Applications: The MFA Story

Applications: MFA Financial Management System

A financial management system for
municipal debt financing and investing.

The Problem

The Municipal Finance Authority of B.C. employs a unique business model that pools the borrowing capacity of its members to leverage better rates for financing the projects of local government organizations in the Province of British Columbia. The remarkable success achieved by the MFA led to an increasing client base with larger and more complex financial requirements. An existing legacy system operating on an AS/400 computer could not handle the changes needed to meet these new challenges. Furthermore, not all the required changes could be predicted in advance because the MFA's business model was expected to change in response to outside influences, including possible changes in its mandate and other demands imposed by the ever-changing financial world.

The Solution

Acquired Intelligence is primarily a developer of knowledge-based products and applications. However, most artificial intelligence applications involve development of database, web, and other components using standard programming languages and tools in addition to knowledge-based technologies. The MFA Financial Management System was developed as a secure, web-based J2EE and Oracle database application that handles short and long term debt, investments, leasing, and expense management, all integrated with a custom general ledger program.

Issue Management (Long Term Debt)

The Issue Management Module is the core of the MFA Financial Management System. It creates and manages all operations on "Issues". An Issue is associated with one or more debt instruments that provide funds that subscribing members can borrow. The interest for the debt instruments is serviced by payments from the members according to the amounts they borrow, but the principle portion is retained for investment purposes until the debt instruments mature. Earnings from investments are periodically distributed to members. Over the life of the issue, profits from investments are used to reduce the amount required from members for final payment, usually resulting in early retirement of their debt obligations. Although this explanation is simplified, this is the fundamental core of the MFA's business model.

The Issue Management Module provides all the functionality to create, launch, and manage an issue over its (up to 30-year) life cycle, including automatic billing of members; maintenance of debt payment schedules; buying, selling and re-allocating investments; distributing profits, interest, and investment management fees; providing checks and balances through cashflow reporting; answering queries about issue and member status; and providing account tracking and transaction summary information to the General Ledger Module for further analysis and reporting.

Custom General Ledger

The General Ledger Module is comprised of two parts: one for issue-based accounts related to the Issue Management Module, and another for non-issue accounts to support other MFA operations. The issue-based accounts record all journal entries provided automatically by the Issue Management Module in an account structure specifically designed to help the MFA manage and provide audit information for issue-based financing. Erroneous entries can be automatically replaced if detected prior to posting, or retracted otherwise. Additional accounts and manual transactions can be manually created to support additional financial analysis and reporting. User privileges are controlled at the functional level, and can be configured by roles. XML technology is used extensively to filter reports so that only the information allowed by user privileges is presented in any report. Non-issue accounts are supported by manual account and journal entry creation in any structure the user desires in order to provide General Ledger services to the MFA's other business processes (e.g. operating accounts).

Leasing

The MFA's leasing service enables almost anything (fire trucks, computers, buildings, land, etc.) to be leased at lower rates through a process that greatly eases the administrative burden on the MFA's members. The Leasing Module manages a lease throughout its life, from initial application (with all required documentation), approval, funding, automatic billing, and termination or renewal of the lease. The Leasing Module also provides a secure web interface for members (to review the status of their leases).

Short Term Debt Management

The Issue Management Module provides funds for terms ranging from 5 to 30 years but money is sometimes needed on a more temporary basis. The Short Term Debt Management Module secures funds from the Commercial Paper program and its Line of Credit in response to requests for short term debt from the Issue Management, Leasing, and Interim Financing modules.

Expense Mangement

The Expense Management Module handles all payments required by any of the modules in the Financial Management System and also handles revenues and payments required in the normal operations of the Municipal Finance Authority.

Technologies Used

J2EE (Java 2 Enterprise Edition) using EJB, JSP, JNDI, JDBC
Javascript
XML
Oracle 9i
Orion