What are the warning signs of financial and economic abuse?

The article is relevant to members in Australia and New Zealand and was current at the time of publication.

When financial abuse occurs, accountants are often the first to see the warning signs. The abuse can take many forms: an elderly client’s finances may suddenly be managed by an adult child, or a power of attorney may begin making decisions that benefit everyone except the person they are meant to protect. 

In a business context, the dynamics can look different and are often easier to overlook. Abuse may be embedded in governance structures, ownership arrangements or decision-making power rather than appearing as outright theft. A spouse may be listed as a company director but have little real involvement, or one partner may control all financial decisions.  

These behaviours may be misinterpreted as relationship or management issues, rather than coercive control exercised through financial systems and structures.  

Now, new guidance and resources developed by CPA Australia and community health service Each are helping practitioners identify these red flags and respond appropriately. 

“Financial abuse happens everywhere. It is not a matter of whether it will cross an accountant’s desk, but whether they’ll recognise it when it does,” says Julie Dal Pra, Small Business Financial Counsellor at Each. 

Spotting the financial abuse red flags

At its core, economic and financial abuse involves using money to control, exploit or undermine another person. Financial abuse typically centres on the misuse of funds or assets, while economic abuse extends further, which restricts a person’s ability to earn, access or maintain financial independence. 

It is more common than many accountants realise, Dal Pra says. In Australia, cases of financial abuse occur with one in six women and one in 12 men. 

“The perpetrators are often highly skilled at coercion and manipulation, not just of their partner, but of others around them. They may tell the accountant what they think they need to hear in order to achieve their desired outcome.” 

For practitioners, the warning signs are often subtle and easy to overlook in the context of day-to-day client work. Zak Hablas CPA, Principal at Assuris FIG, says his radar goes off the moment someone cannot answer a question directly. 

“If the person says the client can’t be contacted and starts offering excuses, that’s a red flag,” he says. “When intentions aren’t genuine, the responses tend to be vague and avoid directly answering your questions.” 

A consistent breakdown in direct client engagement is one of the clearest indicators, according to Dal Pra. 

“We know from our casework that in around 90 per cent of cases, the accountant never actually engages with the client,” she says. “Instead, everything is done through a third party, which is usually a spouse.” 

That gap can have serious consequences. “We see tax returns being submitted without the client’s knowledge or consent,” she says.  

“Often the explanation is that the spouse will ‘get the signature’ or ‘handle the paperwork’, so the accountant is dealing with them as a kind of intermediary.” 

The risks are not limited to immediate family dynamics. Hablas points to situations in migrant communities where trust and cultural connections can be exploited. 

“People may step in and say, ‘I’ll take care of this for you,’ particularly for newly arrived individuals who may be less familiar with the system,” he says. 

While most practitioners act in good faith, maintaining professional boundaries is essential. “If something doesn’t feel right, that’s when you have to stop and say, ‘I’m not going any further with this,’” Hablas says. 

Looking to the future 

Relying on third parties to relay instructions or manage financial affairs on a client’s behalf can carry significant risks, with the consequences often only becoming apparent much later, says Dr Sarah Osborne CPA, Senior Lecturer of Financial Accountancy and Corporations Law at Queensland University of Technology. 

“Our research shows that economic and financial abuse isn’t just about who holds the strings anymore. It’s not just about who’s controlling the money. It’s really about who is engineering the other person’s economic future and economic outcomes,” she says. 

Accountants should consider whether arrangements are balanced and flexible, or whether they disproportionately advantage one party either now or over time. 

“Economic and financial abuse is rarely confined to the present,” she says. “More often, it plays out over years, shaping financial trajectories and entrenching disadvantage long before the impact becomes visible.” 

Responding in practice 

For accountants, responding appropriately requires diligence and documentation. 

First, basic verification steps are critical, Dal Pra says. “There needs to be direct engagement with the client, whether that’s face-to-face, over the phone or via video. Without that, you can’t be confident you’re acting on their instructions.” 

Clear communication protocols can also make a significant difference. Engaging each party individually, using separate email correspondence, and confirming informed consent for financial arrangements helps ensure transparency and protects both the client and the practitioner. 

The legal landscape is also evolving. Changes to the Family Law Amendment Act 2024, which took effect in June 2025, explicitly recognise economic and financial abuse as a form of domestic and family violence, Osborne says. 

Osbourne maintains, in future, accountants’ records, file notes and correspondence could be increasingly being subpoenaed in family law matters. These documents can provide crucial evidence of patterns, timing and intent, particularly where abuse is not immediately visible. 

“Practitioners should now operate under the assumption that every record they create may later be relied upon in court. Previously, it was less common for accountants or tax practitioners to be subpoenaed for their notes outside business structures, but this is shifting as courts look at the timing and future impact of past accounting decisions,” she warns. 

What questions to ask

Knowing what questions to ask is a critical part of due diligence when financial abuse is suspected or if there is a power imbalance between parties. 

Questions an accountant may ask themselves: 

• Do the proposed structures create uneven risk or control between parties? 
• Who benefits in five to ten years’ time? 
• Does this arrangement advantage one party in the short term while disadvantaging the other in the long term? 
• If the relationship ended tomorrow, how would each party be positioned financially? 
• Who carries the risk if the business fails or there is a tax liability? 
• Is the person taking on the risk the same person receiving the benefit? 
• Who has access to bank accounts, online platforms or accounting systems? 
• Has anything been lodged or signed on behalf of a client without their clear involvement? 
• Why was the other party not present at the meeting? 
• Why has the client presented several years’ worth of outstanding tax returns at once? 

Questions an accountant may ask clients: 

• I need to speak with you directly before proceeding. Can we arrange a time to talk privately? 
• Are you aware that you have been appointed as a director of this company? 
• Do you understand your role and responsibilities as a director? 
• Are you aware that directors can be personally liable for certain debts, including unpaid tax and superannuation? 
• Can you describe, in your own words, your role in this business or trust? 
• Would you prefer future communications to come directly to you? 
• Would it help to have time to think this through before making a decision? 
• Can you help me understand why this structure is needed, from your perspective? 
• Before I proceed, I need to clarify whose instructions I am acting on – can you confirm this? 
• Is there anything about this situation you think I should share, that has not come up yet? 
• Can you walk me through the reasons for moving funds between these entities?