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Audit finds material weaknesses in Eagle Pass finances; council accepts audit and asks staff for corrective plan
Summary
An independent audit of the City of Eagle Pass’ fiscal year ending Sept. 30, 2023 produced a clean opinion on the city’s financial statements but identified multiple material weaknesses in internal controls and accounting procedures.
The City of Eagle Pass received a clean (unmodified) opinion on its audited financial statements for the year ended Sept. 30, 2023, but auditors identified multiple material weaknesses and control deficiencies that the council heard about at its March 4, 2025 meeting.
Milo Martinez of Martinez Rosario & Company LLP told the council the financial statements fairly present the city’s financial position, but the audit uncovered nine material weaknesses in internal controls, delayed bank reconciliations, limitations in the accounting software (unsupported modules), misposted transactions that required numerous audit adjustments, and insufficient monitoring of the city’s self-insured employee health plan. "The good thing is you have an unmodified or a clean opinion," Martinez said, but he also reported that auditors required many audit adjustments to reach that result.
Auditors flagged the self-insurance program as a major control point: the city moved to a self-funded health plan in October 2020 and staff and auditors said the program needs a formal, regular analysis and closer monitoring of incurred-but-not-reported claims. Martinez said the city recorded a significant liability adjustment of roughly $1.5–$1.6 million during the audit review and recommended monthly or quarterly monitoring, periodic reporting to council and a formal plan to analyze program performance.
Other findings included construction-in-progress accounting that had not been updated timely for multiple bond-financed projects, lack of timely bank reconciliations (auditors prefer reconciling within 30 days), deficiencies in accounts-payable controls and user-security settings in the accounting system, and missing documentation for compliance with the Texas Public Funds Investment Act (quarterly reports and training documentation).
City staff committed to corrective steps. "We're gonna devise a plan to get all these findings corrected as soon as possible," said Felix (city staff), who told council staff would prepare a corrective action plan. Finance leadership and the city manager said they will present an action plan for each finding and implement a new financial-management software expected to address several system limitations.
Council accepted and approved the audit as presented. Mayor Pro Tem Davis moved to accept the audit and Councilman Garcia seconded; the motion passed unanimously.
Ending: Auditors offered to support additional follow-up work and recommended routine monthly closings, stronger reconciliations and formalized monitoring of the self-insurance program; staff said it will return with a corrective-action plan and an updated timeline to address the auditor’s recommendations.
