Inquiries by the Independent established that Michael Henshaw, owner of the north London firm, is a former tax inspector who has taken no accountancy examinations and is not affiliated to any professional accountancy body.
Although he told clients that he was not authorised to audit accounts, his firm accepted auditing work in contravention of the Companies Act. Shaun Hughes, a spokesman for Michael Henshaw and Associates, said last night that Mr Henshaw had complied with company law by having a qualified employee audit
But corporate lawyers and the three major professional accountancy bodies said his firm should never have audited company accounts for Mr Birt.
The Independent's findings came as the Director-General of the BBC faced growing demands to name the secretarial assistant for whom he charged pounds 15,000 as an expense in the accounts of John Birt Productions Ltd, into which his BBC salary - believed to be about pounds 150,000 - has been paid since 1987.
A report in the Financial Times yesterday that his wife, Jane, was the secretary, as well as a director of the company provoked widespread criticism. However, the BBC said Mr Birt would not discuss details of his private
A review of Mr Birt's company returns by the accountants Ernst & Young this week found that his tax arrangements saved him pounds 810. But if Mrs Birt received the pounds 15,000 salary, as well as pounds 14,000 for being a director, then, according to one tax expert, the saving could have been pounds 1,975.75.
Mr Birt's audit must raise questions over the validity of his company's accounts. A person wrongly presenting himself as an auditor is liable for prosecution and a fine of up to pounds 5,000. The Secretary of State for Trade and Industry has powers to order accounts to be reaudited, but it is not clear whether this would apply to papers filed before changes in the law in October 1991.
Mr Birt's accountants said they had complied with the law and Mr Henshaw's arrangements had been cleared with an official at Companies House in Cardiff - something Companies House was not able to confirm yesterday.
Under the 1985 Companies Act - which was updated in 1989, but which is relevant for the accounts filed for Mr Birt - a person was authorised to audit limited company accounts if he or she was a member of the Institute of Chartered Accountants in England and Wales, or Scotland or Ireland (ICA); the Chartered Association of Certified Accountants (ACCA); or the Association of Authorised Public Accountants (AAPA).
In certain cases, individuals could be registered with the Department of Trade and Industry. Mr Henshaw was not. Tim Anderson, a corporate partner of the City law firm Reynolds Porter Chamberlain, said that when a company appoints a firm of
auditors to do its accounts, the
partners of the firm take
'At least one partner would have to be an authorised auditor under the Act,' he said.
That view was supported by the ICA, ACCA and AAPA. But Mr Henshaw is the sole owner of his firm, according to his spokesman, Mr Hughes.
Anthony Booth, under-secretary of the ACCA, said: 'This firm should not have accepted the appointment (as auditors). There is a legal requirement that you are a member of a recognised body in order to accept the appointment. It does not make it all right to say that an authorised employee had been appointed to act as auditor.
'If the employee were a member of ours, we would take disciplinary action unless he was in practice on his own account. He should not accept the appointment as auditor if the auditor
appointed was not authorised.'
Bruce Picking, director of practice regulation at the ICA, said: 'I have never heard anyone argue that a firm with no authorised principals can be appointed because it has an employee who is authorised.'
Mr Henshaw, jailed for 24 hours in 1977 for disobeying a court order to hand over a client's accounts, refused to comment.Reuse content