By Wanda I. DeLeo, C. Angela Letourneau, and J. Gregory McCleymore

The needs of senior Americans are mushrooming. Busy families frequently do not have the time or capability to effectively supervise the needs of seniors. Frequently, seniors require assistance managing a portfolio of securities and retirement funds from several sources, maintaining a home, and allocating financial resources. Many spend years in an assisted living environment, where some guardian must guarantee that services are indeed performed. There is a growing demand for professionals that can serve this eldercare market.

The primary professional skills for eldercare are accounting, investing, scheduling, forecasting, budgeting, and auditing. Also required is competence in evaluating the quality of eldercare services, determining reasonable costs of services, directing the employment of emergency services, and monitoring client care. Another challenging aspect of eldercare is that a younger relative will generally pay the fee for services for the elderly client.

Eldercare Assurance

Since May 1997, the AICPA Special Committee on Assurance Services’ Eldercare Task Force has been working to develop eldercare assurance services, which could include traditional accounting services as well as measuring how effectively care providers meet goals established by a third party or client. These procedures might include: accounting for routine financial transactions, supervising investments, accounting for the estate, and investigating unexpected situations. Providers of eldercare assurance may also be required to inspect logs, diaries, contracts, laws, or other evidence to determine whether caregivers are meeting performance criteria. Periodic reporting to children or other family members on the activities of the elder, and on the degree to which care providers are meeting established criteria, is central to meeting the desires of purchasers of this service. In addition to the familiar tasks of auditing, accounting, and reporting, eldercare requires significant personalized selling and involvement in service management.

Need for Eldercare Service

A nationwide survey was conducted for the AICPA Special Committee on Assurance Services to evaluate the attitudes and concerns of Americans regarding the care of an aging parent or close relative. The study revealed that 89% of high-income Americans ages 40 to 64 said that they would be at least “somewhat likely” to use the services included in eldercare assurance if the need arose. Fifty-one percent said they would be “very likely” to use such services (AICPA 1996). Many of the respondents cited trustworthiness as the most valuable service eldercare professionals could offer the elder and the family. Reliability, compassion, and a high quality of service also ranked high.

This survey reveals that CPAs are ideally positioned to play a larger role in the eldercare market. CPAs have a reputation for independence, trustworthiness, and objectivity. In fact, CPAs are already providing some part of eldercare assurance service within their traditional accounting services.

Analysis

The authors conducted a study to determine the interest and desire of South Carolina CPA firms in offering eldercare assurance services. The survey results revealed the following:

The results of the survey are shown in the Exhibit 1, Exhibit 2, Exhibit 3, Exhibit 4 and Exhibit 5. The results indicate that although CPAs are more comfortable with offering traditional accounting services, like estate and investment planning, they are interested and willing to move into more nontraditional areas like supervision of household expenditures, reporting on the degree of care received, and inspecting care facilities. Last, the survey pointed to an interest and desire for training in this nontraditional area.

As with this or any other new service area, consideration must be given to the challenges presented by the practice area, such as the competition, potential marketplace, anticipated revenue, and profitability, as well as liability risks.