FEDERAL 

MARITIME 

COMMISSION

An independent agency of the U.S. Government 

Acting Chairman Michael A. Khouri

November 2018
FMC FISCAL YEAR 2018| Performance and Accountability Report| i

MESSAGE FROM THE ACTING CHAIRMAN

 

Federal Maritime Commission 

Washington, D.C. 20573-0001 

 

Office of the Chairman 

November 15, 2018

The following Fiscal Year (FY) 2018 Performance and Accountability Report (PAR) for the Federal 

Maritime Commission (FMC or Commission) provides the results of the FY 2018 independent audit 

of the Commission’s financial statements and measures the agency’s performance against its fiveyear Strategic Plan for FY 2018-2022.

The FMC ensures a competitive and reliable international ocean transportation supply system. 

International ocean shipping and the international supply chain are essential to our Nation's 

economy, moving more than $1 trillion in U.S. exports and imports annually. By implementing and 

enforcing the Shipping Act of 1984 and other related maritime statutes, the FMC plays a vital role in 

strengthening American economic competitiveness through international shipping.

Challenging market conditions over the past decade have led the global ocean transportation 

industry to cut costs and realize greater efficiencies through consolidations, mergers, and operational 

cooperation. FY 2018 saw a continuation of these trends among both ocean carriers and marine 

terminal operators. The FMC will continue vigilance against anticompetitive activity in the 

international ocean transportation marketplace and will respond quickly and decisively to any 

developments that warrant the intervention of the Commission. 

The FMC is a small agency with limited resources and staff, necessitating we accomplish our mission 

by managing ourselves against clear strategic goals and performance targets. The FY2018 PAR 

showcases the overall success the FMC has achieved in meeting its strategic goals. Furthermore, this 

report shows our commitment to proper operational oversight, with safeguards in place to protect 

the agency and the public from financial risks. The results of this year’s independent audit of the 

Commission's financial statements have earned an unmodified ("clean") opinion from the agency's 

independent auditor for the fifteenth consecutive year. The agency's annual assessment of internal 

controls over operations, systems, and financial reporting did not identify any material weaknesses. 

Both the performance and financial data contained in this report are reliable and complete.

Our Nation’s economy cannot function without the services provided by the industries and 

companies the Commission oversees. I am proud of the contribution the FMC makes to ensure 

competition and integrity for America’s ocean supply chain.

Sincerely, 

/s/

Acting Chairman
FMC FISCAL YEAR 2018| Performance and Accountability Report| ii

TABLE OF CONTENTS

MESSAGE FROM THE ACTING CHAIRMAN i

Table of Contents ii

Introduction....................................................................................................................................................ii

MANAGEMENT’S DISCUSSION and ANALYSIS 1

History, Mission, and Organization ............................................................................................................2

Regulatory Responsibility and Oversight...................................................................................................6

Financial Performance Overview..............................................................................................................13

Financial Statement Highlights..................................................................................................................15

Analysis of Entity’s Systems, Controls, and Legal Compliance............................................................17

Acting Chairman’s Statement of Assurance.............................................................................................20

PROGRAM PERFORMANCE INFORMATION 21

Annual Performance Report......................................................................................................................22

FINANCIAL INFORMATION 26

Message from the Chief Financial Officer / Managing Director.........................................................27

Principal Financial Statements...................................................................................................................28

Independent Auditors' Report...................................................................................................................32

OTHER INFORMATION 13

Office of Inspector General Fiscal Year 2018 Management Challenge ..............................................14

Comments on Inspector General-Identified Management and Performance Challenge .................17

Financial Statement Audit Summary.........................................................................................................19

Management Assurances Summary...........................................................................................................19

Improper Payments Information Act.......................................................................................................20

Reduce the Footprint ..................................................................................................................................23

Civil Monetary Penalty Adjustment for Inflation ...................................................................................23

Grants Oversight & New Efficiency (GONE) Act Requirements......................................................24

Biennial Review of User Fees ....................................................................................................................24

This Report can be downloaded at http://www.fmc.gov/about/performance_and_accountability_reports.aspx. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| ii

INTRODUCTION

The FMC’s Performance and Accountability Report (Report or PAR) details its performance,

management, and financial information for fiscal year 2018 (FY 2018). This report enables the 

President, Congress, and the public to assess the Commission’s activities and accomplishments in 

support of its mission and the resources entrusted to it, and satisfies the following legislation:

• The Federal Manager’s Financial Integrity Act of 

1982 requires continuous evaluations and reporting of 

the adequacy of systems of internal accounting and 

administrative controls. 

• The Chief Financial Officers Act of 1990 provides for 

the production and submission of complete, reliable, 

timely, and consistent financial information for use by

the Executive Branch of the government and the 

Congress in the financing, management and evaluation 

of Federal programs. 

• The Government Management Reform Act of 1994 

requires the submission of audited financial statements. 

• The Reports Consolidation Act of 2000 authorizes 

agencies to consolidate several reports to provide 

performance, financial, and other related data in a more 

useful manner. 

• The Inspector General Reform Act of 2008 amends 

the Inspector General Act of 1978 to enhance the 

independence of Inspectors General, to create a Council 

of the Inspectors General on Integrity and Efficiency, 

and for other purposes.

• The Government Performance and Results 

Modernization Act of 2010 (GPRA Modernization 

Act) requires an annual report that measures the 

performance results of the agency against the established 

agency goals. 

• The Improper Payments Elimination and Recovery 

Act of 2010 provides for estimates and reports of 

improper payments by Federal agencies.

• The Digital Accountability and Transparency Act of 

2014 (DATA Act) amends the Federal Funding 

Accountability and Transparency Act of 2006 (Public 

Law 109-282), requiring the establishment of 

government-wide data standards for spending 

information.

HOW THIS REPORT IS ORGANIZED

Management’s Discussion and Analysis (MD&A) provides an overview of the Commission including 

financial audit results, program performance, management assurances on internal controls and 

financial management systems compliance, other management information, agency initiatives, and 

challenges. 

Program Performance Information describes the Commission’s strategic goals and targets, and details the 

FMC’s progress toward meeting those goals during the fiscal year. 

Financial Information includes the FMC’s finances for FY 2018. The Message of the Chief Financial 

Officer, followed by the Office of the Inspector General’s commentary on the FMC’s FY 2018 

financial audit, the independent auditor’s report, the audited financial statements and related notes, 

and required supplementary information are included in this section. 

Other Information includes a statement prepared by the Inspector General summarizing what the 

Office of the Inspector General considers to be the most serious management and performance 

challenges facing the Commission, a report on improper payments, and a table summarizing the 

financial statement audit.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 1

MANAGEMENT’S DISCUSSION

AND ANALYSIS

Fiscal Year 2018
FMC FISCAL YEAR 2018| Performance and Accountability Report| 2

HISTORY, MISSION, AND ORGANIZATION

HISTORY

First constituted over 100 years ago as the United States Shipping Board in the Shipping Act of 

1916, the Federal Maritime Commission was authorized in its current form as an independent 

Executive Branch agency in 1961. The Commission is a small agency that oversees international 

ocean trade. 

THE FMC TODAY

International ocean shipping is vital to the Nation’s commerce, moving more than $1 trillion in U.S. 

exports and imports each year. From its beginning, the Commission has worked to further 

competition and integrity for America’s ocean supply chain. While the specifics of U.S. maritime 

policy and legislation have evolved over time, the FMC’s mission of ensuring a competitive and 

reliable international ocean transportation supply system and protecting the public from unlawful, 

unfair, and deceptive ocean transportation practices remain the cornerstone of today’s regulatory 

efforts.

The international ocean transportation industry continues to adjust and react to challenging market 

conditions. Carriers and marine terminal operators (MTOs) have been compelled by market forces

to find ways to cut costs and realize greater efficiencies, whether individually or through 

consolidation, joint ventures, or operational cooperation with their competitors under agreements 

filed with the FMC. Carrier and MTO-concerted activity and resulting changes in market structure,

require the FMC to continue to quickly respond by timely and efficiently analyzing the competitive 

impact of agreements filed with the Commission to guard against possible anti-competitive abuse of 

the filed agreement authority, to avoid unreasonable increases in transportation costs or decreases in 

transportation services, and to address other activities prohibited by the Shipping Act. 

The FMC ensures a competitive and reliable international ocean transportation supply system in part 

by balancing efficiency strategies and cooperative working arrangements among carriers or MTOs 

with the legitimate business needs of the Nation’s many exporters/importers. The end goal is to 

ensure that their goods reach international markets efficiently and reliably. As the industry continues 

to evolve and change, the FMC has focused on competition and integrity for America’s ocean 

supply chain by:

• Analyzing and monitoring key U.S. trade lanes; 

• Assessing the competitive effects of agreement parties’ activities, focusing on issues of costs 

(freight rates), vessel capacity (supply), and equipment availability; and

• Monitoring changes taking place in the provision of chassis for the inland movement of 

containerized goods, and the competitive effects of changing carrier alliance structures, 

particularly as they may affect concerted procurement of carrier services in U.S. ports.

STATUTORY AUTHORITY

The FMC oversees the international ocean transportation supply system to maintain competitiveness 

and reliability for the shipping public. The FMC also protects the public from unlawful, unfair, and 

deceptive practices. The principal statutes administered by the Commission, codified at 46 U.S.C. 

§§ 40101-44106, are:
FMC FISCAL YEAR 2018| Performance and Accountability Report| 3

• The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (Shipping 

Act);

• The Foreign Shipping Practices Act of 1988 (FSPA);

• Section 19 of the Merchant Marine Act, 1920 (1920 Act); and

• Sections 2 and 3 of Pub. L. No. 89-777, 80 Stat. 1350.

MISSION

The FMC’s mission is to ensure a competitive and reliable international ocean transportation supply 

system that supports the U.S. economy and protects the public from unfair and deceptive practices. 

Fulfilling this mission involves achieving two primary goals: maintaining a competitive and reliable 

international ocean transportation supply system, and protecting the public from unlawful, unfair, 

and deceptive practices. Our mission is achieved by ensuring that the fundamental dynamics of a 

free, open, and competitive ocean transportation market drive economic outcomes. The 

Commission administers the Shipping Act, employing a minimum of government intervention and 

regulatory costs, and by placing a greater reliance on the marketplace.

ORGANIZATION 

The FMC is governed by five commissioners nominated by the President and confirmed by the 

Senate, each serving a staggered five-year term. No more than three members of the Commission

may be from the same political party. One commissioner, designated by the President, serves as 

Chairman. Michael A. Khouri, a commissioner since 2010, was designated Acting Chairman on 

January 23, 2017, and serves as the Chief Executive and Administrative Officer of the Commission. 

The FMC’s staff is comprised of economists, attorneys, and experts in ocean transportation and 

government administration. Most of the Commission’s workforce is located at its Washington, D.C. 

headquarters, and the Commission also maintains a presence in six major port locations nationwide. 

In FY 2018, the FMC realigned its Office of Consumer Affairs and Dispute Resolution Services 

under the Office of the Managing Director, recognizing management efficiencies and improving 

information sharing among program offices.

Supporting the Commissioners’ offices, professional staff is organized into 10 bureaus and offices:

The Bureau of Certification and Licensing 

(BCL) protects the public from financial 

harm through its OTI licensing, registration, 

and surety bonding programs. BCL also 

protects the public by requiring Passenger 

Vessel Operators (PVOs) to maintain 

adequate financial coverage to reimburse 

cruise cancellations or to cover liability in the 

event of death or injury at sea. 

The Bureau of Enforcement (BOE) is the 

prosecutorial arm of the Commission. Bureau 

attorneys serve as trial counsel in formal 

proceedings, and protect the shipping public 

by working closely with the Commission’s 

Area Representatives in investigations of 

potential violations of the Shipping Act and 

Commission regulations. BOE negotiates 

settlements and informal compromises of civil 

penalties, and may act as investigative officers 

in formal fact-finding investigations.

The Bureau of Trade Analysis (BTA)

analyzes and monitors the concerted activities 

of VOCCs and marine terminal operators to 

detect and guard against possible 

anticompetitive abuse of authority contained 

in filed agreements under the Shipping Act 

that could result in substantial increases in 

transportation costs or decreases in 

transportation services; and to identify and 

address other prohibited activities. BTA also 

reviews and analyzes service contracts, 

monitors rates of foreign, government-owned 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 4

controlled carriers; and reviews carrierpublished tariff systems under the accessibility 

and accuracy standards of the Shipping Act. 

The Office of the Administrative Law 

Judges (OALJ) resolves cases of alleged 

violations of the Shipping Act and other laws 

within the Commission’s jurisdiction. 

Through trial hearings and the issuance of an 

initial decision, the OALJ ensures that the 

rights of all parties are preserved.

The Office of Consumer Affairs and 

Dispute Resolution Services (CADRS)

provides assistance to shippers, OTIs, cruise 

operators and passengers, truckers, MTOs, 

and VOCCs by providing alternative dispute 

resolution (ADR) services, ombuds assistance, 

mediation, facilitation, and arbitration to 

resolve disputes involving cargo shipments, 

household goods shipments, and cruises.

The Office of Equal Employment 

Opportunity (OEEO) advises and assists the 

Commission in carrying out its responsibilities 

relative to Titles VI and VII of the Civil 

Rights Act of 1964 (as amended), other laws, 

executive orders, and regulatory guidelines 

implementing affirmative employment, and 

the processing of EEO complaints.

The Office of the Inspector General 

(OIG) is an independent and objective 

oversight office created within the FMC by 

the Inspector’s General Act of 1978 (as 

amended) to conduct and supervise audits, 

inspections, and investigations relating to 

FMC programs; detect and prevent waste, 

fraud, and abuse; promote economy, 

efficiency, and effectiveness; review existing 

and proposed legislation and regulations; keep 

the Chairman, Commissioners, and Congress 

fully informed of serious problems and 

deficiencies and recommend corrective 

actions; and, as appropriate, report violations 

of law to the U.S. Attorney General.

The Office of the General Counsel (OGC)

provides sound and timely legal services to the 

Commission and staff as it fulfills 

responsibilities that include: preparing final 

decisions, orders, and regulations for 

Commission approval and issuance; 

representing the Commission in litigation 

before the courts; providing technical and 

policy assistance to other government 

agencies engaged in international negotiations 

or discussions on shipping matters; and 

providing legal opinions to the Commission, 

its staff, and the general public in appropriate 

instances. OGC also oversees the 

Commission’s international affairs activities. 

The General Counsel is the Commission’s 

Chief Legal Officer.

The Office of the Managing Director 

(OMD) is responsible for implementing the 

administrative directives of the Chairman, the 

management and coordination of program 

offices and bureaus, and overseeing the 

agency’s Area Representatives located in six 

major port areas nationwide. It has direct 

oversight of the Commission’s administrative 

offices, which include the offices of Budget 

and Finance (OBF), Human Resources

(OHR), Information Technology (OIT), and 

Management Services (OMS). The Managing 

Director is the Commission’s Chief Financial 

and Operating Officer.

The Office of the Secretary (OS) serves as 

the office through which all filings are made 

in Commission proceedings, notices of 

proceedings are given, and from which all 

official actions are issued by the Commission. 

The OS prepares and maintains agenda 

matters and actions taken by the Commission; 

maintains official files and records of formal 

proceedings; ensures compliance with the 

Freedom of Information, Government in the 

Sunshine, and Privacy Acts; responds to 

information requests from the public; issues 

publications and authenticates instruments 

and documents of the Commission; maintains 

a public reference/law library and a docket 

library; and oversees the organization and 

content of the Commission’s website.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 5

Federal Maritime Commission

Organization Chart*

*This is the current organization chart for the Commission, depicting a Congressionally-authorized 

realignment of the Office of Consumer Affairs and Dispute Resolution Services under the Managing 

Director, approved April 27, 2018. Counterpart changes in 46 C.F.R. Part 501 are currently pending 

publication.

Commissioner Commissioner Commissioner
FMC FISCAL YEAR 2018| Performance and Accountability Report| 6

REGULATORY RESPONSIBILITY AND OVERSIGHT

The FMC ensures a competitive and reliable ocean transportation supply system by:

• Reviewing and monitoring agreements among and between vessel-operating common carriers and 

among and between marine terminal operators serving the U.S. foreign oceanborne trades to ensure 

that they do not cause unreasonable increases in transportation costs or decreases in transportation 

services;

• Maintaining and reviewing confidentially filed service contracts and non-vessel-operating common 

carrier (NVOCC) Service Arrangements to guard against detrimental effects to shipping;

• Providing a forum for exporters, importers, and other members of the shipping public to obtain 

relief from ocean shipping practices or disputes that impede the flow of commerce;

• Ensuring common carriers’ tariff rates and charges are published in private, automated tariff systems 

and publicly available;

• Acting to address unfavorable conditions caused by foreign government or foreign business 

practices in U.S. foreign shipping trades; and

• Monitoring rates, charges, and rules of government-owned or -controlled carriers to ensure they are 

just and reasonable.

The FMC protects the public from financial harm and contributes to the integrity and security of the 

Nation’s import and export supply chains and ocean transportation system. FMC activities include:

• Licensing and registering NVOCCs, and licensing U.S.-based freight forwarders, collectively “ocean 

transportation intermediaries” (OTIs); 

• Administering and enforcing a surety bond program to ensure payment of judgments for damages 

by OTIs;

• Investigating and prosecuting violations of the Shipping Act and related statutes;

• Helping resolve disputes involving the shipment of goods or the carriage of passengers;

• Adjudicating private party complaints alleging Shipping Act violations; 

• Ensuring that passenger vessel operators maintain proper financial coverage to reimburse cruise 

passengers in the event their cruise is cancelled or to cover liability in the event of death or injury 

at sea; and

• Registering and annually verifying VOCC status of ocean common carriers operating in U.S. trades.

ALLIANCE, VESSEL SHARING, AND MARINE TERMINAL OPERATOR AGREEMENTS

The FMC monitors key trade lanes, and reviews and analyzes the competitive impact of agreements with 

particular emphasis on issues concerning carrier consolidation, adequate vessel capacity, and equipment 

availability. World-wide economic conditions continue to drive changes among vessel operating carriers 

resulting in more complex and geographically broader agreements filed with the Commission. 

The trend toward consolidation in the ocean carrier industry continued in 2018 and will continue to impact 

existing and future filed agreements. Three Japanese carriers, K Line, MOL, and NYK completed the merger 

of their container shipping businesses to form the new company Ocean Network Express, which launched 

operations in April 2018. This type of consolidation may be contributing to increased agreement filings

closer to the ten-year average after a number of years of decreases in filings. 

In the landside operations sector, changes designed to increase drayage productivity at marine terminals 

are being discussed by the West Coast MTO Agreement. The terminal operators modified their OffPeak 

program to include an appointment system intended to reduce idle truck time during peak hours. Fiscal 

Year 2018 also saw the completion of a full audit of all MTO Agreements on file with the Commission. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 7

This endeavor purged obsolete or inactive agreements from the FMC’s agreement library, and presents a 

more accurate picture of antitrust immunity extended to MTOs at U.S. ports.

As the industry continues to undergo significant structural change, the FMC will continue to play an 

important role in analyzing agreements for anti-competitive practices. This includes overseeing the 

changes and monitoring the impact on the Nation’s exporters/importers to ensure goods reach 

international markets efficiently and reliably.

PORT CONGESTION AND SECURITY INITIATIVES

In December 2017, the 18-month work of the Commission’s Supply Chain Innovation Initiative 

culminated in the issuance of a final report on challenges and commercial solutions to supply chain 

challenges and related port congestion concerns. Led by Commissioner Rebecca F. Dye, Supply Chain 

Innovation Teams composed of industry leaders from across the international ocean transportation supply 

chain discussed challenges and collaborated on solutions to help reduce port congestion and remove 

related obstacles to efficient U.S. supply chain operations. The teams looked beyond the dock and the 

terminal gate to identify commercial solutions to increase American international supply chain 

performance. The report identified several major systemic challenges, for example, the lack of direct 

customer relationships between actors in the system, such as shippers and marine terminals. 

One “Value Proposition” resulting from the initiative is to establish a National Seaport Information Portal 

to provide visibility of critical, timely information so that self-correction and harmonization can occur in 

the supply chain. The Port of Los Angeles and GE Transportation are now working with MTOs, shipping 

lines, cargo interests and railroads to develop, as a pilot project, a single electronic window funneling 

much-needed data on arrivals, terminal handling, container location and release times in order to optimize 

use of assets and reduce supply chain costs.

The FMC remains active in security initiatives related to U.S. ocean commerce, and works with other 

agencies engaged in homeland security to improve identification of entities providing and utilizing 

maritime transportation services and to coordinate the use of available database systems. To facilitate 

these activities, the FMC executed a Memorandum of Understanding (MOU) with the U.S. Customs and 

Border Protection to provide a more efficient utilization of existing systems and services. The FMC also 

has an active MOU with the Census Bureau, U.S. Department of Commerce, to provide the FMC with 

access to the Census’ Automated Export System (AES) database. These relationships allow the FMC to 

access confidential U.S. export shipment data to accomplish its mission and to protect the Nation’s 

security interests. The Commission also supports the Nation’s economic and security interests by 

partnering with the National Intellectual Property Rights Coordination Center (IPR Center), a Department 

of Homeland Security-led partnership of 23 Federal and international agencies targeting intellectual 

property- and trade-related crimes. This partnership has resulted in coordinated enforcement efforts to 

address international criminal activity. 

ENFORCEMENT, DISPUTE RESOLUTION, AND PUBLIC INFORMATION

The Commission is aware of the ever-increasing pressure of industry consolidation and port congestion

and its impact on U.S. exporters and their need for efficient ocean transportation in reaching foreign 

markets. The FMC will continue its focus on monitoring agreements, service contracts, and tariffs in key 

trades as barometers of market cycles and shifts in the balance of supply and demand. The FMC will 

continue to expand and promote its compliance-focused program to monitor and audit ocean common 

carrier, NVOCC, and ocean freight forwarder operations. The Commission’s Bureau of Enforcement, 

through the Commission’s statutory and regulatory mandate, protects the shipping public and ensures 

industry adherence to U.S. shipping laws. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 8

The Commission provides information in many forms to educate regulated entities, stakeholders, and the 

public about its resources, remedies, and regulatory requirements. The Commission’s website offers 

brochures, how-to guides, forms and applications, reference libraries, news releases, information on 

investigations, and advice on topics such as FMC regulations, OTI licensing, household goods moves, and 

use of ADR services to assist parties with resolving cruise- and cargo-related disputes. The Commission’s 

CADRS office receives time-sensitive requests for assistance from shippers and carriers. The Commission 

works closely with the Federal Motor Carrier Safety Administration (FMCSA) and participated in quarterly 

working group and Moving Fraud Task Force meetings. Area Representatives, strategically located near six 

key maritime ports, commonly operate as the Commission’s front line for questions and issues facing the 

industry. The Commission’s Office of the Secretary updates the FMC’s website and social media 

frequently, providing time sensitive notifications and important information to the public. The FMC also 

responds to requests for information from the press and the public, delivering key information directly to 

potentially affected shippers and consumers. 

The FMC also assists with industry-driven solutions to ocean shipping issues. For example, the 

Commission regularly provides outreach and education to the shipping industry, stakeholders, and other 

government entities on the statutes it implements, and to address any issues that may arise. 

Commissioners and staff address industry and stakeholder groups as speakers and panelists to provide 

information on the latest issues related to Commission activities and international commerce.

AGENCY MISSION CHALLENGES

The Commission is well-informed of the day-to-day issues and challenges which face the United States’ 

ocean transportation system and its stakeholders, and will continue to focus its efforts to foster the 

Nation’s international trade and economic growth. This agency strives to accomplish its strategic goals by 

improving staff efficiency and closely managing its resources to enforce the Commission’s governing 

statutes and regulations to protect the shipping public. As financial resources allow, the FMC will 

continue to prioritize investments needed in information technology to improve information security,

efficiency, and greater public access, while reducing costs over time. 

REGULATORY REVIEW

The FMC systematically reviews its regulatory requirements and processes for efficiency and effectiveness. 

As changing economic conditions alter the state of the shipping industry and business practices, 

regulations are revised to respond to new conditions. During FY 2017, the Commission designated its 

Managing Director as the Commission’s Regulatory Reform Officer responsible for organizing the FMC’s 

Regulatory Reform Task Force to identify regulations that have become outdated or unduly burdensome. 

The FMC’s Regulatory Reform Task Force lead the Commission to identify those regulations that have 

become less relevant, or are unduly burdensome. On January 12, 2018, the Commission released its Plan 

for Regulatory Reform of Existing FMC Rules, which identified regulations currently suitable for reform or 

elimination, and established a schedule to systematically review these regulations for provisions that may 

be burdensome and no longer necessary to meet obligations under the Shipping Act. A new webpage,

designed to provide transparent, real-time information to the public regarding the Commission’s plan was 

also launched during the fiscal year. This new plan supersedes the Commission’s previous Plan for 

Retrospective Review of Existing Rules.

The Commission issued a final rule in Docket 17-10, Amendments to Regulations Governing NVOCC Negotiated 

Rate Agreements and NOVVCC Service Arrangements, effective on August 22, 2018, offering deregulatory 

flexibilities for Non-Vessel Operating Common Carrier Negotiated Rate Arrangements (NRAs) and 

NVOCC Service Arrangements (NSAs). The rule allows NRAs to be amended at any time, allows the 

inclusion of non-rate economic terms, and allows an NVOCC to provide for shipper’s acceptance of the 

NRA by booking a shipment. NSAs also were made easier and more attractive to use by removing filing 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 9

and essential terms requirements. A number of favorable comments were received applauding the 

Commission’s action to revise its regulations affecting these commercial pricing tools used by NVOCCs 

which will provide welcome regulatory relief to nearly 6,000 small businesses in the OTI community.

In FY 2018, staff updated recommendations for Commission consideration of potential regulatory 

reforms to the filing and processing of agreements, quarterly monitoring reports and agreement meeting 

minutes, taking into consideration industry comments received in response to its Notice of Proposed 

Rulemaking (NPR) in Docket No. 16-04, Ocean Common Carrier and Marine Terminal Operator Agreements 

Subject to the Shipping Act of 1984. The recommendations are under review and the Commission anticipates 

that the agreement rulemaking initiative will conclude during FY 2019.

PROGRAM PERFORMANCE OVERVIEW

The FMC, like other Federal agencies, provides a performance plan to Congress, pursuant to the 

Government Performance and Results Act (GPRA). The Commission’s performance goals are organized 

to aid in achieving its strategic goals. The FMC’s Strategic Plan for Fiscal Years 2018-2022 is posted on the 

Commission’s website. The complete Program Performance Report for FY 2018 is contained in the

Program Performance section of this Report.

ACHIEVING STRATEGIC GOAL RESULTS

The FMC developed performance goals and measures to both promote its strategic goals and support its

mission. Specific targets and strategies must be accomplished to meet the identified performance goals, 

and the FMC has quantified and measured performance goals for the past ten years. The Commission’s 

actual performance in FY 2018 is compared with the past targeted levels of performance established in the 

agency’s Strategic Plan Fiscal Years 2014-2018 (Revised) and is the first year of reporting under the new

Strategic Plan FY 2018-2022. Taken together, performance measures and targets under each strategic goal 

are designed to enhance and further those goals each fiscal year, bringing the agency closer to full 

achievement of its strategic goals. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 10

Historical Performance of Strategic Goals and Objectives

Strategic Goal Objective Performance Measures 2015 2016 2017 2018

Goal 1. Maintain a 

competitive and 

reliable international 

ocean transportation 

supply system.

1. Ensure that actions 

under filed agreements do 

not result in unreasonable 

increases in transportation 

costs and/or 

unreasonable decreases in 

transportation services.

Percentage of FMC-filed agreements 

reviewed at Commission level which 

are modified through negotiation to 

mitigate anti-competitive effects. 

TARGET n/a n/a n/a 50%

ACTUAL n/a n/a n/a 100%

Percentage of agreement monitoring 

reports reviewed within 30 days of 

receipt to detect actionable information 

including market-distorting behavior. 

TARGET n/a n/a n/a 65%

ACTUAL n/a n/a n/a 89%

2. Enhance efficiency in 

the trades through use of 

asset sharing authority 

under the Shipping Act of 

1984.

Percentage share of U.S. containerized 

cargo moving on other agreement 

parties' vessels in major U.S. trades.1

TARGET 40% 40.5% 41% n/a

ACTUAL 49% 51% 51% n/a

Goal 2. Protect the 

public from unlawful, 

unfair, and deceptive 

ocean transportation 

practices.

1. Identify and take 

action to end unlawful, 

unfair, and deceptive 

practices.

Percentage of enforcement actions 

taken under the Shipping Act 

successfully resolved through favorable 

judgment, settlement, issuance of 

default judgment, or compliance letter 

or notice.

TARGET 77% 77.5% 77.5% 77.5%

ACTUAL 83.4% 88.6% 82.8% 85.8%

2. Prevent public harm 

through licensing and 

financial responsibility 

requirements.

Percentage of decisions on completed 

OTI license applications rendered 

within 60 calendar days, facilitating 

lawful operation of OTIs with the 

appropriate character and experience 

requirements.

TARGET 75% 75% 75% 75%

ACTUAL 72% 79.7% 95% 97%

Percentage of PVOs examined during 

the year that have the full financial 

coverage required by regulation to 

protect against loss from nonperformance or casualty.

TARGET 95% 95% 95% 95%

ACTUAL 96% 96% 100% 99%

3. Enhance awareness of 

agency resources, 

remedies, and regulatory 

requirements through 

education and outreach.

Percentage of Commission issuances, 

orders, and reports available through 

the Commission’s website within 5 

working days of receipt.

TARGET 78% 80% 82% 84%

ACTUAL 92% 90% 95% 97%

4. Impartially and timely 

resolve international 

shipping disputes through 

ADR and adjudication.

Percentage of ombuds and ADR 

matters closed within 6 months of 

request for assistance.

TARGET n/a n/a 60% 60.5%

ACTUAL n/a n/a 99% 97%

Percentage of formal complaints or 

Commission-initiated orders of 

investigation completed within two 

years of filing or Commission initiation.

TARGET 58% 60% 62% 64%

ACTUAL 90% 86% 79% 38%

Number of cases opened and closed 

each fiscal year using ombuds and 

ADR services to assist consumers in 

recovering goods or funds.2

TARGET 825 825 n/a n/a

ACTUAL 882 778 n/a n/a

1 This measure was replaced by the first two new measures listed under strategic Goal No. 1 of the FY 2018-2022 Strategic Plan.

2 To more accurately reflect the Commission’s performance in this area, this measure was replaced in FY 2017 and carried forward in the 

Commission’s current Strategic Plan. For additional historical data on this performance measure, see previously published PARs posted on 

the Commission’s website.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 11

Building upon the success of our prior Strategic Plan, the Commission retains, with slight language 

modifications:

• Strategic Goal One, Maintain a competitive and reliable international ocean transportation supply system, and 

• Strategic Goal Two, Protect the shipping public from unlawful, unfair, and deceptive ocean transportation practices. 

The Commission developed a new objective under Strategic Goal One, to ensure that actions under filed 

agreements do not result in unreasonable increases in transportation costs and/or unreasonable decreases in transportation 

services. The measures to assess this objective will track modifications made in the review process to 

mitigate anti-competitive effects, and ensure timely review of monitoring reports. 

A brief overview of the agency’s successes includes the following:

Strategic Management of Human Capital – In 2018, the FMC continued to implement the strategic goals, 

objectives, and strategies outlined in its 2012-2017 Human Capital Plan. The Commission’s Human 

Capital Plan was developed under the Office of Personnel Management’s (OPM) Human Capital 

Assessment and Accountability Framework, and provides for recruiting and retaining a talented workforce, 

and appropriately managing succession in the Commission’s relatively small workforce. Currently, a new 

2018-2022 Human Capital Operating Plan is being constructed to reflect the results and changes of 

strategies and goals in alignment with the FMC’s Strategic Plan for FY 2018-2022. 

Consistent with OMB’s April 17, 2017 guidance, Comprehensive Plan for Reforming the Federal Government and 

Reducing the Federal Civilian Workforce, the Commission implemented several initiatives under its 5-year 

Agency Reform and Long-Term Workforce Plan FY 2018–2022 during the fiscal year, including:

• reducing the number of SES and supervisory positions; 

• establishing a new two-tier SES structure to realign and control SES salary and costs; 

• realigning and combining functions within the Commission; and 

• continuing to emphasize the achievement of operational efficiencies and improvement of customer 

service through automation projects.

To recruit and retain a highly qualified and diverse workforce, the Human Capital Operating Plan includes 

improved marketing of the FMC; streamlining and automating the application process; targeting 

recruitment tools and areas of consideration to increase the diversity of applicants; and incorporating 

organizational needs based on the annual OPM Federal Employee Viewpoint Survey results.

Strong leadership is a critical asset, and at the close of FY 2018, 43 percent of the FMC’s executives were 

eligible for optional retirement. The Commission continues to engage in succession management and 

projecting its future needs by using training needs assessments, establishing and conducting an agency Stay 

Interview process, offering leadership development opportunities, and realigning and combining functions 

across the Commission to allow for greater career development opportunities. Staff are being trained and 

developed to assume greater levels of responsibility, and to allow the agency to continue to maintain 

talented and knowledgeable leadership to meet the challenges of the future. Continuous training and 

development in leadership competencies will prepare the next generation of leaders at the Commission.

Competitive Sourcing – The FMC submitted its FY 2018 Federal Activities Inventory Reform Act (FAIR 

Act) Inventory to OMB in June 2018. The Inventory identified 68 of the agency’s 127 authorized FullTime Equivalent employees (FTEs) as commercial activity FTEs. No challenges to its commercial 

inventories have ever been received.

Improved Financial Performance – The FMC again received an unmodified (“clean”) opinion on its FY 2018 

financial statements, and will continue its ongoing efforts to improve operations and achieve unmodified

audit opinions in the future.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 12

Expanded E-Government – The Commission continued to monitor public usage trends and leverage user 

feedback during FY 2018. Public feedback was used to refine and improve users’ experience with the 

Commission’s website (www.fmc.gov), and enhance the organization, quality, clarity, and accessibility of 

content provided to the shipping public. Notable achievements included: 

• archiving and streamlining content to improve delivery and accuracy of information; 

• continuing work on a major platform migration and extensive improvements to the information 

architecture of its public-facing website which will be launched in FY 2019;

• improving access to Commission resources by revising content using Plain Language principles;

• migrating all content to a mobile responsive platform to meet new government-wide website 

requirements; and

• enhancing technological capabilities to caption and live stream over the world wide web the FMC’s 

public meetings under the Government in the Sunshine Act.

The Commission remains committed to a multiyear enhancement of its IT systems, which will make it 

faster and easier for the public and regulated companies doing business with the FMC to find information 

and complete required filings. The Commission’s new Information Technology Strategic Plan covering 

FY 2018-2022 (IT Strategic Plan) identifies several overarching challenges including: consolidation and 

upgrade of legacy applications and infrastructure with relevant technologies; implementation of 

automation to streamline workflow processes and improve efficiency; and integrating security standards 

and frameworks to protect from cybersecurity risks all agency-owned/issued assets and commercially 

sensitive data collected from the shipping public.

Efforts to advance the IT Strategic Plan and the IT Capital Plan were made during the fiscal year, and 

significant upgrades were made to the agency’s IT infrastructure. Critical applications and the 

Commission’s disaster recovery server were moved to the cloud in FY 2017 to ensure regular and effective 

data backups, to assist in effectively continuing operations during emergency events, and continue to save 

the Commission the operating costs of maintaining a physical disaster recovery location. The FMC is 

compliant with FEDRAMP and with Department of Homeland Security (DHS) continuous monitoring 

requirements for network security. Internal security tools were deployed to effectively monitor and 

address network operations, including file integrity, password sufficiency, and probing for open ports and 

other externally visible points of attack. 

Performance Improvement – The Commission’s Strategic Plan is the foundation for Agency-wide planning 

and budgeting activities. Funding and FTE levels are integrated into the Commission’s performance 

budget planning document by strategic goal to clearly identify the budgetary and staff resources committed 

to the performance of each goal.

Fiscal Year 2018 begins a new five-year performance cycle under the Commission’s Strategic Plan for FY 

2018-2022. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 13

FINANCIAL PERFORMANCE OVERVIEW

The FMC’s financial condition as of September 30, 2018, is sound, and internal controls are in place to 

ensure that funds are used efficiently and effectively, and that its budget authority is not exceeded. The 

FMC’s accounting services provider, the Bureau of the Fiscal Service (BFS), prepared the financial 

statements as required by the Accountability of Tax Dollars Act of 2002. They have been prepared from, 

and are fully supported by, the books and records of the FMC in accordance with Federal Generally 

Accepted Accounting Principles (GAAP), standards approved by the Federal Accounting Standards 

Advisory Board (FASAB), and OMB Circular A-136, Financial Reporting Requirements.

The principal financial statements provided in this document are prepared to report the financial position 

and results of the operations of the FMC, pursuant to the requirements of 31 U.S.C. § 3515(b). Reports 

used to monitor and control budgetary resources are prepared from the same books and records. The 

financial statements should be read with the understanding that they are for a component of the U.S. 

Government. 

SOURCE OF FUNDS

The FMC has single source funding, Salaries and Expenses, funded by an annual appropriation available 

for commitments and obligations incurred during the fiscal year in which the authority was granted. 

Congress approved FY 2018 appropriations for the FMC in the amount of $27,490,000 through P.L. 115-

141, a straight line from the FY 2017 final appropriation level. Additionally, the Commission had 

reimbursable budget authority of $55,034 for work performed by FMC staff at other government agencies. 

The FMC collects remittances for user fees and penalties, however, it is not authorized to offset any of its 

budget authority by using these funds. Collections are deposited directly into the Treasury General Fund. 

This information is captured in the Statement of Custodial Activity which can be found in the Financial 

Information section of this report.

APPROPRIATION HISTORY
FMC FISCAL YEAR 2018| Performance and Accountability Report| 14

FULL-TIME EQUIVALENT HISTORY

The FMC’s FTE level is largely driven by its annual appropriation level. The FMC currently has onboard 

two of its statutorily authorized five Commissioners.

A number of

retirements and 

separations in 2018

resulted in a lower than 

anticipated FTE level. 

The actual FTE level 

for 2018 was 118, with 

114 employees on 

board at fiscal year’s 

end. The Commission

continues to endeavor 

to develop the 

appropriate mix of 

staffing and other 

available resources to 

ensure effective 

accomplishment of its

mission. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 15

USES OF FUNDS BY EXPENSE CATEGORY

During FY 2018, obligations against the FMC’s appropriation totaled $26,821,172, representing 97.57

percent of the funding level. The Commission spent $26.821 million as follows: 68.30 percent for salaries 

and benefits, 0.57 percent for official travel expenses, and 31.13 percent for administrative expenses (e.g., 

rent, government and commercial contracts, telephones, and IT services and equipment). The unexpended

balance of $668,828 will be allocated to legitimate increases to existing FY 2018 obligations.

18,317

154

8,350

18,835

156

8,201

$0

$5,000

$10,000

$15,000

$20,000

FY 2018 FY 2017

Salaries & Expenses Travel Administrative

Utilization of Funds by Expense Categories

($000s)

AUDIT RESULTS

The FMC again received an unmodified (“clean”) opinion on its FY 2018 financial statements from the 

auditing firm of Dembo Jones, P.C., under contract through the FMC’s OIG. Comparative statements 

may be found in the Financial Information section of this report.

FINANCIAL STATEMENT HIGHLIGHTS

The financial statements were prepared to report the financial position and results of operations of the 

Commission pursuant to the requirements of 31 U.S.C. § 3515(b). The statements were prepared from the 

books and records of the Commission in accordance with the formats prescribed by OMB. The 

statements should be read with the understanding that they are for a component of the U.S. Government, 

a sovereign entity. One implication of this is that liabilities cannot be liquidated absent legislation that 

provides resources to do so. 

The FMC’s financial statements summarize the financial position and financial activity of the agency. The 

financial statements, footnotes, and the remainder of the required supplementary information appear in 

their entirety in the Financial Information section of this report. A brief analysis of the principal statements 

follows.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 16

SUMMARY OF ASSETS

The FMC’s assets were $6,351,453 as of September 30, 2018. This represents an increase from FY 2017 of 

$334,811. The FMC’s assets reported in the balance sheet are summarized in the accompanying table. 

The Fund Balance with Treasury of $6,234,624

represents the FMC’s largest asset and 

comprises 98.16 percent of the agency’s total 

assets. The Fund Balance with Treasury is 

comprised only of annual appropriations 

maintained by the Department of the Treasury 

to address current liabilities. 

Accounts Receivable as of September 30, 2018,

was $10,462 for outstanding receivables billed to 

both Federal and non-Federal entities. This 

accounts for 0.16 percent of the FMC’s assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 1.68 percent of the FMC’s 

total assets as of September 30, 2018. The net value of $106,367 accounts for the depreciation of all assets 

and represents the current book value of those assets.

SUMMARY OF LIABILITIES

The FMC’s liabilities totaled $2,211,709 as of 

September 30, 2018, a decrease of $199,340 from 

FY 2017. The majority of the decrease is related 

to a reduction in accrued liabilities.

The FMC’s accounts payable as of September 30, 

2018, was $105,107. This represents the funds 

owed for goods and services received from 

vendors. Accrued liabilities represent future costs 

such as accrued annual and sick leave balances and 

workman’s compensation that are not covered by 

current budgetary resources. Accumulated leave costs are recognized as they are taken and workman’s 

compensation costs are recognized as they are paid out.

ANALYSIS OF CHANGES IN NET POSITION SUMMARY

The Changes in Net Position Summary is a summary of two factors, Unexpended Appropriations and 

Cumulative Results of Operations. The total net 

position for FY 2018 is an increase of $534,151

from FY 2017.

Unexpended Appropriations represent the 

amount of unobligated and unexpended budget 

authority for the 5-year period ending on 

September 30, 2018. Unobligated balances are the 

amount of appropriations or other authority remaining after deducting the cumulative obligations from the 

amount available for obligation for the same period. The Cumulative Results of Operations (the 

cumulative excess of financing resources over expenses) is the net result of FMC’s operations for all active 

fiscal years.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 17

ANALYSIS OF NET COST SUMMARY

The analysis of Net Cost Summary presents the net 

cost of FMC’s Programs as identified in the 

Annual Report. The four agency programs are 

Operational and Administrative, Formal 

Proceedings, Inspector General, and Equal 

Employment Opportunity. The Statement of Net 

Costs shows the net cost of operations for the 

agency as a whole and its sub-organizations and/or 

programs. Net Costs compared to Budgetary 

Resources can be found in the Financial Information

section of this report. This table reflects costs attributable to all active fiscal years (2014-2018).

ANALYSIS OF THE STATEMENT OF BUDGETARY RESOURCES

The Statement of Budgetary Resources (SBR) 

shows the source of the agency’s budgetary 

resources, the status of those resources at the end 

of the reporting period, and the relationship 

between the two. Total budgetary resources must 

be equal to the status of budgetary resources at all 

times. A more detailed SBR can be found in the

Financial Information section of this report. During 

FY 2018, the FMC had a total of $28,008,233 available, representing an increase of $261,120 from 2017 in 

budgetary resources. The budgetary resources represent financial activity during the accounting period for 

the five active fiscal years.

ANALYSIS OF ENTITY’S SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

The Commission’s internal controls are fundamental to the systems and processes used in managing its 

operations and achieving its strategic goals. The Acting Chairman’s Statement of Assurance in the 

following section notes that there are no material weaknesses or instances of nonconformance to report 

for FY 2018. 

Additionally, in line with the requirements of OMB Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control, the Commission formed an Enterprise Risk Management Committee 

to engage all agency management in collaborating to identify, measure, and assess risk points across the

agency. The Committee developed a risk profile, which when used in conjunction with existing internal 

controls, will serve to improve the Commission’s accountability and effectiveness.

MANAGEMENT ASSURANCES

The Federal Managers’ Financial Integrity Act (FMFIA) mandates that agencies establish controls that 

reasonably ensure that: 

• obligations and costs comply with applicable laws,

• assets are safeguarded against waste, loss, unauthorized use, or misappropriation, and 

• revenues and expenditures are properly recorded and accounted for.

This Act encompasses program, operational, and administrative areas as well as accounting and financial 

management. The FMFIA requires that the Acting Chairman provide an assurance statement of the 

adequacy of management controls and conformance of financial systems with Government-wide
FMC FISCAL YEAR 2018| Performance and Accountability Report| 18

standards, that FMC managers are held accountable for efficient and effective performance of their duties 

in compliance with applicable laws and regulations, and for maintenance of the integrity of their activities 

through the use of controls. 

Acting Chairman Khouri has provided his annual assurance statement in this report based on various 

sources, including knowledge of the daily operation of Commission programs and reviews, regular

discussions with the Managing Director and the Directors of the Offices of Budget and Finance and 

Management Services, audits of the financial statements, and the Commission’s strategic plan. 

Additionally, the Acting Chairman meets regularly with the Commission’s Senior Management, and 

receives regularly scheduled reports from the FMC’s Inspector General and OEEO Director. 

Identified deficiencies in management control would be addressed at the highest management levels within 

the FMC. For instance, corrective actions for significant deficiencies identified in the information 

technology area would be overseen directly by the agency’s Chief Information Officer (CIO).

During the fiscal year, the IG identified no significant deficiencies and there were no significant 

management decisions made on which the IG disagreed. During FY 2018, management and the OIG 

reached agreement on all OIG audit recommendations. Management resolved or worked to address a 

number of recommendations from these reviews, and it is expected that progress will be made to address 

the remaining open recommendations during FY 2019. 

DEBT COLLECTION IMPROVEMENT ACT OF 1996

The Debt Collection Improvement Act enhances the ability of the government to service and collect debts 

as it centralized the collection of non-tax delinquent debt owed to the government. Federal agencies are 

required to refer delinquent accounts in excess of 180 days to Treasury for collection. Collection of the 

Commission’s delinquent debts is conducted by the Bureau of the Fiscal Service through the CrossServicing Program and Treasury Offset Program, where the names and taxpayer identification numbers 

(TIN) of the delinquent entities are matched against the TINs of recipients of government payments. The 

balance owed to the government is deducted or offset from the payment to the entity to satisfy the debt. 

The goal is to minimize the amount of delinquent debt owed to the government. 

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014

The Digital Accountability and Transparency Act of 2014 (DATA Act) is an amendment to the Federal 

Funding Accountability and Transparency Act of 2006 (Public Law No. 109-282), and required the 

establishment of government-wide data standards for spending information that agencies report to 

Treasury, OMB, and the General Services Administration. The Commission began reporting standardized 

spending information as required, on May 9, 2017. 

Additionally, the DATA Act required Treasury and OMB to publish standardized spending information 

for free access and download on the government’s USASpending.gov website by May 9, 2018.

The Commission uses the infrastructure and financial system maintained by its Federal Shared Service 

Provider, the Administrative Resource Center (ARC), Bureau of the Fiscal Service (BFS). The 

Commission continued to work closely with ARC during the fiscal year to ensure that it was on target with 

DATA Act requirements. 

Fiscal Year 2018 was the first full year of DATA Act implementation. Working with our financial services 

provider, the FMC complied with all requirements and timely submitted all DATA Act certifications.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 19

PROMPT PAYMENT ACT OF 1982

The Prompt Payment Act requires agencies to make timely payments to vendors for supplies and services, 

to pay interest penalties when payments are made after the due date, and to take cash discounts when they 

are economically justified. In FY 2018, the FMC maintained a 97.6 percent of on-time payments.

In FY 2018, the FMC paid $22.00 in interest payments as a result of three late payments. The FMC will 

continue to work towards maintaining 100 percent on-time vendor payments in future years.

PERFORMANCE MEASURE SUMMARY

The FMC does not have an in-house financial accounting system, and does not receive a Performance 

Measure Summary from the Department of the Treasury. The agency acquires travel, procurement, 

accounting, and financial services from Treasury’s Bureau of the Fiscal Service. The Commission verifies 

and reconciles all financial statements and reports prior to submission.

INSPECTOR GENERAL ACT OF 1978, AS AMENDED IN 1988, AND THE INSPECTOR GENERAL 

REFORM ACT OF 2008

Section 5(b) of the Inspector General Act of 1978 requires agencies to report on final actions taken on 

OIG audit recommendations. Action was taken to close all audit recommendations during the year. No 

significant deficiencies or material weaknesses were identified during FY 2018.

Inspector General Issued Audits, Reports, and Evaluations -- FY 2018

A18-01: Independent Auditors’ Report of the FMC’s FY 2017 Financial Statements

Date Issued Recommendations Issued Remediated in FY 2018

11/2017 None, and no management letter --

A18-02: Evaluation of the FMC’s Compliance with the Federal Information Security Management Act 

FY 2017

Date Issued Recommendations Issued Remediated in FY 2018

10/2017 Two One

A18-03: DATA Act Audit, 2017

Date Issued Recommendations Issued Remediated in FY 2018

11/2017 One One

A-18-04: Evaluation of the FMC’s Information Technology Inventory

Date Issued Recommendations Issued Remediated in FY 2018

5/2018 Eight Eight, pending IG review

TREASURY ASSURANCE STATEMENT – USA SPENDING RECONCILIATION

The FMC has implemented its plan to ensure data completeness and accuracy on www.USAspending.gov 

by using control totals with financial statement data, and comparing samples of financial data to actual 

award documents. The prime Federal award financial data reported on www.USAspending.gov is correct 

at the reported percentage of accuracy, and the FMC has adequate internal controls over the underlying 

spending.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 20

ACTING CHAIRMAN’S STATEMENT OF ASSURANCE

The Federal Maritime Commission managers are responsible for 

establishing and maintaining effective internal control and financial 

management systems that meet the objectives of Sections 2 and 4 of 

the Federal Managers’ Financial Integrity Act of 1982 (FMFIA). The FMC 

provides an unqualified statement of assurance that its internal 

controls and financial management systems meet the objectives of the 

FMFIA with no material weaknesses.

The FMC conducted its annual assessment of internal control over 

programmatic operations in accordance with the Office of 

Management and Budget (OMB) Circular A-123, Management’s 

Responsibility for Enterprise Risk Management and Internal Control (A-123) 

guidelines. Based on the results of this assessment, the Commission

can provide reasonable assurance that its internal control over 

operations, reporting, and compliance were operating in compliance with applicable laws and guidance, 

and no material weaknesses were found as of September 30, 2018.

Additionally, the FMC conducted its assessment of the effectiveness of internal control over financial 

reporting, which includes safeguarding assets and compliance with applicable laws and regulations, in 

accordance with the requirements of Appendix A of A-123. Based on the results of that evaluation, the 

FMC can provide reasonable assurance that its internal control over financial reporting as of September 

30, 2018 was operating effectively, and no material weaknesses were found in the design or operation of 

the internal control over financial reporting.

In accordance with the guidance established in A-123, Appendix D, the CFO reviewed audit reports and 

other sources of information, and as of September 30, 2018, can provide reasonable assurance that the 

FMC’s financial systems substantially comply with Federal financial system requirements, applicable 

Federal accounting standards, and the U.S. Treasury standard general ledger at the transaction level, as 

required by the Federal Financial Management Improvement Act of 1996.

These assessments ensure effectiveness and efficiency of operations, reliability of reporting for internal and 

external use, and compliance with applicable laws and regulations. 

/s/

Michael A. Khouri

Acting Chairman

November 15, 2018
FMC FISCAL YEAR 2018| Performance and Accountability Report| 21

PROGRAM PERFORMANCE

INFORMATION

Fiscal Year 2018
FMC FISCAL YEAR 2018 Performance and Accountability Report  22

ANNUAL PERFORMANCE REPORT

INTRODUCTION

The Commission’s performance management system includes specific strategic goals, performance 

measures, and targets. Strategic goals represent the FMC’s mission and reflect the overall outcomes 

and objectives the agency is working to achieve. This report describes progress towards performance 

targets in 2018 in furtherance of the Commission’s mission to ensure a competitive and reliable 

international ocean transportation supply system that supports the U.S. economy and protects the 

public from unfair and deceptive practices. 

During 2017, the FMC engaged in a systematic strategic planning process that included reviewing 

the FY 2014-2018 Strategic Plan; assessing and revising the mission statement; conducting a 

Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis; and assessing whether 

measures and targets under the FY 2014-2018 Strategic Plan continued to provide appropriate 

performance measures. Based on that comprehensive process, which included opportunity for 

public and Congressional comment, the FMC developed and issued a new Strategic Plan covering

fiscal years 2018-2022. This new Strategic Plan provides the framework to address existing and 

anticipated challenges in the ocean transportation industry over the next five years by developing 

new performance measures and continuing calibration of previous measures to ensure the 

Commission meets its statutory mission and the needs of a rapidly changing industry.

With minor language modifications, both Strategic Goals from the FMC’s previous 5-year plan were 

retained. A new objective and two new measures to support Strategic Goal One replace the previous 

objective and measure under this Strategic Goal. The four objectives and associated measures under 

Strategic Goal Two were brought forward and included in the Commission’s current Strategic Plan 

covering FY 2018-2022. The current strategic goals and objectives are: 

• Maintain a Competitive and Reliable International Ocean Transportation Supply System.

o Ensure that actions under filed agreements do not result in unreasonable increases in 

transportation costs and/or unreasonable decreases in transportation services.

• Protect the Public from Unlawful, Unfair, and Deceptive Ocean Transportation Practices.

o Identify and take action to end unlawful, unfair, and deceptive practices. 

o Prevent public harm through licensing and financial responsibility requirements.

o Enhance public awareness of agency resources, remedies, and regulatory requirements 

through education and outreach. 

o Impartially and timely resolve international shipping disputes through alternative dispute 

resolution and adjudication. 

Eight performance goals were quantitatively measured during the fiscal year. All but one measure 

reached and exceeded FY 2018 targets. Each measure, target, and actual result is reported in Table 1 

below and includes a description of data used to measure performance, and an explanation of 

procedures used to validate and ensure integrity of the reported result. 

Trend data for performance measures is shown in Table 2 and reflects continuous increases in 

agency efficiency and productivity – a result of both improved and streamlined processes, and 

enhanced focus on improving the critical processes being measured. 

The agency has forwarded this report to the President, the OMB Director, appropriate 

Congressional committees, and others as dictated by OMB Circular A-136, Revised. Additionally, 

this report has been placed on the FMC’s public website to ensure that it is accessible to interested 

parties. All Commission employees have been advised to review this report.
FMC FISCAL YEAR 2018 Performance and Accountability Report  23

TABLE 1: SUMMARY OF PERFORMANCE MEASURE RESULTS – FY 2018

Targeted performance compared to actual results.

Strategic Goal No. 1: Maintain a competitive and reliable international ocean transportation supply 

system.

Performance Measure FY 2018 

Target

FY 2018 

Actual

Measure: Percentage of FMC-filed agreements reviewed at Commission level which are 

modified through negotiation to mitigate anti-competitive effects.

2018 Target: 50%

Validation: This outcome goal is measured using data from the eAgreements electronic 

filing system that identifies agreements requiring Commission level review. Each of those 

filings is then examined to determine whether any changes were made to the originally filed 

agreement that mitigated anticompetitive effects of the agreement. This measure is tracked 

on an ongoing basis.

50% 100%

Measure: Percentage of agreement monitoring reports reviewed within 30 days of receipt 

to detect actionable information including market-distorting behavior.

2018 Target: 65%

Validation: This outcome goal is measured using data contained in the eMonitoring system 

used for the electronic filing of agreement monitoring submissions. Performance is 

measured by comparing the file receipt date to the date that the filing was reviewed by staff 

analyst. The data is constantly under review and frequently updated. 

65% 89%

Strategic Goal No. 2: Protect the public from unlawful, unfair, and deceptive ocean transportation 

practices.

Performance Measure FY 2018 

Target

FY 2018 

Actual

Measure: Percentage of enforcement actions taken under the Shipping Act of 1984 

successfully resolved through favorable judgment, settlement, issuance of default 

judgment, or compliance letter or notice.

2018 Target: 77.5%

Validation: This outcome goal is measured by examining enforcement case inventory and 

physically counting the number of cases resolved. The inventory is maintained for case load 

management, and monthly and quarterly reporting purposes. The data is constantly under 

review and frequently updated.

77.5% 85.8%

Measure: Percentage of decisions on completed OTI license applications rendered within 

60 calendar days of receipt, facilitating lawful operation of OTIs with the appropriate 

character and experience requirements.

2018 Target: 75%

Validation: This outcome goal is measured by comparing data fields in an internal database 

that contains, among other data points, the date the OTI license application is accepted for 

processing and the date a licensing determination is made or the application process has 

been completed. The difference between these two dates is the length of time to render a 

decision on an OTI application accepted for processing. The database is maintained for daily 

case load management, and monthly and quarterly reporting purposes. The data is 

constantly under review and frequently updated.

75% 97%
FMC FISCAL YEAR 2018 Performance and Accountability Report  24

Measure: Percentage of PVOs examined during the year that have the full financial 

coverage required by regulation to protect against loss from non-performance or casualty.

2018 Target: 95%

Validation: This outcome goal is measured by comparing reported financial coverage 

amounts against required coverage amounts. Approximately 200 cruise vessels are 

registered and monitored by the Commission’s Passenger Vessel (Cruise) Operator program. 

Operators covered by this program file semi-annual, monthly, and weekly unearned 

passenger revenue reports. This information is used to compare reported coverage against 

required coverage amounts.

95% 99%

Measure: Percentage of Commission issuances, orders and reports available through the 

Commission’s website within 5 working days of receipt.

2018 Target: 84%

Validation: This outcome goal is measured by reviewing the workflow processes for posting 

documents to the Commission’s website docket activity logs. The date that each docket 

activity log is updated with new filings or issuances is compared to the date the document is 

filed with or issued by the Commission in a particular proceeding. The case logs are used on 

a daily basis by agency staff and by the public, therefore, any discrepancies are discovered 

and remedied quickly.

84% 97%

Measure: Percentage of ombuds and ADR matters closed within 6 months of request for 

assistance.

2018 Target: 60.5%

Validation: This outcome goal is measured using data maintained by the Commission on 

each ombuds and ADR matter opened. Cases are opened upon the request of the public for 

assistance and are subject to the normal fluctuations in businesses and consumers seeking 

help from the Commission. Cases are closed upon resolution, voluntary termination by the 

parties, or when the CADRS mediator determines that particular issues prevent the 

possibility for successful negotiation.

60.5% 97%

Measure: Percentage of formal complaints or Commission-initiated orders of investigation 

completed within two years of filing or Commission initiation.

2018 Target: 64%

Validation: This outcome goal is measured by using docket activity logs maintained by the 

Commission for docket management, and monthly/annual reporting purposes. The logs are 

used on a daily basis by agency staff and the public.

For FY 2018, 38 percent of the 13 private-party formal adjudications and FMC-initiated 

investigations commenced in FY 2016 were completed within the two-year measurement 

period. The subject of this measure include four relatively complex formal, private-party 

complaints that were brought as putative class actions, involve multiple parties, and 

concurrent federal court proceedings, necessitating unusual protracted proceedings. In FY 

2017, a fifth companion case was filed. Parties to several of the other private-party cases 

used to calculate the FY 2018 performance result engaged in more numerous and

aggressive litigation tactics than is customarily seen in Commission proceedings. As a result 

of these factors, the pace of closure of the 13 cases has been slower than in previous years. 

Historically, the Commission has easily met or exceeded its target goals for closure of 

private-party case and FMC-initiated investigations.

64% 38%
FMC FISCAL YEAR 2018 Performance and Accountability Report  25

TABLE 2: PERFORMANCE MEASURE TRENDS, FY 2014-2018

Strategic Goal No. 1: Maintain a competitive and reliable international ocean transportation supply system.

Performance Measure FY 2014 FY 2015 FY2016 FY 2017 FY 2018

Measure: Percentage of FMC-filed agreements reviewed at Commission level which are modified through negotiation to mitigate 

anti-competitive effects.

TARGET N/A N/A N/A N/A 50%

ACTUAL N/A N/A N/A N/A 100%

TARGET MET/UNMET N/A N/A N/A N/A MET

Measure: Percentage of agreement monitoring reports reviewed within 30 days of receipt to detect actionable information 

including market-distorting behavior.

TARGET N/A N/A N/A N/A 65%

ACTUAL N/A N/A N/A N/A 89%

TARGET MET/UNMET N/A N/A N/A N/A MET

Measure: Percentage share of U.S. containerized cargo moving on other agreement parties’ vessels in major U.S. trades.1

TARGET 39.5% 40% 40.5% 41% N/A

ACTUAL 45.6% 49% 51% 51% N/A

TARGET MET/UNMET MET MET MET MET N/A

Strategic Goal No. 2: Protect the public from unlawful, unfair, and deceptive ocean transportation practices.

Measure: Percentage of enforcement actions taken under the Shipping Act successfully resolved through favorable judgment, 

settlement, issuance of default judgment, or compliance letter or notice.

TARGET 76.5% 77% 77.5% 77.5% 77.5%

ACTUAL 83.8% 83.4% 88.6% 82.8% 85.8%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of decisions on completed OTI license applications rendered within 60 calendar days, facilitating lawful 

operation of OTIs with the appropriate character and experience requirements.

TARGET 75% 75% 75% 75% 75%

ACTUAL 71.3% 72% 79.7% 95% 97%

TARGET MET/UNMET UNMET UNMET MET MET MET

Measure: Percentage of PVOs examined during the year that have the full financial coverage required by regulation to protect 

against loss from non-performance or casualty.

TARGET 94% 95% 95% 95% 95%

ACTUAL 96.7% 96% 96% 100% 99%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of Commission issuances, orders, and reports available through the Commission’s website within 5 working 

days of receipt.

TARGET 76% 78% 80% 82% 84%

ACTUAL 93% 92% 90% 95% 97%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of Ombuds and ADR matters closed within 6 months of request for assistance.

TARGET N/A N/A N/A 60% 60.5%

ACTUAL N/A N/A N/A 99% 97%

TARGET MET/UNMET N/A N/A N/A MET MET

Measure: Percentage of formal complaints or Commission-initiated orders of investigation completed within two years of filing or 

Commission initiation.

TARGET 58% 58% 60% 62% 64%

ACTUAL 88% 90% 86% 79% 38%

TARGET MET/UNMET MET MET MET MET UNMET

Measure: Number of cases opened and closed each fiscal year using Ombuds and ADR services assisting consumers to recover 

goods or funds.2

TARGET 825 825 825 N/A N/A

ACTUAL 994 882 778 N/A N/A

TARGET MET/UNMET MET MET UNMET N/A N/A

1 This measure was replaced by the first 2 new measures listed under Strategic Goal No. 1 in the Commission’s FY 2018-2022 Strategic Plan. For 

additional historical data on this performance measure, see published Commission Performance and Accountability Reports posted on its website. 2 To more accurately reflect the Commission’s performance in this area, this measure was replaced in FY 2017. For additional historical data on this 

performance measure, see published Commission Performance and Accountability Reports posted on its website.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 26

FINANCIAL INFORMATION

Fiscal Year 2018
FMC FISCAL YEAR 2018| Performance and Accountability Report| 27

MESSAGE FROM THE CHIEF FINANCIAL OFFICER / 

MANAGING DIRECTOR

I am pleased to present the Financial Information portion of this Performance and 

Accountability Report, and the FMC’s Financial Statements for Fiscal Year 2018. 

For the fifteenth consecutive year, an independent auditor has rendered an 

unmodified opinion on the FMC’s financial statements. The auditor did not identify 

any deficiencies in internal control over financial reporting that they consider to be 

material weaknesses. Further, the auditor’s tests for compliance with selected 

provisions of applicable laws, regulations and contracts disclosed no instances of 

noncompliance for fiscal year 2018 that would be reportable under U.S. generally accepted government 

auditing standards. This demonstrates that the Federal Maritime Commission has continued its record of 

strong fiscal stewardship on behalf of the American people and that the agency is committed to maintaining

high standards for the financial management of the resources entrusted to it. 

The following financial statements and related notes, prepared in conformity with accounting principles 

generally accepted in the U.S., and requirements set forth in OMB Circular No. A-136, Financial Reporting 

Requirements, revised July 30, 2018, fairly present the Commission’s financial position. 

The FMC’s financial condition is sound, sufficient internal controls are in place to ensure that its budget 

authority is not exceeded, and funds are used efficiently and effectively. The following key accomplishments 

demonstrate the effectiveness and efficiency of the FMC’s acquisition and financial functions during Fiscal 

Year 2018:

• A continuous record of no material weaknesses, significant control deficiencies, or noncomformance

with the Federal Managers’ Financial Integrity Act and other applicable laws and regulations;

• Collecting, in civil enforcement proceedings and user fees, more than $1,354,000 on behalf of the 

American public;

• Continued focus on internal controls and risk management, as mandated by OMB Circular A-123, 

providing budget information in concise, reliable, and understandable formats;

• Accurate and timely issuance of financial statements as required by the Accountability of Tax Dollars 

Act of 2002, which are prepared from, and fully supported by, the books and records of the FMC in 

accordance with Generally Accepted Accounting Principles (GAAP), standards approved by the 

Federal Accounting Standards Advisory Board (FASAB), and OMB Circular A-136; and

• Successful implementation of the Digital Accountability and Transparency Act of 20 2014 (DATA 

Act), which provides detailed information on the FMC’s careful stewardship of resources on the 

USASpending.gov website.

The Commission strives to exhibit exemplary financial management of its limited resources, and to enhance 

operational efficiency while continuing to protect the interest of the American shipping public. I am 

confident that the FMC will continue its high level of quality financial management in the coming fiscal years. 

/s/

Karen V. Gregory

Chief Financial Officer/Managing Director

November 15, 2018
FMC FISCAL YEAR 2018 Performance and Accountability Report  28

PRINCIPAL FINANCIAL STATEMENTS

The principal financial statements presented include:

• Balance Sheet – Presents the combined amounts the agency had to use or distribute (assets) 

versus the amounts the agency owed (liabilities), and the difference between the two (net

position);

• Statement of Net Cost – Presents the annual cost of agency operations. The gross cost less any 

offsetting revenue is used to determine the net cost;

• Statement of Changes in Net Position – Reports the accounting activities that caused the change 

in net position during the reporting period;

• Statement of Budgetary Resources – Reports how budgetary resources were made available and 

the status of those resources at fiscal year-end; and

• Statement of Custodial Activity – Reports collections and their disposition by the agency on 

behalf of the Treasury General Fund. The FMC acts as custodian and does not have use of 

these funds. 

LIMITATIONS OF THE FINANCIAL STATEMENTS

The principal financial statements have been prepared to report the financial position and results of 

operations of the FMC, pursuant to the requirements of 31 U.S.C. § 3515(b). While the statements 

have been prepared from the books and records of the agency in accordance with GAAP for 

Federal entities and the formats prescribed by OMB, the statements are in addition to the financial 

reports used to monitor and control budgetary resources, which are prepared from the same books 

and records. The statements should be read with the realization that they are for a component of the 

U.S. Government, a sovereign entity. Therefore, liabilities not covered by budgetary resources 

cannot be liquidated without the enactment of an appropriation, and the payment of all liabilities 

other than for contracts can be abrogated by the sovereign entity. Other limitations are included in 

the footnotes to the principal statements. The accompanying notes are an integral part of these 

statements. 

The Federal Maritime Commission’s financial statements were audited by Dembo Jones, P.C., under 

contract to the FMC’s Office of the Inspector General.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 29

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF THE 

FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2018 and 2017
FMC FISCAL YEAR 2018| Performance and Accountability Report| 30

FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 7, 2018

Office of Inspector General

Dear Acting Chairman Khouri and Commissioner Dye:

I am pleased to provide the attached audit report required by the Accountability for Tax

Dollars Act of 2002 (ATDA), which presents an unmodified (clean) opinion on the Federal

Maritime Commission’s (FMC) fiscal year (FY) 2018 and 2017 financial statements. The audit results

indicate that the FMC has established an internal control structure that facilitates the preparation of 

reliable financial and performance information. The Office of Inspector General (OIG) commends the 

FMC for the noteworthy accomplishment of attaining an unmodified opinion.

The OIG contracted with the independent certified public accounting firm of Dembo Jones, 

P.C. to: perform the audit of the FMC’s financial statements for the fiscal years ending September 30, 

2018 and 2017; consider internal control over financial reporting; and test the agency’s compliance 

with certain provisions of applicable laws, regulations, and contracts that could have a direct and

material effect on the financial statements. The contract required that the audit be performed in

accordance with U.S. Generally Accepted Government Auditing Standards and Office of Management 

and Budget (OMB) audit guidance.

In its audit of the FMC, Dembo Jones found: the financial statements were fairly presented,

in all material respects, in conformity with U.S. Generally Accepted Accounting Principles; there were

no material weaknesses or significant deficiencies in internal control over financial reporting; and 

no reportable noncompliance issues with the laws and regulations tested.

In connection with the OIG’s contract, the OIG reviewed Dembo Jones’ report and related 

documentation and inquired of its representatives. Our review, as differentiated from an audit in 

accordance with U.S. Generally Accepted Government Auditing Standards, was not intended to enable 

the OIG to express, and we do not express, opinions on FMC's financial statements or internal control; 

or conclusions on compliance with laws and regulations. Dembo Jones is responsible for the attached 

auditors' report dated November 15, 2018 and the conclusions expressed in the report. However, our 

review disclosed no instances where Dembo Jones did not comply, in all material respects, with 

Generally Accepted Government Auditing Standards.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 31

The OIG would like to thank FMC staff; especially the Office of Budget and Finance, for their 

assistance in helping Dembo Jones and the OIG meet the audit objectives.

Respectfully submitted,

/s/

Jon Hatfield

Inspector General

Attachment

cc: Office of the Managing Director 

Office of the General Counsel

Office of Budget and Finance
FMC FISCAL YEAR 2018| Performance and Accountability Report| 32

INDEPENDENT AUDITORS' REPORT

Independent Auditor’s Report

To Acting Chairman Khouri

Federal Maritime Commission

In our audits of the fiscal years 2018 and 2017 financial statements of Federal Maritime Commission 

(FMC) we found:

a) FMC’s financial statements as of and for the fiscal years ended September 30, 2018 and 2017, 

are presented fairly, in all material respects, in accordance with U.S. generally accepted 

accounting principles;

b) no material weaknesses in internal control over financial reporting based on the limited 

procedures we performed; and 

c) no reportable noncompliance for fiscal year 2018 with provisions of applicable laws, 

regulations and contracts we tested. 

The following sections discuss in more detail (1) our report on the financial statements, which includes 

required supplementary information (RSI), such as “Management’s Discussion and Analysis”; (2) our 

report on internal control over financial reporting; (3) our report on compliance with laws, regulations 

and contracts; and (4) agency comments. 

Report on the Financial Statements 

In accordance with Generally Accepted Government Auditing Standards (GAGAS) and Office of 

Management and Budget (OMB) Bulletin No. 19-01, Audit Requirements for Federal Financial Statements,

we have audited FMC’s financial statements. FMC’s financial statements comprise the balance sheets 

as of September 30, 2018, and 2017; the related statements of net cost, changes in net position,

budgetary resources and custodial activity for the fiscal years then ended; and the related notes to the 

financial statements. 

We conducted our audits in accordance with U.S. generally accepted government auditing standards. 

We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our 

audit opinions. 

 6010 Executive Blvd • Suite 900 Dembo Jones, P.C. 8850 Stanford Blvd • Suite 2000

 Rockville, MD 20852 A Member of Allinial Global Columbia, MD 21045

 P 301.770.5100 • F 301.770.5202 www.dembojones.com P 410.290.0770 • F 410.290.0774
FMC FISCAL YEAR 2018| Performance and Accountability Report| 33

Management’s Responsibility for the Financial Statements

FMC’s management is responsible for (1) the preparation and fair presentation of these financial 

statements in accordance with U.S. generally accepted accounting principles; (2) preparing, measuring, 

and presenting the RSI in accordance with U.S. generally accepted accounting principles; (3) preparing 

and presenting other information included in documents containing the audited financial statements 

and auditor’s report, and ensuring the consistency of that information with the audited financial 

statements and the RSI; and (4) maintaining effective internal control over financial reporting, 

including the design, implementation, and maintenance of internal control relevant to the preparation 

and fair presentation of financial statements that are free from material misstatement, whether due to 

fraud or error.

Auditors’ Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audits. U.S. 

generally accepted government auditing standards require that we plan and perform the audit to obtain 

reasonable assurance about whether the financial statements are free from material misstatement. We 

are also responsible for applying certain limited procedures to RSI and other information included 

with the financial statements. 

An audit of financial statements involves performing procedures to obtain audit evidence about the 

amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 

judgment, including the auditor’s assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditor considers 

internal control relevant to the entity’s preparation and fair presentation of the financial statements in 

order to design audit procedures that are appropriate in the circumstances, but not for the purpose of 

expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no 

such opinion. An audit of financial statements also involves evaluating the appropriateness of the 

accounting policies used and the reasonableness of significant accounting estimates made by 

management, as well as evaluating the overall presentation of the financial statements. Our audits also 

included performing such other procedures as we considered necessary in the circumstances. 

Opinion on Financial Statements

In our opinion, FMC’s financial statements present fairly, in all material respects, FMC’s financial 

position as of September 30, 2018 and 2017, and its net costs of operations, changes in net position, 

budgetary resources and custodial activity for the fiscal years then ended in accordance with U.S. 

generally accepted accounting principles.

Other Matters

Required Supplementary Information 

U.S. generally accepted accounting principles issued by the Federal Accounting Standards 

Advisory Board (FASAB) require that the RSI be presented to supplement the financial 

statements. Although the RSI is not a part of the financial statements, FASAB considers this 

Dembo Jones, P.C.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 34

information to be an essential part of financial reporting for placing the financial statements 

in appropriate operational, economic, or historical context. We have applied certain limited 

procedures to the RSI in accordance with U.S. generally accepted government auditing 

standards, which consisted of inquiries of management about the methods of preparing the 

RSI and comparing the information for consistency with management’s responses to the 

auditor’s inquiries, the financial statements, and other knowledge we obtained during the audit 

of the financial statements, in order to report omissions or material departures from FASAB 

guidelines, if any, identified by these limited procedures. We did not audit and we do not 

express an opinion or provide any assurance on the RSI because the limited procedures we 

applied do not provide sufficient evidence to express an opinion or provide any assurance. 

Other Information 

FMC’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements or the RSI. We read the other 

information included with the financial statements in order to identify material inconsistencies, 

if any, with the audited financial statements. Our audit was conducted for the purpose of 

forming an opinion on FMC’s financial statements. We did not audit and do not express an 

opinion or provide any assurance on the other information.

Report on Internal Control over Financial Reporting 

In connection with our audits of the FMC’s financial statements, we considered the FMC’s internal 

control over financial reporting, consistent with our auditor’s responsibility discussed below. We 

performed our procedures related to the FMC’s internal control over financial reporting in accordance 

with U.S. generally accepted government auditing standards. 

Management’s Responsibility

FMC management is responsible for maintaining effective internal control over financial reporting, 

including the design, implementation, and maintenance of internal control relevant to the preparation 

and fair presentation of financial statements that are free from material misstatement, whether due to 

fraud or error. 

Auditor’s Responsibility 

In planning and performing our audit of FMC’s financial statements as of and for the year ended 

September 30, 2018, in accordance with U.S. generally accepted government auditing standards, we 

considered the FMC’s internal control over financial reporting as a basis for designing audit 

procedures that are appropriate in the circumstances for the purpose of expressing our opinion on 

the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the 

FMC’s internal control over financial reporting. Accordingly, we do not express an opinion on the 

FMC’s internal control over financial reporting. We are required to report all deficiencies that are 

considered significant deficiencies or material weaknesses. We did not consider all internal controls 

relevant to operating objectives, such as those controls relevant to preparing performance information 

and ensuring efficient operations. 

Dembo Jones, P.C.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 35

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel, the objectives of which are to provide reasonable 

assurance that (1) transactions are properly recorded, processed, and summarized to permit the 

preparation of financial statements in accordance with U.S. generally accepted accounting principles, 

and assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and (2) 

transactions are executed in accordance with provisions of applicable laws, including those governing 

the use of budget authority, regulations and contracts, noncompliance with which could have a 

material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or detect 

and correct, misstatements due to fraud or error. 

Results of Our Consideration of Internal Control over Financial Reporting 

Our consideration of internal control was for the limited purpose described above, and was not 

designed to identify all deficiencies in internal control that might be material weaknesses and 

significant deficiencies or to express an opinion on the effectiveness of the FMC’s internal control 

over financial reporting. Given these limitations, during our audit, we did not identify any deficiencies 

in internal control over financial reporting that we consider to be material weaknesses. However, 

material weaknesses may exist that have not been identified. 

Intended Purpose of Report on Internal Control over Financial Reporting 

The purpose of this report is solely to describe the scope of our consideration of the FMC’s internal 

control over financial reporting and the results of our procedures, and not to provide an opinion on 

the effectiveness of the FMC’s internal control over financial reporting. This report is an integral part 

of an audit performed in accordance with U.S. generally accepted government auditing standards in 

considering internal control over financial reporting. Accordingly, this report on internal control over 

financial reporting is not suitable for any other purpose. 

Report on Compliance with Laws, Regulations and Contracts

In connection with our audits of FMC’s financial statements, we tested compliance with selected 

provisions of applicable laws, regulations and contracts, consistent with our auditor’s responsibility 

discussed below. We caution that noncompliance may occur and not be detected by these tests. We 

performed our tests of compliance in accordance with U.S. generally accepted government auditing 

standards.

Dembo Jones, P.C.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 36

Management’s Responsibility

FMC management is responsible for complying with laws, regulations and contracts applicable to 

FMC. 

Auditor’s Responsibility 

Our responsibility is to test compliance with selected provisions of applicable laws, regulations and 

contracts applicable to FMC that have a direct effect on the determination of material amounts and 

disclosures in FMC’s financial statements, and perform certain other limited procedures. Accordingly, 

we did not test compliance with all laws, regulations and contracts applicable to FMC. 

Results of Our Tests for Compliance with Laws, Regulations and Contracts 

Our tests for compliance with selected provisions of applicable laws, regulations and contracts 

disclosed no instances of noncompliance for fiscal year 2018 that would be reportable under U.S. 

generally accepted government auditing standards. However, the objective of our tests was not to 

provide an opinion on compliance with laws, regulations and contracts applicable to FMC. 

Accordingly, we do not express such an opinion. 

Intended Purpose of Report on Compliance with Laws, Regulations and Contracts

The purpose of this report is solely to describe the scope of our testing of compliance with selected 

provisions of applicable laws, regulations and contracts, and the results of that testing, and not to 

provide an opinion on compliance. This report is an integral part of an audit performed in accordance 

with U.S. generally accepted government auditing standards in considering compliance. Accordingly, 

this report on compliance with laws, regulations and contracts is not suitable for any other purpose.

Rockville, Maryland

November 15, 2018

Dembo Jones, P.C.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 37

APPENDIX A

FEDERAL MARITIME COMMISSION 

COMMENTS ON AUDIT REPORT
FMC FISCAL YEAR 2018| Performance and Accountability Report| 38

Federal Maritime Commission

Washington, DC 20573

 Office of the 

Managing Director

November 15, 2018

Donald K. Marshall, CPA

Dembo Jones, P.C.

6010 Executive Boulevard, Suite 900

Rockville, MD 20852

Dear Mr. Marshall:

I have reviewed the financial statements audit report for the Federal Maritime Commission for fiscal 

year 2018. I concur with the audit report’s findings that the financial statements fairly present the 

Commission’s financial position during the fiscal year ending September 30, 2018, and that the 

financial statements are in conformity with U.S. Generally Accepted Accounting Principles; that the 

FMC has maintained, in all material respects, effective internal control over financial reporting; and 

that there were no instances of reportable noncompliance with laws and regulations tested by the 

auditors. 

The Commission appreciates Dembo Jones’ work over the past fiscal year.

Sincerely,

/s/

Karen V. Gregory

Chief Financial Officer / Managing Director
FMC FISCAL YEAR 2018| Performance and Accountability Report| 39

APPENDIX B

FEDERAL MARITIME COMMISSION 

FINANCIAL STATEMENTS

FOR THE YEARS ENDED 

SEPTEMBER 30, 2018 and 2017

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 40

FEDERAL MARITIME COMMISSION FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

TABLE OF CONTENTS

BALANCE SHEET........................................................................................................... 41

STATEMENT OF NET COST.......................................................................................... 42

STATEMENT OF CHANGES IN NET POSITION........................................................... 43

STATEMENT OF BUDGETARY RESOURCES.............................................................. 45

STATEMENT OF CUSTODIAL ACTIVITY.................................................................... 46

NOTES TO THE FINANCIAL STATEMENTS..................................................................... 6-15
FMC FISCAL YEAR 2018| Performance and Accountability Report| 41

FEDERAL MARITIME COMMISSION

BALANCE SHEET

AS OF SEPTEMBER 30, 2018 AND 2017

(In Dollars)

2018 2017

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 6,234,624 $ 5,614,138

Total Intragovernmental 6,234,624 5,614,138

Accounts Receivable, Net (Note 3) 10,462 2,856

Property, Equipment, and Software, Net (Note 4) 106,367 399,648

Total Assets $ 6,351,453 $ 6,016,642

Liabilities:

Intragovernmental

Accounts Payable $ 28,145 $ 2,100

Other (Note 6) 146,929 168,533

Total Intragovernmental 175,074 170,633

Accounts Payable 76,962 151,872

Federal Employee and Veterans' Benefits (Note 5) 3,334 3,307

Other (Note 6) 1,956,339 2,085,237

Total Liabilities $ 2,211,709 $ 2,411,049

Net Position:

Unexpended Appropriations - Other Funds $ 5,326,391 $ 4,483,892

Cumulative Results of Operations - Other Funds (1,186,647) 

(878,299)

Total Net Position $ 4,139,744 $ 3,605,593

Total Liabilities and Net Position $ 6,351,453 $ 6,016,642
FMC FISCAL YEAR 2018| Performance and Accountability Report| 42

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)

2018 2017

Program Costs:

Operational and Administrative

Gross Costs $ 20,632,539 $ 16,890,163

Net Program Costs $ 20,632,539 $ 16,890,163

Formal Proceedings

Gross Costs $ 7,077,950 $ 8,017,250

Less: Earned Revenue - 

(13,947)

Net Program Costs $ 7,077,950 $ 8,003,303

Office of Inspector General

Gross Costs $ 394,371 $ 284,734

Net Program Costs $ 394,371 $ 284,734

Office of Equal Employment Opportunity

Gross Costs $ 167,957 $ 141,325

Less: Earned Revenue (58,034) -

Net Program Costs $ 109,923 $ 141,325

Net Cost of Operations $ 28,214,783 $ 25,319,525
FMC FISCAL YEAR 2018| Performance and Accountability Report| 43

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)

2018

Unexpended Appropriations:

Beginning Balances $ 4,483,892

Budgetary Financing Sources:

Appropriations Received 27,490,000

Other Adjustments (55,651)

Appropriations Used (26,591,850)

Total Budgetary Financing Sources 842,499

Total Unexpended Appropriations $ 5,326,391

Cumulative Results of Operations:

Beginning Balances $ (878,299)

Budgetary Financing Sources:

Appropriations Used 26,591,850

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 9) 1,314,585

Total Financing Sources 27,906,435

Net Cost of Operations (28,214,783)

Net Change (308,348)

Cumulative Results of Operations $ (1,186,647)

Net Position $ 4,139,744
FMC FISCAL YEAR 2018| Performance and Accountability Report| 44

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2018 and 2017

(In Dollars)

2017

Unexpended Appropriations:

Beginning Balances $ 1,520,851

Budgetary Financing Sources:

Appropriations Received

Other Adjustments

Appropriations Used

 27,490,000

 (297,273) 

(24,229,686)

Total Budgetary Financing Sources 2,963,041

Total Unexpended Appropriations $ 4,483,892

Cumulative Results of Operations:

Beginning Balances $ (715,389)

Budgetary Financing Sources:

Appropriations Used

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 9)

 24,229,686

 926,929

Total Financing Sources

Net Cost of Operations

 25,156,615

 (25,319,525)

Net Change (162,910)

Cumulative Results of Operations $ (878,299)

Net Position $ 3,605,593
FMC FISCAL YEAR 2018| Performance and Accountability Report| 45

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)

2018 2017

Budgetary Resources:

Unobligated balance from prior year budget authority, net $ 460,199 $ 243,166

Appropriations 27,490,000 27,490,000

Spending authority from offsetting collections 58,034 13,947

Total Budgetary Resources $ 28,008,233 $ 27,747,113

Memorandum (non-add) Entries:

Net adjustments to unobligated balance brought forward, Oct. 1 $ ( 4,744,348) $ (3,301,168)

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 11) $ 27,138,443 $ 27,331,928

Unobligated balance, end of year:

 Apportioned, unexpired account (Note 2) 668,828 264,347

Expired unobligated balance, end of year (Note 2) 200,962 150,838

Unobligated balance, end of year (total) 869,790 415,185

Total Budgetary Resources $ 28,008,233 $ 27,747,113

Outlays, net:

Outlays, net, (total) $ 26,813,862 $ 25,294,941

Distributed Offsetting Receipts ( 251,562) 

(234,968)

Agency outlays, net $ 26,562,300 $ 25,059,973

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 46

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)

2018 2017

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 1,354,016 $ 2,115,237

Total Cash Collections (Note 13) 1,354,016 2,115,237

Accrual Adjustments (337) 2,161

Total Custodial Revenue 1,353,679 2,117,398

Disposition of Collections:

Transferred to Others (by Recipient) 1,354,016 2,115,237

Increase/(Decrease) in Amounts Yet to be Transferred (337) 2,161

Total Disposition of Collections 1,353,679 2,117,398

Net Custodial Activity $ - $ 

-

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 7

FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

A. Reporting Entity

The Federal Maritime Commission (FMC or 

Commission) was established as an independent 

regulatory agency on August 12, 1961. The FMC is 

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 (FSPA), section 19 of the 

Merchant Marine Act of 1920, and sections 2 and 3 

of Public Law No. 89-777.

The Commission monitors the activities of ocean 

common carriers, marine terminal operators 

(MTOs), agreements among ocean common carriers 

and/or MTOs, ports and ocean transportation 

intermediaries (non-vessel-operating common 

carriers and ocean freight forwarders) operating in 

the U.S. foreign commerce to ensure they maintain 

just and reasonable practices; maintains trade 

monitoring, enforcement and dispute resolution 

programs designed to assist regulated entities in 

achieving compliance and to detect and remedy 

malpractices and violations of the 1984 Act; 

monitors the laws and practices of foreign 

governments which could have a discriminatory or 

otherwise adverse impact on shipping conditions in 

U.S. trades, and imposes remedial action, as 

appropriate, pursuant to section 19 of the 1920 Act 

or FSPA; enforces special regulatory requirements 

applicable to carriers owned or controlled by 

foreign governments; processes and reviews 

agreements, service contracts, and service arrangements pursuant to the 1984 Act for compliance with 

statutory requirements; and reviews common 

carriers’ privately published tariff systems for 

accessibility and accuracy, as required by OSRA. 

The FMC also issues licenses to qualified ocean 

transportation intermediaries (OTIs) in the U.S., 

ensures that all OTIs are bonded or maintain other 

evidence of financial responsibility, and ensures 

that passenger vessel operators (PVOs) demonstrate 

adequate financial responsibility in case of 

nonperformance of voyages or death or injury 

occurring to passengers.

The FMC is composed of five Commissioners 

appointed for five-year terms by the President with 

the advice and consent of the Senate. The President 

designates one of the Commissioners to serve as 

Chairman, who is the chief executive and 

administrative officer of the FMC.

The FMC reporting entity is comprised of General 

Funds and General Miscellaneous Receipts. 

General Funds are accounts used to record financial 

transactions arising under congressional 

appropriations or other authorizations to spend 

general revenues. General Fund Miscellaneous 

Receipts are accounts established for receipts of 

non-recurring activity, such as fines, penalties, fees 

and other miscellaneous receipts for services and 

benefits.

The FMC makes custodial collections and holds 

custodial receivables that are non-entity assets and 

are transferred to Treasury at fiscal year-end. The 

FMC has rights and ownership of all assets reported 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 7

in these financial statements. FMC does not possess 

any non-entity assets.

B. Basis of Presentation

The financial statements have been prepared to 

report the financial position and results of 

operations of FMC. The Balance Sheet presents the 

financial position of the Commission. The 

Statement of Net Cost presents the Commission’s 

operating results; the Statement of Changes in Net 

Position displays the changes in the Commission’s 

equity accounts. The Statement of Budgetary 

Resources presents the sources, status, and uses of 

the Commission’s resources and follows the rules 

for the Budget of the United States Government.

The statements are a requirement of the Chief 

Financial Officers Act of 1990 and the Government 

Management Reform Act of 1994. They have been 

prepared from, and are fully supported by, the books 

and records of FMC in accordance with the 

hierarchy of accounting principles generally 

accepted in the United States of America, standards 

issued by the Federal Accounting Standards 

Advisory Board (FASAB), Office of Management 

and Budget (OMB) Circular A-136, Financial 

Reporting Requirements, as amended, and FMC 

accounting policies which are summarized in this 

note. These statements, with the exception of the 

Statement of Budgetary Resources, are different 

from financial management reports, which are also 

prepared pursuant to OMB directives that are used

to monitor and control FMC’s use of budgetary 

resources. The financial statements and associated 

notes are presented on a comparative basis. Unless 

specified otherwise, all amounts are presented in 

dollars.

C. Basis of Accounting

Transactions are recorded on both an accrual

accounting basis and a budgetary basis. Under the 

accrual method, revenues are recognized when 

earned, and expenses are recognized when a liability 

is incurred, without regard to receipt or payment of 

cash. Budgetary accounting facilitates compliance 

with legal requirements on the use of federal funds.

D. Fund Balance with Treasury

Fund Balance with Treasury is the aggregate 

amount of the FMC’s funds with Treasury in 

expenditure and receipt accounts. Appropriated 

funds recorded in expenditure accounts are 

available to pay current liabilities and finance 

authorized purchases. 

E. Accounts Receivable

Accounts receivable consists of amounts owed to 

FMC by other Federal agencies and the general 

public. Amounts due from Federal agencies are 

considered fully collectible. An allowance for 

uncollectible accounts receivable from the public is 

established when, based upon a review of 

outstanding accounts and the failure of all collection 

efforts, management determines that collection is 

unlikely to occur considering the debtor’s ability to 

pay.

F. Property, Equipment, and Software

Property, equipment and software represent 

furniture, fixtures, equipment, and information 

technology hardware and software which are 

recorded at original acquisition cost and are 

depreciated or amortized using the straight-line 

method over their estimated useful lives. Major 

alterations and renovations are capitalized, while 

maintenance and repair costs are expensed as 

incurred. FMC’s capitalization threshold is $25,000 

for individual purchases. Property, equipment, and 

software acquisitions that do not meet the 

capitalization criteria are expensed upon receipt. 

Applicable standard governmental guide-lines 

regulate the disposal and convertibility of agency 

property, equipment, and software. The useful life 

classifications for capitalized assets are as follows:

Description Useful Life (years)

Leasehold Improvements 5

Office Furniture 5

Computer Equipment 5

Office Equipment 5

Software 5

G. Advances and Prepaid Charges

Advance payments are generally prohibited by law. 

There are some exceptions, such as reimbursable 

agreements, subscriptions and payments to 

contractors and employees. Payments made in 

advance of the receipt of goods and services are 

recorded as advances or prepaid charges at the time 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 8

of prepayment and recognized as expenses when the 

related goods and services are received.

H. Liabilities

Liabilities represent the amount of funds likely to be 

paid by the FMC as a result of transactions or events 

that have already occurred.

The FMC reports its liabilities under two categories, 

Intragovernmental and With the Public. Intragovernmental liabilities represent funds owed to 

another government agency. Liabilities with the 

Public represent funds owed to any entity or person 

that is not a federal agency, including private sector 

firms and federal employees. Each of these 

categories may include liabilities that are covered 

by budgetary resources and liabilities not covered 

by budgetary resources.

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or other 

funding source. These consist of accounts payable 

and accrued payroll and benefits. Accounts payable 

represent amounts owed to another entity for goods 

ordered and received and for services rendered 

except for employees. Accrued payroll and benefits 

represent payroll costs earned by employees during 

the fiscal year which are not paid until the next fiscal 

year.

Liabilities not covered by budgetary resources are 

liabilities that are not funded by any current 

appropriation or other funding source. These 

liabilities consist of accrued annual leave, actuarial 

Federal Employees’ Compensation Act (FECA), 

and the amounts due to Treasury for collection and 

accounts receivable of civil penalties.

I. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the 

accrual is reduced as leave is taken. The balance in 

the accrued leave account is adjusted to reflect 

current pay rates. Liabilities associated with other 

types of vested leave, including compensatory, 

restored leave, and sick leave in certain 

circumstances, are accrued at year-end, based on 

latest pay rates and unused hours of leave. Funding 

will be obtained from future financing sources to the 

extent that current or prior year appropriations are 

not available to fund annual and other types of 

vested leave earned but not taken. Non-vested leave 

is expensed when used. Any liability for sick leave 

that is accrued but not taken by a Civil Service 

Retirement System (CSRS)-covered employee is 

transferred to the Office of Personnel Management 

(OPM) upon the retirement of that individual. 

Credit is given for sick leave balances in the 

computation of annuities upon the retirement of 

Federal Employees Retirement System (FERS)-

covered employees.

J. Accrued and Actuarial Workers’ 

Compensation

The FECA administered by the U.S. Department of 

Labor (DOL) addresses all claims brought by the 

FMC employees for on-the-job injuries. The DOL 

bills each agency annually as its claims are paid, but 

payment of these bills is deferred for two years to 

allow for funding through the budget process. 

Similarly, employees that the FMC terminates 

without cause may receive unemployment compensation benefits under the unemployment insurance 

program also administered by the DOL, which bills 

each agency quarterly for paid claims. Future 

appropriations will be used for the reimbursement 

to DOL. The liability consists of (1) the net present 

value of estimated future payments calculated by 

the DOL, and (2) the unreimbursed cost paid by 

DOL for compensation to recipients under the 

FECA.

K. Retirement Plans

FMC employees participate in either the CSRS or 

the FERS. The employees who participate in CSRS 

are beneficiaries of FMC matching contribution, 

equal to 7% of pay, distributed to their annuity 

account in the Civil Service Retirement and 

Disability Fund.

Prior to December 31, 1983, all employees were 

covered under the CSRS program. From January 1, 

1984 through December 31, 1986, employees had 

the option of remaining under CSRS or joining 

FERS and Social Security. Employees hired as of 

January 1, 1987 are automatically covered by the 

FERS program. Both CSRS and FERS employees 

may participate in the federal Thrift Savings Plan 

(TSP). FERS employees receive an automatic 

agency contribution equal to 1% of pay and FMC

matches any employee contribution up to an 

additional 4% percent of pay. For FERS 

participants, FMC also contributes the employer’s 

matching share of Social Security.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 9

FERS employees and certain CSRS reinstatement 

employees are eligible to participate in the Social 

Security program after retirement. In these 

instances, FMC remits the employer’s share of the 

required contribution.

The FMC recognizes the imputed cost of pension 

and other retirement benefits during the employees’ 

active years of service. OPM actuaries determine 

pension cost factors by calculating the value of 

pension benefits expected to be paid in the future 

and communicate these factors to FMC for current 

period expense reporting. OPM also provides 

information regarding the full cost of health and life 

insurance benefits. FMC recognized the offsetting 

revenue as imputed financing sources to the extent 

these expenses will be paid by OPM.

FMC does not report on its financial statements 

information pertaining to the retirement plans 

covering its employees. Reporting amounts such as 

plan assets, accumulated plan benefits, 

and related unfunded liabilities, if any, is the 

responsibility of the OPM, as the administrator.

L. Other Post-Employment Benefits

FMC employees eligible to participate in the 

Federal Employees' Health Benefits Plan (FEHBP) 

and the Federal Employees' Group Life Insurance 

Program (FEGLIP) may continue to participate in 

these programs after their retirement. The OPM has 

provided the FMC with certain cost factors that 

estimate the true cost of providing the postretirement benefit to current employees. The FMC 

recognizes a current cost for these and Other 

Retirement Benefits (ORB) at the time the 

employee's services are rendered. The ORB 

expense is financed by OPM, and offset by the FMC 

through the recognition of an imputed financing 

source. 

M. Use of Estimates

The preparation of the accompanying financial 

statements in accordance with generally accepted 

accounting principles requires management to make 

certain estimates and assumptions that affect the 

reported amounts of assets, liabilities, revenues, and 

expenses. Actual results could differ from those 

estimates. 

N. Imputed Costs/Financing Sources

Federal Government entities often receive goods 

and services from other Federal Government 

entities without reimbursing the providing entity for 

all the related costs. In addition, Federal 

Government entities also incur costs that are paid in 

total or in part by other entities. An imputed 

financing source is recognized by the receiving 

entity for costs that are paid by other entities. FMC 

recognized imputed costs and financing sources in 

fiscal years 2018 and 2017 to the extent directed by 

accounting standards. 

O. Contingencies

Liabilities are deemed contingent when the 

existence or amount of the liability cannot be 

determined with certainty pending the outcome of 

future events. FMC recognizes contingent 

liabilities in the accompanying balance sheet and 

statement of net cost, when it is both probable and 

can be reasonably estimated. 

The FMC discloses contingent liabilities in the 

notes to the financial statements when the 

conditions for liability recognition are not met or 

when a loss from the outcome of future events is 

more than remote. In some cases, once losses are

certain, payments may be made from the Judgment 

Fund maintained by the U.S. Treasury rather than 

from the amounts appropriated to FMC for agency 

operations. Payments from the Judgment Fund are 

recorded as an “Other Financing Source” when 

made.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 7

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2018, and 2017 were as follows:

2018 2017

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 668,828 $ 264,347

 Unavailable 200,962 150,838

Obligated Balance Not Yet Disbursed 5,364,834 5,198,953

Total $ 6,234,624 $ 5,614,138

No discrepancies exist between the Fund Balance reflected on the Balance Sheet and the balances in the 

Treasury accounts.

The available unobligated fund balances represent the current-period amount available for obligation or 

commitment. At the start of the next fiscal year, this amount will become part of the unavailable balance,

as described in the following paragraph.

The unavailable unobligated fund balances represent the amount of appropriations for which the period of 

availability for obligation has expired. These balances are available for upward adjustments of obligations 

incurred only during the period for which the appropriation was available for obligation or for paying claims 

attributable to the appropriations. The obligated balance not yet disbursed, includes accounts payable, 

accrued expenses, and undelivered orders that have reduced unexpended appropriations but have not yet 

decreased the fund balance on hand (see also Note 12).

NOTE 3. ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE BALANCES AS OF SEPTEMBER 30, 2018, AND 2017, WERE AS 

FOLLOWS:

2018 2017

With the Public

Miscellaneous Accounts Receivable $ 10,320 $ 2,731

Interest Receivable 12 7

Penalties and Fines Receivable 130 118

Total Accounts Receivable $ 10,462 $ 2,856

The accounts receivable is primarily made up of services provided to the public. Historical experience has 

indicated that the majority of the receivables are collectible. There are no material uncollectible accounts 

as of September 30, 2018 and 2017.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 8

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2018

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ -

Furniture & Equipment 316,289 209,922 106,367

Total $ 541,289 $ 434,922 $ 106,367

Schedule of Property, Equipment, and Software as of September 30, 2017

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ -

Furniture & Equipment 614,777 445,153 169,624

Software-in-Development 230,024 - 230,024

Total $ 1,069,801 $ 670,153 $ 399,648

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2018 and 2017 include liabilities not covered by budgetary 

resources. Congressional action is needed before budgetary resources can be provided. Although future 

appropriations to fund these liabilities are likely and anticipated, it is not certain that appropriations will be 

enacted to fund these liabilities. 

2018 2017

Intragovernmental – FECA $ 474 $ 813

Intragovernmental – Unemployment Insurance - 1,754

Unfunded Leave 1,297,843 1,272,767

Actuarial FECA 3,334 3,307

Other Liabilities 25 25

Total Liabilities Not Covered by Budgetary Resources $ 1,301,676 $ 1,278,666

Total Liabilities Covered by Budgetary Resources 910,033 1,132,383

Total Liabilities $ 2,211,709 $ 2,411,049

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual workers 

compensation claims and unemployment benefits paid on FMC’s behalf and payable to the DOL. FMC 

also records an actuarial liability for future workers compensation claims based on the liability to benefits 

paid (LBP) ratio provided by DOL and multiplied by the average of benefits paid over three years. 

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The balance in 

the accrued annual leave account is reviewed quarterly and adjusted as needed to accurately reflect the 

liability at current pay rates and leave balances. Accrued annual leave is paid from future funding sources 

and, accordingly, is reflected as a liability not covered by budgetary resources. Sick and other leave is 

expensed as taken.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 9

NOTE 6. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2018 were as follows:

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 474 $ 474

Payroll Taxes Payable 144,632 - 144,632

 Custodial Liability 1,823 - 1,823

Total Intragovernmental Other Liabilities $ 146,455 $ 474 $ 146,929

With the Public

 Payroll Taxes Payable $ 22,406 $ - $ 22,406

 Accrued Funded Payroll and Leave 636,064 - 636,064

 Unfunded Leave 1,297,844 - 1,297,844

 Other Liabilities with Related Budgetary 

 Obligations - 25 25

Total Public Other Liabilities $ 1,956,314 $ 25 $ 1,956,339

Other liabilities account balances as of September 30, 2017 were as follows:

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 813 $ 813

Unemployment Insurance Liability 1,754 - 1,754

Payroll Taxes Payable 163,805 - 163,805

 Custodial Liability 2,161 - 2,161

Total Intragovernmental Other Liabilities $ 167,720 $ 813 $ 168,533

With the Public

 Payroll Taxes Payable $ 20,991 $ - $ 20,991

 Accrued Funded Payroll and Leave 791,454 - 791,454

 Unfunded Leave 1,272,767 - 1,272,767

 Other Liabilities with Related Budgetary

 Obligations 25 - 25

Total Public Other Liabilities $ 2,085,237 $ - $ 2,085,237
FMC FISCAL YEAR 2018| Performance and Accountability Report| 10

NOTE 7. OPERATING LEASES

FMC occupies office space in seven locations, of which six of the lease agreements are required to be 

accounted for as operating leases. Lease payments are increased annually based on the adjustments for 

operating cost and real estate tax escalations. The total operating lease expense for fiscal years 2018 and 

2017 were $3,491,970 and $3,036,110, respectively. The lease locations and terms are listed below:

Location Term Lease Expiration Date

Tacoma, WA 10 years 6/30/2019

Hollywood, FL 10 years 5/31/2020

San Pedro, CA 10 years 9/30/2021

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 3/15/2024

Houston, TX 15 years 10/1/2033

The operating lease amount does not include estimated payments for leases with annual renewal options. 

The schedule of future payments for the term of the leases is as follows:

Fiscal Year Totals

2019 $ 3,227,340

2020 3,227,318

2021 3,221,978

2022 3,228,252

2023 324,838

Thereafter 149,696

Total Future Minimum Payments $ 13,379,422

NOTE 8. CONTINGENT LIABILITIES

FMC records commitments and contingent liabilities for legal cases in which payment has been deemed 

probable, and for which the amount of potential liability has been estimated, including certain judgments 

that have been issued against the agency. The FMC has no knowledge of any lawsuits/investigations in 

which payment is deemed probable. 

NOTE 9. IMPUTED FINANCING SOURCES

FMC recognizes as imputed financing the costs of future benefits which include health benefits, life 

insurance, pension and post-retirement benefit expenses for current employees. The assets and liabilities 

associated with such benefits are the responsibility of the administering agency, OPM. For the years ended 

September 30, 2018 and 2017 imputed financing was as follows:

2018 2017

Office of Personnel Management $ 1,314,585 $ 926,929

Total Imputed Financing Sources $ 1,314,585 $ 926,929
FMC FISCAL YEAR 2018| Performance and Accountability Report| 11

NOTE 10. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE UNITED 

STATES GOVERNMENT

The President’s Budget that will include fiscal year 2018 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2019 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb/. The 2019 Budget of the United States 

Government, with the "Actual" column completed for 2017, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

In Millions

Budgetary Obligations Net

FY2017 Resources Incurred Outlays

Statement of Budgetary Resources $ 28 $ 27 $ 25

 Difference - Due to Rounding 1

Budget of the U.S. Government $ 27 $ 27 $ 25

NOTE 11. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2018 and 2017 consisted of 

the following:

2018 2017

Direct Obligations, Category A $ 27,080,409 $ 27,316,025

Reimbursable Obligations, Category A 58,034 15,903

Total Obligations Incurred $ 27,138,443 $ 27,331,928

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the years ended September 30, 2018 and 2017, budgetary resources obligated for undelivered orders 

were as follows:

Current Year

Federal Non-Federal Total

Unpaid Undelivered Orders $ 1,360,299 $ 3,096,302 $ 4,456,601

Total Undelivered Orders $ 1,360,299 $ 3,096,302 $ 4,456,601

Prior Year

Federal Non-Federal Total

Unpaid Undelivered Orders $ 1,166,631 $ 2,902,076 $ 4,068,707

Total Undelivered Orders $ 1,166,631 $ 2,902,076 $ 4,068,707
FMC FISCAL YEAR 2018| Performance and Accountability Report| 12

NOTE 13. CUSTODIAL REVENUES

FMC is an administrative agency, collecting for another entity or the General Fund of the Treasury. As a 

collecting entity, FMC measures and reports cash collections and refunds. These collections are reported 

as custodial revenue on the Statement of Custodial Activity. The type of cash collected is for fines, penalties 

and administrative fees. A small portion is for interest on the past due fines. Another component of the 

custodial revenue is general proprietary receipts (User Fees) for the application of licenses issued to 

qualified Ocean Transportation Intermediaries (OTI’s) in the U.S., FMC reviews petitions, status changes 

and special permission fees. FMC believes that all fines, penalties, administrative fees and user fees will be 

collected in full. There are no material uncollectible accounts as of September 30, 2018 and 2017.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows:

2018 2017

Fines, Penalties, and Forfeitures $ 1,108,194 $ 1,887,513

General Proprietary Receipts (User fees) 251,524 234,886

Refunds of Proprietary Receipts (User fees) (5,740) (7,244)

Interest 38 82

Total Custodial Collections $ 1,354,016 $ 2,115,237

NOTE 14. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

FMC has reconciled its budgetary obligations and non-budgetary resources available to its net cost of 

operations.

2018 2017

 Obligations Incurred $ 27,138,443 $ 27,331,928 

 Spending Authority from Offsetting Collections and Recoveries (158,697) (158,548)

 Offsetting Receipts (251,562) (234,968)

 Obligations Net of Offsetting Collections and Recoveries 26,728,184 26,938,412

 Imputed Financing from Costs Absorbed by Others 1,314,585 926,929

 28,042,769 27,865,341

 91,597 (2,707,733)

 28,134,366 25,157,608

or Generate Resources in the Current Period 80,417 161,917

$ 28,214,783 $ 25,319,525

 Total Resources Used to Finance the Net Cost of Operations 

Resources Used to Finance Activities

Budgetary Resources Obligated

Other Resources

 Total Resources Used to Finance Activities 

Resources Used to Finance Items Not Part of the 

Net Cost of Operations

 Total Resources Used to Finance Items Not Part of the Net Cost 

of Operations 

Net Cost of Operations

Components of the Net Cost of Operations That 

Will Not Require or Generate Resources in the 

Current Period

 Total Components of Net Cost of Operations That will not 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 13

OTHER INFORMATION

Fiscal Year 2018
FMC FISCAL YEAR 2018| Performance and Accountability Report| 14

OFFICE OF INSPECTOR GENERAL

FISCAL YEAR 2018 MANAGEMENT CHALLENGE

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 12, 2018

Office of Inspector General

TO: Acting Chairman Khouri

Commissioner Dye 

FROM: Inspector General 

SUBJECT: Inspector General’s Statement on the Federal Maritime Commission’s Management 

and Performance Challenge

The Reports Consolidation Act of 2000 (Public Law 106-531) requires inspectors general to 

provide a summary and assessment of the most serious management and performance challenges 

facing Federal agencies, and their progress in addressing these challenges. The attached document 

responds to the requirements and provides the annual statement to be included in the Federal Maritime 

Commission’s (FMC) Performance and Accountability Report (PAR) for fiscal year (FY) 2018. 

This year, the Office of Inspector General (OIG) has identified one management and 

performance challenge, information technology (IT) security. The Commission has continued to 

make progress on this challenge since last year; IT security remains a government-wide challenge 

and the FMC’s continued focus is critical to ensure an effective security program. This assessment 

is based on information derived from a combination of sources, including OIG evaluation work; 

Commission reports; Federal government reports; and a general knowledge of the Commission’s 

programs. 

The Reports Consolidation Act of 2000 permits agency comment on the inspector general’s 

statements. Agency comments, if applicable, are to be included in the final version of the FMC PAR 

that is due by November 15, 2018. 

 /s/

Jon Hatfield

Attachment

Cc: Karen V. Gregory, Managing Director

Peter J. King, Deputy Managing Director

Kathie L. Keys, Special Assistant to the Managing Director
FMC FISCAL YEAR 2018| Performance and Accountability Report| 15

Office of Inspector General (OIG)

Fiscal Year 2018 Management Challenge

The Management Challenge - Information Technology Security

Information technology (IT) security continues to be a key risk in the Federal government, 

and as is the case for most Federal agencies, the Federal Maritime Commission (FMC) shares this 

challenge. While the OIG has found the FMC to be focused on maintaining an effective IT security 

program, IT security continues to evolve based on new risks and threats. In a report 1 dated 

September 28, 2017, the Government Accountability Office (GAO) points out that as computer 

technology has advanced, Federal agencies have become dependent on computerized information 

and electronic data to carry out operations and to process, maintain, and report essential 

information. Further, GAO acknowledges that agencies would find it difficult, if not impossible, 

to carry out their missions and account for their resources without these information assets. 

Therefore, securing these systems and data is critical. 

The GAO maintains a high-risk program to focus attention on government operations that 

GAO identifies as high-risk due to their greater vulnerabilities to fraud, waste, abuse, and 

mismanagement or the need for transformation to address economy, efficiency, or effectiveness 

challenges. GAO first designated Federal information security as a government-wide high-risk 

area over 20 years ago. In 2003, GAO expanded this area to include computerized systems 

supporting the nation’s critical infrastructure and, in 2015, GAO further expanded this area to 

include protecting the privacy of personally identifiable information. GAO continues to identify 

Federal information security as a government-wide high-risk area in their February 2017 high-risk 

update report. 

The Office of Management and Budget’s (OMB) 2018 Annual Report to Congress on the 

Federal Information Security Modernization Act of 2014 (FISMA) provides details for fiscal year 

(FY) 2017 on both the progress and the challenges the Federal government faces to protect 

computer information systems and data. Specifically, the report states that the President has made 

strengthening the Nation’s cybersecurity a priority from the outset of the administration. For 

example, among other policies and guidelines, the President issued executive orders in 2017 and 

2018 to promote the secure and efficient use of information technology, and reinforcing the 

FISMA by holding agency heads accountable for managing cybersecurity risks. 

OMB’s 2018 annual FISMA report to Congress also provides information on the number 

of cybersecurity incidents that were reported across the Federal government in FY 2017. The 

1 Government Accountability Office, GAO-17-549, Federal Information Security, Weaknesses Continue to 

Indicate Need for Effective Implementation of Policies and Practices, (September 28, 2017).
FMC FISCAL YEAR 2018| Performance and Accountability Report| 16

OMB reports that 35,277 incidents were reported1 by agencies in FY 2017, a 14% increase from 

FY 2016, as detailed on the following page in figure 1. The report states that e-mail/phishing 

continues to be a highly-targeted attack, with a 122% increase in reported incidents from FY 2016 

to 2017. Phishing is a digital form of social engineering that uses authentic-looking, but fake, 

emails to request information from users or direct them to a fake website that requests information. 

Figure 1: Federal Information Security Incidents by Threat Vector2 Category, Fiscal Year 2017

Agency Progress in Addressing the Challenge

The Federal Information Security Modernization Act of 2014 (FISMA) establishes 

information security program and evaluation requirements for Federal agencies in the executive 

branch, including the FMC. Each year, the FMC OIG performs an independent evaluation of the 

information security program and practices of the agency. The results of the evaluation are reported 

1 US-CERT, a branch of the Department of Homeland Security’s National Cybersecurity and 

Communications Integration Center, is a central Federal information security incident center that compiles 

and analyzes information about incidents that threaten information security. Federal agencies are required 

to report such incidents to US-CERT. 

2 A threat vector (or avenue of attack) specifies the conduit or means used by the source or attacker to 

initiate a cyberattack. US-CERT’s Federal Incident Notification Guidelines specify nine potential attack 

vectors agencies should use to describe incident security incidents during reporting. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 17

annually to the Office of Management and Budget; selected congressional committees; the 

Comptroller General; and the FMC’s Commission and management. 

In the OIG’s Evaluation of the FMC’s Compliance with the Federal Information Security 

Modernization Act (FISMA) FY 2017, the OIG found the FMC had effectively implemented all six 

of the prior year FISMA recommendations. Further, the FY 2017 FISMA evaluation contained 

two new recommendations to address two findings. The two recommendations involved the timely 

disabling of computer accounts for separated users, and proper physical controls for the agency’s 

computer server room.

The Challenge Ahead

Significant cybersecurity incidents in recent years highlight that continued advancements 

in computer and communication technologies will likely result in ongoing challenges protecting 

Federal systems, to include the FMC. Particularly because of the FMC’s small size and limited 

resources, it is critical for the FMC to prioritize security controls and enhancements based on risk, 

and continue to properly plan and partner with Federal agencies to protect vital agency resources.

COMMENTS ON INSPECTOR GENERAL-IDENTIFIED MANAGEMENT 

AND PERFORMANCE CHALLENGE

The Commission appreciates the Inspector General’s essential role in keeping up-to-date on the 

significant risks and challenges facing the Federal government as a whole, and in reviewing the 

Commission’s work to ensure that it maintains accountability and compliance with Federal laws and 

mandates. The Inspector General’s Management and Performance Challenge – information 

technology security – poses a significant risk in today’s Federal government. A response to the

challenge is outlined below:

1. Information Technology Security

The Commission is aware of the increasing number and sophistication of cybersecurity incidents

and threats government-wide, and appreciates working proactively with the Office of the 

Inspector General to strengthen the Commission’s security posture. Protecting our information 

and information systems against cybersecurity threats and unauthorized access remains a priority

at the Commission. Numerous steps have been taken at the Commission to combat the everpresent cybersecurity risk faced by most federal agencies such as viruses, malware, intrusion, and 

compromised credentials, among other things. 

The FMC has moved to a Managed Trusted Internet Protocol Services (MTIPS) certified 

internet service provider to comply with the Trusted Internet Connection (TIC) initiative, an 

OMB mandate. This reduces the number of Internet gateways on the Commission’s network 

and ensures that all external connections are routed through a government agency designated as 

an approved TIC Access Provider. 

The FMC has moved all email services to Microsoft 365, which provides built-in malware and 

spam filtering capabilities that help protect inbound and outbound messages from malicious 

software and helps to protect the Commission’s network from spam and other malicious files 

transferred through email. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 18

The FMC is compliant with DHS BOD 18-01, Trustworthy Email Cyber Hygiene Assessment, created 

by the National Cybersecurity Assessments and Technical Services (NCATS) team in DHS 

National Cybersecurity and Communications Integration Center (NCCIC). This directive’s

requirements increase the security of emails in transit and make it easier to detect emails that 

attempt to spoof .gov domains. 

The FMC also employs several other types of software which continuously monitor the network 

looking for the tell-tale signs of virus/malware activity.

To supplement this technology, the FMC provides yearly Security Awareness Training to 

educate FMC staff and contractors about the different tactics and methods intruders can use to 

attempt to infiltrate the agency’s network. Well-educated FMC staff and contractors are

essential to create a culture of accountability and awareness to mitigate risk.

The Commission will continue to focus on this high-risk challenge with careful planning, by 

making the best use of available resources, and prioritizing our IT security controls. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 19

FINANCIAL STATEMENT AUDIT SUMMARY

Table 1 is a summary of the results of the independent audit of the FMC’s financial statements by 

the agency’s auditors in connection with the FY 2018 audit.

MANAGEMENT ASSURANCES SUMMARY

Table 2 is a summary of management assurances related to the effectiveness of internal control over 

the FMC’s financial reporting and operations, and its conformance with financial management 

system requirements under Sections 2 and 4, respectively, of the Federal Managers’ Financial 

Integrity Act (FMFIA) of 1982. The last portion of this table summarizes compliance with the 

Federal Financial Management Improvement Act (FFMIA), which is not applicable to the 

Commission.

Table 1. Summary of Financial Statement Audit

Audit Opinion Unmodified

Restatement No

Material Weaknesses Beginning balance New Resolved Consolidated Ending Balance

None n/a n/a n/a n/a n/a

Total Material Weaknesses None None n/a n/a None

Table 2. Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses None n/a n/a n/a n/a None

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of weakness] None n/a n/a n/a n/a None

Total Material Weaknesses None n/a n/a n/a n/a None

Compliance with Federal Financial Management System Requirements (FMFIA § 4)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of non-compliance] None n/a n/a n/a n/a None

Total non-compliances None n/a n/a n/a n/a None

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. Federal Financial Management 

System Requirements

FFMIA does not apply to the FMC n/a

2. Applicable Federal Accounting 

Standards

FFMIA does not apply to the FMC n/a

3. USSGL at Transaction Level FFMIA does not apply to the FMC n/a
FMC FISCAL YEAR 2018| Performance and Accountability Report| 20

IMPROPER PAYMENTS INFORMATION ACT

NARRATIVE SUMMARY OF IMPLEMENTATION EFFORTS FOR FY 2018

The FMC has fully complied with the requirements of OMB Circular A-123 (Appendix C), 

Requirements for Payment Integrity Improvement, which implements the provisions of the Improper 

Payments Information Act of 2002, as amended by the Improper Payments Elimination and Recovery Act of 

2010 (IPERA), and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA), 

and directs federal agencies to review and assess all programs and activities they administer and 

identify those determined to be susceptible to significant improper payments. 

In 2017 the FMC completed a risk assessment analysis in accordance with guidance received from 

OMB in Circular Number A-123. OMB Circular No. A-123 defines significant erroneous payments 

to be annual erroneous payments in a program that exceed both $10 million and 1.5 percent or $100 

million of total annual disbursements. The assessment considered certain risk factors that would 

likely cause improper payments. It covered all disbursement programs including travel, payroll, 

intragovernmental transactions, and vendor payments. It was determined that the FMC does not 

meet the baseline criteria (both 1.5 percent and $10,000,000 of the total program) to trigger a 

quantitative risk assessment as stated in OMB Circular No. A-123 (Appendix C). 

The FMC’s authorized budget for FY 2018 was $27,490,000. Obligations against the FMC’s 

appropriation totaled $26,821,172, representing 97.57 percent of the funding level. The largest 

annual disbursements were related to salaries and benefits and represent 68.30 percent of the annual 

budget. The next largest allocation of funds, 31.13 percent, was for administrative expenses which 

include GSA rent, utilities, communications, and IT services and equipment. Based on the results of 

testing a sample of transactions, our assessment of risk factors, and our reliance on internal controls, 

including an appropriate segregation of duties, performed at both the service provider level and 

FMC, we have determined that no FMC programs or activities were susceptible to significant 

erroneous payments in FY 2018. The following chart denotes the FMC’s qualitative risk analysis for 

FY 2018.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 21

We are confident that the FMC has an efficient and effective process which provides a reasonable 

assurance that payments are made for legitimate and proper expenses of the FMC. The FMC 

maintains a very low erroneous payment percentage and continually strives to reduce those 

payments. We plan to continuously review, monitor, and evaluate our programs and activities.

The Federal Maritime Commission has not identified any program that in and of itself constitutes a 

high-risk for improper payments. Therefore, the FMC considers all payments to fall within the realm 

of low risk. 

The National Finance Center (NFC) became the agency’s payroll provider in 2002 and is responsible 

for monitoring and reporting on any payroll-related payments. Any overpayments made to an FMC 

employee by the NFC on behalf of the FMC, would be offset by NFC. In FY 2018, the FMC 

processed 15 overpayments for a total of $89,639.62. The FMC did not identify any improper 

collections through the Intergovernmental Payments and Collections (IPAC). 

Efforts to recover the overpayments were conducted by the contracting officer’s representative, and 

finance and procurement staff through communication with the vendors through GSA and directly 

contacting the vendors. The FMC has since received credits for the overpayments.

I. The FMC used a statistical sample conducted by BFS to determine its improper payment rate. 

II. The FMC will continue to monitor payments to effect a zero-dollar improper payment figure

and ensures that there is sufficient segregation of duties pertaining to all payments. The process 

entails an aggressive level of scrutiny of all IPAC collections made against the Commission. The 

FMC will continue to monitor all disbursements made on its behalf to ensure payments are 

valid and proper.

III. The table below represents the improper payments made by the FMC in FY 2018 with 

percentage forecasts through FY 2021.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 22

IV. The FMC has a segregation of duties in place to ensure that all invoices processed for payment 

are legitimate expenses of the agency. All IPAC invoices are received by BFS and forwarded to 

OBF electronically for internal processing and payment authorization. When an invoice is 

received, it is first verified as a valid invoice belonging to the agency. OBF matches the invoice 

to documentation provided by the Contracting Officer’s Representative (COR) indicating that 

goods/services have been received by the Commission and approves the invoice for payment. 

BFS is advised of the purchase order the invoice is being paid against and the payment amount. 

OBF also ensures that sufficient funds have been obligated to make the payment and provides 

BFS with the period of performance. Once OBF staff has processed the payment 

authorization, the payment information is verified by a second OBF staff member. At that 

point, the invoice is electronically returned to BFS for processing. When the payment is loaded 

into the Oracle database, a final funds availability check is made by the financial system against 

the fund controls set for the FMC. OBF audits the payment information posted in the 

financial system.

V. The Acting Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible 

for the efficient and effective utilization of spending authority granted the agency by Congress. 

The Acting Chairman has delegated administrative funds control to the Director, OBF. The 

Director, OBF, has the responsibility to ensure that disbursements made by BFS on behalf of 

the FMC are legitimate expenses of the Commission and that there are sufficient funds 

available to pay the agency’s expenses. The OBF is responsible for reducing and recovering 

improper payments and keeps senior agency officials apprised of all relevant activities.

VI. a. The FMC does not have an in-house information system to help reduce improper 

payments. The agency utilizes the infrastructure and financial system maintained by BFS in 

Parkersburg, WV.

b. In 2018, the FMC requested funding to maintain the contract between the FMC and 

BFS for financial support and platform access to the Oracle database through Oracle’s 

Discoverer portal.

There are no statutory or regulatory barriers that limit the agency’s ability to take corrective actions 

to address any improper payments.
FMC FISCAL YEAR 2018| Performance and Accountability Report| 23

REDUCE THE FOOTPRINT

Consistent with Section 3 of OMB Memorandum M-12-12, Promoting Efficient Spending to Support 

Agency Operations, and Management Procedures Memorandum 2013-02, “Freeze the Footprint” 

policy implementation guidance, the FMC reports that it does not own any real property and leases 

space through General Services Administration (GSA). 

Although not a CFO Act agency, the FMC works closely with GSA to better steward government 

resources. In previous fiscal years, the FMC realigned the size of its leased space with actual program 

needs. For example, in FY 2017, the FMC reconfigured its headquarters space and returned 

approximately 1,395 square feet of space, providing an annual cost savings of approximately 

$66,000.

The FMC’s current office portfolio of properties total 54,249 usable square feet (USF), which is 

consistent with GSA occupancy agreements, and remains unchanged from the 2017 Reduce the 

Footprint baseline. In FY 2018, the FMC budgeted $3.427 million for rental payments to the GSA.

Table 1: Reduce the Footprint Policy Baseline Comparison 

FY 2017

(Baseline) FY 2018 Change (FY 2017 Baseline – FY 2018)

Square Footage (SF in millions) 0.054* 0.054 0.000

*In the FY 2017 PAR, this figure was reported as rentable square footage, 0.063. Usable square footage for FY 2017 was 0.054.

Table 2: Reporting of O & M Cost – Owned and Direct Lease Buildings

FY 2015 Reported Cost FY 2018 Reported Cost Change in Baseline 2015-

2018

Operation and Maintenance (O&M) 

Costs N/A* N/A* N/A*

*The FMC does not directly lease or own any space, but has occupancy agreements with GSA.

The FMC’s current space meets program needs. As the FMC works to develop requirements when 

its current lease expires in FY 2023, it will look to best uses of space to meet its program needs.

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 104-410, as amended by the 

Debt Collection Improvement Act of 1996, Pub. L. 104-134, and the Federal Civil Penalties 

Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, requires agencies to make 

regular and consistent inflationary adjustments of civil monetary penalties to maintain their deterrent 

effect. Below are the civil penalties that the FMC may impose, authority for imposing the penalty, 

dates of inflation adjustments, and current penalty levels. The Federal Register notice (83 FR 1304)

may be viewed at: https://www.federalregister.gov/documents/2018/01/11/2018-00319/inflationadjustment-of-civil-monetary-penalties. 
FMC FISCAL YEAR 2018| Performance and Accountability Report| 24

Penalty Statutory Authority Date of Previous 

Adjustment

Date of Current 

Adjustment

Maximum 

Penalty 

Adverse impact on U.S. carriers by foreign 

shipping practices 46 U.S.C. 42304 January 15, 2017 January 15, 2018 $2,052,107

Knowing and Willful violation / Shipping Act 

of 1984, or Commission regulation or order 46 U.S.C. 41107(a) January 15, 2017 January 15, 2018 $58,562

Violation of Shipping Act of 1984, Commission 

regulation or order, not knowing and willful 46 U.S.C. 41107(b) January 15, 2017 January 15, 2018 $11,712

Operating in foreign commerce after tariff 

suspension 46 U.S.C. 41108(b) January 15, 2017 January 15, 2018 $117,125

Failure to provide required reports, etc. / 

Merchant Marine Act of 1920 46 U.S.C. 42104 January 15, 2017 January 15, 2018 $9,239

Adverse shipping conditions / Merchant 

Marine Act of 1920 46 U.S.C. 42106 January 15, 2017 January 15, 2018 $1,847,663

Operating after tariff or service contract 

suspension / Merchant Marine Act of 1920 46 U.S.C. 42108 January 15, 2017 January 15, 2018 $92,383

Failure to establish financial responsibility for 

non-performance of transportation* 46 U.S.C. 44102 January 15, 2017 January 15, 2018 $23,335$778

Failure to establish financial responsibility for 

death or injury* 46 U.S.C. 44103 January 15, 2017 January 15, 2018 $23,335$778

Program Fraud Civil Remedies Act / makes 

false claim 31 U.S.C. 3802(a)(1) January 15, 2017 January 15, 2018 $11,181

Program Fraud Civil Remedies Act / giving 

false statement 31 U.S.C. 3802(a)(2) January 15, 2017 January 15, 2018 $11,181

*These amounts are based on the penalties established in § 44104 for violations of §§ 44102 and 44103: $5,000, plus $200 for each 

passage sold. These penalties were established in 1966 and, applying the statutory inflation adjustment formula, amount to $23,335, 

plus $778 for each passage sold, in current dollars.

GRANTS OVERSIGHT & NEW EFFICIENCY (GONE) ACT 

REQUIREMENTS

The FMC does not issue Federal grants or cooperative agreement awards. 

Category 2-3 Years 3-5 Years >5 Years

Number of Grants / Cooperative Agreements with Zero Dollar Balances 0 0 0

Number of Grants / Cooperative Agreements with Undisbursed Balances 0 0 0

Total Amount of Undisbursed Balances 0 0 0

NOTE: The Federal Maritime Commission does not issue grants or cooperative agreement awards.

BIENNIAL REVIEW OF USER FEES

Agencies are required by the Chief Financial Officers Act of 1990 to conduct biennial reviews of 

fees and other charges that they impose, and to revise these fees and charges to cover program and 

administrative costs incurred as necessary. The Commission published notice of its final rule, Update 

of Existing User Fees, on October 5, 2018, 83 FR 50290. New user fee rates will take effect on 

December 19, 2018.