RELEVANCE TO ACCOUNTANTS
The effect of financial abuse of older people can be profound, deeply affecting individuals, families, the entire community and the economy.
The effect on the individual
The sums involved may be large or small, but even when the sums are small the effect can be devastating for the older person who may have few assets and typically will not have the time or opportunity to recover their financial losses.
The financial loss may mean that the older person can no longer afford the sort of care they need and had intended to provide for, or can simply no longer do the things they enjoy, such as travel, go out with friends, pursue hobbies or indulge their grandchildren. They may have to sell their home, leading to severe emotional stress and further social dislocation.
In addition to the financial loss, there may be loss of security, independence, self-esteem and confidence leading to ongoing fear, lack of trust and acute or chronic anxiety. The older person may become isolated, depressed and even more vulnerable to abuse. This may result in deteriorating health and possibly early death.
The late Mickey Rooney, the Oscar winning Hollywood actor, described the effect he suffered as a result of having been an alleged victim of financial elder abuse:
"When it happens, you feel scared, disappointed, yes and angry. And you can't believe that it's happening to you. You feel overwhelmed. When I asked for information I was told that I couldn't have any information of my own. What the hell are you talkin' about. I was told it was none of my business, and when you're told that you're left (to feel) powerless".
– Mickey Rooney, testimony to a the special U.S. Senate Committee on Elder Abuse, 2011
The effect on the family, the community and the economy
Financial abuse of a loved older person can result in bitterly divided families and general loss of trust, faith, confidence in all individuals involved in the family. The effect on the broader community may include negative impacts on caregivers, charitable and religious institutions, and the courts.
The negative effect on the community as taxpayers and on the economy can be substantial. In many cases the abuse will result in greater dependence on government assistance and increase the potential costs of care to the community. The assistance required may include restitution advocacy, counselling, capacity assessments, asset investigations, emergency shelter, crisis intervention, legal assistance and assistance setting up ongoing support.
Australia’s ageing population
Australians are living longer and, as the Baby Boomer generation moves into the "older persons" age group, the proportion of the population in the over 65 age group is projected to grow. The majority of older Australians own their own homes and many if not most have made some provision for their retirement. Compared with previous generations, they are relatively wealthy. With longevity will come greater numbers of people with dementia and therefore impaired capacity to make decisions for themselves.
A greater number of vulnerable people, with assets and with potential for impaired capacity, means that the issue of financial elder abuse will continue to grow in importance.
The importance of the role of accountants
The accounting profession requires that its members act ethically and professionally in the best interests of their clients – all members have a duty of care.
Additionally accountants, like all responsible members of society, should have a social and moral conscience which sees any mistreatment of older people –financial or otherwise – as being unacceptable and possibly illegal.
CPA Australia recognises that the duty of care that the accountant owes to the client is such that in the face of a suspected case of financial abuse, the accountant should not simply turn a blind eye and ought to do everything that can reasonably be done to prevent or detect instances. It is the correct thing to do in accordance with the profession’s statements on ethics and social responsibility.
The accountant has professional and legal accountability
An accountant can be in a unique position due to their professional training to recognise and understand where financial abuse may exist – either potentially or actually. This professional understanding lifts the level of responsibility of the accountant above that of the “man in the street” and in the event that a case of abuse results in court action it may be that the accountant may have to defend their actions or lack of actions against charges of negligence.
If a finance professional or institution knowingly assists a fiduciary, such as a trustee or the holder of a power of attorney, to commit a breach of fiduciary duty such as the misappropriation or the misuse of funds, he or she may be liable for loss resulting from the breach, even though the professional or institution received no benefit from the breach, and even though it was not fraudulent or dishonest itself. This is known as liability under the second limb of Barnes v Addy (PSD) – assisting with knowledge in a breach of duty by a fiduciary.
The accountant's professional duty to exercise reasonable care and skill may, in some circumstances, include the obligation to enquire as to whether a valid mandate exists. This is so, despite the potential for a conflict between the professional's duty to carry out their client's instructions and the responsibility to ensure that there is a valid mandate for those instructions.
The accountant as a trusted advisor
Accountants, particularly those in public practice, are typically persons who clients trust to know and understand financial matters which can affect them, whether it be tax, financial planning or other general financial advice.
A read of money sections of the daily press will show that correspondents are very often advised to discuss matters with their accountant before making financial decisions. This is an indication of the broad perception that the accountant is the “doctor” of matters financial and should be referred to for professional, unbiased and sound advice.
The accountant has the professional and ethical training
An accountant is likely to be in a position to both notice and understand the implications of actions that could lead to elder financial abuse. Elsewhere in this toolkit the various forms of financial abuse are discussed and it is apparent from the recognition of the forms it may take, that a client who is otherwise quite in control of their faculties may be blind to the potential abuse because of:
- the people involved (trusted friends or family)
- the complexity of the matter
- I leave all that to my accountant.
While there is no consideration that the accountant should be burdened with total responsibility, their professional competence does inevitably mean that they face a degree of accountability if no attempt is made to deal with the concerns involved.