Paris Economic Development Corp. FY 2005-06

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[ MCCLANAHAN AND HOLMES, LLP CERTIFIED PUBLIC ACCOUNTANTS Independent Auditors' Report 228 SIXTH STREET, S.E. PARIS, TEXAS 75460 903.784-4316 FAX 903-784-4310 304 WEST CHESTNUT DENISON, TEXAS 75020 903-465.6070 FAX 903.465.6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903.583.5574 FAX 903-583-9453 R. FRANK RAY, CPA R. E. BOSTWICK, CPA STEVEN W. MOHUNDRO, CPA GEORGE H. STRUVE, CPA ANDREW B. REICH, CPA Board of Directors Paris Economic Development Corporation Paris, Texas We have audited the accompanying financial statements of Paris Economic Development Corporation (PEDe), a component unit of the City of Paris, Texas, as of and for the year ended September 30, 2006, as listed in the table of contents. These [mancial statements are the responsibility ofPEDC's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audit provides us with a reasonable basis for our opinion. PEDC has not provided a valuation allowance for a note receivable which may not be fully collectable. In our opinion such allowance should be provided in order to conform with accounting principles generally accepted in the United States of America. This matter is further discussed in note 5 to the financial statements. In our opinion, except for the effects of not providing a valuation allowance as discussed above, the financial statements referred to above present fairly, in all material respects, the financial position of Paris Economic Development Corporation as of September 30, 2006, and the results of its activities for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The Continuing Disclosure Information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it. The budgetary comparison information on Page 8 is not a required part of the financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. PEDC has not presented Management's Discussion and Analysis which accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the financial statements. rhdLcww~ owl /I~, (LI Certified Public Accountants January 4, 2007 Paris, Texas AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS