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Read this article if you are responsible for preparing or reviewing governmental financial statements for governmental agencies.

The Governmental Accounting Standards Board (GASB) issued Statement No. 105, Subsequent Events to enhance the transparency, consistency, and value of financial reporting related to events that occur after the financial statement date, but before the financial statements are issued. The statement realigns existing guidance by clearly describing the subsequent events' time frame, distinguishing between recognized and non-recognized subsequent events, and providing specific disclosure requirements. 

Why GASB issued Statement No. 105 

Preceding guidance on subsequent events existed within the GASB literature. However, governmental entities and auditors sometimes differed in their determination of what events should be recognized in the financial statements and what should be disclosed in the notes to the financial statements. Also, there were differing interpretations regarding how long subsequent events should be evaluated. As a result, GASB 105 seeks clarity by establishing clear definitions and precise disclosure requirements, with the intention of improving comparability and transparency for financial statement readers.

Defining subsequent events and the evaluation period 

GASB 105 clearly defines subsequent events as transactions or other events that occur after the date of the financial statements, but before the financial statements are available to be issued. 

The guidance defines the date the financial statements are available to be issued as the date when: 

• The financial statements are complete in form and format that comply with generally accepted accounting principles
• All approvals necessary for issuance have been obtained

This clarification is important because it provides an endpoint for evaluating subsequent events across all governmental entities. GASB 105 also stipulates that governmental entities disclose the date through which subsequent events were evaluated, providing financial statement readers more transparency pertaining to the scope of management review. 

Recognized and non-recognized subsequent events 

A critical feature of GASB 105 is the clear distinction between recognized and non-recognized subsequent events. 

Recognized subsequent events are those that provide additional context about conditions that existed as of the financial statement date. These occurrences impact amounts or estimates reported in the financial statements, and therefore, require adjustments to the financial statements. 

Examples may include the following: 

• Information received after year-end that confirms the impairment of an asset that existed at the financial statement date 
• Outcome of litigation that provides additional evidence about conditions present at year-end 

In these cases, the financial statements should be adjusted to reflect the new information. 

Non-recognized subsequent events are events that relate to conditions that came about after the financial statement date. These events do not impact the amounts reported in the financial statements for the period being reported. However, it may still be important to financial statement readers. 

Examples may include: 

• Issuance of long-term debt after year-end 
• Major natural disasters occurring after the financial statement date 
• Government combinations or disposals completed after year-end 

Although these events are not recognized in the financial statement, GASB 105 requires that significant non-recognized subsequent events be disclosed in the notes to the financial statements. 

Disclosure requirements for non-recognized events 

For non-recognized subsequent events that are significant, GASB 105 requirements specify that the following be disclosed: 

• A description of the nature of the event 
• An estimate of the financial effect, if such an estimate can be made 
• A statement that an estimate cannot be made, if applicable 

These disclosure requirements are intended to help financial statement readers receive relevant information about occurrences that could impact their understanding of a government’s financial position or future operations. 

What GASB 105 means for governments  

Although GASB 105 provides new recognition or measurement concepts, it may require governmental entities to revisit existing financial reporting practices. Specifically, governmental entities should seek to evaluate whether their financial statement preparation, review, and approval processes clearly identify the point at which financial statements are issued. In most cases, internal policies or governing body approval practices may need clarification to provide consistent application of the subsequent events evaluation period. 

Governmental entities should help ensure that staff responsible for financial reports understand the distinction between recognized and non-recognized subsequent events and are prepared to identify and document events occurring throughout the evaluation process. The use of an implementation checklist could aid in this process. 

What to avoid when implementing GASB 105 

As governments implement GASB 105, several common pitfalls may arise: 

• Assuming the audit report date defines the subsequent events evaluation period 
• Failing to disclose the date through which subsequent events were evaluated 
• Treating all subsequent events as disclosure-only items 
• Having inadequate documentation supporting the classification of events as recognized or non-recognized 

Effective date and transition 

The requirements of GASB 105 are effective for fiscal years beginning after June 15, 2026, and for all reporting periods thereafter. Earlier application is encouraged. 

Governmental entities that are considering early adoption should evaluate their financial reporting timelines and approval processes so they can appropriately identify and assess subsequent events through the newly defined “available to be issued” date. 

Audit considerations 

GASB 105 may impact audit planning by extending the period through which subsequent events must be evaluated and documented. Early communication between management and auditors can help support expectations related to timing, documentation, and disclosure of subsequent events. 

Governance and oversight implications 

Since subsequent events may involve significant financing decisions, legal matters, or operational changes, GASB 105 has implications beyond the accounting function. Governing bodies and oversight officials should be aware that events occurring after year-end but before financial statements are issued may still require evaluation and disclosure. Clear communication between management, governing bodies, and auditors can help ensure that significant events are appropriately identified, evaluated, and disclosed in a timely manner. 

Plan for implementation 

GASB 105 represents a meaningful refinement of subsequent events guidance for governmental entities. By defining the evaluation period, distinguishing between recognized and non-recognized events, and standardizing disclosure requirements, the statement enhances the usefulness and consistency of governmental financial reporting. Government entities should begin planning now for smooth implementation. 

BerryDunn’s team of governmental professionals is well-versed in helping entities implement new GASB standards. We can assist with assessing current processes for identification and evaluation of transactions or other events occurring during the subsequent events' time frame. We can also update financial statement templates so that the required subsequent event note disclosures are included. Contact us to learn how we can support you in preparing for the implementation of GASB 105. Learn more about our team and services. 

Maine business owners, this one's been a long time coming.

After years of advocacy from the Maine CPA community and business organizations, Governor Janet Mills' supplemental budget proposal includes a Pass-Through Entity Tax (PTET) for Maine, which would be effective for tax years beginning January 1, 2026. If enacted, partnerships and S corporations will finally have access to a federal tax planning strategy that businesses in 36 other states have been using for years. Maine has been late to the party, but the party has started!

Why the pass-through entity tax matters to Maine businesses

Here's the backstory. The 2017 Tax Cuts and Jobs Act capped the federal deduction for state and local taxes (SALT) at $10,000 per year for individual taxpayers. For many business owners, that cap wiped out a meaningful federal deduction on income that was already being taxed at the state level. C-corporations never had this problem, as they've always been able to deduct state income taxes in full at the entity level. The PTET would level the playing field by shifting the tax obligation from the individual to the entity, where it can be deducted without hitting the SALT cap.

OBBBA impact on the pass-through entity tax

When the One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025, it changed the math again. The OBBBA temporarily raised the individual SALT cap from $10,000 to $40,000 for tax years 2025 through 2029. Good news, right? For many business owners, the answer was “yes.” But the headline number doesn't tell the whole story.

The expanded cap phases out aggressively for higher earners. If your modified adjusted gross income exceeds $500,000, that $40,000 cap starts shrinking; if your income is above $600,000, you're effectively back to $10,000. For Maine's most successful pass-through entity owners, the expanded SALT cap may provide little or no individual relief. For that group, the PTET remains the more powerful tool.

For owners in the $300,000 to $500,000 range, the analysis is more nuanced. The expanded cap may partially cover your deduction needs, but when you add up property taxes, state income taxes, and other SALT items, the entity-level election often still makes sense—especially when you can potentially stack the full PTET deduction at the entity level on top of up to $40,000 of personal SALT items.

How Maine's PTET works

The election is made annually on a timely-filed Maine return and is irrevocable once the filing deadline passes. The tax is calculated on the entity's aggregate Maine-source income—grossed up for the PTE tax itself—at Maine's highest individual marginal rate of 7.15%. Members then receive a 90% refundable credit against their individual Maine income tax for their share of what the entity paid.

That 90% matters. Maine is joining Massachusetts and a handful of other states that offer less than a full 100% credit, which means there's a built-in 10% cost to the election. In most cases, the federal benefit will outweigh that haircut—but it requires analysis. This isn't a one-size-fits-all recommendation.

What if your business has nonresident members?

If your entity has nonresident members, there's an additional wrinkle: the electing PTE must pay estimated tax equal to 10% of the PTE tax allocated to each nonresident member, due within 30 days of the entity return's due date. The upside: Nonresident members whose only Maine-source income flows through electing PTEs may be able to skip filing a Maine individual return entirely if their credits cover the liability.

The bottom line: A win for Maine businesses

For high-income pass-through entity owners—especially those above the $500,000 MAGI threshold—the PTET election is likely the primary tool for capturing federal tax relief. For owners in the middle-income ranges, the interaction between the expanded personal SALT cap and the entity-level election needs careful modeling. And for everyone, that 10% non-refundable component means that a thoughtful calculation is needed before a decision is made.

This is a real win for Maine's business community—assuming it crosses the finish line. If you own a partnership or S corporation with Maine operations, now is the time to start the conversation so you're ready to move when it does. The election is annual, irrevocable once the deadline passes, and the first necessary actions will be approaching fast.

About BerryDunn

Our seasoned tax professionals partner with you to offer practical, accessible guidance and develop detailed strategies that support your unique needs. We excel at tax strategy and solutions, placing an emphasis on building long-term relationships. Our deep expertise spans a full range of tax concerns, tax services, and consulting to support individuals, businesses, and nonprofit organizations. Our tax consultants are specialists in their industry, working closely with colleagues across the firm to deliver integrated, comprehensive solutions. Learn more about our services and team.

On February 20, 2026, the US Supreme Court issued a ruling on Learning Resources, Inc. v. Trump, a case challenging President Trump’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). In a 6-3 vote, the US Supreme Court ruled that IEEPA does not permit the President to impose tariffs.

Tariffs imposed under IEEPA

Prior to this ruling, the Trump Administration imposed significant tariffs under IEEPA. This law authorizes the President to act to address any unusual or extraordinary foreign threat that endangers national security, foreign policy, or the economy in the US if a national emergency is declared. President Trump declared such an emergency on April 2, 2025, citing the trade deficit and illegal immigration. The subsequent tariffs include:

• 10% minimum tariff on most imports
• 50% tariff on copper, steel, and aluminum
• 20 – 40% tariffs on most goods from Brazil, India, Canada, Mexico, and China

How can importers request refunds?

These tariffs are estimated to generate $175 billion in refunds for affected importers. Although the Court’s decision does not provide guidance on how importers should be refunded for these previously paid tariffs, it is expected that a refund procedure will be established through either the US Court of International Trade or US Customs and Border Protection (CBP). To prepare for these refunds, importers should:

• Compile entries and payment records related to IEEPA duties.
• Submit CBP Form 19 protests within 180 days of each entry’s liquidation, if not done so already. This 180-day deadline may be waived when refund procedures are established.
• Prepare for possible litigation in the US Court of International Trade.

What's next? 

While this is a significant “win” for US importers, Trump has asserted that he will continue to impose tariffs via alternative statutes that allow him to act. While these statutes may authorize the President to impose tariffs, these authorities are limited by time-based restrictions or approval from other governmental parties.

How BerryDunn can help

Our dedicated audit, tax, and consulting professionals understand the impact of tariffs and can assist with developing strategies for refunds as they become available. Learn more about our team and services. 

Read this article if you are the owner/investor, accounting manager, controller, or CFO at a SaaS company. 

Many software-as-a-service (SaaS) companies operate on a subscription-based model with large payments due up front. This article explores how these companies can manage the significant timing differences between financial reporting and IRS tax requirements.

The "tax surprise" in SaaS billing 

For SaaS companies, collecting three years of cash upfront is great for liquidity but creates a significant tax acceleration. While US Generally Accepted Accounting Principles (US GAAP) allow you to spread that revenue over the full three-year term as you deliver the service, the IRS generally only allows a one-year deferral. This means in year two, you may be taxed on the entire remaining contract balance, even though you haven’t "earned" it yet for financial reporting purposes.

Understanding the book and tax gap 

Under US GAAP, specifically ASC 606, revenue is recognized only as the service is actually delivered to the customer. Therefore, if a company receives payment of $600,000 for a three-year subscription on December 31, 2024, it has only "earned" the first year of that agreement by December 31, 2025. As a result, $200,000 is recognized as revenue, while $400,000 remains as "deferred revenue" on the balance sheet—representing services the company is still obligated to provide in the future. 

For financial reporting, this upfront cash helps with immediate operations, while the deferred revenue reflects the health of future recurring income. Unfortunately, the IRS views taxable income differently. 

The tax impact: IRC Section 451(c) 

While US GAAP focuses on when the service is earned through performance, federal tax law generally operates under the "all events test." For tax purposes, the IRS often considers income "fixed" the moment you have the right to the money or receive the payment. 

When payment is received up front, the law generally only allows you to pause tax recognition for one year. In the example above, you can defer the revenue for 2024. However, in 2025, the company must recognize the entire remaining balance ($600,000) as taxable income. This creates an additional $400,000 of taxable income in year two that hasn't been recognized for book purposes yet. 

The difference eventually reverses in 2026 and 2027, and the sudden tax acceleration in year two often catches businesses off guard. 

Strategic tax accounting and compliance 

Managing these timing differences requires proactive structuring. Key considerations include: 

• Deferral method election: Under IRC Section 451(c), taxpayers can elect to defer the recognition of advance payments to the year following receipt, rather than reporting it all immediately. 
• Accounting method changes: Moving to a deferral method typically requires filing IRS Form 3115 to formally change your tax accounting approach. 
• Applicable Financial Statements (AFS): Your ability to use these deferral methods often depends on whether your firm produces an "applicable financial statement," such as an audit or a review. 
• Contract structuring: If your company does not strictly need 100% of the cash on day one, structuring contracts with annual billing can eliminate the gap between book and tax reporting.

BerryDunn can help 

While "cash in hand" is usually the best option, it is vital to understand the tax ramifications that come with it. The accounting and tax experts in BerryDunn’s technology practice have advised many clients on navigating these multiyear contracts. Please reach out to your contact at the firm when entering into these agreements to ensure your tax planning stays ahead of your revenue growth. Learn more about our team and services. 

In 2025, our team completed projects in seven states and kicked off new work in 17 states, partnering with communities ranging from fewer than 12,000 residents to more than one million. These projects reflect the core of what our Parks, Recreation, and Libraries team does: helping agencies improve operations, drive innovation, identify improvements based on community need, and strengthen their brand and image. 

From master plans to feasibility studies to strategic and operational assessments, our 2025 work offered a clear look at what agencies are prioritizing—and where the field is heading. Here are the key trends we saw, along with what they mean for your agency. 

1. Sustainability is becoming a planning non‑negotiable 

Across communities in Colorado, North Carolina, Nevada, and beyond, agencies are increasingly incorporating sustainability into capital, operational, and master planning decisions. This aligns with our team's master planning approach, which integrates infrastructure assessments, levels of service analysis, and long-term operational considerations to build more resilient systems.  

What this means for agencies: 

• Consider lifecycle cost analysis for both new facilities and renovations. 
• Integrate sustainability and climate-resilience metrics into future master plans. 
• Use feasibility studies to evaluate long-term operational implications of amenities. 

2. Data-driven decision-making is accelerating 

Communities are increasingly turning to data to support transparent decision-making and long-term planning. Many 2025 projects—including fee studies, strategic plans, and PROST plans—highlighted the importance of diagnostic data collection, analysis, and community needs assessment so agencies can make informed decisions grounded in facts and local context.  

How this helps agencies: 

• Centralize the data you already collect (registration, attendance, maintenance). 
• Use data stories to better communicate funding needs to governing bodies. 
• Apply GIS mapping tools to identify equity gaps or underserved areas. 

3. Workforce resilience remains a top priority 

Staffing challenges, burnout, and shifting workforce needs emerged repeatedly throughout 2025—both in projects and in conversations at conferences. Many communities sought organizational assessments or strategic plans specifically to address staffing constraints, workload distribution, and long-term talent development. 

This trend aligns with our team’s emphasis on operational assessments and improving organizational effectiveness to help agencies create more sustainable internal systems and staff structures that support mission delivery.  

What agencies can do: 

• Revisit job descriptions to ensure they match current responsibilities. 
• Use organizational assessments to evaluate staffing structure and workload. 
• Invest in leadership development to build internal capacity. 

4. Community expectations are rising—and evolving 

Residents continue to voice strong expectations for transparency, access, and inclusivity in parks and recreation services. This aligns with our team’s strong emphasis on robust community engagement, which includes prioritizing needs, facilitating equitable input, and linking community feedback directly to planning recommendations.  

How agencies can respond: 

• Use engagement tools that reach a broad audience (mobile surveys, pop-up events). 
• Share “what we heard” summaries to build trust and accountability. 
• Ensure engagement findings directly inform budget and capital priorities. 

5. “One size fits all” planning no longer works 

In 2025, our team worked with communities ranging from small rural towns to large metropolitan regions. These widely different contexts confirm what our master planning methodology is built on: planning must be tailored to each community, grounded in local data, demographic realities, facility and system assessments, and achievable implementation strategies.  

How this helps agencies: 

• Use right-sized planning: mini master plans, targeted system reviews, or operational assessments. 
• Align planning scope and budget with your community’s capacity. 
• Use implementation tools like timelines, KPIs, and action plans to ensure follow-through. 

As you plan for the rest of the year, these patterns can help you benchmark your agency’s current priorities, consider emerging needs, and identify where additional planning, assessment, or visioning may support your goals. 

About BerryDunn

BerryDunn's parks, recreation, and libraries consultants work with you to improve operations, drive innovation, identify improvements to services based on community need, and elevate your brand and image―all from the perspective of our team’s combined 100 years of hands-on experience. We provide practical park solutions, recreation expertise, and library consulting. Learn more about our team and services.   

Read this article if you are a member of an accounting/finance department or executive team and want to ensure your accounting firm is keeping pace with the latest Artificial Intelligence (AI) and automation technologies. 

The accounting profession is undergoing one of the most significant transformations in its history. Advances in AI, automation, data analytics, and enhanced cloud-based platforms are reshaping not only how accounting work is performed, but also the value that CPAs deliver to their clients. The critical question is no longer whether technology is changing accounting—but whether your CPA is continuing to invest in education, innovation, and forward-thinking strategies to keep pace. This article outlines key questions you need to ask your CPA firm about AI and automation.

1. How are you responsibly adopting new technologies to keep pace with your clients? 

It's no longer optional for a CPA firm to merely stay attuned to emerging technologies—it is essential. Adopting innovative solutions allows a firm to operate more efficiently. More importantly, it enables a CPA firm to deliver timely compliance, deeper insight, and proactive advisory services that help clients make faster, better-informed decisions.   

Is your CPA firm doing the following on an ongoing basis?: 

• Evaluating new and emerging technologies 
• Enhancing internal processes through automation and optimization 
• Training its professionals and educating clients 
• Ensuring technology is adopted responsibly, securely, and with purpose 

You want a firm that is positioned to not only adapt to change, but to lead you through it. This requires a commitment to investing in digital transformation, supporting continuous learning for team members, and strengthening innovation governance.

2. How are you using automation and AI to improve speed, accuracy, and insight? 

The accounting profession is rapidly evolving due to technologies such as AI, intelligent automation, advanced analytics, and integrated digital platforms. 

"What if you could close your books in a day instead of weeks due to innovation?" —David Stone, BerryDunn Senior Manager

Let’s say innovation enables you to close your books in a day instead of weeks. Can your CPA firm keep up while also delivering compliance services faster and providing elevated, forward-looking insight?  

“Technology alone doesn’t improve speed or accuracy—people do,” said Dan Bednarski, BerryDunn Senior Manager. “Automation and AI are only effective when professionals are trained to use them thoughtfully and responsibly. Without proper education, these tools are simply underutilized software." 

3. How does technology enhance your compliance services beyond meeting deadlines? 

Automation and integrated systems improve accuracy by reducing manual data entry, while analytics help identify anomalies and risks earlier in the process. Standardized digital workflows strengthen consistency and documentation, and real-time access to data enables more proactive planning and issue resolution. 

4. How are your professionals embracing change and new technologies in a rapidly evolving profession? 

Confirm that innovation is a core part of your CPA firm’s culture. When it is intentionally integrated in the daily lives of team members, it gives them the ability to explore how technology like AI can improve workflows, processes, and more.  

“For technology to have real impact, innovation has to be embedded in everyday work—not treated as a side initiative,” said Marc Scribi, BerryDunn Manager. 

This type of culture promotes openness to change and exploration. 

“When professionals are given the time and support to explore how tools like AI can improve workflows and processes, it encourages curiosity, strengthens judgment, and drives meaningful efficiency,” noted Danielle Bedard, BerryDunn Senior Manager. 

Ultimately, a commitment to innovation ensures that technology enhances professional judgment, strengthens quality, and elevates the client experience.

Preparing for the next five years—and beyond

Five years ago, the accounting profession looked vastly different than it does today. Cloud adoption was still gaining momentum, automation was limited, and artificial intelligence had yet to make a meaningful impact on day-to-day accounting operations. What will it look like five years from now? 

BerryDunn can help

If you are looking for a CPA firm that views innovation as a strategic differentiator, not simply a tool for efficiency, reach out. Learn more about our team and services. 

The BerryDunn Assurance, Tax, & Advisory Team’s Innovation Solutions Committee is dedicated to exploring, evaluating, and implementing new technologies and innovative solutions to enhance the audit, tax, and advisory processes. The committee’s mission is to support excellent client service, maximize productivity through technology, and implement processes and procedures that align with overall firm goals and resources. This includes integrating the tax and advisory teams within the innovation focus and renaming the committee to reflect this broader scope.  

David Stone, Marc Scribi, Danielle Bedard, and Dan Bednarski contributed to this article and are members of the committee. 

Read this article if you are a renewable energy developer or investor.

Enacted as part of the One Big Beautiful Bill Act (OBBBA), the foreign entity of concern (FEOC) requirements are designed to reduce US reliance on certain foreign suppliers in the renewable energy sector. These rules bar projects with prohibited foreign entity (PFE) ties from claiming clean energy tax credits and take effect for projects initiated after December 31, 2025. 

PFEs include entities with direct or indirect ties to the covered nations that include China, North Korea, Russia, and Iran, with a particular focus on China due to its dominant role in renewable energy supply chains.

Limits on material assistance from PFEs 

Projects must now meet minimum sourcing requirements for components from non-prohibited foreign entities. Central to this is the material assistance cost ratio, with increasing thresholds over time for the proportion of project costs that must be sourced from non-prohibited foreign entities.  

US-based suppliers may be classified as PFEs if they rely heavily on PFE capital, components, raw materials, or intellectual property. 

Restrictions on ownership, debt, and management involvement 

An entity cannot claim tax credits if it has excessive PFE equity, debt, or management involvement. Both specified foreign entities (SFEs) and foreign influenced entities (FIEs) are considered PFEs and are not entitled to tax credits. SFEs are entities controlled by foreign individuals or governments from the covered nations, while FIEs are entities influenced by the covered nations. 

Contracts with PFEs 

Existing contracts and technology licenses with PFEs need to be identified and scrubbed of any provisions that grant the counterparty effective control over the taxpayer or project. New contracts with PFEs are high-risk and should be structured carefully so that they clearly do not grant control or influence. New technology licenses with PFEs are automatically treated as giving the licensor effective control and the related project will not be eligible for tax credits.  

Additional guidance from the IRS is expected before December 31, 2026. 

Penalties for non-compliance with FEOC 

The IRS has six years to challenge whether a project improperly benefited from material assistance from PFEs. The penalties for failing to comply with the FEOC requirements are severe: 

• There is a 100% disallowance of tax credits if the requirements are not met. 
• Investors face a 20% penalty based on the underpayment of their tax liability if violations are found. 

Navigating FEOC requirements  

To navigate these new rules, entities should: 

• Obtain clear representations from equipment vendors and EPC contractors confirming they are not PFEs. 
• Secure certificates from suppliers stating that products were not made by PFEs and that the supplier does not know or have reason to know of any such entities in their supply chain. 
• Evaluate ownership, debt, and management each year to ensure the company is not controlled or influenced by the covered nations.  
• Avoid embedded technology licenses in equipment procurement contracts, which could create indirect foreign control. 
• Be aware of the 10-year recapture provision. For projects placed in service in 2028 or later, the full Investment Tax Credit (ITC) must be repaid if any contractual arrangements give PFEs effective control.

While further IRS guidance is expected in 2026, the intent of the new FEOC requirements is to reduce US dependence on foreign suppliers from covered nations and to prevent prohibited foreign individuals and entities from controlling or benefiting from clean energy tax credits. Early identification of affected contracts and proactive compliance will be essential for developers and investors. Berry Dunn’s renewable energy team has a deep understanding of the FEOC requirements and can assist with navigating these changes. Learn more about our team and services. 

When CMS previewed its streamlined Medicaid Enterprise System (MES) templates at the Medicaid Enterprise Systems Conference (MESC) in August 2025, the message was clear: change is coming. And guess what? Change arrived with the start of the new year when CMS officially released eight new templates to standardize processes, improve oversight, and accelerate federal reviews. States and territories now have six months to adopt these templates, with full compliance required by July 1, 2026.

The clock is ticking! Early adoption isn’t just encouraged, it’s strategic. Here’s what these templates are, why they matter, and how you can confidently prepare for the required adoption of these templates and related processes.

What’s new? The eight CMS templates at a glance

CMS’ new artifacts support the full MES lifecycle, from planning and procurement to operations and certification. Here’s a quick overview:

1. MES APD Template
A standardized structure for Planning, Implementation, Update, and As-Needed APD submissions, supporting MMIS and E&E individually or combined.

Why it matters: Prescribes updated and uniform expectations for APD sections, including reducing or eliminating non-essential content.

2. MES Operational APD (OAPD) Template
A uniform format for operational APDs used to maintain and enhance existing modules.

Why it matters: Enhances transparency into operational activities by clearly defining scope, funding needs, and timelines, improving predictability for Medicaid agencies and CMS while supporting continuous system improvement.

3. Medicaid Detailed Budget Table (MDBT)
A common budget layout that simplifies federal review by organizing costs predictably.

Why it matters: Integrates MES and E&E funding into a single consolidated MDBT, promoting greater alignment across the Medicaid program and providing a more holistic perspective on SMAs' budgets and expenditures.

4. Operational Report Workbook (ORW)
Monthly operational reporting aligned to maintain enhanced federal match and improve data consistency.

Why it matters: Creates a consistent, module-based reporting structure across states, improving data quality, aggregation, and CMS visibility into Medicaid operations.

5. Analysis of Alternatives (AoA) Template
A structured approach to document solution options, risks, costs, and reuse opportunities.

Why it matters: Supports sound procurement decision-making and compliance with 45 CFR §95.610.

6. Project Status Report
A monthly summary of milestones, risks, funding request status, and progress.

Why it matters: Improves oversight and accountability by offering a concise, repeatable snapshot of progress, risks, and financial posture, enabling Medicaid agency leadership and CMS to make informed decisions.

7. MES Procurement Document Checklist
Aligns solicitations (RFPs/RFQs) with CMS expectations and federal regulations.

Why it matters: Helps ensure procurement packages fully align with CMS expectations, meets or includes citations for Conditions for Enhanced Funding, minimizing rework, reducing procurement delays, and setting Medicaid agencies up for smoother system certification.

8. Streamlined Modular Certification (SMC) Intake Form
The intake form for MES module certification, replacing prior EVV intake.

Why it matters: Clarifies certification evidence requirements early in the lifecycle, reducing ambiguity for vendors and states/territories and paving the way for efficient, timely CMS certification.

Why the change—and why now?

CMS’ goal is clear: reduce administrative burden, improve consistency, and accelerate federal review cycles. These templates create a common language for Medicaid agencies, vendors, and CMS—making compliance easier and oversight stronger.

Six months may sound like plenty of time, but consider the following as a sampling of what’s needed:

• Active and upcoming MES deliverables (ORWs, project status reporting, APDs, and procurements) will need to transition to new templates before July 1
• Procurements submitted to CMS must include a completed CMS Procurement Document Checklist demonstrating that the Medicaid Agency has addressed each CMS expectation within the procurement.
• Operational reporting will require new data pipelines and project governance to help ensure accuracy of outcomes and metrics reporting.

Waiting will compress your compliance window and increase risks for non-compliance. Those who collaborate early and often with their CMS State Officer will benefit from smoother adoption and fewer surprises.

Your action plan

Here’s a practical roadmap to hit the July 1 deadline:

1. Mobilize now, develop your plan, and align with your State Officer

• Form a cross-functional team (program, IT, finance, procurement, PMO/PgMO) and establish a shared understanding of the requirements, the team’s roles, and the frequency with which the group connects to stay aligned in your compliance efforts.
• Create an inventory of APDs, active and planned procurements, forthcoming certifications, and status reports.
• Develop your proposed timeline for transitioning to the new templates. More specifically, identify the APD Packages (i.e., APDs, MDBTs), Procurements, Project Status Reports, and Templates the agency believes can be transitioned in the very near term versus a future update.
• Discuss your proposed plan for compliance with your Medicaid Agency’s CMS State Officer and align with their expectations. Lean into them as your partner for success.

2. Start small and stay aligned with your CMS State Officer

• Consider strategies for implementation, such as:
  • Converting one APD and MDBT as a “pathfinder” to set the standard, before fully implementing your plan for adoption of the new APD and MDBT templates.
  • Piloting the ORW and Status Report templates internally for one to two projects to validate data sources and reporting cadence.
• Align internally on how the AoA fits into your existing strategic planning and procurement processes, and draft an AoA for an upcoming decision to exercise the new format.
• Regularly discuss your compliance efforts with your CMS State Officer, soliciting their feedback and guidance along the way.

3. Ensure alignment across templates

• Map dependencies across templates (e.g., ORW ↔ APDs, AoAs within APDs ↔ procurements) to help ensure data, assumptions, and timelines remain consistent as templates are adopted.
• Coordinate rollout sequencing so related templates are implemented together or in a logical order, reducing rework and misalignment across planning, reporting, and procurement activities.
• Establish shared governance and review checkpoints to validate cross-template consistency before submission to CMS.

4. Scale and train

• Expand beyond initial pilots to full-scale implementation of the new templates across APDs, ORWs, procurements, status reports, and related artifacts well in advance of the July 1 deadline.
• Work across the enterprise, including program, IT, finance, procurement, PMO, and vendors, to ensure shared understanding, consistent data, and aligned execution as adoption scales.
• Provide targeted, role-based training for agency staff and supporting vendors to reinforce expectations, clarify template interdependencies, and support consistent, high-quality submissions.
• Continue proactive engagement with CMS throughout implementation by seeking clarifications, validating interpretations, and offering feedback to inform ongoing refinement and successful compliance.

Common pitfalls to avoid

• Treating templates as a simple “copy‑paste” exercise, assuming that legacy content transfers over directly without evaluating whether requirements, processes, or context have changed and what new information needs to be added.
• Underestimating the effort to stand up ORW reporting; ORW and SMC Intake Forms typically require multi-vendor engagement and adoption, as well as discussions with SMA team members.
• Fragmenting ownership of adoption without a core team driving compliance with CMS expectations for template adoption, results in consistency issues.
• Limiting early engagement with your CMS State Officer without ongoing conversations to review your plan, ask questions, and gather feedback.

How BerryDunn can help

We’ve been tracking these changes and are ready to help Medicaid agencies and vendors move quickly toward adoption by:

• Conducting template walkthroughs and conversion sprints for APDs, MDBTs, status reporting, ORWs, and related artifacts.
• Facilitating AoA development and reuse analysis to support informed decision-making.
• Reviewing procurement materials to help ensure alignment with federal regulations and related APDs.
• Supporting certification readiness through SMC Intake Form preparation and evidence mapping.
• Delivering tailored training and practical playbooks aligned to agency staff and vendors.
• Providing a portfolio management solution capable of supporting your strategic planning, procurement, implementation, and certification activities—as well as the critical reporting needed to support federal compliance (i.e., AoA, APDs, Status Reporting, ORW)

July 1, 2026, will be here before we know it! Medicaid agencies acting now have a higher likelihood of compliance success and will also achieve stronger governance and clearer outcomes. The clock’s ticking and we’re here to help!

Reach out to Amber Davis or Brennan Pouliot to learn more about BerryDunn can help you implement the CMS’ new MES templates.

Resources

• CMS Streamlining Medicaid Enterprise Systems Templates
• SHO #25-003
• tHHS: Medicaid and HHS agency’s Portfolio Management Solution

As BerryDunn’s Healthcare Practice Group lead, Lisa Trundy-Whitten is closely attuned to the healthcare industry. From challenges faced by healthcare organizations to the solutions BerryDunn’s experts can provide, Lisa shares thoughtful insights for healthcare leaders.  

As we begin 2026, healthcare organizations have an opportunity to reset. Several years of sustained disruption have created a transformational moment for both operational and strategic realignment. Many organizations are transitioning from a period of reactive decision-making and are now better positioned to take a more intentional, proactive approach. As healthcare leaders, you’re beginning to see opportunities to restore margin, build resiliency, and boost strategic growth.

Positive signs in the industry 

While you continue to face ongoing challenges, there are encouraging signs across the healthcare continuum. Here are some examples: 

• Volume stabilization is occurring in many sectors. 
• Workforce shortages have declined. 
• Providers and payers are strengthening financial discipline with innovation. 
• Value-based pilots are growing. 
• Creative employee retention programs are being implemented. 
• Telehealth and Artificial Intelligence (AI) are on the rise. 

Pursue near-term wins 

Now is the time to re-align your clinical priorities with financial realities by: 

• Reassessing your service lines 
• Renegotiating payer contracts using better data 
• Improving cost transparency

Instead of pursuing major changes, consider making small, intentional adjustments such as:  

• Recalibrating productivity benchmarks 
• Using better revenue cycle processes to reduce denials 
• Improving forecasting 

All of these adjustments can create near-term wins that you can leverage to build momentum early in the year.  

Be intentional with your progress in 2026 

The trends that have challenged the industry continue to shape what we are seeing today: 

• Continued pressure on labor costs 
• Regulatory uncertainty and complexity 
• Ongoing scrutiny from lenders, regulators, and boards 

At the same time, there is a shift toward value-based care, outpatient migration, and greater reliance on data in decision-making. 

So, how do you respond to these challenges and changes? Our advice is to apply focus and discipline. By clearly defining your strategic priorities and directing funds accordingly, you can make the most of limited resources. 

Harness emerging technologies 

Rather than view emerging technologies like AI as optional experiments, thoughtfully embrace them as tools to boost efficiency, reduce costs, and improve care. AI can speed up revenue recovery, lower administrative burdens, improve clinical decisions, and enhance the patient experience.  

Are you wondering where to start? Identify the pain points where technology can deliver value for your organization. Consider focusing on specific initiatives like optimizing your revenue cycle, forecasting, compliance monitoring, or analytics, rather than leaping into broad, less focused initiatives. Keep it simple and small when beginning. Form an AI governance committee to prioritize use cases, manage risk, and scale what works.  

Sustainability often depends on making the right investments. A strategic investment in technology can lower long-term costs, mitigate risk, and enhance decision-making—all in support of your organization’s mission.

BerryDunn can help 

As you look ahead in 2026, there will be challenges. Rather than letting these obstacles define you, view them as opportunities to respond with more clarity, stronger discipline, and renewed confidence. The path to your organization’s success is recognizing and understanding the financial and regulatory landscape while thoughtfully adapting and investing in your future. 

If you need support, reach out to us to discuss ways we can guide you and help you improve outcomes. I encourage you to explore our comprehensive breadth of services and learn about our team of experts across healthcare practices. 

Best,

Lisa Trundy-Whitten