Considerations when working with an aging client base

BY SARAH BECKETT FERENCE, CPA

  • I provide bill-paying services to my elderly client, and I’m afraid she’s going to run out of money soon. 
  • My client’s mental capacities appear to be diminishing. I’m not sure he understands the engagement letter I’ve asked him to sign.
  • My elderly client’s child has a gambling problem and always asks for money. My client gives it to him but has previously told me that she wants to be fair to all her kids. 


CPAs in the AICPA Professional Liability Insurance Program have cited these as the kinds of issues they are dealing with as the country’s elderly population grows at historic rates. The 2010 Census recorded the greatest number and proportion of people age 65 and older in census history. This aging client base presents service opportunities but also new challenges to address. According to the Alzheimer’s Association’s 2012 Alzheimer’s Disease Facts and Figures report, one in eight older Americans suffers from Alzheimer’s disease. Consequently, questions related to serving elderly clients are likely to increase.

The client may forget a name or misplace a bank statement. The CPA may notice changes in client behavior or personality. Diminished mental capacity, whether caused by Alzheimer’s disease, another form of dementia, or something else, is a complex issue. CPAs should be cognizant of the professional liability risks that may exist when working with aging clients.

PROFESSIONAL LIABILITY RISKS

Claims related to elderly clients often are similar in nature. An heir or personal representative to the client’s estate asserts the CPA mismanaged the client’s affairs and did not adequately preserve or protect the assets. He or she asserts that the CPA assisted in estate planning and missed a tax return election or provided bad investment advice and that the elderly client may not have understood the impact of decisions made due to diminished mental capacity.

Sometimes, a sympathetic practitioner may take on responsibilities outside the scope of the original engagement, such as paying bills for a tax compliance client or making maintenance requests to the client’s nursing home. The CPA may respond to questions outside his or her area of expertise, such as advising on estate planning matters or the suitability of a client’s care facility. The client may also rely on others to provide support or attend meetings with the practitioner. These interactions with third parties may present a greater likelihood that confidential client information is divulged. 

RISK MANAGEMENT CONSIDERATIONS

Be Proactive
Waiting until warning signs of diminished mental capacity appear may be too late to best mitigate professional liability risks. Ideally, the CPA should have a candid discussion with the client before potential issues surface. This discussion may be difficult or uncomfortable, but obtaining the client’s input on what to do if the CPA begins to notice a diminished mental capacity is best.

If the client wishes to designate a person authorized to make decisions on his or her behalf in the event of incapacity, identify this contact person in the engagement letter and obtain a copy of the appropriate power of attorney. If the client wants you to share confidential information with other parties, obtain written authorization in accordance with applicable statutes, rules, and regulations including Internal Revenue Code Section 7216. ( Editor’s note: The AICPA provides sample consent forms, which are available at tinyurl.com/n5ww3nc).

Be Aware
While a CPA is not a medical practitioner, professional judgment should be employed in assessing a client’s ability to understand the services provided and make decisions related to them. CPAs providing services to elderly clients should be aware of the warning signs of diminished mental capacity and be alert to changes in a client’s behavior or personality. The Alzheimer’s Association website (alz.org) provides information on warning signs for Alzheimer’s disease and other forms of dementia.

Warning Signs Starting to Appear?
If you believe your client’s mental faculties are already starting to fail, try to have a discussion with the client similar to the one described above during periods of alertness. Also, request identification of a legally authorized contact person to act on the client’s behalf if circumstances worsen. Your client may feel threatened, but open and honest communication can best serve his or her interests.

Consider modifying your style or approach to better accommodate the needs of an elderly client. Meetings may need to be shorter but more frequent. The number of topics discussed may need to be limited so as not to overwhelm the client. Consider meeting at the client’s home or another familiar setting. Appointment reminders and following up a discussion with a written summary of the meeting are good practices for any client—and are especially relevant in dealing with elderly clients.

Know When to Call for Reinforcements
Unfortunately, there may come a time when the client’s mental capacities are so diminished that it severely affects the CPA’s ability to deliver services. If a contact person has not been named in the engagement letter, the CPA may have no choice but to suspend providing services until someone is identified to help. Work with the client’s family or contact an appropriate state or government agency, which can be identified through the National Association of Area Agencies on Aging (n4a.org).

Other Risk Management Tips
As with any engagement, memorialize the scope of services in an engagement letter and identify the client’s responsibilities and the limitations on the CPA’s services. Communicate clearly to help ensure the client understands the content of the engagement letter and to avoid potential misunderstandings.

An engagement’s scope may evolve in the midst of providing services, particularly if circumstances are fluid and the practitioner wishes to accommodate the client’s changing needs. A change in service is acceptable, but the CPA should assess whether the client understands the changes in scope and memorialize the change agreement in writing. Additionally, CPAs should recognize their limitations and refrain from providing advice on matters outside their area of expertise.

WHAT IF I SUSPECT SOMEONE IS TAKING ADVANTAGE OF MY CLIENT?

CPAs may find themselves in a position where they suspect elder mistreatment, whether financial in nature or otherwise. Many state statutes require certain professionals, called mandated reporters, to inform authorities when they observe suspected cases of abuse. Some states require “any person” who suspects mistreatment of an elderly person to report it. 

The National Center on Elder Abuse website (ncea.aoa.gov/index.aspx) contains a wealth of helpful information—including state-specific reporting phone numbers, government agencies, laws, data, and statistics. A practitioner faced with a questionable situation should consult available resources and seek legal advice to determine the best course of action.

SUMMARY

While this column specifically addresses elderly clients, other clients may have similar concerns due to stroke, post-traumatic stress disorder, or other reasons. Working with long-term clients is generally a rewarding experience, and many CPAs typically find it more important to help clients when they are vulnerable. However, being aware of the risks involved in serving such clients and implementing some of the risk-mitigating strategies discussed here can be a winning combination for both the client and the CPA.

Sarah Beckett Ference ( sarah.ference@cna.com ) is a risk control consulting director at CNA.

Continental Casualty Co., one of the CNA insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program. Aon Insurance Services, the National Program Administrator for the AICPA Professional Liability Program, is available at 800-221-3023 or visit cpai.com.

This article provides information, rather than advice or opinion. It is accurate to the best of the author’s knowledge as of the article date. This article should not be viewed as a substitute for recommendations of a retained professional. Such consultation is recommended in applying this material in any particular factual situations. 

Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured.

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