Role of the accountant
Accountants, as trusted professionals, are required to act in accordance with the highest professional and ethical standards.
A fundamental principle is that the accountant must be objective and "not allow bias, conflicts of interest, or undue influence of others to override professional or business judgements". Another is that accountants must exercise professional competence and due care. It would be contrary to those principles for an accountant to knowingly or negligently facilitate arrangements which expose an older person to financial abuse and it would be ethically and morally unacceptable to "turn a blind eye" to abuse once suspected.
The professional must not merely follow instructions; he or she must ensure that the client is properly advised , even where they have not actively sought advice. Although specifically drafted for lawyers, Assets for care, published by Senior Rights Victoria, provides guidelines which are equally relevant to accountants and financial advisors, including:
- avoid conflicts of interest
- give comprehensive and independent advice so the older person can make an informed decision
- be fully informed
- consider your client's motives and intentions
- suggest alternative ways to achieve the desired outcome
- preferably talk to the older person alone, without the presence of the person who has influence or control over them
- suggest the client enters into a formal rather than informal arrangement, such as a Care Agreement and an Enduring Power of Attorney
- be satisfied that the older person has the capacity to make the decision
- consider whether your client, if the older person, displays capacity to act
- be satisfied that the client is not being influenced by the person seeking to receive benefit
- be satisfied that the client is entering into the transaction freely
- ensure the client receives and understands your advice
- be sensitive to cultural and language influences
- if necessary, be prepared to refer the older person to external agencies who can help
- refuse to carry out instructions which you believe are likely to be either illegal or unethical
- fully document all discussions and confirm your advice in writing to your client.
Where illegal activity is suspected, bring this to the attention of the client, encourage them to seek advice from one of the statewide elder abuse services, encourage them to report it to the police, and ensure that you thoroughly minute your advice.
The accountant should proceed cautiously, being careful to avoid taking action which does more harm to the individual and family than good.
Why professionals often retreat from suspected cases of elder financial abuse
Failure by professionals to act upon or report financial abuse of older people may in some cases be due to a lack of awareness of the issue, or to a failure to fully grasp the role of the profession in helping to address it.
Even if the professional is aware of the issue, they may not recognise its existence when it occurs. Abusive situations are often hidden from the outside world, disguised as beneficial arrangements. Victims are often reluctant to report abuse, perhaps due to fear of the consequences, shame or feelings of family loyalty. Sometimes even the victims themselves may not recognise what is happening as abuse. Perpetrators often rationalise the abusive situation. They may hold the view that the assets are really theirs, since they will inherit them anyway. They may have convinced themselves that they deserve access to the assets now, as a reward for services rendered.
The Monash University Protecting Elders' Assets Study (PDF) found evidence that, even when abuse is suspected, professionals are often reluctant to report it. This may be due to perceived confidentiality issues, or because they simply do not believe that their actions would improve the situation. They may fear that their intervention would make matters worse, and that it is better not to "rock the boat".
There may well be a strong temptation to take the easy way out, to "turn a blind eye", to focus on the function rather than the substance, to get on with the job, to pretend the matter doesn't exist.
Raising suspicions of financial abuse is not a step to be taken lightly and it is not an easy step to take. To ensure an objective response the accountant must ensure that there is no conflict of interest, in particular, he or she must avoid acting for both parties in the matter.
What you should do if you suspect abuse
The overriding concern should be that if there is sufficient reason for an accountant to suspect abuse they should not ignore it, ethically and morally that should not be an option.
Accountants may come across potentially abusive situations either:
- before the abuse occurs, such as when providing advice on retirement planning or intergenerational asset transfer planning
- after the abuse commences, when advising a client on the state of their financial situation.
- Clients have the right to make bad decisions. The accountant cannot prevent a client from making an inappropriate decision if they wish to and have the capacity to understand their course of action. The advising accountant's responsibility is to provide the best possible advice, including pointing out potential negative outcomes for the client, not to take responsibility for a client's valid, if ill-advised, decision
- Is there a potential or real conflict of interest? A conflict of interest may arise where the accountant is asked to represent both sides – particularly in a family situation.