Do you have clients who are single elders with no family, but have a regular visitor, such as a gardener, shopper or caregiver?

Perhaps you have a client who is a surviving spouse with some degree of dementia and is a co-trustee with another person? Or maybe the surviving spouse is the trustee, but is no longer able to act.

Maybe you have an elderly client with a living trust that is not supervised.

These are just some of the many elder client scenarios that should raise red flags to CPAs. With America’s population aging at a staggering rate, and with so much wealth transferring between generations, the potential for financial elder abuse is high.

Sensitivity to financial elder abuse, training and staying current on the subject are keys for CPAs to spot potential problems.

Years ago, I had a client who suffered financial elder abuse. At the time there were few, if any, elder abuse resources specifically for CPAs. But now, this emerging area of concern is gaining attention. CalCPA’s Personal Financial Planning Committee provides an ElderCare Resource Guide, www.calcpa.org/members/committees/PFP/eldercareresource, that details many resources.

An article titled “Fighting Back” by Vanessa Hill in the March/April 2005 California CPA details the vulnerabilities of elders and the different types of financial abuse that can occur.

Hill states that more than two-thirds of reported elder abuse cases involve family members. Since CPAs are often one of the few advisers in a position to get to know family members, they have a unique ability to render essential assistance to elders.

One of the more prominent warning signs of elder abuse is isolation. When a person asks to visit or speak to an elder, the perpetrator tells the visitor that the elder does not want to see them or gives a similar excuse. The perpetrator then tells the elder that nobody but the perpetrator loves them anymore and that no calls or visits have occurred. This is a violation of California Welfare and Institutions Code Sec. 15610.43. The ultimate of all stories is then told to the elder: if any government, social worker or other person asks the elder any questions, it is only for the purpose of placing the elder in a nursing facility. This statement shocks the elder into silence, afraid of speaking even to those who are sincerely trying to help.

So, be on the lookout for warning signs, listen to all of the family members and talk to your client privately—and often.

For CPAs seeking financial elder abuse resources, help may be around the corner. A little-known, but highly valuable, tool for combating financial elder abuse—a Financial Abuse Specialist Team, or FAST—is taking hold in some counties in California.

Los Angeles County formed the first FAST in 1993.

Each FAST team differs from county to county. In Santa Barbara, for example, there are more than 40 government agencies and private industry representatives on the team, which we established in 2004.

The team includes representatives from the FBI; police and sheriff’s departments; district attorney’s office; Adult Protective Services; Long-Term Care Ombudsman; Area Agency on Aging; county mental health; Alzheimer’s Association; Visiting Nurses and Hospice; Social Security Administration; the Public Guardian’s office; a real estate title company; banks, elder law attorneys; a CPA; a CFP; health care workers; legal aid; persons qualified to do geriatric assessments; and others. Agencies that work with dependent adults over 18 also are represented.

All 40-plus members gather monthly to hear cases and give free and confidential advice about possible solutions.

Anyone can submit a case by calling a FAST coordinator. Depending on the case, they may write a summary of the case facts (sanitizing any names or other identifying information), and the coordinator may schedule the case to be heard at the next FAST meeting. This can be a good resource for the CPA.

It is best to contact your malpractice insurance carrier prior to submitting any case to FAST.

Some counties do not have a FAST, but rather a Multidisciplinary Team (MDT). The MDTs generally assist with health and other care issues, and they may be able to assist with financial elder abuse. Alternatively, the CPA may be able to help bring a FAST to their county.

For a listing of the various counties’ and states’ FASTs or MDTs, visit the Council on Aging for Orange County at www.coaoc.org/FAST.html and click on “Prevention Teams,” or visit CalCPA’s Eldercare Resource Guide, www.calcpa.org/eldercare.htm.

Most California CPAs with elder clients are familiar with the Revenue and Taxation Code and the Probate Code. Another code the CPA should be familiar with is the California Welfare and Institutions Code (W&I Code), which defines “abuse of an elder” in Sec. 15610.07 and “financial abuse of an elder” in Sec. 15610.30.

It is critical that CPAs understand the rules that govern other professionals who may be working with the elder. Sec. 15630 of the W&I Code defines “mandated reporters” as those who must report any “suspicions” of elder abuse. If a mandated reporter doesn’t report such suspicions, the penalty is generally up to $1,000 or six months in jail.

While CPAs are not mandated reporters, as protectors of the public trust, the sooner CPAs familiarize themselves with elder abuse issues and solutions, the better chance they have of dealing with the complexities of financial elder abuse.

California attorneys are not required to report suspicions, due to the attorney-client privilege. Clergy are considered “mandated reporters,” but generally not for information obtained in confession or confidence.

Even if professionals are able to report elder abuse, elders themselves can throw up roadblocks. Some elders know their children are stealing from them, but continue to allow it. Another problem is that the elder often is embarrassed that any financial crime may have occurred, and may be hesitant to tell the CPA.

There are a myriad of privacy issues to deal with before CPAs can report financial elder abuse. For starters, the AICPA Code of Professional Conduct Rule 301 states, “a member in public practice shall not disclose any confidential client information without the specific consent of the client.” Confidentiality requirements also are found in state and board accountancy laws and rules.

Additionally, IRC Code Secs 7213 and 7216 deal with the unauthorized disclosure of tax information.

At the federal level, the Gramm-Leach-Bliley Act addresses privacy and imposes additional requirements on CPAs.

Ideally, your client would report the abuse and seek help, but by the time your client needs help, they may lack the judgment to ask for it.

If the CPA knows of a problem and does nothing, might it be possible for a disgruntled heir to later suggest that the CPA aided and abetted, or was an unwitting accomplice?

Since the California statute of limitations to sue a CPA is two years, or more in some situations, from discovery (not date of service), do you even want to leave that option open?

There are several concepts in the Sarbanes-Oxley Act, SAS 99, and other recent publications that may provide some clues as to how the future may judge us. Among these include the desire for the CPA to maintain a heightened skepticism, and to look at even small badges of fraud. Being proactive seems to be a good rule of thumb.

W&I Code Sec. 15634(a) says that a non-mandated reporter (such as a CPA), “reporting a known or suspected instance of elder or dependent adult abuse, shall not incur civil or criminal liability as a result of any report authorized by this article, unless it can be proven that a false report was made and the person knew that the report was false.”

Also, a “reasonable suspicion” is defined in W&I Code Sec. 15610.65 as “an objectively reasonable suspicion that a person would entertain, based upon facts that could cause a reasonable person in a like position, drawing when appropriate upon his or her training and experience, to suspect abuse.” Additionally, attorneys have advised that the truth is an absolute defense against slander.

I’ve considered allowing my clients to give me permission ahead of time to disclose information in given situations, but this issue is fraught with legal and emotional complexity. The simplest agreement might be one drafted by an attorney that would treat the CPA “as if” they were a “mandated reporter” under California law and would thoroughly list, define and approve the various privacy issues.

The first step that CPAs should take is to call their malpractice insurance carrier and tap into their experience and legal resources. Since most policies require CPAs to report to the carrier at the first hint of a potential claim, contacting the carrier from the beginning is a good rule of thumb.

CPAs can’t rely on something they’ve read to determine their liability risk, and should obtain formal legal advice on their situation. Many policies provide such advice free of charge.

Additional considerations in contacting your carrier include:

• You may not agree with the action, or lack of action, the carrier wishes;
• Once something is reported to a local agency, its treatment or disposition is most likely out of your hands forever. Your client may not be able to stop the process even if they change their mind. This may have a negative impact on your relationship with your client; and
• Even if an investigation is started, your client may change their mind and refuse or withdraw consent to the investigation at any time under W&I Code Sec. 15636(a), unless the abuse has risen to the level of a crime under Penal Code Sec. 368.

Gloria Molnar, CPAis a Santa Barbara-based sole practitioner and was a member of the task force that brought the FAST to Santa Barbara County. You can reach her at gmolnar@silcom.com or (805) 962-6334.