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Manchester City's audit by BDO is under scrutiny after the club was found guilty of a £900m cheating scandal. BDO was paid £47,000, far less than rivals' auditors.
Accountancy firm BDO is facing fresh questions about its audit of Manchester City after the club was found guilty of the biggest cheating scandal in British sporting history. The Premier League club has lodged an appeal against the ruling. The scandal involves financial rule breaches worth £900million between the 2009-10 and 2017-18 seasons.
BDO Audit Fees Questioned
During the nine-year period covered by the Premier League inquiry, BDO, the UK's fifth-biggest accountancy firm, was paid what appears to be a very low fee for auditing City's accounts. Payments to BDO peaked at £47,000 in 2016 before falling to £42,000 two years later, according to an analysis of City's accounts.
In comparison, rivals Manchester United paid their auditors £500,000 in 2018. Football finance expert Kieran Maguire said: "On the face of it £47,000 doesn't look particularly high. 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."
Premier League Inquiry Findings
The three-year Premier League inquiry found that City's Abu Dhabi owners and commercial partners were involved in a series of sham sponsorship deals. These deals boosted the club's income and reduced costs by more than £900million, breaching financial fair play rules.
City's accounts show that during the inquiry period, other operating income grew rapidly to account for £232million of total revenue by 2018, easily surpassing broadcast and gate receipts. Maguire added: "If I was a partner and was looking at risk areas then perhaps this might be on my high risk pile."
Pressure Mounts on Regulators
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, has written to FRC chair Jayne-Anne Gadhia asking for her assessment.
Byrne said the findings raised a question over how the established system of audit and regulatory scrutiny failed to uncover alleged misstatements of such a scale over nine years. He added: "The FRC must establish where scrutiny broke down, and what must change."
City has said the Premier League's ruling on its cheating contained clear material errors and is unsafe. The club added: "The club is innocent of the accusations made and a comprehensive body of irrefutable evidence exists relating to this case."
The Institute of Chartered Accountants in England and Wales declined to comment. BDO also declined to comment.
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