City case puts auditors and Burnham under scrutiny

Manchester City’s financial misconduct case has widened into questions about audit oversight and political involvement, with Prime Minister Andy Burnham agreeing to disclose his meetings with senior figures at the club as their appeal proceeds.The disclosure pledge follows criticism of Burnham’s response to the independent commission’s findings, while auditors BDO face scrutiny over accounts that the panel found concealed the true extent of City’s financial position.Speaking on ‘The Rest Is Politics’ podcast, Burnham said: “I’ve been asked by the leader of the opposition to publish details of my meetings, which I’m happy to do and I’m going to.“I will quite clearly put out there everything that I have done working with them in my previous role as Mayor of Greater Manchester.“None of it is recent, actually, in terms of the meetings I had. I only had one significant meeting, actually, and that was in 2021.”Conservative leader Kemi Badenoch had demanded disclosure of contacts between Burnham and senior club figures, bringing his relationship with City’s Abu Dhabi ownership into focus following his previous role as mayor of Greater Manchester.Burnham initially told the BBC he would be concerned if the owners withdrew, prompting some Premier League clubs to raise fears about political interference in the appeal process.In that interview, Burnham commented: “Well, I would be really concerned to lose them. They’ve been such a huge partner in the building of modern Manchester. Obviously, the building of Manchester City into the global force that it is.“I can’t intervene more in the process. It would be wrong for me to do that. It would be wrong, I think, to jump to a conclusion before having really studied all of the detail, but obviously it’s ongoing, and because it’s still contested by Manchester City, then I think it’s right that I don’t say much more.”He has since defended his response and argued that the football proceedings should be considered separately from investment in Manchester.Burnham continued: “The football issues are different from the investment issues. People will try and conflate those two things, but they shouldn’t, in my view.“The football issues, the findings of the independent commission are serious, as I said in the interview.”The commission found City had used sham commercial arrangements to disguise more than £830m in funding between 2009 and 2018, with the wider inflation of their financial position exceeding £900m through overstated income and understated costs.City deny wrongdoing and have lodged an appeal, with sanctions yet to be announced and a separate independent appeal board due to review the decision.The club stated: “The Club’s firm position is that, on multiple grounds, the opinion contains clear material errors, of law, principle and fact and is unsafe.“The Club is innocent of the accusations made by the Premier League and a comprehensive body of irrefutable evidence exists in support of all of its positions, relating to this case.“We will continue to respect due process and are necessarily restricted in what we can say further until all proceedings are complete.”The findings have also raised questions about BDO’s audit work, although the commission concluded that City concealed their true finances from the firm and its decision does not itself establish an audit failure.The Financial Reporting Council has not opened an investigation into BDO or those responsible for preparing City’s accounts, but is examining its jurisdiction and whether it should take responsibility for the matter from the Institute of Chartered Accountants in England and Wales.City’s status as a privately owned business outside the public interest entity regime means their audits do not fall under the same oversight framework as listed companies, banks and insurers.Liam Byrne, chair of parliament’s business and trade select committee, has called for regulatory examination, asking: “How could the established system of audit and regulatory scrutiny fail to uncover alleged misstatements of such a scale over nine years?”Any examination would need to assess whether BDO sufficiently tested transactions and exercised professional scepticism, taking account of both the applicable standards and the information available during the period.BDO has declined to comment, citing legal and professional confidentiality requirements, and retains City as a client.The political and audit questions now sit alongside the independent football proceedings, with Burnham’s promised disclosures and the regulators’ jurisdictional assessment creating further scrutiny while City pursue their appeal.