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CITY OF PARIS, TEXAS <br />Notes to Financial Statements (Continued) <br />September 30, 2022 <br />IV. Detailed Notes on All Activities and Funds (Continued) <br />B. Investments (Continued) <br />Interest rate risk is the policy of the City to invest public funds in a manner which will provide the highest <br />investment return with the maximum security while meeting the daily cash flow demands of the entity and <br />conforming to all state and local statutes governing the investment of public funds. The City's investment <br />portfolio is designed with the objective of attaining an acceptable rate of return throughout budgetary and <br />economic cycles and commensurate with the City's investment risk constraints and the cash flow characteristics <br />of the portfolio. The City's investment strategy is active. Given this strategy, the basis used by the Finance <br />Director to determine whether market yields are being achieved shall be the Average Fed Funds rate. No other <br />formal policy related to interest rate risk is included in the City's adopted investment policy. <br />Credit risk is the risk that an issuer of an investment will not fulfill its obligations to the holder of the <br />investment. This type of risk is typically expressed in terms of the credit ratings issued by a nationally <br />recognized statistical rating organization. The City and PEDC reduce the risk of issuer default by limiting <br />investments to those instruments allowed by the Public Funds Investment Act, Chapter 2256, Texas <br />Government Code. <br />Concentration credit risk is the risk of loss attributed to the magnitude of a government's investment in a single <br />issuer. With the exception of obligations of the United States or its agencies and authorized pools, no more than <br />50% of the City's total investment portfolio will be invested in a single financial institution with the exception <br />of its local depository. PEDC's investment balance consists of only externally pooled accounts. <br />The custodial credit risk for investments is the risk that, in the event of failure of the counterparty to a <br />transaction, a government will not be able to recover the value of investment or collateral securities that are in <br />the possession of an outside party. In accordance with the City's deposit and investment policy, all deposits <br />placed at a financial institution shall be insured or collateralized with applicable State law. <br />Foreign currency risk is the risk that an investment denominated in the currency of a foreign country could <br />reduce in value as a result of changes in currency exchange rates. At September 30, 2022, the City was not <br />exposed to foreign currency risk. <br />C. Accounts Receivable and Payable <br />Amounts are aggregated into a single accounts receivable (net of allowance for uncollectibles) line for certain <br />funds and aggregated columns. Below is the detail of receivables in the aggregate, including the applicable <br />allowances for uncollectible accounts: <br />44 <br />