Eagle Pass City Council Changes External Auditor Without Benefit of All The Facts
By: Ricardo E. Calderon, Eagle Pass Business Journal, Inc., Copyright 2025
The City of Eagle Pass, Texas City Council unanimously voted to change the City External Auditor for the Fiscal Year 2023-2024 Audit at its Thursday, July 31, 2025 meeting upon the recommendation of City Finance Director Felix Castillo without having the benefit of all the facts pertaining to this key audit contract, according to Ismael N. Martinez, C. P.A. of Martinez, Rosario & Company, LLP of San Antonio, Texas.
The City of Eagle Pass had granted a three year contract to the auditing firm of Martinez, Rosario & Company, LLP that extended until September 30, 2025.
The City Finance Director, Felix Castillo, and City Manager Homero Balderas, Jr. added a Supplemental Agenda to the July 31, 2025 City Council Meeting after the initial meeting had already been posted that now included a new agenda item No. 3 calling for the “Consideration and possible action to allow the City Manager to negotiate and execute professional services contract agreement with Leal & Carter, P.C. in an amount not to exceed $120,000 for Fiscal Year 2023-2024 Audit.”
At the July 31st City Council meeting, City Finance Director Felix Castillo advised City Council the reason for recommending the change to Leal & Carter, P.C. was because the City’s contracted auditor, Martinez, Rosario & Company, LLP, was unavailable to complete the Fiscal Year 2023-2024 Audit within 30 days while Leal & Carter, P.C. committed to completing it within that time frame. Based on Castillo’s recommendation, the City Council approved their Finance Director’s request.
At the City Council’s August 5, 2025 regular meeting, Martinez, Rosario & Company, LLP Managing Partner Ismael N. Martinez, C. P. A. personally appeared before the City Council during the Citizens Communication agenda to address the Council and clarify the facts not presented to them by Finance Director Felix Castillo, distributing to Council a written letter setting the record straight concerning the situation with the 2023-2024 Fiscal Year Audit. The Eagle Pass Business Journal requested and received a copy of Martinez, Rosario & Company. LLP’s Letter to Mayor Aaron Valdez and City Council members.
Martinez states in his letter that Finance Director Castillo never formally informed Martinez, Rosario & Company, LLP of the City’s desired audit timeline, other than a statement by Castillo at a July 24, 2025 meeting mentioning that the audit be completed by August 31, 2025. Martinez added “In that same meeting, Mr. Castillo was unable to provide a definitive date for when the City’s cash reconciliations and financial records would be complete and ready to audit. Surprisingly, during the July 31 meeting, he asserted that the City’s books would be prepared on or before August 4, a date that had never been communicated or committed to Martinez, Rosario & Company, LLP.”
Martinez added “Mr. Castillo also mentioned during the July 24, 2025 meeting that he would inform me to schedule a meeting with the City Manager and Assistant City Manager to discuss the additional projects to close the books and audit status on either July 28th or 29th. However, Martinez, Rosario & Company, LLP was never contacted or invited to participate in such a meeting. In that same July 24th conversation, I suggested bringing the matter to the City Council to present the complete audit plan and timeline. No response has ever been received from Mr. Castillo regarding this recommendation.”
Martinez noted in his letter he had a telephone conversation with Assistant City Manager Ivan Morua expressing to him the lack of responsiveness from Mr. Castillo. Mr. Castillo allegedly advised Martinez that the bank reconciliation project would be a significant challenge for his City team.
Martinez added in his letter to City Council that he communicated to Mr. Castillo that based on the City’s prior lack of responsiveness and outstanding issues, ‘it would take approximately 60 days to complete the cash reconciliations and close the books correctly, followed by an additional 45 days to complete the audit. This estimate accounts for the delays typically experienced due to the inefficient responsiveness of City staff.”
Martinez added that in March 2025, following the release of the September 30, 2023 audit report, Mr. Castillo informed Martinez, Rosario & Company, LLP that the books would be ready to be audited by April 15, 2025. Based on this representation, Martinez, Rosario & Company, LLP scheduled staff and resources accordingly. Had the April 15, 2025 date been met, the FYE 09/30/2024 Audit would have been completed by June 30, 2025.”
Martinez noted that he had received a request for pricing to assist the City with cash reconciliations from Mr. Castillo, Martinez, Rosario & Company, LLP provided a change order engagement letter along with a breakdown of hours and staff levels required for this project, but Mr. Castillo later advised Martinez that funding was not available for this project and would not get approved.
Martinez admonishes Mayor Valdez and City Council that the July 25, 2025 Letter from Carter & Leal, P.C. to Mr. Castillo is based on the assumption that the City’s books and records will be closed and ready for audit. Martinez pointed out that “Carter & Leal, P. C.’s assumption is consistent with Martinez, Rosario & Company, LLP’s understanding and expectations regarding audit timeline and prerequisites”
Martinez concludes his letter to Mayor Valdez and City Council thanking the City of Eagle Pass for the opportunity to serve the City as its external auditors.
Martinez’s letter is a poignant reminder that the Mayor and City Council are requested by City Administration and Department Heads to make changes, terminate, retain, or hire certain services and/or contracts on behalf of the City of Eagle Pass without being advised of the full facts pertaining to each matter they are being requested to vote on at City Council meetings. City taxpayers have many questions and concerns why the City changed external auditors so late in the process and without providing City Council all the facts concerning the matter.
