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In today's rapidly evolving business landscape, boards of directors are more than just stewards of governance—they are the strategic compass guiding an organization toward enduring success. As the challenges facing companies grow increasingly complex, from disruptive technological trends to shifting societal expectations, the board's role has never been more critical. 

This series is designed to empower board members with the insights and tools necessary to navigate change with confidence. Our experts, each a leader in their respective field, will share real-world examples, practical frameworks, actionable advice in a Q&A format, and lessons learned from their personal and professional journeys.  

Employee well-being: The key to a productive and healthy workforce 

Our board leadership series begins with BerryDunn’s Workforce and Well-being practice lead, Vienna Morrill, who shares insight on how well-being programs can contribute to a thriving workforce.  

Q: What’s the most important thing that boards need to know about employee well-being?  

A: A culture-first approach is essential—well-being programs and benefits are less meaningful unless employees feel empowered to use them. Leadership commitment is critical; having a visible leader championing well-being helps normalize it as part of the workday rather than as an afterthought. Manager engagement is equally important, as managers must understand the value of well-being and take responsibility for fostering it within their teams. Importantly, well-being cannot be just an HR initiative; it requires active participation from leaders, managers, and employees themselves. An organization’s well-being strategy should integrate well-being into every aspect of the employee experience, with multi-dimensional benefits that address physical, mental, social, financial, and career needs, and be aligned with broader initiatives related to employee engagement and experience. A maturity model—such as assessing your organization’s current well-being program—can further help boards identify gaps and drive continuous improvement. 

Q: How do you ensure that well-being initiatives are inclusive and accessible to employees with different needs, backgrounds, and work styles? 

A: Organizations need to know their people and seek input. By developing and maintaining psychological safety in the workplace, organizations are better positioned to get meaningful feedback from employees about their well-being needs and programming preferences. Psychological safety begins with an environment where people feel comfortable showing up as themselves. In today’s fast-paced world of work, this often requires greater intention around creating opportunities for people to get to know each other, develop connections, and build a sense of community.  

Additionally, if you have employees or teams who are actively involved in specific diversity and inclusivity initiatives, it’s important to include them in the well-being planning process. Often, these initiatives can work hand-in-hand and be mutually beneficial. If budgets are limited, it’s best to focus on embedding well-being into the overall employer brand and employee experience before focusing extensively on “above and beyond” programs, resources, and benefits. Building a culture where well-being is viewed as a normal, expected part of work naturally supports inclusivity, helping to ensure every employee has access to the resources and support they need. 

Q: For those organizations that continue to have a large remote or hybrid workforce, what are some ways to support the work-life balance of all employees? 

A: The physical workplace offers valuable opportunities to showcase your well-being strategy and reinforce the culture you want to cultivate. However, when much of your workforce is remote, frequently traveling, or outside a traditional office environment, your approach should be anchored in location-agnostic programming to ensure broad reach and inclusivity. For example, focus on delivering consistent, organization-wide messaging that highlights your commitment to employee well-being, and establish clear feedback channels to surface needs and guide continuous improvement.

One of the largest challenges for remote and hybrid employees is often the blurring of boundaries between work and life. Organizations can set clear boundaries for work hours by encouraging practices such as logging off from collaboration platforms after hours and establishing norms around calendar sharing and personal time. For those in the office, creating a healthy physical environment reinforces the overall commitment to well-being. Additionally, encouraging remote employees to take stretch breaks, engage in local professional communities, or visit the office periodically for meaningful engagement can help maintain a healthy balance.

Q: How do you incorporate movement and exercise into the daily routine of employees who work at desks for long hours? 

A: Encouraging movement is vital for desk-bound employees, as opportunities to step away from screens, stimulate circulation, and refresh focus are essential for physiological and psychological health. This is an area where leaders and managers can be particularly influential by modeling that it’s okay to step away from your desk – whether by openly sharing that they are taking a break for physical activity, inviting others to join them, or speaking to its importance. Organizations can promote the idea of taking assignments offline—such as walking while brainstorming or listening to podcasts during breaks—to integrate exercise into the workday. Allowing flexibility so that employees can take planned, consistent breaks to move can not only improve time management and clarity of thought but also counteract the negative effects of prolonged sitting. 

Q: What are some common financial challenges employees face, and how can employers support them through education or benefits programs? 

A: Financial well-being starts with ensuring fair and competitive salaries that address factors like pay equity, cost of living, and benefits affordability. Employers can further support their teams by offering resources, tailored education, and benefits that assist with managing debt, saving for the future, and mitigating financial stress. A holistic approach might include personalized financial counseling, credit and debt management resources, and incentives such as matching student loan repayments through 401(k) contributions. Additionally, employers should make sure that employees are aware of and know how to access online tools and resources integral to their existing benefit platforms, empowering them to make informed financial decisions. 

About Vienna 

Vienna has long valued well-being, a passion born from early struggles with focus, fatigue, and depression that spurred her to explore how lifestyle habits impact both physical and mental vitality. Through a journey of personal growth, she discovered that nurturing the body with proper nutrition, hydration, sleep, and exercise could transform everyday energy and resilience. Over time, her perspective broadened to include the importance of community, meaningful relationships, and living authentically in alignment with one’s values. In her previous work as an IT Management Consultant, she observed that even routine technical challenges carried deep human implications, reinforcing her belief that employee well-being is a dynamic, personalized pursuit. Combining personal insights with professional experience, she has become a strong advocate for fostering holistic well-being in the workplace, convinced that a healthier team is the key to sustained business success. 

BerryDunn partners with organizations to create work environments where business success and personal growth coexist and where people are confident knowing their workplace positively contributes to their well-being. We take a comprehensive approach to our workforce and well-being work, considering how business needs, organizational capacity, and the employee experience work together to drive your business forward. Learn more about our team and services. 

Nonprofit audit committees play a pivotal role in maintaining transparency and accountability. Their responsibilities include financial oversight, compliance, reporting guidelines, risk management, external audits, internal audits, and ethical standards. Have you ever wondered what kinds of questions the audit committee should be asking of management and each other? Consider the following list of sample questions as a starting place.

Sensitive areas

Audit committees must ensure ethical standards and financial integrity across all aspects of the organization.

• Executive compensation: Is it reasonable and compliant with IRS guidelines?
• Travel and expense approvals: Are there any questionable items?
• Loans and related-party transactions: Are these legal and appropriate?
• Conflict of interest policies: Are they robust and effective?

Accounting and financial reporting

A strong financial framework requires thorough oversight of internal controls, reporting accuracy, and audit recommendations.

• Internal controls: Are they adequate, especially in managing contributions?
• Auditor recommendations: Are they being implemented?
• Financial statements: Are there significant changes or new revenue sources?
• Budgeting practices: Are all liabilities recorded accurately?

Program activities

Nonprofits must ensure that their resources are effectively allocated to fulfill their mission and serve community needs.

• Expense allocation: What percentage of expenses goes to program services?
• Unit costs: How do they compare to similar organizations?
• Community needs: Are they reassessed periodically?

Fundraising

Sustainable funding is key to a nonprofit’s success, requiring well-managed donor outreach and revenue diversification.

• Solicitations: How many are sent to donors?
• Cost-effectiveness: Are fundraising efforts efficient?
• Funding sources: Is there a diversity of funding sources?
• Board contributions: Do all board members contribute to fundraising campaigns?

Investment management

Managing investments wisely ensures financial stability and mitigates potential risks.

• Return on investments: How does it compare to market indices?
• Risk management: How are market fluctuations and potential losses managed?

Tax and regulatory matters

Compliance with IRS regulations and maintaining tax-exempt status are essential for nonprofit credibility.

• IRS compliance: Is the organization compliant with IRS regulations?
• Unrelated business income: Are potential liabilities assessed?
• Tax-exempt status: Is it properly maintained?

Nonprofit environment

External factors such as economic conditions and reputational risks can impact long-term stability.

• External factors: How do demographic trends and economic conditions affect the organization?
• Reputational risks: What strategies are in place to mitigate these risks?
• Insurance coverage: Is it adequate against various liabilities?

External auditors' relationship

Maintaining independent auditors and transparency strengthens credibility and financial reporting.

• Independence: Are external auditors independent?
• Transparency: Are audit fees and potential conflicts disclosed?

Internal audit oversight

Regular internal audits ensure financial accountability and effective risk management.

• Audit plans: Are they approved and effectively overseen?
• Enterprise risk management: Is it robust and comprehensive?

By addressing these questions, audit committees can help safeguard the nonprofit organization's integrity and financial health, ensuring it continues to serve its mission effectively.

As auditors and consultants to nonprofits of all sizes throughout the US, BerryDunn's not-for-profit team has a clear understanding of industry best practices. We provide the vital strategic, financial, and operational support necessary to help you fulfill your missions. Learn more about our team and services. 

How often does a new category of lending open up for the banking industry? This could happen if Congress ends federal tax exemptions for interest earned on municipal (“muni”) bonds. While a final decision has not yet been made, Congress is debating this option as they decide how to handle expiring provisions of the 2017 Tax Cuts and Jobs Act.

Doing so would put banks in the position of lending a substantial amount of funds directly—more than $500 billion in new bonds were issued in the last 12 months. To lend in this arena successfully, bank boards and executives will need to be familiar with not only the opportunity, but also the unique risks posed by lending to municipalities.

How municipal bonds work

Municipal bonds are issued by state and local governments to fund a variety of long-term projects, such as roads, bridges, parks, and public buildings. Money for the project is raised when bonds are sold to investors. The issuing municipality repays the investment, with interest, out of tax revenue and fees. Investors receive certain tax exemptions on the interest income generated by their investment. The tax exemption acts as an incentive for investors, whose stated rate of return is often lower than prevailing market rates. Without this incentive, municipalities may struggle to get enough investors to fund their project(s), creating an opportunity for banks to provide direct financing for these state or local government projects.

To understand the level of new muni bond issuances in your lending area, refer to the Municipal Securities Rulemaking Board (MSRB)’s 2024 Municipal Market Facts. This document includes a US map with the dollar amount of bond issuances displayed in each state, as well as a chart of dollar values of bonds by type of project and tax-exempt status.

Credit risk considerations for lending to municipalities

Banks have provided some direct financing to state and local governments in the past, which poses some unique challenges. Financing the types of projects typically handled via bond issuance raises new risk considerations. Additionally, such lending activity may expose banks to those risks for longer periods of time than has been their experience, historically. To help ensure your institution is ready to make the most of this potential opportunity, here are just a few of the key questions and areas we recommend bank leaders consider:

• What does it mean to have a state, city, or town as a legal borrower?
• How will the bank establish, evaluate, document, and monitor the credit worthiness and financial condition of the municipality?
• Is the municipality willing to increase taxes if needed to cover bank loan debt obligations on these longer-term projects?
• What is the collateral for public works projects? How will the bank establish lendable value and perfect its lien position?
• How will the bank handle cases of default and bankruptcy? What would the foreclosure process look like?
• How will the bank establish and monitor loan loss reserve levels on these projects?

It is likely that a bank’s borrower due diligence practices will need to be more robust and customized to understand the municipality’s unique dynamics. Transparency and disclosure may be limited, so asking the right questions is important.

Banks should be aware that municipalities generally cannot guarantee debt, may withdraw support from a project, and can file for bankruptcy protection. When the source of repayment is tax revenue, new metrics must be evaluated and considered—such as trends related to the municipality’s tax base, taxpayer population, and tax revenue. If municipalities must balance their budget annually, they may have to borrow or restructure debt to do so, and banks should consider this in their monitoring practices. Gaining an understanding of the nature and type of expenses is also essential as these may not be effectively or quickly cut—for example, union contracts and pension obligations.

Our team of financial institution experts is here to help you navigate change and evaluate opportunities. Please visit our Ask the Advisor page any time to connect with us or submit questions.

On the latest edition of the In The Know Podcast, BerryDunn’s David Stone and Susan Weber break down the latest in banking—from financial trends to policy changes that could shake things up. 

Big picture: Banking in 2025 

BerryDunn just released its quarterly banking profile for Q4 2024. The headlines? A 2.5% drop in net income year-over-year, thanks to rising non-interest expenses, provision costs, and losses on security sales. Banks are feeling the squeeze, with the efficiency ratio ticking up to 65%. 

On the accounting front, things have been pretty quiet. But public business entities need to gear up for the new income tax disclosure standard—it’s happening this year. Non-public entities have an extra year to sort things out. 

Regulatory shakeups and what it means for banks 

With the new administration settling in, agencies are reassessing rules—some are getting rescinded, while others are refocusing on existing frameworks. 

Here’s what’s changing – so far: 

• The CRA final rule may be rolled back—regulators say the previous framework works just fine. 
• The OCC is rolling out a fintech innovation office to encourage industry collaboration. 
• The FDIC is easing restrictions on crypto activity—banks won’t need pre-approval anymore, just solid risk management. 

And in a move that’s raising some eyebrows, the SEC won’t be defending its own climate disclosure rules. Released last year, these rules were immediately challenged in court. The SEC’s recent decision not to defend them means enforcement looks unlikely. 

Less regulation does not mean less risk 

Susan raises an important point: Just because regulators are stepping back does not mean financial risks magically disappear. Banks still need solid risk management strategies. The expectation is that institutions will take responsibility for integrating these risks into their existing frameworks rather than relying on specialized regulations. 

Evolve 2025: A must-attend event for finance professionals 

Exciting news—BerryDunn’s annual Evolve Conference for financial institutions is happening May 28-29 at Wentworth by the Sea. Expect deep dives into: 

• Economic trends and balance sheet strategies 
• Regulatory insights straight from Washington 
• Accounting and tax updates 
• Leadership strategies 
• Compensation and 401(k) discussions 

It’s shaping up to be a packed event, and if you haven’t signed up yet, there's still time to register!

About BerryDunn 

BerryDunn’s Financial Services Practice Group serves the complex auditing, accounting, tax, consulting, and information technology needs of financial institutions, broker-dealers, and other financial service providers. With our dedication to knowledge sharing, we offer our clients best practices based on the depth and breadth of our industry knowledge. Learn more about our team and services.  

Employee retention is crucial in construction, where turnover can delay projects, increase training costs, and reduce efficiency. Statistics show that turnover in construction is approximately 21.4%, and with the industry facing an estimated labor shortage of 430,000 workers as of 2023, retaining skilled workers is vital. Here, we’ll look at proven strategies, backed by industry data and case studies, that small to medium-sized construction companies can use to reduce turnover and improve employee satisfaction.

1. Understand the root causes of turnover

In construction, common reasons for turnover include physically demanding work, extended hours, safety risks, and limited paths for advancement. According to the US Chamber of Commerce, around 89% of construction firms face labor shortages, which often places extra pressure on current workers, increasing turnover.

Best practice: Conduct an annual formal survey of employees, formally or informally, to gauge employee satisfaction and take proactive steps to reduce common causes of turnover. 

Example in action: A construction company in New England makes a point to formally recognize employees who are helping make up for labor shortages to help retain those employees during tough times. Recognition can be financial, additional benefits like comp time, or non-monetary rewards like gifts or prizes.

2. Offer competitive wages and benefits

Fact: A study from the National Bureau of Economic Research found that construction firms offering a 10% increase in wages saw turnover rates drop by 15-20%. Companies that implement regular wage reviews to stay competitive report increased loyalty among workers.

Best practice: Benefits like health and wellness support also improve retention. Randstad reports that 66% of workers across industries prioritize benefits like paid sick leave and health coverage over salary alone. In construction, this can be achieved through modest investments in health incentives or wellness programs.

Example in action: A mid-sized construction company in Texas introduced a quarterly safety bonus program, rewarding employees who demonstrated excellent safety practices and accident-free performance. Within the first year, the company observed a 25% reduction in turnover, as workers felt more recognized and motivated by these benefits. In addition, incident rates decreased, reducing project delays and insurance costs. The extra wage cost more than paid for itself in time and resources spent recruiting, hiring, and training new employees.

3. Prioritize training and career development

Fact: According to the Construction Industry Institute, firms with structured onboarding and training programs experience up to 30% lower turnover. Providing safety training and mentoring programs for new hires not only reduces early turnover but builds loyalty as workers feel more supported and prepared for their roles.

Best practice: Construction firms that establish career ladders see higher retention rates. Research from the Center for Construction Research and Training (CPWR) indicates that companies offering promotion opportunities have a 24% higher retention rate than those without.

Example in action: A company in California created a “Field Leader Program,” where entry-level workers are eligible for additional training to become team leads within two years. Employees in the program reported higher job satisfaction, and the company saw a 30% improvement in their retention rate. This approach not only retained employees but allowed the company to promote from within, reducing recruiting and training costs.

4. Foster a supportive work environment

Fact: The AGC reports that companies emphasizing a positive, respectful team culture experience a 15% improvement in retention. Employees who feel respected and included are more likely to remain, as a supportive environment can offset demanding job conditions.

Best practice: Companies that regularly check in with employees—whether through surveys, performance reviews, or informal feedback sessions—experience better engagement. According to a Gallup study, companies that implement regular feedback sessions reduce turnover by up to 14%.

5. Recognize and reward hard work

Fact: The Society for Human Resource Management (SHRM) reports that companies with structured recognition programs see a 31% decrease in voluntary turnover. For construction firms, rewards can include simple recognition tactics, such as monthly shout-outs for high-performing workers or project completion bonuses.

Best practice: Recognizing anniversaries or successful project completions can boost morale. Research shows that employees who feel valued are up to 28% more likely to stay with a company.

Example in action: A company implemented a “Milestone Recognition” program that celebrates project completions with team lunches and small bonuses. As a result, they saw employee morale and retention rates improve by 20% over two years. Employees cited feeling “seen” and appreciated as a primary factor in their decision to stay with the company.

Read more best practices for workforce well-being in the construction industry. 

Investing in retention strategies tailored to the construction industry benefits both the workforce and the business. Companies that prioritize competitive wages, career development, and employee recognition can reduce turnover, cut costs, and build a committed team ready to drive projects to success. At BerryDunn, we take a comprehensive approach to our workforce and well-being work, considering how business needs, organizational capacity, and the employee experience work together to drive your business forward. Learn more about our team and services. 

Anyone involved in international operations, finance, or compliance should pay attention to transfer pricing—here’s why. 

This article is the first in an article series to help businesses navigate trade strategies amidst tariff changes. Next up: The strategic advantage of foreign trade zones.  

In today's dynamic trade landscape, businesses engaged in international commerce face growing challenges. Recent shifts in US trade policy and evolving global tariff structures have added layers of complexity that companies must navigate carefully. As new regulations take shape and tariff frameworks continue to change, importers must assess their compliance strategies with heightened scrutiny. One of the most critical components of this evaluation is transfer pricing. 

What is transfer pricing? 

Transfer pricing refers to the pricing of goods, services, and intellectual property exchanged between related entities within a multinational organization. These intercompany transactions must adhere to the arm's length principle, meaning they should be priced as if the parties were unrelated. This ensures that profits are appropriately allocated among different jurisdictions and that regulatory compliance is maintained. 

While transfer pricing has traditionally been a tax-driven consideration, its intersection with customs compliance has made it even more significant for companies that import goods into the US. Understanding how transfer pricing interacts with customs valuation is essential to avoiding penalties and managing costs effectively. 

Aligning transfer pricing policies with CBP regulations 

For importers, aligning transfer pricing policies with US Customs and Border Protection (CBP) regulations is a critical step in mitigating risk. Discrepancies between tax transfer pricing and customs valuation can lead to significant consequences, including: 

• Potential penalties for misalignment between declared customs values and tax-related intercompany prices. 
• Increased duties due to incorrect customs valuation, resulting in higher operational costs. 
• Compliance risks, as evolving tariff structures demand greater accuracy in documentation and reporting. 

With trade policies fluctuating, businesses must adopt proactive strategies to help ensure their transfer pricing aligns seamlessly with customs requirements. Effective documentation and transparency can help prevent costly disputes with customs authorities while ensuring that companies can take advantage of duty-saving opportunities. 

Strategic considerations for businesses 

Managing transfer pricing effectively requires a well-defined approach that integrates both tax and customs compliance into a cohesive framework. Businesses should prioritize the following: 

• Robust documentation: Companies must maintain detailed records supporting their transfer pricing methodologies. Documentation should justify intercompany pricing decisions and demonstrate compliance with both tax and customs regulations. 
• Periodic review and adjustments: Given the volatility in global tariffs, transfer pricing policies should be reviewed regularly to ensure alignment with current trade conditions. 
• Risk mitigation strategies: Businesses should identify potential risks related to transfer pricing and customs valuation. Developing strategies that minimize exposure to financial and regulatory penalties is essential. 
• Customs valuation optimization: Many businesses overlook opportunities to optimize customs valuation. By carefully structuring intercompany transactions, organizations can identify potential duty savings while staying compliant. 

How BerryDunn can help  

Navigating transfer pricing complexities requires specialized expertise. At BerryDunn, our professionals work closely with clients to develop and document strategic transfer pricing policies that satisfy both tax and customs requirements. Our approach focuses on risk reduction, cost management, and identifying opportunities for operational efficiencies. 

We help businesses: 

• Ensure transfer pricing policies adhere to both IRS tax regulations and CBP customs valuation rules. 
• Reduce risk exposure by strengthening documentation and compliance frameworks. 
• Identify duty-saving opportunities through strategic pricing alignment. 

 With our team’s extensive experience, we guide organizations through shifting trade policies with clarity and precision. 

Let’s talk strategy 

The evolving trade environment demands proactive planning. Businesses cannot afford to be caught off guard by tariff changes and compliance challenges. By taking a strategic approach to transfer pricing, companies can turn complexity into opportunity. 

Contact our team today to discuss how we can support your transfer pricing strategy and help you stay compliant while maximizing efficiency. 

Digital accessibility is more than a legal requirement—it’s about ensuring everyone can access public services, regardless of ability. As government agencies increasingly move services online, compliance with accessibility standards like the ADA’s Web Content Accessibility Guidelines (WCAG), EAA regulations, and Section 508 is essential. 

It may seem like a complex process, but the benefits are well worth the effort. An accessible website means broader reach, better usability, and fewer barriers for the people who rely on your services. It also reduces legal risks and supports civic engagement, helping governments fulfill their mission to serve all constituents. 

With new ADA standards coming into effect, public agencies must take steps now to meet compliance deadlines. Below, you’ll find the key dates and a collection of useful resources to guide your efforts. 

Key compliance deadlines for public entities 

Government agencies must meet the following accessibility deadlines: 

• State and local governments: April 24, 2026 
• Public schools and universities: April 24, 2027 
• Municipal services and online offerings: April 24, 2027 

Helpful resources to improve accessibility 

To assist public entities in meeting compliance requirements, here are some key resources: 

• Start here if you're new to accessibility: Accessibility Fundamentals Overview | W3C 
• Review the official web rule: Federal Register: Nondiscrimination on the Basis of Disability 
• Explore the financial and regulatory impact: Regulatory Impact Analysis | ADA 
• Find disability statistics for your state: Disability and Health Data System | CDC 
• Learn about accessibility certifications: International Association of Accessibility Professionals (IAAP) 

Meeting these requirements will take planning and coordination, but the result is worth it. The goal is simple: an online space where every citizen can access information, complete transactions, and participate fully—without limitations. BerryDunn's government assurance team can help you at every step of the process. Learn more about our services and team. 

How does your nursing facility’s financial health stack up against industry peers? Benchmarking can provide you with clear, relevant comparisons that are essential to measuring and optimizing your facility’s performance. Cost data and key operating indicators from the Maine Medicaid cost reporting database provide an in-depth look at key trends for both nursing facilities and nursing facility-based residential care facilities (RCF). 

Occupancy 

For both nursing facilities and nursing facility-based RCFs, occupancy was about 90% in 2019 and through early 2020 (pre-COVID-19). Once the pandemic hit, occupancy began to decline, then dropped significantly in 2021 at the height of the crisis. By 2022, occupancy trends started to rebound, bringing nursing facilities up to nearly 82% occupancy and nursing facility-based RCFs up to about 84%. The regional average in 2023 was about 81% occupancy versus a national average of 76%. This trend continued through 2024.  

Medicaid reimbursement 

Data for 2012 – 2023, when nursing labor and occupancy significantly drove per resident day costs up, demonstrates a Medicaid shortfall for Maine nursing facilities. In 2023, the Medicaid shortfall reached $35 million, but would have nearly doubled to $65 million without supplemental payments released by Maine DHHS to help curb the impact of exponentially rising costs.  

MaineCare revenue and cost 

From 2014 – 2022, MaineCare experienced a steady rise in cost per patient day (PPD). In 2023, the allowable cost PPD hit $370 — $213 of which was direct care cost, and of that $84 was related to contract nursing. Revenue PPD was just $330. These costs are after supplemental payments and any ECA (Extraordinary Circumstances Allowance) funds were applied. The broadening gap between reimbursement rates and cost for nursing facilities is clear. 

Payer mix 

From 2019 – 2023, there was a significant shift in the payer mix for nursing facilities, with an increase in the use of Medicare Advantage and a decrease in Medicaid and Medicare A payers. This is indicative of the growing diversity in payer sources and underscores the importance of facilities understanding and adapting to the intricacies of Medicare Advantage plans, which include pre- and post-payment reviews.  

Nationally, Medicare Advantage has grown from 27% utilization by Medicare beneficiaries in 2012 to 54% in 2024, and Maine is one of seven states with more than 60% of eligible Medicare beneficiaries enrolled in the Medicare Advantage plan.  

Labor trends 

The use of contract labor has been a significant source of frustration for nursing facilities, especially in Maine. Payroll-Based Journal (PBJ) reporting for Maine for Q2 2024 reflects an alarming increase in the use of administrative nurses, such as nursing directors and MDS coordinators, and highlights the need to improve retention for leadership positions. Q4 2020 through Q4 2024 showed an increase in contract labor utilization for LPNs — a cost-saving measure for providing licensed nursing care.  

Data from Q4 2023 to Q2 2024 on the use of contract staff in Maine by county points to labor challenges in rural counties, while it shows facilities in more urban counties are better able to maintain staffing requirements with in-house staff. Some counties relied so heavily on contract labor that it accounted for approximately 45% of all staffed hours.  

The cost of contract labor for Maine facilities skyrocketed from its 2020 cost PPD of $25 — nearly tripling to $70 in 2023. The driving factor behind this was the increased demand for contract labor services. PBJ data for 2022 – 2024 shows a more positive trend for staff turnover despite continued challenges with contract labor. Registered nurse turnover decreased by 10% and overall staff turnover levelled off.  

Other trends 

The number of nursing facilities by fiscal year remained stable for 2020 and 2021 but began to decline steadily from 2022 – 2024. This trend can be attributed to the deepening gap between costs — both for direct care and contract labor — and reimbursement, forcing some facilities to close or convert to residential care facilities. In 2023, there were approximately 86 nursing facilities with a total of roughly 7,696 beds in Maine. 

2025 rate reform is designed to address the financial challenges of nursing facilities.  

• The transition to the pricing methodology has eliminated the cost settlement for direct and routine costs, enabling facilities to plan expenses and manage costs on known rates for the year.  
• Rate reform also includes value-based purchasing adjustments, which allow facilities to earn back a portion of their rate reduction through quality improvements or achievements.  
• The guiderails allow for potential rate adjustments of up to a 10% increase or decrease compared to prior rates, creating flexibility in the management of reimbursement rates.  

For nursing facilities seeking to improve financial operations, BerryDunn’s industry experts can assist with benchmarking by analyzing data on occupancy, Medicaid reimbursement, and contract labor to guide you to better understand how your cost and revenue drivers can lead to outcomes. Learn how to access our self-service Senior Living Benchmarking Portal for a carefully curated, comprehensive set of financial benchmarking reports. To learn more, visit berrydunn.com/stay-current. 

A financial institution’s core banking system, or core processing system, is an essential software that provides the backbone for day-to-day operations and transaction processing. Accounting for the costs of these systems can be tricky because of the complexities often involved in these contracts.  

The contracts tend to be long-term, as it would be infeasible (and undesirable) for financial institutions to have to re-negotiate and possibly switch core providers on a frequent basis. In addition, the contracts often include varying fees and provisions listed throughout the contract. The accounting team is often provided this lengthy contract and then left with the task of deciphering what is meaningful from an accounting standpoint.  

There are two key pieces of accounting guidance to consider when analyzing core contracts: 

1) Accounting Standards Codification (ASC) 705 – Cost of Sales and Services 

2) ASC 350-40 – Intangibles – Goodwill and Other – Internal-Use Software 

Core contracts may provide incentives or credits that can be applied against the fees charged by the core provider. According to ASC 705-20-25-1, “consideration from a vendor also includes credit or other items (for example, a coupon or voucher) that the entity can apply against amounts owed to the vendor (or to other parties that sell the goods or services to the vendor). The entity shall account for consideration from a vendor as a reduction of the purchase price of the goods or services acquired from the vendor…” 

As an example, let’s say your financial institution receives a one-time credit as part of signing a new core contract of $100,000 and the contract is to provide services to your institution over five years. This credit can be applied to future invoices received from the core provider. The contract has a monthly maintenance fee of $20,000 (likely among other charges). This credit would thus reduce the monthly maintenance expense of $20,000 to $18,333 (reduced by $100,000 divided by 60 months). This is a simple example, but hopefully, it will provide insight into the mechanics of the accounting for credits and incentives. In reality, these contracts tend to be much more complex, with variable fees and possibly even credits or incentives that can only be applied against certain fees. These credits/bonuses may not be recognized fully up front as a gain, revenue, or reduction of expense.  

There are often many fees listed in a core contract and these fees tend to be for various services related to the contract. Each fee should be considered on its own and assessed against the criteria listed in ASC 350-40-25, which establishes three project stages for internal-use software: 

1. Preliminary Project Stage. This stage may include: 

a. Conceptual formulation of alternatives 

b. Evaluation 

c. Determination 

d. Final selection 

All costs associated with the preliminary project phase shall be expensed as incurred. 

2. Application Development Stage. This stage may include: 

a. Design 

b. Coding 

c. Installation 

d. Testing 

Whether or not costs in this stage shall be expensed or capitalized is dependent on the type of cost: 

1. Costs incurred to develop internal-use software shall be capitalized. 
2. Costs to develop or obtain software that allows for access to or conversion of old data by new systems shall be capitalized. 
3. Training costs shall be expensed as incurred. 
4. Data conversion or clean-up costs shall be expensed as incurred. 
5. Postimplementation-Operation Stage. This stage may include: 

a. Training 
b. Application maintenance 

All costs associated with the post-implementation-operation stage shall be expensed as incurred. 

Costs incurred for upgrades and enhancements to internal-use software shall be expensed or capitalized in accordance with the guidance provided above. Costs incurred for maintenance shall be expensed as incurred.  

As an example in applying the above project stages, let’s say your institution has hired your core provider to develop an application programming interface (API – essentially a “bridge” between two software programs, allowing them to “talk” one another) so a new automated account reconciliation software can interface directly with your core. The core provider is charging you directly for the design of this API. These costs would be capitalized. Once designed, the core provider also provides your institution training on the API (for a fee) – these training fees would be expensed. Any internal training expenses, such as ongoing training, would be expensed as incurred. Furthermore, if your core provider charges a maintenance fee for ongoing maintenance of the API, these fees would also be expensed as incurred. 

Given these core contracts, and the fees associated with them, can be quite voluminous, it is best practice to establish a list of the services and associated fees listed in the contract. An accounting determination can then be made in accordance with ASC 705 and 350-40 and listed next to each service/fee. Such a list can also be helpful in tracking the various credits and incentives that are being provided and how much of these credits and incentives remain to be utilized by your financial institution. 

It should be noted that the Financial Accounting Standards Board (FASB) has an ongoing project related to the accounting for and disclosure of software costs. More details and a current status update on the project can be found on the FASB’s website. A proposed Accounting Standards Update (ASU) was issued in October 2024. The proposed ASU would eliminate the project stages detailed above. Instead, costs would start to be capitalized when both of the following occur: 

1. Management has authorized and committed to funding the software project. 
2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). 

Again, this is just a proposed ASU at this time and until a final ASU is issued, financial institutions should continue to follow the project stage guidance detailed above in assessing the accounting treatment for the fees in their core contracts. As always, your BerryDunn team is here to help should you have any questions!