115 charges brought against the club by the Premier League, with the official appeal process ongoing.

The verdict and ongoing appeal is likely to hang over City for the remainder of the season, but now things may be about to get even worse as Labour MP Liam Byrne has revealed that the Financial Reporting Council (FRC) are examining City’s audit.

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Man City set to be examined following letter from Labour MP

Byrne, the MP for Birmingham Hodge Hill and Solihull North, recently wrote a letter about City to the chair of the FRC, an independent regulator which, as per its own website, 'regulate(s) auditors, accountants and actuaries, and set(s) the UK's Corporate Governance and Stewardship Codes.

In his letter, Byrne asked that the initial findings in City's case be investigated, asking why the audit system had failed to discover City's breaches.

"The findings raise a fundamental question: how could the established system of audit and regulatory scrutiny fail to uncover alleged misstatements of such a scale over nine years?" he asks in the letter.

"We are particularly concerned that these issues came to light through media reporting rather than the established audit and accounting process," Byrne continues.

Now, Bryne has released an update revealed that the FRC had replied to his letter, confirming it is examining Manchester City’s audit.

However, while sharing images of the letter, Bryne claimed that it made it clear that the financial regulator has 'gaps' in the rules to force football clubs to comply.

"The regulator's letter exposes gaps in its ability to compel evidence from the club and pursue directors who fall outside its disciplinary rules," Bryne claimed.

"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."

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What does a new Man City investigation actually mean?

Despite Bryne's claims, the examination could still prove to be a major headache for City, as it could ultimately lead to a formal investigation which could result in further scrutiny.

The main points in the letter are as follows:

• The FRC has taken responsibility for the case.
• Both the auditors and some club personnel could face scrutiny: BDO’s audit work, and possible misconduct by City directors or employees who belong to professional accountancy bodies.
• These are preliminary enquiries. The letter does not announce a formal investigation or establish wrongdoing.
• City’s appeal does not stop those enquiries, although the FRC will take the appeal into account.

Essentially, it means that there will be possible accounting enforcement alongside the 115 charges case, although no potential punishment or timetable has been shared.

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