Watford are under investigation by the English Football League (EFL) following allegations of supplying false financial documents to the governing body.

Here, we examine why the Hornets are under the microscope and what sanctions the club could face.

Why are Watford under scrutiny?

(Andrew Matthews/PA)

Owner Gino Pozzo is alleged to have used a forged banking letter to verify his financial status when assuming complete control of Watford from his father Giampaolo in 2014.

Gino Pozzo is alleged to have submitted the document to the EFL as proof of his financial suitability to run the club, before the 2014/15 season kicked off.

The Daily Telegraph broke the story on Monday, liaising with police and the EFL over the matter.

What have Watford said about the matter?

(Nick Potts/PA)

Watford released a statement on Monday acknowledging the EFL’s investigation and insisting the club was unaware of any previous questions regarding this document’s authenticity.

“The club had no prior knowledge of any concerns about the authenticity of the document,” said chief executive Scott Duxbury in a statement.

“The club takes this matter extremely seriously and has instructed independent solicitors to carry out an investigation into relevant matters and provide the EFL with the solicitor’s report early next month.

“The EFL has indicated it is happy with this course of action.

“In light of the ongoing investigation, it would be inappropriate to comment further at this time.”

What is the EFL’s position?

(Nigel French/PA)

The EFL has confirmed the investigation and demanded a detailed response from Watford.

“We can confirm, following receipt of information from the Daily Telegraph, that we immediately commenced a disciplinary investigation into serious allegations made against Watford Football Club,” read an EFL statement.

“The club has been formally contacted by the EFL and is now required to provide a full and detailed response to the allegations.

“Once that response is received, it will be fully considered by the EFL and appropriate action will be taken under our rules and regulations.

“We will not be making any further comment until we are in receipt of the club’s response.”

Why is the EFL conducting the investigation when Watford play in the Premier League?

(Mike Egerton/PA)

Watford were a Football League club at the time of the alleged misconduct, hence the EFL is taking the lead on the investigation.

What punishments could Watford face?

The EFL has the power to enforce fines or points deductions. There is no precedent for this case in English football, though both Middlesbrough and Portsmouth have previously been hit with points deductions by the Premier League.