Accountancy firm BDO is facing renewed scrutiny over its audit of Manchester City, as the Premier League club has lodged an appeal against findings of financial rule breaches. Regulators are reportedly examining BDO's role after the club was accused of breaking financial rules by an estimated £900 million over a nine-year period, from the 2009-10 to the 2017-18 seasons.
New details have emerged regarding the fees paid to BDO, the fifth-largest accountancy firm in the UK, for its annual audits of Manchester City during the period in question. Analysis of the club's accounts indicates that payments to BDO peaked at £47,000 in 2016, decreasing to £42,000 two years later. This contrasts sharply with the £500,000 fee that rival club Manchester United reportedly charged its auditors in 2018.
Football finance expert Kieran Maguire commented on the reported fees, stating, "On the face of it £47,000 doesn’t look particularly high." He added that for a business of Manchester City's size, such a fee might not cover extensive work hours, considering the hourly rates of partners and staff.
Maguire also suggested that the rapid growth in "other operating income" within City's accounts during the period of the Premier League's inquiry could have been a significant risk area for auditors. This income category grew substantially to account for £232 million of the club's total revenue by 2018, surpassing income from broadcasting and gate receipts.
Pressure is mounting on the Financial Reporting Council (FRC), the United Kingdom's audit watchdog, to clarify how it will investigate potential audit failings. Liam Byrne, chairman of the Commons business and trade select committee, has written to the FRC's chair, Jayne-Anne Gadhia, seeking an assessment of the situation. Byrne raised concerns about how the established system of audit and regulatory scrutiny could fail to uncover alleged misstatements of such magnitude over a nine-year span, emphasizing the need for the FRC to identify where scrutiny broke down and what changes are necessary.
Magnetic City has responded to the Premier League's ruling, asserting that it contains "clear material errors and is unsafe." The club maintains its innocence of the accusations and states that a comprehensive body of irrefutable evidence supports its case. Representatives from the Institute of Chartered Accountants in England and Wales and BDO have declined to comment on the matter.