Terrell council authorizes RFQ for independent compliance audit of Q1–Q2 finances, approves up to $75,000

The Terrell City Council on March 31 approved issuing a request for qualifications to hire an independent firm to perform a compliance audit of the city’s financial activity for the first two quarters of fiscal year 2025, with an estimated cost not to exceed $75,000.

The vote followed a presentation by City Manager Mike Sims describing steps already taken after a Texas Municipal League (TML) financial review, including placing the previous finance director on administrative leave, hiring an interim finance director, and immediate changes to purchasing-card procedures. Sims said the RFQ would aim to produce a consolidated set of third-party financial statements for the period ending March 31, 2025.

Sims said the TML team worked on-site March 5–8 and the city received that report on March 4; the city manager briefed council and posted the TML report online in early March. "We're not gonna wait. We're gonna look at it right now," Sims said, describing the council request to begin a targeted compliance audit covering October 1 through March 31 (Q1 and Q2 of FY25). He recommended the engagement be overseen by a selection panel of outside local-government finance professionals and include an option to expand work into FY23 if the compliance review identifies issues requiring backward review.

Under the council-approved direction, the city will advertise an RFQ in April and open proposals on April 5 (dates in the presentation). Sims estimated the compliance-audit engagement would cost between $50,000 and $75,000 and suggested firms be given up to roughly 90–120 days to complete a thorough review. The RFQ will also solicit proposals for the standard FY25 annual audit to help return the city’s audit timetable to normal.

Council discussion touched on specific improvements already implemented from the TML report: canceling departmental purchasing cards and reissuing cards in individual employees’ names; posting recommended items on the city website; and revising procurement practice to trigger full procurements where recurring monthly purchases could exceed the $50,000 council-approval threshold over a fiscal year. Sims said staff are completing bank reconciliations for FY24 and evaluating whether reconciliations should continue to be performed by an outside contractor or brought in-house.

One council member expressed distrust of the compliance-only approach and requested a separate forensic audit of the general fund, saying the compliance plan felt like a "smokescreen." City Manager Sims and other council members responded that a compliance audit would produce a list of findings and, if the auditors identify specific red flags, the council could pursue forensic follow-up or prosecution based on those findings.

A motion to approve the procurement (item 3.1) was made by Deputy Mayor Pro Tem Phil Robinson and seconded by Councilmember Ronnie Velasquez. The roll-call vote recorded four ayes and one no; the motion carried 4–1. The council directed staff to share the RFQ draft with council members before public release and to proceed with transparent updates to council and the public throughout the process.

Sims said the interim finance director, Martie Corsi, began work March 27 and will be introduced to council at the April meeting. The city will return to council to approve the selected firm, scope of work, contract, cost and timetable once proposals are received and evaluated by the proposed selection panel.

The council meeting concluded after the vote; no additional actions were taken on related requests for a forensic audit during that session.