The aging of the Baby Boom generation will create more targets for perpetrators of elder fraud. Here’s how CPAs can keep older clients from falling prey:
Be able to recognize the many types of fraud. There are several types of elder financial abuse. One is theft, usually carried out by family members, friends, or neighbors. Two-thirds of the time, financial abuse is committed by family members, according to The New York State Cost of Financial Exploitation Study.
Another is internet and phone scams. For instance, impostors may call older people posing as the IRS and demand payment of back taxes under threat of arrest. There are also Medicare, lottery, and grandparent scams. In the latter case, scammers call posing as seniors' grandchildren to ask for money.
"The con artists will go on Facebook and see who [clients'] connections are, and they'll call knowing who their grandkids are," said John Bunting, CPA/CFF, who volunteers with the First Judicial District Elder Abuse Unit in Jefferson County, Colo. "They're very convincing ... and have an urgency."
Educate your clients. Let your clients know about common scams. By raising clients' awareness, you can help them know when something is suspicious, said Mitchell Freedman, CPA/PFS, president of MFAC Financial Advisors in Westlake Village, Calif. Inform younger clients, too, so they can keep tabs on their elderly parents.
Get to know the family. Establishing a relationship with clients' adult children early on can help facilitate communication. Encourage clients to give you consent to engage their adult children years before any issues arise.
"Your engagement letter can allow you to speak with family members" if you suspect fraud or abuse, Freedman said. "You can be the eyes and ears for that family."
In addition, if you think a client may have fallen victim to a scam, and you have the client's specific consent to inform a third party of your suspicions, consider contacting an adult protective services department and local law enforcement. (Notifying a third party without the client's specific consent is a violation of the "Confidential Client Information Rule" (ET §1.700.001) in the AICPA Code of Professional Conduct.)
Check for fraud at tax time. Unusual activity on a client's tax returns can be an indicator that something is wrong. "What if their 1099s and distributions are much larger, all of a sudden, than they have been?" noted Karen Webber, CPA, founder of Webber CPA in Rochester, N.Y. "That should set off some alarms."
Offer oversight. Studies show that managing money is among the first skills to go when dementia and memory problems set in. CPAs can help elderly clients with daily money management, Webber suggested. Technology can facilitate this process. Services such as EverSafe, for example, help to monitor bank and investment accounts, alerting clients and family members to suspicious activity. SilverBills is a bill-paying service geared toward seniors and their families.
Editor's note: This checklist is excerpted from "How CPAs Can Help Prevent Elder Fraud," CPA Insider, May 7, 2018.
— Ilana Polyak is a freelance writer based in Massachusetts. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, a JofA editorial director, at Kenneth.Tysiac@aicpa-cima.com.