10 - PEDC 2015-2016 ANNUAL AUDIT REPORT

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PARIS ECONOMIC DEVELOPMENT CORPORATION (A Component Unit of the City of Paris, Texas) Notes to the Financial Statements September 30, 2016 1. Summary of SijZnificant Accounting Policies A. Description of Government -Wide Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government. Governmental activities are supported by taxes, intergovernmental revenues, and other nonexchange transactions. The statement of activities reports both the gross and net cost of Paris Economic Development Corportation's (PEDC) function (economic development). Economic development is supported by general government revenues (sales tax and interest on investments). B. Reporting Entity The Paris Economic Development Corporation is a governmental non - profit corporation established July 19, 1993, funded by a quarter percent sales tax. PEDC was organized exclusively for the purpose of benefiting and accomplishing public purposes of the City of Paris, Texas, by promoting, assisting, and enhancing economic development activities as provided by the Development Corporation Act of 1979. PEDC is a component unit of the City of Paris, Texas, and the business and affairs are managed by a five- member board of directors appointed by the governing body of the City of Paris, Texas. C. Basis of Presentation — Government -Wide and Fund Financial Statements The fund financial statements provide information about PEDC's funds. However, the financial statements include both government -wide (reporting the unit as a whole) and fund financial statements (reporting PEDC's major funds). PEDC reports the following major governmental funds General Fund - The General Fund is the general operating fund and is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund — The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long -term debt. D. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transaction or events for recognition in the financial statements. In the Statement of Net Position, the governmental activities column is reported using the accrual basis of accounting and an economic resources measurement focus, which recognizes all long -tern assets and receivables as well as long -term debt and obligations, if any. Net position is reported in various categories based on current financial reporting pronouncements. The reporting policy regarding committed classification is that when a contractual obligation is created by the governing board, the amount of the incentive is considered committed. When payments are made, they are considered to have been paid from the fund balance classification in which they were accumulated.