EAGLE PASS, TEXAS — Questions are mounting over the City of Eagle Pass’s sudden decision to terminate its contract with Martinez, Rosario & Company, LLP (MRC), the independent auditing firm that had been serving as the city’s external auditor under a three-year agreement valid through September 30, 2025. Documents reviewed by The Maverick Times, including an official letter from MRC to the Eagle Pass City Council dated August 5, 2025 and the City’s Audit Corrective Action Plan for Fiscal Year 2022–2023, reveal troubling signs of internal mismanagement, incomplete financial reconciliations, and a lack of readiness for audit review.

The letter from Martinez, Rosario & Company stated that the firm was removed from its engagement without explanation or advance notice. Finance Director Felix Castillo reportedly told council members that the change was due to scheduling conflicts with the city’s audit timeline. However, MRC directly refuted this claim, writing that “no specific timeline had been discussed or confirmed” and that the firm was fully prepared to begin work upon receiving the city’s financial records. The firm emphasized that it had worked diligently with the city’s Finance Department throughout its engagement and was surprised to learn of its replacement through indirect communication.

MRC’s letter further documented a consistent lack of cooperation and communication from the city’s Finance Department. Despite repeated requests, the auditors reported that the department failed to provide reconciled financial statements and other critical documentation necessary to begin the audit process. The firm cited delays tied to incomplete bookkeeping and difficulties completing bank reconciliations, calling the issue a “significant challenge” that required immediate correction before accurate financial reporting could occur.

These concerns are reflected in the City of Eagle Pass Audit Corrective Action Plan for Fiscal Year 2022–2023, signed by Finance Director Felix Castillo on March 13, 2025. The plan outlines several material weaknesses and noncompliance issues previously identified by the city’s auditors. Among these findings are unreconciled cash accounts, misposted transactions, outdated accounting systems, inconsistent reconciliation of accounts payable, failure to monitor self-insurance liabilities, and an unbalanced interfund relationship with the Eagle Pass Water Works System.

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COEP TX Letter to City Council Download

The corrective action plan also admitted that the city had not maintained compliance with the Texas Public Funds Investment Act, citing incomplete investment training records and a lack of formal oversight of investment activities.

To address these deficiencies, the city pledged to modernize its accounting infrastructure by transitioning to a cloud-based Enterprise Resource Planning (ERP) system, improving monthly closing procedures, and consolidating bank accounts to streamline financial controls. However, Martinez, Rosario & Company noted in its correspondence that as of early August, the Finance Department was still months away from achieving the level of readiness necessary for a complete audit. The firm estimated it would take up to 60 additional days to reconcile accounts before audit testing could begin.

Shortly after that warning, the City of Eagle Pass replaced Martinez, Rosario & Company with Leal & Carter, P.C., another San Antonio-based accounting firm. The new engagement was reportedly approved at a cost between $100,000 and $120,000, an increase from the prior contract.

The timing of the change has fueled speculation about whether the move was intended to delay or obscure financial findings that had not yet been reconciled. Residents and community advocates have called on the city to release all correspondence and communications related to the auditor’s termination to ensure transparency and accountability.

“The fact that the independent auditor was dismissed in the middle of a corrective action process, while the city’s books were still being reconciled, raises serious questions about internal controls,” said one local financial professional familiar with the city’s operations. “If an independent auditor was removed before completing their work, the public deserves to know why.”

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Audit Corrective Action Plan FY 2022-2023 Final (1)Download

Both documents obtained by The Maverick Times demonstrate that many of the city’s financial problems are not new but rather recurring issues that have appeared in multiple audit cycles. Despite prior warnings, the same findings including untimely reconciliations, outdated systems, and unverified interfund transfers, continue to appear in official reports.

The Maverick Times reached out to City Manager Homero Balderas and Finance Director Felix Castillo for comment regarding the auditor change and ongoing financial issues. As of this publication, neither official has responded to requests for clarification.