A CPA’s role …..
can be instrumental in helping people stay financially safe as they age. Older clients and their families can avoid costly accounting mistakes by discussing with their CPA about their family situation. A CPA is able to notice if clients seem to be having any changes in their abilities to manage their own affairs. CPAs are in a unique position to help with our growing older adult population.
Did you know that financial issues are often one of the first signs that a person may be struggling with a dementia-related condition? It can help enormously if the CPA has already had conversations with clients about what happens if they become incapacitated and what the client can do if they are being taken advantage of financially. The client needs to identify a trusted individual that a CPA can contact in such a situation, and keep written permission on file to avoid violating any confidentially rules and current power-of-attorney documents.
Because of our professional reputation, we are already trusted advisors. We can see the entire picture — the economic impacts on the individual, their family and our economy. We understand the intricacies of financial fraud and how to work with regulators and we know about putting controls in place to protect assets.
A CPA can also discuss with his clients on how to cover the financial costs of aging relatives. A CPA can inquire if children live in the area, whether any new caretakers have entered their lives (who seem to answer questions for the client) and even if the client was approached by a family member or someone else in their life and asked to give them money or invest in some type of business or project.
It is the CPA’s very familiarity with the client over a long period of time that provides a baseline for recognizing changes in the client’s behavior. The CPA may have to decide if a client’s changing behavior and diminishing mental capacity are interfering with the CPA/client relationship. The CPA must rely on his or her best professional judgment as to which actions to take. CPAs will never make a medical diagnosis, but they can make communication changes with clients to accommodate sensory and cognitive impairments.
Some services that a CPA can provide.
A CPA can ask about the names of beneficiaries and trustees, as well as who has power of attorney and health surrogate powers. He keeps that information on file for each client, even if he or she is not currently dealing with memory loss or capacity issues. A CPA can offer services to their clients from quarterly to annual meetings and a service to reconcile bank statements to scenarios where the CPA has the authority to pay for a person’s day-to-day care at a nursing home or similar facility.
Having the information on hand — and easily accessible — can be enormously helpful if the situation changes and a CPA needs to help family members or others suddenly navigate a person’s finances.
A CPA will review any information at annual meetings to make sure things are up to date and that there haven’t been any changes in patterns or behaviors that seem out of character for the client and if the CPA suspect something, he/she can talk with the client, or appointed trustees, to try to find a way to resolve any issues before they become major problems.
Engagement letters and legal documents.
Anticipating the cognitive problems your clients may have is the best preparation. According to the AICPA publication CPA ElderCare/PrimePlus Services: A Practitioner’s Resource Guide, it is recommended that the engagement letter include the name of a contact person designated to make decisions on behalf of the client should the client lack capacity. The contact person should hold the appropriate durable power of attorney that permits him or her to act in case of mental incapacity. Periodically, the engagement letter should be updated or, at the very least, the contact person named in the original letter should be reconfirmed. If the contact person has since died or is unwilling or unable to perform, a new contact plerson must be named.
If the contact person has since died or is unwilling or unable to perform, a new contact plerson must be named.If the CPA finds that there is no contact person or that the contact person is no longer willing or able to perform the duties, you may still be able to ensure the appropriate documents are in place. According to Pam Smith, education coordinator at the Rush University Alzheimer’s Disease Center in Chicago, individuals in the early stages of Alzheimer’s have lucid moments. During these moments of lucidity, the client can name the contact person and sign the documents. It is important for the CPA to obtain the appropriate written permission to discuss concerns with the contact person. Rule 301 of the AICPA Code of Professional Conduct imposes a duty on members to protect the confidentiality of client information. If the client does not grant permission, it may be difficult for the CPA to discuss the client’s situation. And if the client does not have an attorney, a CPA can recommend the counsel of an elder law attorney.
Signs of exploitation of a client?
How can a CPAs spot signs that a client may be at risk of financial exploitation and report those concerns? They look for the warning signs. There are not hard-and-fast signs as to when someone is being exploited. That said, it is important to be aware of what could signal an issue. If a CPA is seeing erratic spending patterns, cognitive issues coupled with erratic behaviors, missing possessions, money missing or withdrawn from banks and investment accounts, and unpaid bills then this is a warning sign that something is amiss. If a CPA has suspicions there might be something amiss, but it is not something the CPA can conclusively prove, the CPA makes note of their concerns. Documenting the precise details of the CPA’s observations can help piece things together later if more issues arise.
What a CPA does when he/she sees decline in a client?
While it is often unpleasant, a CPA needs to have a discussion with the client when the CPA first detects problems. Even long-term clients may resent the CPA broaching the topic and challenging the client’s qualifications. But a CPA is not making a diagnosis; he/she is merely discussing the problems the CPA is experiencing in working with the client.
What exactly is DEMENTIA?
Dementia can be caused by more than 70 diseases and conditions. Alzheimer’s disease is a type of dementia. Although rare, temporary dementia may be caused by other health issues.
Alzheimer’s consists of three stages: mild or early stage, moderate, and severe or late stage. As the disease progresses, the symptoms become more obvious. During the mild stage, a CPA may first notice that the client is undergoing changes in personality and experiencing memory loss.
In particular, the client may have trouble remembering recent events but be able to recall events that took place years ago. Communication problems also become evident. These problems include trouble finding the right word, difficulty understanding what a word means, and problems paying attention. Personality changes include becoming more easily upset and worried more than normal and believing other people are hiding things. The client may also have more trouble than usual managing finances. This is because the client slowly loses the ability to solve simple math problems, to balance a checkbook, and to plan and organize.
It is during the mild stage that the CPA may become concerned and question whether the problems are beginning to interfere with the professional relationship.
The 10 Symptoms & Warning Signs of Dementia:
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1. Memory Loss. |
6. Problems with |
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2. Difficulty |
7. Misplacing |
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3. Problems with |
8. Changes in mood |
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4. Disorientation |
9. Changes in |
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5. Poor or |
10. Loss of |
There is no clear line that separates normal changes from warning signs. The early signs of dementia are very subtle and vague and may not be immediately obvious to family members but a CPA may notice them early.
What changes can a CPA do to help the client?
When problems first become apparent, a CPA may also consider making changes to the practice incorporating procedures to accommodate a client’s diminished capabilities like:
- Schedule meetings during the time of day the client tends to be more comfortable and aware and make meetings shorter but more frequent.
- Focus on just one or two topics per meeting.
- Invite the client to bring a spouse or a trusted family member to the meeting.
- Follow up each meeting with detailed notes to send the client. For clients with more severe memory problems send a copy of meeting notes (with the client’s permission) to a family member.
- In the notes, be clear regarding who is responsible to take what action and any agreed-upon deadlines.
- It may be useful to assign an assistant to make “reminder calls” to the client the day before a meeting.
- A CPA might also meet the client in his or her home. For individuals experiencing memory loss, familiar surroundings are best. By doing this, the client does not have to deal with the stress of getting ready for the meeting and driving to the office and arriving there—on time. All of that takes energy that may make it difficult for the client to focus.
When Dementia interferes with the CPA/client relationship.
Despite all the planning and effort, the client’s incapacity may reach a level that severely interferes with the CPA/client relationship. If a contact person is named in the engagement letter and is still able and willing to perform, it is recommended that the CPA call the person in.
In some circumstances when no contact person or family member is available, the CPA may consider contacting a state or local government agency that provides services to seniors. Many states impose a duty to report individuals who may be prone to “self-neglect.” State laws supersede the AICPA Code of Professional Conduct. State law may also impose an affirmative duty on the CPA to report suspected physical abuse, neglect, or financial exploitation of an elderly client.
Overall, it may be said that the aging of our society is a personal and professional challenge for many people. CPA’s will experience it within their own families. But while the challenges are great, so is the opportunity for professional satisfaction by learning to work successfully with vulnerable clients and their families. If you suspect a family member is having trouble with their finances talk with them and their CPA about it.