Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

April 1, 2017 – September 30, 2017 

FEDERAL MARITIME COMMISSION
 
 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

October 31, 2017 

Office of Inspector General 

Dear Acting Chairman Khouri and Commissioners Dye, Doyle, and Maffei: 

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

Act of 1978, as amended. This report summarizes the activities of the Federal Maritime 

Commission (FMC) Office of Inspector General (OIG) for the period April 1, 2017 to September 

30, 2017. 

During this reporting period, the OIG initiated the annual financial statement audit (A18-

01); the annual evaluation of the FMC’s compliance with the Federal Information Security 

Management Act (A18-02); and a compliance audit of the DATA Act (A18-03). All of these 

assignments are expected to be completed in late October or early November 2017 and are 

discussed in more detail later in this report. 

The OIG continues to appreciate the cooperation and courtesies provided by the FMC’s 

leadership and staff. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

Enclosure 
	 	 	

   

   

   

       

         

       

   

   

     

                     

         

                            

          

          

                  

          

                  

Table of Contents

Transmittal Letter
 

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

FEDERAL MARITIME COMMISSION............................................................................................................1
 

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

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

Open Audits and Evaluation...................................................................................................................................... 3
 

Hotline and Investigations........................................................................................................................................ 4
 

Memorandum of Understanding.............................................................................................................................. 4
 

Review of Legislation ................................................................................................................................................ 5
 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities...................................................... 5
 

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS.............................................................7
 

TABLE I ‐ Summary of Reports with Corrective Actions Outstanding for More than 6 Months..................8
 

TABLE II ‐ Listing of Reports Issued...........................................................................................................8
 

TABLE III ‐ Reports with Questioned Costs ...............................................................................................8
 

TABLE IV  ‐ Recommendations that Funds be Put to Better Use ................................................................9
 

Appendix A ‐ Peer Review Activity .........................................................................................................10
 

Pictured: The Port of New York and New Jersey
	 	

 

 

 

	 	

 

EXECUTIVE SUMMARY
 

This semiannual report summarizes the activities and accomplishments of the Federal 

Maritime Commission (FMC), Office of Inspector General (OIG) for the six month reporting 

period April 1, 2017 through September 30, 2017. The most significant activities of the OIG 

during the second half of fiscal year (FY) 2017 are summarized below and additional details can 

be found in subsequent sections of this report. 

During this reporting period, the OIG initiated two audits and one evaluation. Specifically, 

the OIG initiated the annual financial statement audit (A18-01); the annual evaluation of the 

FMC’s compliance with the Federal Information Security Management Act (A18-02); and a 

compliance audit of the DATA Act (A18-03). All of these assignments are expected to be 

completed in late October or early November 2017 and are discussed in more detail later in this 

report. 

During the period, the OIG closed two hotline complaints. There were no new 

investigations or matters referred to prosecutorial authorities during this period. At the end of this 

reporting period, two hotline complaints were pending and there were no investigations open. 

FEDERAL MARITIME COMMISSION

The FMC is an independent federal agency responsible for ensuring a competitive and 

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

from unfair and deceptive practices. 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 U.S. Senate, each serving five-year terms. Currently one of the Commissioner positions is 

vacant. Although the majority of FMC personnel are located in Washington, D.C., the FMC also 

maintains a presence in Los Angeles, Seattle, New York, New Orleans, Houston, and South Florida 

through Area Representatives. These Area Representatives serve the major ports and 

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transportation centers within their respective geographic areas, and provide information, liaison 

and investigatory services on behalf of the FMC. 

OFFICE OF INSPECTOR GENERAL

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

(5 U.S.C. app.). The OIG is an independent audit and investigative unit headed by an IG who 

reports to the FMC Commissioners and Congress. 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 IG 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 this 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 Congressional 

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

independence of the OIG. 

To aid the FMC in accomplishing its 

mission, the OIG is provided two full-time 

positions, the IG and an auditor. During this 

reporting period, the OIG’s one auditor position 

was vacant. During this semiannual period, the 

OIG was pleased to welcome two summer interns, 

Mr. Robert Gordon, and Ms. Natalia Graf. Photo courtesy of FMC’s David W. Story. 

Mr. Gordon is a senior at James Madison University (JMU) where he has spent the last two 

years of his school career; he previously attended Virginia Commonwealth University before 

transferring to JMU. Mr. Gordon is studying to be an accountant and plans to become a Certified 

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Public Accountant (CPA). During the summer of 2017, Mr. Gordon aided the inspector general 

with audit oversight of the financial statements, and other special projects. 

Before starting the OIG internship in May, Ms. Graf finished her first year of school at 

Salisbury University as a member of the Honors College. She previously interned with her local 

economic development council on the Women Tech Council. Ms. Graf is studying both 

accounting and information systems, and plans to become a CPA after she graduates. Ms. Graf 

helped the OIG with its FISMA evaluation, DATA Act audit, and other special projects. 

In addition to their work assignments, Mr. Gordon and Ms. Graf had the opportunity to 

tour the United States Capitol, an event organized for the agency’s summer interns by the FMC’s 

Office of Consumer Affairs and Dispute Resolution Services. The OIG’s summer interns also 

attended several training events and OIG community meetings throughout the summer. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES

Open Audits and Evaluation

Independent Auditors’ Report of FMC’s FY 2017 Financial Statements. The audit 

objectives are to opine on whether the FMC’s FY 2017 financial statements follow U.S. Generally 

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

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

related laws and regulations. The statements to be audited are the Balance Sheet as of September 

30, 2017, and the related Statement of Net Cost, Statement of Changes in Net Position, Statement 

of Budgetary Resources, and Statement of Custodial Activity. 

DATA Act Audit, 2017. The Digital Accountability and Transparency Act of 2014 (DATA 

Act), in part, requires federal agencies to report financial and award data in accordance with the 

established Government-wide financial data standards. In May 2015, the Office of Management 

and Budget (OMB) and the Department of Treasury published 57 data definition standards and 

required federal agencies to report financial data in accordance with these standards for DATA 

Act reporting, beginning January 2017. Once submitted, the data will be displayed on 

USAspending.gov for taxpayers and policy makers to understand how taxpayer dollars are being 

spent. 

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The DATA Act also requires the IG of each federal agency to review a statistically valid 

sample of the spending data submitted by its federal agency and to submit to Congress a publicly 

available report assessing the completeness, timeliness, quality, and accuracy of the data sampled 

and the implementation and use of the Government-wide financial data standards by the federal 

agency. The OIG commenced the audit in the summer of 2017 and plans to issue the final audit 

report by November 8, 2017. 

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

Act (FISMA) FY 2017. The objectives of the independent evaluation of the FMC’s information 

security program are to evaluate its security posture by assessing compliance with FISMA and 

related information security policies, procedures, standards, and guidelines. The scope of this 

evaluation includes general controls of the FMC network and applications housing service 

contracts, tariff location filings, and FMC license applications. The OIG will evaluate potential 

system vulnerabilities and assess management actions to implement prior-year recommendations. 

Hotline and 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 the period, the OIG closed two hotline complaints. There were no new 

investigations or matters referred to prosecutorial authorities during this period. At the end of this 

reporting period, two hotline complaints were pending and there were no investigations open. 

Memorandum of Understanding

In accordance with Section 6 of the Inspector General Reform Act of 2008, each Inspector 

General shall have his or her own legal counsel, or obtain the services of a counsel appointed by 

and directly reporting to another Inspector General or the Council of the Inspectors General on 

Integrity and Efficiency (CIGIE) on a reimbursable basis. The OIG has a memorandum of 

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understanding (MOU) with the Federal Election Commission (FEC) OIG under which the FEC 

IG’s Counsel also serves as the FMC IG’s Counsel on a reimbursable basis. 

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, waste, and 

abuse. 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities

The 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. The FMC OIG remains active in CIGIE 

operations. Specifically, the Inspector General (IG) is a member of CIGIE, participates in the 

monthly CIGIE meetings and periodically assists CIGIE on special projects. 

During this reporting period, the IG served on the CIGIE’s Audit Committee. The Audit 

Committee is responsible for coordinating government-wide activities that promote economy and 

efficiency in federal programs and operations, and to address areas of weakness and vulnerability 

with respect to fraud, waste, abuse, and mismanagement. The Audit Committee serves as a 

resource for the federal audit community, maintains professional audit standards, and develops 

auditor training requirements. 

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On October 1, 2017, CIGIE announced the official launch of Oversight.gov. This new 

website provides a “one stop shop” to follow the ongoing oversight work of all Inspectors General 

that publicly post reports. The FMC OIG, like the other 

OIGs, will continue to post reports to its own website. 

But with the launch of Oversight.gov, users can now 

sort, search, and filter the site’s database of public 

reports from all of CIGIE’s member OIGs to find 

reports of interest. In addition, the site features a userfriendly map to find reports based on geographic 

location, and contact information for each OIG’s whistleblower hotline. Users can receive 

notifications when new reports are added to the site by following CIGIE’s new Twitter account, 

@OversightGov. 

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SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS
 

IG Act Reference Reporting Requirement Pages 

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 

None 

Section 5(a)(4) Matters referred to prosecutorial authorities and results None 

Section 5(a)(5) Summary of instances where information was refused None 

Section 5(a)(6) List of audit, inspection, and evaluation reports by subject 

matter, and where applicable, the value of questioned costs, 

unsupported costs, and funds put to better use 

None 

Section 5(a)(7) Summary of each report 3-4 

Section 5(a)(8) Audit, inspection, and evaluation reports with questioned 

and unsupported costs 

None 

Section 5(a)(9) Audit, inspection, and evaluation report recommendations 

that funds be put to better use 

None 

Section 5(a)(10) Summary of each audit, inspection, and evaluation report 

issued before the commencement of this reporting period for 

which no management decision was made by the end of the 

reporting period; for which comments were not returned 

within 60 days of report issuance; and for which there are 

any outstanding unimplemented recommendations 

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 804(b) of the Federal Financial 

Management Improvement Act (FFMIA) of 1996 

None 

Section 5(a)(14)(15) Peer review activity on FMC OIG 10, App. A 

Section 5(a)(16) Peer review activity by FMC OIG on another OIG None 

Section 5(a)(17) Statistical tables on investigative activities None 

Section 5(a)(18) Description of metrics used for developing the data for the 

statistical table under Section 5(a)(17) 

None 

Section 5(a)(19) Report on each investigation involving a senior Government 

employee where allegations of misconduct were 

substantiated 

None 

Section 5(a)(20) Description of whistleblower retaliation None 

Section 5(a)(21) Description of any attempt by the establishment to interfere 

with the independence of the OIG 

None 

Section 5(a)(22) Description of particular circumstances of each inspection, 

evaluation, and audit conducted that is closed and was not 

disclosed to the public; and investigation conducted by the 

OIG involving a senior Government employee that is closed 

and was not disclosed to the public 

None 

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TABLE I ‐		Summary of Reports with Corrective Actions Outstanding for More

than 6 Months

Recommendations 

Report Title Report 

Number 

Issue 

Date Number Open Closed 

N/A N/A N/A 0 0 0 

TABLE II ‐		Listing of Reports Issued

Report Title Assignment 

Number 

Issue 

Date 

Questioned 

Costs 

Unsupported 

Costs 

Funds 

Put to 

Better 

Use 

N/A N/A N/A $0 $0 $0 

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 

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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 

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Appendix A ‐		Peer Review Activity

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010 (Section 989C of P.L. 111-203), which amended Section 5 of the Inspector General Act of 

1978, OIGs are required to include in their semiannual reports (SAR) to Congress the results of 

peer reviews of their offices, as well as outstanding and not fully implemented recommendations 

from peer reviews the OIG received from another OIG, and outstanding and not fully implemented 

recommendations the OIG made in any peer review it performed for another OIG. 

An external peer review of the FMC OIG audit office was completed on March 24, 2016, 

during a prior semiannual period, by the U.S. International Trade Commission OIG. A pass rating 

was issued and there were no recommendations contained in the peer review report. 

During a prior reporting period ending September 30, 2016, the OIG conducted an audit 

peer review of the Election Assistance Commission (EAC) OIG and issued a peer review report 

on July 20, 2016. The FMC OIG issued a modified peer review report to the EAC OIG, and the 

peer review report contained no recommendations. 

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HOTLINE COMPLAINTS 

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

depends on the cooperation of FMC employees and the public. 

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.

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

(202) 523‐5865

ONLINE COMPLAINT FORM:

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO:

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL. YOU CAN CHOOSE TO REMAIN

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR

GENERAL BY SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR

ADDITIONAL INFORMATION.

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