AGENDA - Finance Advisory Committee - 20150428FINANCE
ADVISORY COMMITTEE
MEETING AGENDA
TUESDAY,APRIL 28,2015
5 P.M.
LEKSAND ROOM
AURORA TOWN HALL
PUBLIC RELEASE
April 24,2015
TOWN OF AURORA
FINANCE ADVISORY COMMITTEE
MEETING AGENDA
DATE:Tuesday,April 28,2015
TIME AND LOCATION:5 p.m.,Leksand Room,Aurora Town Hall
1.DECLARATION OF PECUNIARY INTEREST AND GENERAL NATURE THEREOF
2.APPROVAL OF THE AGENDA
RECOMMENDED:
THAT the agenda as circulated by Legal and Legislative Services be approved.
3.RECEIPT OF THE MINUTES
4.DELEGATIONS
(a)Paul Duggan,Director of Audit Services,York Region pg.1
Re:N6 Internal Audit Services
5.CONSIDERATION OF ITEMS
1.Memorandum from Town Clerk pg.2
Re:Finance Advisory Committee –Terms of Reference
RECOMMENDED:
THAT the memorandum regarding Finance Advisory Committee –Terms
of Reference be received;and
THAT the Finance Advisory Committee Terms of Reference be
amended to reflect the changes recommended by staff.
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Page 2 of 2
2.2015 Budget Process Debrief –Discussion
RECOMMENDED:
THAT the comments of the Finance Advisory Committee regarding 2015
Budget Process Debrief be referred to staff for consideration.
3.CFS15-021 –Multi-Year Budget Approach pg.5
RECOMMENDED:
THAT Report No.CFS15-021 be received for information.
4.Memorandum from Director of Corporate &Financial pg.12
Services/Treasurer
Re:Financial Information Systems –Pending Replacement Request
RECOMMENDED:
THAT the memorandum regarding Financial Information Systems –
Pending Replacement Request be received for information.
5.Agenda Items for Future Meetings –Discussion
-Citizen Budget
-Investment Income
-Other
RECOMMENDED:
THAT the Agenda Items for Future Meetings as identified by the Finance
Advisory Committee be referred to staff.
6.NEW BUSINESS
7.ADJOURNMENT
DELEGATION REQUEST
This Delegation Request form and any written submissions or background information for
consideration by either Council or Committees of Council must be submitted to the Clerk’s office by
the following deadline:
4:30 P.M.ON THE BUSINESS DAY PRIOR TO THE REQUESTED MEETING DATE
COUNCIL/COMMITTEE/ADVISORY COMMITTEE DATE:Finance Advisory Committee April 28,
2015
SUBJECT:N6 Internal Audit Services
NAME OF SPOKESPERSON:Paul Duggan,Director of Audit Services
NAME OF GROUP OR PERSON(S)BEING REPRESENTED (if applicable):
York Region
BRIEF SUMMARY OF ISSUE OR PURPOSE OF DELEGATION:
To update the committee on the role and activities within the N6 Municipalities.
PLEASE COMPLETE THE FOLLOWING:
Have you been in contact with a Town staff or Council member
regarding your matter of interest?YES ☐NO ☐
IF YES,WITH WHOM?CAO DATE:April 22,2015
☒I acknowledge that the Procedural By-law permits five (5)minutes for Delegations.
Legal and Legislative Services
905-727-3123
CSecretariat@aurora.ca
Town of Aurora
100 John West Way,Box 1000
Aurora,ON L4G 6J1
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Delegation (a)Page -1
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MEMORANDUM
DATE:April 28,2015
TO:Mayor and Members of Council
FROM:Stephen M.A.Huycke,Town Clerk
RE:Finance Advisory Committee –Terms of Reference
RECOMMENDATIONS
THAT the memorandum regarding Finance Advisory Committee –Terms of
Reference be received;and
THAT the Finance Advisory Committee Terms of Reference be amended to reflect the
changes recommended by staff.
COMMENTS
On December 16,2014 Council established the Finance Advisory Committee (FAC)by
adopting the following resolution:
NOW THEREFORE BE IT HEREBY RESOLVED THAT a Finance Advisory
Committee be established for the current Term of Council and that the draft Terms of
Reference,which were developed in consultation with the Director of Corporate and
Financial Services/Treasurer to reflect the current needs of the Corporation and
Council,be approved.
Staff recommend that section 6 of the approved FAC Terms of Reference,titled “Meetings
Times and Locations,”be amended to read as follows:
The Committee shall normally meet four times per year.Meeting dates,times and
locations shall be determined by the Chair.The Chair may call additional meetings
of the Committee as required.
The recommended changes will ensure that the Committee has the flexibility to schedule its
meetings to accommodate the attendance of all committee members
ATTACHMENTS
Attachment 1 -Revised Finance Advisory Committee Terms of Reference
100 John West Way
Box 1000
Aurora,Ontario
L4G 6J1
Phone:905-727-3123 ext.4771
Email:shuycke@aurora.ca
www.aurora.ca
Town of Aurora
Legal &Legislative Services
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 1 Page -1
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2014-2018 Boards and Committees
FINANCE ADVISORY COMMITTEE
TERMS OF REFERENCE
1.PURPOSE
The primary function of the Finance Advisory Committee is to assist Council and the
Corporation in fulfilling its fiscal responsibilities by reviewing and recommending on
the long range corporate financial planning process;capital planning initiatives and
fiscal policy matters.
The Committee mandate shall include proactive advance input into the annual
budgeting processes with a view to enhancing reporting and analysis mechanisms to
ensure we are delivering values programs and services in the most effective and
efficient manner.
2.MEMBERSHIP
The Committee shall be composed of three (3)Councillors.
As part of its mandate the Committee shall also cultivate a consultative advisory group
comprised of community members who have financial qualifications and experience
within the public/private sector (i.e.,Chief Financial Officer or Vice President Finance)
from which it will periodically obtain input with respect to specific projects or initiatives.
3.TERM
The Committee shall hold office for a term of four years concurrent with the term of
Council.
4.REMUNERATION
None
5.DUTIES AND FUNCTIONS
The Committee shall review and make recommendations to Council in the following
areas:
•long-range,corporate financial planning policy/process that would enhance
the long-term financial health of the Corporation
•the annual capital and operating budget process and financial reporting process
to enhance:
1.the higher level policy decision-making role of Council
Attachment #1
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 1 Page -2
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Finance Advisory Committee
Terms of Reference
Page 2 of 2
2014-2018 Boards and Committees
2.the existing reporting/analysis tools to assist Council’s decision-making
process
3.the timing and extent of public participation in the process
•the business practices of the organization,identifying opportunities that would
increase effectiveness and efficiencies
•fiscal policy matters
•the annual performance measures report to the Province,noting the relative
position of Aurora with comparator municipalities in the designated
categories
•undertake other assignments as may be requested by Council from time to time.
6.MEETING TIMES AND LOCATIONS
The Committee shall normally meet four times per year.Meeting dates,times and
locations shall be determined by the Chair.The Chair may call additional meetings of
the Committee as required.
7.STAFF SUPPORT
Technical support shall be provided by the CAO and the Director of Corporate
&Financial Services -Treasurer.The Legal &Legislative Services Department shall
provide administrative support services to the Committee.
8.AGENDAS
Agendas are set by the Director in consultation with the Chair.
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 1 Page -3
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FINANCE ADVISORY COMMITTEE REPORT No.CFS15-021
SUBJECT:Multi-Year Budget Approach
FROM:Dan Elliott,Director,Corporate &Financial Services -Treasurer
DATE:April 28,2015
RECOMMENDATIONS
THAT Report No.CFS15-021 be received for information.
PURPOSE OF THE REPORT
To present information to the Finance Advisory Committee for discussion and
consideration with respect to the implementation of multi-year budgets and approvals
for the Town of Aurora.
BACKGROUND
At its budget meeting held January 26,2015,General Committee considered and
recommended for adoption staff report CFS15-004,“Proposed changes to annual
budget approach and timing”.That report outlined five changes to the budget approach
to be used for 2015 and forward as follows:
Introduction of the Asset Management Plan (AMP)document,merging it with the
current annual Ten Year Capital Investment Plan
Combining together the annual capital budget with the review of the combined
Asset Management Plan and Ten Year Capital Investment Plan documents,and
completing this review and approval of capital into late September of each year.
Maintaining the review of the Annual Operating Budget in the late Fall
Introduction of multi-year operating budgets
Incorporation of a focus on budget changes,and service levels,and Key
Performance Indicators (KPI’s)rather than detailed departmental operational
budget reviews.
Transferring the detailed departmental budget reviews to the new Finance
Advisory Committee,to be conducted on a periodic basis at the discretion of the
Finance Advisory Committee outside of the operating budget review and
approval process.
TOWN OF AURORA
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 3 Page -1
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April 28,2015 -2 -Report No.CFS15-021
COMMENTS
Multi-Year Budget Process
Section 291 of the Municipal Act,2001,S.O.2001,c.25 as amended (the “Act”)makes
provision for multi-year budgets to be used by municipalities.A council may approve a
multi-year budget for a period of two to five years,in which each year’s details are
shown separately.Annually thereafter,Council must review and “re-adopt”that year’s
budget,reflecting any changes necessary to reflect the surplus or deficit actual results
of the prior year’s budget (Section 290(4)(b)changes).Any multi-year budget which
reaches beyond an election,the budget for the first year following the election must be
reviewed and re-adopted by the newly elected Council.
A number of municipalities are beginning to utilize formal multi-year budgets.The Town
of Aurora has been working for a couple of years to forecast key pressures facing the
municipality in the following three years,and provide Council with this tax pressure
forecast.Staff are now in the position to improve upon this and actually present Council
with multi-year detailed future budgets beginning with the presentation of the 2016 to
2018 budget years in 2015.
It was proposed that the 2015 budget process include consideration and approval of the
3 year budget forecast as the targets for future years.
For the 2016 budget process,staff would then undertake to present a detailed multi-
year budget which reflects the forecast target tax increases for review and approval by
Committee.Such an approach would allow Council to consider the budget across a
longer time horizon and plan for service level changes.Accordingly the annual budget
would be a continually rolling four year multi-year budget.
The process would be as follows:
1.2015 Operating budget reviewed and approved (spring 2015)
2.Three year operating forecast presented,reviewed and approved (spring 2015)
3.2016-2019 four year rolling operating budget reviewed and approved (fall 2015)
4.2017-2020 four year rolling operating budget reviewed and re-adopted (fall 2016)
5.2018-2021 four year rolling operating budget reviewed and re-adopted (fall 2017)
6.2019-2022 four year rolling operating budget reviewed and approved
(reconfirmed or recast by new Council,spring 2019)
All assumptions of growth,new staffing proposals,and key pressures included will be
disclosed for each year of the outlook years.Any significant changes of regulations,
requirements,major decisions of Council,or newly approved initiatives will result in a
variance in the final budget from the previously approved budget and forecast.
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 3 Page -2
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April 28,2015 -3 -Report No.CFS15-021
Moving to multi-year budgets will improve the operational efficiency of the municipalities
through improved long range planning,and integration of Strategic Plan objectives,and
discussion of service levels,rather than annually looking at each budget line item
throughout the corporation.
York Region now uses multi-year budgeting in this manner,although their intent is to
only seek formal forecast approvals for budgets within the term of the approving
Council,which could be adopted for Aurora.
The basic premise of the multi-year budget approach is that a future budget which
meets the approved tax rate target will be approved by Council.Any variations would
need to be fully explained in the presentation of such.It is important to note that
Committee or Council can still make amendments to those future approved forecasts
based on new initiatives,new regulations,or changing circumstances.
By making informed decisions regarding forecast tax pressures in the annual budget,
Committee can essentially preapprove future budgets based on the forecast,with the
intent that approval is expected at such tax pressure,unless additional budget
pressures are imposed by service level decisions of Council in the interim,new
regulatory amendments or significant economic circumstances which affect the Town’s
budget.Using this presumed approval and multi-year approach to developing budgets
will give several advantages:
better coordination of budgeting and strategic priorities,
greater certainty for departments in managing expenditures and service
levels
improved fiscal discipline of the organization
streamline annual budget reviews to focus on key changes in assumptions
and outlooks,and the reasons driving such changes
allow staff to develop budgets with fixed targets in place,allowing early
response to circumstances and budget constraints of such targets.
Discussion
Three existing tax rate pressures in addition to annual inflation
Currently,General Committee has approved a funding strategy for the expansion of fire
services and the implementation of the updated Fire Master Plan to increase property
taxes by 1.3%per year for 6 years,for the period 2015 to 2020.
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 3 Page -3
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April 28,2015 -4 -Report No.CFS15-021
Council is also committed to increase property taxes in order to increase its
contributions to reserves for funding needed infrastructure rehabilitation and renewal.
The annual ten year capital plan outlines and updates the strategy each year.The
driver for the need for current tax increases in this regard is a historical underfunding of
contributions to infrastructure reserves,and the detailed planning and forecasting taking
place for the management of infrastructure.This situation is being experienced in most
municipalities across Canada,particularly by those municipalities such as Aurora who
implemented long periods without increasing taxes.This actually made matters worse,
as the core operations of the Town experiences inflationary pressures every year,as
does the cost of rehabilitation and replacement of infrastructure.
Council is also pursuing a strategy to reduce its operating budget reliance on interest
earned and transferred from the Hydro Sale Investment Reserve Fund,as well as its
reliance on Supplementary Tax revenues.
These three noted key strategies must be implemented over and above normal
operational inflationary pressures.Council and staff would need to recognize the need
to increase base operating budgets,in expense allocations as well as fees &charges,
by inflationary allowances each year.Not doing so may constrain the ability to continue
to deliver services and programs year after year without dilution of the quality or quantity
of such.Increasing expenses for inflation,but ignoring fees will add additional pressure
to the tax rate in excess of inflation levels.Increased tax revenue from a growing
municipality,or “growth revenue”needs to be used to fund the expansion and extension
of operational services to these new residents and business through increased
spending,and should not be considered a mitigating factor for inflation or tax increases.
Based on the above,it is recommended by staff that budget directions or approval of
forecasts be in the form clearly worded directives.It may be possible that such
directives are worded such that they remain effective for multiple years,allowing a
consistent budget development approach and review process.Below are some
statements that could be combined to compile such a Council Budget Direction.
Approach #1
core services program net budget,excluding Fire &Emergency Services and
fiscal strategies,be limited to inflationary increases of the 12 month July to June
Toronto Area Consumer Price Index (CPI)
all fees and charges be indexed by a minimum of the 12 month July to June
Toronto Area CPI.
a 1.3%tax increase be levied to fund the multi-year budget requirements of
Central York Fire Services and their pending expansion of service
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 3 Page -4
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April 28,2015 -5 -Report No.CFS15-021
in addition to the above,an additional tax increase of x%be levied for purposes
of increasing the contributions to infrastructure reserves for the ultimate
rehabilitation and replacement of infrastructure,to reduce the operational budget
reliance on interest from the hydro reserves and to reduce the budget reliance on
temporarily high supplementary tax revenues;and
in addition,staff bring forward a list of options to reduce administrative or
operational net budgets by $xxx,xxx,half by revenues,and half by expenditure
reductions,together with a list of options to reduce program and service
operational net budgets by $xxx,xxx,also half by revenue increases,and half by
expenditure reductions,together with the implications of such.
Approach #2
the Town’s core services program expenditure budget be targeted to a year over
year Fiscal Sustainability Index value of between 0.85 and 1.0,excluding
corporate expenditure items
the Town’s non-tax revenues budget be targeted to a similar year over year
“revenue sustainability index”value of between 0.85 and 1.1,with minimum
indexing of all fees and charge rates by the Toronto area CPI
the Town’s core services program net budget,excluding Fire &Emergency
Services and fiscal strategies,be limited to inflationary increases of the 12 month
July to June Toronto Area CPI
in addition to the operational inflationary budget increase,a 1.3%tax increase be
levied to fund the multi-year budget requirements of Central York Fire Services
and their pending expansion of service;and
an additional tax increase of x%be levied for purposes of increasing the
contributions to infrastructure reserves for the ultimate rehabilitation and
replacement of infrastructure,to reduce the operational budget reliance on
interest from the hydro reserves and to reduce the budget reliance on temporarily
high supplementary tax revenues
Approach #3
the Town’s core services program expenditure budget be targeted to a year over
year Fiscal Sustainability Index value of between 0.85 and 1.0,excluding
corporate expenditure items
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 3 Page -5
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April 28,2015 -6 -Report No.CFS15-021
the Town’s non-tax revenues budget be targeted to a similar year over year
“revenue sustainability index”value of between 0.85 and 1.1,with minimum
indexing of all fees and charge rates by the Toronto area CPI
the Town’s core services program net budget,excluding Fire &Emergency
Services and fiscal strategies,be limited to x%for fiscal 2016,x%for fiscal 2017
and x%for fiscal 2018
in addition to the operational inflationary budget increase,a 1.3%tax increase be
levied each year to fund the multi-year budget requirements of Central York Fire
Services and their pending expansion of service;and
an additional tax increase of x%for 2016,x%for 2017 and x%for 2018 be levied
for purposes of increasing the contributions to infrastructure reserves for the
ultimate rehabilitation and replacement of infrastructure,to reduce the
operational budget reliance on interest from the hydro reserves and to reduce the
budget reliance on temporarily high supplementary tax revenues
LINK TO STRATEGIC PLAN
Developing multi-year budgets supports improved coordination and achievement of
strategic plan objectives and goals through improved departmental planning,
coordination and alignment with such plans over a longer period of fiscal certainty.
ALTERNATIVE(S)TO THE RECOMMENDATIONS
Finance Advisory Committee could refer this matter back to staff for a report with a
detailed outline of forecast pressures for the next three budget years,together with
specific recommendations similar in nature to Approach #x set out in report CFS15-021
for consideration at the next meeting of the Finance Advisory Committee.
Finance Advisory Committee could refer this matter to General Committee –Budget for
consideration.
FINANCIAL IMPLICATIONS
There are no direct financial implications of this report.
Finance Advisory Committee Meeting Agenda
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Finance Advisory Committee Meeting Agenda
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April 28, 2015 -7-Report No. CFS15-021
CONCLUSIONS
Implementing multi-year budgets as outlined above will bring stability and predictability
to delivery of services, predictability to tax rates in the future, and streamline annual
budget development and review processes.
PREVIOUS REPORTS
January 26, 2015 , General Committee-Budget Report CFS15-004 "Proposed changes
to annual budget approach and timing"
ATTACHMENTS
None
PRE-SUBMISSION REVIEW
Executive Leadership Team -Thursday, April 16, 2015
Prepared by: Dan Elliott, Director of Corporate & Financial Services -Treasurer
Director of Corporate & Financial
Services -Treasurer
UM-
Neil Garbe
Chief Administrative Officer
MEMORANDUM
DATE:April 28,2015
TO:Mayor and Members of Finance Advisory Committee
FROM:Dan Elliott,Director,Corporate &Financial Services -Treasurer
RE:Financial Information Systems –Pending Replacement Request
RECOMMENDATIONS
THAT the memorandum regarding Financial Information Systems –Pending
Replacement Request be received for information.
Prior to 2015,staff had identified systemic constraints with the financial system in several
areas including:
1.Human Resource system does not interface with the Payroll module
2.The Budget system is separate from the General Ledger system,creating
many difficulties for recurring reporting and analysis needs.The budget
binder materials are substantially produced off line from the systems.
3.Procurement system module is using manual work-arounds at year ends to
meet the business needs.
4.The G/L system is not capable of handling the new PSAB accounting
requirements for tangible capital assets.
5.The Financial Statements were being prepared off line,and now being
prepared using a separate piece of software due to limitations with the GL
system.
6.The current systems do not readily support project managers in managing
the key financials of their projects,and these must be undertaken off line.
7.Current system is not designed to budget and track costs by service line.
8.Management dashboard reporting is unavailable with the current systems
due to the variety of systems involved.
9.In general,the reporting capability of the financials has deficiencies in the
user friendliness,report customization,and ease of outputs.
Staff have been working over the past number of years to optimize the existing systems in
an attempt to bring internal resolution to the above issues.While some success has been
seen,the solutions have not been addressing the root cause of systemic and integration
issues.The end result is a continuation of work-around approaches,and does not
effectively streamline the Town’s business processes to an efficient level for use by staff and
Council.The existing system took a long period of time to implement initially,with a go-live in
2005.
Town of Aurora
Corporate &Financial Services
Finance Advisory Committee Meeting Agenda
Tuesday,April 28,2015 Item 4 Page -1
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Page 2
The Town previously had in its long range capital plan a replacement of the Financial
System in its plans for the year 2013.At that time,staff were still hopeful changes could be
made to extend the life of the current system.The Human Resources/Payroll issues have
been addressed with the recent selection of a new cloud solution which is in late stages of
pre-implementation testing,with an expected go-live date in the summer 2015.
Following the most recent budget process and the reporting expectations of the system,
together with the ongoing work-arounds and difficulties in monthly reporting,staff have now
concurred that the system should be replaced,with a core focus in the new system being a
wholly integrated “procurement to payment”cycle,budget and GL,as well as contract
management capabilities,being a spin-off from the procurement component.
In the coming weeks,staff will be preparing and presenting a detailed report outlining the
need for a financial system replacement,and will seek mid-year budget amendment to add
some consulting funding to the 2016 Capital Budget to begin the work of specification,
tendering and selecting a new financial system for the Town.
At this time,it is unclear what the total cost of the project will be,particularly now with the
advent of cloud based solutions where the software is not actually purchased but rather is
annually licenced.Total costs for the system,licencing,and implementation costs including
staff back fills could range from $500,000 to $1.5 million using rough estimates based on
experience.
Replacement of a business financial system is a major interruption to the ongoing business
activities of any organization.A critical key to the success of the implementation will be
bringing in of third party project management expertise with the specific experience of
financial systems replacement.In addition to project leadership skills,critical in-house staff
familiar with various processes,needs,and systems currently in place,must be teamed
together to ensure implementation addresses all concerns,required internal controls and
that new processes are logical,efficient and effective.
It is critical at the outset that Council recognize the magnitude of this undertaking,and that it
will require dedicated staff resources similar in fashion to the electronic document
management system project.
The following outlines a rudimentary project outline,with refinements to occur as the project
proceeds:
Heads-up report to Finance Advisory Committee (today)
Mid-year budget request to GC (May 2015)
Alert external auditors to project and engage as necessary for process controls
Procure and engage consultant for development of business needs &specifications and
tender preparation/evaluation
Update to Capital Budget funding during 2016 Capital Budget process
Tender award for system to Council
Develop detailed implementation plan with vendor and project manager for
implementation.Identify internal resources required and arrange backfill as necessary
funded from project budget.
Project status reports to Executive Information Technology Steering Committee
Configure,test,train,and go-live
Post implementation review/debrief
Finance Advisory Committee Meeting Agenda
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Page 3
For reference,the following diagram illustrates the current components and modules of the
core business systems of the Town,highlighting those which are targeted to be replaced
with a new singular system.
Components of the Town’s Financial Business Systems
All green shaded boxes above are components of
the same “core financial system”software.The
other colours denote independent systems,which
have been interlinked in different ways to the core
financial system.
General
Ledger
Accounting
System
Accounts
Payable
Module
Budget
Software
Financial
Reporting
Module
Procure
Module
Capital
Asset
Accounting
Software
Financial
Statement
Prep.
Software
Project
Mgmt
(manual)
Cityview
WAMIS
Class Prog.Reg.
By-law Ticketing
Tax Billing Admin.
Water Bill Admin.
Cashiering
Module Other Business Systems
with connections to
Financial Systems
HRIS/Payroll
Core Systems and Components to be Replaced
Misc.A/R
Module
Finance Advisory Committee Meeting Agenda
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