Paris Economic Development Corp. FY 2006-07

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Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2007 Note 2: Summary of Significant Accounting Policies (Continued) 2) Restricted Assets and Fund Balance Reserves Certain resources set aside for repayment of revenue bonds and related interest are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The Debt Service Fund is used to accumulate resources for debt service payments over the next twelve months. Governmental funds report reservations of fund balances for amounts that are not considered a current financial resource. The Reserve Fund is accumulated for the purpose of retiring the last of any bonds as they become due or for debt service when the Debt Service Funds are insufficient 3) Land Development Cost -Industrial Park PEDC has acquired land and added improvements to develop an industrial park which is to be divided and sold to businesses wanting to locate their facilities in such an area.. Land and added improvements are not depreciated because they are expected to be sold and are not used in PEDC's ongoing activities. 4) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For the yeaz ended September 30, 2007, expenditures exceeded budgeted amounts in the General Fund in Special Service Fees ($42,009), Furniture and Fixtures ($5,501), Travel Expenses ($7,464), Contractual Associations ($1,706), Promotional Advertising ($7,897), Sundry Charges ($2,615), Utilities ($4,157), and Debt Principal ($151). Note 3: Deposits and Investments PEDC maintains accounts in several financial institutions. At September 30, 2007, the carrying amount of demand deposits and certificates of deposit was $833,366 and the bank balance was $870,544 which was covered by federal depository insurance in the amount of $585,000 leaving $285,544 which was exposed to custodial credit risk since all deposits were not insured. Note 4: Public Funds Investment Pools Public funds investment pools in Texas (Pools) are established under authority of the Interlocal Cooperation Act, Chapter 79 of the Texas Government Code, and aze subject to the provisions of the Public Funds Investment Act (the Act), Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the Pool and other persons who do not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio within one-half of one percent of the values of its shares.