Jack is agitated. He has been a client for 10 years, and is now 80 years old. He lost his wife of 40 years a year ago.
At your last meeting six months ago, Jack was engaged and paid close attention. Today, he is easily distracted. While he has trouble remembering recent events, he can recall small details about events that happened long ago. He is obsessed with an $8,000 loan he made to his company (now run by his son) 25 years ago. He wants you to “dig into the details” and find out if it was repaid. He also wants to make sure that any interest paid on the loan was reported properly. He asks you to obtain a copy of his 1985 and 1986 federal income tax returns. He also wants you to go through his personal financial records to determine if the loan was repaid— if not he’ll confront his son with the evidence and demand repayment. Jack wants to make sure his son knows he’s “paying close attention.” Jack becomes agitated when you ask him to consider whether the time and expense of tracking down the transaction is worth the effort. He tells you to “get to work on this.” You leave the meeting concerned. The project will take many hours of professional time and result in a large bill to Jack that can’t be justified. Previously, Jack had expressed pride in how well his son was running the company but now is suspicious. You’ve known Jack a long time. Jack’s personality and his mental abilities are changing right before your eyes.
What actions, if any, should a CPA take if he or she suspects a client has diminished mental capacity? In an aging society, this is not a hypothetical question. The CPA’s client base is living longer. Along with the benefits of aging can come challenges such as diminished mental capacity that may interfere with the CPA/client relationship. The problem will grow in the years ahead. Now is the time for practitioners to think through these issues and the related practice management implications.
CPAs should never make a medical diagnosis, but it is important to have a basic knowledge of the health challenges older clients may face. Just as you might make office space changes to accommodate the physical challenges of some older clients, you should also make communication changes with clients to accommodate sensory and cognitive impairments.
AN INTRODUCTION TO DEMENTIA
Diminished mental capacity among the elderly is a complex issue that can have many causes. Dementia is one type of diminished mental capacity. A diagnosis of dementia requires a set of symptoms to be present (see sidebar, “The Symptoms and Warning Signs of Alzheimer’s”).
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, for example, a urinary tract infection, substance abuse or vitamin deficiency. More commonly, dementia is a permanent, progressive and irreversible condition. According to the Alzheimer’s Association’s 2009 Alzheimer’s Disease Facts and Figures, Alzheimer’s is the most common cause of dementia, present in 70% of cases.
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 than normal and believing other people are hiding things. The client may also have more trouble than usual managing finances. This is because he or she 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 Symptoms and Warning Signs of Alzheimer’s
According to the Alzheimer’s Association, Alzheimer’s is a progressive disease of the brain that causes problems with memory, thinking and behavior. The 10 warning signs of Alzheimer’s include:
1. Memory loss.
2. Difficulty performing familiar tasks.
3. Problems with language.
4. Disorientation to time and place.
5. Poor or decreased judgment.
6. Problems with abstract thinking.
7. Misplacing things.
8. Changes in mood or behavior.
9. Changes in personality.
10. Loss of initiative.
There is no clear line that separates normal changes from warning signs. See Basics of Alzheimer’s Disease at alz.org.
PRACTICE MANAGEMENT IMPLICATIONS
While it’s often unpleasant, you need to have a discussion with the client when you first detect problems. Even long-term clients may resent your broaching the topic and challenge your qualifications. But you are not making a diagnosis; you are merely discussing the problems you are experiencing in working with the client. You could very well lose the engagement. You may get fired or need to resign because you believe the situation has become untenable. The problems cannot be ignored, and changes to your practice management may be required.
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 take action 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 person must be named.
If you find 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 maybe difficult for the CPA to discuss the client’s situation.
If the client does not have an attorney, consider recommending him or her to seek the counsel of an elder law attorney.
Enhancing your client’s capabilities. 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 has to rely on his or her best professional judgment as to which actions to take.
When problems first become apparent, the CPA may consider:
Some problems may be only temporary. The recent death of a spouse, changes in medications, illnesses and infections may cause temporary problems. If the problems appear to be temporary, suggest rescheduling the meeting or cutting the meeting short. Recommend the client delay making decisions.
If an older client is exhibiting ongoing problems, consider changing how you communicate to accommodate your client’s limitations. If it appears the client is struggling, it may be best to shorten the meeting and suggest you finish at a later date (see sidebar, “Communication Skills”).
You may also consider making changes to your practice procedures to accommodate a client’s diminished capabilities:
Make meetings shorter but more frequent.
Schedule meetings during the time of day the client tends to be more comfortable and aware.
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.
Smith of the Rush Alzheimer’s Disease Center recommends meeting the client in his or her home. For individuals experiencing memory loss, familiar surroundings are best. In addition, 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 Alzheimer’s 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.” In Illinois, for example, a CPA is immune from criminal, civil or professional disciplinary action if he or she files a report with the Illinois Department on Aging if the CPA believes that doing so is in the best interest of the elderly person. 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. You should try to become familiar with the law in your state.
The aging of our society is a personal and professional challenge for CPAs. Many CPAs will experience it within their own families. Professionally, CPAs face challenges providing services to clients with mild to moderate Alzheimer’s. But while the challenges are great, so is the opportunity for professional satisfaction by learning to work successfully with vulnerable clients and their families.
Experts provide the following tips for communicating with a person who has Alzheimer’s. The tips may or may not apply to an individual depending on the severity of the client’s Alzheimer’s:
During the mild stage of Alzheimer’s disease, a CPA may notice that a client is having trouble communicating and/or undergoing personality changes. The client may have trouble remembering recent events yet be able to recall events that took place years ago.
Problems associated with Alzheimer’s can interfere with the CPA/client relationship. If you suspect a client is suffering from diminished mental capacity and are having problems with the professional relationship as a result, you must address the issues by having a frank discussion with the client. You could still lose the engagement by being fired or having to resign from a situation that has become untenable.
Anticipating the cognitive problems your clients may have is the best preparation. The AICPA publication CPA ElderCare/PrimePlus Services: A Practitioner’s Resource Guide recommendsthat the engagement letter include the name of a contact person designated to make decisions on behalf of the client. If a contact person is not available, there may be opportunities to make sure the appropriate documents are in place.
CPAs who have a longstanding relationship with a client are in a position to recognize 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 and what actions should be taken.
When a client’s incapacity reaches a level that severely interferes with the CPA/client relationship, other measures should be considered. If a contact person is named in the engagement letter and is still able and willing to perform, the CPA should initiate the call. If no contact person or family member is available, the CPA may consider contacting a state or local government agency that provides services to seniors.
James Sullivan (email@example.com) is a member of the AICPA ElderCare/ PrimePlus Task Force. Janet Sullivan (firstname.lastname@example.org) is a sole practitioner who specializes in Medicaid planning, estate planning and guardianship.
To comment on this article or to suggest an idea for another article, contact Loanna Overcash, senior editor, at email@example.com or 919-402-4462.
Adviser’s Guide to Counseling Aging Clients and Their Families (#091024)
CPA ElderCare/PrimePlus Services: A Practitioner’s Resource Guide (#022511)
The CPA’s Guide to Long-Term Care Planning (#017259)
Professional Ethics: AICPA’s Comprehensive Course, a CPE self-study course (#732312)
Real World Business Ethics: How Would You React?, a CPE self-study course (#731686)
For more information or to make a purchase, go to cpa2biz.com or call the Institute at 888-777-7077.
PFP Center and PFS credential
Membership in the Personal Financial Planning (PFP) Section provides access to specialized resources in the area of personal financial planning, including complimentary access to Forefield Advisor. Visit the PFP Center at aicpa.org/PFP. Members with a specialization in personal financial planning may be interested in applying for the Personal Financial Specialist (PFS) credential. Information about the PFS credential is also available at aicpa.org/PFP.
National Institute on Aging, www.nia.nih.gov. Click on “Alzheimer’s Disease Information.”
National Academy of Elder Law Attorneys, naela.org