New questions for Manchester City auditors BDO

Accountancy firm BDO is facing fresh questions about its audit of Manchester City as the shamed Premier League club lodged an appeal after being found guilty of the biggest cheating scandal in British sporting history. 

The Daily Mail this week revealed that regulators were ‘looking into’ BDO – which signed off City’s accounts over the nine years the football club was found to have broken financial rules to the tune of £900million between the 2009-10 and 2017- 18 seasons. 

Now it can be revealed that during this period BDO, the fifth-biggest accountancy firm in the UK, was paid what appears to be a very low fee for the annual audit of City’s numbers. 

Payments to BDO peaked at £47,000 in 2016 before falling to £42,000 two years later, an analysis of City’s accounts shows. 

That compares with a £500,000 fee rivals Manchester United charged its auditors in 2018. ‘On the face of it £47,000 doesn’t look particularly high,’ said football finance expert Kieran Maguire. 

‘A (BDO) partner would be charging £250 to £300 an hour and you’ve got staff so you’re not getting many hours of work for a £500million business.’ 

Accountancy firm BDO is facing fresh questions about its audit of Manchester City

The recently concluded three year Premier League inquiry into City found its Abu Dhabi owners and commercial partners were at the centre of a series of ‘sham’ sponsorship deals that boosted the club’s income and reduced costs by more than £900million, breaching financial fair play rules. 

City’s accounts show in the period covering the Premier League’s inquiry ‘other operating income’ grew rapidly to account for £232million of total revenue by 2018, easily outstripping broadcast and gate receipts. 

‘If I was a partner and was looking at risk areas then perhaps this might be on my “high risk” pile,’ Maguire said. 

Pressure is growing on the Financial Reporting Council (FRC), the audit watchdog, to explain how it will examine potential audit failings.

Liam Byrne, chairman of the Commons business and trade select committee, last night wrote to the FRC’s chair Jayne-Anne Gadhia asking for her assessment. 

He said the findings raised a question over how ‘the established system of audit and regulatory scrutiny [could] fail to uncover alleged misstatements of such a scale over nine years’. 

Byrne added: ‘The FRC must establish where scrutiny broke down, and what must change.’ 

City yesterday said the Premier League’s ruling on its cheating contained ‘clear material errors and is unsafe’. 

‘The club is innocent of the accusations made and a comprehensive body of irrefutable evidence exists relating to this case,’ it added. 

The Institute of Chartered Accountants in England and Wales declined to comment. BDO also declined to comment. 

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