FEDERAL MARITIME COMMISSION 

Product/Service 

Information

Office of Inspector General

Semiannual Report to Congress 

Covering the Period 

 

April 1, 2013 – September 30, 2013 
FEDERAL MARITIME COMMISSION

Washington, DC 20573 

October 31, 2013 

Office of Inspector General

Dear Chairman Cordero and Commissioners: 

The attached report is submitted in accordance with Section 5 of the Inspector General 

Act of 1978, as amended. It summarizes the activities of the Office of Inspector General 

(“OIG”) for the period April 1, 2013 to September 30, 2013. The Act requires that you transmit 

the report to the appropriate Congressional committees within 30 days of receipt. Your 

transmittal should also include any comments you consider appropriate and other statistical 

tables and reports required by law. 

It has been a real pleasure to serve as your Interim Inspector General (IG) since early 

August 2013. I have enjoyed meeting the fine staff of the FMC and learning about the critical 

mission of the agency overseeing the international ocean transportation system on behalf of the 

American public. Based on my discussions with the Commission and an understanding of their 

IG recruitment efforts, I am encouraged that a permanent IG will be in place very soon. Until 

that time, I look forward to continuing to work with you and the Commissioners in our ongoing 

efforts to promote economy and efficiency in agency programs. Finally, I would like to express 

my gratitude to the FMC OIG staff for their hard work and dedication to the work and mission of 

the FMC OIG, as well as their untiring assistance to me, during this trying transitional period. 

 

 Respectfully submitted, 

 /Jonathan Hatfield/ 

 Interim Inspector General 

Enclosure 
TABLE OF CONTENTS 

Transmittal Letter 

EXECUTIVE SUMMARY .......................................................................................................... 1

FEDERAL MARITIME COMMISSION .................................................................................. 2

OFFICE OF INSPECTOR GENERAL ...................................................................................... 2

OFFICE OF INSPECTOR GENERAL ACTIVITIES ............................................................. 3

On-going Audits and Evaluations ............................................................................................... 3

Investigations .............................................................................................................................. 4

Other Activities ........................................................................................................................... 5

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS ............................ 8

TABLE I – Summary of Audit Reports with Corrective Actions Outstanding for 

 More than 1 Year .................................................................................................. 9

TABLE II – Listing of Audit Reports Issued ............................................................................. 9

TABLE III – Reports with Questioned Costs ........................................................................... 10

TABLE IV – Recommendations that Funds be Put to Better Use ............................................ 11
April 1, 2013 – September 30, 2013 Page 1 

EXECUTIVE SUMMARY

This Semiannual Report summarizes the activities and accomplishments of the Federal 

Maritime Commission (“FMC” or “Commission”), Office of Inspector General (“OIG”) for the 

period April 1, 2013 through September 30, 2013. The most significant activities of the OIG 

during the second half of Fiscal Year (“FY”) 2013 are noted below. Additional details pertaining 

to each activity can be found in subsequent sections of this report. 

The FMC OIG has been without a permanent Inspector General since January 2013. 

During this period, the FMC OIG has had two Interim Inspectors General, each generally 

working one or two days per-week. Throughout their tenure with the FMC, the Interim 

Inspectors General have held concurrent positions in other OIG offices. Between January 24, 

2013 and August 9, 2013, through a series of agreements, the Commission designated Dana 

Rooney-Fisher, the Inspector General for the Federal Labor Relations Authority (“FLRA”), to 

serve as Interim Inspector General, while a search for a permanent inspector general was 

conducted. Following the expiration of Ms. Rooney-Fisher’s last agreement, the Commission 

designated Jonathan Hatfield to serve as Interim Inspector General, while the permanent IG 

position remains open. Mr. Hatfield is concurrently serving as the Deputy Inspector General for 

the Federal Election Commission (“FEC”) OIG. 

During this period, the OIG had three audits and one evaluation open. Specifically, as of 

the end of this reporting period, the OIG’s Audit of Expenditures for Furnishing or Redecorating Commissioners’ Offices was in the report phase and the draft report is expected to be 

issued to FMC management shortly. In addition, the OIG’s annual financial statement audit and 

Evaluation of the FMC’s Compliance with the Federal Information Security Management Act 

Fiscal Year (FY) 2013 were both in progress and expected to be completed by December 2013. 

Lastly, the OIG initiated an audit of the FMC’s physical security operations during this reporting 

period and this audit is expected to be completed in a future reporting period. 

During this reporting period, the OIG received eight complaints, two of which reported 

similar allegations and one that duplicated a previous complaint. The eight complaints were 

received through the following methods: five anonymous contacts; one through the OIG’s main 

telephone line; one through the OIG’s hotline; and one by internal mail. The two similar 
April 1, 2013 – September 30, 2013 Page 2 

allegations were combined into one preliminary investigation, which later was converted into a 

formal investigation. The duplicate complaint was included in a matter that is already under an 

administrative investigation, after consulting with the Department of Justice regarding the 

allegations and receiving a declination to prosecute. The OIG began a preliminary investigation 

of one of the eight complaints and closed it due to lack of evidence. We forwarded two 

complaints to responsible officials outside of the OIG for appropriate action, if warranted. 

Lastly, the OIG commenced preliminary investigations on two of the complaints concerning 

allegations about FMC employees. 

In addition to these activities, the OIG continued to work with the Commission’s Office 

of the General Counsel to update and issue Commission Order 113, which pertains to OIG 

reporting responsibilities and protections for whistleblowers with access to classified 

information. The OIG also revised its own System of Records Notice and is working with the 

Commission to post the revisions, upon approval by the IG. 

FEDERAL MARITIME COMMISSION

The FMC is an independent agency responsible for the regulation of ocean borne 

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

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

Ocean Shipping Reform Act of 1998; the Foreign Shipping Practices Act of 1988; and Section 

19 of the Merchant Marine Act of 1920. 

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

the Senate, each serving five-year terms. Although the majority of FMC personnel are located in 

Washington, D.C., the Commission also maintains a presence in Los Angeles, Seattle, New 

York, New Orleans, Houston, and South Florida through area representatives who serve the 

major ports and transportation centers within their respective geographic areas. In addition, one 

at-large area representative operates from Washington, D.C. 

OFFICE OF INSPECTOR GENERAL

The OIG was established in 1989 by the Inspector General Act of 1978, as amended (5 

U.S.C. app.). The OIG is an independent audit and investigative unit headed by an IG who 
April 1, 2013 – September 30, 2013 Page 3 

reports to the FMC Commissioners. To aid the FMC in accomplishing its mission, the OIG is

provided three full-time positions. 

The OIG is responsible for conducting audits and investigations relating to the programs 

and operations of the FMC. Audits are conducted for the purpose of finding and preventing 

fraud, waste and abuse, and promoting economy, efficiency and effectiveness within the agency. 

The OIG investigations seek out facts related to allegations of wrongdoing on the part of FMC 

employees and individuals, or entities contracting with, or obtaining benefits from, the agency. 

The Inspector General Act provides that the OIG shall have access to all agency records and may 

subpoena records from entities outside of the agency in connection with an audit or investigation. 

The IG is required by law to prepare a report summarizing OIG audits and investigations 

during the immediately preceding six-month period. The report is sent to the FMC 

Commissioners, the President of the Senate, the Speaker of the House and FMC’s appropriating 

and authorizing committees. This dual reporting requirement helps to ensure the independence 

of the OIG. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES 

On-going Audits and Evaluations 

Audit of Expenditures for Furnishing or Re-decorating Commissioners’ Offices. The 

OIG decided to perform this review after the FMC received a request, on May 9, 2012, from the 

Committee on Oversight and Government Reform to provide a complete account for all 

purchases made for the previous Chairman. The objectives of the audit were to determine 

whether the Commission complies with applicable laws and regulations regarding expenses 

associated with furnishing, redecorating, or making improvements to Commissioners’ offices. 

Specifically, we performed this review to determine whether the Commissioners stayed within 

their $5,000 statutory spending limit and to determine whether these expenses are recorded and 

tracked during the term, reappointment or hold over of office for each Presidential-appointee. 

The OIG staff completed the audit fieldwork and the Federal Trade Commission (“FTC”) 

OIG independently referenced the report. The audit workpapers and draft report are currently 

under OIG management review and the final report is expected to be issued to FMC management 

during the next semiannual reporting period. 
April 1, 2013 – September 30, 2013 Page 4 

Evaluation of FMC’s Compliance with the Federal Information Security Management 

Act FY 2013. The objectives of the independent evaluation of the FMC’s information security 

program are to evaluate its security posture by assessing compliance with the Federal 

Information Security Management Act and related information security policies, procedures, 

standards, and guidelines. The scope of this task includes the FMC network and applications 

housing service contracts, tariff location filings, and FMC license applications. The OIG also 

plans to perform a network scan to identify potential system vulnerabilities and assess 

management actions to implement prior-year recommendations. 

Independent Auditor’s Report of FMC’s FY 2013 Financial Statements. The audit 

objectives are to opine on whether the FMC’s FY 2013 financial statements follow U.S. 

Generally Accepted Accounting Principles and present fairly the financial position of the agency. 

The OIG also will review internal controls over financial reporting and agency compliance with 

laws and regulations. The statements to be audited are the Balance Sheets as of September 30, 

2013 and 2012, and the related Statements of Net Cost, Statements of Changes in Net Position, 

Statements of Budgetary Resources and Statements of Custodial Activity. 

Audit of FMC’s Physical Security – Datawatch. This audit was incorporated into the 

OIG’s 2013 annual audit plan and was initiated on November 8, 2012; however, with the press of 

other OIG activities, it was delayed. The OIG re-initiated the review in August 2013, with the 

objectives to determine the effectiveness of the Datawatch physical security system. 

Investigations 

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

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

occurring within FMC programs and operations by employees or contractors. Matters of 

possible wrongdoing are referred to the OIG in the form of allegations or complaints from a 

variety of sources, including FMC employees, other government agencies and the general public. 

During this reporting period, the OIG received eight complaints, two of which reported 

similar allegations and one that duplicated a previous complaint. The eight complaints were 

received through the following methods: five anonymous contacts; one through the OIG’s main 

telephone line; one through the OIG’s hotline; and one by internal mail. The two similar 
April 1, 2013 – September 30, 2013 Page 5 

allegations were combined into one preliminary investigation, which later was converted into a 

formal investigation. The duplicate complaint was included in a matter that is already under an 

administrative investigation, after consulting with the Department of Justice regarding the 

allegations and receiving a declination to prosecute. The OIG began a preliminary investigation 

of one of the eight complaints and closed it due to lack of evidence. We forwarded two 

complaints to responsible officials outside of the OIG for appropriate action, if warranted. 

Lastly, the OIG commenced preliminary investigations on two of the complaints concerning 

allegations about FMC employees. 

Other Activities

Peer Review

Federal offices of inspectors general are required by the IG Act to have an audit peer 

review performed once every three years. These reviews are to be performed only by Federal 

auditors. A committee of the Council of Inspectors General on Integrity and Efficiency (CIGIE) 

schedules the review to ensure that resources are available to perform the review and that OIGs 

do not conduct reciprocal reviews. 

 The objectives of a peer review are to determine, for the audit function, whether an 

effective quality control system has been established in the office and if policies, procedures and 

applicable government auditing standards are being followed. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Public Law 

111-203, requires federal offices of inspectors general to include in their semiannual reports to 

Congress an appendix containing the results of any peer review conducted by another OIG 

during the reporting period, or, if no peer review was conducted within that reporting period, a 

statement identifying the date of the last peer review conducted by another OIG. 

The Postal Rate Commission OIG completed a peer review of the FMC OIG and issued a 

report in a previous reporting period, on March 28, 2013. The peer review was conducted for the 

period October 1, 2009 through September 30, 2012. The report has a rating of pass and is 

available on the FMC OIG website. The system review report included no recommendations. 
April 1, 2013 – September 30, 2013 Page 6 

Memorandum of Understandings

The FEC OIG signed a Memorandum of Understanding (“MOU”) with the Commission 

under which the FEC’s Deputy Inspector General serves as the Commission’s Interim Inspector 

General while the IG position remains open. 

Prior to the current MOU, the FLRA signed a series of MOUs with the Commission, 

under which the FLRA’s Inspector General acted as the Commission’s Interim Inspector 

General. 

 The FTC OIG and FMC OIG signed a MOU during this reporting period to provide 

independent referencing of each office’s respective audit/evaluation reports. 

Review of Legislation

As required by the Inspector General Act of 1978, as amended, the OIG routinely reviews 

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

proposed legislation or regulation: (1) impacts the economy and efficiency of FMC programs 

and operations; and (2) contains adequate internal controls to prevent and detect fraud and abuse. 

However, the OIG has revised its own System of Records Notice and is working with the 

Commission to post the revisions, upon approval by the IG. 

Review of FMC Policies

During this semiannual period, the OIG continued to work with the agency’s Office of 

the General Counsel to revise Commission Order 113, which pertains to OIG reporting 

responsibilities and protections for whistleblowers with access to classified information. 
April 1, 2013 – September 30, 2013 Page 7 

Council of Inspectors General on Integrity and Efficiency Activities

The Council of Inspectors General on Integrity and Efficiency (“CIGIE”) was established 

by law as an independent entity by the Inspector General Reform Act of 2008 (P.L. 110-409) to: 

address integrity, economy and effectiveness issues that transcend individual government 

agencies; and 

increase the professionalism and effectiveness of personnel by developing policies, 

standards, and approaches to aid in the establishment of a well-trained and highly skilled 

workforce in the Office of Inspectors General. 

The CIGIE is comprised of all inspectors general that are Presidentially-appointed / 

Senate confirmed and those that are appointed by agency heads -- designated federal entities.

The FMC OIG remains active in CIGIE operations. Specifically, the Interim Inspector General 

is a member of CIGIE and participates in the monthly CIGIE meetings. The Assistant Inspector 

General for Audits participates in Federal Audit Executive Council (“FAEC”) activities. The 

FAEC is comprised of senior audit staff from agency OIGs that discuss and coordinate issues 

affecting the federal audit community -- with special emphasis on audit policy and operations of 

common interest to FAEC members. The Counsel to the Inspector General participates in the 

Council of Counsels to the Inspector General (“CCIG”) activities. The CCIG consists of senior 

counsel from agency OIGs who discuss various legal issues that affect the OIG community. As 

Chief Investigator, the OIG Counsel also attends the Assistant Inspector General for 

Investigations Committee quarterly meetings, where issues concerning OIG investigative matters 

are discussed. 
April 1, 2013 – September 30, 2013 Page 8 

SUMMARY OF INSPECTOR GENERAL 

REPORTING REQUIREMENTS

IG Act Reference Reporting Requirement Pages

Section 4(a)(2) Review of legislation and regulations 6

Section 5(a)(1) Significant problems, abuses and deficiencies None

Section 5(a)(2) Recommendations with respect to significant 

problems, abuses, or deficiencies

None

Section 5(a)(3) Prior significant recommendations on which 

corrective actions have not been completed

9

Section 5(a)(4) Matters referred to prosecutive authorities 5

Section 5(a)(5) Summary of instances where information was 

refused

None

Section 5(a)(6) List of audit reports by subject matter None

Section 5(a)(7) Summary of each particularly significant report None

Section 5(a)(8) Statistical table Reports with questioned costs 10

Section 5(a)(9) Statistical table recommendations that funds be 

put to better use

11

Section 5(a)(10) Summary of each audit issued before this 

reporting period for which no management 

decision was made by the end of the reporting 

period

None

Section 5(a)(11) Description and explanation of significant 

revised management decisions

None

Section 5(a)(12) Significant management decisions with which 

the inspector general disagrees

None

Section 5(a)(13)

Information under Section 5(b) of the Federal 

Management Improvement Act (FFMIA) of 

1996

None

Section 5(a)(14) Peer Review Activity 5
April 1, 2013 – September 30, 2013 Page 9 

TABLE I – Summary of Audit Reports with 

Corrective Actions Outstanding for More than 1 Year 

Recommendations

Report Title Report 

Number

Issue 

Date Number Open Closed

FY 2011 Implementation 

of FISMA

A12-02 1/17/12 20 9 11

Review of FMC’s User 

Fee Calculations

OR10-03 5/27/10 1 1 0

FY 2009 Implementation 

of FISMA

A10-02 1/28/10 19 1 18

TABLE II - Listing of Audit Reports Issued 

Report 

Number

Issue 

Date

Report Title Questioned 

Costs

Unsupported 

Costs

Funds Put to 

Better Use

NONE $0 $0 $0
April 1, 2013 – September 30, 2013 Page 10

TABLE III 

Reports with Questioned Costs

Number

of 

Reports

Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has been 

made by the commencement of the reporting 

period.

0 $0 $0

B. Which were issued during the reporting period. 0 $0 $0

Subtotal (A + B) 0 $0 $0

C. For which a management decision was made 

during the reporting period.

0 $0 $0

(i) dollar value of disallowed costs; and 0 $0 $0

(ii) dollar value of costs not disallowed 0 $0 $0

D. For which no management decision has been 

made by the end of the reporting period.

0 $0 $0

E. Reports for which no management decision 

was made within six months of issuance.

0 $0 $0
April 1, 2013 – September 30, 2013 Page 11

TABLE IV 

Recommendations That Funds Be Put To Better Use 

Number

of 

Reports Dollar Value

A. For which no management decision has been made 

by the commencement of the reporting period.

0 $0

B. Which were issued during the reporting period. 0 $0

Subtotal (A + B) 0 $0

C. For which a management decision was made during 

the reporting period.

0 $0

(i) dollar value of recommendations that were 

agreed to by management; and

0 $0

(ii) dollar value of recommendations that were not 

agreed to by management

0 $0

D. For which no management decision has been made 

by the end of the reporting period. 0 $0

E. Reports for which no management decision was 

made within six months of issuance 0 $0
April 1, 2013 – September 30, 2013 Page 12

Contacting the Office of Inspector General

Employees and the public are encouraged to contact the OIG regarding any incidents of 

possible waste, fraud or abuse occurring within FMC programs and operations. To report 

suspected wrongdoing, employees or the public may call the OIG Hotline on (202) 523-5865. A 

confidential or anonymous message can be left 24 hours a day. Complaints or allegations of 

fraud, waste or abuse can also be emailed to oig@fmc.gov or to 

https://www2.fmc.gov/oigcomplaints/ (if the complainant wishes to remain anonymous). For 

general information and to speak with the OIG staff, the OIG main telephone number is (202) 

523-5863. 
HOTLINE COMPLAINTS

The success of the OIG mission to prevent fraud, waste and abuse 

depends on the cooperation of FMC employees and the public. 

A COMPLAINT CAN BE REPORTED BY CALLING OUR 24-HR DIRECT LINE

(202) 523-5865

E-MAIL ADDRESS: OIG@FMC.GOV

OR

https://www2.fmc.gov/oigcomplaints/

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO:

Federal Maritime Commission

Office of Inspector General

Room 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL AND YOU CAN BE ANONYMOUS

HOWEVER, CALLERS ARE ENCOURAGED TO ASSIST THE INSPECTOR GENERAL BY

SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR ADDITIONAL INFORMATION