Office of Ins~ector General 

Semiannual Report 

To the Congress, 

Covering the Period 

April 1,2005 to September 30,2005 
Office of Inspector General 

FEDERAL MARITIME COMMISSION 

Office of the Inspector General 

Washington, DC 20573-0001 

October 20,2005 

Tel.: (202)523-5863 

Fax: (202) 566-0043 

E-mail: oig @ ftnc.gov 

Honorable Steven R. Blust 

Chairman 

Federal Maritime Commission 

Washington, DC 20573 

Dear Chairman Blust: 

The enclosed report is submitted in accordance with section 5 of the Inspector General Act of 1978, as 

amended by the Inspector General Act Amendments of 1988. It summarized the activities of the Office 

for the period from April 1,2005, through September 30,2005. The Act requires that you transmit the 

report to the appropriate committees of the Congress within 30 days of its receipt. Your transmittal 

should also include any comments you consider appropriate and other statistical tables and reports 

required by law. 

During the current reporting period two audits were issued in final, they were the Audit of Controls over 

Agency Property and the Audit of Procurement of Vendor Training Services. Management agreed with 

our recommendations for both audits and has established corrective actions. We are currentlyreviewing 

the Commission's annual financial statements and have completed the review of its information security 

requirement. Also, we have performed a survey of the Bureau of Enforcement's functions. 

In addition to the audit work, a number of Hotline complaints were received, however, they were 

referred to other agencies and a number of informal investigations were opened. There are no formal 

investigations opened and none remained pending. 

I appreciate the continued cooperation and support the Office receives from you, the other 

Commissioners, and management. 

Sincerely, 

Bridgette S. Hicks 

Acting Inspector General 

Enclosure 
Inspector General's Semiannual Report to Congress 

TABLE OF CONTENTS 

Transmittal Letter 

Executive Summary ........................................................................................................................ -2 

Background ...................................................................................................................................... 2 

Audits/Inspections ........................................................................................................................... -4 

Audit of Controls over Agency Property ................................................................................ 4 

Audit of Procurement of Vendor Training Services ................................. :............................ 5 

Corrective Actions Not Made ................................................................................................. 6 

Investigations Activities ................................................................................................................... 7 

Other OIG Activities ........................................................................................................................ 7 

.Summary of Inspector General's 

Reporting Requirement ................................................................................................................ 9 

Statistical Summary .................................................................................................................... 10 

Table I ................................................................................................................................ 10 

Table I1 ............................................................................................................................... 11 

Table III .............................................................................................................................. 12 

April 1. 2005 . September 30. 2005 Page I 
Inspector General's Semiannual Report to Congress 

EXECUTIVE SUMMARY 

The Semiannual Report to the Congress summarizes the activities and accomplishments of the 

Federal Maritime Commission (FMC or Commission), Office of Inspector General (OIG) and covers 

the period April 1,2005 through September 30,2005. During this period we issued two reports in 

final to the Commission and had three ongoing audits/inspections at the end of this reporting period. 

BACKGROUND 

The Commission is an independent regulatory agency responsible for the regulation of oceanborne 

transportation in the foreign commerce of the United States. The principal statutes or statutory 

provisions administered by the Commission are the Shipping Act of 1984, as amended by the Ocean 

Shipping Reform Act of 1998; the Foreign Shipping Practices Act of 1988; and section 19 of the 

Merchant Marine Act, 1920. 

The FMC is authorized five Commissioners appointed for five-year terms by the President with the 

advice and consent of the Senate. On September 12, 2005, Commissioner Rebecca F. Dye was 

sworn in for a second term which expires on June 30,2010. The President designates one of the 

Commissioners to serve as Chairman. The Chairman is the chief executive and administrative 

officer of the Commission. 

In Fiscal Year (FY) 2005, the Commission was authorized a total of 133 full-time equivalent 

positions and a total appropriation of $19,340,032. The majority of the Commission's personnel are 

located in Washington, DC. The Commission maintains a presence in Los Angeles, Miami, 

SeattlelTacoma, New York, and New Orleans through area representatives who serve the major port 

areas and transportation centers within their respective areas. In addition, two at-large area 

representatives operate out of Washington, DC. 

April 1,2005 - September 30,2005 Page 2 
Inspector General's Semiannual Report to Congress 

During this reporting period the Commission's area representative in New Orleans was impacted by 

Hurricane Katrina. However, with the Commission's support and concerted efforts he continues to 

serve the port and transportation center in New Orleans. 

The FMC OIG is an independent audit and investigative unit with an independent Inspector General 

(IG) who reports directly to the Chairman of the FMC. 

The FMC OIG was established pursuant to P.L. 100-504, Inspector General Act of 1978 (P.L. 95- 

452), as amended in 1988. The OIG was formally established at the Commission on February 26, 

1989. The Act states that the IG is responsible for (1) audits and investigations; (2) review of 

legislation; (3) recommendation of policies for the purpose of promoting economy and efficiency in 

the administration of, or preventing and detecting fraud and abuse in programs and operations of the 

establishment. In this regard, the IG is responsible for keeping the Chairman and Congress fully 

informed about the problems and deficiencies in FMC programs and operations and the need for 

corrective actions. The IG has authority to inquire into all FMC programs, these inquiries may be in 

the form of audits, surveys, investigations, or other appropriate methods. The two primary purposes 

of these inquiries are (1) to assist all level of FMC management by identifying and reporting problem 

areas, weaknesses, or deficiencies in procedures, policies, program implementation, and (2) to 

recommend appropriate corrective actions. 

The OIG is currently comprised of an Acting Inspector General and a Staff Assistant. The Office has 

a Memorandum of Understandings (MOU) with the FMC's Office of the General Counsel (OGC) 

and the Office of the Inspector General at the U.S. Social Security Administration (SSA) which 

provides that an OGC attorney will furnish legal services to the OIG as the need arises and provides 

for criminal investigative assistance as needed, respectively. 

April 7,2005 - September 30,2005 Page 3 
Inspector General's Semiannual Report to Congress 

During this semiannual period, the OIG issued reports on controls over agency property and 

procurement of vendor training services. In addition to these completed audits, the OIG began 

fieldwork on a survey of the Bureau of Enforcement's functions, as well as contracted with an 

independent auditor that completed fieldwork on the Commission's information security. Also, we 

contracted with another independent auditor to audit the Commission's FY 2005 financial 

statements. 

Completed Audits 

Audit Report Number Sub-iect of Audit 

Audit of Controls over Agency Property 

Audit of Procurement of Vendor Training 

Summarv of Audits Issued During the Current Period 

In A05-01, Audit of Controls over Agency Property dated April 5, 2005, the objective was to 

determine whether the Commission had controls in place over its personal property and the handling 

of excess property. The review primarily focused on the accountability of computers and related 

equipment due to the Commission spending approximately $3 19,400 for IT equipment and software 

in FY 2004. We also performed follow-up of recommendations from prior audit reports A01-01, 

Review of the Commission's Property Management System dated February 28,2001 and A97-02, 

Review of the Agency's Property Management System dated November 25,1997. 

During this review we found that the Commission has made progress in implementing controls over 

its property and has established procedures relating to control over property. However, we found 

that the procedures needed to be updated with a joint effort by the Office of Information Technology 

April 1,2005 - September 30,2005 Page 4 
Inspector General's Semiannual Report to Congress 

(OIT), the Office of Management Service (OMS) and the Office of Budget and Financial 

Management (OBFM) to include such matters as the process for recording and the disposition of 

non-information technology (IT) equipment and capitalized assets. We also found that OIT could do 

a better job in tracking IT equipment in its possession. 

We made five recommendations to management, they were: (1) to establish joint procedures with 

the affected offices to incorporate non-lT equipment and capitalized assets; (2) update procedures to 

include performing inventory of excessed equipment; (3) utilize the property tracking system's 

functionality to enter the dates when items are received; (4) perform an extensive review of IT 

equipment in OIT, and (5) use the equipment transaction form to include whether new equipment is 

replacing older equipment or whether it is new. 

Management agreed with our recommendations and plan to implement the following corrective 

actions: (1) develop procedures for disposal of non-IT equipment and capitalized assets; (2) 

incorporate steps to conduct an inventory of excess equipment prior to disposition; (3) enter the 

receipt date of items into the property tracking system; (4) conduct a spot check and re-inventoried 

Om's equipment to ensure that the inventory accurately reflects the items within OR and (5) to 

revised the equipment transaction form to document replacement and new equipment. 

In A05-02, Arcdit of Procurement of Vendor Training Services dated June 30,2005; the objective 

was to assess the effectiveness and efficiency of management controls governing the process for 

procurement of training services obtained through outside vendors. We specifically reviewed the 

authorization of training requests, methods of payments, completion of training and maintenance of 

training records. 

April 1,2005 - September 30,2005 Page 5 
Inspector General's Semiannual Report to Congress 

Our review disclosed that the Commission needs to develop updated written policies and procedures 

to ensure more effective and efficient ways of managing the training program of the Commission. 

We also found that the request for vendor training services should be streamlined. 

We recommended that the FMC update written policies and procedures and incorporate the 

following: (1) streamline the request for training; (2) require FMC employees to attest and certify 

that training has been completed; (3) provide the Human Resource Specialist (HRS) with supporting 

documents for procurement of training done by others; (4) that payments are made for training 

received; (5) SF-182s or other authorized training forms be required for all training; (6) the 

approving official for the HRS be the Director of Human Resource for purchase card transactions; 

and (7) expand the automated log to track employee development and training, training costs and 

payments. 

Management agreed with our recommendations and plans to implement the corrective actions in 

their policy statement. 

CORRECTIVE ACTIONS NOT MADE 

We reported in our last semiannual report that there were three material weaknesses where 

corrections have been made. However, during this reporting period the Commission closed one of 

those material weaknesses relating to the FY 2004 Federal Manager's Financial Integrity Act. The 

Commission still has two more material weaknesses those needs to be corrected which are related to 

the FY 2004 Federal Information Security Management Act. 

April 1,2005 - September 30,2005 Page 6 
Inspector General's Semiannual Report to Congress 

INVESTIGATIVE ACTIVITIES 

The Inspector General Act of 1978, as amended, provides that the IG may receive and investigate 

complaints or information concerning the possible allegations of fraud, waste and abuse occurring 

within F'MC programs and operations. Matters of possible wrongdoing are referred to the OIG in the 

form of allegations or complaints from a variety of sources, including FMC employees, other 

government agencies and the general public. The OIG does not employ criminal investigators; 

however, when the need arises the MOU with SSA goes into effect. 

During this reporting period, a number of Hotline complaints were received, however, they were 

referred to other government agencies and a few informal investigations were opened. There are no 

formal investigations opened and none remained pending. 

OTHER OIG ACTIVITIES 

As required by the Inspector General Act of 1978, as amended, the Office of Inspector General 

routinely reviews proposed legislation and regulations. The purpose of these reviews is to assess 

whether the proposed legislation or regulation (1) impacts on the economy and efficiency of F'MC 

programs and operations, and (2) contains adequate internal controls to prevent and detect fraud and 

abuse. 

During this period, a number of legislative proposals as well as Commission Orderslpolicy 

guidelines were reviewed by this Office. 

The Commission's Acting Inspector General continues to serve on the Executive Council on 

Integrity and Efficiency (ECIE) and has provided input into a number of initiatives proposed by the 

April 1,2005 - September 30,2005 Page 7 
Inspector General's Semiannual Report to Congress 

Council. The ECIE serves as a forum for the exchange of views for the inspector general community 

and provides a base for the establishment of joint inspector general projects. She also participates in 

the Federal Audit Executive Council (FAEC) and the IG E-Learning initiative. 

April 1,2005 - September 30,2005 Page 8 
Inspector General's Semiannual Report to Congress 

SUMMARY OF INSPECTOR GENERAL'S REPORTING REQUIREMENTS 

IG Act 

Reference 

Section 4(a)(2) 

Section 5(a)(l) 

Section 5(a)(3) 

Section 5(a)(4) 

Section 5(a)(5) 

Section 5(a)(6) 

Section 5(a)(7) 

Section 5(a)(8) 

Section 5(a)(9) 

Section 5(a)(10) 

Section 5(a)(11) 

Section 5(a)(12) 

Reporting Requirement Page(s) 

Review of legislation and regulations 7 

Significant problems, abuses and deficiencies 

Prior significant recommendations on which 

corrective actions have not been made 

Matters referred to prosecutive authorities 

Summary of instances where information was 

refused 

List of audit reports by subject matter, showing 

dollar value of questioned costs and funds put to 

better use 

Summary of each particularly significant report 

Statistical tables showing number of reports and 

dollar value of questioned costs 

Statistical tables showing number of reports and 

dollar value of recommendations that funds be put 

to better use 

Summary of each audit issued before this reporting 

period for which no management decision was 

made by the end of the reporting period 

Significant revised management decisions 

Significant management decisions with which the 

inspector general disagrees 

None 

6 

None 

None 

None 

None 

None 

April 1,2005 - September 30,2005 Page 9 
Inspector General's Semiannual Report to Congress 

TABLE I 

SUMMARY OF AUDITS 

WITH NON-FINANCIAL RECOMMENATIONS 

Non-Financial Recommendations 

Audit Report Report Issue Management Mgt. 

No. Date Response Date No. Mgt. Agrees Disagrees 

April 1,2005 - September 30,2005 page 10 
Inspector General's Semiannual Report to Congress 

TABLE I1 

INSPECTOR GENERAL ISSUED REPORTS 

WITH QUESTIONED COSTS 

Dollar Value 

Questioned Unsupported 

Number - Cost Costs 

A. For which no management decision has been 

made by the commencement of the reporting 

period 

B. Which were issued during the reporting 

period? 

Subtotal (A + B) 

C. For which a management decision was made 

during the reporting period 

(i) dollar value of disallowed costs 

(ii) dollar value of costs not disallowed 

D. For which no management decision has been 

made by the end of the reporting period 

E. Reports for which no management decision 

was made within six months of issuance 

April 1,2005 - September 30,2005 Page 11 
Inspector General's Semiannual Report to Congress 

INSPECTOR GENERAL ISSUED REPORTS 

WITH RECOMMENDATIONS 

THAT FUNDS BE PUT TO BETTER USE 

A. For which no management decision has been made 

by the commencement of the reporting period 

B. Which were issued during the reporting period 

Subtotal (A plus B) 

C. For which a management decision was made during 

the reporting period 

dollar value of recommendations that were 

agreed to by management 

(ii) dollar value of recommendations that were 

not agreed to by management 

D. For which no management decision has been made 

by the end of the reporting period 

Reports for which no management decision was 

made within six months of issuance 

Number Dollar Value 

0 

April 1,2005 - September 30,2005 Page 12 
HOTLINE COMPLAINTS 

7Fie success of the OIG mission topreventfi-ad waste andabuse 

dependi on the cooperation of YNC emplbyees andtliepu6fic. 

Federal Maritime Commission 

Office of Inspector General 

Room 1054 

800 North Capitol Street, NW 

Washington, DC 20573 

To Be O~ened Bv the IG Onlv