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1 ANNUAL REPORTSEPTEMBER 30, 2016P. O. BOX 1493 | PECOS, TEXAS 79772 Oiled & primedIndependent Auditor s Report 1 - 2 Management s Discussion and Analysis 3 - 8 Basic Financial Statements Statement of Net Position & Governmental Funds Balance Sheet 9 Statement of Activities & Statement of Revenues, Expenditures and Changes in Fund Balances 10 Statement of Cash Flows 11 Notes to the Basic Financial Statements 12 - 17 Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards 18 - 19 Required Supplementary Information

2 Governmental Fund Revenues, Expenditures and Changes in Fund Balance Budgetary Comparison Schedule 20 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATIONTABLE OF CONTENTS FOR THE YEAR ENDED SEPTEMBER 30, 20161 Painter and Associates, Certified Public Accountants 836 King George Lane Savannah, Texas 76227-7854 1 INDEPENDENT AUDITOR S REPORT Board of Directors Pecos Economic Development Corporation Pecos, Texas We have audited the accompanying financial statements of the governmental activities, of the Pecos Economic Development Corporation (Corporation), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Corporation s basic financial statements as listed in the table of contents.

3 Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit.

4 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5 In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

6 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities of the Pecos Economic Development Corporation, as of September 30, 2016, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

7 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information on pages 3 through 8 and 20 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

8 We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

9 We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Painter and Associates, Savannah, Texas December 15, 2016 3In this section of the Annual Financial Report, we, the managers of the Pecos EconomicDevelopment Corporation, discuss and analyze the Corporation s financial performance for thefiscal year ended September 30, 2016. Please read it in conjunction with, the independentauditors report on pages 1 and 2, and the Corporation s Basic Financial Statements, whichbegin on page HIGHLIGHTSThe Corporation s net position increased by $477,277 as a result of this year s operations, andas a result the net position of our governmental activities increased by over 10%.

10 During the year, the Corporation had expenses of $416,467 that were $477,277 less than the$738,491 generated by the sales tax apportioned by the Town of Pecos City in the GeneralFund plus lease Corporation realized a gain of $46,353 on the assets held for sale that were sold duringthe fiscal year. Cash flow was a positive amount which was driven by the purchase andconstruction of capital assets and the receipt of other sources of revenue. Depreciationexpense for the year was $18, General Fund ended the year with a fund balance of $3,779,610 as compared to last yearwhen the fund balance was $3,303, budget for the Corporation revealed $118,491 more revenues were received during theyear that was budgeted while $203,783 less expenses were incurred than were budgeted forthe year.