Financial abuse – role of accountants

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 or 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.

Monash University’s 2009 study “Financial abuse of elders: A review of the evidence” found 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 and 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, they must avoid acting for both parties in the matter.

The overriding concern should be that if there is enough 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, or
• 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. The advising accountant cannot then 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.