Paris Economic Development Corp. FY 2006-07Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Independent Auditors' Report
and Financial Statements
For the Year Ended September 30, 2007
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Table of Contents
September 30, 2007
Independent Auditors' Report
Financial Statements:
Governmental Funds Balance SheedStatement of Net Assets
Statement of Revenues, Expenditures, and Changes in Fund Balances/
Statement of Activities
Notes to Financial Statements
Required Supplementary Information -Budgetary Comparison Schedule -
General Fund
Notes to Required Supplementary Information
Continuing Disclosure Information (Unaudited)
4
10
MCCLANAHAN AND HOLMES, LLP
CERTIFIED PUBLIC ACCOUNTANTS
R. FRANK RAY, CPA 228 SIXTH STREET, S.E.
R. E. BOSTWICK, CPA PARIS, TEXAS 75460
STEVEN W. MOHUNDRO, CPA 903-784-4316
GEORGE H. STRUVE, CPA FAX 903-784-4310
ANDREW B. REICH, CPA -
304 WEST CHESTNUT
DENISON, TEXAS 75020
903-465-6070
FAX 903-465-6093
1400 WEST RUSSELL
BONHAM, TEXAS 75418
Independent Auditors' Report 903-583-5574
FAX 903-583-9453
Board of Directors
Paris Economic Development Corporation
Paris, Texas
We have audited the accompanying financial statements of Paris Economic Development Corporation (PEDC), a
component unit of the City of Paris, Texas, as of and for the year ended September 30, 2007, as listed in the table of
contents. These financial statements are the responsibility of PEDC'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 financial statement
presentation. We believe that our audit provides us with a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of PEDC as of September 30, 2007, 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 of America has determined is necessary to supplement, although not required to be part of, the
financial statements.
Certified Public Accountants
December 4, 2007
Paris, Texas
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Governmental Funds Balance Sheet/Statement of Net Assets
September 30, 2007
ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable -
Sales Tax
Accrued Interest Receivable
Restricted Assets
Bond Debt Service Fund
Cash and Cash Equivalents
Bond Reserve Fund
Cash and Cash Equivalents
Notes Receivable
Land Development Costs
Total Assets
General Debt Service
Fund Fund
$ 1,551,060 $ -
490,941 -
199,084 -
10,553 -
Governmental
Total Adjustments* Activities
$ 1,551,060 $ - $ 1,551,060
490,941 - 490,941
199,084 - 199,084
10,553 - 10,553
- 32,450 32,450 - 32,450
- 449,957 449,957 - 449,957
2,907,211 - 2,907,211 - 2,907,211
1,261,215 - 1,261,215 - 1,261,215
$ 6,420,064 $ 482,407 $ 6,902,471 $ - $ 6,902,471
LIABILITIES
Liabilities Payable
from Restricted Assets
Current Portion of Bonds Payable $ - $ - $ - $ (190,000) $ 190,000
Accrued Interest Payable - - - (16,124) 16,124
Notes Payable -
Due Within One Year - - - (369,048) 369,048
Notes Payable -
Net of Current Portion - - - (273,691) 273,691
Bonds Payable -
Net of Current Portion - - - (2,760,000) 2,760,000
Total Liabilities - - - (3,608,863) 3,608,863
FUND BALANCES/NET ASSETS
Fund Balances:
Reserved for
Long-term Notes Receivable 2,593,606 - 2,593,606 2,593,606 -
Reserved for Land Development Costs 1,261,215 - 1,261,215 1,261,215 -
Reserved for Debt Service - 482,407 482,407 482,407 -
Unreserved 2,565,243 - 2,565,243 2,565,243 -
Total Fund Balances 6,420,064 482,407 6,902,471 6,902,471 -
Total Liabilities and Fund Balances $ 6,420,064 $ 482,407 $ 6,902,471
Net Assets:
Restricted for Debt Service (276,283) 276,283
Unrestricted (3,017,325) 3,017,325
Total Net Assets $ - $ 3,293,608
*Primarily long-term liabilities not reported in the funds
See accompanying notes to financial statements.
2
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities
For the Year Ended September 30, 2007
Debt Statement
General Service of
Fund Fund Total Adjustments* Activities
Revenues:
Sales Tax $ 1,134,833 $ - $1,134,833 $ - $1,134,833
Investment Earnings 263,409 20,860 284,269 - 284,269
Total Revenues 1,398,242 20,860 1,419,102 - 1,419,102
Expenditures:
Industrial Support and Incentives 27,208 - 27,208 - 27,208
Office Supplies and Postage 9,985 - 9,985 - 9,985
Communications 3,283 - 3,283 - 3,283
Special Service Fees 67,004 - 67,004 - 67,004
Furniture and Fixtures 8,501 - 8,501 - 8,501
Travel Expenses 27,464 - 27,464 - 27,464
Public Notices 502 - 502 - 502
Contractual Associations 4,706 - 4,706 - 4,706
Promotional Advertising 32,897 - 32,897 - 32,897
Administration Fee 10,000 - 10,000 - 10,000
Personnel Compensation 73,803 - 73,803 - 73,803
Sundry Charges 6,365 - 6,365 - 6,365
Utilities 4,157 - 4,157 - 4,157
Debt Service
Principal 406,473 180,000 586,473 (586,473) -
Interest 39,665 207,478 247,143 (1,162) 245,981
Total Expenditures 722,013 387,478 1,109,491 (587,635) 521,856
Excess (Deficit) of Revenues
Over Expenditures 676,229 (366,618) 309,611 587,635 897,246
Other Financing Sources/LTses:
Transfers -Internal Activities (364,000) 364,000 - - -
Excess of Expenditures and Other Uses
Over Revenues and Other Sources 312,229 2,618 309,611 587,635 897,246
Fund Balances/Net Assets:
Beginning of the Year 7,007,835 485,025 7,492,860 (4,196,498) 3,296,362
Prior Period Adjustment (900,000) - (900,000) - (900,000)
Fund Balance at Beginning of Year
as Adjusted 6,107,835 485,025 6,592,860 (4,196,498) 2,396,362
End of the Year $ 6,420,064 $ 482,407 $6,902,471 $ (3,608,863) $ 3,293,608
*Primarily long-term liabilities not reported in the funds
See accompanying notes to financial statements.
3
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements
September 30, 2007
Note 1: Organization
The Paris Economic Development Corporation (PEDC) 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 alive-member board of directors appointed by the governing
body of the City of Paris, Texas.
Note 2: Summary of Significant Accounting Policies
A. Measurement Focus, Basis of Accounting, and Basis of Presentation
The accounting policies of PEDC conform to accounting principles generally accepted in the United
States of America as applicable to governments. The following is a summary of the more significant
accounting policies:
Financial Statements -Combined Governmental Funds and Government-Wide Statements
PEDC's financial statements include both government-wide (reporting the unit as a whole) and
fund financial statements (reporting PEDC's major funds).
In the Statement of Net Assets, the governmental activities column is reported on a full accrual,
economic resource basis, which recognizes all long-term assets and receivables as well as long-
term debt and obligations, if any. Net assets are reported in two parts -restricted for debt expense
and unrestricted net assets.
The Statement of Activities reports both the gross and net cost of PEDC's function (economic
development). Economic development is supported by general government revenues (sales tax,
interest on investments, etc.).
The financial transactions of PEDC are reported in two individual funds in the combined financial
statements. These funds are accounted for by providing a separate set of self-balancing accounts
that comprise their assets, liabilities, fund equity, revenues, and expenditures/expenses. The focus
of the governmental funds' measurement (in the fund statements column) is upon determination of
financial position and changes in financial position (sources, uses, and balances of financial
resources) rather than upon net income. The following is a description of the governmental funds
of PEDC:
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.
B. Assets, Liabilities, and Net Assets
1) Deposits and Investments
Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term
investments with original maturities of three months or less from the date of acquisition.
Investments are stated at market value.
4
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.
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2007
Note 4: Public Funds Investment Pools (Continued)
PEDC's investments in Pools are reported at an amount determined by the fair value per share of the
Pool's underlying portfolio, unless the Pool is 2a7-like, in which case they are reported at share
value. A 2a7-like Pool is one which is not registered with the Securities and Exchange Commission
(SEC) as an investment company, but nevertheless has a policy that it will, and does, operate in a
manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940.
Temporary investments at September 30, 2007, are invested in Lone Star Investments ($413,416 )
(Texas Political Subdivisions Investment Pool) and MBIA Municipal Investors Service Cotp.
($1,277,627). These investments are reported with the bank accounts as Cash and Cash Equivalents.
Note 5: Notes Receivable
PEDC has a note receivable bearing interest at 7.00% from a corporation located in Paris, Texas, to
assist with the purchase of an existing business. The note is due in monthly installments of principal
and interest of $32,000 through April 15, 2017, at which time the remaining principal is due. This
note is secured by a security agreement, which lists PEDC as having a subordinate interest in all
respects to the financial institution involved and to other individuals as listed in the security
agreement. The balance of this note at September 30, 2007, was $2,669,211.
PEDC and C-Tech, Inc. entered into an incentive agreement and a loan agreement dated June 16,
2003. PEDC agreed to grant C-Tech, Inc. certain economic incentives in consideration of C-Tech's
agreement to conduct business, create new jobs over a certain period of time, and execute and
deliver anon-interest bearing promissory note in favor of PEDC with an original principal amount of
$1,500,000. C-Tech, Inc. did not comply with the terms of the agreements and the terms were
renegotiated. On July 25, 2007, a new agreement became effective which provided for an immediate
payment of $250,000, an additional payment of $50,000 by December 1, 2007, and monthly
payments of $6,000 until $200,000 is paid, beginning September 1, 2007. The balance remaining of
the original note is $238,000. The independent auditors' report for the year ended September 30,
2006, was qualified because a valuation allowance was not provided for the note and the amount of
the uncollecrible portion is reflected as an adjustment to the beginning fund balance.
Note 6: Notes and Bonds Payable
PEDC has executed a note payable to fund an incentive agreement with a corporation planning to
create and operate a computer services business in Paris, Texas. The note beazs interest at a rate of
3.692% with principal and interest payments due on a monthly basis. The note is secured by a tax
assignment and security agreement. It also contains, to the extent permitted by law, a right of setoff
in all accounts PEDC has with the lender. The balance of the note at September 30, 2007, was
$161,990.
A second note has also been executed to fund this incentive agreement and funding for an industrial
park. This note beazs interest at a rate of 4.942% with principal and interest payments due on a
monthly basis. The note is secured by a tax assignment and security agreement. It also contains, to
the extend permitted by law, a right of setoff in all accounts PEDC has with the lender. The balance
of the note at September 30, 2007, was $480,750.
PEDC has outstanding Paris Economic Development Corporation Taxable Sales Tax Revenue
Bonds, Series 1998 originally issued at $4,200,000, bearing interest at 6.25% to 7.75%. Principal
payments are due serially in varying annual amounts to September 1, 2018, from $190,000 to
$365,000.
6
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Financial Statements (Continued)
September 30, 2007
Note 6: Notes and Bonds Payable (Continued)
Sales and Use Taxes (one-quarter of one percent) levied by the City of Paris, Texas, within its
boundaries under the Development Corporation Act of 1979, are pledged for payment of bonds and
interest. The resolution authorizing the issuance of the bonds requires that monthly deposits be made
to the Debt Service Fund in an amount sufficient to pay the next maturing bonds and interest.
A Reserve Fund is required to be maintained with a balance of at least $388,708, the average annual
principal and interest requirements of the bonds. At September 30, 2007, the balances in the Debt
Service Fund and Reserve Fund are $32,450 and $449,957, respectively.
Debt Service requirements related to these bonds and the notes are as follows for the years ended
September 30:
Bonded Debt Requirements Note Payable Note Payable
Years Principal Interest Principal Interest Principal Interest Total
2008 $ 190,000 $ 193,486 $ 161,990 $ 2,549 $ 207,058 $ 19,442 $ 774,525
2009 200,000 178,761 - - 217,733 8,767 605,261
2010 215,000 166,261 - - 55,959 473 437,693
2011 230,000 152,716 - - - - 382,716
2012 245,000 138,111 - - - - 383,111
2013-2017 1,505,000 428,856 - - - - 1,933,856
2018 365,000 24,181 - - - - 389,181
$ 2,950,000 $ 1,282,372 $ 161,990 $ 2,549 $ 480,750 $ 28,682 $ 4,906,343
A summary of long-term liability transactions for the year ended September 30, 2007, is as follows:
Balance Balance
September 30, September 30,
2006 Additions Reductions 2007
Bonded Debt $ 3,130,000 $ - $ 180,000 $ 2,950,000
Note Payable 371,360 - 209,370 161,990
Note Payable 677,852 - 197,102 480,750
Total $ 4,179,212 $ - $ 586,472 $ 3,592,740
Note 7: Commitments
There are currently no outstanding incentive agreements by PEDC however, $10,000 has been
approved as a matching contribution for a skills development grant.
Note 8: Risk Management
PEDC is exposed to various risks of loss and has obtained insurance related to general liability, loan
enforcement liability, errors and omissions liability, and automobile liability.
7
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Required Supplementary Information
Budgetary Comparison Schedule -General Fund
For the Year Ended September 30, 2007
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues:
Sales Tax $ 1,000,000 $ 1,000,000 $ 1,134,833 $ 134,833
Investment Earnings 214,121 214,121 263,409 49,288
Total Revenues 1,214,121 1,214,121 1,398,242 184,121
Expenditures:
Industrial Support and Incentives 1,345,479 1,345,479 27,208 1,318,271
Office Supplies and Postage 10,000 10,000 9,985 15
Commuications 3,500 3,500 3,283 217
Special Service Fees 25,000 25,000 67,004 (42,004)
Furniture and Fixtures 3,000 3,000 8,501 (5,501)
Travel Expenses 20,000 20,000 27,464 (7,464)
Public Notices 1,000 1,000 502 498
Miscellaneous 1,000 1,000 - 1,000
Contractual Associations 3,000 3,000 4,706 (1,706)
Promotional Advertising 25,000 25,000 32,897 (7,897)
Administration Fee 10,000 10,000 10,000 -
Personnel Compensation 120,133 120,133 73,803 46,330
Sundry Charges 3,750 3,750 6,365 (2,615)
Utilities - - 4,157 (4,157)
Debt Service
Principal 406,322 406,322 406,473 (151)
Interest 39,816 39,816 39,665 151
Total Expenditures 2,017,000 2,017,000 722,013 1,294,987
Excess (Deficit) of Revenues
Over Expenditures
Other Financing Sources/LJses:
Transfer to Debt Service Fund
Net Change in Fund Balances
Fund BalanceslBeginning of the Year
(802,879) (802,879) 676,229 1,479,108
(387,000) (387,000) (364,000) 23,000
(1,189,879) (1,189,879) 312,229 1,502,108
7,007,835 7,007,835 7,007,835 -
Prior Period Adjustment - - (900,000) (900,000)
Fund Balance at Beginning of Year
as Adjusted 7,007,835 7,007,835 6,107,835 (900,000)
Fund Balances/End of the Year $ 5,817,956 $ 5,817,956 $ 6,420,064 $ 602,108
8
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Notes to Required Supplementary Information
September 30, 2007
Budgetary Data
PEDC's fiscal year commences October 1st and ends September 30th. A budget for the forthcoming
fiscal year shall be submitted to, and approved by the Board of Directors in June and delivered to the
City of Paris on or before June 30th. After Board approval, the budget on appropriate forms is
submitted to the City Manager for inclusion in the annual budget of the City of Paris. The budget is
to include projected operating expenses and such other budgetary information as shall be useful to or
appropriate for the Board and the City.
The proposed budget shall contain such classifications and shall be in such form as may be
prescribed from time to time by the Council of the City of Paris. The budget shall not be effective
until it has been approved by the City Council.
The Budgetary Comparison Schedule presented as Required Supplementary Information for the
General Fund is presented to provide a meaningful comparison of actual results with the budget. For
the year ended September 30, 2007, expenditures exceeded budgeted amounts in the General Fund in
Special Service Fees, Furniture and Fixtures, Travel, Contractual Associations, Promotional
Advertising, Sundry Charges, Utilities, and Debt Principal.
Paris Economic Development Corporation
(A Component Unit of the City of Paris, Texas)
Continuing Disclosure Information
September 30, 2007
(Unaudited)
Sales Tax Collections
The following table shows Sales Tax Collections for the Paris Economic Development Corporation's 1/4% sales tax for the
five years ended September 30, 2007.
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2006-07 2005-06 2004-OS 2003-04 2002-03
October $ 84,238.04 $ 78,521.27 $ 70,285.42 $ 65,923.96 $ 68,571.50
November 115,618.43 101,335.94 100,256.78 94,123.54 103,503.28
December 85,747.00 78,925.11 67,281.60 70,572.68 67,994.97
January 79,007.32 76,474.78 72,957.02 65,910.92 67,958.27
February 124,953.39 122,263.65 118,587.03 108,397.88 104,726.44
March 77,448.73 77,196.42 69,789.83 69,157.00 62,995.32
April 79,522.92 62,161.14 68,029.22 65,462.23 60,076.19
May 112,034.88 110,259.06 101,310.24 99,416.34 92,500.48
June 81,031.99 87,009.11 73,271.56 70,797.62 70,048.21
July 86,879.45 82,354.41 77,849.58 73,846.17 76,369.23
August 106,314.87 109,883.37 100,414.56 101,302.10 86,326.04
September 88,526.17 87,089.96 80,952.28 78,887.97 75,461.24
Totals $1,121,323.19 $ 1,073,474.22 $1,000,985.12 $ 963,798.41 $ 936,531.17
Pro Forma Bonded Debt Service Coverage
Maximum Annual Debt Service Requirement (2018)
Projected Annual Sales Tax Receipts 2007-08
(Pledged Revenues are gross 1/4 cent sales tax)
Estimated Pro Forma Coverage
Average Annual Remaining Debt Service at September 30, 2007
Projected Annual Sales Tax Receipts 2007-08
(Pledged Revenues are gross 1/4 cent sales tax)
Estimated Pro Forma Coverage
Condensed Corporation Operating Statement
Operating Revenues:
Sales Taxes
*Other Income (Loss)
Total Revenues
Operating Expenses:
Projects
Administration and
Promotion
Total Expenditures
Net Available for Additional
Economic Incentives or
Debt Service
$ 389,181
$ 1,062,500
2.73 x
$ 384,761
$ 1,062,500
2.76 x
Fiscal Year Ended September 30,
2007 2006 2005 2004 2003
$ 1,134,833 $ 1,080,270 $ 1,013,371 $ 958,941 $ 945,281
38,288 (7,367) (43,268) (47,377) 6,280
1,173,121 1,072,903 970,103 911,564 951,561
27,208 107,725 464,422 221,204 575,561
248,667 247,977 209,611 204,713 271,819
275,875 355,702 674,033 425,917 847,380
$ 897,246 $ 717,201 $ 296,070 $ 485,647 $ 104,181
Source: Information received from the Issuer.
* The net of interest income, interest expense, and gain or loss on the sale of assets.
10
PARIS ECONOMIC DEVELOPMENT CORPORATION
Paris, Texas
COMMUNICATION OF
REPORTABLE CONDITIONS
SEPTEMBER 30, 2007
MCCLANAHAN AND HOLMES, LLP
CERTIFIED PUBLIC ACCOUNTANTS
R. FRANK RAY, CPA 22g SIXTH STREET, S.E.
R. E. BOSTWICK, CPA PARIS, TEXAS 75460
STEVEN W. MOHUNDRO, CPA 903-784-4316
GEORGE H. STRUVE, CPA FAX 903.784-4310
ANDREW B. REICH, CPA
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
Board of Directors
Paris Economic Development Corporation
Paris, Texas
In planning and performing our audit of the financial statements of Paris Economic Development Corporation for the
year ended September 30, 2007, we considered Paris Economic Development Corporation's internal control in order to
determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to pro-
vide assurance on internal control. However, we noted certain matters involving internal control and its operation that
we consider to be reportable conditions under standards established by the American Institute of Certified Public
Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the
design or operation of internal control that, in our judgement, could adversely affect the organization's ability to record,
process, summarize, and report financial data consistent with the assertions of management in the financial statements.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not
necessarily disclose all matters that might be reportable conditions. In addition, because of inherent limitations in any
internal control, errors or fraud may occur and not be detected by such internal control.
Paris Economic Development Corporation maintains several accounts at one bank which are set up under its corporate
name and identification number. The bank provides FDIC coverage as required, however, some deposits do not appear
to be insured nor secured by securities pledged by the bank. We recommend that management or the board of directors
review the situation to assess the risk involved and determine an appropriate action.
This report is intended solely for the information and use of the board of directors and management of Paris Economic
Development Corporation and is not intended to be and should not be used by anyone other than these specified parties.
Certified Public Accountants
Paris, Texas
December 4, 2007
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS